Decision limiting liability when a permitted driver authorizes a third party to use the vehicle outside the scope of original grant of permission. 

Whenever an accident occurred involving someone other than an insured driver, you can bet you that there will be a careful examination of whether the negligent driver had permission to drive the vehicle. For coverage to extend to the negligent driver, he or she has qualify as a permitted driver. This means that he had the permission of the insured party. Secondly, the accident must have occurred within the scope of permitted use of the vehicle. For example, if you borrow my car to go to the store down the street and decide to take a detour to your friends house thirty (30) minutes away, coverage may not extend to you if you were involved in an accident while leaving your friends house. This is because the reason I gave you the vehicle was to go to the store and not to your friends house.

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 0046
September Term, 2013
DAVID PAYNE et ux.
v.
ERIE INSURANCE EXCHANGE et al.
Matricciani,
Kehoe,
Moylan, Charles E., Jr.
(Retired, Specially Assigned),
JJ.
Opinion by Moylan, J.
Filed: January 29, 2014
A grant of permission to use a motor vehicle can pass swiftly from a named insured
to a first permittee to a second permittee. The liability coverage under a policy’s omnibus
clause, however, may not replicate so facile a transfer, as if passing easily from Tinker to
Evers to Chance. The grant of permissive use may sometimes stop at Evers and never make
it all the way to Chance. Even should the permissive use get into the hands of Chance,
however, his status may be discounted as that of a mere agent or chauffeur of Evers. Tinker,
by and large, will be free of troubles. In any event, insurance law can be a more sluggish
arena than Wrigley Field.
Did The Tortfeasor Have Insurance?
At approximately three p.m. on February 11, 2008 on Route 202 in Prince George’s
County, the automobile then being driven by the appellant, David J. Payne, Sr., was struck
by a 1995 Subaru Legacy being driven by Ameen Ragher Abdulkhalek. The appellant sued,
inter alia, Abdulkhalek. The 1995 Subaru Legacy, however, was owned by Alan Dwyer.
The appellee, Erie Insurance Exchange, had issued a policy of automobile liability insurance
to Alan Dwyer for the Subaru Legacy. The only issue before us is whether coverage under
the omnibus clause of Erie’s insurance policy extended from Alan Dwyer to Abdulkhalek.
Under the policy, Alan Dwyer was the named insured. In defining precisely who
received liability protection under the policy, the omnibus clause spelled out:
“Anyone we protect” means:
1. “you” or any “relative” using an “auto we insure;”
2. any person using, or any person or organization legally responsible for
the use of, an “owned auto we insure.” This use must be with “your”
permission unless the use is by a “relative;” and
3. any person or organization legally responsible for the use, by “you” or
a “relative,” of any “non-owned auto.” This protection applies only
if the person or organization does not own or hire the vehicle being
used.
(Emphasis in original).
The 1995 Subaru Legacy that figures in this case had been purchased by Alan Dwyer
primarily for the use of his 34-year-old daughter, Karen Dwyer. Karen, along with her three
children, lived at home with her mother and father. Karen suffered periodically from Lupus.
For purposes of analyzing the policy coverage on the Subaru Legacy, Karen generally had
the unlimited permission of her father to use the Legacy as she wished, with one significant
prohibition. Karen was the first permittee for using the insured vehicle.
The one significant prohibition imposed by Alan Dwyer on the use of the Legacy was
with respect to Abdulkhalek. Dwyer absolutely forbade Karen’s allowing Abdulkhalek to
drive the car. Abdulkhalek, though he did not live with Karen, was the biological father of
her three children. Two of Karen’s and Abdulkhalek’s three children attended the St.
Ambrose private school, which is located within the same residential community where the
Dwyers live. Normally, Karen makes the two minute drive to pick the two up from school.
On February 11, 2008, however, Karen was feeling ill with Lupus and asked Abdulkhalek
to take the Legacy and pick the children up. Instead of going directly to the school, which
is only two blocks away, Abdulkhalek for some unknown reason drove out onto Md. 202
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and to an Exxon station, where he remained for approximately three minutes. Whether the
detour was to gas up the car or simply to pick up a pack of cigarettes, we are not told. In any
event, it was after leaving the Exxon station that, at a traffic light on Md. 202, Abdulkhalek
hit the rear of the car driven by David Payne.
When this case came on for a pretrial hearing before Judge John P. Davey in the
Circuit Court for Prince George’s County on February 15, 2013, Judge Davey denied the
appellant’s motions for a declaratory judgment and for summary judgment but granted Erie’s
motion for summary judgment. This appeal timely followed.
The Use Versus The Operation Of A Vehicle
The appellant relies primarily on Maryland Indemnity Insurance Co. v. Kornke, 21
Md. App. 178, 319 A.2d 603 (1974). In Kornke, the named insured of a vehicle was the
father and the first permittee was the father’s teenaged son. At the very outset of the opinion,
this Court pointed out that we were dealing with the extent of the coverage of a policy’s
omnibus clause.
The so-called “omnibus clause,” required by statute in a number of states, is
in addition to the general insuring clause and extends the protection of the
automobile liability insurance policy to any person using the insured vehicle
provided the use (or “actual use”) is by the named insured or with his
permission or consent. The clause, irrespective of language variations, clothes
the named insured with broad authority to constitute other persons as
“additional insureds.”
21 Md. App. at 180 (footnotes omitted; emphasis supplied).
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In Kornke the named insured of a 1960 Chevrolet hardtop was William T. Kornke,
Sr. His 18-year-old son, a high school student living at home, used the car regularly for
purposes of going to school and to work and drove the car “almost every day.” When the
son would wish to use the car for a date or other social purpose, however, he would
generally ask for special permission from his father. On the critical date in the case, the son,
with his father’s permission, was driving the family car, with three other friends, to a latenight
cookout. In attempting to repair a faulty electrical connection in the engine, the son
received an electric shock and his right hand and arm temporarily “numbed up.” Although
his father had in the past told him not to allow anyone else to drive the car, on this occasion
the son asked one of his friends to take over the driving. An accident ensued.
After examining the case law and observing that “use and operation are not
synonymous,” 21 Md. App. at 186, this Court’s opinion held that the son was, indeed, using
the car even though someone else was behind the wheel. Our holding clearly stated that the
son was using the car even though he was not driving it, but also that his actual presence in
the car was nonetheless a sine qua non for extending the liability coverage.
[U]sing a car by a borrower includes riding in it while another drives, at least
where the former remains “the custodian of the instrumentality confided to his
keeping,” or the latter “is the agent or servant of another and subject to his
immediate and present direction and control.”
21 Md. App. at 192 (emphasis supplied).
After analyzing earlier Maryland cases, our opinion pointed out for the first time in
this state that the scope of the permission ordinarily granted by the named insured to the first
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permittee is not simply the entitlement to operate the vehicle but, more broadly, an
entitlement to use the vehicle for a permitted purpose even though the literal operation of
the vehicle is delegated to someone else.
The First Permittee Must Be In The Car
The actual presence of the first permittee in the vehicle, however, is a sine qua non
for any coverage of the actual driver as a second permittee. It is the first permittee who is
deemed to be actually using the car and the second permittee, who is driving, is considered
to be the mere agent (or chauffeur) of the first permittee. The Maryland case law has never
extended coverage under an omnibus clause to an absentee use of the vehicle by the first
permittee, such as sending the second permittee on an errand while the first permittee stays
home. The rationale energizing Kornke’s expanded interpretation of a “permitted use” as
opposed to a more restricted “permitted operation” of the vehicle is that the first permittee
is present in the car as the master of the ship even when not literally standing at the helm.
Under all circumstances, the first permittee must be on board. On this critical issue, Kornke
relied heavily on the earlier Maryland decision of Hardware Mutual Casualty Co. v. Mitnick,
180 Md. 604, 26 A.2d 393 (1942).
Chief Judge Bond, writing for the Court, rejected this contention, holding that
using includes riding while another drives:
“But using a car in the ordinary acceptation of the words seems
clearly to include a borrower’s making use of it by riding while
driven by another. Mrs. Phillips (the granddaughter) was ‘still
the director of the enterprise, still the custodian of the
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instrumentality confided to (her) keeping, still the master of the
ship.'”
21 Md. App. at 185 (emphasis supplied).
The second earlier Maryland opinion that Kornke relied upon was Melvin v.
American Automobile Insurance Co., 232 Md. 476, 194 A.2d 269 (1963). In that case,
Judge (later Chief Judge) Henderson made it clear that although the actual user of a vehicle
need not be the person behind the steering wheel, the user must nonetheless be present in
the vehicle so that the driver may be said to be “subject to his immediate and present
direction and control.”
We see no reason to limit the meaning of the words “actual use” to the
operation of a vehicle, where the operator is the agent or servant of another
and subject to his immediate and present direction and control.
232 Md. at 478-79 (emphasis supplied).
As the case law about the extent of coverage authorized by the typical omnibus clause
developed, this Court’s opinion in Kornke was a major landmark in that evolution.1 It
articulated for the first time in a clear holding the critical distinction between the permitted
use of a vehicle and the permitted operation of a vehicle. Permitted use embraces permitted
1In National General Insurance Co. v. Government Employees Insurance Co., 81 Md.
App. 104, 111, 566 A.2d 1117 (1989), Judge Rosalyn Bell praised the fact that in Kornke,
“this Court changed the tide of decisions which refused to extend coverage to permittees and
second permittees.”
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operation but is significantly broader. It includes both the active modality of driving and the
passive modality of being driven.2
Kornke’s recognition of the passive modality of being driven in a vehicle for a
permitted purpose was a logical expansion of liability coverage, but the expansion was not
without its limits. The first permittee’s use of the automobile contemplates an actual use and
not a mere constructive use. If the first permittee is actually driven to the pharmacy to pick
up her medicines, the expanded liability coverage travels with her and with her driver as
well. If, on the other hand, the first permittee’s trip to the pharmacy is only a constructive
one, as she stays at home and sends her driver in her stead, the expanded liability coverage
