Md. Ins. Admin. v. State Farm Mut. Auto. Ins. Co.

451 Md. 323

152 A.3d 795

MARYLAND INSURANCE ADMINISTRATION

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al.

No. 41, Sept. Term, 2016

Court of Appeals of Maryland.

January 23, 2017

J. Van Lear Dorsey, Asst. Atty. Gen. (Brian E. Frosh, Atty. Gen. of Maryland; Brandy J. Gray, Asst. Atty. Gen., Baltimore, MD), on brief, for petitioner.

Michael J. Budow (Melissa D. McNair, Budow and Noble, P.C., Bethesda, MD), on brief, for respondents.

Barbera, C.J., Greene, Adkins, McDonald, Watts, Hotten, Getty, JJ.

Watts, J.

This case requires the Court to determine whether an insured may receive personal injury protection ("PIP") coverage, under a personal motor vehicle liability insurance policy held by the insured, for injuries sustained while driving a taxicab owned by the insured but not covered by the personal motor vehicle liability insurance policy, where the personal motor vehicle liability insurance policy contains an exclusion for motor vehicles owned but not insured under the policy. Under Maryland law, generally, insurers are required to provide drivers with liability, PIP, and uninsured/underinsured motorist ("UM/UIM") coverage. See Md. Code Ann., Ins. (1997, 2011 Repl. Vol., 2016 Supp.) ("IN") §§ 19–504, 19–505, 19–509; Md. Code Ann., Transp. (1977, 2012 Repl. Vol., 2016 Supp.) ("TR") § 17–103. And, where a motor vehicle insurance policy contains PIP coverage and UM/UIM coverage, an insurer is required to provide PIP coverage to an insured or an insured's resident family member who is injured in a motor vehicle accident "while occupying a motor vehicle for which the coverages described in [IN] §§ 19–505 [ (PIP coverage) ] and 19–509 [ (UM/UIM coverage) ] are not in effect[.]" IN § 19–513(d)(1)(i). The definition of a "motor vehicle" set forth in IN § 19–501(b)(2)(ii), however, expressly excludes taxicabs as "motor vehicles" for purposes of Subtitle 5 of Title 19 of the Insurance Article; thus, IN § 19–505(a) does not require insurers to offer PIP coverage in policies insuring taxicabs.

This case raises the overall issue of whether an insurer of a personal motor vehicle liability insurance policy, which includes PIP coverage, is responsible for PIP coverage for injuries that an insured sustained while driving a taxicab owned by the insured but not covered by the personal motor vehicle liability insurance policy, or whether the personal motor vehicle liability insurance policy's owned but not insured exclusion applies, such that the insurer is not responsible for PIP coverage under those circumstances. To answer that overarching question, this Court must determine three very specific issues: (1) whether a taxicab is a "motor vehicle" for purposes of the statutory exclusion from PIP coverage under IN § 19–505(c)(1)(ii) and for the payment of benefits under IN § 19–513(d)(1)(i); (2) whether "uninsured motor vehicle" for purposes of IN § 19–505(c)(1)(ii) means uninsured altogether, uninsured for PIP coverage, or not insured under the relevant motor vehicle liability insurance policy; and (3) whether the exclusion in the personal motor vehicle liability insurance policy in this case—which excluded coverage, in pertinent part, for the insured "while occupying a motor vehicle owned by [the insured] ... and which is not insured under the liability coverage of this policy" (capitalization omitted)—is authorized by the statutory exclusion from PIP coverage set forth in IN § 19–505(c)(1)(ii), the "owned but uninsured" exclusion.

As to the primary question presented in this case, we hold that an insurer of a personal motor vehicle liability insurance policy, which includes PIP coverage, is not responsible, as a result of the application of the personal motor vehicle liability insurance policy's owned but not insured exclusion, for PIP coverage for injuries the insured sustained while driving a taxicab owned by the insured but not covered by the personal motor vehicle liability insurance policy. As to the more specific underlying issues, we conclude that: (1) a taxicab is a "motor vehicle" for purposes of the owned but uninsured exclusion from PIP coverage set forth in IN § 19–505(c)(1)(ii) and for the payment of benefits under IN § 19–513(d)(1)(i); (2) "uninsured motor vehicle" under IN § 19–505(c)(1)(ii) means uninsured for PIP coverage, such that a motor vehicle, including a taxicab, that is not insured for PIP coverage is an "uninsured motor vehicle" for purposes of IN § 19–505(c)(1)(ii); and (3) the exclusion in the personal motor vehicle insurance policy in this case is authorized by the owned but uninsured exclusion from PIP coverage set forth in IN § 19–505(c)(1)(ii). Accordingly, we affirm the judgment of the Court of Special Appeals.

