Universal Underwriters v. Lowe

• Decision Date: 08 November 2000
• Docket Number: No. 2431
• Citation: 761 A.2d 997,135 Md. App. 122
• Parties: UNIVERSAL UNDERWRITERS INSURANCE COMPANY v. Melody LOWE, et al.
• Court: Court of Special Appeals of Maryland

761 A.2d 997

135 Md. App. 122

UNIVERSAL UNDERWRITERS INSURANCE COMPANY v. Melody LOWE, et al.

Nos. 2431, Sept. Term, 1999.

Court of Special Appeals of Maryland.

November 8, 2000.

Don F. Ryder, Jr. (Martell, Donnelly, Grimaldi & Donnelly, on the brief), Rockville, for appellant.

Alan R. Siciliano (DeCaro, Doran, Siciliano, Gallagher & DeBlasis, L.L.P., on the brief), Lahnam, for appellees.

Argued before EYLER, ROBERT L. KARWACKI (Retired, specially assigned) and ROBERT F. FISCHER (Retired, specially assigned), JJ. ROBERT F. FISCHER, Judge (Retired, Specially Assigned).

The appeal before us stems from a motor vehicle accident that occurred on May 10, 1996, in which a car driven by Melody Lowe ("Ms. Lowe") collided with a car driven by Nicole Parsons. We are asked, in essence, to determine which of two insurers, if either, must provide coverage to Ms. Lowe.

FACTS

Nicole Parsons and her husband, Michael Parsons, filed suit in the Circuit Court for Anne Arundel County against: Ms. Lowe; Ms. Lowe's father, Hubert Lowe;¹ and the Parsons' own insurer, State Farm Mutual Automobile Insurance Company² ("State Farm").

Hubert Lowe sold an automobile dealership to Bob Bell Automotive Group, Inc. ("Bell") in August of 1995. Pursuant to the sale agreement, Bell provided two cars to Hubert Lowe and his wife, Rebecca Lowe ("Mrs. Lowe"), for their personal use. The cars were still owned by Bell. Ms. Lowe was driving one of those vehicles when the accident occurred.

Bell's vehicles were insured by Universal Underwriters Insurance Company ("Universal"). In the declarations sheets to Bell's policy with Universal, Hubert and Rebecca Lowe were listed as "Other Insureds" for the following parts of the policy:

—"Auto Inventory Unicover Coverage Part 300," which, in pertinent part, provided coverage for any loss of or to any covered auto unless the auto was furnished or available for the regular use of an individual named in the declarations sheets as an insured or a family member of that individual. See Universal Policy, Part 300 at 9-14 and Endorsement No. 11 at 79-80.

—"Garage Unicover Coverage Part 500," which provided coverage for injuries that resulted from garage operations or auto hazard, and which extended, in certain circumstances to be discussed in more detail, infra, to autos "furnished [by Bell] for the use of any person or organization." See Universal Policy, Part 500 at 32-41.

Hubert and Rebecca Lowe were listed as "Named Insureds" under:

"Property Unicover Coverage Part 330," which provided coverage for loss to property located at various Bell locations. See Universal Policy, Part 330 at 15-25.

The Lowes were not listed as "Named Insureds" or "Other Insureds" under "Basic Auto Unicover Coverage Part 900." The only entity listed as insured under that part was Bob Bell Leasing, Inc. ("Bell Leasing"), which was identified as a "Named Insured." In pertinent part, Part 900 provided coverage for any injury resulting from an occurrence arising out of the ownership, maintenance, use, loading, or unloading of a vehicle owned or leased by Bell Leasing. See Universal Policy, Part 99 at 47. Part 900 specifically provided, however, that any person using such a vehicle within the scope of Bell Leasing's permission was insured under the policy.³ See id. at 49.

At the time of the accident, Melody Lowe resided in the household of her parents. Hubert and Rebecca Lowe owned several vehicles other than those provided by Bell, and those other vehicles were insured by Brethren Mutual Insurance Company ("Brethren"). Although Brethren began providing a defense to Ms. Lowe, it eventually denied coverage. Ms. Lowe then claimed coverage under the Universal policy.