stays home with her. The permitted use of a vehicle contemplates that the first permittee,
who is the first and last recipient of the grant of permission by the named insured, actually
be present in the vehicle. It is not enough that the vehicle is being used for her purposes or
benefit. It is required that the first permittee be the actual user and not simply the
beneficiary of the use. The chain of permissive use does not extend to an absentee user. The
expanded liability coverage adheres to the person of the first permittee. To enjoy coverage
derivatively from the first permittee, the second permittee must be within the first permittee’s
penumbra.
Use is not synonymous with operation. If Her 2 Royal Majesty should grant
permission to the Prince of Wales to use the Royal Rolls Royce, the Prince of Wales, as first
permittee, will be using the Rolls Royce even should the Yeoman Chauffeur be at the wheel.
Thus it is with the typical teenaged child and the use (not merely the operation) of the family
car.
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The failure to appreciate that a permitted use demands the first permittee’s presence
as well as being for the first permittee’s benefit is the fatal flaw in the appellant’s argument.
He looks only to the fact that the trip to pick up the children from school was for Karen’s
benefit. He utterly discounts the requirement of Kornke, and all of the other cases, that
Karen must have been in the vehicle for the expanded coverage to attach to the vehicle.
In Federal Insurance Co. v. Allstate Insurance Co., 275 Md. 460, 341 A.2d 399
(1975), the Court of Appeals held that under the omnibus clause of an automobile liability
policy issued by Allstate to a named insured, the coverage extended to a second permittee
who was driving the vehicle at the time of an accident. The named insured was Direct Way
Auto Shippers, a company in the business of delivering automobiles for its customers from
New York to Florida. The driver hired by Direct Way to deliver the vehicle to Florida was
Richard Frank. Without permission having been granted to do so Frank took along on the
trip both his girlfriend and another acquaintance, James Straz. It was Straz who was actually
driving when the car was involved in an accident in Prince George’s County, Maryland. The
issue before the Court of Appeals was clear.
Clearly, Direct Way, the named insured, gave permission to Frank to drive the
car to Florida. There was, however, no express permission given Frank to
carry passengers or to allow another person to drive the vehicle.
275 Md. at 470 (emphasis supplied).
Frank, the first permittee, was covered because each of two necessary conditions was
satisfied. The car was being used for the specific purpose for which the permitted use had
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been granted by the named insured, to wit, getting the car to Florida. The second
requirement was also satisfied. Notwithstanding the fact that Frank was not driving, he was
physically in the car and in charge of the mission. It was he, therefore, who was using the
car, albeit not driving it.
Since Frank, the first permittee of Direct Way, was in the car while
enroute to Florida at the time of the accident, it was still being used for the
purpose for which it was given to Frank. Because Frank was the “custodian
of the instrumentality confided” to him, it is clear under the Maryland cases
that he was using the automobile. Accordingly, Frank is an insured under the
Allstate policy.
275 Md. at 470-71 (emphasis supplied).
In then going on to hold that the driver, Straz, was also covered as a second permittee,
the indispensable element was that Frank, the first permittee, was physically present in the
car. The first permittee was the captain, and the captain has to be on board.
[T]here was implied permission from Direct Way to Frank to subdelegate the
driving to Straz, in light of these facts: the first permittee (Frank) was a
passenger in the car and had control and direction of the car; subdelegation of
permission to drive was not specifically forbidden; the second permittee
(Straz) was serving some purpose of Frank; and both Straz and Frank, by
driving the Schwartz vehicle to Florida, were serving a purpose of the named
insured (Direct Way). Consequently, Straz is also an insured under the
omnibus clause of the Allstate policy.
275 Md. at 472 (emphasis supplied).
In discussing the general disfavor of second permittees but the exception to that
general disfavor when the first permittee is actually in the car, the Court of Appeals quoted
from 7 Am. Jur. 2d:
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In discussing this question, 7 Am. Jur. 2d, Automobile Insurance, § 117
(1963), states:
“The ‘general rule’ that a permittee may not allow a third party
to ‘use’ the named insured’s car has generally been held not to
preclude recovery under the omnibus clause where (1) the
original permittee is riding in the car with the second permittee
at the time of the accident, or (2) the second permittee, in using
the vehicle, is serving some purpose of the original permittee.”
275 Md. at 471 (emphasis supplied).
Nationwide General Insurance Co. v. Government Employees Insurance Co.
(“Geico”), 81 Md. App. 104, 566 A.2d 1117 (1989), reechoed the requirement that for a
second permittee to enjoy coverage, the first permittee must be present in the vehicle. The
named insured in that case gave his teenaged daughter a broad grant of permission to use a
family car, particularly for the purpose of driving to school. The father specifically
instructed his daughter that “she was not to let anyone else drive the car,” expressly
including her boyfriend, Stephen. On a trip to school, however, Stephen was driving when
an accident occurred.
This Court held that Stephen, as a second permittee, enjoyed coverage
notwithstanding the directive of the named insured to his daughter that Stephen not be
permitted to drive the car. This Court took advantage of the two ameliorating circumstances
that the Court of Appeals had simply recognized as theoretical possibilities in Bond v.
Pennsylvania National Mutual Casualty Co., 289 Md. 379, 424 A.2d 765 (1981). A
significant finding was that the trip to school was for the benefit of the daughter and was
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unquestionably for the purpose for which the permissive use had been granted. The
absolutely critical criterion was that the daughter, as first permittee, was present in the car
at the time of the accident. This circumstance in Geico was expressly contrasted with the
contrary circumstance in Bond.
Unlike Kornke and the instant case, the first permittee was not present in the
automobile when the Bond accident occurred.
81 Md. App. at 113.
That distinction was critical to our allowing of that first ameliorating exception to
extend the policy’s coverage from the first to the second permittee.
We hold that the instant case falls within the first proposed exception
alluded to in Bond, and meets the Kornke “tests” since Nancy, the first
permittee, was in the car with Stephen and was benefitted by its operation. …
Further, the present case is factually quite similar to Kornke and unlike Bond
since the first permittee accompanied the second permittee.
81 Md. App. at 115 (emphasis supplied).
We also pointed out that our view was in line with the broad consensus of sister
jurisdictions.
According to the most recent ALR annotation, 21 A.L.R. 4th 1146, the
broad view is that even where the first permittee is expressly prohibited from
allowing others to drive coverage ordinarily extends to a second permittee
where the first permittee was a passenger in the vehicle at the time of the
accident.
81 Md. App. at 117 (emphasis supplied). Lest there be any doubt, we concluded the opinion
with the following square holding:
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[W]e hold that this case, like Kornke, fits the first exception alluded to in
Bond since the first permittee was both present and benefitted by the second
permittee’s driving.
81 Md. App. at 123 (emphasis supplied).
The Scope of the Permission
Quite aside from the fact that Karen, the first permittee, was not in the car when the
accident occurred, a second, independent, and self-sufficient reason why Abdulkhalek did
not enjoy coverage under the omnibus clause was that the person authorized to define the
scope of the grant of permission, the named insured, had explicitly directed that
Abdulkhalek, by name, was prohibited from driving the Subaru Legacy. Among other
possible disqualifications in Alan Dwyer’s mind was the fact that Abdulkhalek had had his
driver’s license suspended. In his deposition, Alan Dwyer stated:
Q You heard Mr. Khalek say that there was, I guess, sort of a
standing order prior to the date of this accident that he not drive your vehicles.
A Yes.
Q Is that a correct statement by Mr. Khalek?
A Very correct.
For his part, Abdulkhalek was fully aware of the prohibition on his driving of the car.
Q Now, had Mr. Dwyer ever told you that you were not
allowed to drive his car?
A Yes.
Q When did he tell you that?
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A I don’t recall the exact date, but it was a known fact I was not
allowed to use that car because of the status of my license.
(Emphasis supplied).
Bond v. Pennsylvania National Mutual Casualty Insurance Co., 289 Md. 379, 424
A.2d 765 (1981), was stern in its insistence that if the limits placed by the named insured on
the grant of permissive use are unambiguous, those scope limitations are not to be ignored.
Judge Digges’s opinion for the Court of Appeals, quoting National Grange Mutual Insurance
v. Pinkney, 284 Md. 694, 704-05, 399 A.2d 887 (1979), stated at the outset that an insurance
policy is a contract and that the normal rules for construing a contract apply to a contract of
insurance:
[I]t is well settled that in interpreting insurance contracts, words are to be
given their customary and normal meaning. Absent ambiguity the
construction of the contract remains within the province of the court[.] 289 Md. at 384.
In Bond, 289 Md. at 383, even as in the present case, the named insured had expressly
directed that the ultimate driver of the vehicle, by name, was not to be permitted to drive it.
I find as a fact that the person driving the car was Renee Lantz, and the owner
and named insured had specifically restricted her daughter, Kathy, from
allowing anybody, including Renee Lantz, to drive the car. And Renee had
heard Mrs. Fairley say that[.] In defining the scope of a grant of permissive use, moreover, the focus must be on
the relationship between the named insured and the first permittee and not on the
relationship between the first permittee and the second permittee.
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[W]e initially note that the principal focus of our inquiry is on the relationship
between the named insured (the mother) and the first permittee (Kathy Fairley)
and not, as Patricia would have it, between the first and second permittees.
289 Md. at 385 (emphasis supplied).
It is true that when the admonition by the named insured is from a parent to a
teenaged child and is simply a generic “Do not let anyone else drive the car,” the courts have
sometimes been willing to find an overriding implied consent by the named insured under
various sets of reasonably persuasive circumstances. The Bond opinion is steadfast,
however, that such tolerant inferential factfinding is inappropriate in the face of an
unambiguous command by the named insured to the contrary.
[O]nce the trier of fact determined … that the named insured “had specifically
restricted her daughter, Kathy, from allowing anybody, including Renee
Lantz, to drive the car,” and that this express ban was operative when the
accident occurred, there is no escape from Judge Raine’s further conclusion
that “you cannot imply something in face of an express statement to the
