Kee v. State Highway Admin.

• Decision Date: 01 September 1987
• Docket Number: No. 152,152
• Citation: 313 Md. 445,545 A.2d 1312
• Parties: Evelyn KEE, Pers. Rep. of the Estate of Mark Schaffert et al. v. STATE HIGHWAY ADMINISTRATION et al. ,
• Court: Maryland Court of Appeals

Page 445

313 Md. 445

545 A.2d 1312

Evelyn KEE, Pers. Rep. of the Estate of Mark Schaffert et al. v.STATE HIGHWAY ADMINISTRATION et al.

No. 152, Sept. Term, 1987.

Court of Appeals of Maryland.

Aug. 26, 1988.

Paul Victor Jorgensen, Middletown, for appellants.

Hugh G. Stevenson, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Ralph S. Tyler, III, Carolyn A. Quattrocki, Asst. Attys.Gen., on brief), Baltimore, for appellees.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS and BLACKWELL, JJ.

ELDRIDGE, Judge.

This case involves a question of coverage under the Maryland Tort Claims Act, Maryland Code(1984, 1987 Cum.Supp.), § 12-101 through § 12-110 of the State GovernmentArticle, formerly codified in Code (1974, 1980 Repl.Vol., 1983 Cum.Supp.), § 5-401 through § 5-408 of the Courts and Judicial Proceedings Article.¹

I.

Before setting forth the facts of the case and the parties' contentions, we briefly review the relevant statutory provisions and legislative background.

Effective July 1, 1982, the General Assembly enacted the Maryland Tort Claims Act, waiving the tort immunity of the State under specified conditions.Ch. 298 of the Acts of 1981, Code (1980 Repl.Vol., 1983 Cum.Supp.), §§ 5-401 through 5-408 of the Courts and Judicial Proceedings Article.Section 5-403 of the Courts and Judicial Proceedings Article set forth the scope of the waiver.Subsection (a) of that section provided as follows:

"(a) Actions in which State's immunity is waived.--Except as provided in subsection (b) of this section, the immunity of the State from suit in the courts of this State and liability in tort is waived in the following actions to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer pursuant to § 27 of Article 95.

(1) An action to recover damages caused by the negligent maintenance or operation of a motor vehicle by a State employee;

(2) An action to recover damages caused by the negligence of a health care employee of a State facility or institution or by a doctor, nurse, dentist, or related health care personnel employed by the State;

(3) An action to recover damages caused by the patently dangerous condition of a building, structure, or other public improvement owned and controlled by the State;

(4) An action to recover damages caused by the negligent use or maintenance of State property by a State employee;

(5) an action to recover damages caused by a defective, unsafe, or dangerous condition of any street, alley, sidewalk, or highway owned and controlled by the State if constructive or actual notice of the condition existed; and

(6) An action to recover damages caused by the negligent failure of a State employee to properly supervise an activity at a State park or recreation facility."

As the introductory language in subsection (a) makes clear, the General Assembly waived the State's immunity only "to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer pursuant to § 27 of Article 95."Code(1979 Repl.Vol., 1984 Cum.Supp.), Art. 95, § 27(d), provided that "[t]o the extent that funds are available in the budget, the Treasurer shall provide self-insurance or purchased insurance or a combination of [both] ... sufficient to cover the liability of the State and its employees under Subtitle 4 of Title 5 of the CourtsArticle of this Code."

For the first year of the Tort Claims Act, the fiscal year beginning July 1, 1982, and ending June 30, 1983, the General Assembly appropriated $2,836,500 to the State Treasurer for the purchase of insurance generally.The budget bill, as submitted by the Governor and as enacted by the General Assembly, stated (Ch. 125 of the Acts of 1982, at 1383)"not more than $1,000,000 of this appropriation shall be utilized to purchase commercial insurance for the purpose of a limited waiver of sovereign immunity for tort claims under the provisions of section 5-403(a)(3)(4) of the Courts and Judicial Proceedings Article ... and that no other portion of this appropriation may be expended for insurance under Section 27(d) of Article 95."

Thus the Treasurer had $1,000,000 with which to purchase an insurance policy covering claims made under paragraphs (3) and (4) of § 5-403(a).²Using this appropriation, the State Treasurer purchased an insurance policy with Reliance of Illinois for $613,951.In accordance with the statutory authorization, the policy apparently covered only claims made under paragraphs (3) and (4) of § 5-403(a).³The policy was in effect from July 1, 1982, through November 1, 1983, covering occurrences within that period.

