Maryland Automobile Ins. Fund v. Baxter

• Decision Date: 09 June 2009
• Docket Number: No. 0530, September Term, 2008.,0530, September Term, 2008.
• Citation: Maryland Automobile Ins. Fund v. Baxter, 973 A.2d 243, 186 Md. App. 147 (Md. App. 2009)
• Parties: MARYLAND AUTOMOBILE INSURANCE FUND v. Conchita BAXTER, et al.
• Court: Court of Special Appeals of Maryland

973 A.2d 243

186 Md. App. 147

MARYLAND AUTOMOBILE INSURANCE FUND v.Conchita BAXTER, et al.

No. 0530, September Term, 2008.

Court of Special Appeals of Maryland.

June 9, 2009.

George W. Fanshaw, Timonium (Gloria W. Shelton, Annapolis, Douglas F. Gansler, Atty. Gen., on the brief, Baltimore), for appellant.

Andrew Janquitto(Mudd, Harrison & Burch, LLP, on the brief), Towson, for appellee.

Panel: SALMON, DEBORAH S. EYLER and GRAEFF, JJ.

SALMON, Judge.

The main question presented in this appeal is whether Maryland law requires an automobile insurer to provide uninsured motorist coverage to an uninsured stranger/pedestrian who is struck by an automobile driven by a person excluded under the insurer's policy.We shall answer that question in the negative, as did the Circuit Court for Baltimore City.

I.

On January 21, 2007, Teresa Ann Palugi owned a 1998 Jeep Grand Cherokee that she insured with Interstate Automobile Insurance Company("Interstate").When Mrs. Palugi applied for insurance, Interstate discovered that William Palugi, her husband, did not have a valid driver's license.Because Interstate's underwriting rules do not allow it to insure someone without a valid driver's license, Mrs. Palugi agreed to exclude her husband as an insured.Accordingly, the Interstate policy was issued with a "named driver's exclusion" that listed William Palugi as an excluded driver.Interstate's policy read, in pertinent part, as follows:

When a motor vehicle covered under the policy is operated by an excluded operator or user, ALL COVERAGE provided by the [Interstate] policy is EXCLUDED for the following:

1.The excluded operator or user;

2.The vehicle owner(s);

3.Family members residing in the household of the vehicle owner(s); and

4.Any other person, except for Personal Injury Protection benefits and Uninsured Motorist coverage if such insurance is not available to that other person under another motor vehicle policy.

This exclusion applies whether or not the operation of the motor vehicle by the named excluded operator or user was with the express or implied permission of an insured person.

(Emphasis added.)

On January 21, 2007, Stephanie Scott was struck and killed by the 1998 Jeep Grand Cherokee owned by Mrs. Palugi.At the time of the accident, the Jeep was being driven by William Palugi, the excluded driver.Ms. Scott did not know the Palugis prior to the accident.Her only contact with the Palugis was that she was struck by a vehicle owned by Mrs. Palugi and driven by William Palugi.

On January 11, 2008, Conchita Baxter, as personal representative of Ms. Scott's estate, and Shirley Goldsborough, Ms. Scott's mother, filed a complaint in the Circuit Court for Baltimore City asking the court to decide whether they were entitled to coverage for the January 21, 2007 accident under the policy issued by Interstate, or whether they were entitled to recovery from the Maryland Automobile Insurance Fund.According to the complaint, the death of Ms. Scott was solely caused by the negligence of William Palugi.

The Maryland Automobile Insurance Fund (MAIF) was named as a defendant because the uninsured division of MAIF is required to investigate, pay, and otherwise administer claims by Maryland residents who are involved in motor vehicle accidents with uninsured motorists and who have no other source of recovery.The type of claims that can be made against the uninsured division of MAIF are ones that arise when an accident is caused by an unidentified motorist, a disappearing motorist, or a known uninsured motorist.

Both MAIF and Interstate filed motions for summary judgment.The circuit court granted Interstate's motion and denied the motion filed by MAIF.In a memorandum and order, the circuit court declared the rights of the parties as follows:

The plaintiffs' decedent was not an insured under [Interstate's] policy and nothing in the policy or the statutes relied upon by MAIF entitled plaintiffs to recover under the UM coverage of that policy.See, Erie v. Ins. Exchange v. Reliance Ins. Co. [Erie Ins. Exchange v. Reliance Ins. Co.],63 Md.App. 612, 493 A.2d 405(1985).The fact that the deceased was in contact with the insured automobile at the time of collision does not qualify her as a person "occupying" the automobile.MAIF relies upon the language in the exclusions and exceptions to exclusions in the policy and the statutes.To be excluded one must first be included, in this case as an insured.One can not become an insured under [a] policy or statutory language which provides for exclusions from coverage or exceptions to exclusions.See e.g.American Home Assurance v. Osbourn,47 Md.App. 73 at 82, 422 A.2d 8(1981)[1980].