contrary.” This is so because implied permission arises from the use of
circumstantial evidence showing a course of conduct indicative of mutual
acquiescence or a lack of objection signifying permission and, thus, it flows
by inference to fill the void created by the absence of an express statement.
But when an uncountermanded express statement exists, there is no vacuum
to be filled. The vast majority of our sister jurisdictions considering the matter
have reached a decision which is in accord with the view we express.
289 Md. at 385-86 (emphasis supplied). The circumstantially implied consent that may
trump a modest admonition does not have the same force against an unequivocal command.
The Bond opinion did, however, note two possible situations in which a stern
adherence to the named insured’s prohibition might be ameliorated.
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This annotation notes two variations from the general rule denying coverage
to the second permittee where the named insured expressly prohibited the first
permittee from allowing others to drive the car. They are, one, where the first
permittee was riding in the car, or was benefited by its operation, and two,
where the second permittee’s driving was occasioned by an emergency or a
situation involving elements of urgency or necessity, benefiting the first
permittee. Neither of these variations are applicable here, and we have in this
case no occasion to consider their viability in this State.
289 Md. at 386 n.1 (emphasis supplied).
Just as neither of those ameliorating circumstances was present in the Bond case, so
too was neither present in this case. We have already discussed at length the dispositive fact
that Karen, the first permittee, was not present in the Subaru Legacy when the accident
occurred.
An Inconvenience Is Not An Emergency
Coverage was foreclosed for yet a second reason. The appellant has not advanced
an argument that Karen and Abdulkhalek were responding to an emergency when she,
incapacitated by Lupus, sent him in the Legacy to pick up their children at school. The
testimony of Alan Dwyer, Karen’s father, would have obliterated any such argument had it
been made. In terms of whether the school pick-up constituted any arguable emergency, one
of several factors that might be pertinent, Alan Dwyer was asked on deposition what would
ordinarily happen if and when Karen could not herself pick the children up. He replied that
they would simply walk home, because home was but two blocks from school.
Q If on this day there – I may have already asked this and you may
have told me. If Karen calls you on the day of this accident and says, “I
cannot pick up the kids,” and from her position Mr. Khalek is there to drive
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the vehicle, but he would not be able to do it, what alternatives would have
been available to pick up the children?
A Walk.
Q Who walk?
A The kids walk home.
Q How close is Saint Ambrose to your home?
A About two blocks.
Q Can you go from Saint Ambrose to your home without ever
getting onto 202?
A Yes.
Q Is it within your community?
A Yes
Q Do you need to be on 202 to even get to Saint Ambrose from
your home?
A No.
(Emphasis supplied). An inconvenience is not an emergency.
The Use Must Be For The Designated Purpose
Even when the cast of characters is unobjectionable, the plot itself must still pass
muster. The mere fact that the first permittee is present in the insured vehicle does not, in
and of itself, extend the coverage of the policy to a second permittee who is driving at the
request of the first permittee. The use of the vehicle must still be for the specific purpose
for which the permissive use was granted by the named insured in the first instance.
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The opinion of this Court in Liberty Mutual Insurance Co. v. Maryland Automobile
Insurance Fund, 154 Md. App. 604, 841 A.2d 46 (2004), is squarely on point. The named
insured in that case received a telephoned request from his ex-wife, asking if their son could
pick her up in the family car and drive her to work. The named insured felicitously
acquiesced. He instructed the son, the first permittee, to use the car to drive the mother to
work, but then to bring the car back. There were no further instructions given.
On his way to pick his mother up, the son gratuitously picked up a friend, Leo
Stevenson. He then picked his mother up and delivered her to her place of work. After
dropping the mother off, however, the pair decided to visit a mutual friend in Washington.
Because the son did not know his way around the neighborhood, he asked Stevenson to
drive the car. Stevenson thus became a second permittee. Stevenson, while driving, struck
a parked truck which was propelled forward into a pedestrian.
The opinion for this Court by Judge (now Chief Judge) Krauser pointed out the scope
of the permitted use granted by the named insured had been exceeded in two respects.
Although the father had not expressly instructed his son on this occasion that no one but he
should drive the car, there was a long-term understanding between father and son to that
effect.
There was … ample evidence presented that, at the time that Stevenson
was operating the covered vehicle, there was, as the circuit court put it, a
“mutual understanding” between father and son “that the driving would be
restricted to the son when the car was lent to him.”
154 Md. App. at 611 (emphasis supplied).
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The use of the vehicle exceeded the scope of the permission granted in yet a second
respect. Judge Krauser pointed out:
Because Drewery, Jr. was prohibited from allowing others to drive his father’s
vehicle, and because the vehicle was on the way back from an unauthorized
detour when the accident occurred, Stevenson was not covered by the MAIF
policy. Moreover, as we shall see, appellant’s claim that the court erroneously
relied on Bond and not Kornke in deciding this case is without merit, as it is
Bond which is applicable to the instant case and Kornke which is
distinguishable from it.
154 Md. App. at 612-13 (emphasis supplied).
Our opinion was very clear that the scope of a permitted use is a factor that will not
be lightly ignored nor loosely interpreted.
Even though Stevenson was driving because he reportedly knew the
D.C. area better than Drewery, Jr., the operation of Drewery, Sr.’s car was not
“for a purpose germane to the permission granted.” There is no dispute that
Drewery, Jr. was given permission to use the car only for the purpose of
taking his mother to work. After completing that task, Drewery, Jr. and
Stevenson decided, without consulting Drewery, Sr., to continue on into the
District of Columbia to pick up Stevenson’s cousin. Since Drewery, Jr. was
not granted permission to use the car for any other purpose than to take his
mother to work, the use of the car at the time of the accident was outside of
the scope of the permission granted. Therefore, the circuit court did not err
in finding that Stevenson was not covered under the MAIF policy.
154 Md. App. at 616 (emphasis supplied). See also American Home Assurance Co. v. Erie
Insurance Exchange, 252 Md. 116, 121-22, 248 A.2d 887 (1969) (The accident occurred
two and one-half hours after the driver borrowed it for a trip that was not to have taken more
than 45 minutes, and the permittee had not yet picked up his wife which was his intended
purpose.); Cohen v. American Home Assurance Co., 255 Md. 334, 349, 258 A.2d 225
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(1969) (The mother-owner gave the car keys to her son with the understanding that a friend,
not the son, would drive. When the son drove the car, that was not within the scope of the
permission granted by the mother.); Goodwin v. Home Indemnity Co., 255 Md. 364, 367,
258 A.2d 220 (1969) (The permission granted to the permittee was for a repair pick up on
Saturday morning, “not a Friday night (or early Saturday morning) escapade,” which
occurred.).
A trip to the Exxon station in this case, for whatever purpose, was not within the
scope of a two-block trip to a school to pick up two children. A deviation is a deviation, be
it large or small.
How To Think About Grants of Permission
In analyzing the coverage of the typical omnibus clause, the phrase “second permittee”
has been a two-edged sword, with unquestioned pluses but also troublesome minuses. It
conveniently identifies the status of one who takes the wheel at the behest of a first permittee
and it helps to distinguish a second permittee’s more restricted permissive scope (generally
limited to operating the car) from the broader discretionary scope typically enjoyed by a first
permittee.
On the other hand, the phrase can be an analytic snare. Because of their parallel
structures, there is an almost hypnotic impulse to analogize “second permittee” to “first
permittee.” Those who write law school examination questions might even dream of a third
permittee or, yea perchance, a fourth. It is a treacherous frame of mind to slip into, however,
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because the two (or three or four) permissive phenomena are not truly analogous. We may
not attribute the rules that govern and the characteristics of the first grant of permission to
the second, because the second is no mere second-generation replication of the first. It is a
distinct and more narrow grant with tighter rules and more limited characteristics of its own.
Under an omnibus clause, the exclusive creator of a permitted use of a vehicle is the
named insured. It is he who establishes the purpose for which a use is given. It is he,
therefore, who establishes the limits on the range or scope of such use. It is the first
permittee who is the exclusive beneficiary of the permissive use. The scope of the permitted
use is bounded by what will benefit or serve the purposes of that first permittee. The use is
not an independent entitlement which the first permittee can receive and then assign or pass
on, in turn, to a second permittee. As a mere grantee of the use, the first permittee cannot
alter or modify the purpose for which it was granted or create a new purpose. For any
subsequent use of the vehicle to come under the coverage of the omnibus clause, such use
must be in the service of the purpose for which the grant of the use was originally made.
Although the use of the ordinals “first” and “second” inevitably suggest a sequence,
we actually deal with a one-step process and not a two-step process. It is not the case that
a grant of a permissive use is made by the named insured to the first permittee and later
regranted from the first permittee to the second permittee in a second transfer of permission.
It is rather the case that the grant is made on a single occasion from the named insured to the
first permittee and, implicitly, because the first permittee need not drive the car himself, to
– 20 –
whatever agents or servants the first permittee may subsequently procure to do the driving
for him. The grant may well have contemplated such a possible agency from the beginning.
When the first permittee designates an agent to drive him or her some place, that is
not a second grant of a permissive use. It is only an incident or implementation by the first
permittee of the original grant of the use. The so-called “second permittee” is simply an
agent for the limited purpose of driving. The very term “second permittee” is, to be sure,
very convenient. It may well be indispensable. It nonetheless requires sensitive handling
and vigilant awareness of the danger of over-analogizing.
Conclusion
Under the terms of the omnibus clause in this case, the coverage of the policy did not
extend to Abdulkhalek, the ostensible second permittee, who was expressly prohibited from
driving the car, 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.
JUDGMENT AFFIRMED; COSTS TO
BE PAID BY APPELLANT.
– 21 –

