Waters v. United States Fidelity & Guaranty Co.

ELDRIDGE, Judge. This case involves the requirements of the uninsured motorist provisions of the Maryland Insurance Code. It arises out of an automobile accident which occurred in Gaithersburg, Maryland. The plaintiff, John Waters, was a passenger in an automobile driven by Edward Schreier and owned by Edward’s father.

Mr. Waters sustained physical injuries when the Schreier automobile crossed the center line and struck a pick up truck driven by Shirley Dunham. Ms. Dunham also sustained injuries in the collision. ⁷⁰⁶ The Schreier vehicle was insured by Continental Insurance Company, under a policy issued in Maryland, with a total limit of liability coverage of $100,000, i.e., $100,000 per person and $100,000 per accident. The plaintiff, John Waters, was an insured under an automobile insurance policy issued in Maryland by the defendant United States Fidelity & Guaranty Company (USF & G). The USF & G policy provided uninsured motorist coverage with limits of $100,-000 per person and $300,000 per accident.

John Waters filed in the Circuit Court for Montgomery County the present action for money damages, naming as defendants Edward Schreier, Ms. Dunham and USF & G. Ms. Dunham filed in the same court a separate action for money damages against Edward Schreier, and in this suit Mr. Schreier filed a cross claim against Ms. Dunham. The lawsuit between Ms. Dunham and Edward Schreier was resolved when Mr. Schreier entered into a consent judgment in favor of Ms. Dunham in the amount of $97,000. Mr. Schreier’s liability insurer, Continental Insurance Company, paid Ms. Dunham $97,000. Consequently, although Continental had valued Mr. Waters’s damages at $83,000, only $3,000 was available to Mr. Waters under Edward Schreier’s liability policy.

Mr. Waters in the present case sought to recover from USF & G under his uninsured motorist coverage. USF & G denied that Mr. Waters was entitled to recover under the policy. The insurer moved for summary judgment on the ground that Mr. Schreier was not driving an “uninsured motor vehicle,” as that term is defined in Maryland Code (1957, 1991 RepLVol.), Art. 48A, § 541, because the limit of uninsured motorist coverage in the USF & G policy did not exceed the limit of liability coverage on the Schreier automobile. 1 USF & G also claimed that its policy did not ⁷⁰⁷ provide for underinsured coverage. The trial court compared Mr. Schreier’s total liability limit of $100,000 with Mr. Waters’s uninsured motorist per person limit of $100,000.

The trial court did not consider the per accident limit of $300,000 under Mr. Waters’s uninsured motorist coverage. 2 Based upon the above comparison, the trial court held that Mr. Schreier was not driving an “uninsured motor vehicle,” as defined by § 541(c), and that Mr. Waters could not collect under the uninsured motorist provisions of his policy. The court granted USF & G’s motion for summary judgment. Mr. Waters filed a motion pursuant to Maryland Rule 2-602(b) requesting that the trial court direct the entry of a final judgment in favor of USF & G. In a multiple claim or multiple party case, Rule 2-602(b) allows a court to direct the entry of a final judgment as to a claim or a party “[i]f the court expressly determines in a written order that there is no just reason for delay.” The trial court’s order in this case merely stated that “[u]pon consideration of the plaintiff, John Waters[’s], Motion for Final Judgment, and good cause shown, it is ... ORDERED, that the Motion be GRANTED.” The court failed to make an express determination that there was no just reason for delay.

Consequently, the trial court’s purported Rule 2-602(b) determination was ineffective, and there was no final appealable ⁷⁰⁸ judgment in favor of USF & G. Blucher v. Ekstrom, 309 Md. 458, 462 , 524 A.2d 1235, 1237 (1987). The order granting summary judgment in favor of USF & G was fully subject to revision by the trial court at any time until the entry of a proper final judgment, and USF & G remained a party in the trial court. Rule 2-602(a)(2) and (3). See also, e.g., Sisk v. Friendship Packers, 326 Md. 152, 159-160 , 604 A.2d 69, 72-73 (1992); Quartertime Video v. Hanna, 321 Md. 59, 65-66 , 580 A.2d 1073, 1076 (1990).