Ms. Baxter,¹ along with MAIF, filed a timely appeal to this Court.

II.

In its opening brief, MAIF did not contend that coverage was provided to the plaintiffs under the terms of Interstate's policy.Instead, it contended only that the terms of Interstate's policy conflicted with provisions of the Maryland Uninsured Motorist Statute as codified in the Insurance Article of the Maryland Code Ann.(2006 Repl.Vol., 2008 Supp.).²Ms. Baxter makes a similar contention but she also argues, in the alternative, that the Interstate policy, as written, did provide coverage to Ms. Scott.In its reply brief, MAIF asserted for the first time that the insurance policy issued by Interstate did provide coverage, albeit for a different reason than that advanced by Ms. Baxter.

III.

MAIF's Claim That Interstate's Policy, as Written, Provided Coverage to Ms. Scott or Persons Claiming Through Her.

Before setting forth the pertinent parts of Interstate's policy, it is important to bear in mind that uninsured motorist coverage is first-party coverage, i.e., a promise by an insurer "to pay its own insured, rather than a promise to pay some third party."Bausch & Lomb, Inc. v. Utica Mutual Ins. Co.,355 Md. 566, 583, 735 A.2d 1081(1999)(quotingReese v. State Farm Mutual Auto. Ins.285 Md. 548, 552, 403 A.2d 1229(1979)).To make a successful uninsured motorist ("UM") claim, the plaintiff must prove either: 1) that he or she was insured under the terms of the policy issued by the defendant's insurance company or 2) that if the insurance policy written by the defendant insurer had provided the coverage required by section 19-509 of the Insurance Article, he or she would have been insured.SeeBlue Bird Cab Co., Inc., v. Amalgamated Casualty Insurance Co.,109 Md.App. 378, 388, 675 A.2d 122(1996)(citingJennings v. GEICO,302 Md. 352, 356, 488 A.2d 166(1985)).

The UM coverage provided by Interstate's policy was set forth in part C, which read in pertinent part:

INSURING AGREEMENT

"We" will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of:

1."Bodily injury" sustained by an "insured" and caused by an accident: and

2."Property damage" caused by an accident....

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle."

The following definitions apply to part C:

* * *

"Insured" means:

1."You" or any "family member";

2.Any other person "occupying""your covered auto"; or

3.Any person for damages that person is entitled to recover because of "bodily injury" to which this coverage applies sustained by a person described in 1. or 2. above.

In insurance parlance, the three categories of insured just mentioned are often called Clause 1, 2 and 3 insured.SeeMundey v. Erie Insurance Group,396 Md. 656, 667-68, 914 A.2d 1167(2007).

Mrs. Palugi was the named insured in Interstate's policy.Ms. Scott was clearly not a Clause 1 insured.She was not "You," which is defined in the policy as meaning the named insured and the named insured's spouse.Moreover, Ms. Scott was not a "family member," which the policy defines as a person related by blood, marriage or adoption to the named insured or the named insured's spouse.

In their opening briefs, neither Ms. Baxter nor MAIF contended that Ms. Scott was a Clause 1, Clause 2, or Clause 3 insured.More specifically, neither Ms. Baxter nor MAIF contended that Ms. Scott was "occupying" the Jeep at the time the accident occurred.The policy defines "occupying" as "in or upon or entering into or alighting from."In its reply brief, however, MAIF contends that Ms. Scott was "occupying" the Jeep that struck her.It devotes only two sentences in support of that argument, saying: "Ms. Scott was crossing Greenmount Ave when she was struck by one of the vehicles listed in the policy.Since she was struck by the vehicle, she certainly was upon the vehicle at the time of the accident."

Ordinarily, we will consider as waived any issue not raised by an appellant in its opening brief.SeeOak Crest Village, Inc. v. Murphy,379 Md. 229, 241-42, 841 A.2d 816(2004)("An appellant is required to articulate and adequately argue all issues the appellant desires the appellate court to consider in the appellant's initial brief.It is impermissible to hold back the main force of an argument to a reply brief and thereby diminish the opportunity of the appellee to respond to it.").

But even if MAIF had made its "occupying" argument in its initial brief, the argument would not succeed.See generally,R.P. Davis, Annotation, Scope of Clause of Insurance Policy covering injuries sustained while "in or on" or "in or upon" motor vehicle,39 A.L.R.2d 952 § 4(1955).

Although there are numerous cases in this country dealing with the meaning of the word "upon" in the context of a policy defining "occupying" in a manner similar to the definition set forth in Interstate's policy, MAIF cites no case (nor have we found one) from any jurisdiction supporting its contention that a pedestrian, who had no prior connection with the insured vehicle, was nevertheless "occupying" that vehicle simply because he or she...