DeJarnette v. Federal Kemper Insurance

ELDRIDGE, Judge,

dissenting:

I agree with the majority that Maryland Code (1957, 1979 Repl.VoL, 1983 Cum.Supp.), Art. 48A, § 545(b), authorizes an insurer to exclude so-called personal injury protection coverage for injuries sustained by a passenger on a motorcycle. On the other hand, I believe that the Federal Kemper policy at issue in this case failed to do so. In my view the term “use of a motorcycle” in the policy provision, as applied to a passenger exercising no control over the vehicle, is ambiguous. The ambiguity should be resolved against Federal Kemper as the party which drafted the policy. I would, therefore, reverse.

This Court has consistently adhered to the principle that when an ambiguity exists in an insurance contract, as well as other types of contracts, the ambiguity will be resolved against the party which drafted the instrument. Thus an ambiguity in an insurance policy “is to be resolved against the company which prepared the policy and in favor of the insured.” Bond v. Pennsylvania Nat’l Mut., 289 Md. 379, 384, 424 A.2d 765 (1981), quoting National Grange Mut. Ins. v. Pinkney, 284 Md. 694, 705, 399 A.2d 877 (1979), and Gov’t Employees Insur. v. DeJames, 256 Md. 717, 720, 261 A.2d 747 (1970). Accord: St. Paul Fire & Mar. Ins. v. Pryseski, 292 Md. 187, 200, 438 A.2d 282 (1981); Truck Ins. Exch. v. Marks Rentals, 288 Md. 428, 435, 418 A.2d 1187 (1980); Aragona v. St. Paul Fire & Mar. Ins., 281 Md. 371, 375, 378 A.2d 1346 (1977); McKoy v. Aetna Cas. & Sur. Co., 281 Md. 26, 31, 374 A.2d 1170 (1977); Peoples Life Ins. Co. v. Jerrell, 271 Md. 536, 542, 318 A.2d 519 (1974), and cases there cited.

Language in an insurance policy is ambiguous if it is reasonably susceptible of more than one meaning. St. Paul Fire & Mar. Ins. v. Pryseski, supra, 292 Md. at 198, 438 A.2d 282; Truck Ins. Exch. v. Marks Rentals, supra, 288 *727Md. at 433, 418 A.2d 1187. Moreover, the existence of an ambiguity is not determined by what the insurer intended its words to mean; instead, whether language is ambiguous is determined by what a reasonably prudent person would have understood the words to mean. C & H Plumbing v. Employers Mut., 264 Md. 510, 515, 287 A.2d 238 (1972). Finally, the same language may be ambiguous in one context but free of ambiguity under other circumstances. See Truck Ins. Exch. v. Marks Rentals, supra, 288 Md. at 433, 418 A.2d 1187; Ebert v. Millers Fire Ins. Co., 220 Md. 602, 610, 155 A.2d 484 (1959).

In the context of a permissible optional exclusion from the personal injury protection coverage prescribed by Art. 48A, § 539(a), for a motorcycle passenger exercising no control over the vehicle, the phrase “use of a motorcycle” is certainly not free of ambiguity.

Section 539(a) of the Insurance Code requires that automobile insurance policies issued, sold or delivered in Maryland provide coverage, regardless of fault, for medical expenses and loss of wages. The benefits under this coverage are often referred to as economic loss benefits or personal injury protection (PIP) benefits. Section 545 of the Insurance Code, which authorized the exclusion involved in this case, provides in subsection (b) as follows:

“(b) With respect to motorcycles, economic loss benefits required under § 539 may be excluded, or may be offered with deductibles, options or with specific exclusions.”

Thus, § 545(b), and the exclusion in Federal Kemper’s policy, specifically relate to the coverage dealt with in § 539(a). Furthermore, as the above-quoted language shows, the Legislature contemplated that an insurer, for whatever reason, might not wish to exclude entirely § 539(a) coverage with respect to motorcycles but might wish to offer only “specific exclusions.”

Turning to § 539(a), the pertinent language of the provision is as follows (emphasis supplied):

*728“The benefits, or their equivalent, shall cover the named insured and members of his family residing in his household ... injured in any motor vehicle accident ..., other persons injured while occupying the insured motor vehicle as a guest or passenger, or while using it with the express or implied permission of the named insured____”

The above-quoted language clearly draws a distinction between occupying a vehicle as a passenger and using the vehicle. This was conceded by Federal Kemper’s counsel during oral argument in this case. The non-operator passenger is referred to as one “occupying” the vehicle, whereas the driver is referred to as the person “using” the vehicle. In the context of § 539(a), the meaning of “use” is limited to “driving.”

When language in an insurance policy is drafted in response to specific statutory provisions, and the same language also appears in those statutory provisions, it is only reasonable that a court should look to the statutes in ascertaining the meaning of the language. Even in situations where the policy was not drafted with a specific statute in mind, courts have looked to statutory definitions of words for guidance in interpreting policy language. See Pennsylvania Indemnity Fire Corporation v. Aldridge, 117 F.2d 774, 133 A.L.R. 914 (D.C.Cir.1941); Sullivant v. Pennsylvania Fire Ins. Co., 223 Ark. 721, 268 S.W.2d 372, 374-375 (1954); Hayes v. Financial Indemnity Co., 118 Cal.App.2d Supp. 883, 257 P.2d 765, 767 (1953); Southeastern Fidelity Insurance Co. v. Fluellen, 128 Ga.App. 877, 198 S.E.2d 407, 408-409 (1973); St. Paul Mercury Ins. v. Tri-State Cattle, 628 S.W.2d 844, 847 (Tex.App.), aff'd 638 S.W.2d 868 (Tex.1982); P.E. Ashton Company v. Joyner, 17 Utah 2d 162, 406 P.2d 306 (1965).

