Mundey v. Erie Insurance Group

GREENE, Judge. On January 17, 2002, petitioner, Richard A. Mundey, Jr. (“Mundey”), age 21,.sustained serious injuries as a result of an auto collision that occurred while he was the front-seat passenger in a vehicle driven by Amber Rose Burgess (“Burgess”). At the time of the accident, Burgess was insured under a Maryland Automobile Insurance Fund (MAIF) policy which provided the minimum statutory liability coverage of $20,000. Mundey filed a complaint against Burgess in the Circuit Court for Prince George’s County, seeking damages, in excess of the MAIF policy limits, for injuries caused by Burgess’s negligence.

The complaint was amended to add a declaratory judgment count against Mundey’s parents’ insurer, respondent, Erie Insurance Group (“Erie”), to determine if Erie’s uninsured/underinsured (“UM”) motorist endorsement insured Mundey, in light of his living arrangements, at the time of the accident. ⁶⁵⁹ In that regard, Mundey sought a declaration that the UM endorsement in the Erie policy covered damages that he sustained as a result of the motor vehicle collision. The negligence claim against Burgess was settled for $20,000 and that count was subsequently dismissed. As to the declaratory judgment count, the parties entered into a stipulation as to the facts with regard to Mundey’s residence. The trial court ruled in favor of Erie, finding that Mundey was not entitled to coverage under Erie’s policy.

Mundey noted an appeal to the Court of Special Appeals. The Court of Special Appeals affirmed the judgment of the trial court. Mundey v. Erie Ins. Group, 167 Md.App. 444 , 893 A.2d 645 (2006).

Thereafter, Mundey filed a petition for writ of certiorari seeking review of the judgment of the Court of Special Appeals. We granted the petition. 1 Mundey v. Erie Ins. Group, 393 Md. 245 , 900 A.2d 751 (2006). We hold that Mundey is not entitled to recover under his parents’ uninsured motorist endorsement because he was not a resident of their household or otherwise insured under the automobile liability insurance policy in question.

FACTUAL AND PROCEDURAL BACKGROUND We adopt the facts as stated by Judge Frederick Sharer, writing for a panel of the Court of Special Appeals in this case: The Erie “Pioneer Family Auto Insurance Policy” purchased by [petitioner’s] parents provided policy limits of $250,000. The policy’s uninsured/underinsured provision, at issue in this appeal, provides, in relevant part, as follows: UNINSURED/UNDERINSURED MOTORISTS COVERAGE ⁶⁶⁰ OUR PROMISE We will pay damages for bodily injury and property damage that the law entitles you or your legal representative to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle. Damages must result from a motor vehicle accident arising out of the ownership or use of the uninsured motor vehicle or underinsured motor vehicle as a motor vehicle and involve: 1. bodily injury to you or others we protect. OTHERS WE PROTECT 1.

Any relative. “Relative” is defined in the policy’s definitions section: “relative” means a resident of your household who is: 1. a person related to you by blood, marriage or adoption, or 2. a ward or any other person under 21 years old in your care. “resident” means a person who physically lives with you in your household. Your unmarried, unemancipated children under age 24 attending school full-time, living away from home will be considered residents of your household. (Emphasis in original.) The declaratory judgment action came on for trial on August 26, 2004. Neither party called live witnesses; rather, each proffered evidence from which the Circuit Court could have found the following: On or about February 14, 2001, [petitioner], then 20 years old, was arrested and incarcerated for failure to pay a court-ordered fine. [Petitioner’s] parents, Richard A Mundey, Sr. and Sharon Mundey, agreed to post his bail if he would agree to, inter alia> move out of their home in Lusby, Maryland, and into his grandmother’s home in Waldorf, Maryland.

It was further agreed that [petitioner] ⁶⁶¹ would have to get a job and “get his act together” before he could move back into his parents’ home. Upon the posting of bail by his parents,[petitioner] was released from jail and moved into the home of his grandmother, Shirley Sterling, in Waldorf. Shortly thereafter [petitioner] got a job in Waldorf; first at Oak Ridge Construction Company and then at Damon’s Restaurant. Approximately one month after he moved in with his grandmother [petitioner] obtained his driving learner’s permit. [Petitioner] was not, at any time relevant to the issues in this case, enrolled in college. [Petitioner] lived with his grandmother in Waldorf for the 11 months preceding the accident.

