Benner v. Nationwide Mutual

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CHARLES MYRON BENNER, M.D.;
PATRICIA GURNEY-BENNER, M.D.,
individually and as Personal
Representatives of the Estate of
John Daniel Benner and by and on
behalf of Molly Benner, a minor,
No. 94-1845
Plaintiffs-Appellants,
v.
NATIONWIDE MUTUAL INSURANCE
COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Deborah K. Chasanow, District Judge.
(CA-93-2003-DKC)
Argued: January 31, 1996
Decided: August 28, 1996
Before HALL and MURNAGHAN, Circuit Judges, and STAMP,
Chief United States District Judge for the
Northern District of West Virginia, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Murnaghan wrote the opinion,
in which Judge Hall and Chief Judge Stamp joined.
_________________________________________________________________
COUNSEL
ARGUED: James H. Falk, Jr., THE FALK LAW FIRM, Washing-
ton, D.C., for Appellants. Angus Robert Everton, MASON, KET-
TERMAN & MORGAN, Baltimore, Maryland, for Appellee. ON
BRIEF: James H. Falk, Sr., THE FALK LAW FIRM, Washington,
D.C., for Appellants. Charles N. Ketterman, MASON, KETTERMAN
& MORGAN, Baltimore, Maryland, for Appellee.
_________________________________________________________________
OPINION
MURNAGHAN, Circuit Judge:
Following the death of their son in a car crash, Appellants Charles
Myron Benner and Patricia Gurney-Benner sought payment from
their insurer, Nationwide Mutual Insurance Company. When they
were denied full coverage for their claims, the Benners filed a declar-
atory judgment action in federal district court seeking a determination
of the coverage limits of their primary automobile and umbrella insur-
ance policies.1 The district judge granted summary judgment to the
insurer regarding the umbrella policy, but sent the remaining issues
regarding the primary policy to a jury. After the jury returned a ver-
dict in favor of Nationwide, the court issued an order declaring that
the primary policy provided only minimal coverage for the Benners
claims while the umbrella policy provided no coverage. The Benners
have challenged the district court's order on several grounds. Because
we find no error, we affirm.
I.
In April 1992, the Benners' young son, John Daniel, died in an
automobile wreck which occurred while he was riding as a passenger
in the family's 1991 Honda Accord. At that time, the Benners held
two Nationwide insurance policies which covered the Honda: (1) a
primary policy, called a Century II Auto Policy, originally purchased
in 1985 and renewed in six-month intervals; and (2) a Personal
Umbrella Policy providing additional coverage and renewed annually.
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1 The Benners' minor daughter, Molly Benner, was also named as a
plaintiff.
2
The Benners presented survival and wrongful death claims to
Nationwide for more than $500,000 in damages arising from their
son's death. They believed that they possessed $500,000 in primary
coverage for damages sustained by any member of their family and
umbrella coverage of $2,000,000.2 Nationwide conducted an investi-
gation of the accident and determined that the family baby sitter, who
was driving the Benners' car with their permission, was solely at
fault. The insurer also concluded that the Benners were entitled to a
maximum of $20,000 on their claims because of a"household exclu-
sion" that had been added to their primary policy and gone into effect
on December 26, 1991. The exclusion provision limited to the statu-
tory minimum requirements of Maryland law Nationwide's liability
for bodily injury to an insured or any family member of an insured
living in the same household.3 The household exclusion had not previ-
ously been a part of the Benners' policy.4 In applying the exclusion
_________________________________________________________________
2 In July 1987, the Benners had increased to $500,000 per person/
$500,000 per occurrence, the bodily injury liability coverage limits in
their primary policy in exchange for higher premium payments. Under
the terms of the policy, the Benners were entitled to "benefits for acci-
dental bodily injury involving a motor vehicle." The policy defined "bod-
ily injury" as "bodily injury, sickness, disease or death" and provided
basic personal injury protection to "you and your relatives" and any per-
son injured "while using your auto with your permission."
