O'QUINN v. MAIF

• Decision Date: 02 June 2004
• Docket Number: No. 0658,0658
• Citation: 157 Md. App. 214,850 A.2d 386
• Parties: Thomas O'QUINN v. MARYLAND AUTOMOBILE INSURANCE FUND, et al.
• Court: Court of Special Appeals of Maryland

850 A.2d 386

157 Md. App. 214

Thomas O'QUINN v. MARYLAND AUTOMOBILE INSURANCE FUND, et al.

No. 0658, Sept. Term, 2003.

Court of Special Appeals of Maryland.

June 2, 2004.

Salvatore J. Zambri (Thanos Basdekis, Regan, Halperin & Long, on brief), Washington, DC, for appellant.

Joseph J. Mulhern (Mulhern and Patterson, PC, on brief), Rockville, for appellee.

Argued by DAVIS, ADKINS, and ROBERT E. CAHILL, JR., (Specially Assigned) JJ.

ADKINS, J.

This appeal requires us to decide whether the vehicle that struck appellant Thomas O'Quinn was a "temporary substitute" for a vehicle insured by appellee Maryland Automobile Insurance Fund (MAIF), in which case the MAIF policy provided liability coverage. The Circuit Court for Prince George's County concluded that the vehicle was not a temporary substitute and granted summary judgment in favor of MAIF on O'Quinn's declaratory judgment action. We shall reverse that judgment.

FACTS AND LEGAL PROCEEDINGS

On August 8, 1998, while Thomas O'Quinn was walking in a parking lot, he was struck by a 1996 Ford Escort driven by Mosele Kabila. O'Quinn suffered severe leg injuries.

Averaging 150 miles each weekday, Kabila was an "independent contractor" for Washington Express, a courier service. In 1997, Kabila had purchased a high mileage 1988 Hyundai for $400, to use in this work. He was paid based solely on the number of routes he completed.

At the time of the accident, there was a $20,000 MAIF liability policy in effect on the Hyundai. But Kabila was not driving the Hyundai on the day of the accident because that car had broken down for the fifth time. The vehicle had been smoking and would stall out, requiring towing services on two occasions. Kabila garaged the Hyundai, which was not operable, making no plans to repair it.

Kabila rented the Escort two weeks after the Hyundai broke down, on June 10, 1998.¹ He wanted to buy the Escort, but did not have the money or the credit necessary to make the purchase. In order to establish credit, Kabila made rental payments on the vehicle every two weeks. Once he made a number of timely payments he could qualify to buy the Escort. At the time of the August 8 accident, then, Kabila was still renting the Escort. Kabila did not inform MAIF that he had the Escort until he actually purchased the vehicle in October 1998.

O'Quinn sued MAIF and Kabila in the Circuit Court for Prince George's County. He sought, inter alia, a declaration that the MAIF policy covered the Escort because it was a "temporary substitute" or "replacement" for the Hyundai described in the MAIF policy. MAIF denied coverage, citing Kabila's abandonment of the Hyundai and his use of the rented Escort for more than 30 days. Agreeing that there was no factual dispute regarding the "rent before the purchase" circumstances at the time of the accident, O'Quinn and MAIF filed cross-motions for summary judgment on the coverage issue. The court granted MAIF's motion and denied O'Quinn's. This timely appeal followed.

DISCUSSION

The MAIF liability policy defines as a "[c]overed automobile" either the vehicle described in the policy or any of the following:

3. an automobile that you acquire during the policy period provided that it:

(a) replaces an automobile owned by you and described in the Declarations; or

(b) is in addition to the automobile(s) described in the Declarations but only if:

(1) we insure all automobiles owned by you on the date the newly acquired automobile is delivered to you; and

(2) you notify us within thirty days following its delivery;

4. a temporary substitute automobile that you do not own, provided that you are using it with the permission of the owner as a substitute for an automobile described in the Declarations that has been withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;

5. any other automobile that you do not own, provided that it is being used by you with the permission of the owner and;

(a) it is not furnished for your regular use; and

(b) it is not owned by or furnished for the regular use of a member of your household other than your private chauffeur or domestic employee; and

(c) it is not rented to you for a period of more than thirty consecutive days. (Emphasis added.)

Maryland applies the principle of objective contract construction to insurance contracts.

In construing contracts of insurance, Maryland follows the general contract rule that the agreement should be viewed as a whole to determine the intention of the parties to the contract and the purpose which they sought to accomplish. When the provisions are not ambiguous, a court should enforce them according to their plain meaning. If, however, the terms of the contract are ambiguous, the ambiguity shall be resolved against the drafter of the policy and in favor of the insured.

