Commercial Union Ins. Co. v. Harleysville Mut. Ins. Co.

• Court: Maryland Court of Appeals
• Writing for the Court: HARRELL
• Citation: Commercial Union Ins. Co. v. Harleysville Mut. Ins. Co., 675 A.2d 1059, 110 Md.App. 45 (Md. App. 1995)
• Decision Date: 01 September 1995
• Docket Number: No. 1339,1339
• Parties: COMMERCIAL UNION INSURANCE COMPANY, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY, et al. ,

Page 45

110 Md.App. 45

675 A.2d 1059

COMMERCIAL UNION INSURANCE COMPANY, v. HARLEYSVILLE MUTUAL INSURANCE COMPANY, et al.

No. 1339, Sept. Term, 1995.

Court of Special Appeals of Maryland.

May 7, 1996.

S. Woods Bennett (Theodore B. Cornblatt, Smith, Somerville & Case, L.L.C., Baltimore, Donald P. Maiberger and Anderson & Quinn, Rockville, on the brief), for Appellant.

Robert L. Humphreys, Sr. and Timothy E. McLaughlin (Herwig & Humphreys, L.L.P., on the brief), Baltimore, for appellees DDB and Harleysville.

J. Joseph Curran, Jr., Atty. Gen. and James W. Himes, Asst. Atty. Gen., on the brief, Towson, for appellee, Uninsured Employers' Fund.

Argued before BISHOP, CATHELL and HARRELL, JJ.

HARRELL, Judge.

This appeal requires us to determine the effect of a workers' compensation insurance policy carried by a Virginia employer, purportedly limiting the scope of its coverage to the workers' compensation law of Virginia, given a situation in which an employee of the Virginia employer sustained a work-related injury in Maryland and filed a claim for compensation in our State. Furthermore, we must decide whether certain steps taken by an admitted "statutory employer" (the principal contractor who engaged the Virginia employer as a subcontractor on the Maryland job where the claimant was injured) to ascertain whether its subcontractor obtained workers' compensation insurance for its employees were adequate to escape liability under Md. Labor & Employ. Code Ann. ("LE") § 9-508 (Repl.Vol.1991). Appellant, Commercial Union Insurance Company, insurer of the Virginia employer/subcontractor, appeals from the judgment of the Circuit Court for Prince George's County, which denied its motion for summary judgment and granted appellees' ¹ cross-motion for summary judgment, thereby affirming the decision of the Workers' Compensation Commission ("Commission"). The Commission found that appellant was the correct workers' compensation insurer in this case.

QUESTIONS PRESENTED

Appellant had originally presented three questions for our resolution, but, because of DD & B/Harleysville's subsequent admission of its statutory employer status, the withdrawal in its reply brief of one of appellant's original arguments, and the modification of another, ² we have reorganized and rephrased the remaining questions as follows:

I. Did the Commission err by finding that appellant was the correct insurer in this case?

II. Assuming the answer to the first question to be in the affirmative, are DD & B/Harleysville liable, under the statutory employer sections of the workers' compensation statute, to pay the claimant compensation?

FACTS AND PROCEEDINGS BELOW

Rockwood Builders, Inc. ("Rockwood") is a small Virginia corporation engaged primarily in the construction trade, usually as a subcontractor. From 3 September 1992 until 3 September 1993, a period encompassing the occurrence of the accident that gave rise to this case, Rockwood carried a workers' compensation insurance policy that was assigned to the insurer through Virginia's Assigned Risk Plan. Appellant was the actual issuer of that policy. On Rockwood's written application for the insurance, the company only requested coverage for Virginia, although it indicated that it occasionally did business in various other states, including Maryland. In fact, directly beneath the space on the application form inquiring as to other states in which they did business, there was a "box" to be checked if coverage was desired for those states. Rockwood checked the "No" box, thereby expressly declining coverage for jurisdictions other than Virginia. The policy ultimately issued by appellant, in concordance with Rockwood's application, restricted its coverage to the workers' compensation laws of Virginia.