For the next four years, the Benners renewed their primary policy with
the same bodily injury coverage limits every six months. On December
10, 1991, the Benners renewed the policy for the six-month period from
December 26, 1991, to June 26, 1992. Although the premium was higher,
the declarations pages for the renewal period specified the same bodily
injury liability coverage which the Benners had maintained for the pre-
ceding four years. Therefore, the Benners have maintained that they
believed they possessed $500,000 in primary coverage for damages sus-
tained by any member of their family. On the date of the wreck, the Ben-
ners also had umbrella coverage of up to $2,000,000.
3 The Maryland Financial Responsibility Law requires the payment of
minimum benefits for bodily injury or death resulting from an accident
of up to $20,000 per person/$40,000 per occurrence. Md. Ann. Code art.
48A, § 541; Md. Transp. Code Ann. tit. 17,§ 103 (Michie 1992).
4 The household exclusion appears in Endorsement 1952C, an amenda-
tory endorsement approved by the Maryland Insurance Commissioner in
3
to the Benners' claims, Nationwide maintained that it had sent along
with their policy renewal pages documents noticing and describing
the exclusion. Because the Benners paid their premium on time and
without protest, the household exclusion became effective during the
next renewal period.5 The umbrella policy also contained a household
exclusion.6
After Nationwide denied the Benners the coverage they had antici-
pated, the Benners invoked federal diversity jurisdiction and filed an
_________________________________________________________________
August 1991 for inclusion in Nationwide's Maryland auto insurance pol-
icies. Endorsement 1952C is a four-page document that describes various
changes to the policies. The description of the household exclusion
appears on page 2 as follows:
COVERAGE EXCLUSIONS
Exclusions 3 and 4 are replaced and Exclusion 9 is added to
read:
...
9. It does not cover bodily injury to any insured or any resident
family member in an insured's household. However this exclu-
sion applies only to the extent that the limits of liability for this
exclusion exceed the limits of liability required by Maryland
law.
5 Nationwide mailed Endorsement 1952C and a notice highlighting pol-
icy changes (commonly referred to as a "stuffer") along with the renewal
declaration pages sent to Maryland policyholders during the several
months following the document's approval. The Benners received
renewal pages dated December 2, 1991, during that time and paid the
stated premium promptly.
6 It reads:
EXCLUSIONS
Excess liability and additional coverage does not apply to:
...
10. bodily injury or personal injury to an insured who lives in
your household.
The umbrella policy also defines "bodily injury" as including harm, sick-
ness, disease, or death of a person.
4
action in the United States District Court for the District of Maryland.7
They sought a declaratory judgment that the coverage limit for the
wrongful death of their son under the primary policy was $500,000--
not $20,000 as Nationwide asserted--and a declaratory judgment as
to the available coverage under their umbrella policy. On cross
motions for summary judgment, the district judge granted only
Nationwide's motion concerning the umbrella policy. The court ruled
that, as a matter of law, the notice requirements set forth in Article
48A, Section 240AA of the Maryland Insurance Code did not apply
to the household exclusion contained in the primary policy and that
there was no coverage available under the umbrella policy for the
Benners' claims. The court also held that the Maryland Code imposed
upon Nationwide a regulatory duty to provide the policyholder with
notice of any reduction in coverage.
At the close of all the evidence at trial, both parties moved for
judgment as a matter of law. Not granting either motion, the district
court sent the case to the jury. The jury found in favor of Nationwide
on all of the remaining issues concerning the primary policy. Four
days later, the district judge entered judgment in accord with the
jury's determinations, declaring that the primary auto policy provided
coverage only up to $20,000 per person/$40,000 per occurrence and
that the umbrella policy provided no coverage for the Benners'
wrongful death and survival claims. The Benners filed a timely
appeal.
II.
As to the primary policy, the Benners contend that the district court
erred in failing to rule that, as a matter of law, the household exclu-
sion was void. Under Maryland law, an insurer who inserts a cover-
age exclusion during renewal of a policy must satisfy certain
conditions. Government Employees Ins. Co. v. Ropka, 536 A.2d 1214,
1219-28 (Md. Ct. Spec. App.), cert. denied, 541 A.2d 964 (Md.