St. Paul Fire & Marine Ins. Co. v. Nationwide Mut. Ins. Co., 79 Md.App. 734, 737-38, 558 A.2d 1244 (1989). "Although Maryland law does not construe insurance policies as a matter of course against the insurer, when a term in an insurance policy is found to be ambiguous, the court will construe that term against the drafter of the contract which is usually the insurer." Mamsi Life & Health Ins. Co. v. Callaway, 375 Md. 261, 279-80, 825 A.2d 995 (2003).

As grounds for their contradictory conclusions regarding the coverage afforded by the policy, O'Quinn and MAIF both cite the undisputed inoperability of the Hyundai, its "withdraw[al] from normal use as a result of its breakdown," Kabila's use of the Escort as a substitute for the Hyundai without notice to MAIF, his rental of the Escort for more than 30 days, and his purchase of the Escort as a permanent replacement after the accident. Each side agrees that the material facts are not in dispute; they disagree only about whether the policy provides coverage in these undisputed circumstances. Thus, their cross-motions and arguments reveal that summary judgment on the coverage question raised in this declaratory judgment action is a question of law for the court. When there is no genuine factual dispute, we review the grant of summary judgment in a declaratory judgment action concerning the scope of insurance coverage to determine whether the insurer was entitled to judgment as a matter of law. See St. Paul Fire & Marine Ins. Co.,79 Md.App. at 737,558 A.2d 1244; Lee R. Russ, Couch on Insurance § 117:68 (3d ed. database updated through Dec. 2003)("Couch").

O'Quinn contends that the circuit court erred when it ruled that the Escort was not covered by the MAIF policy, either as a "temporary substitute" under section 4 of the "covered automobile" definition, or as a "replacement" vehicle under section 3(a).² MAIF counters that Kabila's rental of the Escort for more than 30 days, without notice to MAIF, excluded the Escort from coverage. More specifically, MAIF argues that subsection 3(a) does not apply because Kabila did not notify MAIF within 30 days that he was using the Escort and he did not own the Escort. Section 4 does not apply in MAIF's view, because Kabila rented the Escort for more than 30 days, planning to buy it, so that his use of it was not "temporary."

We shall assume arguendo that the Escort is not a covered automobile within the meaning of subsection 3(a).³ We nevertheless conclude that the Escort was a "temporary substitute automobile" within the coverage afforded by section 4.

The so-called "substitution" provision is concerned with the situation where the vehicle described in the policy becomes unavailable for use for any one of a number of specified reasons, and another vehicle, not owned by the insured, is temporarily used in its place. It is not necessary that the insured still own the original automobile at the time of the use of the temporary substitute taking the place of the "destroyed" car.

Couch, supra, § 117:61; see, e.g., McKee v. Exchange Ins. Ass'n, 270 Ala. 518, 120 So.2d 690, 693 (1960)

(substitute vehicle provision did not require insured to retain ownership of described vehicle). This type of "substitute coverage clause is for the benefit of the insured." Couch, supra, § 117:63. The MAIF policy language is identical to the current Insurance Services Office standard automobile policies for personal and business use. See id. at § 117:61.

As a threshold matter, we note that there is no debate that the rented Escort qualified as a "substitute" vehicle. We have held that, in the "covered automobile" definition of a liability policy, "[t]he term `substitute' connotes the replacement of one thing for another." St. Paul Fire & Marine Ins. Co., 79 Md.App. at 738-40, 558 A.2d 1244. And we have classified a rental car as a covered substitute under a substantively similar policy.

In St. Paul Fire & Marine Ins. Co., Patricia Caldwell rented a car after the vehicle described in her policy was damaged in an accident. She initially rented from the dealer who was repairing her car, but later arranged for a less expensive rental from Snappy Car Rental. The Snappy car was delivered to Caldwell's home. Caldwell drove the dealer car back to the dealer, while her housemate followed in the Snappy car. En route, the housemate was involved in an accident.

Snappy's insurer refused to provide a defense, claiming that the dealer rental car, rather than the Snappy car, was the only "temporary substitute" for the insured vehicle at the time of the accident. We agreed, holding that "[t]he problem in the instant case arose because at the time of the accident, Caldwell had rented two vehicles to replace the one vehicle covered by her insurance policy" and "[b]oth rental vehicles were on the road at the same time." Id. at 740, 558 A.2d 1244. We explained that,

[w]hen Caldwell rented the car from [the dealer], it is clear that her insurance coverage ... extended to that vehicle. If Caldwell had returned the [dealer] car and thereafter rented another vehicle, that second vehicle would have been covered

...