In subsequent fiscal years, the General Assembly appropriated funds for the purchase of commercial insurance for the Tort Claims Act generally, and did not limit the authorization to any particular categories of actions for which immunity was waived.⁴Moreover, by Ch. 538 of the Acts of 1985, the General Assembly repealed the provisions listing specified categories for which immunity was waived and adopted entirely different language describing the scope of the immunity waiver.SeeClea v. City of Baltimore, 312 Md. 662, 671 n. 6, 541 A.2d 1303, 1307 n. 6(1988).

In 1985, the General Assembly authorized payment of claims not covered by commercial insurance from the State Insurance Trust Fund(self-insurance), and appropriated funds for that purpose.SeeCh. 538 of the Acts of 1985, at 2685;Ch. 109 of the Acts of 1986, at 360.⁵These provisions became effective July 1, 1985, and on July 17, 1985, the Treasurer promulgated an emergency regulation authorizing payment of claims from the self-insurance fund.SeeCOMAR 25.02.01.01(1986).⁶

II.

Turning to the facts of the instant case, Mark Schaffert was driving an automobile, in which Gary Schaffert was a passenger, on the Old National Pike highway in Frederick County, Maryland, on September 24, 1982.Mark Schaffert swerved to avoid another vehicle, went through a guardrail, and slid down an embankment.The accident resulted in the death of Mark Schaffert and in serious injury to Gary Schaffert.

Gary Schaffert and Evelyn Kee, the mother of Mark and Gary Schaffert, in her own capacity and as personal representative of Mark Schaffert's estate, sought to recover for these injuries from the State under the recently enacted Maryland Tort Claims Act.In accordance with the provisions of the Tort Claims Act, they initially presented their claim for damages to the State Treasurer.See§ 5-406.Their claim alleged that the injuries occurred as a result of a negligently maintained guardrail that could not withstand the impact of the vehicle, thus allowing the vehicle to flip over and slide down the embankment.The claim also alleged that the State had knowledge of the guardrail's dangerous condition.

On August 21, 1985, the Treasurer denied the claim, concluding that the State had not waived its immunity under the Tort Claims Act for this type of claim in 1982.

On September 25, 1985, Gary Schaffert and Evelyn Kee filed the present action in the Circuit Court for Frederick County.The State Highway Administration, the State of Maryland, and a third party, Green Acres, Inc., were named as defendants.The complaint set out the detailed facts of the accident, the allegations concerning the negligent maintenance of the guardrail by the State Highway Administration, and the fact that their claim had been presented to and denied by the State Treasurer.The complaint made no reference to any particular paragraphs of § 5-403(a) or any of the waiver categories listed in that section.

In January 1986, the statedefendants filed a motion for summary judgment contending that both the State and the State Highway Administration retained their immunity from suit because the State was not covered by a program of insurance for this type of accident.The statedefendants asserted that the plaintiffs' claim fell within paragraph (5) of § 5-403(a), relating to damages caused by a defective, unsafe, or dangerous condition of a state highway.The statedefendants then pointed out that in 1982, pursuant to legislative directive, insurance coverage had only been purchased to cover claims made under paragraphs (3) and (4) of § 5-403(a).Attached to the motion for summary judgment was a brief affidavit by the "Insurance Manager for the State Treasurer," stating that there was no insurance "to cover an action to recover damages caused by a defective, unsafe, or dangerous conditions of any street, alley, sidewalk or highway owned and controlled by the State between July 1, 1982 and November 1, 1983."

The circuit court granted the statedefendants' motion for summary judgment, thereby purporting to dispose of the claim against the statedefendants.The court's order did not, however, dispose of the claim against Green Acres, Inc., nor did the court certify the judgment in favor of the statedefendants as final pursuant to Maryland Rule 2-602.⁷

The plaintiffs appealed the circuit court's decision to the Court of Special Appeals.SeeKee et al. v. State Highway Administration et al., 68 Md.App. 473, 513 A.2d 930(1986).The Court of Special Appeals appeared to accept the statedefendants' contention that the plaintiffs' claim fell only within paragraph (5) of § 5-403(a), and the court pointed out that the insurance policy in effect in 1982 excluded such a claim.Nevertheless, the intermediate appellate court reversed, holding that, under the statutory scheme, the State Treasurer had a duty to purchase insurance to cover all of the various categories under the Tort Claims Act, and that the Treasurer could not decide to insure certain causes of action to the exclusion of others.68 Md.App. at 488-490, 513 A.2d at 937-939.Because, according to the Court of Special Appeals, the record did not indicate whether funds were available to purchase insurance to cover claims under pa...