During that time he visited his parents’ home approximately four to six times. He spent the night at their house on two occasions-Thanksgiving and Christmas night. On those occasions, [petitioner] slept on an extra bed in his younger brother’s room, as his former bedroom had been converted to other family use. At his grandmother’s home, [petitioner] had his own bedroom and was free to use the entire house, and the telephone. [Petitioner] ate his meals with his grandmother and, when he was not at work, he either watched television or spent time with his girlfriend at his grandmother’s house.

In December 2001, [petitioner’s] father denied [petitioner’s] request to move back into the family home. Except for his pay record at Damon’s Restaurant, [petitioner] continued to use his parents’ Lusby address as his home address. Although [petitioner] never filed for a change of address in Lusby, his mother either brought his mail when she visited her mother, or mailed it to [petitioner] at the Waldorf address. After hearing the proffers and arguments of counsel, the Circuit Court issued an opinion from the bench providing, in relevant part: It appears to me that the definitions used in Erie’s policy are not void against public policy, but are in fact logical, clear, and stated in plain language, sufficient to put all policyholders on notice of the extent of risk that this con ⁶⁶² tract is intended to cover.

The temporary residence of the [petitioner] at his grandmother’s home was temporary based on the limits placed by the homeowners who are the insureds under this policy. That is it was entirely up to his parents, the named insured homeowners, to determine how long that temporary residence would continue. The policy anticipates that issue in its specific statement regarding full-time students living away from home who are unemancipated children under age 24.... Here we have a young man who was emancipated absolutely.

He was over 18. He was living, and working on his own. He was not dependent for any purpose for his parents, and therefore could not even be considered an unemancipated child over 18 .... Only a temporary residence for school purposes for an unemancipated child between the ages of 18 and 24 would allow that person to still be continued as a member of the household.

I see nothing void against public policy in this. . We have, in addition, the intention declared by the parents that he was not to be considered a member of the household in any number of ways. One, they forwarded his mail to him at the other location. Two, he was supposed to be self-supporting at another location.

Three, they did not notify the insurance company of his driving on his learner’s permit because they were not permitting him to use their vehicles. All of those intentions clarify the intention that he not be considered a resident of the household at the time of this incident. It is sad, it is tragic, but it is the law, and I see nothing in public policy or in the statutory language, or in any of the appellate decisions, to suggest otherwise. The Circuit Court’s oral opinion was followed by a declaratory judgment order, filed on October 19, 2004.

The order declared that the relevant policy provisions did not violate public policy and that, because [petitioner] was not physically living in his parents’ household for the 11 months prior to the ⁶⁶³ accident, he was ‘not an insured by definition under the policy and does not qualify for uninsured or underinsured motorist coverage.’ Mundey, 167 Md.App. at 447-50 , 893 A.2d at 646-48 (alterations added) (footnotes omitted). DISCUSSION A. We turn first to Maryland’s Motor Vehicle Insurance Law and our interpretation of the uninsured motorist provisions. Petitioner contends that Erie narrowed the required coverage, without any statutory authority, by inserting into the common declaration, what is in petitioner’s view, an unduly restrictive definition of “resident.” Petitioner posits that the policy requirement that “residents” physically live in the “named insured’s” household is invalid and illegal and further that Maryland’s Motor Vehicle Insurance Laws are to be liberally construed so as to provide coverage for Mundey. In order to determine whether Mundey is entitled to collect under the uninsured motorist provision of his parents’ automobile liability insurance policy, we must interpret Md.Code (1997, 2006 Repl.

Vol.), § 19-509 of the Insurance Article, 2 the ⁶⁶⁵ UM Endorsement and subsequent definitions of “relative” and “resident.” Our interpretation must conform to the well-settled principles of statutory construction. As this Court recently said in Walzer v. Osborne, 395 Md. 563, 571-573 , 911 A.2d 427, 431-433 (2006), ‘[t]he cardinal rule of statutory construction is to ascertain and effectuate the intent of the Legislature.’ Mayor & Town Council of Oakland v. Mayor & Town Council of Mt. Lake Park, 392 Md. 301, 316 , 896 A.2d 1036, 1045 (2006); Chow v. State, 393 Md. 431, 443 , 903 A.2d 388, 395 (2006) (citations omitted); see also Johnson v. Mayor of Balt. City, 387 Md. 1, 11 , 874 A.2d 439, 445 (2005); Moore v. State, 388 Md. 446, 452 , 879 A.2d 1111, 1114 (2005); O’Connor v. Balt.