As the language in Federal Kemper’s policy was drafted for the sole purpose of creating a permissible exclusion from § 539(a)’s required coverage, it is reasonable to assume that the words in the policy exclusion have the same *729meaning as the words in § 539(a). At the very least, an ambiguity is created.1

While the majority, like Federal Kemper’s counsel, acknowledges that § 539(a) makes a distinction between occupying a vehicle as a passenger and using it, the majority goes on to offer three reasons for ignoring this statutory distinction.

First, the majority asserts that “the occupying and using language pertains to accidents in an insured vehicle [and in] the instant case the insured vehicle was not involved in the accident.” While true, the assertion is wholly irrelevant to the meaning of the terms “using” and “occupying” as intended by the Legislature in § 539(a).

The majority’s second reason, that “neither occupy [n]or use is contained in the definition section of the statute,” overlooks the fact that the Legislature employed these two different words in the same sentence and, as the majority opinion itself recognizes, the Legislature in § 539(a) drew a distinction between the two words. Long ago this Court stated that “ ‘when the Legislature, in the same sentence, uses different words, the courts of law will presume that they were used in order to express different ideas.’ ” Parkinson v. State, 14 Md. 184, 197, 74 Am.Dec. 522 (1859).

The majority’s third argument, that “§ 539 merely provides for coverage in general terms [while §] 545 ... is more specific,” again does not relate to the meaning of the word “use” in the pertinent statutory provisions. Section 545, which in subsection (b) authorizes the motorcycle exclusion from the coverage prescribed by § 539(a), does not employ any form of the verb “use.” Instead, the Legislature in § 545(b) employed the broad language “[w]ith respect to motorcycles.” It is only § 539(a), the basic section concerning PIP benefits, which distinguishes “using” from “occupying the insured motor vehicle as a ... passenger.”

*730The majority’s attempt to bolster its position, by “finding that ... the terms the legislature chose to employ in § 545 do not conform to the terms used in § 539,” and by its conclusion that “the § 539 language does not control § 545,” is also irrelevant. The question is not which section controls; rather the issue relates to the meaning of the word “use” as employed in the pertinent statutes. In addition, the majority’s claim that the terms of the two sections “do not conform” is strained. The sole example of this purported noncomformity is a suggestion of alternative language which might have been employed in § 545(a)(2), where the language actually employed by the Legislature in § 545 is not at all inconsistent with that of § 539. And again, it must be emphasized that the relevant statutory issue to be resolved is not which section governs; rather it is whether the Legislature employed the term “using” solely to refer to the operator of a motor vehicle, reserving the word “occupying” to refer to guests and passengers. Nothing in the majority opinion is persuasive that this was not the case.

In addition to the circumstance that the policy provision at issue was specifically designed to exclude § 539(a) coverage and § 539(a) employs “using” to mean only “driving,” there is another reason in this case for rejecting Federal Kemper’s position. Not only does the policy make reference to § 539, but the policy itself appears to adopt the limited meaning of “using,” as referring solely to the vehicle’s operator. In the definition section, the policy defines “injured person” as

“(b) any other person who sustains bodily injury (1) while occupying the insured motor vehicle as a guest or passenger, or (2) while using the insured motor vehicle with the express or implied consent of the named insured.” (Emphasis added.)

Lastly, the majority cites several cases as holding that a non-directing passenger is “using” a motor vehicle within the meaning of an insurance policy. None of these cases, however, involved an interpretation of “use” in an exclu*731sion from coverage, as applied to a non-directing passenger. Other courts have held the term “use” in the context of a policy exclusion to be ambiguous, requiring resolution in favor of the insured. See, e.g., LeJeune v. Allstate Insurance Co., 365 So.2d 471, 476 (La.1978). At least one court has noted “the inherent ambiguity of the term [which] ambiguity calls for a strict construction against the party who drew the contract.” Travelers Insurance Co. v. Aetna Casualty & Sur. Co., 491 S.W.2d 363, 365 (Tenn.1973). Moreover, none of the cases relied on by the majority involved statutory language like that of § 539(a).

Federal Kemper, in attempting to limit § 539(a) coverage, employed language which, under § 539(a), means “driver” and not “passenger.” In light of this, the intent of the policy language to exclude passengers is at least ambiguous. To reiterate, “[w]e have made it clear that where an insurance company, in attempting to limit coverage, employs ambiguous language, the ambiguity will be resolved against it as the one who drafted the instrument,” Haynes v. Am. Cas. Co., 228 Md. 394, 400, 179 A.2d 900 (1962). See Penn., etc., Ins. Co. v. Shirer, 224 Md. 530, 537, 168 A.2d 525 (1961). Our cases require a reversal here.

DAVIDSON, J., has authorized me to state that she concurs with the views expressed herein.

. It is noteworthy that the Federal Kemper policy, under "EXCLUSIONS," makes specific reference to § 539.