New Decision on Uninsured Motorist Coverage: Per Accident Limit Upheld

The case revolved around language limiting the per accident coverage available to insureds. In the case, GEICO issued the Uninsured Motorist Coverage(“UIM”) with policy limits of $300,000 per person/$300,000 per occurrence to both Mr. and Mrs. Connors.
Both insureds were injured in an accident caused by another driver. Mr. Connors’ injuries were fatal. The at-fault drivers policy maxed out at $200,0000.00. The damages for the Connors exceeded that amount. As a result, Mrs. Connors and Mr. Connors estate sought to recover damages under the UIM policy.

In a creative reading of the insurance contract, the attorneys for the estate sought to claim UIM benefits on a per person basis. This meant that both Mr. and Mrs. Connor would each be entitled to up to $300K in UIM benefits.

GEICO, on the other hand, held the position that the per accident limit should apply to both Mrs. Connors and the estate of her deceased husband

Several hundred thousand dollars were on the line for both sides. The Connors would gain up to $400K while GEICO would be responsible to paying the same.

The pertinent provisions of the GEICO policy are set forth below:
“SECTION IV– UNINSURED MOTORISTS COVERAGE
* * *
LIMITS OF LIABILITY
Regardless of the number of insureds, autos or trailers to which this
policy applies:
1. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to “each person” is the limit of our liability for all damages, including those for care or loss of services, due to bodily injury sustained by one person as the result of one accident.
2. The limit of liability for Uninsured Motorists coverage stated in the Declarations as applicable to “each accident” is, subject to the above provision respecting each person, the total limit of our liability for all such damages including damages for care and loss of services, due to bodily injury sustained by two or more persons as the result of one accident.
* * *
4. . . . .
The amount payable under this coverage will be reduced by all amounts:
(a) Paid by or for all persons or organizations liable for the injury . . . .”
8

For illustration purposes the court provided the following.
1. Without per accident limitation.

Estate of Mr. Connors:
GEICO UIM Coverage $300,000 per person
Payment from Tortfeasor ($100,000 per person)
GEICO Coverage Remaining $200,000 per person

Mrs. Connors:
GEICO UIM Coverage $300,000 per person
Payment from Tortfeasor ($100,000 per person)
GEICO Coverage Remaining $200,000 per person

2. GEICO’s Position – With Per Accident Limit

Estate of Mr. Connors and Mrs. Connors Individually:
GEICO UIM Coverage $300,000 per accident
Payment from Tortfeasor ($200,000 in aggregate)
GEICO Coverage Remaining $100,000 per accident

The Court of Appeals agreed with GEICO holding that the Section 2 of the policy above controlled and the limit of liability applicable to each accident applied in this case. Therefore, the estate and Mrs. Connors were subject to the $300K per accident limit and could not recover a penny more.