County, 382 Md. 102, 113 , 854 A.2d 1191, 1198 (2004); Mayor & City Council of Balt. v. Chase, 360 Md. 121, 128 , 756 A.2d 987, 991 (2000). If the language of the statute is ambiguous, however, then ‘courts consider not only the literal or usual meaning of the words, but their meaning and effect in light of the setting, the objectives and purpose of [the] enactment [under consideration].’ Fraternal Order of Police v. Mehrling, 343 Md. ⁶⁶⁶ 155, 174, 680 A.2d 1052, 1062 (1996) (quoting Tucker v. Fireman’s Fund Ins. Co., 308 Md. 69, 75 , 517 A.2d 730, 732 (1986)). We have said that there is ‘an ambiguity ■within [a] statute’ when there exist ‘two or more reasonable alternative interpretations of the statute.’ Chow, 393 Md. at 444 , 903 A.2d at 395 (citations omitted).

When a statute can be interpreted in more than one way, ‘the job of this Court is to resolve that ambiguity in light of the legislative intent, using all the resources and tools of statutory construction at our disposal.’ Id. If the true legislative intent cannot readily be determined from the statutory language alone, however, we may, and often must, resort to other recognized indicia—among other things, the structure of the statute, including its title; how the statute relates to other laws; the legislative history, including the derivation of the statute, comments and explanations regarding it by authoritative sources during the legislative process, and amendments proposed or added to it; the general purpose behind the statute; and the relative rationality and legal effect of various competing constructions. Witte, 369 Md. at 525-26, 801 A.2d at 165. In construing a statute, ‘[w]e avoid a construction of the statute that is unreasonable, illogical, or inconsistent with common sense.’ Blake v. State, 395 Md. 213, 224 , 909 A.2d 1020, 1026 (2006) (citing Gwin v. MVA, 385 Md. 440, 462 , 869 A.2d 822, 835 (2005)); see Frost v. State, 336 Md. 125, 137 , 647 A.2d 106, 112 (1994).

In addition, ‘the meaning of the plainest language is controlled by the context in which it appears.’ State v. Pagano, 341 Md. 129, 133 , 669 A.2d 1339, 1341 (1996) (citations omitted). As this Court has stated, [bjecause it is part of the context, related statutes or a statutory scheme that fairly bears on the fundamental issue of legislative purpose or goal must also be considered. Thus, not only are we required to interpret the statute as a whole, but, if appropriate, in the context of the entire statutory scheme of which it is a part. ⁶⁶⁷ Gordon Family P’ship v. Gar On Jer, 348 Md. 129, 138 , 702 A.2d 753, 757 (1997) (citations omitted). The history of Maryland’s Uninsured Motorist Statute, as summarized by the Court in State Farm Mut.

Auto. Ins. Co. v. DeHaan, 393 Md. 163 , 900 A.2d 208 (2006), informs our discussion. In DeHaan , we noted that, [t]he Legislature first enacted the uninsured motorist statute as Chapter 73 of the Acts of 1972.

This section was part of a large bill which also created the Maryland Automobile Insurance Fund (MAIF), the bill provided: ‘(c) In addition to any other coverage required by this subtitle, every policy of motor vehicle liability insurance issued, sold, or delivered in this State after January 1, 1973 MAY contain coverage, in at least the amounts required under Section 7-101 of the Article 66% of the Annotated Code of Maryland (1970 Replacement Volume and 1972 Supplement), for damages which the insured is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injuries sustained in an accident arising out of the ownership, maintenance, or use of such uninsured motor vehicle The statute was later amended and codified as Maryland Code (1957, 1972 Repl. Vol., 1978 Cum. Supp.), Art 48A, § 541(c). The enactment of this section complied with one of the recommendations made in a Report of the Special Committee on No-Fault Insurance dated January 31, 1972.

The committee’s recommendation stated: ‘To complement the first party coverage and to protect more fully a Maryland driver, the second bill requires the driver to carry uninsured motorist coverage in the event he suffers damage caused by an out-of-state driver not protected by liability insurance.’ DeHaan, 393 Md. at 171-72 , 900 A.2d at 213 . As one commentator has noted, “the Maryland Uninsured Motorist Endorsement specifically establishes three classes of persons’ ability to recover under the policy.” Andrew Jan ⁶⁶⁸ quitto, Uninsured Motorist Coverage in Maryland, 21 U. Balt. L.Rev. 171, 221 (1992). Of the three classes of persons, this case concerns only what has been labeled “clause 1 insureds:” ‘Clause 1 insureds’ consists of the named insured, the named insured’s spouse, and members of the named insured’s household----The coverage granted to ... [them] is personal and comprehensive: it does not run with the insured vehicle.

