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REPORTED

IN THE COURT OF SPECIAL APPEALS OF MARYLAND

No. 2431

September Term, 1999 _________________________________ UNIVERSAL UNDERWRITERS INSURANCE COMPANY v. MELODY LOWE, et al. _________________________________

Eyler, Karwacki, Robert L.
(Retired, specially assigned)

Fischer, Robert F.,
(Retired, specially assigned)

JJ.

_________________________________

Opinion by Fischer, J. _________________________________

Filed: November 8, 2000

The appeal before us stems from a motor vehicle accident that occurred on May 10, 1996, in which a car driven by Melody Lowe ("Ms. Lowe") collided with a car driven by Nicole Parsons. We are asked, in essence, to determine which of two insurers, if either, must provide coverage to Ms. Lowe.

FACTS Nicole Parsons and her husband, Michael Parsons, filed suit in the Circuit Court for Anne Arundel County against: Ms. Lowe;

Ms. Lowe's father, Hubert Lowe;1 and the Parsons' own insurer, State Farm Mutual Automobile Insurance Company2 ("State Farm"). Hubert Lowe sold an automobile dealership to Bob Bell

Automotive Group, Inc. ("Bell") in August of 1995.

Pursuant to

the sale agreement, Bell provided two cars to Hubert Lowe and his wife, Rebecca Lowe ("Mrs. Lowe"), for their personal use. The cars were still owned by Bell. Ms. Lowe was driving one of

those vehicles when the accident occurred.

The suit alleged that Melody Lowe was an "agent, servant, and employee" of Hubert Lowe. Mr. Lowe is not a party to this appeal. The Parsons misnamed their insurer as State Farm Insurance Companies. State Farm Mutual Automobile Insurance Companies insured the Parsons' vehicle. The Parsons' suit alleged that "Brethren Mutual Insurance Company, the insurance carrier for Defendants, Melody Lowe and Hubert Lowe, has refused to provide coverage to its insured, thereby requiring Plaintiffs to file an Uninsured Motorist claim with their own insurance carrier . . . ."
2

1

Bell's

vehicles

were

insured

by

Universal

Underwriters

Insurance Company ("Universal"). Bell's listed policy: policy as with Universal,

In the declarations sheets to Hubert the and Rebecca Lowe of were the

"Other

Insureds"

for

following

parts

- "Auto Inventory Unicover Coverage Part 300," which, in pertinent part, provided coverage for any loss of or to any covered auto unless the auto was furnished or available for the regular use of an individual named in the declarations sheets as an insured or a family member of that individual. See Universal Policy, Part 300 at 9-14 and Endorsement No. 11 at 79-80. - "Garage Unicover Coverage Part 500," which provided coverage for injuries that resulted from garage operations or auto hazard, and which extended, in certain circumstances to be discussed in more detail, infra, to autos "furnished [by Bell] for the use of any person or organization." See Universal Policy, Part 500 at 32-41. Hubert and Rebecca Lowe were listed as "Named Insureds" under: "Property Unicover Coverage Part 330," which provided coverage for loss to property located at various Bell locations. See Universal Policy, Part 330 at 15-25. The Lowes were not listed as "Named Insureds" or "Other The Bell

Insureds" under "Basic Auto Unicover Coverage Part 900." only entity listed as insured under that part was Bob

Leasing, Inc. ("Bell Leasing"), which was identified as a "Named Insured." In pertinent part, Part 900 provided coverage for any -2-

injury

resulting

from

an

occurrence

arising

out

of

the

ownership, maintenance, use, loading, or unloading of a vehicle owned or leased by Bell Leasing. at 47. using See Universal Policy, Part 99

Part 900 specifically provided, however, that any person such a vehicle within the scope of Bell Leasing's

permission was insured under the policy.3

See id. at 49.

At the time of the accident, Melody Lowe resided in the household of her parents. vehicles other vehicles were than those by Hubert and Rebecca Lowe owned several provided Brethren by Bell, and those other

insured

Mutual

Insurance

Company

("Brethren").

Although Brethren began providing a defense to Ms. Lowe then claimed

Ms. Lowe, it eventually denied coverage. coverage under the Universal policy.

Universal, in response, filed a declaratory judgment action in the Circuit Nicole Court for Anne Arundel County against State Melody Farm4.

Lowe,

and

Michael

Parsons,

Brethren,

and

Universal averred that the Brethren policy "may have provided
3

The parties do not explain the relationships between the various Bob Bell entities. We thus cannot determine whether the cars supplied to Hubert and Rebecca Lowe were supplied by Bob Bell Leasing as well as Bob Bell Automotive Group, Inc., and whether the permission granted to Mr. and Mrs. Lowe by Bob Bell Automotive Group, Inc. to use the car in question was the equivalent of permission from Bell Leasing. Like the Parsons, Universal mistakenly referred to State Farm Mutual Automobile Insurance Company as State Farm Insurance Company. -34

coverage to Melody Lowe for the claims of Nicole and Michael Parsons," and that, in any event, "at the time of the collision there was also in effect an insurance policy issued by State Farm to Nicole and Michael Parsons providing uninsured and

underinsured motorist coverage to them for injuries arising out of the collision." Universal asked that the court declare that to provide a defense to

it "has no duty under its policy . . .