Universal, in response, filed a declaratory judgment action in the Circuit Court for Anne Arundel County against Melody Lowe, Nicole and Michael Parsons, Brethren, and State Farm⁴. Universal averred that the Brethren policy "may have provided coverage to Melody Lowe for the claims of Nicole and Michael Parsons," and that, in any event, "at the time of the collision there was also in effect an insurance policy issued by State Farm to Nicole and Michael Parsons providing uninsured and underinsured motorist coverage to them for injuries arising out of the collision." Universal asked that the court declare that it "has no duty under its policy ... to provide a defense to Melody Lowe ... or to indemnify her for, or pay, any judgment which may be entered against her...." Ms. Lowe moved for summary judgment. In her written motion, she asserted, in essence, that there was no dispute that she had her parents' permission to use the car on the day the accident occurred. She concluded that she was therefore insured under Part 900 of the Universal policy, and asked the court to declare that, as a matter of law, Universal was required to defend and indemnify her. Ms. Lowe attached to her motion copies of the Universal policy and Universal's response to her request for admissions of fact. In the response, Universal admitted, inter alia, that Ms. Lowe had her parents' permission to use the car at the relevant time.

Universal opposed Ms. Lowe's motion for summary judgment and filed a cross-motion for summary judgment.⁵ In its motion, Universal contended that Hubert and Rebecca Lowe were not insured under Part 900 of the policy and that the relevant coverage part was Part 500. It asserted that Bell had expressly forbidden Hubert and Rebecca Lowe to permit anyone else to use the automobile, and that Melody was therefore not covered under Part 500. Universal attached to its motion the affidavit of Bell general manager Michael Fitzpatrick, affirming that he had met with Hubert Lowe in August of 1995 and again in March of 1996 and had both times informed Mr. Lowe that "only he and his wife had permission to drive the automobiles being furnished to them pursuant to the sale of his automobile agency to Mr. Bell."

A hearing was held, and the parties reiterated the positions set forth in their memoranda. Counsel for Ms. Lowe contended that, on the face of the Universal policy, Hubert and Rebecca Lowe had authority, under both Part 900 and Part 500, to permit Melody Lowe to use the automobile. Ms. Lowe's counsel posited that the Fitzpatrick affidavit was inadmissible in that, in counsel's view, it was "extrinsic evidence ... beyond the four corners of the insurance policy." In the event that the court believed such "extrinsic" evidence was admissible, counsel submitted to the court a letter dated August 26, 1995, which was apparently prepared for Hubert Lowe's signature but was never signed. If signed, the letter would have reflected Mr. Lowe's agreement that only he and Rebecca Lowe were to use the Bell vehicles. Counsel did not explain who prepared the unsigned letter or how it controverted the Fitzpatrick affidavit.

The court subsequently issued an order by which it resolved, in Ms. Lowe's favor, that portion of the declaratory judgment action regarding whether Universal was required to defend and indemnify Ms. Lowe. The order stated:

This matter came before this Honorable Court on February 8, 1999, for a hearing on the Plaintiff's [(Universal's)] Motion for Summary Judgment and the Defendant's [(Ms. Lowe's)] Motion for Summary Judgment. Having considered the arguments of both parties, it is this 9th day of February, 1999, by the authority of the Circuit Court for Anne Arundel County, State of Maryland.

ORDERED that the Plaintiff's Motion for Summary Judgment is DENIED; and it is further,

ORDERED that the Defendant's Motion for Summary Judgment [is] GRANTED; and it is further

ORDERED that judgment be entered in favor of the Defendant.

(Footnote omitted.) The only explanation for the court's decision was contained in a footnote, which provided:

Maryland Rule 2-501(c) states that "[t]he court shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." In the present case there is no dispute as to the facts. Therefore, the only issue is whether either party is entitled to judgment as a matter of law.

The primary consideration in this case is whether the Defendant, Melody Lowe, was insured by the Plaintiff at the time of her accident. Having reviewed the terms of the policy, this Court finds that the Defendant, Melody Lowe, was an insured and entitled to indemnification to the extent provided for in the policy. Consequently, summary judgment in favor of the Defendant is appropriate.⁶

Brethren also moved for summary judgment in the declaratory judgment action. Brethren pointed out that Hubert and Rebecca Lowe were the named insureds under its policy, and that the automobile in question was neither owned by Hubert and Rebecca Lowe nor listed in the declarations to the Brethren policy as a covered auto. Brethren further pointed out that the policy specifically excluded coverage for any automobile that was not a covered auto but was "furnished or available" for the "regular use" of the named insureds, Hubert and Rebecca Lowe. Brethren argued that, because there was no dispute that the car Melody Lowe was driving was furnished for the regular use of Hubert and Rebecca Lowe, Brethren was not required to provide coverage as a matter of law.

Universal opposed Brethren's motion, arguing, in essence, that because Melody Lowe was a family member of a named insured rather than a named insured herself, she was not subject to the exclusion for automobiles furnished or available for the regular use of named insureds.⁷ A hearing was held on November 18, 1999, and the court granted summary judgment in Brethren's favor. In the resulting order, the court explained:

There is no dispute that the vehicle being driven by Melody Lowe was not an insured vehicle under the Brethren policy, nor is there any dispute that the

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