Powell v. State Farm Mutual Automobile Insurance

CATHELL, Judge. Appellant, Kenneth R. Powell, was injured in an automobile accident while driving his wife’s Nissan. That car was covered by an insurance policy with $20,000/$40,000 uninsured motorist coverage. Mr. Powell also owned another Nissan, not involved in the accident, covered by a separate policy which provided $100,000/$300,000 uninsured motorists coverage. 1 Mr. and Mrs. Powell, as plaintiffs, filed suit against the driver of the other car and against State Farm Mutual Insurance Company, the insurer under both their policies.

By way of a Motion for Partial Summary Judgment, both plaintiffs sought a declaration that the policy on the husband’s vehicle provided coverage. The trial court (Perry, J.) held that the limit applicable to the present case was the $20,000/$40,000 coverage under the policy covering the vehicle involved in the accident — Mrs. Powell’s automobile. As applicable to the issue now presented, the husband’s policy contained the following language: THERE IS NO COVERAGE: 2. FOR BODILY INJURY TO YOU ...

WHILE OCCUPYING ... A MOTOR VEHICLE OWNED BY YOU, YOUR SPOUSE OR ANY RELATIVE, and which is not insured under the liability coverage of this policy. Appellant summarized his argument as follows: 1. Exclusion in the Insurance Policy The exclusion contained in the appellant’s policy contains two conditions which must both be fulfilled before the exclusion becomes effective.

Since only one condition was fulfilled, the exclusion is inoperative. 2. Applicable Statute ¹⁰¹ Even if the exclusion contained in the appellant’s insurance policy is found to be operative because both conditions contained therein have been fulfilled, the exclusion is not one of the exclusions expressly authorized by the Maryland State Legislature and is therefore invalid as against public policy. 3. Appellee’s Cited Case — Howell v. Harleysville Mut. Ins.

The case cited by the appellee as controlling, Howell v. Harleysville Mut. Ins. Co., 305 Md. 435 , 505 A.2d 109 (1986) is not applicable to the case before this Court. I Exclusion in the Insurance Policy The exclusion contained in the appellant’s policy contains two conditions which must both be fulfilled before the exclusion becomes effective.

Since only one condition was fulfilled, the exclusion is inoperative. Appellant first argues that the portion of the policy exclusion quoted supra has not been met, asserting that “the mandatory Maryland coverage ... extends to any vehicle being driven by the appellant as a named insured.” Because he is covered while driving any vehicle, he contends that any vehicle he drives is thus a vehicle insured under the liability coverage of his policy. Md.Ann.Code art. 48A, § 538 (1979) offers definitions of both “Motor Vehicle” and “Named Insured” which, of course, are not synonymous. Section 539(a) provides that insurance benefits must cover the “Named Insured” injured in a motor vehicle accident, and explains that a policy must also include provisions requiring its benefits to be applicable to any other person “injured while occupying the insured motor vehicle ... or while using it with the express or implied permission of the named insured____” As we read the statute, the “insured motor vehicle” is the vehicle named in the policy.

The statute requires coverage when the “insured motor vehicle” is involved in an accident irre ¹⁰² spective of who is driving it. Additionally, the statute requires the policy to cover the “named insured” when involved in an accident involving any vehicle. We note that the Court of Appeals has rejected technical construction when a statute or a policy fails to define words: By not defining these words in the statute, there is nothing to indicate the legislature “intended to express a technical meaning.” State Tax Commission v. Allied Mortgage Companies, 175 Md. 357, 360 , 2 A.2d 399, 400 (1938). A strained or unreasonable construction of the policy language should not be indulged in.

In interpreting the language of insurance contracts, words are to be given their customary, normal menaing [sic]. DeJarnette v. Federal Kemper Insurance Company, 299 Md. 708, 717, 721 , 475 A.2d 454 (1984). (Citations omitted.) We said in Schuler v. Erie Insurance Exchange, 81 Md.App. 499, 505 , 568 A.2d 873 (1990), that: The primary purpose in construing insurance contracts is to effectuate the intention of the parties. U.S.F. & G. v. Nat.

Pav. Co., 228 Md. 40 , 178 A.2d 872 (1962). The language employed is to be afforded its ordinary and usually accepted meaning. C. & H. Plumbing v. Employers Mut., 264 Md. 510 , 287 A.2d 238 (1972).