BACKGROUND

On November 14, 2011, Alhassan Bundu–Conteh ("Bundu–Conteh"), Respondent, was rear-ended by a motor vehicle while driving his taxicab. Bundu–Conteh sustained personal injuries. At the time of the accident, Bundu–Conteh owned two vehicles: a 1997 Jeep Grand Cherokee ("the Jeep") and a 2006 Ford Crown Victoria taxicab ("the taxicab"). The Jeep was insured under a liability and no-fault policy with State Farm Mutual Automobile Insurance Company ("State Farm"), Respondent, which included PIP coverage. The taxicab was insured by Amalgamated Insurance Company ("Amalgamated") and carried liability-only coverage, which does not include PIP coverage.¹

Following the accident, Bundu–Conteh submitted a PIP claim to State Farm for the injuries that he sustained. State Farm denied Bundu–Conteh's PIP claim, relying on the following exclusion ("the third exclusion") for no-fault coverage:

Exclusions

THERE IS NO COVERAGE:

* * *

3. FOR YOU OR ANY RESIDENT RELATIVE WHILE OCCUPYING A MOTOR VEHICLE OWNED BY YOU OR ANY RESIDENT RELATIVE AND WHICH IS NOT INSURED UNDER THE LIABILITY COVERAGE OF THIS POLICY[.]

Bundu–Conteh subsequently filed a complaint with the Maryland Insurance Administration ("the MIA"), Petitioner. In the complaint, Bundu–Conteh contended that the third exclusion was inapplicable to him because, at the time of the accident, he was driving a taxicab, which IN § 19–501(b)(2)(ii) excludes from the definition of "motor vehicle."² Alternatively, Bundu–Conteh argued that, even if the taxicab were categorized as a "motor vehicle," the third exclusion in the State Farm policy is incompatible with well-settled Maryland law.

On December 27, 2012, after completing its review of the case, the MIA concluded that State Farm's denial of Bundu–Conteh's PIP claim violated IN §§ 4–113,³ 19–505,⁴ 19–513,⁵ and 27–303.⁶ Specifically, the MIA determined that, pursuant to IN § 19–513(d), State Farm is obligated to provide PIP benefits to its insured policy holders who are injured in a motor vehicle accident, subject to limited exclusions. According to the MIA, the third exclusion in State Farm's policy is incompatible with the exclusions under IN § 19–505(c) and thus constitutes "an arbitrary and capricious denial of a claim without just cause[.]"

On January 25, 2013, State Farm appealed the MIA's determination and requested a hearing. Specifically, State Farm contended that the third exclusion fell squarely within the "owned but uninsured" exclusion under IN § 19–505(c)(1)(ii) and, thus, was permissible. According to State Farm, the taxicab was "uninsured" for the purposes of IN § 19–505(c)(1)(ii) because it was not insured under the State Farm policy. Both State Farm and the MIA, on Bundu–Conteh's behalf, filed with the Maryland Insurance Commissioner ("the Commissioner") cross-motions for summary decision. On August 15, 2013, the Commissioner held a hearing on the cross-motions for summary decision. On January 24, 2014, the Commissioner issued a Memorandum and Final Order, concluding that State Farm's denial of coverage to Bundu–Conteh violated IN §§ 19–505 and 19–513. The Commissioner determined that the third exclusion is not a permissible exclusion under IN § 19–505(c). Specifically, the Commissioner determined that, under the plain language of IN § 19–505(c)(1)(ii), the meaning of "uninsured motor vehicle" is "a motor vehicle without insurance." Thus, the Commissioner concluded that to interpret IN § 19–505(c)(1)(ii) as excluding coverage for individuals like Bundu–Conteh, who carried PIP coverage on their vehicles and were not injured while in an "uninsured" vehicle, "would be contrary to the remedial legislative purpose of assuring compensation for damages to victims of motor vehicle accidents without regard to fault." The Commissioner, therefore, granted the MIA's motion for summary decision and ordered State Farm to pay Bundu–Conteh's PIP claim arising from the accident plus 1.5% interest for each intervening month starting 30 days after Bundu–Conteh first submitted his PIP claim.

On February 20, 2014, State Farm filed in the Circuit Court for Baltimore City ("the circuit court") a petition for judicial review. On January 9, 2015, the circuit court issued a Memorandum and Order reversing the Commissioner's Final Order. On January 29, 2015, the MIA noted an appeal to the Court of Special Appeals. In an unreported opinion dated March 15, 2016, the Court of Special Appeals affirmed the judgment of the circuit court. State Farm subsequently requested that the Court of Special Appeals report the opinion. On June 1, 2016, the Court of Special Appeals reported the opinion. SeeMd. Ins. Admin. v. State Farm Mut. Auto. Ins. Co., 228 Md.App. 126, 137 A.3d 310 (2016). The MIA thereafter filed in this Court a petition for a writ of certiorari , which we granted on September 2, 2016. See Md. Ins. Admin. v. State Farm Mut. Auto. Ins., 450 Md. 102, 146 A.3d 463 (2016).

DISCUSSION

The Parties' Contentions

The MIA contends that the Court of Special Appeals erred by not affording deference to the Commissioner's interpretation of IN § 19–505. According to the MIA, the Commissioner correctly determined that, at the time of the accident, Bundu–Conteh was not driving an "uninsured motor vehicle" and, thus, the exclusion under...