Nationwide Mutual Insurance v. Seitz

HOLLANDER, Judge. Edward Seitz, appellee, was seriously injured when two vehicles collided, one of which was insured by Nationwide Mutual Insurance Company, appellant, and the other of which was insured by Allstate Insurance Company. In this appeal, we are asked to decide whether one or both insurers are obligated to pay Personal Injury Protection (“PIP”) benefits to Seitz. Nationwide argues that only Allstate is liable, even though Allstate’s PIP policy limit is considerably less than the limit in Nationwide’s policy.

Seitz asserts that he is entitled to recover the larger policy amount, either from Nationwide alone or from both insurers. We agree with the Circuit Court for Montgomery County that Seitz is entitled to recover from both Nationwide and Allstate, in an amount not to exceed Nationwide’s policy limit. 1 The facts are undisputed. On December 25, 1993, Seitz was driving his vehicle on Dorsey Road in Anne Arundel County when he was struck from behind by a vehicle owned by Richard Ward and driven by Eric Ward (“the Ward vehicle”). ³⁵⁸ Seitz was insured under a motor vehicle insurance policy issued to him by Allstate Insurance Company, which contained a provision for PIP benefits in the amount of $2,500. The Ward vehicle was insured by Nationwide, and the applicable policy contained a provision for PIP benefits in the amount of $10,000.

After the collision, Seitz stepped out of his vehicle to assess the damage. Shortly thereafter, a third vehicle, owned and operated by Michelle Foster, struck the Ward vehicle from behind and propelled it into Seitz. The Foster vehicle was also insured under a policy issued by Allstate; it contained a provision for PIP benefits in the amount of $2,500. Seitz was injured and incurred medical expenses well in excess of $10,-000.

Seitz filed a declaratory judgment action in the circuit court to determine the rights and responsibilities of Nationwide and Allstate with respect to the PIP endorsements for the Ward and Foster vehicles. Seitz did not argue that he is entitled to the aggregate maximum coverage from both carriers, i.e., $12,500. Instead, Seitz contended that he was entitled to a total of $10,000, either from Nationwide alone or from both Nationwide and Allstate, because $10,000 constitutes the larger of the two PIP policy limits. 2 After a hearing, the circuit court found that both Nationwide and Allstate were liable to Seitz. At Nationwide’s request, when the court determined that Nationwide was obligated to pay, the circuit court applied the “other insurance” clause in the Nationwide PIP endorsement.

It then determined that Nationwide was liable in the amount of $8,000 and that Allstate was liable in the amount of $2,000. 3 The “other insurance” clause provided: ³⁵⁹ In the event the injured person has other optional Personal Injury Protection insurance available and applicable to the accident, the maximum recovery under all such insurance shall not exceed the amount which would have been payable under the provisions of the insurance providing the highest dollar limit, and the Company [Nationwide] shall not be liable for a greater proportion of any loss to which this coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of this coverage and all other such insurance. [4] Nationwide now appeals, and presents a single question for our consideration: Whether payment of a PIP claim must be made by both the insurer of a vehicle that strikes another vehicle, propelling it into a pedestrian and the insurer of the vehicle that is struck and propelled into a pedestrian, rather than only the insurer of the vehicle striking another vehicle and propelling it into a pedestrian? DISCUSSION The issue presented requires us to analyze various interlocking provisions of Article 48A of the Annotated Code of Maryland (1957, 1994 Repl.Vol. and Supp.1995). 5 Article 48A, § 539(a) requires that all motor vehicle insurance policies ³⁶⁰ issued in this State “provide coverage for the medical, hospital, and disability benefits set forth in this section,” unless the insured makes a valid waiver of the coverage. The coverage required by § 539 is colloquially referred to as “Personal Injury Protection” or “PIP coverage.” PIP coverage is entirely “no-fault” insurance. Section 540(a)(1) provides that PIP benefits “shall be payable without regard to ... [t]he fault or nonfault of the named insured or the recipient in causing or contributing to the accident.” When the Foster vehicle struck the Ward vehicle and propelled the Ward vehicle into Seitz, an “accident” occurred within the meaning of § 538.

