Sherrod v. Achir

JAMES R. EYLER, Judge. The principal question presented in this case is whether the District of Columbia Compulsory/No-Fault Motor Vehicle Insurance Act (“Compulsory No-Fault Act”) bars a tort claim arising out of a motor vehicle accident when the claimants are District residents insured by a policy issued in the District and the accident occurs in Maryland. We shall answer that question in the negative. Factual Background On November 19, 1999, Vashti Sherrod, driver of a vehicle, and Eugene Sherrod, a passenger in that vehicle, appellants, were injured when their vehicle was struck in the rear by a vehicle operated by Mohammed El-Habib Achir (“Achir”), appellee.

The accident occurred in Prince George’s County. On May 11, 2001, appellants filed a complaint in the Circuit Court for Prince George’s County against Achir, and on July 19, 2001, amended their complaint, adding Shahzad Eshai (“Eshai”), president of Atlantis Courier, Inc. (“Atlantis”), and Atlantis, as additional defendants. Appellants alleged that Achir was negligent and that he was acting as agent, servant, and employee of Eshai and Atlantis, the other appellees. 1 ⁶⁴² At all relevant times, appellants were residents of the District of Columbia and were insured by Progressive Insurance Company (“Progressive”) under a policy issued in the District. Appellants made a claim against Progressive pursuant to the personal injury protection (“PIP”) coverage under the policy, and when it was denied, appellants filed suit against Progressive in the Superior Court of the District of Columbia.

In that suit, appellants alleged that Progressive breached its contract by failing to pay appellants’ lost wages. 2 Subsequently, and prior to the filing of the suit in Maryland, Progressive paid or settled the claim, and the case was dismissed with prejudice. On December 7, 2001, Eshai and Atlantis filed a motion for summary judgment in the case pending in the Circuit Court for Prince George’s County on the ground that the suit was barred by the Compulsory/No-Fault Act. Appellees pointed out that the Act, with certain exceptions, bars a tort action when an injured party elects PIP benefits. Accordingly, when appellants elected to receive PIP benefits, and because the exceptions were not applicable, appellees argued that they lost their right to pursue a tort action.

On February 14, 2002, Eshai and Atlantis filed a supplemental memorandum in support of their motion, asserting that Achir was an independent contractor and not their agent. The court never ruled on the agency issue. By order dated April 23, 2002, the court granted the motion on the ground that appellants’ suit was barred by the Compulsory/No-Fault Act. On April 30, 2002, Achir filed a motion for summary judgment on the same grounds that had been successful for the other defendants.

By order dated June 3, 2002, the court granted Achir’s motion. Appellants subsequently filed a timely appeal to this Court. ⁶⁴³ Discussion Appellees, as they did below, rely on the terms of the Compulsory/No-Fault Act and the Court of Appeals’ decision in Ward v. Nationwide Mutual Automobile Insurance Company, 328 Md. 240 , 614 A.2d 85 (1992). The pertinent portion of the Compulsory/No-Fault Act provides as follows: (b) A victim who elects to receive personal injury protection benefits may maintain a civil action based on liability of another person only if: (1) The injury directly results in substantial permanent scarring or disfigurement, substantial and medically demonstrable permanent impairment which has significantly affected the ability of the victim to perform his or her professional activities or usual and customary daily activities, or a medically demonstrable impairment that prevents the victim from performing all or substantially all of the material acts and duties that constitute his or her usual and customary daily activities for more than 180 continuous days; or (2) The medical and rehabilitation expenses of a victim or work loss of a victim exceeds the amount of personal injury protection benefits available. D.C.Code § 31-2405(b)(2002). 3 Appellees argue that the Court of Appeals, in Ward , held that the PIP provisions of the law of the District of Columbia control the construction of insurance policies issued to District residents.

Consequently, because appellants elected to receive PIP benefits, appellees argue that the lawsuit restriction contained in 31-2405(b) prohibits appellants from maintaining a tort suit against them. Appellees point to the following specific language in Ward : “The ‘beneficiaries’ of the District’s no-fault insurance plan are the victim and the negligent ⁶⁴⁴ tortfeasor, who, if the victim elects to receive PIP benefits, is protected from a third party liability suit unless certain conditions are met.” 328 Md. at 253 , 614 A.2d 85 . Relying on this language, appellees argue that the protection extends to entities vicariously liable, and because the exceptions in the Compulsory/No-Fault Act do not apply, summary judgment was appropriate. Appellants’ argument is confusing.

Appellants agree that “the District of Columbia law should apply,” and also rely on the Compulsory/No-Fault Act and the decision in Ward . Appellants argue that the facts in Ward are “virtually identical” to the facts in the case before us and that the “decision and reasoning of the Ward Court should be applied here.” Appellants further assert that appellees’ attempt to distinguish Ward should fail because there is no rationale upon which to distinguish it. As we have seen, contrary to appellants’ assertion, appellees also rely on Ward and do not attempt to distinguish it. In our view, the reason that appellees’ conclusion is faulty and appellants’ argument is confusing is that the parties do not distinguish between contract and tort actions for purposes of applying choice of law rules in order to determine what law applies to the issue in question.

Because both parties rely on Ward , we shall discuss it in detail. Ward arose out of a motor vehicle accident between two vehicles that occurred in Maryland. Id. at 242 , 614 A.2d 85 . The plaintiffs were occupants in a vehicle that was registered in the District of Columbia and owned by District of Columbia residents.

Id. The vehicle was insured by a policy issued and delivered in the District by Nationwide Mutual Automobile Insurance Company (“Nationwide”). Id. The policy contained PIP coverage as required by the D.C.Code and provided that the insurer was required to offer medical and rehabilitation expenses, work loss, and funeral benefits as set forth in the statutory provision.

The plaintiffs applied for PIP benefits and, at the same time, advised Nationwide of their intent to pursue a third party tort claim against the driver of the ⁶⁴⁵ other vehicle. Id. at 244-45 , 614 A.2d 85 . Nationwide denied the PIP claim on the ground that the plaintiffs had to elect either the PIP claim or the third party claim because they could not pursue both. Id. at 243 , 614 A.2d 85 .

The plaintiffs filed suit in the Circuit Court for Prince George’s County, asserting claims against Nationwide on the policy for PIP benefits and third party tort claims against the driver of the other vehicle. Id. Nationwide moved for summary judgment and, after pointing out that its policy had been issued in the District on a vehicle registered in the District, argued that under Maryland’s choice of law