The claimant, Stanley Stuttard, first became employed as a carpenter by Rockwood in May of 1993, in the course of a job the company was performing in Pennsylvania. ³ It was at this time that Rockwood informed the claimant that it had an opening for him at an upcoming job in Maryland. ⁴ The job to which Rockwood was referring involved its being hired as a subcontractor by DD & B, the principal contractor, to perform construction work erecting a metal garage building at a publicly-operated landfill in Prince George's County. On 1 June 1993, prior to Rockwood starting work at the landfill, at DD & B's request, Rockwood's insurance agent provided DD & B with a "Certificate of Insurance" ("Certificate"), listing Rockwood, at its Virginia address, as the named insured, and appellant as its workers' compensation liability insurer. Contained on the Certificate were the insured's policy numbers for its general liability and workers' compensation coverage, and the monetary coverage ceilings on the aforementioned policies. There was a space provided for a "Description of Operations/Locations ...," but this space was left blank. The record contains no suggestion that DD & B made any further inquiry with regard to Rockwood's workers' compensation insurance coverage before permitting its workers onto the job-site to begin work. On 17 July 1993, while working for Rockwood at the landfill, the claimant was severely injured in a fall from the roof of the garage under construction to the concrete floor below. Shortly thereafter, on 3 August 1993, Rockwood amended its workers' compensation insurance policy to reflect coverage for states other than Virginia.

The workers' compensation process in Virginia was put into motion, not by Mr. Stuttard filing a claim, but by Rockwood filing an employer's first report of the accident. After performing an investigation of the circumstances surrounding the accident, appellant denied coverage for the payment of benefits to the claimant, asserting a lack of jurisdiction under the workers' compensation law of Virginia. The correspondence from appellant to the claimant, and the reply from the claimant's attorney, provided in the appendix to DD & B/Harleysville's brief, demonstrates that the claimant "absolutely concur[red]" with appellant that Virginia lacked jurisdiction to consider any claim for benefits that Stuttard might file there. No one pursued a Virginia claim thereafter. This correspondence was not in the record before the Commission or the circuit court, and is actually at odds with the information provided by the parties to the circuit court in their cross-motions for summary judgment, which indicated that Virginia's consideration of the matter had actually proceeded far enough to be dismissed for lack of jurisdiction. ⁵

On 30 August 1993, the claimant filed an application for compensation with the Maryland Workers' Compensation Commission. In January of 1994, the Commission held a hearing on the issues presented by the claim, and on 28 March 1994, issued its decision and order. The Commission found "that the claimant sustained an accidental injury arising out of and in the course of employment," and that Rockwood was the correct employer and appellant the correct insurer. Thus, the Commission ordered Rockwood and appellant to pay the claimant temporary total disability from 18 July 1993, presumably computed under Maryland's workers' compensation law, as well as his medical bills in accordance with the Commission's Medical Fee Guide. The Commission also dismissed DD & B, Harleysville, and the Fund as "possible parties."

Appellant sought, in the Circuit Court for Prince George's County, judicial review of the Commission's decision. On 27 December 1994, appellant filed a motion for summary judgment. On 19 January 1995, DD & B/Harleysville responded to appellant's motion, and made a cross-motion for summary judgment. Oral argument was permitted on the cross-motions on 8 March 1995, after which the case was taken under advisement by the circuit court. On 12 May 1995, the circuit court issued its opinion and order, granting DD & B/Harleysville's cross-motion for summary judgment, and explicitly affirming the Commission's decision. This timely appeal followed. Additional facts will be supplied as necessary in our analysis.

ANALYSIS

Standard of Review

The standard of appellate review of a trial court's grant of a motion for summary judgment under Maryland Rule 2-501 is whether the lower court was legally correct. Baltimore Gas & Elect. Co. v. Lane, 338 Md. 34, 43, 656 A.2d 307 (1995); Beatty v. Trailmaster Products, Inc., 330 Md. 726, 737, 625 A.2d 1005 (1993). When making a determination on summary judgment, a trial court makes no findings of fact, but rather determines whether a genuine dispute exists concerning a material fact which would preclude the entry of summary judgment. Beatty, supra, 330 Md. at 737, 625 A.2d 1005; King v. Bankerd, 303 Md. 98, 111, 492 A.2d 608 (1985). A material fact, is one that will somehow affect the outcome of the case. King, supra, 303 Md. at 111, 492 A.2d 608. The general rules pertaining to the proper entry of summary judgment apply with equal force on appeals from decisions of the Commission. Dawson's Charter Serv. v. Chin, 68 Md.App. 433, 440, 511 A.2d 1138 (1986).

I.

Our analysis of appellant's potential liability must commence with the Court of Appeals's decision in Kacur v. Employers Mut. Casualty Co., 253 Md. 500, 254 A.2d 156 (1969), one of the leading cases nationally in this area. In Kacur, the employer was a resident of Maryland who operated a business in Pennsylvania. The employer carried a workers' compensation insurance policy, which purportedly limited its inclusiveness to insuring against liability imposed upon the insured by the workers' compensation law of Pennsylvania. One of the employer's employees was injured in Maryland while in the course of his employment. The employer filed first reports of injury in both Maryland and Pennsylvania, but the employee only filed a claim for compensation in Maryland. The Maryland Commission awarded the employee compensation, and the employer's workers' compensation insurer...