The full case is listed below.

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 773
September Term, 2011
LINDA CONNORS, INDIVIDUALLY ETC.
v.
GOVERNMENT EMPLOYEES
INSURANCE COMPANY
Woodward,
Berger,
Eyler, James R.
(Retired, Specially Assigned),
JJ.
Opinion by Woodward, J.
Filed: March 25, 2014
Appellants, Linda Connors, individually and as personal representative of the Estate
of Robert Connors, appeal from an Order of the Circuit Court for Montgomery County
granting summary judgment in favor of appellee, Government Employees Insurance
Company (“GEICO”). Appellants present one question 1 for our review:
Do the underinsured motorist provisions of GEICO’s insurance
contract provide the Appellant, Linda Connors Individually and Linda
Connors as personal representative of the Estate of Robert Connors,
a limit of underinsured coverage of $300,000 each, subject to an
aggregate payment to all Appellant’s claims by GEICO not to exceed
$300,000?
Finding no error, we shall affirm the judgment of the circuit court.
BACKGROUND
Linda and Robert Connors, husband and wife, were injured on April 14, 2009, while
walking on Captain Dement Drive in Waldorf, Maryland. A vehicle driven by Adam Pond,
pulled out of a driveway at 3269 Captain Dement Drive, striking Mr. and Mrs. Connors and
knocking them to the ground. Mrs. Connors suffered minor physical injuries and significant
emotional trauma, while Mr. Connors was injured severely, and he died on January 31, 2011.
Mr. and Mrs. Connors were both “insureds” under a motor vehicle policy issued by GEICO
which provided uninsured motorist coverage (“UIM”) with policy limits of $300,000 per
person/$300,000 per occurrence. The tortfeasor, Adam Pond, maintained automobile liability
insurance through Allstate Insurance Company with liability limits of $100,000 per
1 Robert Connors died during the pendency of the instant case in the trial court, and
Linda Connors was substituted as Personal Representative of his estate. We will use the term
“appellants” for clarity, as there are two underlying uninsured motorist claims. Where
necessary, we will identify Mr. and Mrs. Connors, individually.
person/$300,000 per occurrence. With GEICO’s consent, Mr. and Mrs. Connors accepted
“per person” policy limits from Allstate, receiving $100,000 each, thereby exhausting the
limits of the Allstate policy.
The Connorses submitted claims to GEICO pursuant to the UIM provisions of
GEICO’s Maryland Family Automobile Policy issued to Mr. Connors. GEICO asserted that,
after crediting the policy for $200,000, which appellants received from Allstate, only
$100,000 of UIM benefits remained. The Connorses disagreed with GEICO’s calculation,
contending that the “per person” limit of the policy should apply, leaving $300,000 in UIM
benefits remaining.
The Connorses filed a claim with the Maryland Insurance Administration, pursuant
to Maryland Code (1996, 2006 Repl. Vol., 2008 Cum. Supp.), § 27-1001 of the Insurance
Article II (“I.A. II”), alleging that GEICO had failed to act in good faith 2 in settling their
claim. On July 22, 2010, the Maryland Insurance Administration issued a decision, finding
that GEICO did not breach its obligation to act in good faith, and agreeing with GEICO that
$100,000 of UIM coverage remained. GEICO subsequently tendered the Connorses the
$100,000 it asserts is available according to the terms of the UIM policy, under an agreement
that allows appellants to pursue their contention that $300,000 in benefits remain (inclusive
of the $100,000 paid).
2 Unless otherwise indicated, all subsequent statutory references herein shall be to the
2008 Cumulative Supplement to the Insurance Article.
2
On December 16, 2010, Mr. and Mrs. Connors filed a lawsuit against GEICO, seeking
declaratory relief in the Circuit Court for Montgomery County. After considering crossmotions
for summary judgment, the circuit court granted summary judgment in favor of
GEICO. The circuit court, in relevant part, stated as follows:
2. The GEICO Policy is not ambiguous. GEICO is obligated
under GEICO Policy No. 0377-86-55-06 to make $100,000 in UIM
benefits available to satisfy the claims of [appellants].
3. GEICO’s remaining UIM obligation is calculated by taking its
$300,000 “per accident” limit under the GEICO Policy and
subtracting all amounts received by [appellants] that exhausted the
tortfeasor’s liability limits, which in this instance was $200,000.
GEICO’s remaining UIM obligation to [appellants] is to fill the “gap”
between what [appellants] could have recovered from the tortfeasor
had the tortfeasor maintained identical liability coverage to the
coverage [appellants] purchased under the GEICO Policy. That “gap”
is $100,000 which, as noted, has been paid.
Appellants noted this timely appeal.
DISCUSSION
When we review the decision of a circuit court granting summary judgment, we
review that decision de novo. Powell v. Breslin, 195 Md. App. 340, 345 (2010), aff’d, 421
Md. 266 (2011). A trial court, when deciding a motion for summary judgment, may grant
summary judgment if the motion and response show that there is no genuine dispute as to any
material fact and that the party in whose favor the judgment is entered is entitled to judgment
as a matter of law. Id. at 345-46. Where there is no dispute of material fact, our review
focuses on whether the trial court’s grant of the motion was legally correct. Id. at 346.
3
Appellants contend that the circuit court erred in interpreting the language of the
GEICO insurance policy’s UIM provisions. They argue that the plain language of the
insurance contract allows for both Mrs. Connors and the estate of Mr. Connors to collect
$300,000 pursuant to the policy’s “per person” limits. Specifically, appellants contend that
the policy’s “subject to” language in subsection (2) of the “Limits of Liability” portion of
Section IV support the “per accident” limit as being subservient to the “per person” limit.
Appellants assert that the UIM policy provides $300,000 “per person” worth of coverage
irrespective of the limiting language $300,000 “per occurrence.” Because there were claims
filed on behalf of two individuals, Mr. Connors and Mrs. Connors, appellants contend the
UIM benefits calculation should start with a total of $600,000 in UIM coverage. Appellants
agree that GEICO should receive credit for the $200,000 from Allstate’s liability policy, but
argue that this amount should be applied to the $600,000 figure, leaving $400,000. Finally,
appellants conclude their calculation by using the $300,000 “per accident” limit as a “cap”
on the $400,000 aggregate amount, thus entitling them to a total recovery from GEICO of
$300,000.
GEICO responds that the language of the UIM policy is clear and unambiguous,
mandating that $100,000 of UIM benefits remain available to appellants. GEICO asserts that
the insurance contract states clearly that the “per occurrence” limit applies to claims of two
or more people, and is to be reduced by all amounts paid by the tortfeasor, in aggregate.
GEICO also argues that appellants’ interpretation of the “subject to” language is flawed,
4
because, when read properly, it functions to restrict an individual insured from collecting
more than the “per occurrence” policy limit. GEICO further contends that, in order to
interpret the insurance policy accurately, the contract must be read in context with
Maryland’s UIM statutory scheme and relevant case law. According to GEICO, appellants’
conscious decision to purchase $300,000 in UIM coverage, viewed in accord with
Maryland’s UIM statute, represents “the amount that would place [a]ppellants in the same
position [as] if the tortfeasor had carried identical liability coverage.” GEICO also contends
that Maryland case law supports the “per occurrence” limit as the “appropriate starting point”
for a UIM “gap” calculation. GEICO concludes that the circuit court was correct in finding
that $100,000 of UIM benefits remain under the provisions of the insurance policy and in
granting summary judgment in its favor.
I.
UIM coverage “plays a leading role in Maryland’s comprehensive motor vehicle
insurance scheme by assuring compensation for victims of noninsured or inadequately
insured motorists.” Andrew Janquitto, Maryland Motor Vehicle Insurance § 8.1, at 308 (3d
ed. 2011). Multiple amendments to the Maryland UIM statute evidence the increasing
importance of UIM insurance within insurance law. UIM coverage first found its way into
Maryland law in 1972. 1972 Md. Laws, Chap. 73, § 1; see also Janquitto, supra, § 8.1, at
308. In 1975, the UIM statute was amended to require every motor vehicle insurance policy
issued in Maryland to contain minimum uninsured motorist coverage. 1975 Md. Laws, Chap.
5
562, § 1; see also Waters v. U.S. Fid. & Guar. Co., 328 Md. 700, 710 (1992) . In 1981, the
UIM scheme was again amended to allow insureds the opportunity to contract for more than
a minimum amount of UIM coverage. 1981 Md. Laws, Chap. 510; see also Waters, 328 Md.
