Walther v. Allstate Insurance

ROBERT M. BELL, Judge,

dissenting.

In State Farm Mut. v. Nationwide Mut., 307 Md. 631, 644, 516 A.2d 586 (1986), the Court of Appeals held “that the ‘insured’ segment of a ‘household exclusion’ clause in an automobile liability insurance policy is invalid to the extent of the minimum statutory liability coverage. So far as the public policy evidenced by the compulsory insurance law is concerned, it is a valid and enforceable contractual provision as to coverage above that minimum.” In footnote 1, the Court defined the nature of the “household exclusion”:

The “household exclusion” before us in this case involves two distinct components. One is the exclusion of the insured. The second is the exclusion of family members residing in the insured’s household. The facts before us implicate only the first of these components.

Id., 307 Md. at 633, 516 A.2d 586. Thus, inasmuch as it addressed only one aspect of the exclusion, the Court’s holding was a narrow one. That this is so is evident from the fact that, in subsequent footnotes, the Court continued to refer to the insured aspect of the exclusion. In footnote 4, for example, while explaining why Meyer v. State Farm Mutual Auto. Insurance Company, 689 P.2d 585 (Colo. 1984) (en banc), a case which dealt with intra-family immunity, rather than inter-spousal immunity, was not persuasive, the Court pointed out that, “Since the case before us deals only with the ‘insured’ portion of the ‘household exclusion,’ ... the intrafamily immunity concerns that were considered by the Colorado court have no pertinence here.” Similar explanations were made in the footnotes that followed.

Notwithstanding the foregoing, focusing on footnote 1, and relying upon the Court’s rejection, as unpersuasive, of the rationale enunciated in Estep v. State Farm Mutual *413Auto. Insurance Company, 103 N.M. 105, 703 P.2d 882 (1985); Hughes v. State Farm Mutual Auto. Insurance Company, 236 N.W.2d 870 (N.D.1975), and Meyer v. State Farm Mutual Auto. Insurance Company, 689 P.2d 585 (Col.1984), the majority “draw[s] the inference that the Court’s opinion [in State Farm v. Nationwide ] is more sweeping than the footnote professes it to be” and concludes that “State Farm implicitly approved the household exclusion clause’s application to spouses of insured motor vehicle operators.” At 409. The majority’s position is further buttressed, we are told, by “those foreign cases upon which the Court in State Farm relied and ‘aligned’ itself.” At 409-410.

I totally disagree with the majority. In my opinion, State Farm is a well-reasoned and well-crafted opinion. Rather than being haphazard, it represents a masterful job of draftsmanship. The scope of the opinion, and by necessary implication, its limitations were established very early on. The Court was careful to point out, in the first footnote, what was at issue and, indeed, what was not. As it discussed the cases pro and con, pertinent to the issue presented, and any legislative action bearing on the subject, it was careful to note, usually in a footnote, how it was that they, or the actions, were pertinent to the issue before it. In fact, careful reading of the footnotes, in context, makes obvious that the Court’s entire discussion focused upon the rationale, rather than the factual context, of the various cases and how that rationale related to the issue of the viability of the “insured” aspect of the household exclusion. Thus, we may only assess the Court’s discussion of the cases, both pro and con, in the context of the “insured” aspect of the exclusion. Indeed, I believe that State Farm, by its very terms, does not even address the “other family members” segment of the household exclusion. If this were not sufficient, the Court’s holding, as we have seen, explicitly addressed only the “ ‘insured’ segment” of the household exclusion. Consequently, I do not believe that the majority’s very broad reading of State Farm is correct.

*414And, in my opinion, the Court’s limitation of its holding, particularly in view of the careful way in which it did so, is significant. Since they are but different segments of the same issue, it would have been very simple, and, indeed, would have provided clearer guidance, for the Court simply to have addressed the household exclusion in a unitary fashion. And, given the different foci of the cases discussed by the Court, there was every incentive, if the considerations are indeed the same, for the Court to have addressed them together. It did not, however, as we have seen. I believe that it did not because it recognized that there are different considerations applicable to each segment of the exclusion; the “other household members” segment involves different considerations than does the “insured” segment. And within the “other household members” segment, itself, there are sub-segments 1 as to each of which there may also be different considerations, depending upon the relationship of the household member to the insured.2

To focus the inquiry in this case properly, in addition to the State Farm, case, Boblitz v. Boblitz, 296 Md. 242, 462 A.2d 506 (1983) and Jennings v. Government Employees Insurance Company, 302 Md. 352, 488 A.2d 166 (1985), must be considered and analyzed. The Court of Appeals, in Boblitz, abolished inter-spousal immunity in negligence cases. In so holding, it rejected the reasons asserted in favor of the immunity as providing “no reasonable basis for denial of recovery for tortious personal injury”, finding no “subsisting public policy” to justify its retention, 296 Md. at *415273, 462 A.2d 506. Significantly, the decision was not dependent upon the existence, or nonexistence, of insurance. Whether and, if so, how, the Maryland Financial Responsibility law would impact on spousal suits in which insurance is a resource was not presented. The effect of the Boblitz decision was, in my opinion, to place the injured spouse, on an equal footing with strangers, i.e., to permit one spouse to sue the other for negligence and to recover the damages to which he or she is entitled to the same extent as would be a stranger.

