Government Employees Ins. Co. v. Ropka

• Decision Date: 11 February 1988
• Docket Number: No. 496,496
• Citation: 536 A.2d 1214,74 Md.App. 249
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY v. Frances ROPKA, Personal Representative of the Estate of Michael Chilcoat et al. Sept. Term 1987.
• Court: Court of Special Appeals of Maryland

Page 249

74 Md.App. 249

536 A.2d 1214

GOVERNMENT EMPLOYEES INSURANCE COMPANY v. Frances ROPKA, Personal Representative of the Estate of Michael Chilcoat et al.

No. 496 Sept. Term 1987.

Court of Special Appeals of Maryland.

Feb. 11, 1988.

Daniel W. Whitney (David M. Buffington and Semmes, Bowen & Semmes, on the brief), Baltimore, for appellant

John R. Penhallegon (Smith, Somerville & Case, on the brief for appellee, Consolidated Rail Corp.), Baltimore, Richard H. Offutt, Jr. (Hoffman & Comfort, on the brief for appellee, Frances Ropka), Westminster, for appellees.

Argued before WEANT, ALPERT and ROBERT M. BELL, JJ.

ALPERT, Judge.

FACTS

On October 15, 1982, Michael Chilcoat and his wife and two daughters were killed in a tragic automobile accident. Michael Chilcoat was driving the automobile that was involved in an accident with a truck operated by Consolidated Rail Corporation (hereinafter "Conrail").

The personal representatives of the four decedents filed a wrongful death action against Conrail and the Pennsylvania Department of Transportation. Those defendants filed a third-party claim against the estate of Michael Chilcoat, seeking contribution and/or indemnification because he was the driver of the other vehicle. Frances Ropka, the personal representative of Michael Chilcoat's estate, demanded that Government Employees Insurance Co. (Michael Chilcoat's insurer, hereinafter referred to as "GEICO") defend against the third-party claim. GEICO refused to defend the third-party action, arguing that a "household exclusion" in the policy protected it from liability. The exclusion provided Bodily injury to an insured or any family member of an insured residing in the insured's household is not covered.

(Emphasis in the policy).

GEICO filed a declaratory judgment action in the Circuit Court for Carroll County. GEICO sought a declaration that the household exclusion was valid, and that GEICO was not required to defend any claims against, nor pay any judgments rendered against, Michael Chilcoat's estate.

After the declaratory judgment action was filed, but before a hearing was held on the merits, the Court of Appeals of Maryland decided Jennings v. Government Employees Insurance Co., 302 Md. 352, 488 A.2d 166 (1985). Jennings held that a household exclusion in an automobile liability insurance policy was inconsistent with public policy and thus was invalid.

A trial on the declaratory judgment action instituted by GEICO was held on December 5, 1985, the Honorable Donald J. Gilmore presiding. In an order dated June 26, 1986, Judge Gilmore held that the household exclusion, pursuant to Jennings, "was void from the beginning," and that GEICO was required to defend Frances Ropka and pay any judgment arising out of the third-party case. The 30-day period for appeal expired without appeal by GEICO. Then on October 2, 1986, counsel for GEICO filed a Motion to Revise Enrolled Judgment. The attorneys for GEICO filed affidavits with the court stating that they had not received a copy of Judge Gilmore's order of June 26, 1986. They asked for a reissuance of the order, to give them time for an appeal.

A hearing on the Motion to Revise Enrolled Judgment was held on March 13, 1987 and on March 19 Judge Gilmore vacated his June 26, 1986 decision and reissued it unchanged as of March 19, 1987. GEICO then noted this appeal, challenging Judge Gilmore's decision that GEICO was obligated to defend against the third-party claim. Frances Ropka, as Michael Chilcoat's personal representative,

filed a cross-appeal, contending that the trial judge improperly granted GEICO's Motion to Revise Enrolled Judgment. ¹

I.

The first issue we must dispose of is a procedural one. If GEICO's Motion to Revise Enrolled Judgment was improperly granted, then GEICO would have failed to appeal the judgment entered against it within the 30-day period prescribed by Rule 1012. Thus, we would be without jurisdiction to entertain an appeal on the merits of the declaratory judgment entered on June 26, 1986.

Section 6-408 of the Courts and Judicial Proceedings Article of the Annotated Code of Maryland provides:

§ 6-408

. Revisory power of court over judgment.

For a period of 30 days after the entry of a judgment, or thereafter pursuant to motion filed within that period, the court has revisory power and control over the judgment. After the expiration of that period the court has revisory power and control over the judgment only in case of fraud, mistake, irregularity, or failure of an employee of the court or of the clerk's office to perform a duty required by statute or rule. (1977, ch. 271).

Md.Cts. & Jud.Proc.Code Ann. § 6-408 (1984 Repl. Vol., 1987 Cum.Supp.) (emphasis added).

