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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 776 September Term, 1995 _______________________________

CARL JEFFREY HICKEY, ET AL.

V.

HERBERT RICHARD KENDALL, ET AL.

_______________________________ Harrell, Salmon, Alpert, Paul E. (Ret., Specially Assigned), JJ. _______________________________ Opinion by Salmon, J. _______________________________ Filed: August 28, 1996

On April 26, 1991, appellee Shirley Kendall ("Shirley") was involved in an accident with a vehicle driven by Carl Hickey ("Hickey"). Shirley, at the time of the accident, was driving a

1986 Pontiac with her husband, appellee Herbert Richard Kendall ("Herbert"), sitting next to her. As a result of this accident,

Herbert filed suit in the Circuit Court for Montgomery County against Shirley and Hickey.1 Shirley, for her part, filed a cross-

claim against Hickey, wherein she alleged that as a result of Hickey's negligence she was injured. She asked for both

compensatory and punitive damages against Hickey.

In addition,

Shirley's cross-claim sought indemnification and/or contribution from Hickey in the event that she was held liable for her husband's injuries. praying Hickey, in turn, filed a cross-claim against Shirley indemnification and/or contribution in the event

for

Herbert recovered damages against him. Shirley and Herbert each suffered extensive injuries as a result of the April 26, 1991 accident. Hickey's vehicle was

covered by a policy issued by the Maryland Automobile Insurance Fund ("MAIF"), which had bodily injury liability limits of only $20,000 per claimant, $40,000 per accident. low limits, Shirley made a claim As a result of these Nationwide Mutual

against

Herbert sought compensatory and punitive damages against Hickey but sued Shirley only for compensatory damages.

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Insurance

Company

("Nationwide"),

her

insurer,

under

the

uninsured/underinsured ("U/M") portion of her policy.2 Shirley claimed that, even though she was driving a vehicle with $20,000/$40,000 U/M coverage at the time of the accident, she was entitled to the U/M coverage of $100,000/$300,000 that applied to her 1975 Chevrolet Cavalier. Alternatively, she claimed that

Nationwide had breached the duty, set forth in Maryland Code, Article 48A, section 541(c)(2)(ii) (1957, 1994 Repl. Vol.), to offer her, in writing, the opportunity to contract for U/M coverage equal to the $100,000/$300,000 liability coverage on the 1986 Pontiac. Nationwide, for its part, denied coverage to Shirley but was granted leave to intervene in the pending tort action as a party defendant. Nationwide contended that it had complied with the

requirements of Article 48A, section 541(c)(2)(ii) and that the U/M limits applicable to the subject accident were the same as Hickey's liability limits. On February 5, 1992, Shirley filed a pleading entitled "Motion for Partial Summary Judgment Involving Declaratory Relief as to Uninsured Motorist Coverage" against Nationwide. Shirley contended

in her motion that her policy allowed her to select the highest U/M

Underinsured motorist coverage "applies when an insured is involved in an accident with a motorist, who may carry extensive liability insurance far in excess of any amounts statutorily required, but whose liability coverage is less than the insured's underinsured motorist coverage." Hoffman v. United Services Automobile Association, 309 Md. 167, 174 (1987). In contrast, uninsured coverage applies when an insured is involved in an accident with a motorist who is either uninsured or who has policy limits that are below the statutory minimum. Id. In this opinion, the initials U/M mean uninsured/underinsured motorist coverage.

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coverage available for any of the three cars that were covered by the Nationwide policy. Herbert eventually also made a claim

against Nationwide, which was similar to Shirley's, and he moved for summary judgment against Nationwide on the same ground as his wife. A hearing was held on the summary judgment motions on May 14, 1992. The trial judge granted the relief sought by Shirley and

Herbert, saying, "I am going to grant [the] Motion [for partial summary judgment], the coverage is a hundred [thousand dollars per claimant]." After ruling against Nationwide on the coverage issue, the court bifurcated the tort case. A jury trial commenced on

August 23, 1993, devoted exclusively to the issue of liability. The jury, after a four-day trial, concluded that Hickey's

negligence caused the subject accident and that Shirley was not negligent. Hickey filed a Motion for Judgment Notwithstanding the Subsequently, on March 20, 1995, Judge

Verdict, which was denied.

Leonard Rubin presided at a bench trial that dealt solely with the issue of damages. The court awarded $100,000 to Shirley and After these judgments were Herbert and against Hickey,

$81,551.91 to Herbert as damages. entered in favor of Shirley and

Nationwide and Hickey both filed appeals, and Herbert filed a timely cross-appeal. The insurance coverage issue raised by Nationwide in this appeal is:

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Did the trial court err in finding that Mr. and Mrs. Kendall were each entitled to the $100,000 underinsured [U/M] coverage limits purchased in connection with a 1975 Chevrolet, even though at the time of the subject accident they were in a 1986 Pontiac, which had much lower limits, but was insured under the same policy? We answer "Yes" to this question. As a result, this case must be

remanded so that the court can rule on the Kendalls' claim that the applicable U/M limits were $100,000/$300,000 because (allegedly) Nationwide failed to notify them that they could contract for U/M coverage on the 1986 Pontiac that was equal to their liability limits. Also presented are several more mundane issues that

concern the conduct of the negligence phase of the lawsuit. I. COVERAGE ISSUES

The 1986 Pontiac that Shirley was driving at the time of the accident, like two other cars owned by the Kendalls (a 1978 Chevrolet and a 1975 Chevrolet), was insured through Nationwide. The Nationwide policy declaration set forth the following

coverages: Veh #1 U/M3 BI4 PD5 Make Year Pont. '86 Veh #2 $ Make Year Chev. '78 Veh #3 Make Year Chev. '75

$ 20,000/40,000 100,000/300,000 10,000

20,000/40,000 100,000/300,000 10,000

$100,000/300,000 100,000/300,000 50,000

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Underinsured/uninsured coverage. Bodily injury liability coverage. Property damage liability coverage.