Section 538 defines “accident” as “any occurrence involving a motor vehicle, other than an occurrence caused intentionally by or at the direction of the insured, from which damage to any property or injury to any person results.” Moreover, § 539(b) enumerates the persons protected by PIP coverage. Among these individuals are “[pjedestrians injured in an accident in which the insured motor vehicle is involved.” § 539(b)(3). The parties agree that Seitz, who had exited his vehicle after the first accident, was a “pedestrian” when he was struck during the next accident. See Tucker v. Fireman’s Fund Insurance Co., 308 Md. 69, 78 , 517 A.2d 730 (1986) (General Assembly “intended to include as a ‘pedestrian’ under § 539 all persons not occupying, entering, or alighting from a motor or other covered vehicle without regard to whether, when struck, they were actually travelling on foot, standing in a stationary position, sitting, or ... within some structure”).

Further, since the Ward vehicle was the object that struck and injured Seitz, it was clearly “involved” in the accident within the meaning of § 539(b)(3). Thus, under that statute, Seitz, as a pedestrian, was among the designated individuals covered by the PIP endorsements of both the Nationwide and Allstate policies. Seitz was, within the terms of the statute, a “[p]edestrian injured in an accident in which the insured motor vehicle was involved.” Section 543(a) prohibits duplicative recovery of PIP benefits.' It provides, in pertinent part: “Notwithstanding any ³⁶¹ other provision of this subtitle, no person shall recover benefits under the coverage described in [§ 539] of this subtitle from more than one motor vehicle liability policy or insurer on either a duplicative or supplemental basis.” Other subsections of § 543 govern the coordination of policies when more than one PIP policy might provide coverage for a particular insured. Moreover, § 543(b)(1) states, in relevant part: “As to any person injured in any accident while occupying a motor vehicle for which the coverage described under § 539 of this subtitle is in effect, and as to any person injured by such a motor vehicle as a pedestrian ..., the benefits shall be payable by the insurer of the motor vehicle.” (Emphasis supplied).

As we noted, Seitz does not seek to recover the aggregate of PIP benefits under each policy, which would total $12,500. Rather, he contends that he is entitled to recovery of $10,000, because that is the larger of the two policy limits for PIP benefits and his medical bills exceed $10,000. Understandably, it does not seem to matter to him if he recovers from Nationwide alone or from Nationwide and Allstate together. Nationwide advances several arguments to support its claim that it has no obligation to pay PIP benefits.

First, Nationwide argues that Seitz was not really “injured by” its insured vehicle within the meaning of § 543(b)(1). In Nationwide’s view, this is because the Ward vehicle “was merely a projectile propelled into Seitz” by the Foster vehicle. As a “projectile” or inanimate object knocked into Seitz, the Ward vehicle, according to Nationwide, did not “injure” Seitz. This argument is not well taken.

The facts of this case indicate that the Ward vehicle was not simply an “innocent” vehicle turned into a projectile by another driver. To the contrary, the Ward vehicle had been involved in an accident with Seitz before the Foster vehicle was ever involved. Indeed, it was because of that accident that Seitz exited his vehicle to inspect the damage and was then injured when the Foster vehicle collided with Ward’s car. ³⁶² Moreover, whether the Ward vehicle was a mere “projectile” or was being driven at the time is completely irrelevant under the statutory scheme. Section 538(b) defines “motor vehicle,” in pertinent part, as an “automobile and any other vehicle ... operated or designed for operation upon a public road by any power other than animal or muscular power____” (Emphasis supplied).

While the Ward vehicle was in a stationary position at the time the Foster vehicle struck it, it retained its status as a motor vehicle, because it was “designed for operation” on the public roads. In addition, contrary to Nationwide’s suggestion, it is obvious that Seitz was “injured by” the Ward vehicle within the meaning of § 543(b)(1), because the Ward vehicle came into contact with him. While there may be one or more forces that combine to cause an injury, Atlantic Mutual Insurance Co. v. Kenney, 323 Md. 116, 127 , 591 A.2d 507 (1991); Karns v. Liquid Carbonic Corp., 275 Md. 1, 20 , 338 A.2d 251 (1975), what caused the Ward vehicle to strike him is not relevant. This view is supported by the no-fault nature of PIP coverage, codified in § 540(a)(1).

The purpose of the PIP legislation was “to put a limited amount of money in the hands of an injured individual under certain circumstances without regard to whether another person is liable for the injuries which the claimant sustained.” Smelser v. Criterion Insurance Co., 293 Md. 384, 393 , 444 A.2d 1024 (1982). It is thus intended “to assure financial compensation to victims of motor vehicle accidents without regard to the fault of a named insured or other persons entitled to PIP benefits.” Pennsylvania National Mutual Casualty Insurance Co. v. Gartelman, 288 Md. 151, 154 , 416 A.2d 734 (1980) (emphasis supplied). Consequently, whether the owner or operator of the Nationwide vehicle was at fault for Seitz’s injuries is immaterial. The Nationwide vehicle struck Seitz and caused his injuries.