Rather the policy covers clause 1 insureds in a variety of situations: when they are occupying a vehicle under the policy, when they are occupying most other vehicles, when they are riding bicycles, and when they are pedestrians. Id. We have stated that the phrase “resident of the same household” is not ambiguous, but rather “[t]he words themselves are clear, simple, and in general use.” Peninsula Ins. Co. v. Knight, 254 Md. 461, 477 , 255 A.2d 55, 63 (1969)(holding that the insured was a member of his parents’ household and that their claim against him was precluded by an exclusionary clause in a policy of insurance issued by Peninsula.

Further acknowledging that “[a] ‘resident’ of a household may have a status ranging from temporary to permanent but ... he is nonetheless a resident” in light of a number of factors including his usage of the living space and the storage location of his belongings.) Petitioner urges this Court to consider him a “clause 1 insured” under his parents’ automobile liability policy at the time of the accident and therefore entitled to coverage. For the reasons discussed infra, we disagree. The essence of this appeal is our interpretation of subsection (c)(1) of § 19-509. Subsection (c)(1), requires that each motor vehicle liability insurance policy issued, sold, or delivered in the State ..., shall contain coverage for damages, subject to the policy limits, that: (1) the insured is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injuries sustained in a motor vehicle accident arising out of the ownership, maintenance, or use of the uninsured motor vehicle.... ⁶⁶⁹ (Emphasis added).

The statute does not define the word “insured. 3 ” Because the Legislature failed to define “insured,” we must examine what the Legislature intended “insured” to mean in light “of the Legislature’s general purpose and in context of the statute as a whole.” Nesbit v. Gov’t Employees Ins. Co., 382 Md. 65, 76 , 854 A.2d 879, 885 (2004) (citation omitted). Further, ‘[w]e have repeatedly stated that where the [Legislature has chosen not to define a term used in a statute, that term should, ... be given its ordinary and natural meaning.’ By not defining these words in the statute, there is nothing to indicate the [Legislature ‘intended to express a technical meaning.’ DeJarnette v. Fed. Kemper Ins. Co., 299 Md. 708, 717 , 475 A.2d 454, 459 (1984) (citations omitted).

Petitioner expands upon an argument presented by commentator, Andrew Janquitto, in a treatise on Maryland motor vehicle law. Mr. Janquitto urges that “[because the UM statute does not indicate who must be insured, the only guidance is a negative implication from the exclusions. In other words, if certain persons such as family members, can be excluded under some specified circumstances, they must be included in all other circumstances.” Andrew Janquitto, Maryland Motor Vehicle Insurance § 8.9(A)(1) (2006 Supplement). Petitioner further expands upon Mr. Janquitto’s argument by citing specific statutes from which, Petitioner contends, this Court can imply the meaning of the word “insured.” Petitioner contends that the Legislature intended “insured” to include all family members of the “named insured,” including those who are temporarily absent from the household.

Accordingly, petitioner avers that Maryland’s Motor Vehicle ⁶⁷⁰ Insurance Laws do not authorize an exclusion for temporarily absent resident relatives. Further, petitioner asserts that had the General Assembly intended to give insurers permission to narrow the coverage in this way, it would have expressly included a provision to that effect in the original UM statute or, later, after this Court’s interpretation of the term “resident” in Forbes v. Harleysville Mut. Ins. Co., 322 Md. 689 , 589 A.2d 944 (1991).

Moreover, petitioner argues that the definition of “resident” contained within Erie’s policy is invalid because it restricts the legislatively mandated coverage and, moreover, that the policy provisions are inconsistent with Maryland’s UM statute and are thus invalid. Finding no explicit definition of “insured” within the UM statute, petitioner contends that this Court should look to the exclusions contained within the UM statute and elsewhere within the motor vehicle insurance scheme, and that these exclusions show by negative implication that the Legislature intended the term “insured” to include family members of the named insured that are temporarily absent from the household. Petitioner relies on several sections of the Insurance Article for this proposition. Specifically, petitioner cites § 19-505 and § 27-606 as instructive.

