Wednesday, February 17, 2016

Allstate Ins. Co. v. Kponve and Proof of Uninsured Motorist Coverage at Trial

In a break from the recent past, the Court of Appeals of Maryland recently announced it is granting mid-term Petitions for Writ of Certiorari. These fourteen petitions will be included in the Court’s September 2015 term in addition to the eighty petitions the Court granted last fall. In addition to numerous criminal matters and a few labor and employment cases, the Court agreed to hear an appeal from an insurance law matter that has potential implications for the auto insurance industry, Kponve v. Allstate Ins. Co., 225 Md. App. 370, 124 A.3d 1147 (2014).  Kponve will address important issues concerning uninsured/underinsured motorist coverage (“UM/UIM coverage”), and specifically, which party has the burden to prove UM/UIM coverage at trial and its impact on a potential verdict.
In Kponve, Allstate Insurance Company intervened in an auto tort case immediately before the defendant-tortfeasor settled out of the case for $25,000.00.  The case proceeded to trial, and the remaining parties, Allstate and Plaintiff Austria Kponve, stipulated that Allstate had issued Mrs. Kponve a policy that provided for UM/UIM coverage, and that the policy was in effect at the time of the occurrence. However, there was no specific stipulation with respect the amount of UM/UIM coverage in effect on the Kponve policy at the time of the accident, which was $50,000.00. Kponve, 225 Md. App. at 375-76, 124 A.3d at 1150-51. 
After a two-day jury trial, the Montgomery County, Maryland jury awarded $374,000.00. Allstate filed a post-judgment motion, seeking a reduction of the verdict to $25,000.00:  an amount reflecting the difference between the UM/UIM policy limits of $50,000 and the settling tortfeasor’s payment of $25,000.00. The trial court inexplicably denied the motion without opinion. 
On appeal, Kponve argued that Allstate had never raised policy limits as a defense or introduced the policy into evidence, rendering moot the argument that the verdict should be reduced pursuant to Kponve’s UM/UIM limits.  Kponve argued that it was Allstate’s burden to put its policy into evidence and prove the amount of UM/UIM coverage, as well as the credit to which it was entitled because of the tortfeasor’s settlement.  Kponve, 225 Md. App. at 377-78, 124 A.3d at 1152.  Kponve observed that “[t]here are hundreds of thousands of Maryland drivers and passengers, and to think that that all these drivers and passengers know exactly what their policy says … is placing too much of a burden on the plaintiff.”  Id.   Additionally, citing the seminal case Allstate Ins. Co. v. Miller, 315 Md. 182, 192-93, 553 A.2d 1268, 1272-73 (1989), Kponve asserted that policy limits have no relevance to the issue of tort damages, and therefore, should have no effect on the jury’s verdict. 
The Court of Special Appeals did not find Kponve’s arguments convincing, holding that
[…]as an intervening party, Allstate did not have the burden of proving the amount of its policy limits or the amount of the credit to which it was entitled … [and] it was up to Mrs. Kponve to prove the amount of her contract damages, i.e., to establish the amount of her underinsured motorist coverage less the amount of her settlement with [the tortfeasor]. 
Id. at 388, 1158. 
More important than this ruling, however, was the Kponve Court’s treatment of Miller.  Although the Court clearly disagreed with the Kponve’s view that Miller placed the burden of proof on the insurer to prove policy limits, the Court did seem to open the door for the Court of Appeals to potentially re-examine Miller
The primary holding of Miller is that that the amount of UM/UIM coverage is irrelevant in a breach of contract action brought against an insurer, and therefore inadmissible evidence.  See Miller, supra.  While the Kponve Court clearly agreed with this holding, it also appeared—again citing Miller—to draw a distinction between a case in which an insurer intervenes as opposed to a case in which a UM/UIM carrier is sued for breach of contract by its insured. Although the Court described the former case as a tort case in which UM/UIM policy limits have no relevance, it noted the latter case is only “functionally a tort case”, and therefore, suggested that coverage limits may have relevance in that context.  Kponve, 225 Md. App. at 387-88, 124 A.3d at 1157-58. 

In short, while the Court of Special Appeals in Kponve did not attempt to overrule Miller by holding that UM/UIM coverage limits constitute admissible evidence, it did suggest that those limits are relevant in a breach of contract action, thereby opening the door for the Court of Appeals to address this issue.  Kponve is certainly a case worth monitoring, and our readers can expect a full analysis of the Court of Appeals’ decision as soon as it is reached.

No comments:

Post a Comment