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Maryland Court of Appeals Interprets Insurance Policy in Favor of Insurer and Concludes that Underinsured Motorist Provisions Were Not Ambiguous

Linda Connors, Individually etc., v. Government Employees Insurance Co.
Court of Appeals of Maryland, Case No. 45, September Term, 2014 (Md. April 17, 2015)

by Jhanelle A. Graham, Associate
Semmes, Bowen & Semmes (

For more information, contact Paul N. Farquharson at (410) 576-4742.

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In Linda Connors, Individually etc., v. Government Employees Insurance Co., the Court of Appeals of Maryland decided a case involving a dispute between an insurance company and two (2) of its insureds, regarding the method to calculate the proceeds owed to the insureds pursuant to the underinsured motorist provisions of their policy. The insureds argued that the express terms of the insurance contract mandated that the insurance company pay them $300,000, the per occurrence limit on their underinsured motorist policy. By contrast, the insurance company argued that its insureds were owed only $100,000, calculated as $300,000 less credits of $200,000 paid by the torfeasor’s insurer. To settle this dispute, the appellate court was called upon to interpret the subject policy, and concluded that the policy was not ambiguous. Consequently, the Court of Appeals agreed with the insurance company that the terms of the policy mandated that the insureds were owed $100,000.

The facts of the case were undisputed. On August 14, 2009, Robert and Linda Connors (collectively, the “Connors”), husband and wife, took an ill-fated stroll in their Waldorf neighborhood. A motor vehicle operated by Adam Pond (“Pond”), while backing out of a residential driveway, struck the Connors who were pedestrians. The Connors alleged, in their subsequent Complaint, that Linda Connors hit the vehicle with her hand and screamed when she was struck, after which the vehicle stopped. Allegedly, Pond saw Linda screaming on the ground and nonetheless resumed moving the vehicle again as he attempted to flee the scene, and in the process backed over Robert Connors. Both of the Connors sustained injuries. Robert Connor sustained serious injuries to his head, including a traumatic brain injury, as well as injuries to his neck, body, and limbs. He was taken to Holy Cross Hospital for treatment of his injuries and transferred later to the Crofton Rehabilitation Center, where he died on January 31, 2011. Linda sustained injuries to her neck, back, leg, and arm, and also claimed emotional injuries incurred as a result of watching her husband being run-over.

At the time of the accident, the Connors together owned a vehicle insured by Government Employees Insurance Co. (“GEICO”) under a Maryland Family Automobile Insurance Policy (the “GEICO policy” or the “policy”). GEICO conceded that both Robert and Linda Connors were “insureds” under the policy, the terms of which included underinsured motorist (“UIM”) coverage of $300,000 per person/$300,000 per accident. Pond maintained automobile liability insurance with Allstate Insurance Co. (“Allstate”), limited to $100,000 per person/$300,000 per accident. The record did not divulge the exact monetary amount of damages sustained by Robert and Linda Connors, although GEICO conceded that the total amount exceeded all available and collectable insurance. The Connors settled with Allstate for the limits of Pond’s liability insurance after GEICO waived its rights of subrogation against Pond. Pursuant to this settlement, Allstate paid $100,000 to Robert (before he died) and $100,000 to Linda.

Each of the Connors then submitted claims for underinsured motorist coverage to GEICO under the terms of their policy. The Connors sought $300,000 total from GEICO. GEICO agreed that the Connors were owed a total of $100,000 under the terms of the policy, but disputed the additional $200,000 claimed by them. Pursuant to an agreement reached between the parties, GEICO paid the Connors the $100,000 it agreed was owed them, with the understanding that the Connors could proceed with a Complaint for Declaratory Judgment as to the $200,000 in dispute.

On December 16, 2010, Robert and Linda Connors filed in the Circuit Court for Montgomery County a Complaint for Declaratory Judgment against GEICO, together with a motion for summary judgment. GEICO filed initially a motion to dismiss, which was denied summarily. GEICO THEN filed an answer, a cross-motion for summary judgment, and opposition to the Connors’ motion for summary judgment. The Circuit Court heard arguments from all parties and ruled from the bench as to the pending motions and the Complaint, agreeing with GEICO’s interpretation of the policy and determining that the Connors should recover only $100,000 from GEICO. The Connors filed a Petition for Writ of Certiorari, which the Court of Appeals granted.

On appeal, the Maryland Court of Appeals noted that Maryland law requires every motor vehicle insurance policy issued in Maryland to contain minimum uninsured motorist coverage. Md. Code (1997, 2011 Repl.Vol.), Ins. Art., § 19-509; see Waters v. U.S. Fidelity & Guaranty Co., 328 Md.700, 710, 616 A.2d 884, 888 (1992). At the time of the Connors’ accident, each Maryland motor vehicle liability policy had to contain a minimum of $20,000 coverage for injury or death of any one (1) person in an accident, a minimum of $40,000 in coverage for injury or death of two (2) or more people in an accident, and a minimum of $15,000 in coverage for property damage resulting from any one accident. Md. Code (1977, 2009 Repl. Vol.), Transp. Art. II, § 17-103.

The parties provided the Court with various formulas by which to calculate the benefits due to the Connors under the terms of their policy. As a general rule, the appellate court opined that it interprets the language of an insurance policy with the same principles and rules of construction that it uses to interpret other contracts. See Megonnell v. United States Auto Ass’n, 368 Md.633, 655, 796 A.2d 758, 772 (2002); Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305,753 A.2d 533, 537 (2000). Further, the appellate court explained that a policy term is considered “ambiguous if, to a reasonably prudent person, the term is susceptible to more than one meaning.” Cole, 359 Md. at 305–06, 753 A.2d at 537. In this case, the Court found that the policy was not ambiguous and could be enforced as a matter of law. Specifically, Subsection (2) of the policy addressed the “limit of liability” in situations where “bodily injury” was “sustained by two (2) or more persons as the result of one accident.” Subsection (2) referred to subsection (1) by its own terms, however, which indicated to the reader that subsection (1) impacted the meaning of subsection (2). Accordingly, the “subject to” clause present in subsection (2) incorporated subsection (1)’s per person limits and provided simply that when two (2) or more persons sustain bodily injury as the result of one (1) accident, the “per person” limits of the policy discussed in subsection (1) still apply.

Further, Subsection (4) of the policy provided that the “amount payable under this coverage” would be reduced by payments received from persons or organizations liable for the injury, such as Allstate on behalf of Pond. The Court interpreted the phrase “this coverage” to refer to the uninsured motorist coverage generally. Therefore, once the parties established the calculations and caps of subsections (1) and (2), and arrived at a penultimate number, they were required at that point by subsection (4) to “credit” payments made by other entities such as Allstate. This was the final amount owed by GEICO. According to the Court, this understanding of subsection (4) was confirmed by the policy’s definition of “uninsured motor vehicle,” which mandated that any other amount paid to the insured of any person who may be held liable for the bodily injury or death of the insured be deducted from the amount calculated pursuant to the declarations.

For these reasons, the appellate court concluded that the policy was not ambiguous and the terms of the policy mandated that the total damages due to the Connors as a couple were capped at $300,000, pursuant to the per accident limit of the policy. Allstate had already paid each of the Connors $100,000, which was deducted from the amount that GEICO would be required otherwise to pay the Connors pursuant to subsection (4). Accordingly, the Court held that GEICO was responsible for the remaining $100,000, which was already paid to the Connors.