General Acc. Ins. Co. v. Scott
| Decision Date | 01 September 1994 |
| Docket Number | No. 901,901 |
| Citation | 107 Md.App. 603,669 A.2d 773 |
| Parties | GENERAL ACCIDENT INSURANCE COMPANY v. Florence E. SCOTT, et al. , |
| Court | Court of Special Appeals of Maryland |
Anthony D. Dwyer (Law Offices of Michael P. DeGeorge, on the brief), Columbia, for appellant.
Leslie L. Gladstone of Baltimore, for appellee, Scott.
Gregory L. VanGeison (Robert H. Bouse, Jr. and Anderson, Coe & King, on the brief), Baltimore, for appellees.
Argued before WILNER, C.J., HOLLANDER, J., and JOHN J. GARRITY, Judge (retired), Specially Assigned.
In this case, we are asked to resolve a dispute concerning underinsured motorist coverage. Florence E. Scott, appellee and cross-appellant, was injured in a two-car collision. At the time, she was one of several passengers in a car operated by Norvin Jones that was insured by the Hartford Accident & Indemnity Company ("Hartford"), appellee. Jones's car was struck from behind by a vehicle driven by William Bain, Jr.; that car was owned by Valencia Watson (who was a passenger) and insured by State Farm Mutual Insurance Company ("State Farm"). Approximately two and one half years after the accident, when Watson's liability policy was insufficient to compensate Scott for her injuries, Scott made demand on her own insurer, General Accident Insurance Company ("General Accident"), appellant and cross- appellee, pursuant to the underinsured motorist provisions of Scott's policy.
When General Accident denied Scott's claim, she instituted a declaratory judgment action in the Circuit Court for Baltimore City to determine the responsibilities of Hartford and General Accident. Scott and General Accident filed cross-motions for summary judgment. After a hearing, the circuit court (Gordy, J.) granted summary judgment in favor of Scott and against General Accident. At a later date, summary judgment was entered in favor of Hartford.
General Accident now appeals and presents the following issues for our review, which we have rephrased slightly:
I. Did the trial court err in entering summary judgment in favor of Scott even though Scott unreasonably notified General Accident two years and five months after the accident and only after a finding by an arbitrator on both liability and damages?
II. Did the trial court err in finding that General Accident, not Hartford, must indemnify Scott for the underlying judgment after the culpable car's insurance carrier, State Farm, paid its $25,000 limit of liability, even though the Hartford single limit of $50,000 exceeded the State Farm policy's $25,000 per person limit of liability?
We answer both questions in the negative; therefore, we shall affirm.
On January 27, 1991, Scott was injured in an automobile accident in the District of Columbia. At the time, Scott was a passenger in a car driven by Norvin Jones that was owned by Security America ("the Jones vehicle"). Jones's daughters, Aleesha and Sherice Jones, and Talika Brown were also passengers. The Jones vehicle allegedly was stopped at a red light and was struck in the rear by the car behind it, which was driven by Bain and owned by Watson ("the Watson vehicle"). All of the occupants of the Jones vehicle were injured in the accident.
Three groups of insurance policies are relevant to this case. The Jones vehicle was insured under a policy issued by Hartford which provided uninsured/underinsured coverage 1 up to $50,000 per accident. The Watson vehicle was insured by State Farm, whose policy provided liability coverage up to $25,000 for each person injured in an accident, with a maximum liability of $50,000 per occurrence. Scott's General Accident policy, insuring her personal vehicle, provided uninsured motorist protection up to $50,000 for each person injured in an accident, with a maximum coverage of $100,000 per occurrence.
Following the accident, Scott retained an attorney, Leslie Gladstone, who investigated the incident and began the process of seeking compensation for her injuries. Given the relatively low coverage limits of Watson's policy with State Farm ($25,000 per person and $50,000 per accident), Gladstone recognized that Scott might need to make an uninsured motorist claim and he informed Hartford of the accident. Apparently, Gladstone was incorrectly informed that the Hartford's uninsured motorist policy limit was $500,000 per accident. As a result, Gladstone evidently felt that Scott would not need to make any claim on her own uninsured motorist policy with General Accident and he did not notify General Accident of the occurrence. In November 1992, the occupants of the Jones vehicle, including Scott, filed suit against Bain and Watson in the Superior Court of the District of Columbia. As permitted by that court's rules of procedure, the parties agreed to submit the case to non-binding arbitration. A hearing was held before an arbitrator in May 1993, who found in favor of Scott and the other plaintiffs. Scott was awarded damages in the amount of $61,610.60, and the other plaintiffs were awarded damages totalling $29,740.08. It is undisputed that, as of this time, General Accident still knew nothing of these proceedings.
