Kendall v. Nationwide Ins. Co.

• Decision Date: 01 September 1996
• Docket Number: No. 127,127
• Citation: 348 Md. 157,702 A.2d 767
• Parties: Herbert KENDALL and Shirley Kendall v. NATIONWIDE INSURANCE COMPANY and Carl Jeffrey Hickey. ,
• Court: Maryland Court of Appeals

Page 157

348 Md. 157

702 A.2d 767

Herbert KENDALL and Shirley Kendall v. NATIONWIDE INSURANCE COMPANY and Carl Jeffrey Hickey.

No. 127, Sept. Term, 1996.

Court of Appeals of Maryland.

Nov. 21, 1997.

James J. Debelius, Debelius, Clifford, Debelius, Crawford & Bonifant, Chtd., Gaithersburg, on brief, Robert A. Meier, Jr., Damascus, on brief, for petitioner.

Angus R. Everton, Mason, Ketterman & Morgan, Baltimore, Donald J. Caulfield (John D. Holler, Caulfield & Holler, on brief), Mt. Rainier, for respondent.

Argued before BELL, C.J., ELDRIDGE, RODOWSKY, CHASANOW and RAKER, JJ., and ROBERT L. KARWACKI and MARVIN H. SMITH, Judges (retired), Specially Assigned.

KARWACKI, Judge.

At issue in this case is the proper construction of the provisions of an automobile liability insurance policy relating to uninsured/underinsured motorist coverage issued by Nationwide Mutual Insurance Company ("Nationwide"), the Respondent, to Shirley Lou Kendall ("Shirley"), one of the Petitioners.

On April 26, 1991, Shirley was the owner and operator of a 1986 Pontiac that was involved in a motor vehicle accident with a motor vehicle operated by Carl Jeffrey Hickey ("Hickey"). At the time of the accident Shirley's husband, Herbert Richard Kendall ("Herbert"), also a Petitioner, was a passenger in the 1986 Pontiac. Both Petitioners suffered serious personal injuries.

At the time of the accident, Shirley maintained an automobile liability insurance policy with Nationwide covering three vehicles she owned. According to the declaration page of the policy, a 1975 Chevrolet had uninsured/underinsured ¹ motorist coverage limits of $100,000 per person and $300,000 per occurrence for which a premium of $22.00 was paid. By contrast, a 1978 Chevrolet and the 1986 Pontiac had the statutory minimum requirements ² of uninsured/underinsured motorist coverage limits of $20,000 per person and $40,000 per occurrence for which a premium of $11.80 per vehicle was paid.

The vehicle operated by Hickey was insured by the Maryland Automobile Insurance Fund with statutory minimum liability limits of $20,000 per person and $40,000 per occurrence.

Because of the low liability limits on the Hickey vehicle, Petitioners filed a claim against Nationwide seeking the highest uninsured/underinsured motorist coverage limits stated in their policy, notwithstanding the fact that the vehicle for which these limits were listed was not involved in the accident. Nationwide denied their claim.

Petitioner, Herbert, filed the initial complaint in the Circuit Court for Montgomery County naming as defendants his wife and Hickey. Shirley filed a cross claim against Hickey. Nationwide filed a motion to intervene as a party defendant, and that motion was granted. Shirley subsequently filed a cross claim against Nationwide asserting four counts sounding in contract, negligence, breach of Maryland statute, and declaratory judgment. Herbert also filed a cross claim against Nationwide essentially adopting Shirley's cross claim against Nationwide.

Shirley moved for partial summary judgment as to the contract and declaratory judgment counts, asserting that as the named insured she was entitled to the highest limits available on her policy for uninsured/underinsured motorist coverage. Accordingly, Shirley sought damages in the amount of $100,000 per person and $300,000 per occurrence, as those were the highest limits available under one of the three vehicles covered by the insurance policy. Herbert joined her by also filing a motion for summary judgment, again adopting Shirley's motion in pertinent part, claiming that he was also entitled to the highest limits available as he was a family member living in Shirley's household.

