Benner v. Nationwide Mut. Ins. Co.

Decision Date28 August 1996
Docket NumberNo. 94-1845,94-1845
Citation93 F.3d 1228
PartiesCharles Myron BENNER, M.D.; Patricia Gurney-Benner, M.D., individually and as Personal Representatives of the Estate of John Daniel Benner and by and on behalf of Molly Benner, a minor, Plaintiffs-Appellants, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: James H. Falk, Jr., The Falk Law Firm, Washington, D.C., for Appellants. Angus Robert Everton, Mason, Ketterman & Morgan, Baltimore, Maryland, for Appellee. ON BRIEF: James H. Falk, Sr., The Falk Law Firm, Washington, D.C., for Appellants. Charles N. Ketterman, Mason, Ketterman & Morgan, Baltimore, Maryland, for Appellee.

Before HALL and MURNAGHAN, Circuit Judges, and STAMP, Chief United States District Judge for the Northern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge HALL and Chief Judge STAMP joined.

OPINION

MURNAGHAN, Circuit Judge:

Following the death of their son in a car crash, Appellants Charles Myron Benner and Patricia Gurney-Benner sought payment from their insurer, Nationwide Mutual Insurance Company. When they were denied full coverage for their claims, the Benners filed a declaratory judgment action in federal district court seeking a determination of the coverage limits of their primary automobile and umbrella insurance policies. 1 The district judge granted summary judgment to the insurer regarding the umbrella policy, but sent the remaining issues regarding the primary policy to a jury. After the jury returned a verdict in favor of Nationwide, the court issued an order declaring that the primary policy provided only minimal coverage for the Benners claims while the umbrella policy provided no coverage. The Benners have challenged the district court's order on several grounds. Because we find no error, we affirm.

I.

In April 1992, the Benners' young son, John Daniel, died in an automobile wreck which occurred while he was riding as a passenger in the family's 1991 Honda Accord. At that time, the Benners held two Nationwide insurance policies which covered the Honda: (1) a primary policy, called a Century II Auto Policy, originally purchased in 1985 and renewed in six-month intervals; and (2) a Personal Umbrella Policy providing additional coverage and renewed annually.

The Benners presented survival and wrongful death claims to Nationwide for more than $500,000 in damages arising from their son's death. They believed that they possessed $500,000 in primary coverage for damages sustained by any member of their family and umbrella coverage of $2,000,000. 2 Nationwide conducted an investigation of the accident and determined that the family baby sitter, who was driving the Benners' car with their permission, was solely at fault. The insurer also concluded that the Benners were entitled to a maximum of $20,000 on their claims because of a "household exclusion" that had been added to their primary policy and gone into effect on December 26, 1991. The exclusion provision limited to the statutory minimum requirements of Maryland law Nationwide's liability for bodily injury to an insured or any family member of an insured living in the same household. 3 The household exclusion had not previously been a part of the Benners' policy. 4 In applying the exclusion to the Benners' claims, Nationwide maintained that it had sent along with their policy renewal pages documents noticing and describing the exclusion. Because the Benners paid their premium on time and without protest, the household exclusion became effective during the next renewal period. 5 The umbrella policy also contained a household exclusion. 6

After Nationwide denied the Benners the coverage they had anticipated, the Benners invoked federal diversity jurisdiction and filed an action in the United States District Court for the District of Maryland. 7 They sought a declaratory judgment that the coverage limit for the wrongful death of their son under the primary policy was $500,000--not $20,000 as Nationwide asserted--and a declaratory judgment as to the available coverage under their umbrella policy. On cross motions for summary judgment, the district judge granted only Nationwide's motion concerning the umbrella policy. The court ruled that, as a matter of law, the notice requirements set forth in Article 48A, Section 240AA of the Maryland Insurance Code did not apply to the household exclusion contained in the primary policy and that there was no coverage available under the umbrella policy for the Benners' claims. The court also held that the Maryland Code imposed upon Nationwide a regulatory duty to provide the policyholder with notice of any reduction in coverage.

At the close of all the evidence at trial, both parties moved for judgment as a matter of law. Not granting either motion, the district court sent the case to the jury. The jury found in favor of Nationwide on all of the remaining issues concerning the primary policy. Four days later, the district judge entered judgment in accord with the jury's determinations, declaring that the primary auto policy provided coverage only up to $20,000 per person/$40,000 per occurrence and that the umbrella policy provided no coverage for the Benners' wrongful death and survival claims. The Benners filed a timely appeal.