Melody Lowe . . . or to indemnify her for, or pay, any judgment which may be entered against her . . . ." Ms. Lowe moved for summary judgment. In her written motion,

she asserted, in essence, that there was no dispute that she had her parents' permission to use the car on the day the accident occurred. She concluded that she was therefore insured under

Part 900 of the Universal policy, and asked the court to declare that, as a matter of law, Universal was required to defend and indemnify her. Ms. Lowe attached to her motion copies of the

Universal policy and Universal's response to her request for admissions of fact. In the response, Universal admitted, inter

alia, that Ms. Lowe had her parents' permission to use the car at the relevant time.

-4-

Universal opposed Ms. Lowe's motion for summary judgment and filed a cross-motion contended Part for that 900 of summary Hubert the judgment.5 and policy Rebecca and In its motion, not

Universal insured

Lowe the

were

under

that

relevant

coverage part was Part 500.

It asserted that Bell had expressly

forbidden Hubert and Rebecca Lowe to permit anyone else to use the automobile, and that Melody was therefore not covered under Part 500. Universal attached to its motion the affidavit of

Bell general manager Michael Fitzpatrick, affirming that he had met with Hubert Lowe in August of 1995 and again in March of 1996 and had both times informed Mr. Lowe that "only he and his wife had permission to drive the automobiles being furnished to them pursuant to the sale of his automobile agency to Mr. Bell." A hearing was held, and the parties reiterated the positions set forth in their memoranda. Counsel for Ms. Lowe contended

that, on the face of the Universal policy, Hubert and Rebecca Lowe had authority, under both Part 900 and Part 500, to permit Melody Lowe to use the automobile. that the Fitzpatrick affidavit was Ms. Lowe's counsel posited inadmissible in that, in

The Parsons opposed Ms. Lowe's motion for summary judgment as well. In a memorandum filed with the court, the Parsons posited that the question as to coverage hinged on disputed facts, and that Universal and Brethren should be permitted to present evidence and argument at trial as to which insurer was responsible for primary coverage. -5-

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counsel's view, it was "extrinsic evidence . . . beyond the four corners of the insurance policy." believed such "extrinsic" In the event that the court was admissible, counsel

evidence

submitted to the court a letter dated August 26, 1995, which was apparently prepared for Hubert Lowe's signature but was never signed. If signed, the letter would have reflected Mr. Lowe's

agreement that only he and Rebecca Lowe were to use the Bell vehicles. Counsel did not explain who prepared the unsigned

letter or how it controverted the Fitzpatrick affidavit. The court subsequently issued an order by which it resolved, in Ms. Lowe's favor, that portion of the declaratory judgment action regarding whether Universal was required to defend and indemnify Ms. Lowe. The order stated:

This matter came before this Honorable Court on February 8, 1999, for a hearing on the Plaintiff's [(Universal's)] Motion for Summary Judgment and the Defendant's [(Ms. Lowe's)] Motion for Summary Judgment. Having considered the arguments of both parties, it is this 9th day of February, 1999, by the authority of the Circuit Court for Anne Arundel County, State of Maryland. ORDERED that the Plaintiff's Motion for Summary Judgment is DENIED; and it is further, ORDERED that the Defendant's Motion for Summary Judgment [is] GRANTED; and it is further ORDERED that judgment favor of the Defendant. -6be entered in

(Footnote

omitted.)

The

only

explanation

for

the

court's

decision was contained in a footnote, which provided: Maryland Rule 2-501(c) states that "[t]he court shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." In the present case there is no dispute as to the facts. Therefore, the only issue is whether either party is entitled to judgment as a matter of law. The primary consideration in this case is whether the Defendant, Melody Lowe, was insured by the Plaintiff at the time of her accident. Having reviewed the terms of the policy, this Court finds that the Defendant, Melody Lowe, was an insured and entitled to indemnification to the extent provided for in the policy. Consequently, summary judgment in favor of the Defendant is appropriate.[6]

We note that the court's order, at best, barely meets the requirements for a declaratory judgment. "While a declaratory decree need not be in any particular form, it must pass upon and adjudicate the issues raised in the proceeding, to the end that the rights of the parties are clearly delineated and the controversy terminated." Dart Drug. Corp. v. Hechinger Co., Inc., 272 Md. 15, 29 (1974) (emphasis added). See also Md. Code (1974, 1998 Repl. Vol., 2000 Cum. Supp.),

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