Nationwide responded to the motions for summary judgment and asserted that a claimant under a multi-vehicle liability insurance policy is only entitled to the uninsured/underinsured coverage limits as stated on the declaration page for the vehicle that was involved in the accident. Nationwide contended that because the liability limits of the vehicle driven by Hickey were the same as the limits of uninsured/underinsured coverage for Shirley's 1986 Pontiac that was involved in the accident, the coverage did not apply as the Hickey vehicle was not underinsured. The trial court heard oral arguments and, finding that the policy was ambiguous, entered an order granting summary judgment, declaring that the Petitioners were entitled to uninsured/underinsured motorist coverage under the Nationwide policy in the amount of $100,000 per person and $300,000 per occurrence. Finding no just reason for delay, the trial court purported to certify the judgment as final pursuant to Maryland Rule 2-602(b). ³ Nationwide noted an immediate appeal to the Court of Special Appeals. In an unreported decision the Court of Special Appeals dismissed Nationwide's appeal because the trial court's certification of the declaratory judgment as a final judgment pursuant to Md Rule 2-602(b) was improper. Cf. Huber v. Nationwide Mutual Insurance Company, 347 Md. 415, 701 A.2d 415 (1997). The case was remanded for further proceedings on the bifurcated issues of liability and damages.

At trial the jury determined that Hickey was the sole party responsible for the accident. Judgments were entered on special damage verdicts against Hickey and Nationwide in favor of Shirley for $100,000 and Herbert for $81,551.91. Both Hickey and Nationwide noted an appeal to the Court of Special Appeals. The judgments against Hickey were affirmed, while the judgment against Nationwide was reversed and the case remanded.

The sole issue presented on appeal by Nationwide was whether the trial court erred in finding that there was an ambiguity in the uninsured/underinsured provisions of Nationwide's automobile policy, such that Shirley and Herbert Kendall were entitled to the uninsured/underinsured policy limits of $100,000 per person and $300,000 per occurrence as stated for the 1975 Chevrolet notwithstanding this was not the vehicle involved in the accident. The Court of Special Appeals held that the Nationwide policy was not ambiguous because the policy specifically stated that limits apply to each insured vehicle as stated in the declarations and, accordingly, that the trial court erred in granting summary judgment in favor of the Kendalls and against Nationwide. Hickey v. Kendall, 111 Md.App. 577, 683 A.2d 789 (1996). Shirley and Herbert filed petitions for a writ of certiorari to this Court, seeking review solely of the proper construction of the uninsured/underinsured motorist provisions of the automobile insurance policy issued to Shirley by Nationwide. We issued the writ, and we shall affirm the decision of the Court of Special Appeals.

I.

Petitioners and Respondent both argue that a plain reading of the policy dictates a decision in their respective favors. The provisions of the automobile insurance policy issued by Nationwide to Shirley provides in relevant part as follows "The Insuring Agreement

For your payment of premiums in amounts we require and subject to all of the terms and conditions of this policy, we agree to provide the coverages you have selected. Your selections are shown in the attached Declarations, which are a part of this policy contract.

* * *

Uninsured Motorist Coverage

Under this coverage we will pay all sums for bodily injury and property damage that you or your legal representative are legally entitled to recover as damages from the owner or driver of an uninsured motor vehicle. Damages must result from an accident arising out of the ownership, maintenance, or use of the uninsured motor vehicle.

* * *

Bodily injury means bodily injury, sickness, disease, or death. Relatives living in your household also are covered for bodily injury damages under this coverage. Anyone else is protected while occupying:

1. your auto.

2. a motor vehicle you do not own, while it substitutes temporarily for your auto. Your auto must be out of use because of breakdown, repair, servicing, loss, or destruction.

* * *

An uninsured motor vehicle includes an underinsured motor vehicle. This is one for which there are bodily injury liability coverage or bonds in effect. Their total amount, however, is less than the limits of this coverage. These limits are shown in your policy's Declarations.

* * *

Limits And Conditions of Payment

Amounts Payable for Uninsured Motorist Losses Our obligation to pay uninsured motorists losses is limited to the amounts per person and per occurrence stated in the attached Declarations. The following conditions apply to these limits:

1. Bodily injury limits shown for any one person are for all legal damages claimed by anyone for bodily injury or loss of services of one person as a result of one occurrence. Subject to this limit for any one person, the total limit of our liability shown is for all damages, including loss of services, due to bodily injury to two or more persons in any one occurrence.

2. Limits shown for property damage are for all legal damages claimed by one or more insureds for property damage as a result of one occurrence.

3. The insuring of more than one person or vehicle under this policy does not increase our Uninsured Motorist payment limits. Limits apply to each insured vehicle as stated in the Declarations. In no event will any insured be entitled to more than the highest limit applicable to any one motor vehicle under this or any other policy issued by us." (Emphasis added).

We begin by examining the rules of interpretation governing the contract of insurance. Although the petitioners argue that we should construe the policy against the insurer, we are unable to do so unless the policy is ambiguous. An insurance policy is a contract between the parties, the benefits and obligations of which are defined by the terms of the policy. We have repeatedly held that the construction of insurance contracts in Maryland is confined to the few...