II.

As to the primary policy, the Benners contend that the district court erred in failing to rule that, as a matter of law, the household exclusion was void. Under Maryland law, an insurer who inserts a coverage exclusion during renewal of a policy must satisfy certain conditions. Government Employees Ins. Co. v. Ropka, 74 Md.App. 249, 536 A.2d 1214, 1219-28, cert. denied, 312 Md. 601, 541 A.2d 964 (1988). The insurer must draft the exclusion unambiguously, provide conspicuous notice of the change in coverage, provide legal consideration for the reduction in coverage and comply with all governing notice requirements. Id. The Benners maintain that Nationwide unilaterally added the household exclusion to their policy renewal without their knowledge. Specifically, they allege that Nationwide failed to deliver the amendatory endorsement and stuffer to them, that Nationwide failed to comply with Maryland's statutory and common law notice requirements, that the household exclusion is ambiguous and that there was no consideration supporting the reduction in coverage. The jury specifically found against the Benners on each of these issues, after the judge had already ruled that Maryland's enhanced notice requirements for changes in auto insurance policies did not apply.

In general, we review the district court's conclusions of law de novo. United States v. Smith, 30 F.3d 568, 571 (4th Cir.), cert. denied, 513 U.S. 1028, 115 S.Ct. 604, 130 L.Ed.2d 514 (1994). Because there was a full trial and final judgment on the merits, we may not review the district courts pre-trial denial of summary judgment as to the primary policy. See Chesapeake Paper Prods. Co. v. Stone & Webster Eng'g Corp., 51 F.3d 1229, 1234-37 (4th Cir.1995) (adopting, for various reasons, the rule that denial of summary judgment is not reviewable on appeal after a full trial and final judgment on the merits of the case has occurred, resolving the factual issues). We may review, however, the district court's denial of the Benners' motion for judgment as a matter of law raising legal issues pursuant to Rule 50 of the Federal Rules of Civil Procedure.

While the Benners did move for judgment as a matter of law at the close of all the evidence--the equivalent of seeking a directed verdict--the record before us indicates that they failed to renew their motion after the jury verdict as required by Rule 50(b). The Benners' omission limits our remedial power, but not our ability to review the alleged error. See Morrash v. Strobel, 842 F.2d 64, 69-70 (4th Cir.1987) (after finding that the trial court erred in denying a motion for directed verdict, stating that party's failure to move for judgment n.o.v. limited the appellate court to vacating judgment and remanding for new trial); Smith v. Trans-World Drilling Co., 772 F.2d 157, 162 (5th Cir.1985) (same). The prerequisite for reviewing the sufficiency of the evidence on appeal is a proper pre-verdict motion at trial for judgment as a matter of law pursuant to Rule 50(a). See Bristol Steel & Iron Works, Inc., v. Bethlehem Steel Corp., 41 F.3d 182, 186-87 (4th Cir.1994) (observing that "[i]t is well settled that in the absence of a motion for directed verdict, the sufficiency of the evidence supporting the jury's findings is not reviewable on appeal") (citation omitted); Smith, 772 F.2d at 160 (finding motion for directed verdict under Rule 50(a) adequate to preserve sufficiency of evidence argument on appeal despite failure to move for judgment n.o.v. under Rule 50(b)). In the absence of a proper Rule 50(b) motion after the verdict, we cannot order an entry of judgment contrary to that made by the district court as the Benners seek. See Johnson v. New York, N.H. & H.R. Co., 344 U.S. 48, 50, 73 S.Ct. 125, 126-27, 97 L.Ed. 77 (1952) (holding that failure to move for judgment n.o.v. pursuant to Rule 50(b) deprives the appellate court of power to order entry of judgment); Cone v. West Virginia Pulp & Paper Co., 330 U.S. 212, 218, 67 S.Ct. 752, 756, 91 L.Ed. 849 (1947) (same); Morrash, 842 F.2d at 70 (applying rule). If we find error, we may only vacate and remand. Morrash, 842 F.2d at 70; Smith, 772 F.2d at 162.

Judgment as a matter of law is proper "when without weighing the credibility of the evidence there can be but one reasonable conclusion as to the proper judgment." Singer v. Dungan, 45 F.3d 823, 826 (4th Cir.1995) (citation omitted). Our review of the district court's ruling on a Rule 50 motion for judgment a matter of law is plenary. Benesh v. Amphenol Corp. (In re...

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