at 711 (noting that by Chapter 510 of the 1981 Acts, the “General Assembly . . . required that
insurers shall [make] available to the insured the opportunity to contract for higher amounts”
(second alteration in original) (internal quotation marks omitted)).
Uninsured, and underinsured, motorist insurance is applicable when 3 the limit of the
tortfeasor’s liability insurance policy is less than an insured’s UIM coverage. Waters, 328
Md. at 711-12. Maryland Code (1977, 2009 Repl. Vol.), §17-103 of the Transportation
Article II mandates that in Maryland, each motor vehicle liability policy contain a minimum
of $20,000 coverage for injury or death of any one person in an accident, $40,000 in
coverage for injury or death of two or more people in an accident,4 and a minimum of
$15,000 in coverage for property damage resulting from any one accident. See also I.A. II
§ 19-509(e) (requiring that UIM coverage equal at least the amount required by Title 17 of
the Transportation Article). The underlying purpose of Maryland’s UIM scheme is to
“provide an injured insured with resources equal to those which would have been available
3 “The concept of ‘uninsured’ was broadened to include any vehicle insured with
liability limits in an amount ‘less than the amount of coverage provided to the insured under
this subsection.’” Waters v. U.S. Fid. & Guar. Co., 328 Md. 700, 711(1992) (quoting Md.
Code (1972, 1981 Repl. Vol.), Art. 48A § 541(c)(1)) (summarizing the General Assembly’s
purpose of the 1981 amendments to the UIM scheme).
4 These amounts were increased as of January 1, 2011, to $30,000 and $60,000
respectively. See 2010 Md. Laws, Chap. 411.
6
had the tortfeasor carried liability coverage equal to the amount of uninsured motorist
coverage which the injured insured purchased from his own insurance company.” Waters,
328 Md. at 714. The statute permits insureds to contract for higher amounts than those
provided under Title 17 of the Transportation Article provided these amounts do not exceed
the amounts of the motor vehicle liability coverage provided by the policy. I.A. II
§ 19-509(e); Hoffman v. United Servs. Auto. Ass’n, 309 Md. 167, 178 (1987).
We interpret the language of an insurance policy in accord with the same principles
applicable to the construction of other contracts. Mitchell v. AARP Life Ins. Program, N.Y.
Life Ins. Co., 140 Md. App. 102, 116 (2001). Like any other contract, an insurance contract
is “measured by its terms unless a statute, a regulation, or public policy is violated thereby.”
Pac. Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388 (1985). The words of an
insurance contract are given their customary, ordinary, and accepted meaning. Beale v. Am.
Nat’l Lawyers Ins. Reciprocal, 379 Md. 643, 660 (2004). The ordinary meaning of a word
is determined by what a reasonably prudent lay person would attach to it. Id. When a court
finds that the contractual language is plain and unambiguous, the court will enforce the terms
as a matter of law. Pac. Indem. Co., 302 Md. at 389. If the language of an insurance
contract is ambiguous, however, the court may turn to extrinsic evidence to determine the
intent of the parties. Clendenin Bros. v. U.S. Fire Ins. Co., 390 Md. 449, 459 (2006).
Maryland does not follow the rule that some of our sister states apply that an insurance policy
should, as a matter of course, be construed against the insurer. Megonnell v. U.S. Auto.
7
Ass’n, 368 Md. 633, 655 (2002). If ambiguous, however, an insurance policy “‘will be
construed liberally in favor of the insured and against the insurer as drafter of the
instrument.’” Id. at 655-56 (emphasis omitted) (quoting Dutta v. State Farm Ins. Co., 363
Md. 540, 556 (2001)).
The pertinent provisions of the GEICO policy are set forth below:
“SECTION IV– UNINSURED MOTORISTS COVERAGE
* * *
LIMITS OF LIABILITY
Regardless of the number of insureds, autos or trailers to which this
policy applies:
1. The limit of liability for Uninsured Motorists coverage stated
in the Declarations as applicable to “each person” is the limit
of our liability for all damages, including those for care or loss
of services, due to bodily injury sustained by one person as the
result of one accident.
2. The limit of liability for Uninsured Motorists coverage stated
in the Declarations as applicable to “each accident” is, subject
to the above provision respecting each person, the total limit
of our liability for all such damages including damages for care
and loss of services, due to bodily injury sustained by two or
more persons as the result of one accident.
* * *
4. . . . .
The amount payable under this coverage will be reduced by all
amounts:
(a) Paid by or for all persons or organizations liable for the
injury . . . .”
8
(Emphasis added) (bold italics in original).
Appellants contend that the appropriate benefits calculation begins with subsection
(1), which mandates a $300,000 limit for “each person” resulting from “one accident.”
Appellants argue that the “subject to” language in subsection (2) makes the $300,000 limit
governing “each accident” subservient to the $300,000 limit for “each person” from
subsection (1). Appellants’ reading of the insurance contract would allow an additional
recovery of up to $200,000 for Mrs. Connors individually and an additional recovery of up
to $200,000 for the estate of Mr. Connors. Appellants further argue that failing to give
meaning to the “subject to” language of subsection (2) would allow GEICO to “avoid paying
benefits it otherwise agreed to pay.” To provide additional clarity, appellants argue that the
UIM benefits should be calculated as follows:
Estate of Mr. Connors:
GEICO UIM Coverage $300,000 per person
Payment from Tortfeasor ($100,000 per person)
GEICO Coverage Remaining $200,000 per person
Mrs. Connors:
GEICO UIM Coverage $300,000 per person
Payment from Tortfeasor ($100,000 per person)
GEICO Coverage Remaining $200,000 per person
Appellants conclude that by utilizing the per accident limitation of $300,000 as a cap on the
above-calculated $400,000 aggregate amount, they are ultimately entitled to $300,000 in
remaining UIM benefits.
GEICO counters that “subsection (2) is the starting point, not subsection (1), because
9
the claims involve injuries ‘sustained by two or more persons as the result of one accident.’”
GEICO argues that using subsection (2) as a starting point, the per accident limit of $300,000
is reduced by the $200,000 received from the tortfeasor, leaving $100,000 in UIM benefits
available to appellants. GEICO contends that the “subject to” language of subsection (2),
when read properly, further limits liability pertaining to one accident involving one person.
To provide additional clarity, GEICO argues that the UIM benefits should be calculated as
follows:
Estate of Mr. Connors and Mrs. Connors Individually:
GEICO UIM Coverage $300,000 per accident
Payment from Tortfeasor ($200,000 in aggregate)
GEICO Coverage Remaining $100,000 per accident
We agree with GEICO.
The plain language of subsections (1) and (2) of GEICO’s insurance policy, indicates
the correct starting point for calculations of UIM benefits and the corresponding coverage
limitation. The decisive factor, in our view, is the number of injured insureds claiming under
the policy. Subsection (1) clearly states that it is applicable to “bodily injury sustained by one
person as the result of one accident.” It follows logically that, if one insured is injured as the
result of one accident, subsection (1) limits the liability of the insurer to the coverage limits
pertaining to “each person.” For example, if Mrs. Connors was the only person injured in
the accident, subsection (1) would be the appropriate starting point for the UIM benefits
calculation, limiting GEICO’s liability to the policy’s “each person” limit of $300,000.
Conversely, the unambiguous language of subsection (2) makes it applicable to
10
“bodily injury sustained by two or more persons as the result of one accident.” Therefore,
if two or more insureds are injured as the result of one accident, subsection (2) will apply to
limit the liability of the insurer to the coverage limits relating to “each accident.” When
subsection (2) is the starting point for a claim, the “subject to” qualifying clause functions
to further limit the liability of the insurer. Subsection (2) sets the “each accident” limitation
for an injury involving two or more insureds, which is then further restricted by the “each
person” limit of subsection (1). The qualifying clause does not subvert or modify the
hierarchy of the subsections, as appellant contends, but rather acts to incorporate the limiting
language of subsection (1) into subsection (2), providing a further restriction on liability.
The result is two layers of limitation—subsection (2) initially limits liability to the “each
accident” amount, and then liability is further limited by the “each person” amount. For
