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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND

No. 788 September Term, 2002

WILLIAM HARVEY v. NORTHERN INSURANCE COMPANY OF NEW YORK

Murphy, C.J., Barbera, Weinstein, Paul H., (Specially assigned) JJ.

Opinion by Barbera, J.

Filed: December 3, 2003

Appellant, William Harvey, appeals from an order issued by the Circuit Court for Baltimore City granting a motion for summary judgment in favor of appellee, Northern Insurance Company of New York ("NICNY"). Appellant raises the following questions, which we set forth as they appear in his brief: I. Was the appellant's suit barred by a contractual provision which limited the time for filing suit? Where an insured sues the wrong insurer and such a mistake is due to an intentional misrepresentation by the correct insurer, is the insurer barred from raising the error as a defense?

II.

For the reasons that follow, we shall affirm the judgment. FACTS AND PROCEEDINGS Appellant is the owner of a 1995 twenty-eight foot Bayliner cruiser ("the boat"). On October 29, 1999, NICNY issued a marine The policy insured the hull of the

insurance policy to appellant.

boat up to $48,000.00 for one year, until October 29, 2000. During the afternoon hours of October 24, 2000, the engine compartment of the boat sustained severe damage as a result of a fire. The next day, appellant submitted a claim to NICNY for

damages. The Marine Claims Unit of Farmers Insurance Exchange began investigating appellant's claim. Farmers Insurance Exchange

contracts with Zurich Financial Services Group, of which NICNY belongs, to "perform claims evaluation, adjustment, and defense management of claims" asserted against certain insurance carriers.

Mr. Dennis Kirouac, a marine claims specialist working in the claims unit, assigned Mr. John Horan to investigate appellant's claim. Mr. Horan inspected the boat and found evidence indicating Based on these findings, the

that the fire was not accidental.

claims unit hired Mr. Bill Seals, a cause and origin specialist, "to provide additional information with regard to the source of the fire." Mr. Seals agreed with Mr. Horan that the fire was not the Police

result of an accident, but had been deliberately set.

officers working for the Department of Natural Resources verified that the damage to the boat was not accidental. Approximately five months after the fire occurred, Mr. Kirouac notified appellant of its denial of benefits under the policy. The letter read, in pertinent part: The investigation conducted in this matter concludes that the fire at issue was the result of arson. The investigation also concluded that you were the only individual in contact with your boat on the date of the fire. Furthermore, the investigation indicates that the physical evidence does not support your version of the events of that day and, in fact, indicates that the fire occurred in a way in which you would have had to be an active participant in the ignition of the fire and/or would have had to be aware of the ignition. In view of these findings, we must advise you that your insurance policy does not cover this loss. Mr. Kirouac signed the letter in his capacity as a marine claims specialist for NICNY. The closing of the letter states:

"Sincerely, The Northern Insurance Co. of New York."

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Appellant's insurance policy provides that legal action may be brought against the insurer "within one year after the loss." In

September 2001, eleven months after the loss, appellant filed a single count complaint in the Circuit Court for Baltimore City, naming Zurich Insurance Company ("Zurich") as the sole defendant. Appellant sued Zurich for breach of contract, seeking $50,000.00 in damages. In response, Zurich filed a motion to dismiss arguing

insufficiency of process and service of process, and failure to state a claim upon which relief can be granted. answer the motion to dismiss. Four months later, in January 2002, appellant amended his complaint, naming both Zurich and NICNY as defendants. The parties thereafter filed a "Stipulation of Dismissal" with the circuit court, agreeing that the complaint be dismissed as to Zurich. The Appellant did not

court entered an order dismissing the amended complaint against Zurich. On March 1, 2002, NICNY filed a motion to dismiss the amended complaint, arguing that appellant's complaint is barred by contract because he did not file suit against NICNY within one year of the date of the incident. NICNY appended to its motion several

documents, namely an affidavit of Mr. Craig McGinnes, an employee of the Marine Claims Unit of the Farmers Insurance Exchange, the declarations page of the insurance policy, and other portions of the policy.

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The motion to dismiss came on for a hearing.

The court

considered matters presented to it that were outside the pleadings (thereby treating appellee's motion to dismiss as a motion for summary judgment), and granted the motion. Thirty days later, appellant noted the instant appeal. On the same day, appellant filed a motion for new trial, pursuant to Maryland Rule 2-535(c). motion without a hearing. One month later, the court denied the Appellant did not appeal that ruling.