After the trial court’s ineffective Rule 2-602(b) determination, the plaintiff Waters filed a notice of appeal. Subsequent to the filing of the notice of appeal, but prior to argument in the Court of Special Appeals, Mr. Waters dismissed his claim against Ms. Dunham. In addition, as a result of a settlement, Mr. Schreier entered into a consent judgment in favor of Mr. Waters in the amount of $75,000. Upon the entry of the consent judgment, all claims in the trial court had been disposed of, and there was a final appealable judgment under Rules 2-601 and 2-602(a).

Mr. Waters did not, however, file a new notice of appeal after the final judgment. The Court of Special Appeals, without noticing the procedural irregularity, affirmed the order granting USF & G’s motion for summary judgment. In an unreported opinion, the intermediate appellate court held that Mr. Schreier was not driving an uninsured vehicle because his $100,000 limit of liability was equal to Mr. Waters’s $100,000 per person limit of uninsured motorist coverage. The Court of Special Appeals determined that the per accident limit under the USF & G policy was inapplicable because only one claim was being made against that policy.

Mr. Waters thereafter filed a petition for a writ of certiorari which was granted by this Court. I. As previously indicated, the trial court’s order from which the appeal was taken, i.e. the order granting USF & ⁷⁰⁹ G’s motion for summary judgment, was not effective as a final appealable judgment because of the trial court’s failure to make an express determination that there was no just reason for delay. Furthermore, a new notice of appeal was not filed after a proper final judgment. Under such circumstances, prior to a recent change in the Maryland Rules effective July 1, 1988, we would have been required to vacate the judgment of the Court of Special Appeals and direct that the intermediate appellate court dismiss the appeal.

See Blucher v. Ekstrom, supra, 309 Md. at 462-463 , 524 A.2d at 1237 , and cases there cited. Present Rule 8-602(e), however, effective July 1, 1988, provides in pertinent part as follows: “(e) Entry of Judgment Not Directed Under Rule 2-602.— (1) If the appellate court determines that the order from which the appeal is taken was not a final judgment when the notice of appeal was filed but that the lower court had discretion to direct the entry of a final judgment pursuant to Rule 2-602(b), the appellate court may, as it finds appropriate, (A) dismiss the appeal, (B) remand the case for the lower court to decide whether to direct the entry of a final judgment, (C) enter a final judgment on its own initiative or (D) if a final judgment was entered by the lower court after the notice of appeal was filed, treat the notice of appeal as if filed on the same day as, but after, the entry of the judgment.” ****** “(3) If the appellate court enters a final judgment on its own initiative, it shall treat the notice of appeal as if filed on the date of the entry of the judgment and proceed with the appeal.” The trial court in this case had discretion to enter a final judgment under Rule 2-602(b), intended to do so, and would have accomplished such purpose if it had made the requisite written determination. Consequently, we shall exercise our discretion under Rule 8-602(e)(1)(C), enter a final judgment ⁷¹⁰ on our own initiative, treat the notice of appeal as properly filed, and proceed with the case. See Shofer v. Hack Co., 324 Md. 92, 98 , 595 A.2d 1078, 1080-1081 (1991), cert. denied, — U.S. —, 112 S.Ct. 1174 , 117 L.Ed.2d 419 (1992); Kamin-A-Kalaw v. Dulic, 322 Md. 49, 54 , 585 A.2d 216, 218-219 (1991); Quartertime Video v. Hanna, supra, 321 Md. at 63 n. 4, 580 A.2d at 1075 n. 4.

