Washington Metropolitan Area Transit Authority v. Bullock

• Decision Date: 01 September 1985
• Docket Number: No. 1281,1281
• Citation: 68 Md.App. 20,509 A.2d 1217
• Parties: WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY v. Jackson BULLOCK, et al. ,
• Court: Court of Special Appeals of Maryland

Page 20

68 Md.App. 20

509 A.2d 1217

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY v. Jackson BULLOCK, et al.

No. 1281, Sept. Term, 1985.

Court of Special Appeals of Maryland.

June 6, 1986.

Kevin J. McCarthy (Charles E. Gallagher, Jr. and O'Malley, Miles, McCarthy & Harrell, on brief), Upper Marlboro, for appellant.

Barry J. Dalnekoff (Joel L. Katz, Mark E. Mason and Katz & Dalnekoff, P.A. on brief), Annapolis, for appellee, Bullock.

Frank Collins (Oren D. Saltzman and Jay S. Engerman, on brief), Baltimore, for appellees, Queen and Dunscomb.

Argued before MOYLAN, WILNER and BISHOP, JJ.

WILNER, Judge.

Jackson Bullock was a claims adjustor employed by the Washington Metropolitan Area Transit Authority (WMATA). On the evening of September 10, 1982, while driving a car owned by WMATA on a purely personal errand, Mr. Bullock struck and injured two pedestrians, Regina Queen and Quantonia Discomb. Ms. Queen and Ms. Discomb filed claims against Bullock and WMATA.

WMATA, which self-insures its vehicles, acknowledged the claims ¹ and assigned them to one of its in-house adjustors, Robert Seabald, to handle. Mr. Seabald proceeded, for about 18 months, to receive information from the claimants' counsel and to discuss various aspects of the case with him. At no time during that period did Mr. Seabald suggest to counsel that there was a problem as to underlying coverage. In March, 1984, upon review of the claims by WMATA's acting claims manager, by an "outside" consultant, and by counsel, WMATA concluded that, because Bullock had been instructed not to use the car for personal errands, his use of it at the time of the accident was non-permissive and, as a result, there was no insurance coverage. WMATA then filed this declaratory judgment action in the Circuit Court for Anne Arundel County, seeking a declaration that Bullock was not acting as its agent or employee, that his use of the car was non-permissive, and that WMATA was not responsible for his conduct. Bullock, Queen, and Discomb denied that Bullock's use was non-permissive and asserted further that, by reason of laches, estoppel, and waiver, WMATA was precluded from denying that Bullock's use of the vehicle was permissive. Bullock, indeed, filed a counterclaim in which he asked the court to declare affirmatively that WMATA was obligated to defend the Queen/Discomb claims.

After a non-jury trial, the court ruled against WMATA on a number of bases, each of which is challenged in this appeal.

(1) Status of the Parties--Underlying Facts

WMATA is a regional, quasi-governmental entity created by interstate compact to develop and operate a mass transit system in the District of Columbia and its Maryland and Virginia suburbs. See Md.Code Ann.Transp. art., § 10-204; also 1985-86 Md.Manual, p. 418. The compact provides, in p 80, that WMATA is liable "for its torts and those of its directors, officers, employees and agents committed in the conduct of any proprietary function" and that "[t]he exclusive remedy for such ... torts for which the Authority shall be liable ... shall be by suit against the Authority." Paragraph 72 of the compact authorizes WMATA to self-insure "against liability for injury to persons or property" and provides that "[s]uch insurance coverage shall be in such form and amount as the board may determine...." ² Pursuant to that authority, WMATA apparently elected to self-insure its vehicles in the District of Columbia. ³

WMATA concedes that it owned the vehicle driven by Bullock, that Bullock was its employee, and that he had permission to use the vehicle at work and to commute to and from work. The thrust of its argument is that Bullock was on a personal errand at the time, that he not only did not have permission to use the car for such a purpose but was expressly forbidden to do so, that that restriction is not against public policy, and that it has done nothing to preclude it from asserting the defense of non-permissive use.

Bullock, for his part, concedes that he was on a personal errand and that, as a result, he was not acting within the scope of his employment at the time of the accident. His defense is based on the notion that his personal use of the vehicle was a permissive one and that WMATA is precluded from contending otherwise.

