Wilkerson v. Michael

BISHOP, Judge. Appellants, Carol Ann Wilkerson, Sidney Schlachman as personal representative of the estate of Sheri Ann Wilkerson, Brenda K. Fiorenza, and Gina K. Fiorenza, filed suit in the Circuit Court for Baltimore County against appellees, Patrick ⁷³² Alan Michael (“Patrick”), Arnold Leroy Michael (“Mr. Michael”), and Deborah Lynn Buck (“Debbie”), deceased, for damages arising out of a motor vehicle accident. Frederick R. Buck and Monica Buck (“the Bucks”), personal representatives of Debbie’s estate, moved for judgment at the end of appellants’ case, which the trial court denied. Patrick similarly made a motion for judgment, which the trial court denied.

The jury returned a verdict in favor of appellants in the following amounts: Gina Fiorenza, $1,729,256.76 in compensatory damages and $100,000 in punitive damages; Brenda Fiorenza, $850,918.12 in compensatory damages and $100,000 in punitive damages; the estate of Sheri Wilkerson, $7000 in compensatory damages and $100,000 in punitive damages; Carol Wilkerson, $60,610.72 in compensatory damages; and Theodore Thomas Wilkerson, $15,000 in compensatory damages. The compensatory damages were assessed against Debbie’s estate and the punitive damages were assessed against Patrick. Through various post-trial motions made by the Bucks, the jury verdict was reduced as follows: Gina Fiorenza, $100,000 in compensatory damages; Brenda Fiorenza, $100,000 in compensatory damages; the estate of Sheri Wilkerson, $7,000; and Carol Wilkerson, $60,610.72. In an unreported opinion, this Court upheld the reduction of the jury verdict.

Appellants filed a request for garnishment of property other than wages to attach the insurance proceeds they allege were due from appellee, Allstate Insurance Company (“Allstate”), Mr. Michael’s insurer, to satisfy the judgment rendered against Debbie’s estate. Allstate denied that it was the proper garnishee and filed a motion for summary judgment, which the trial court granted, without opinion. Appellants filed a motion for reconsideration and a motion to alter or amend judgment, both of which the trial court denied. Issues Appellants raise two issues, which we rephrase: ⁷³³ I. Does this case involve a conflict of interest that requires the procedures described in Allstate Insurance Company v. Atwood, 319 Md. 247 , 572 A.2d 154 (1990)?

II

Did the trial court err in granting Allstate’s motion for summary judgment? Facts This appeal arises from a single vehicle automobile accident that occurred on March 13, 1987, and involved Patrick’s 1982 custom-designed Chevrolet van. At the time of the accident, Patrick owned the van although the van was insured under a policy that Mr. Michael, Patrick’s father, had with Allstate. Mr. Michael’s policy excluded Patrick as a driver, specifically disclaiming all liability for “damages, losses or claims arising out of the operation or use of the insured motor vehicle by [Patrick Alan Michael] ... whether or not such operation or use was with the expressed or implied permission of a person insured under the Policy.” (Emphasis added).

Debbie, Patrick’s girlfriend, had, on occasion, the unconventional tendency of jointly driving the van with Patrick. Both of them would sit in the driver’s seat and one would steer while the other controlled the acceleration and braking. On the night of the accident, Mr. Michael had given Debbie permission to drive the van and had expressly told Patrick that he was not to drive the van. Patrick’s deposition testimony, read into evidence at trial, established that, on the night of the accident, during the first part of the evening, Debbie was driving the van, and Sheri Wilkerson, Heather Howard, and Eric Zeman were passengers.

After picking up Debbie’s cousins, Brenda and Gina Fiorenza, Patrick started driving the van “because Debbie started looking a little tipsy.” Patrick admitted that he and Debbie had been drinking during the evening. On their way to a restaurant, however, Debbie and Patrick were both driving. Debbie sat with Patrick in the driver’s seat, and “[Debbie] would steer and [Patrick] worked the pedal or vice versa.” Patrick testified that this was only for a short period ⁷³⁴ of time because Debbie’s “cousins were in the van and she hadn’t seen them in awhile.” According to Patrick, Debbie had stopped driving and was talking with her cousins. At the time of the accident, Debbie was seated partially on the driver’s seat and partially on an ice chest positioned between the driver’s seat and front passenger seat.

Sheri Wilkerson was also seated on the ice chest. Eric Zeman and his girlfriend Heather Howard were seated in the front passenger seat. The Fiorenzas were seated in the back of the van on a mattress. Patrick, while racing with another car, drove the van across the center line and crashed into a guard rail and tree near the intersection of York Road and Thornton Mill Road in Baltimore County, Maryland.

Debbie, Sheri Wilkerson, and Heather Howard were killed. Gina and Brenda Fiorenza were severely injured. Appellants allege that Debbie may have grabbed the steering wheel during the accident; however, according to Patrick, just before the accident, “Debbie was not operating the van in any way” and Debbie probably could not “have grabbed [the steering wheel] to try to steer the van away from the guardrail [because the accident] happened too quick for her to turn around from talking to her friends to help steer.” After a review by independent counsel, Allstate formally advised the Bucks and Mr. Michael that it was “denying liability for all damages, losses and claims arising out of the motor vehicle accident of March 13, 1987.” Allstate, however, provided the Bucks and Patrick with counsel through the conclusion of the jury trial. At the end of the trial, judgment in the amount of $2,597,785.60 was entered against Debbie’s estate.

