Lee v. Wheeler

• Citation: 310 Md. 233,528 A.2d 912
• Decision Date: 01 September 1986
• Docket Number: No. 25,25
• Parties: Ark Kee LEE and Oliva Lee v. Marlene C. WHEELER et al. Misc.,
• Court: Court of Appeals of Maryland

Page 233

310 Md. 233

528 A.2d 912

Ark Kee LEE and Oliva Lee v. Marlene C. WHEELER et al.

Misc. No. 25, Sept. Term, 1986.

Court of Appeals of Maryland.

July 31, 1987.

Thomas A. Gentile (Harry W. Goldberg and Harry W. Goldberg, P.A., on the brief), Chevy Chase, for appellant.

Richard L. Fritts (Joseph Patrick Clancy and Clancy & Pfeifer, on the brief), Chevy Chase, for appellee.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE and ADKINS, JJ., and JAMES F. COUCH, Jr. (retired) Specially Assigned.

ADKINS, Judge.

In State Farm v. Md. Auto. Ins. Fund, 277 Md. 602, 605, 356 A.2d 560, 562 (1976), we held that an insurance policy that limited uninsured motorist coverage "to instances of physical impact between the insured and the phantom vehicle plainly violates the legislative mandate of [Md.Code, Art. 48A] § 541(c) and is void." State Farm concerned an accident that occurred in Maryland. The issue now before us is whether the result should be different when the accident occurs outside Maryland. The specific question, put to us by the United States Court of Appeals for the District of Columbia Circuit pursuant to the Maryland Uniform Certification of Questions of Law Act, Code (1973, 1984 Repl.Vol.) Courts and Judicial Proceedings Art. §§ 12-601 through 12-609, is:

Under an automobile insurance policy covering Maryland insureds, is a provision in that policy requiring physical contact between the insureds' vehicle and the phantom vehicle lawful and enforceable under Maryland law where the accident occurs outside the State of Maryland?

The federal court has concisely summarized the facts giving rise to the dispute now before us:

On April 27, 1980, [appellants] Ark and Oliva Lee, residents of the State of Maryland, were driving their [Maryland-registered] car in the District of Columbia. As they proceeded, a vehicle operated by [appellee] Marlene Wheeler swerved to avoid an unidentified vehicle that suddenly entered her traffic lane. In so doing, Ms. Wheeler struck the Lees' vehicle head-on. Both the Lees sustained serious physical injuries.

The Lees subsequently filed suit against Wheeler in the United States District Court for the District of Columbia.... The Lees also joined their insurer, [appellee] Pennsylvania General Insurance Company (Pennsylvania General), seeking coverage under the policy's uninsured motorist provisions for the damages sustained as a result of the phantom's negligence.

Lee v. Wheeler, 810 F.2d 303, 304 (D.C.Cir.1987).

The Lees recovered against Wheeler, but their claim against Pennsylvania General was dismissed because its insurance policy contained a provision that required physical contact with the phantom vehicle in order for the uninsured motorist provisions to apply, a provision the trial court held valid under District of Columbia law, which it found applicable. On appeal by the Lees, the United States Court of Appeals concluded that Maryland law, not District of Columbia law, was applicable. 810 F.2d at 304-305. But it was unsure whether this Court would follow the holding of State Farm and strike down an insurance policy provision requiring impact with a phantom vehicle when the accident occurs outside of Maryland; hence the certification. For reasons we shall now explain, we hold that the principle stated for the Court by Chief Judge Murphy in State Farm applies here. Accordingly, we hold that uninsured motorist coverage provided to a Maryland insured may not be limited to situations in which there is actual contact between the insured vehicle and a phantom vehicle, when the accident occurs outside the State of Maryland. The answer to the certified question, therefore, is "no." ¹ Our analysis begins with a review of our decision in State Farm v. Md. Auto Ins. Fund, supra. There the Maryland Automobile Insurance Fund (MAIF) sought a declaration that an insurance policy endorsement, requiring physical contact between an insured's vehicle and a phantom vehicle as a prerequisite to coverage, violated the uninsured motorist provision of Md.Code (1957, 1986 Repl.Vol.) ² Art. 48A, § 541(c). Section 541(c)(2) provides

In addition to any other coverage required by this subtitle, every policy of motor vehicle liability insurance issued, sold, or delivered in this State after July 1, 1975 shall contain coverage, in at least the amounts required under Title 17 of the Transportation Article, for damages which the insured is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injuries sustained in an accident arising out of the ownership, maintenance, or use of such uninsured motor vehicle. There shall be available to the insured the opportunity to contract for higher amounts than those provided under Title 17 of the Transportation Article if these amounts do not exceed the amounts of the motor vehicle liability coverage provided by the policy. The coverage required under this subsection (c) shall be in such form and subject to such conditions as may be approved by the Commissioner of Insurance.... In no case shall the uninsured motorist coverage be less than the coverage afforded a qualified person under Article 48A, §§ 243H and 243-I....

