Hickey v. Kendall
| Decision Date | 01 September 1995 |
| Docket Number | No. 776,776 |
| Citation | 111 Md.App. 577,683 A.2d 789 |
| Parties | Carl Jeffrey HICKEY, et al. v. Herbert Richard KENDALL, et al. , |
| Court | Court of Special Appeals of Maryland |
Ronald G. DeWald (Leonard L. Lipshultz, Victor I. Weiner and Lipshultz and Hone, on the brief), Silver Spring, for appellant Hickey.
Donald J. Caulfield (John D. Holler and Caulfield and Holler, on the brief), Mt. Rainier, for appellant Nationwide.
Robert A. Meier, Jr., Damascus, for appellee Herbert Kendall.
James Debelius (Debelius, Clifford, Debelius, Crawford & Bonifant, L.L.C., Gaithersburg, John J. Dillon, Washington, DC, on the brief), for appellee Shirley Kendall.
Argued before HARRELL, SALMON, and PAUL E. ALPERT (Retired, Specially Assigned), JJ.
On April 26, 1991, appellee Shirley Kendall ("Shirley") was involved in an accident with a vehicle driven by Carl Hickey ("Hickey"). Shirley, at the time of the accident, was driving a 1986 Pontiac with her husband, appellee Herbert Richard Kendall ("Herbert"), sitting next to her. As a result of this accident, Herbert filed suit in the Circuit Court for Montgomery County against Shirley and Hickey.1 Shirley, for her part, filed a cross-claim against Hickey, wherein she alleged that as a result of Hickey's negligence she was injured. She asked for both compensatory and punitive damages against Hickey. In addition, Shirley's cross-claim sought indemnification and/or contribution from Hickey in the event that she was held liable for her husband's injuries. Hickey, in turn, filed a cross-claim against Shirley praying for indemnification and/or contribution in the event Herbert recovered damages against him.
Shirley and Herbert each suffered extensive injuries as a result of the April 26, 1991 accident. Hickey's vehicle was covered by a policy issued by the Maryland Automobile Insurance Fund ("MAIF"), which had bodily injury liability limits of only $20,000 per claimant, $40,000 per accident. As a result of these low limits, Shirley made a claim against Nationwide Mutual Insurance Company ("Nationwide"), her insurer, under the uninsured/underinsured ("U/M") portion of her policy.2 Shirley claimed that, even though she was driving a vehicle with $20,000/$40,000 U/M coverage at the time of the accident, she was entitled to the U/M coverage of $100,000/$300,000 that applied to her 1975 Chevrolet Cavalier. Alternatively, she claimed that Nationwide had breached the duty, set forth in Maryland Code, Article 48A, section 541(c)(2)(ii) (1957, 1994 Repl.Vol.), to offer her, in writing, the opportunity to contract for U/M coverage equal to the $100,000/$300,000 liability coverage on the 1986 Pontiac.
Nationwide, for its part, denied coverage to Shirley but was granted leave to intervene in the pending tort action as a party defendant. Nationwide contended that it had complied with the requirements of Article 48A, section 541(c)(2)(ii) and that the U/M limits applicable to the subject accident were the same as Hickey's liability limits.
On February 5, 1992, Shirley filed a pleading entitled "Motion for Partial Summary Judgment Involving Declaratory Relief as to Uninsured Motorist Coverage" against Nationwide. Shirley contended in her motion that her policy allowed her to select the highest U/M coverage available for any of the three cars that were covered by the Nationwide policy. Herbert eventually also made a claim against Nationwide, which was similar to Shirley's, and he moved for summary judgment against Nationwide on the same ground as his wife.
A hearing was held on the summary judgment motions on May 14, 1992. The trial judge granted the relief sought by Shirley and Herbert, saying, "I am going to grant [the] Motion [for partial summary judgment], the coverage is a hundred [thousand dollars per claimant]."