Nationwide also argues, based on our recent decision in Maryland Automobile Insurance Fund v. Erie Insurance Exchange, 105 Md.App. 377 , 660 A.2d 929 (1995), that Seitz is only entitled to receive PIP benefits from Allstate, as the insurer of the Foster vehicle. In Erie, as in the case at bar, ³⁶³ Car A struck Car B, propelling Car B into Pedestrian P. A critical factual difference from the present case, however, was that Car B in Erie was a Virginia vehicle that did not have PIP coverage. Erie thus was a dispute between the insurer of Car A, which had knocked the second vehicle into the pedestrian, and the pedestrian’s own automobile insurer. In addition to § 543(b)(1), we had to analyze the situation in light of § 543(c), a separate coordination of policies provision.

Section 543(c) pertains to situations when an injured party receives PIP benefits from his or her own motor vehicle insurance carrier. The statute provides, in relevant part: “As to any person insured under a policy providing [PIP coverage] who is ... struck as a pedestrian ... by a motor vehicle for which [PIP coverage] is not in effect, the benefits shall be payable by the injured party’s insurer providing such coverage.... ” (Emphasis supplied). The main issue in Erie concerned the meaning of the words “struck ... by” in § 543(c). The insurer of Car A contended that the pedestrian had been “struck by” a vehicle without PIP coverage (Car B) and, therefore, under § 543(c), the pedestrian’s own insurer was responsible for the PIP benefits.

The pedestrian’s insurer countered that Car A’s carrier was responsible under § 543(b)(1), because the pedestrian had been “injured by” Car A which had PIP coverage. We affirmed a judgment in favor of the pedestrian’s insurer. We held that § 543(c) was inapplicable to the case, because the pedestrian had been “struck by” a vehicle with PIP coverage—Car A We reached this conclusion by interpreting the word “struck” as encompassing “not only actual physical contact but also a force causing or resulting in physical contact.” 105 Md.App. at 386 , 660 A.2d 929 (internal quotation marks omitted). Since Car A had applied a force that caused another object to make physical contact with the pedestrian, we concluded that Car A had “struck” the pedestrian.

We then reconciled §§ 543(b)(1) and 543(c) by interpreting § 543(c) as applying only when none of the vehicles that strikes the pedestrian has PIP coverage. 105 Md.App. at 388 , 660 A.2d 929 . Since that circumstance was not present, ³⁶⁴ we held that § 543(c) was inapplicable, that § 543(b)(1) controlled, and that Car A’s insurer, as the insurer of a vehicle that had “injured” the pedestrian, was responsible for the pedestrian’s PIP benefits. 105 Md.App. at 388-89 , 660 A.2d 929 . Nationwide reads Erie as standing for the broad proposition that, in any situation in which Car A hits Car B into Pedestrian P, Car A is always deemed to be the vehicle that “struck” or “injured” P and that, therefore, Car B’s insurer is never responsible for paying the pedestrian PIP benefits. Nothing in Erie can be read as suggesting such a result.

Indeed, that result would be clearly at odds with the statutory language, and our opinion in Erie indicates quite the contrary. We said in Erie that the term “struck ... by” in § 543(c) includes a situation in which a car strikes another object and propels it into a pedestrian. We stated: “[W]e believe that the legislature intended the term ‘struck by’ as used in § 543(c) to encompass not only actual physical, contact but also a force causing or resulting in physical contact.” 105 Md.App. at 386 , 660 A.2d 929 (emphasis supplied). We never stated that actual physical contact by a car against a person was not encompassed in the term “struck by.” In short, Erie involved a situation in which two vehicles had “struck” the pedestrian.

We resolved the potential conflict between §§ 543(b)(1) and 543(c) by holding that “if any vehicle that strikes and injures a pedestrian has PIP coverage in effect, the insurer of that vehicle should pay the injured pedestrian’s PIP benefits.” 105 Md.App. at 388 , 660 A.2d 929 (emphasis in original). As one of the vehicles that had struck the pedestrian—Car A—had PIP coverage, we determined that that vehicle’s insurer was responsible to pay PIP benefits to the pedestrian. Applying Erie here, it is apparent that Seitz was “injured” by the Foster vehicle, which was insured by Allstate (Car A). But Seitz was also “injured” by the Ward vehicle, insured by Nationwide (Car B).

Thus, under § 543(b)(1), both Nationwide and Allstate are obligated to pay PIP benefits to Seitz. ³⁶⁵ Nationwide also suggests