When the language is unambiguous, construction is within the province of the courts and Maryland has not adopted the rule that an insurance policy is to be most strongly construed against the insurer. We do not believe the statute, by extending coverage to the insured when involved in any accident, enlarged the class of “insured motor vehicles” under policies of insurance. Thus, when the appellant’s policy’s language excludes coverage for a vehicle owned by the named insured or his spouse and which was not insured under the liability coverage of “this policy,” it was referring to vehicles not ¹⁰³ described in the policy of insurance at issue, such as the wife’s Nissan. The clause provides that the uninsured motorist coverage under Mr. Powell’s policy does not apply if he was occupying a motor vehicle owned by his wife that was not described as an insured vehicle in his policy.

As we shall discuss later, we fail to see where such language contradicts the statute or is contrary to public policy. Another factor to consider is whether, absent the “in any accident” language, Kenneth Powell’s policy would have afforded coverage, had the wife’s automobile been uninsured. The exclusionary language clearly states that if the named insured is occupying a motor vehicle owned by the insured or the insured’s spouse, and that motor vehicle is not insured under the liability coverage of the policy, then the uninsured coverage does not apply. The liability provisions of the policy provide for coverage in respect to accidents resulting from the use of “your car.” The policy defines “your car” as “the car or the vehicle described on the declarations page.” The “Declarations Page” of the policy at issue describes the 1987 4 door Nissan owned by Kenneth Powell — not the car involved in the accident.

By the language of the husband’s policy, its uninsured motorist coverage would not apply had the wife’s car been completely uninsured. As we have said, we see no ambiguous language in the policy. To accept the interpretation of “insured vehicle” urged upon us by appellant would be to participate in an absurd result. See Howell v. Harleysville Mut.

Ins. Co., 305 Md. 435 , 505 A.2d 109 (1986). We hold that the two conditions of the exclusion (that the appellant was occupying a motor vehicle owned by his spouse, and that that motor vehicle was not insured by appellant’s policy) have been fully met and thus control, unless the exclusion is prohibited. We must therefore next determine whether the exclusion is void as contravening either the uninsured motorists (hereinafter UM) provisions of Md.Ann. Code art. 48A, § 541 (1979), or the public policy which that statute promotes. ¹⁰⁴ II Applicable Statute Even if the exclusion contained in the appellant’s insurance policy is found to be operative because both conditions contained therein have been fulfilled, the exclusion is not one of the exclusions expressly authorized by the Maryland State Legislature and is therefore invalid as against public policy.

The Court of Appeals in State Farm Mutual Automobile Insurance Company v. Nationwide Mutual Insurance Company, 307 Md. 631, 635-36 , 516 A.2d 586 (1986), said: “Beginning in 1972, however, the General Assembly substantially changed the public policy of this State with regard to motor vehicle insurance and reparations for damages caused by motor vehicle accidents.” Jennings [v. Government Emp. Ins. Co.], 302 Md. [352] at 357-358, 488 A.2d [166] at 168 [1985]. That change, of course, was the mandating of compulsory automobile insurance with required minimum coverages____ These and related statutes were before us in Jennings.

Judge Eldridge, for the Court, observed that “a clause in an insurance policy, which is contrary to ‘the public policy of this State, as set forth in ... the Insurance Code’ or other statue, is invalid and unenforceable.” 302 Md. at 356, 488 A.2d at 168 (quoting Guardian Life Ins. v. Ins. Comm 'r, 293 Md. 629, 643 , 446 A.2d 1140 (1982)). The Court of Appeals in Jennings v. Government Employees Insurance Company, 302 Md. 352, 356 , 488 A.2d 166 (1985), opined: “It is settled that a clause in an insurance policy, which is contrary to ‘the public policy of this State, as set forth in ... the Insurance Code’ or other statute, is invalid and unenforceable.” (Citations omitted.) The question, then, is whether the exclusionary language of the instant policy is contrary to the public policy as set ¹⁰⁵ forth in the applicable statute. We hold that it is not, and explain.

In Guardian Life Insurance Company of America v. Insurance Commissioner of the State of Maryland, 293 Md. 629, 642-43 , 446 A.2d 1140 (1982), the Court of Appeals stated the rules that govern the construction of statutes: [SJtatutes should be construed with a view to the original intent and meaning of the legislature, bearing in mind the cause and necessity of the enactment, and that construction is to be applied which, accords with the actual intention of the makers. Similarly fundamental is the rule that where a particular provision of a statute is part of a single statutory scheme the legislative intention must be gathered from the entire statute rather than from only one part. Of course, a well-recognized counterbalancing rule is that a court must not surmise a legislative intention contrary to the plain language of a statute. That which necessarily is implicit in a statute is as much a part of it as that which is expressed. [Citations omitted.] The Court of Appeals in Larimore v. American Insurance Company, 314 Md. 617, 622 , 552 A.2d 889 (1989), stated: On several occasions recently we have reiterated the principle that “ ‘where the Legislature has required specified coverages in a particular category of insurance, and has provided for certain exceptions or exclusions to the required coverages, additional exclusions are generally not permitted.’ ” [Citations omitted.] See also Gable v. Colonial Insurance Company of California, 313 Md. 701 , 548 A.2d 135 (1988).