Pursuant to § 19-505, the personal injury protection (PIP) statute, automobile insurance companies that issue, sell, or deliver policies in Maryland must provide PIP coverage for “the first named insured, and any family member of the first named insured who resides in the first named insured’s household.” Md.Code (1997, 2006 Repl. Vol.), § 19-505(a)(l)(i) of the Insurance Article. Insurers are, however, permitted to exclude from coverage those persons enumerated in subsection (c) 4 of § 19-505. Petitioner contends that the exclusions ⁶⁷¹ allowed under subsection (c) are very limited, that, pursuant to § 19-505, Mundey should be provided PIP coverage, and that it can be concluded that the Legislature intended the word “insured” to mean all resident family members of the “named insured,” whether temporarily absent or not.

Section 27-606 permits a family automobile to remain insured, instead of having the insurance policy canceled, by excluding from the insurance policy a member of the household whose driving record would have warranted a cancellation or non-renewal of the policy. Petitioner contends that the operative language in § 27-606 is “family members residing in the household of the excluded operator or user or vehicle owner.” Md.Code (1997, 2006 Repl. Vol.), § 27-606 of the Insurance Article. Petitioner asserts that the policy issued by Erie exceeds the statutory authorized exclusions by seeking to exclude him from PIP and UM coverage while he was a passenger in a vehicle driven by a non-relative.

Petitioner cites additional sections of the Insurance Code in support of his argument. Petitioner suggests that the intent of the Legislature is revealed by reading §§ 19-509 and 20-601 together. Here, petitioner contends that the operative language, “family who resides in the household,” indicates the Legislature’s intention to require insurers to cover family residents to the same extent that the state fund covers them, through MAIF. ⁶⁷² Finally, petitioner contends that the intent to include household residents in the term “insured” is revealed in various other sections including § 19-506, the waiver of PIP benefits; § 20-603, notice of claim for damages; § 27-601, notice for cancellation or non-renewal of a policy; §§ 27-604 and 27-605, both addressing premium increases. In opposition, respondent contends that, at best, the group of persons who are to be provided uninsured/underinsured motorist coverage would be the named insured and his or her family members who reside in the named insured’s household, but that there is no mandate for any other persons to be covered.

Respondent argues that coverage need not be extended to a named insured’s relatives who intend to move in with the named insured in the future or those who do not physically reside with the named insured. We first address petitioner’s contention that the exclusions contained within the UM statute and elsewhere within the motor vehicle insurance scheme show by negative implication that the Legislature intended the term “insured” to include all relatives of the named insured who are temporarily absent from the household. In Johnson v. Nationwide Mut. Ins.

Co., “[t]he question before us ... [was] whether § 19-509 of the Insurance Article require[d] an insurer to provide uninsured motorist coverage for the wrongful death of a person who was not an insured under the policy.” 388 Md. 82, 86 , 878 A.2d 615, 617 (2005). Jaedon Johnson, a minor, sought to recover under his mother’s insurance policy for the death of his father, a man who was not a named insured under that policy, was not married to the policyholder, and did not live with the policyholder, arguing that § 19—509(c)(2) required the insurer to pay the benefits sought. As part of our analysis in that case, we considered the plain language of § 19-509(c)(l), noting that “[t]he words of the statute require each motor vehicle liability insurance policy to include coverage for that policy’s insured for bodily injuries sustained by that policy’s insured, in a motor vehicle accident involving the use of an uninsured motor vehicle.” Johnson, 388 Md. at 89 , 878 A.2d at 619 (emphasis in original). The minor argued that recovery under his moth ⁶⁷³ er’s policy was necessarily conditioned on his being a survivor of an insured under the statute.

Finding his argument illogical, we opined that such an interpretation would mean that the [L]egislature was requiring every policy to provide uninsured motorist coverage to an unknown number of people, not named in the policy, who are related to (but not living with) someone who is protected by the policy, in the event that those unknown people should be involved in an accident with an uninsured motor vehicle. Id. (alteration added). Our interpretation of § 19-509(c)(l) and analysis of legislative intent as explicated in Johnson are instructive.

Although the term “insured” is not defined, within the context of the uninsured motorist statute, its ordinary meaning is covered or coverage at the time of the accident. See Johnson, 388 Md. at 89, 878 A.2d at 619 ; Forbes, 322 Md. at 708 , 589 A.2d at 953 . It is our view that the Legislature intended for coverage to be extended to the insured motorist and all family members residing with the named insured. By contrast there may be situations where a family member of the named insured who resides with the named insured and is occupying an insured or