It is undisputed that, when Bullock began employment with WMATA in 1972, he was given a company car that he could use for both business and personal use. The unrestricted use of the car was regarded by him, and by the other adjustors who had them, as part of their compensation. Periodically, WMATA announced policies restricting the personal use of company vehicles, but those policies were not effectively enforced against claims adjustors. ⁴ In February, 1982, WMATA decided to discontinue the assignment of cars on a "take-home basis" altogether, which would have precluded their use even for commuting. This new policy was announced in a memorandum of February 16, 1982, which, among other things, repeated the prohibition against using company cars "for other than official purposes."

Regarding this new policy as an improper modification of their unwritten (and, from what we were told at oral argument, at-will) employment agreements, the adjustors protested. On March 10, 1982, ten of them, including Bullock, submitted a proposal "to lay to rest once and for all this demoralizing problem...." They offered two alternatives: (1) to "grandfather" the existing adjustors and permit them "the continued unrestricted and unrestrained use of a WMATA vehicle under the same conditions said employees have utilized and enjoyed since their employment with WMATA began," or (2) the adjustors would receive an immediate full grade step promotion retroactive to January 1, 1982, they would surrender their company cars on January 1, 1983, upon surrender they would receive a bonus of $3,000 plus free maintenance, fuel, insurance, and parking for the cars they bought to replace the company vehicles, and, as their replacement vehicles wore out, they would receive an additional $3,000 toward the cost of a second replacement vehicle.

Management was apparently unwilling to accede to either of those proposals. William Chadwick, purportedly acting on behalf of himself and the nine other adjustors, did, however, negotiate an agreement with Delmer Ison, the acting director of the claims department, under which (1) the ten adjustors would receive a full grade step promotion effective April 16, 1982, (2) they would retain possession of the vehicles assigned to them until December 31, 1982, at which time the vehicles would be surrendered, and (3) the adjustors agreed "not to use the WMATA vehicle assigned to each of them for personal use." Although a senior official of WMATA expressed reservations about this agreement, WMATA fully lived up to its obligations under it. The adjustors, including Bullock, got their immediate raise and, with one exception, they were allowed to keep their vehicles until December 31, 1982. The exception was that, when Mr. Ison learned that Bullock was on a personal errand at the time of the accident, he took the car away from him immediately.

The memorandum of this agreement was signed only by Chadwick, and Bullock never affirmatively acknowledged that he was bound by it. The evidence was uncontradicted, however, that Bullock knew of the agreement, that he accepted the benefits of it, that he never complained about it, and that he never denied being bound by it. There was also some evidence that the interim restriction on personal use was not strictly adhered to, that some of the adjustors continued to use the cars for uses that might be regarded as personal. There was no evidence that anyone in management above Mr. Chadwick, who, though part of the group of 10, was a claims supervisor, was aware of this continued use or in any way approved of it.

In further defense of his position as to permissive use, Bullock presented as an expert witness Edward J. Birrane, Jr., a former Maryland Insurance Commissioner. Over objection, Mr. Birrane was allowed to testify, based on a telephone conversation with a former Motor Vehicle Administrator, that that former Administrator would "not accept a filing from a self insurer whose coverage was less broad than that required by the insurance commissioner of an insurance company" and that

"for a self insured to effect an agreement such as the one that I have seen between WMATA and these particular adjusters is and ought to be contrary to the public policy of the State of Maryland, whose announced public policy is to make sure that any victim or person who suffers loss, damage, through the negligent operation of an automobile ought to be able to show that they are indemnified and this agreement seeks in specific reference as respects the countermanding of the allowance of personal use to deny indemnification which is the specific public policy of Maryland and in my opinion is an open invitation to fraud."

On this evidence, the court announced findings that: (1) the April 8 change of policy was not binding on Bullock because he never "agreed" to it, (2) Bullock therefore had continued permission to use the car assigned to him for personal use, (3) he was, as a result, "operating [the car] with permission of WMATA even though he was using it for his own personal use at that time," (4) for a change in policy restricting personal use to be effective, notice of the change must be given not only to the affected employee but also to "potential claimants," (5) it would be against public policy to allow WMATA, as a self-insurer, to decline coverage "because of some alleged agreement between the employer and employee," and (6) "because of [its] long continued non-enforcement of the so-called company policy, [WMATA] would be estopped from denying coverage to Mr. Bullock for his alleged personal use at the time of this accident."

These findings were translated into formal...