Additional facts will be set forth as they become pertinent to our discussion. DISCUSSION The Standard of Review We have mentioned that the court received evidence on the motion to dismiss, thus transmuting it into a motion for summary judgment. Md. Rule 2-322(c); Muthukumarana v. Montgomery Co., 370 We therefore employ the appellate review

Md. 447, 474 (2002).

standard applicable to the grant of summary judgment. This Court reviews an order granting summary judgment de novo. Beyer v. Morgan State Univ., 369 Md. 335, 359 (2002). We are

required to determine whether a dispute of material fact exists. Id. at 359-60. "`A material fact is a fact the resolution of which

will somehow affect the outcome of the case.'" Matthews v. Howell, 359 Md. 152, 161 (2000) (quoting King v. Bankerd, 303 Md. 98, 111 (1985)). -4-

Summary judgment is only appropriate when, upon review of the facts and inferences therefrom in the light most favorable to the non-moving party, there is no genuine issue of material fact and the party in whose favor judgment is entered is entitled to judgment as a matter of law. Md. Rule 2-501(e); Frederick Road If the

Ltd. P'shp v. Brown & Sturm, 360 Md. 76, 93-94 (2000).

record reveals that a material fact is in dispute, summary judgment is inappropriate. Okwa v. Harper, 360 Md. 161, 178 (2000). Once

we have concluded that there is no genuine issue of material fact, we review the trial court's grant of summary judgment to ascertain if it was legally correct. Jahnigen v. Smith, 143 Md. App. 547,

555, cert. denied, 369 Md. 660 (2002). I. The court granted summary judgment in favor of NICNY because appellant had not filed suit against NICNY within one year after the boat fire occurred, as required by the insurance policy. court was correct in so ruling. The limitations provisions for filing suit are found in Paragraph 11 of the "General Conditions Applicable to All The

Coverages" section of appellant's insurance policy. That paragraph reads: "No legal action may be brought against `us' unless: a)

the `insured' has complied with all provisions and requirements of this policy; and b) under Section I, the action is commenced within one year after the loss." The "Definitions" section of the policy

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defines "us" as "the [c]ompany providing this insurance."

The

declarations page of the policy states that the insurance policy underwriter is NICNY. Resolution of this appeal hinges upon this Court's

interpretation of the word "action" in subpart (b) of Paragraph 11 of the policy. Appellant contends here, as he did below, that the

"action" commenced when he filed his original complaint against Zurich on September 24, 2001, eleven months after the boat fire occurred. He urges that, for purposes of complying with the

limitations provision of Paragraph 11 of the policy, it matters not that Zurich was an improper party; it matters only that he

commenced the action within one year after the loss. Appellant looks primarily to Maryland Rule 1-202 in support of this contention. Subsection (a) of that rule defines "action" as

"collectively all the steps by which a party seeks to enforce any right in a court or all the steps of a criminal prosecution." definition, themselves. of course, applies to the Rules of This

Procedure

Nothing in either law or logic dictates that we apply

the definition in Rule 1-202(a) to the insurance policy at issue here, and we decline to do so. We look, instead, to the insurance policy itself to determine what is meant by "action." An insurance agreement, like any other

contract, is interpreted by its terms, unless to do so would violate public policy. Kendall v. Nationwide Ins. Co., 348 Md.

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157, 166 (1997).

The plain language of the contract is first

examined according to its words and phrases and "their ordinary and accepted meanings as defined by what a reasonably prudent lay person would understand them to mean." Id.

Paragraph 11 of the policy, exclusive of what for present purposes is extraneous language, reads: "No legal action may be brought against `us' unless: . . . (b) under Section I, the action Thus read, the

is commenced within one year after the loss."

meaning of "action" in subpart (b) refers back to the "legal action . . . against `us'" in the opening clause of the paragraph. And,

as we have said, the term "us" is defined in the policy as the "[c]ompany providing this insurance," which, according to the declarations page of the policy, is NICNY, and not Zurich. To comply with Paragraph 11 of the policy, then, appellant's legal action must have been brought against NICNY, and not Zurich, within one year of the loss. It is undisputed that appellant did

not add NICNY as a defendant until January 2002, more than three months beyond the one-year limitations period provided by the insurance policy. Under the plain language of the policy, appellant's complaint is time-barred unless the policy's one-year limitations period violates public policy. It does not. Indeed, the General Assembly has expressly declared that shortened limitations periods in

policies such as the policy at issue in this case do not violate

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public policy.

See Clay v. GEICO, 356 Md. 257, 264 (1999)

("`"[D]eclaration of public policy is normally the function of the legislative branch."'"). (Citations omitted.)

Maryland Code (1995, 1997 Repl. Vol.),

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