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.
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