II

Since 1973, Code (1957, 1991 Repl.Vol.), Art. 48A, § 541(c), has required every motor vehicle insurance carrier to offer certain minimum uninsured motorist coverage in every motor vehicle insurance policy issued in Maryland. By Ch. 562 of the Acts of 1975, § 541(c) was amended to require that every motor vehicle insurance policy issued in Maryland contain minimum uninsured motorist coverage in the amount required under Title 17 of the Transportation Article, i.e. $20,000 per person and $40,000 per accident. Prior to further amendments to § 541 of the Insurance Code in 1981, we had stated that the purpose of the uninsured motorist provisions was “that each insured under such coverage have available 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.” Nationwide Mutual Ins. v. Webb, 291 Md. 721, 737 , 436 A.2d 465, 474 (1981), quoting Webb v. State Farm Mutual Automobile Ins. Co., 479 S.W.2d 148, 152 (Mo.App.1972).

The effect of this mandatory coverage was to “provid[e] minimum protection to individuals injured by uninsured motorists.” Yarmuth v. Gov’t Employees Ins. Co., 286 Md. 256, 264 , 407 A.2d 315, 319 (1979). The pre-1981 statutory scheme did not expressly define “uninsured motor vehicle.” The statutory provisions for uninsured motorist coverage, prior to 1981, allowed an insured to recover from his own uninsured motorist policy when he was injured either by a tortfeasor who did not have liability insurance or by a tortfeasor who carried liability insurance in an amount less than the minimum required by the financial responsibility ⁷¹¹ law. See McKoy v. Aetna Cas. & Sur.

Co., 281 Md. 26, 27 , 374 A.2d 1170, 1171 (1977). 3 There was no provision requiring an insurer to offer an insured the opportunity to purchase uninsured motorist coverage in excess of the $20,000/ $40,000 minimum. By Ch. 510 of the Acts of 1981, the General Assembly amended § 541(c) and, inter alia, defined an uninsured motor vehicle. The concept of “uninsured” was broadened to include any vehicle insured with liability limits in an amount “less than the amount of coverage provided to the insured under this subsection.” The General Assembly in § 541(c) also required that insurers “shall [make] available to the insured the opportunity to contract for higher amounts than those provided under Title 17 of the Transportation Article [$20,000/$40,000] if these amounts do not exceed the amounts of the motor vehicle liability coverage provided by the policy.” § 541(c)(2). 4 Finally, the General Assembly added § 541(c)(3) which provides that “[t]he limit of liability for an insurer providing uninsured motorist coverage under this subsection is the amount of ⁷¹² that coverage less the sum of the limits under the liability insurance policies, bonds, and securities applicable to the bodily injury or death of the insured.” The legislative history of the 1981 amendments demonstrates that their purpose was to provide an insured with the option of purchasing underinsured motorist coverage. See Hoffman v. United States Services Auto Ass’n, 309 Md 167, 178-179, 522 A.2d 1320, 1325 (1987).

The amendments allow an insured to purchase a higher amount of uninsured motorist insurance which will become available when the insured’s uninsured motorist coverage, as well as his damages, exceed the liability coverage of the tortfeasor. According to a committee report contained in the Department of Legislative Reference’s file on Senate Bill 17, which became Ch. 510 of the Acts of 1981, the 1981 amendments make uninsured motorist coverage operate as underinsured motorist coverage. 5 The committee report ⁷¹³ also states that the scheme contemplated by the amendments will function as follows (Committee Report, contained in the Department of Legislative Reference’s file on Senate Bill 17 (1981)): “When an uninsured motor vehicle is involved in an automobile accident causing injury, the injuries shall be compensated for by the insurance company which insures the person injur[ed], to the limits of the UM coverage____ Senate Bill 17 mandates that all companies offer higher limits than 24/40, e.g. 100/300. “As it stands now, if you sued a person who has insurance in the minimal limits of 20/40 and obtained a judgment for say $50,000.00 you would collect $20,000.00 from the guilty party and have no source to satisfy the balance of your judgment, ie. $30,000.00. “S.B. 17 [Ch. 510] will do this. The $30,000 will be paid from the injured party’s own UM coverage if the injured party has UM coverage in excess of the guilty party’s liability coverage. So that if the guilty party had 20/40 and the injured party had UM coverage of 20/40 the injured party obviously would have no source from which to collect the excess verdict.” It follows that if the tortfeasor had $20,000/$40,000 liability coverage and the injured party had uninsured motorist coverage of $100,000/$300,000, the injured party could satisfy the balance of a judgment from his uninsured motorist policy.

