Stickley v. State Farm Fire & Casualty Co.

• Decision Date: 25 April 2013
• Docket Number: Sept. Term, 2012.,No. 48,48
• Citation: 65 A.3d 141,431 Md. 347
• Parties: Joan J. STICKLEY v. STATE FARM FIRE AND CASUALTY COMPANY.
• Court: Maryland Court of Appeals

431 Md. 347

65 A.3d 141

Joan J. STICKLEY

v.STATE FARM FIRE AND CASUALTY COMPANY.

No. 48, Sept. Term, 2012.

Court of Appeals of Maryland.

April 25, 2013.

Gary R. Alexander, (S. Whitney Cleaver of Alexander & Cleaver, P.A., Fort Washington, MD), on brief, for Petitioner.

Michael J. Budow, (Richard E. Schimel of Budow and Noble, P.C., Bethesda, MD), on brief, for Respondent.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, BARBERA and McDONALD, JJ.

GREENE, J.

Joan Stickley (“Petitioner”) was a passenger in a motor vehicle accident, in which the driver of the vehicle, her husband, was killed, and in which she suffered serious injuries. At the time of the accident, Petitioner and her husband had a motor vehicle liability insurance policy with State Farm Mutual Automobile Insurance Company (“State Farm Auto”), and an umbrella policy with State Farm Fire and Casualty Company (“Respondent”) (collectively, “State Farm”). The umbrella policy contained a household exclusion,¹ which formed the basis for State Farm's denial of Petitioner's claim under the umbrella policy. Petitioner challenges the household exclusion's validity in light of Maryland Code (1997, 2002 Repl.Vol., 2005 Cum.Supp.), § 19–504.1 of the Insurance Article (“ § 19–504.1”), ² which requires an insurer to offer liability coverage for claims of family members in the same amount of liability coverage for claims of nonfamily members under a “policy or binder of private passenger motor vehicle liability insurance.” Petitioner claims that she and her husband were never offered equal coverage for family members under their umbrella policy, which contained motor vehicle coverage. Therefore, according to Petitioner, the household exclusion in their umbrella policy is void.

The issue before this Court is the proper interpretation of the phrase “private passenger motor vehicle liability insurance” as contained in § 19–504.1. Specifically, we are asked whether an umbrella policy fits within that definition such that an insurer must offer an insured liability coverage for family members in the same amount as the liability coverage for nonfamily members. We shall hold that the umbrella policy does not fit within the definition of “private passenger motor vehicle liability insurance” as contained in § 19–504.1.

FACTUAL AND PROCEDURAL BACKGROUND

On March 19, 2008, Petitioner was riding as a passenger in a vehicle driven by her husband when, according to Petitioner, her husband negligently drove into an intersection and was struck by another vehicle. As a result of the accident, Petitioner'shusband was killed and Petitioner suffered serious injuries.

At the time of the accident, Petitioner and her husband had several policies of insurance issued by State Farm. They had a motor vehicle liability policy with coverage of $100,000 per person and $300,000 per accident with State Farm Auto. Mrs. Stickley and her husband also had a Personal Liability Umbrella Policy with personal liability and uninsured motorist coverage of $2,000,000 with Respondent, a subsidiary of State Farm Auto. According to Petitioner, the Stickleys purchased both policies from the same State Farm agent.

The umbrella policy was originally purchased in the 1980's and issued by State Farm. It provided coverage for bodily injury, personal injury,³ and property damage. On the “Declarations Page,” the umbrella policy required the insured to maintain specific underlying insurance, including automobile liability insurance. The umbrella policy also included the following language under the “Exclusions” and “Definitions” sections, respectively:

EXCLUSIONS

There is no coverage under this policy for any:

13. bodily injury or personal injury to any insured as defined in part a. or b. of the definition of insured, including any claim made or suit brought against any insured to share damages with or repay someone else who may be obligated to pay damages because of such bodily injury or personal injury [.]

DEFINITIONS

6. “insured” means:

a. you and your relatives whose primary residence is your household;

b. any other human being under the age of 21 whose primary residence is your household and who is in the care of a person described in 6.a[.]

12. “relative” means any person related to you by blood, adoption, or marriage.

(Emphasis in original).

After the accident, Petitioner filed a claim under their automobile liability policy for injuries and losses she sustained as a result of the March 2008 accident. State Farm offered Petitioner the full $100,000 in liability coverage provided under the policy. Petitioner also made a claim for bodily injury under the umbrella policy. State Farm denied the claim, however, due to the household exclusion included in the policy which denied payment of damages for bodily injury or personal injury resulting from the negligence of another insured household member.

