Payne v. Erie Ins. Exch.
| Decision Date | 30 March 2015 |
| Docket Number | No. 38, Sept. Term, 2014.,38, Sept. Term, 2014. |
| Parties | David PAYNE, et ux. v. ERIE INSURANCE EXCHANGE, et al. |
| Court | Court of Special Appeals of Maryland |
Thomas W. Farrington (Kensington, MD), on brief, for petitioners.
Howard R. Meinster (Michael J. Budow, Budow and Noble, P.C., Bethesda, MD; Timothy E. Howie, Hartel, Kane, DeSantis & Howie, LLP, Beltsville, MD), on briefs, for respondents.
Argued before BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, McDONALD and WATTS, JJ.
Automobile insurance policies in Maryland cover persons named in the policy—the named insured—with respect to the vehicles identified in the policy. Coverage under a policy also can extend to some extent to other vehicles driven by the named insured and to other persons who drive the vehicles identified in the policy. The part of the policy that extends coverage to other persons is sometimes called the “omnibus clause.” In particular, an omnibus clause may extend insurance coverage to drivers who use a vehicle with the permission of the named insured.
But what if the person with permission to use the car—the “first permittee”—enlists someone else to drive the car for the benefit of the first permittee? And what if that driver has previously been forbidden to drive the car by the named insured? Under what circumstances might an omnibus clause extend coverage to that driver as a “second permittee”?
Prior appellate decisions have identified alternative scenarios under which an omnibus clause covers the operation of the vehicle on behalf of, and for the benefit of, a first permittee by a driver other than the first permittee. We hold that the omnibus clause in the policy at issue in this case would extend coverage to a second permittee who drove the car for the benefit of the first permittee at her request, regardless of whether the first permittee happened to be physically in the car at that time. The omnibus clause did not extend coverage to that driver, however, when he operated the car for a purpose other than that requested by the first permittee.
Maryland's compulsory motor vehicle insurance law makes automobile liability insurance a prerequisite to the registration of a motor vehicle in Maryland. Maryland Code, Transportation Article, §§ 17–103, 17–104. The law is designed to ensure that “those who own and operate motor vehicles registered in the State are financially able to pay compensation for damages resulting from motor vehicle accidents.” Enterprise Leasing Co. v. Allstate Insurance Co., 341 Md. 541, 549, 671 A.2d 509 (1996) (citation and internal quotation marks omitted). The public policy underlying the law “is to give innocent third parties a source of private sector insurance funds from which to obtain compensation for their injuries.”
Enterprise Leasing Co., 341 Md. at 548–49, 671 A.2d 509. While insurance is linked to the registration of a vehicle and the law thus may be characterized as “vehicle-based,”1 policies typically provide coverage for specified individual drivers, sometimes referred to as the “named insured.”
Liability coverage is extended to certain other drivers of the insured vehicle by virtue of a policy provision known as the “omnibus clause.”2 Although there is no statutory requirement that a policy include an omnibus clause, most policies contain one. A. Janquitto, Maryland Motor Vehicle Insurance (3d ed.2011), § 7.7 at 195. The clause usually extends coverage to designated categories of potential drivers of the insured vehicle, including family members and permissive users of the vehicle. Id. at 196, 671 A.2d 509. The extent to which a permissive user may authorize another individual to drive the vehicle and be covered by means of the omnibus clause of the policy has generated a number of reported appellate decisions. The facts of this case pose yet another factual scenario.
At the time of the accident in February 2008 giving rise to this case, Respondents Alan and Maureen Dwyer lived in Cheverly in Prince George's County. Also resident in their household was their 34–year old daughter, Karen Dwyer, and her three children. The Dwyers provided support for Karen, who was disabled as a result of lupus, and their grandchildren, two of whom attended a school a few blocks from their residence. At the time, Karen was in a relationship with the father of her children, Ameen R. Abdulkhalek.
