BGE Home Products & Services, Inc. v. Owens

• Decision Date: 06 October 2003
• Docket Number: No. 119,119
• Citation: 377 Md. 236,833 A.2d 8
• Parties: BGE HOME PRODUCTS & SERVICES, INC., et al. v. Michael Brian OWENS, et al.
• Court: Maryland Court of Appeals

833 A.2d 8

377 Md. 236

BGE HOME PRODUCTS & SERVICES, INC., et al. v. Michael Brian OWENS, et al.

No. 119, Sept. Term, 2002.

Court of Appeals of Maryland.

October 6, 2003.

Andrew Janquitto (Mudd, Harrison & Burch, on brief), Towson, for appellants.

Richard P. Shapiro (Richard P. Shapiro, P.A., on brief), Baltimore, Mark I. Cantor (Mark I. Cantor, P.A., on brief), Owings Mills, Charles M. Preston (Charles E. Stoner, Stoner, Preston & Boswell, Chtd., on brief), Westminster, for appellees.

Argued before BELL, C.J., ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

ELDRIDGE, J.

"As we have pointed out on several occasions, the Maryland statutory provisions regulating motor vehicle insurance are comprehensive ... [and] mandate compulsory motor vehicle insurance or approved self-insurance," Lewis v. Allstate Ins. Co., 368 Md. 44, 47, 792 A.2d 272, 273 (2002), and cases there cited. See Maryland Code (1977, 2002 Repl.Vol.), §§ 17-103 through 17-110 of the Transportation Article; Code (1997, 2002 Repl.Vol.), §§ 19-502 through 19-513 of the Insurance Article. The present declaratory judgment action requires us to explore the nature of the "approved self-insurance" alternative.

I.

A.

This declaratory judgment action arises out of a motor vehicle accident involving a service van, registered in Maryland, owned by the plaintiff-appellant D.L. Peterson Trust, and leased to the plaintiff-appellant BGE Home Products & Services, Inc. (Hereafter, both plaintiffs-appellants will collectively be referred to as "BGE"). The service van was assigned to Michael Brian Owens, a BGE employee.

A BGE directive, dated March 31, 1994, prohibited any employee from operating a BGE vehicle if the employee had consumed any alcohol or illegal substances. The directive also authorized an employee such as Owens to use the vehicle between work and home and to keep the vehicle at the employee's home during non-work periods. The directive stated that the "Company vehicle can be used to make minor stops between the shop and home (e.g. pick up bread, milk, etc. from store)," that the "Company vehicle can not be used for after hours functions without approval from Supervision," and that, otherwise, the vehicle can not be used "as a personal vehicle."

As previously mentioned, Maryland is a compulsory motor vehicle insurance state. Since the enactment of Ch. 73 of the Acts of 1972, effective January 1, 1973, "the owner of a motor vehicle registered or required to be registered in Maryland must maintain a motor vehicle insurance policy on the vehicle, or self-insurance approved by the M.V.A. [Motor Vehicle Administration]." Van Horn v. Atlantic Mutual, 334 Md. 669, 680-681, 641 A.2d 195, 200 (1994).

On January 14, 1998, BGE submitted to the M.V.A. a self-insurance application for its vehicles, setting forth the various coverages and the amounts of each coverage. The amounts were all the statutory minimums. The application contained other information such as the BGE official to contact with regard to the application, the BGE official in charge of adjusting claims, whether a reserve fund is maintained, and whether there were currently unsatisfied tort judgments. BGE also submitted a signed "Guarantee," guaranteeing "the payment of any valid claims arising from a motor vehicle accident as if a policy of vehicle liability insurance were in effect...."

Neither the application nor the Guarantee contained any exclusions, restrictions, definitions, or limitations other than the monetary limitations for the coverages. Specifically, the application and guarantee did not contain language found in some so-called "omnibus clauses" in many motor vehicle insurance policies which limit coverage for a person, other than the named insured, to situations where such person is "`using ... [the vehicle] with the permission of the named insured, provided his actual operation [was] within the scope of such permission.'"¹ The MVA issued to BGE a "Certificate of Self-Insurance," granting to BGE "approval as a self-insurer in the State of Maryland...." The Certificate was effective on February 1, 1998, and expired on February 1, 1999.

B.

On July 16, 1998, Michael Brian Owens ended his work day as a BGE employee at about 5:00 p.m. when he completed a service call at a country club in Howard County located near the intersection of interstate route 70 and state route 97. Owens began driving the BGE van in the direction of his home in Carroll County. He planned, upon arrival at his home, to tell his wife that he was leaving her.