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The premium for six months U/M coverage on the 1986 Pontiac and the 1978 Chevrolet was $11.80 each, and the six-month U/M premium for the 1975 Chevrolet was $22. Shirley contends that, as to her, the

U/M coverage is "personal" and she should be allowed to select the highest coverage. She acknowledges that everyone else who makes a

U/M claim under the policy is subject to the U/M limits applicable to the insured automobile occupied at the time of injury. Herbert takes a broader view. He claims that the U/M coverage

is "personal" to himself and Shirley but "vehicle specific" to everyone else who claims U/M coverage under the policy. The insuring agreement in the Kendalls' Nationwide policy provided: For your payment of premiums in amounts we require and subject to all of the terms and conditions of this policy, we agree to provide the coverages you have selected. Your selections are shown in the attached Declarations, which are a part of this policy contract.... Under the policy, the term "uninsured motor vehicle" is defined to include: [A]n underinsured motor vehicle. This is one for which there are bodily injury liability coverage or bonds in effect. Their total amount, however, is less than the limits of this coverage. These limits are shown in your policy's Declarations." The "U/M" coverage itself is described by the following policy language: Under this coverage we will pay all sums for bodily injury and property damage that you [defined as the policyholder first named in the Declarations (here, Mrs. Kendall) and 5

includes that policyholder's spouse (Mr. Kendall) if living in the same household] or your legal representative are legally entitled to recover as damages from the owner or driver of an uninsured motor vehicle. Damages must result from an accident arising out of the ownership, maintenance, or use of the uninsured motor vehicle. * * * * Bodily injury means bodily injury, sickness, disease, [or] death. Relatives living in your household also are covered for bodily injury damages under this coverage. Anyone else is protected while occupying: 1. Your auto. * * * * 2. any other motor vehicle while it is being operated by you. However, the vehicle must not be owned by or furnished to you or a relative living in your household for regular use. * * * *

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LIMITS AND CONDITIONS OF PAYMENT -AMOUNTS PAYABLE FOR UNINSURED MOTORISTS LOSSES. Our obligation to pay uninsured motorists losses is limited to the amounts per person and per occurrence stated in the attached Declarations. The following conditions apply to these limits: * * * * 3. The insuring of more than one person or vehicle under this policy does not increase our Uninsured Motorists payment limits. Limits apply to each insured vehicle as stated in the Declarations. In no event will any insured be entitled to more than the highest limit applicable to any one motor vehicle under this or any other policy issued by us. We begin by discussing the general prohibition against the "stacking" (or aggregation) of coverage, a topic that is related to
) although distinguishable from ) the issue we must decide.

The

seminal "stacking" case in Maryland is Howell v. Harleysville Mutual Insurance Co., 305 Md. 435 (1986). John Howell, while

driving a van owned by his employer (the Pritchett Transportation Company, Inc., hereinafter, "Pritchett"), was severely injured in a collision with an uninsured motor vehicle. Pritchett owned a

fleet of 19 vehicles, all of which were insured through the Harleysville Mutual Insurance Company ("Harleysville");

nevertheless, Pritchett's U/M coverage with Harleysville specified that "the most that will be paid for any one accident or loss is $50,000." Id. at 437. Howell argued that the $50,000 limit

applied to each vehicle in Pritchett's fleet and that, therefore, Pritchett's total available U/M coverage for his particular

accident was $950,000.

In other words, Howell sought to "stack"

Pritchett's U/M benefits, a practice that the Court of Appeals held 7

violated both the clear language of the governing policy and ) more important ) common sense: A total of 19 vehicles were insured. Applying the mathematics ... we would find that if Howell's contentions were to prevail there would be an exposure for each vehicle of $950,000 (19 X $50,000). If all 19 vehicles were on the road at one time the total exposure of the insurance company would be $18,050,000 (19 X 950,000). All of this coverage would be available for a premium of $76. This would be a truly absurd result. Id. at 442. this case The holding in Howell was concise: that there cannot be "We shall hold in `stacking' or

intra-policy

pyramiding of uninsured motorists benefits."

Id. at 436.

A similar result was reached in Hoffman v. United States Automobile Association, 309 Md. 167 (1987), a case that presented facts analogous to those in Howell. Appeals stated: In our opinion, the Howell decision controls the present case.... The declarations page provides limits of $300,000 for each person and $500,000 for each occurrence. The endorsement further states that these limits "shall be the total limit of the company's liability for all damages because of bodily injury." * * * * In sum, the principles established in [Howell] preclude stacking the underinsured motorist coverage in this case. 309 Md. at 182-83. By applying the holdings of Howell and Hoffman to the case at bar, we note that Herbert and Shirley Kendall would have been precluded from "stacking" the Nationwide coverage on their three In Hoffman, the Court of

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vehicles to

obtain

a

total

"stacked"

per

person

coverage

of

$140,000 ($20,000 from the 1986 Pontiac, plus $20,000 from the 1978 Chevrolet, plus $100,000 from the 1975 Chevrolet). Stacking their

coverages, however, is not what the Kendalls are currently seeking to do. Rather, they seek to "blend" their coverages, i.e., they

seek to be able to select the vehicle under the policy that will provide maximum coverage, as opposed to combining the full limits of all available policies. The appellate courts of this state have

never specifically addressed the propriety of blending coverages. Before deciding whether "blending" of policy limits is

allowable, it is important to remember the reason why insurers charge additional premiums for each additional vehicle insured. 8C APPLEMAN, INSURANCE LAW
AND

In

PRACTICE,

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