As this legislative history clearly demonstrates, “the amount of coverage provided to the insured under this, [the uninsured motorist] subsection,” § 541(c), is the amount of uninsured motorist coverage the insured chooses to purchase, up to the limits of his liability coverage, including any such insurance purchased in excess of the statutory mínimums. Consequently, a tortfeasor is an uninsured motorist, as defined by § 541(c), whenever the amount of uninsured motorist coverage purchased by the insured exceeds the amount of liability insurance carried by the tortfeasor. ⁷¹⁴ The 1981 changes to the Insurance Code provide an injured insured with resources equal to those which would have been available had the tortfeasor carried liability coverage equal to the amount of uninsured motorist coverage which the injured insured purchased from his own insurance company. See Higgins v. Fireman’s Fund Ins. Co., 160 Ariz. 20, 22 , 770 P.2d 324, 326 (1980); American Motorists Ins.

Co. v. Gould, 213 Conn. 625, 631 , 569 A.2d 1105, 1109 (1990); Home Ins. Co. v. Maldonado, 515 A.2d 690 , 694 n. 8 (Del.1986); Dewberry v. Auto-Owners Ins. Co., 363 So.2d 1077, 1081 (Fla.1978); Connolly v. Royal Globe Ins. Co., 455 A.2d 932, 935 (Me.1983); Schmick v. State Farm Mut.

Auto. Ins. Co., 103 N.M. 216, 219 , 704 P.2d 1092, 1095 (1985); Britton v. Safeco Ins. Co. of America, 104 Wash.2d 518, 522-523 , 707 P.2d 125, 129 (1985).

Under this scheme, a court must compare the amount of liability insurance carried by the tortfeasor with the amount of uninsured motorist coverage carried by the injured party. In the present case, we must determine if Mr. Waters’s uninsured motorist coverage exceeds the amount of liability coverage purchased by the tortfeasor, Mr. Schreier. Mr. Schreier carried liability coverage of $100,000 per person and $100,000 per accident. Mr. Waters carried uninsured motorist coverage of $100,000 per person and $300,000 per accident.

Two people were injured in this accident, and thus the per accident limitation is critical. If Mr. Schreier had carried the same liability coverage, i.e. $100,000 per person and $300,000 per accident, as provided for in Mr. Waters’s uninsured motorist policy, Mr. Waters would have recovered up to the per person limit of $100,000 from the Schreier liability policy regardless of the $97,000 recovery by Ms. Dunham. Mr. Waters’s uninsured motorist coverage thus exceeds the liability coverage carried by Mr. Schreier. Consequently, under the statutory scheme and the facts of this case, Mr. Schreier was an uninsured motorist with respect to the injuries sustained by Mr. Waters.

Mr. Waters may proceed against his uninsured motorist carrier, ⁷¹⁵ USF & G, for the remainder of his damages, up to the per person limit of $100,000. USF & G argues that because only one person is claiming uninsured motorist benefits under its policy, the only relevant limit is the per person limit of $100,000. As previously stated, this approach is inconsistent with the language and purpose of the uninsured motorist statute as amended in 1981. Mr. Waters’s uninsured motorist coverage exceeds Mr. Schreier’s liability coverage because Mr. Waters would have had available a separate per person limit of $100,000 had Mr. Schreier carried liability coverage of $100,000 per person and $300,-000 per accident.

III

The remaining issue in this case