After ruling against Nationwide on the coverage issue, the court bifurcated the tort case. A jury trial commenced on August 23, 1993, devoted exclusively to the issue of liability. The jury, after a four-day trial, concluded that Hickey's negligence caused the subject accident and that Shirley was not negligent. Hickey filed a Motion for Judgment Notwithstanding the Verdict, which was denied. Subsequently, on March 20, 1995, Judge Leonard Rubin presided at a bench trial that dealt solely with the issue of damages. The court awarded $100,000 to Shirley and $81,551.91 to Herbert as damages. After these judgments were entered in favor of Shirley and Herbert and against Hickey, Nationwide and Hickey both filed appeals, and Herbert filed a timely cross-appeal.
The insurance coverage issue raised by Nationwide in this appeal is:
Did the trial court err in finding that Mr. and Mrs. Kendall were each entitled to the $100,000 underinsured [U/M] coverage limits purchased in connection with a 1975 Chevrolet, even though at the time of the subject accident they were in a 1986 Pontiac, which had much lower limits, but was insured under the same policy?
We answer "Yes" to this question. As a result, this case must be remanded so that the court can rule on the Kendalls' claim that the applicable U/M limits were $100,000/$300,000 because (allegedly) Nationwide failed to notify them that they could contract for U/M coverage on the 1986 Pontiac that was equal to their liability limits. Also presented are several more mundane issues that concern the conduct of the negligence phase of the lawsuit.
The 1986 Pontiac that Shirley was driving at the time of the accident, like two other cars owned by the Kendalls (a 1978 Chevrolet and a 1975 Chevrolet), was insured through Nationwide. The Nationwide policy declaration set forth the following coverages:
Veh Make Year Veh Make Year Veh Make Year
-------------------- -------------------- --------------------
# 1 Pont. ' 86 # 2 Chev. ' 78 # 3 Chev. ' 75
U/M3 $ 20,000/40,000 $ 20,000/40,000 $100,000/300,000
BI4 100,000/300,000 100,000/300,000 100,000/300,000
PD5 10,000 10,000 50,000
The premium for six months U/M coverage on the 1986 Pontiac and the 1978 Chevrolet was $11.80 each, and the six-month U/M premium for the 1975 Chevrolet was $22. Shirley contends that, as to her, the U/M coverage is "personal" and she should be allowed to select the highest coverage. She acknowledges that everyone else who makes a U/M claim under the policy is subject to the U/M limits applicable to the insured automobile occupied at the time of injury.
Herbert takes a broader view. He claims that the U/M coverage is "personal" to himself and Shirley but "vehicle specific" to everyone else who claims U/M coverage under the policy.
The insuring agreement in the Kendalls' Nationwide policy provided:
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....
Under the policy, the term "uninsured motor vehicle" is defined to include:
[A]n 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.
The "U/M" coverage itself is described by the following policy language:
Under this coverage we will pay all sums for bodily injury and property damage that you [defined as the policyholder first named in the Declarations (here, Mrs. Kendall) and includes that policyholder's spouse (Mr. Kendall) if living in the same household] 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. any other motor vehicle while it is being operated by you. However, the vehicle must not be owned by or furnished to you or a relative living in your household for regular use. * * * *
LIMITS AND CONDITIONS OF PAYMENT----AMOUNTS PAYABLE FOR UNINSURED MOTORISTS 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: * * * *
3. The insuring of more than one person or vehicle under this policy does not increase our Uninsured Motorists 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.
We begin by discussing the general prohibition against the "stacking" (or aggregation) of coverage, a topic that is related to--although distinguishable from--the issue we must decide. The seminal "stacking" case in Maryland is Howell v. Harleysville Mutual Insurance Co., 305 Md. 435, 505 A.2d 109 (1986). John Howell, while driving a van owned by his employer (the Pritchett Transportation Company, Inc., hereinafter, "Pritchett") was severely injured in a collision with an uninsured motor vehicle. Pritchett owned a fleet of 19 vehicles, all of which were insured through the Harleysville Mutual Insurance Company ("Harleysville"); nevertheless, Pritchett's U/M coverage with Harleysville specified that "the most that will be paid for any one accident or loss is $50,000." Id. at 437, 505 A.2d 109. Howell argued that the $50,000 limit applied to each vehicle in Pritchett's fleet...
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