Through post-judgment motions, that amount was reduced to $267,610.72. Appellants served a request for garnishment of property, other than wages, upon Allstate, alleging that Allstate was responsible for satisfying the judgment amounts entered against Debbie’s estate because the van involved in the accident was insured by Allstate, and Debbie was a permissive ⁷³⁵ user of the van. Allstate, however, denied that it was the proper garnishee and asserted that it was not indebted to Debbie’s estate. Discussion I. The Atwood Issue Appellants contend that, in the case sub judice, a “conflict of interest situation” exists that requires Allstate to follow the mandatory procedures outlined in Allstate Insurance Co. v. Atwood, 319 Md. 247 , 572 A.2d 154 (1990).

In Atwood , the insured, the appellee, was sued in tort because of personal injury. The complaint alleged alternative negligence and battery counts. The homeowner’s insurance policy that covered the appellee “contained an exclusion for ‘bodily injury ... intentionally caused by an insured person.’ ” Id. at 250 , 572 A.2d 154 . Under that exclusion, if the appellee were found negligent, coverage would be afforded; however, if the appellee were found liable for battery, there would be no coverage.

The jury found the insured negligent and awarded damages and, thus, “as a contractual matter, Allstate would normally be bound by the judgment in the tort case.” Id. at 261 , 572 A.2d 154 . The Court held, however, that “the insurer should be bound by the tort action’s resolution of the intentional/negligence issue if, but only if, that issue was fairly litigated in the tort trial.” Id. If the issue that determines insurance coverage is not fairly litigated in the tort trial, “considerations of public policy and fairness militate against holding that the insurer is bound by the outcome of the tort case,” and “[i]f the effect of the tactics of both sides in a tort trial, which is supposed to be an adversarial undertaking, is to cooperate in persuading a jury that intentional wrongful conduct is mere ‘negligence,’ the administration of justice is subverted.” Id. at 262-63 , 572 A.2d 154 . Accordingly, the Court established that, in the conflict of interest issue presented in Atwood , the insurer should be able to bring a post-tort trial declaratory judgment action. ⁷³⁶ The trial judge in that declaratory judgment action would first determine, as a legal matter, whether the issue, which was resolved in the tort trial and which determines insurance coverage, was fairly litigated in the tort trial.

If the declaratory judgment judge decides that the issue was fairly litigated in the tort trial, there should be no relitigation of that issue in the declaratory judgment action. Instead, a final judgment would be entered in the declaratory judgment action declaring that the issue was fairly litigated in the tort trial and that the insurer is bound by the outcome of the tort case against its insured. On the other hand, if the judge in the declaratory judgment action determines that the issue was not fairly litigated in the tort trial, then the insurer should be permitted to relitigate the matter in the declaratory judgment action. Id. at 262 , 572 A.2d 154 .

In Atwood, the factual predicate that a conflict of interest existed involved whether an action was intentional or negligent and, based on such determination, whether there was coverage. Atwood was based, in part, on Brohawn v. Transamerica Insurance Co., 276 Md. 396 , 347 A.2d 842 (1975). In Brohawn , like Atwood , “the issue to be’ resolved in the deciar-. atory judgment proceeding [was] the same as an issue in the tort action.” Atwood, 319 Md. at 252 , 572 A.2d 154 . The issue presented in both proceedings was whether the injury at issue was inflicted intentionally or negligently.

In the case sub judice, the coverage dispute is not an intentional versus negligent issue. We recognize, however, that Atwood does not state explicitly that the declaratory judgment procedure applies only when the issue is whether an injury was intentional or negligent. In fact, post-Atwood decisions from this Court do indicate that the linchpin for determining whether Atwood applies is not whether there is an intentional/negligence issue, but, rather, whether the issue to be resolved in the insurance coverage action is the same as an issue in the underlying tort action. If the issue is the same, the next question is whether that issue ⁷³⁷ has been fairly litigated during that tort trial.

If not, the determination is made in the declaratory judgment action. In Nationwide Mutual Insurance Co. v. Continental Casualty Co., 87 Md.App. 261 , 589 A.2d 556 , cert. denied, 324 Md. 122 , 596 A.2d 628 (1991), we applied Atwood to determine whether Continental Casualty was required to provide coverage for an automobile accident involving a Halperin Distributing Corporation employee who was driving a company automobile insured by Continental Casualty. The insurance coverage dispute involved whether the Halperin employee, who was driving the insured automobile, was driving the car for business purposes, i.e., acting within the “scope of employment.” Id. at 271-72 , 589 A.2d 556 . “We deem[ed] this case to fall into [the Atwood] category,” noting that the facts that determined “scope of employment” in the underlying tort suit were the same facts determining the “scope of permission” issue in the declaratory judgment action. Id.

In Chesapeake Physicians Professional Ass’n v. Home Insurance Co., 92 Md.App. 385 , 608 A.2d 822 , cert. denied, 328 Md. 446 , 614 A.2d 973 (1992), we recognized that, in Atwood , “the Court of Appeals created an exception to the Brohawn general rule against an insurer litigating an issue also present in the underlying tort suit.... [I]n limited circumstances, an insurer may intervene, after the completion of the tort trial, to assert that the conduct of its insured was excluded from coverage.” Id. at 392, 608 A.2d 822 . We held that, because “the Chesapeake companies and Home [Insurance Co.] are seeking to litigate a coverage question wholly apart from the underlying tort suit brought by [the plaintiff],” the Atwood exception did not apply. Id. at 393 , 608 A.2d 822 (emphasis added). Finally, in Medical Mutual