example, the instant case involves two injured insureds, Mr. and Mrs. Connors, who asserted
UIM claims arising from a single accident. Because two insureds were injured, the correct
starting point for a UIM calculation is subsection (2), which mandates GEICO’s liability is
the “each accident” limit of $300,000. The “subject to” qualifying clause, as described
previously, incorporates the “each person” limit of subsection (1) into subsection (2), further
limiting GEICO’s “each accident” liability. Because the “each person” limit in GEICO’s
policy is $300,000, subsection (1) does not provide any further limit on GEICO’s liability.
Thus the “each accident” limit of $300,000 applies.
Appellants’ contention that the “per accident” limitation of subsection (2) is “subject
11
to” the “per person” limitation of subsection (1) arises out of their reading the contract
provisions chronologically in the order of subsection (1) followed by subsection (2).
Although appropriate with some contracts, this is not the manner in which the GEICO
provisions were intended to be navigated. As stated above, the number of injured insureds
is the crucial factor when determining in which paragraph the calculation originates, not the
numeral preceding the contract provision.
We find no controlling precedent narrowly tailored to the facts of the instant matter.
The Court of Appeals’ decision in Waters v. U.S. Fidelity & Guaranty Co., however, is
instructive when considering issues involving Maryland’s UIM statutory scheme. In Waters,
Schreier drove a pickup truck across the center line and collided with a vehicle driven by
Dunham. 328 Md. at 705. Waters was a passenger in the truck, and Waters carried UIM
coverage with limits of $100,000 per person/$300,000 per accident. Id. at 706. Schreier
maintained automobile liability insurance with limits of $100,000 per person/$100,000 per
accident. Id. When $97,000 of Schreier’s $100,000 liability policy was exhausted to cover
injuries to Dunham, Waters filed a UIM claim to recover damages, which was denied by his
insurer. Id. The trial court found that Schreier was not uninsured and therefore Waters could
not collect under his policy for uninsured motorists. Id. at 707.
The Court of Appeals discussed the legislative intent underlying Maryland’s UIM
statute, while additionally contrasting the gap theory of recovery with the excess theory of
12
recovery. Id. at 710-13 & n.5. The Court found that the purpose of Maryland’s 5 current UIM
statute is to “provide an injured insured with resources equal to those which would have been
available had the tortfeasor carried liability coverage equal to the amount of uninsured
motorist coverage which the injured insured purchased from his own insurance company.”
Id. at 714. The Court concluded that Schreier was underinsured compared to Waters, taking
into account the $300,000 per accident limit on Waters’ UIM policy, thus allowing Waters
to proceed against his insurer pursuant to the $100,000 per person limit. Id. at 714-15.
In Hoffman v. United Services Automobile Ass’n, the Court of Appeals considered
recovery under supplemental UIM coverage in excess of the statutorily required amount. 309
Md. at 171. The Hoffmans had purchased an automobile policy which included the
statutorily required UIM coverage, and additionally, a supplemental UIM policy with limits
of $300,000 per person/$500,000 per accident. Id. at 169. Mrs. Hoffman was killed and Mr.
Hoffman was seriously injured during an automobile accident, as passengers, in a vehicle
driven by Whelan. Id. After recovering from the tortfeasor’s liability policy and Whelan’s
UIM policy, Mr. Hoffman sought additional compensation under his supplemental UIM
policy. Id. at 169-70. Mr. Hoffman’s UIM provider denied the claim, arguing that an
insured could not recover on a duplicative basis subsequent to receiving in excess of the
5 Maryland is a gap theory state. Under gap theory, the injured insured may recover
the difference between their UIM coverage and money received from the tortfeasor. See
Aetna Cas. & Sur. Co. v. Souras, 78 Md. App. 71, 78 (1989). Conversely, “[u]nder the
‘excess’ theory a tortfeasor is underinsured when the injured party’s damages exceed the
tortfeasor’s liability coverage.” Waters, 328 Md. at 712.
13
statutory minimums from other insurance sources. Id. at 170. The Court of Appeals found
in favor of Mr. Hoffman recovering from his supplemental UIM policy, concluding that the
General Assembly intended to make “‘available to the insured the opportunity to contract for
higher amounts than those provided under Title 17 of the Transportation Article . . . if these
amounts do not exceed the amounts of the motor vehicle liability coverage provided by the
policy.’” Id. at 178 (quoting Md. Code (1972, 1981 Repl. Vol.), Art 48A § 541(c)(2)).
In support of their position, appellants rely on the North Carolina case of Aills v.
Nationwide Mut. Ins. Co., 363 S.E.2d 880 (N.C. Ct. App. 1988). Mr. and Mrs. Aills were
severely injured in an automobile accident in which the at-fault driver maintained liability
insurance of $50,000 per person/$100,000 per accident. Id. at 881-82. The trial court
awarded the Aillses over $650,000 in combined damages. Id. at 881. The tortfeasor’s
liability insurance was exhausted under the per person limits, paying Mr. and Mrs. Aills
$50,000 each. Id. The Aillses each made a claim under Mr. Aills’s UIM policy which
provided coverage limits of $100,000 per person/$100,000 per accident. Id. The UIM
insurer denied the Aillses’ claims, contending that the tortfeasor’s insurance had paid
$100,000 in aggregate, and no further payment was due. Id. at 881-82. The insurance policy
contained the following language, limiting the insurer’s liability:
The limit of bodily injury liability shown in the Declarations for “each
person” for Uninsured Motorists Coverage is our maximum limit of
liability for all damages for bodily injury sustained by any one person
in any one auto accident. Subject to this limit for “each person”, the
limit of bodily injury liability shown in the Declarations for “each
accident” for Uninsured Motorists Coverage is our maximum limit of
14
liability for all damages for bodily injury resulting from any one
accident.
Id. at 882. The Court of Appeals of North Carolina found the language susceptible to
differing interpretations, and therefore construed the provision against the insurance
company. Id. The court concluded that the “subject to” language made the “each accident”
limit subordinate to the “each person” limit, entitling the Aillses to an additional recovery of
$50,000 each. Id.
In further support of their argument, appellants cite Austin Mut. Ins. Co. v. King, 29
F.3d 385 (8th Cir. 1994). There, the tortfeasor, Leichtenberg, ran a stop sign and hit a car
driven by King. Id. at 386. King and two of her passengers were seriously injured, while
three other passengers in her car died as a result of the accident. Id. Leichtenberg’s
automobile liability policy, with limits of $50,000 per person/$100,000 per accident, was
exhausted by dividing the $100,000 per accident limit between the six occupants of King’s
vehicle. Id. King maintained a UIM policy with coverage limits of $50,000 per
person/$100,000 per accident. Id. The policy contained the following language:
The limit of liability . . . is [insurance company’s] maximum limit of
liability for all damages, including damages for care, loss of services
or death, arising out of “bodily injury” sustained by any one person in
any one accident. Subject to this limit for each person, the limit of
liability . . . is our maximum limit of liability for all damages for
“bodily injury” resulting from any one accident.
Id. at 388 (first and third alterations in original). The Court of Appeals for the Eighth Circuit
held that the policy’s “subject to” language dictated that the per person limit applied, and the
15
per accident limit on the coverage acted only as a cap to the aggregate recovery. Id. at 388-
89. King and each of her passengers would recover $50,000 per person from the UIM
insurer (less the amount received from the tortfeasor), subject to an aggregate maximum of
$100,000 (the per accident limit). Id.
Appellants’ reliance on Aills and King is misplaced. The limiting provisions in both
Aills and King are clearly distinguishable from the limiting provision in GEICO’s policy in
the case sub judice. The limiting provisions of the GEICO policy are structured in
subsections; subsection (1) applies unequivocally to accidents involving one insured and
subsection (2) applies unequivocally to accidents involving two or more insureds. The
“subject to” language in the GEICO policy appears as a qualifying clause within subsection
(2), located in between two commas. In contrast, the limiting provisions in Aills and King
consist of a single paragraph with the “subject to” language at the beginning of a sentence.