In Jennings, the Court of Appeals was faced with the question whether the “household exclusion” clause of an insurance policy which excluded any recovery for either the insured or any member of his or her household was invalid as being contrary to the Maryland Financial Responsibility law. 302 Md. at 354, 488 A.2d 166. The Court held that it was, finding such a clause, under the circumstances, to be “inconsistent with the public policy which the General Assembly adopted in Ch. 73 of the Acts of 1972, providing for compulsory automobile insurance for all Maryland automobiles with specified required coverages.” 302 Md. at 357, 488 A.2d 166. Having determined that “[t]he exclusion of a large category of claimants, suffering bodily injury arising from accidents, is not consistent with [the provisions of the Maryland Transportation Code Ann. § 17-103(b)3]”, id., 302 Md. at 360, 488 A.2d 166, the Court went on to observe that

if any and all exclusions from this required liability coverage are valid as long as they are not expressly prohibited by statute, the purpose of compulsory automo*416bile liability insurance could be frustrated to a significant extent.

Id. Once again, the issue presented on this appeal was not there clearly presented. The Court was not specifically asked to decide if the household exclusion was totally invalid or simply invalid only to the extent of the mandatory insurance coverage.

Noting, and emphasizing, the narrowness of the State Farm holding, appellants’ argument, which the majority characterizes as simplistic, is that Boblitz, read in light of Jennings, controls this case. They assert that the placement of a limit on the amount Mrs. Walther may recover from appellee violates the public policy pursuant to which Boblitz was decided. In short, appellants maintain that Mrs. Walther is entitled to the same rights under her husband’s policy as would be a stranger. In response, the majority argues: Mrs. Walther is not precluded from recovering damages over and above the minimum amount of insurance coverage required by law, she simply is prohibited from obtaining that excess from appellee. I agree with appellants.

The position taken by the majority undermines and, indeed, retards, the continuing vitality of the abolition of the inter-spousal immunity doctrine. It is certainly inconsistent with it. The abolition of inter-spousal immunity has meaning only if one spouse is able to maintain an action against the other and, more importantly, recover from that spouse to the same extent that a stranger could. No problem is presented when insurance is not involved; the injured spouse, as would the stranger, looks solely to the negligent spouse for compensation. Where, however, the act of negligence is covered by insurance, a somewhat different situation exists. Ordinarily, as is the situation sub judice, the policy of insurance will provide for the payment “for all damages an insured is legally obligated to pay because of bodily injury____” Thus, in that scenario, a successful unrelated litigant is entitled to recover from the insurer all of his or her damages up to the face amount of the policy. *417After Boblitz, an injured spouse was able to recover to the same extent. Under the majority decision, upholding the validity of the household exclusion as to the excess insurance above the minimum required, however, an injured spouse coming within the negligent spouse’s policy coverage, who, in all respects save relationship to the insured, is in the same situation as a stranger, may recover only the minimum required coverage. This result, while paying lip service to Boblitz’s abolition of interspousal immunity, substitutes a more subtle form of immunity, which has the effect of undermining Boblitz.

The majority justifies its position by observing that “Nothing in Boblitz purports to declare that the minimum coverage mandated by Transp. Art. § 17-103(b)(l) does not apply to an insured’s spouse,” slip op. at 6-7, and by pointing out that Md.Code Ann. art. 48A, § 545(c) permits an insurer to insert, in a policy, a household exclusion in connection with an uninsured motor vehicle. It also relies upon the insurer’s right to limit its liability and to impose such conditions, by contract, that it wishes so long as it does not “[contravene] a statutory inhibition or the state’s public policy.” At 411. As to that, the majority emphasizes the truism recognized and enunciated in State Farm that “A contractual provision that violates public policy ... is invalid, but only to the extent of the conflict between the stated public policy and the contractual provisions.” Id., quoting State Farm, 307 Md. at 643, 516 A.2d 586.

The majority is, of course, correct, Boblitz does not purport to declare that the minimum coverage mandated by § 17-103(b)(l) does not apply to an insured’s spouse, but neither does it purport to declare that it does apply. The majority’s reliance on Art. 48A § 545(c) is simply irrelevant; it permits such an exclusion with respect to an uninsured motor vehicle, not, as here, an insured one. Nor does the majority’s reliance upon the insurer’s right to limit its liability have validity.

To hold the household exclusion totally invalid insofar as husband and wife is concerned does no violence, whatsoev*418er, to the right of an insurer to contract with its insured, consistent with public policy. In this case, public policy favors permitting one spouse to sue the other for negligence and to recover for injuries caused by that spouse’s negligence. That public policy is contravened when the insured, by contracting with the insurer, can limit his or her spouse's recovery. This is so because, in effect, such a contract, at least partially, abrogates the Court’s prior abolition of inter-spousal immunity. To be sure, such a holding would, and does, as the majority says, interfere with the insurer’s right to contract; however, it does so consistent with, and in the same sense that the requirement of mandatory minimum insurance coverage does. As such, it goes only as far as the law permits and no further.

I would reverse.

. In addition to the interspousal sub-segment, the parent-child sub-segment immediately comes to mind.

. While interspousal immunity has been fully abrogated, Boblitz v. Boblitz, infra, parent-child immunity has not. See Frye v. Frye, 305 Md. 542, 505 A.2d 826 (1986). Hatzinicolas v. Protopapas, 314 Md. 340, 550 A.2d 947 (1988) represents limited loosening of the doctrine. That case held that a child may sue his or her father's business partner for an act of negligence committed in the operation of the partnership business. 314 Md. at 356-60, 550 A.2d 947.

. Section 17-103(b) provides that an automobile liability insurance policy:

shall provide for at least:

(1) The payment of claims for bodily injury or death arising from an accident of up to $20,000 for any one person and up to $40,000 for any two or more persons in addition to interest and costs;
(2) The payment of claims for property of others damaged or destroyed in an accident up to $10,000, in addition to interest and costs....