Similarly, Maryland Rule 2-535(b) provides that a trial court has continuing revisory power over judgments. It provides:

Rule 2-535. REVISORY POWER

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(b) Fraud, Mistake, Irregularity.--

On motion of any party filed at any time, the court may exercise revisory power and control over the judgment in case of fraud, mistake, or irregularity.

Failure to provide a copy of an order required to be sent by Rule 1-324 can be grounds for exercising the court's revisory power. See Maryland Lumber Co. v. Savoy Constr. Co., 286 Md. 98, 405 A.2d 741 (1979); Kramer v. McCormick, 59 Md.App. 193, 474 A.2d 1346 (1984). As the Court of Appeals noted in Mutual Benefit Society of Baltimore, Inc. v. Haywood, 257 Md. 538, 263 A.2d 868 (1970):

The express provision for notice to the litigants overrides our often stated proposition that it is the duty of the defendant "to keep [him]self informed as to what [is] occurring in the case."

Id. at 541, 263 A.2d 868, citing Tasea Inv. Corp. v. Dale, 222 Md. 474, 479, 160 A.2d 920 (1960).

Ropka, as cross-appellant, contends that GEICO failed to establish sufficiently that the court clerk failed to send GEICO a copy of the order as required by Rule 1-324. Pursuant to Bowen v. Rohnacher, 15 Md.App. 280, 290 A.2d 560, cert. denied, 266 Md. 742 (1972), GEICO must establish the irregularity by "clear and convincing" evidence. Id. at 284, 290 A.2d 560.

After reviewing the record, we find that GEICO met its burden of proving that a copy of the order was not sent to its counsel. It should be noted at the outset that the clerk's office in Carroll County did not keep a record that definitively showed whether a copy of the order was sent to counsel for GEICO. The attorneys for GEICO filed affidavits stating they had not received a copy of the order, and testified to that effect at the hearing. There also was testimony from Doris Haines of the clerk's office who was personally responsible for making the docket entries and mailing copies of the orders to the proper parties. In response to a question about to whom she most likely mailed copies of the order, she testified:

I went to the last two pleadings and took the names from there. I told him [counsel for GEICO] that's probably who I sent copies to, but that I could not be sure....

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I ... could not be sure of that. I never told [GEICO's counsel] I was certain of anything.

The notation on the docket stated that copies of the order were sent to "Plaintiff's Attorney" and "Defendant's Attorney," both in the singular. Thus, the docket entry appears to confirm GEICO's claim that copies of the order were mailed to only two of the three parties who should have received them.

We hold that the evidence was legally sufficient to establish that GEICO was not sent a copy of Judge Gilmore's final order. That determination alone, however, does not automatically entitle GEICO to a reissuance of the order. As the party moving to set aside an enrolled judgment, GEICO must also establish "that it is acting in good faith, with ordinary diligence, and that it has a meritorious defense or cause of action." Maryland Lumber Co. v. Savoy Constr. Co., 286 Md. at 102, 405 A.2d 741.

Applying the Maryland Lumber standard, we believe that the trial judge was correct in giving GEICO an opportunity to appeal the merits of the declaratory judgment action. Implicitly, he found no indication that GEICO acted in any way other than consonant with good faith. Judge Gilmore wholly accepted the statements of the attorneys for GEICO that they did not receive a copy of the order and that, consequently, they were not on notice that the 30-day period for appeal had begun to run.

Furthermore, the evidence was sufficient to establish that GEICO's counsel acted with ordinary diligence. The hearing on the declaratory judgment was held on December 5, 1985. In March 1986 counsel for GEICO had been advised of a heavy backlog of cases dating back to May 1985 and, therefore, he anticipated a long wait. Judge Gilmore's order was issued on June 25, 1986. It appears from the record that one of the attorneys for GEICO investigated the status of the declaratory judgment action on September 30, 1986, and discovered that the order had been enrolled. He promptly instituted the Motion to Revise

                on October 2, 1986.   Judge Gilmore did not abuse his discretion in granting the motion to revise
                

II. DUTY TO DEFEND

We now turn to the merits of the declaratory judgment action. GEICO argues that it is not required to defend Michael Chilcoat's estate in the third-party claim because of a household exclusion in the decedent's insurance policy. The exclusion provided:

Bodily injury to an insured or any family member of an insured residing in the insured's household is not covered.

(Emphasis in the policy.)

It is generally true that an insurer has no duty to defend a cause of action against an insured if that cause of action asserts liability on the part of the insured that comes within an exclusion in the insurance policy. See Appleman, Insurance Law and Practice, § 4685, p. 119 (2d ed. 1979) ("Even though an accident might otherwise be covered, if the claim is for injuries to people that are excluded by the policy, there is no duty to...