Aills, 363 S.E.2d at 882; King, 29 F.3d at 388. The provisions in Aills and King establish
liability limits based on one person and limit that amount using the per accident limit. Aills,
363 S.E.2d at 882; King, 29 F.3d at 388-89. This is materially different from the limiting
provision in GEICO’s policy, which establishes the applicable limitation based on the
number of injured insureds making UIM claims. The structure of the provisions in Aills and
King, the location of the “subject to” language, and the method of determining liability limits
is substantially different from that of the GEICO provision.
Moreover, as to Aills, the North Carolina UIM statutory framework is distinguishable
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from Maryland. The North Carolina UIM statute mandated two specific steps evidencing the
legislature’s intent as to what coverage limit applies: “(1) the number of claimants seeking
coverage under the UIM policy; and (2) whether the negligent driver’s liability policy was
exhausted pursuant to a per-person or per-accident cap.” N.C. Farm Bureau Mut. Ins. Co.
v. Gurley, 532 S.E.2d 846, 848 (N.C. Ct. App.), review denied, 545 S.E.2d 427 (N.C. 2000).
The second prong of the North Carolina statute, as interpreted by the court in North Carolina
Farm Bureau Mutual Insurance Co. v. Gurley, required the per accident limit of the UIM
policy to govern when the per accident limit of the tortfeasor’s liability policy was used, and
required the per person limit of the UIM policy to govern when the per person limit of the
tortfeasor’s liability policy was used. Id. at 849. In the case sub judice, I.A. II § 19-509 fails
to provide the level of statutory guidance as does the North Carolina UIM statute when
determining what coverage limit applies.
In sum, there is no available case law which is identical on the facts and law to the
instant matter. The Maryland case law sufficiently supports our analysis of the GEICO
policy language, while the out-of-state precedent offered by appellants lacks factual and
statutory similarities to contradict our decision.
II.
Assuming arguendo that the language of the GEICO insurance contract is ambiguous,
we conclude that the result would remain unchanged. I.A. II § 19-509, contains the
following provision which limits liability to an insurer:
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(g) Limit of insurer liability.—The limit of liability for an insurer
that provides uninsured motorist coverage under this section is the
amount of that coverage less the amount paid to the insured, that
exhausts any applicable liability insurance policies, bonds, and
securities, on behalf of any person that may be held liable for the
bodily injuries or death of the insured.”
This provision of the uninsured motorist statute explains how to calculate policy benefits.
See Aetna Cas. & Sur. Co. v. Souras, 78 Md. App. 71, 78 (1989) (noting that the statutory
predecessor to I.A. II § 19-509(g) “provides a formula for calculating the amount of
uninsured motorist coverage”). The Court of Appeals in Waters eliminated any remaining
ambiguity surrounding Maryland’s method of UIM calculation stating as follows:
The two main theories are that underinsured motorist coverage
provides “excess” coverage and that underinsured motorist coverage
is “gap” coverage.
Under the “excess” theory a tortfeasor is underinsured when
the injured party’s damages exceed the tortfeasor’s liability coverage.
Under the “gap” theory a tortfeasor is underinsured when the
injured party’s uninsured motorist coverage exceeds the tortfeasor’s
liability coverage.
Maryland is a “gap” theory State . . . .
328 Md. at 712 n.5 (citations omitted). Accordingly, in Maryland, a gap theory state, the
injured insured may recover the difference between his or her UIM coverage and money
received from the tortfeasor. Id. In Colonial Ins. Co. of Cal. v. Batson, 85 Md. App. 467,
475 n.1 (1991), this Court found that, when calculating UIM benefits under a gap theory, “the
insured is covered to the extent of his policy less the amount of insurance paid by the tort-
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feasor’s carrier.”
Appellants agree that Maryland is a gap theory state, but contend that the court
“misapplied the ‘gap theory’ in calculating the UIM benefits owed to [them].” Appellants
contend that GEICO should not receive credit for “all payments made by the tortfeasor’s
carrier,” but instead, “credit is to be based on what each person receives.”
GEICO counters that, pursuant to the gap theory of recovery, appellants should
receive the difference between the “per occurrence” UIM policy limits ($300,000) and what
the tortfeasor’s liability insurance paid ($200,000). GEICO contends that it should receive
credit for the full $200,000 paid by the tortfeasor’s liability insurance, because a finding to
the contrary would be pursuant to the “excess theory,” which Maryland does not follow. We
agree with GEICO that the gap theory was applied correctly by the trial court, and $100,000
in UIM coverage remains available to appellants.
Accepting appellants’ rationale of how to calculate UIM benefits using gap theory
would result in consequences unintended by the Maryland General Assembly. Appellants’
method of calculation creates two possible outcomes of recovery, which would vary,
depending on the tortfeasor’s status as: (1) completely uninsured/equally insured, or (2)
underinsured. To illustrate this inconsistency, assume that appellants maintained identical
UIM coverage ($300,000 per person/$300,000 per accident), but were instead involved in
an accident with a completely uninsured tortfeasor. Using appellants’ methodology, they
would recover $300,000 for each person injured ($600,000 total), subject to a maximum of
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$300,000 per accident, leaving them with a total recovery of $300,000. A second scenario
exists in which the tortfeasor is equally insured with identical liability limits to appellants’
UIM limits. This outcome would again consist of appellants receiving $300,000 in
compensation from the tortfeasor’s insurance company, although not being able to recover
from their UIM insurer due to not being underinsured. Contrast the two aforementioned
examples with the actual scenario, in which appellants were involved in an accident with a
tortfeasor who was underinsured. Appellants assert that, after crediting the UIM policy for
the $200,000 paid by the tortfeasor’s insurance company, they are still entitled to $300,000
in UIM coverage. This provides appellants with a total recovery of $500,000 when the
tortfeasor is underinsured, but only $300,000 when the tortfeasor is completely uninsured or
equally insured. This logic would effectively create two categories of UIM recovery: a
premium recovery when the tortfeasor is underinsured and a lesser recovery when the
tortfeasor is completely uninsured or equally insured. We find no evidence from the statute,
or pragmatic support, to indicate that the legislature intended varying recoveries based on the
tortfeasor’s comparative insurance level.
In Gurley, the North Carolina Court of Appeals faced a similar situation. The
defendants in Gurley proposed a similar theory of recovery to that proposed by appellants
and the court noted the unintended consequences that would result stating as follows:
For example, if Mr. Fornes’ liability coverage had been 50/100
instead of 25/50, defendants would not have been entitled to any UIM
coverage because his automobile would not have been an
“underinsured highway vehicle.” Thus, defendants would have
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received $100,000 total in liability coverage from his carrier.
Likewise, if Mr. Fornes had been uninsured altogether, defendants
would have again recovered a total of $100,000, this time in uninsured
motorist (“UM”) coverage. But under defendants’ espoused
interpretation, they would be entitled to $50,000 in liability coverage
and $100,000 in UIM coverage, for a grand total of $150,000 in
compensation. This would give defendants a windfall simply because
they were involved in an accident with an underinsured motorist, as
opposed to an insured or uninsured motorist. We do not believe our
legislature intended such a result. After all, the purpose of UM and
UIM insurance is the same—“to compensate innocent victims of
financially irresponsible motorists.” Since the purpose is the same, no
windfall should be created as between the two.
532 S.E.2D at 849 (citation omitted).
In sum, we affirm the circuit court’s grant of summary judgment in favor of GEICO,
holding that the clear and unambiguous language of the GEICO insurance policy leaves
GEICO with a remaining obligation to appellants of $100,000, which has been satisfied.
JUDGMENT OF THE CIRCUIT COURT FOR
MONTGOMERY COUNTY AFFIRMED.
COSTS TO BE PAID BY APPELLANT.
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