After the arbritrator made her award, the other plaintiffs accepted a total of $25,000 from Watson's $50,000 State Farm insurance policy. Consequently, $25,000 remained on State Farm's policy to cover Scott's award of $61,610.60. Thereafter, Gladstone learned that the Hartford liability limit was $500,000, but that its uninsured motorist coverage was only $50,000. Accordingly, on June 10, 1993, some two years and five months after the accident, Gladstone's associate notified General Accident of the accident and Scott's claim under her policy. That telephone call was followed by a letter to General Accident the next day.
Gladstone sought to cooperate with General Accident in minimizing any harm resulting from the delay in notice. As permitted by the Superior Court's rules on non-binding arbitration, he delayed the entry of a final judgment on the arbitration award by filing a request for a trial de novo. Counsel also sought to give General Accident the opportunity to intervene in the litigation to protect its rights. On June 16, 1993, Gladstone wrote to Reggie Lemon, a General Accident adjuster assigned to Scott's claim. He offered to provide General Accident a thirty day period to investigate the accident and to decide on its course of action. Gladstone wrote:
I do not wish to do anything, however, that would be deemed prejudicial to the interest of General Accident Insurance Company and I am willing to provide any reasonable period of time for you to properly investigate this matter as well as to defend it as you deem appropriate.
Gladstone also told Lemon to let him know whether he needed additional time to complete his investigation, and said that he would withdraw his request for a trial de novo if he did not hear anything within thirty days. In addition, counsel asked Scott to contact General Accident to provide a statement regarding the accident.
General Accident never responded to Gladstone. Accordingly, on July 14, 1993, Gladstone sent another letter to Lemon, advising him that he would withdraw his request for a trial de novo on July 16, unless Lemon requested otherwise. When Gladstone did not receive a response, he called Lemon on July 29, 1993 to ask him about General Accident's position. Lemon responded that, in General Accident's view, Hartford had the responsibility to provide Scott with uninsured motorist benefits. Lemon added that General Accident had referred the matter to its attorney. Gladstone then called the attorney and left a message, but received no response.
On July 30, 1993, Scott's counsel formally withdrew his request for a trial de novo in the Superior Court. Consequently, a judgment on the arbitration award was entered on August 16, 1993.
Meanwhile, Hartford also refused to make any payments to Scott under the uninsured motorist provision of its policy. Hartford took the position that, because the $50,000 liability limit under the State Farm policy was the same as its $50,000 uninsured limit, the Watson vehicle was not an "underinsured" vehicle under the policy, and thus Hartford had no obligation to pay. With both insurance carriers denying coverage, Scott filed her declaratory judgment action against the insurers on September 16, 1993.
Scott and General Accident each moved for summary judgment. General Accident argued that Scott had forfeited coverage under the policy because Scott had unreasonably waited twenty-nine months after the accident before informing General Accident of her claim, and the insurer was prejudiced by the inordinate delay. General Accident also argued that Hartford should be the primary uninsured motorist insurance carrier, and thus General Accident should not have any obligation to pay until Hartford's coverage was exhausted. Hartford reiterated its position that the Watson vehicle was not an uninsured vehicle under its policy.
After a hearing on the cross-motions on March 11, 1994, the circuit court rejected General Accident's untimely notice argument and accepted Hartford's contention that the Watson vehicle was not underinsured under its policy. Accordingly, it entered summary judgment in favor of Scott and against General Accident, and denied General Accident's motion against Scott. The order made no mention of Hartford, however, presumably because Hartford was not a movant. Nor did the court ever enter a formal declaratory judgment, as Scott had requested in her complaint for declaratory judgment.
General Accident noted an appeal to this Court. Under Rule 2-602(a), an order that "adjudicates the rights and liabilities of fewer than all the parties to the action ... is not a final judgment." Since the circuit court's order of March 11, 1994 did not adjudicate the rights and liabilities of Hartford, it was not a final judgment and, therefore, this...
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