According to his deposition testimony, Owens became "scared" about the contemplated confrontation with his wife, and he stopped to visit a female "friend" who had an apartment on the route to Owens's home. Owens testified that he consumed "a bunch of beers," about "six or seven," at his friend's apartment. He then resumed the journey to his home. While driving north on state route 97 in Carroll County, Owens allegedly lost control of the van, negligently crossed the center line into the southbound lane, and collided with a vehicle operated by Stacy Smith Maczis and owned by Gail R. Smith. Aric Maczis was a passenger in the vehicle operated by Stacy Smith Maczis. This vehicle was insured, including uninsured/underinsured motorist coverage, by Nationwide Mutual Insurance Company.

Stacy Smith Maczis, Aric Maczis, and Gail R. Smith filed in the Circuit Court for Carroll County a five-count action against Michael Brian Owens, BGE, and Nationwide Mutual Insurance Company. Counts one and two were tort actions, by Stacy and Aric Maczis, against Owens and BGE, to recover for personal injuries suffered in the accident. Count three was a tort action, by Gail Smith, against Owens and BGE, to recover for the damages to Smith's motor vehicle. Counts four and five were contract actions, by Stacy and Aric Maczis, against Nationwide, to recover under the uninsured/underinsured coverage in the Nationwide insurance policy. The complaint alleged that the accident was caused by Owens's negligent driving and that Owens was operating the van in the scope of his employment for BGE.²

BGE filed, also in the Circuit Court for Carroll County, the present declaratory judgment action against its employee Owens and the tort claimants. Subsequently, Nationwide Mutual Insurance Company was allowed to intervene as an additional defendant. BGE's complaint alleged:

"At the time of the collision, Michael Brian Owens was violating the policies and procedures of BGE Home Products & Services, Inc. because he was operating the service van on a personal errand and while under the influence of alcohol."

BGE asked for the following declaration:

"BGE Home Products & Services, Inc. is not obligated to provide either indemnity or defense to Michael Brian Owens with regard to the subject collision because, at the time of the collision, Michael Brian Owens was not operating the subject service van within the scope of permission."

After the taking of depositions and the filing of affidavits, the tort claimants filed a motion for a summary judgment declaring that, at the time of the accident, the employee Owens was operating the service van within the scope of BGE's permission and within the scope of his employment. The tort claimants relied on deposition testimony that numerous drivers of BGE's vehicles in Owens's division consumed alcohol on a regular basis when driving the vehicles, that BGE's "management or supervisory" personnel "knew about the use of alcohol and driving these vehicles on a regular basis," and that BGE acquiesced in the practice. After a hearing, the Circuit Court denied the tort claimants' motion for summary judgment, holding that there was a "genuine dispute of material" facts concerning the matter and that, if the scope of permission question needed to be resolved, it "must be resolved by the factfinder."

Subsequently, Nationwide filed a motion for a summary judgment "declaring that the Plaintiff, BGE, is required to provide a defense and indemnity to the extent of the limits of its [self-]insurance...." Nationwide chiefly relied on the absence of any permissive user clause in BGE's self-insurance documents. Nationwide argued that an exclusion for driving beyond the scope of permission "cannot be implied or inferred." After the filing of legal memoranda, another hearing, and some procedural skirmishes, the Circuit Court filed an opinion holding that Nationwide's motion for summary judgment should be granted. The Court held that the absence in the self-insurance documents, of alcohol use or personal use exclusions, and the absence of a permissive user clause, precluded BGE from disclaiming coverage on the ground that Owens was not driving within the scope of permission. On June 18, 2002, the Circuit Court filed a declaratory judgment stating, inter alia, as follows:

"Under the self-insurance guarantee, BGE Home Products & Services, Inc. is obligated to defend Owens in the underlying action;

"Under the self-insurance guarantee, BGE Home Products & Services, Inc. is obligated to indemnify Owens in the underlying action to the extent of any and all existing limits of coverage including, but not limited to, the amounts available under the BGE Home Products & Services, Inc.'s certificate of self-insurance, pursuant to Paragraph 6...."

BGE appealed to the Court of Special Appeals. Prior to argument in that intermediate appellate court, this Court issued a writ of certiorari. BG&E Home v. Owens, 372 Md. 763, 816 A.2d 111 (2003).

II.

BGE's arguments are as follows. BGE contends that, even if it has a duty to indemnify Owens up to the amounts of the self-insurance coverages, it has no duty to defend Owens. BGE asserts that the duty to defend an insured is entirely contractual, and that there is no duty to defend provision in any of its self-insurance documents. Absent such a provision, according to BGE, it has no duty to defend.

BGE further argues that...