As earlier noted, after examining the uninsured motorist provisions in light of the remedial design of Art. 48A, we held that a "limitation of coverage to instances of physical impact between the insured and the phantom vehicle plainly violates the legislative mandate of § 541(c) and is void." 277 Md. at 605, 356 A.2d at 562. We reasoned that § 541(c) mandates that "[i]n no case shall the uninsured motorist coverage be less than the coverage afforded a qualified person under Article 48A, §§ 243H and 243-I." ³

Section 243H(a)(1) allows claims against MAIF for injuries caused by phantom vehicles by authorizing in pertinent part,

Claims for the death of or personal injury to a qualified person or for damage to property in excess of $100, arising out of the ownership, maintenance or use of a motor vehicle in this State where the identity of the motor vehicle and of the operator and owner thereof cannot be ascertained....

In State Farm we observed that § 243H makes no distinction between impact and non-impact phantom drivers and authorizes claims against MAIF in either circumstance. An automobile policy that limits coverage only to impact phantom accidents provides less coverage than § 243H and is, therefore, unlawful.

Pennsylvania General does not encourage us to abandon our holding in State Farm. Rather, it argues that its non-impact phantom vehicle exclusion is enforceable under Maryland law, because the accident in this case, unlike that in State Farm, occurred outside the State. That is so, the argument runs, because § 541(c) contains an implied territorial limitation when read in harmony with § 243H(a)(1), which authorizes qualified persons to present claims against MAIF for personal injuries "arising out of the ownership, maintenance or use of a motor vehicle in this State ... [emphasis supplied]."

According to Pennsylvania General, the phrase "in this State" unambiguously creates a geographic restriction on the applicability of the uninsured motorist provision of § 541(c); therefore, the scope of the coverage under its endorsement is not less than § 243H, but in fact identical since MAIF under § 243H, again according to Pennsylvania General, provides no coverage for accidents occurring outside the State of Maryland. We find this argument unpersuasive.

Section 541(a) of Art. 48A commands that every motor vehicle liability policy issued in Maryland contain uninsured motorist coverage. In Pennsylvania Nat'l Mut. v. Gartelman, 288 Md. 151, 157, 416 A.2d 734, 737 (1980), we explained that "[t]he primary purpose of this requirement is to assure financial compensation to the innocent victims of motor vehicle accidents who are unable to recover from financially irresponsible uninsured motorists." Indeed, the enactment of § 541 and the related uninsured motorist provisions of Art. 48A reflect a substantial, legislatively-mandated change in "the public policy of this State with regard to motor vehicle insurance and reparations for damages caused by motor vehicle accidents." Jennings v. Government Employees, 302 Md. 352, 357, 488 A.2d 166, 168 (1985). Cognizant of this change, we have consistently invalidated "conditions or limitations in an uninsured motorist endorsement, which provide less than the coverage required by the statute...." Nationwide Mutual Ins. v. Webb, 291 Md. 721, 730, 436 A.2d 465, 471 (1981) (invalidating "consent to sue" clause); see also Jennings, supra, 302 Md. at 358-359, 488 A.2d at 169 (invalidating household exclusion); Reese v. State Farm Mut. Auto Ins., 285 Md. 548, 555, 403 A.2d 1229, 1233 (1979) (invalidating policy requirement that insured must secure a judgment against tortfeasor before seeking to enforce insurance contract against the insurer).

A corollary principle in our construction of Art. 48A is that we will not imply exclusions nor recognize exclusions beyond those expressly enumerated by the legislature. See e.g., Jennings, supra, 302 Md. at 359, 488 A.2d at 169-170; Gartelman, supra, 288 Md. at 160-161, 416 A.2d at 739; Parsons v. Erie Insurance Group, 569 F.Supp. 572, 578 (D.Md.1983). Section 541(c)(2)(i) and (ii) do authorize two express exclusions from mandatory minimum uninsured motorist coverage. No territorial exclusion or limitation, however, is evident. Indeed, § 541(c) states succinctly that it requires insurers to provide coverage for damages "which the insured is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injuries sustained in an accident arising out of the ownership, maintenance or use of such uninsured motor vehicle."

Despite all this, as we have seen, Pennsylvania General insists that § 243H(a)(1) authorizes an exclusion for phantom vehicle non-impact claims when the...