Alan Dwyer owned a 1995 Subaru Legacy. Karen Dwyer was the primary driver and had unrestricted use of the vehicle. Mr. Dwyer, however, had forbidden Mr. Abdulkhalek to drive the car. The Subaru was insured by a policy in Mr. Dwyer's name with Respondent Erie Insurance Exchange (“Erie”). That policy included an omnibus clause in the section on liability coverage that read as follows:
(boldface in original). The policy elsewhere defined “you” and “your” as referring to the named insured identified in the declarations page of the policy. The policy defined the term “relative” to include a resident of the household related to the named insured by blood, marriage or adoption.
On the afternoon of February 11, 2008, Karen Dwyer had fallen ill when it was time to pick up two of her children from school. Instead of going to the school for the children as she usually did, she gave Mr. Abdulkhalek the keys to the Subaru and asked him to retrieve the children—a two-minute drive from the home. According to Mr. Abdulkhalek, he then drove to a gas station on Route 202 before heading to the school. The record does not reveal the reason for Mr. Abdulkhalek's trip to the gas station. According to Mr. Abdulkhalek, after stopping at the gas station, he made a U-turn on Route 202 and, as he approached a stoplight, collided with a car occupied by Petitioners David and Claudia Payne. Had he driven straight to the school, he would not have been on Route 202.
In October 2010, the Paynes filed a tort action against Mr. Abdulkhalek, the Dwyers, and the Paynes' own automobile insurer, GEICO General Insurance (with respect to uninsured /underinsured motorist benefits). Case No. CAL 10–34352 (Prince George's County Circuit Court). A question arose as to whether any liability of Mr. Abdulkhalek was covered by the Erie insurance policy relating to the Subaru. On November 23, 2011, the Paynes filed in the Circuit Court for Prince George's County a complaint for declaratory judgment naming the Dwyers, Mr. Abdulkhalek, Erie, and GEICO as defendants and seeking a determination as to whether coverage was afforded to Mr. Abdulkhalek by the Erie policy in connection with the accident. Case No. CAL 11–34091 (Prince George's County Circuit Court). The complaint expressly invited the court to resolve the declaratory judgment action on cross motions for summary judgment. The tort action was stayed pending resolution of the insurance coverage question in the declaratory judgment action.
The Paynes and Erie filed cross-motions for summary judgment in the declaratory judgment action. After a hearing, the Circuit Court determined that Mr. Abdulkhalek's use of the vehicle was not covered under the omnibus clause of the policy. Based on that conclusion, the court granted Erie's motion for summary judgment, and denied the Paynes' motion for summary judgment.
The Paynes appealed, and the Court of Special Appeals affirmed. 216 Md.App. 39, 84 A.3d 212 (2014). The Court concluded that “the coverage of the policy did not extend to [Mr.] Abdulkhalek, the ostensible second permittee, who was expressly prohibited from driving the [Subaru], who nonetheless did so without the necessary presence of the first permittee, and who in any event exceeded the scope of any even implicitly permitted use.”Id. at 58, 84 A.3d at 223. The Paynes filed a petition for a writ of certiorari, which this Court granted.
The Circuit Court decided this case on cross motions for summary judgment. Under the Maryland Rules, a circuit court may grant a motion for summary judgment if there is no dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Maryland Rule 2–501(f). The court is to consider the record in the light most favorable to the non-moving party and consider any reasonable inferences that may be drawn from the undisputed facts against the moving party. Mathews v. Cassidy Turley Maryland, Inc., 435 Md. 584, 598, 80 A.3d 269 (2013). When parties file cross motions for summary judgment, the court must assess each motion on its own merits.
MAMSI Life & Health Ins. Co. v. Callaway, 375 Md. 261, 278, 825 A.2d 995 (2003). Although the court is considering the same record, it might draw different inferences from the same basic facts in considering the opposing motions. It is, of course, possible that a court would deny both motions in light of the different inferences drawn from the same facts. In other words, the resolution of cross motions for summary judgment is not a zero sum game. Both combatants may remain standing.
Because a circuit court's decision to award summary judgment turns on a question of law, not a dispute of fact, an appellate court is to review whether the circuit court was legally correct without according any special deference to the lower court's legal conclusions. Mathews, 435 Md. at 598, 80 A.3d 269. We thus consider the legal question at issue anew—or, in the Latin phrase, de novo.
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