The policy in Larimore contained an exclusion worded so as to exclude liability coverage for an employee if that employee was “already entitled to compensation through workers’ compensation.” The Court opined: ¹⁰⁶ Since the General Assembly has extensively considered the relationship between collateral source benefits and the mandatory minimum motor vehicle insurance coverages, and has determined what reductions and exclusions in the compulsory insurance benefits are allowable because of collateral source payments, this Court has been most reluctant to uphold additional set-offs or exclusions. Id. at 624 , 552 A.2d 889 . See also Hoffman v. United Services Automobile Association, 309 Md. 167, 172 , 522 A.2d 1320 (1987), (“this mandatory coverage has ‘the purpose of providing minimum protection to individuals injured by uninsured motorists.’ ”); Nationwide Mutual Insurance Company v. Webb, 291 Md. 721, 737 , 436 A.2d 465 (1981) (UM statutes are intended to allow access to the full statutory minimum “to exactly the same extent as would have been available had the tortfeasor complied with the minimum requirements of the financial responsibility law.”) We said in Provident General Insurance Co. v. McBride, 69 Md.App. 497, 505-06 , 518 A.2d 468 (1986), that: [E]very automobile liability insurance policy must provide “uninsured motorist” (UM) coverage. Md.Code (1957, 1986 Repl.Vol.), Article 48A, § 541(c).

Section 541(c)(2) provides in pertinent part: In no case shall the uninsured motorist coverage be less than the coverage afforded a qualified person under Article 48A, §§ 243H and 243-1. However, the insurer may exclude from coverage benefits for: (i) The named insured or members of his family residing in the household when occupying, or struck as a pedestrian by, an uninsured motor vehicle that is owned by the named insured or a member of his immediate family residing in his household____ We held in Provident, that the language of Md.Ann.Code art. 48A, § 541(c)(2)(i) which then stated that an insurer can exclude “the named insured ... when occupying ... an uninsured motor vehicle that is owned by the named insured ...” was broad enough to permit a policy exclusion by ¹⁰⁷ Provident that excluded motor vehicles “owned or furnished or available for ... regular use by the owner.” When construing policy exclusions in respect to Md.Ann. Code art. 48A § 539 benefits, i.e., personal injury protection (hereinafter PIP), we said in Huntt v. State Farm Mutual Automobile Insurance Company, 72 Md.App. 189, 195 , 527 A.2d 1333 , cert. denied, 311 Md. 286 , 533 A.2d 1307 (1987), discussing our decision in Provident, that: Given the specific legislative authorization for such an exclusion, we declined “to insert or delete words to ascertain a legislative intention different from [the statute’s] clear meaning.” Id. Although § 544(a) may not expressly authorize a policy provision such as that in the case sub judice, we think such a provision is contemplated by the statute’s terms. [Bracketed material in original.] We further held that “[w]hen a policy provision is not in conflict with the statute, that provision will be enforced, the statute’s underlying purpose notwithstanding.” Id. at 194, 527 A.2d 1333 . The language of the statute and the policy mandate coverage for the named insured when involved in any accident.

At the same time the statute permits an insurer to exclude from coverage an insured when he is injured while using a family vehicle that the insurer has not covered. While it might make otherwise uninsured persons insured, as to non-family vehicles, it does not enlarge the description of insured vehicles as described in the policy. The obvious purpose of the policy exclusion as to uninsured vehicles is to prohibit a person from purchasing insurance for one car only and utilizing that coverage as to other vehicles owned by the insured through the “in any accident” provision of the policy. This type of prohibition is not against public policy.

To apply its language as the appellant urges would invite multi-vehicle families to insure only one vehicle. It would play havoc with premium determinations and otherwise be detrimental to the process of providing liability protection to the motorists, and others, of ¹⁰⁸ Maryland. Appellant’s interpretation of the clause, if adopted, would be, as we see it, contrary to public policy. As far as we have been able to determine, the prior cases voiding exclusionary language in respect to uninsured motorist UM coverage and personal injury protection