On February 1, 2010, Petitioner filed a Complaint for Declaratory Judgment in the Circuit Court for Montgomery County. Petitioner sought to have the household exclusion in the umbrella policy declared void. To support her claim, Petitioner cited § 19–504.1, enacted in 2004, that requires an insurer to offer its insured, under a policy or binder of private passenger motor vehicle liability insurance, liability coverage for claims made by family members in the same amount as liability coverage for claims made by nonfamily members. The statute only applies when the liability coverage in the private passenger motor vehicle liability insurance policy exceeds the State-mandated minimum amount of coverage.⁴ Petitioner argued that their Personal Liability Umbrella Policy is private passenger motor vehicle liability insurance, and “the exclusion, which was included in the policy prior to 2004 and never signed off [ ] by the insureds, [is therefore] void” in light of the statute. Subsequently, both Petitioner and Respondent filed Cross–Motions for Summary Judgment.

On March 30, 2011, a hearing was held in the Circuit Court for Montgomery County. The trial judge ruled in favor of State Farm and granted its Motion for Summary Judgment. Finding “absolutely no ambiguity in Section 19–504.1 [,]” the judge stated “that the umbrella policy in this case is not a part of, referred to, connected to, or the same as, a private passenger motor vehicle liability insurance [policy].” The trial judge reasoned:

The Court interprets and reads 19–504.1 literally, and it indicates that a policy ... it doesn't say where there is other coverage. It says, a policy of private passenger motor vehicle liability insurance, liability coverage for claims made by family members, in the same amount as liability coverage for claims made by non-family members under the policy. That is, the insurer shall offer. And in this case, the [$]100,000 pertains to her the same as it would anyone else.

In the particular case of the umbrella, that's a separate animal. It has a lot of coverage. It covers the entire waterfront, but it doesn't make it a private passenger motor vehicle liability insurance coverage policy. That's so specific that the Court doesn't even have to strain to guess. It defies credulity to say that it's ambiguous. It's about as clear as it can be.

The judge further indicated that the General Assembly could have linked umbrella policies and motor vehicle policies together by specifically referencing “any type of policy which affords coverage in any motor vehicle accident” in the statute. As the judge noted, however, the statute was not written that way, and “[o]ur job is to look at what the law says.”

Petitioner appealed the trial court's ruling to the Court of Special Appeals. The intermediate appellate court issued its reported opinion affirming the Circuit Court's ruling. Stickley v. State Farm Fire & Cas. Co., 204 Md.App. 679, 682, 42 A.3d 696, 697 (2012). According to the intermediate appellate court, the General Assembly enacted the statute at issue, § 19–504.1, “to ensure that, when obtaining a policy of private passenger motor vehicle liability insurance with limits in excess of the statutory minimum, the insured would have a right to obtain that policy without a household exclusion.” 204 Md.App. at 696, 42 A.3d at 706. In applying the “public policy considerations leading up to the enactment of the statute” the court reasoned that interpreting the phrase “private passenger motor vehicle liability insurance” as applying to any policy that contains, even in part, some motor vehicle liability insurance, “would be a colossal leap [.]” 204 Md.App. at 696–98, 42 A.3d at 706–07. Further, the court noted the title given to Article 19, Subtitle 5, “ Motor Vehicle Insurance—Primary Coverage” (emphasis added), and analyzed the text of other sections in the Subtitle to support the conclusion that § 19–504.1 must have referred to primary policies alone, and not umbrella policies. 204 Md.App. at 695, 698–700, 42 A.3d at 705, 707–08. Finally, in the court's view, “[t]he coverage under a policy of ‘private passenger motor vehicle liability insurance’ focuses on the scheduled motor vehicles, which is also the focus of the mandatory insurance requirements[,] [whereas] [t]he coverage under an umbrella policy focuses on the insured.” 204 Md.App. at 700, 42 A.3d at 708.

Subsequently, Petitioner asked that we review the case. We granted certiorari in Stickley v. State Farm Fire & Cas. Co., 427 Md. 606, 50 A.3d 606 (2012), to answer the following questions:

1. Whether the Court of Special Appeals erred in concluding that Insurance Code § 19–504.1 does not apply to excess of umbrella policies.

2. Whether a personal liability umbrella policy that includes motor vehicle liability insurance constitutes “private passenger motor vehicle liability insurance” as contemplated by Insurance Code § 19–504.1.

DISCUSSION

I.

The issue in the present case is the correct interpretation of § 19–504.1, which provides:

§ 19–504.1. Coverage for claims of family...