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7 Diversity jurisdiction existed pursuant to 28 U.S.C. § 1332 because
the Benners are citizens of the state of Maryland while Nationwide is a
corporation with its principal place of business in Columbus, Ohio, and
the Benners sought declaratory judgment in a claim for damages in
excess of $50,000.
5
1988). The insurer must draft the exclusion unambiguously, provide
conspicuous notice of the change in coverage, provide legal consider-
ation for the reduction in coverage and comply with all governing
notice requirements. Id. The Benners maintain that Nationwide unilat-
erally added the household exclusion to their policy renewal without
their knowledge. Specifically, they allege that Nationwide failed to
deliver the amendatory endorsement and stuffer to them, that Nation-
wide failed to comply with Maryland's statutory and common law
notice requirements, that the household exclusion is ambiguous and
that there was no consideration supporting the reduction in coverage.
The jury specifically found against the Benners on each of these
issues, after the judge had already ruled that Maryland's enhanced
notice requirements for changes in auto insurance policies did not
apply.
In general, we review the district court's conclusions of law de
novo. United States v. Smith, 30 F.3d 568, 571 (4th Cir.), cert. denied,
115 S. Ct. 604 (1994). Because there was a full trial and final judg-
ment on the merits, we may not review the district courts pre-trial
denial of summary judgment as to the primary policy. See
Chesapeake Paper Prods. Co. v. Stone & Webster Eng'g Corp., 51
F.3d 1229, 1234-37 (4th Cir. 1995) (adopting, for various reasons, the
rule that denial of summary judgment is not reviewable on appeal
after a full trial and final judgment on the merits of the case has
occurred, resolving the factual issues). We may review, however, the
district court's denial of the Benners' motion for judgment as a matter
of law raising legal issues pursuant to Rule 50 of the Federal Rules
of Civil Procedure.
While the Benners did move for judgment as a matter of law at the
close of all the evidence--the equivalent of seeking a directed verdict
--the record before us indicates that they failed to renew their motion
after the jury verdict as required by Rule 50(b). The Benners' omis-
sion limits our remedial power, but not our ability to review the
alleged error. See Morrash v. Strobel, 842 F.2d 64, 69-70 (4th Cir.
1987) (after finding that the trial court erred in denying a motion for
directed verdict, stating that party's failure to move for judgment
n.o.v. limited the appellate court to vacating judgment and remanding
for new trial); Smith v. Trans-World Drilling Co., 772 F.2d 157, 162
(5th Cir. 1985) (same). The prerequisite for reviewing the sufficiency
6
of the evidence on appeal is a proper pre-verdict motion at trial for
judgment as a matter of law pursuant to Rule 50(a). See Bristol Steel
& Iron Works, Inc., v. Bethlehem Steel Corp., 41 F.3d 182, 186-87
(4th Cir. 1994) (observing that "[i]t is well settled that in the absence
of a motion for directed verdict, the sufficiency of the evidence sup-
porting the jury's findings is not reviewable on appeal") (citation
omitted); Smith, 772 F.2d at 160 (finding motion for directed verdict
under Rule 50(a) adequate to preserve sufficiency of evidence argu-
ment on appeal despite failure to move for judgment n.o.v. under Rule
50(b)). In the absence of a proper Rule 50(b) motion after the verdict,
we cannot order an entry of judgment contrary to that made by the
district court as the Benners seek. See Johnson v. New York, N.H. &
H. R. Co., 344 U.S. 48, 50 (1952) (holding that failure to move for
judgment n.o.v. pursuant to Rule 50(b) deprives the appellate court of
power to order entry of judgment); Cone v. West Virginia Pulp &
Paper Co., 330 U.S. 212, 218 (1947) (same); Morrash, 842 F.2d at
70 (applying rule). If we find error, we may only vacate and remand.
Morrash, 842 F.2d at 70; Smith, 772 F.2d at 162.
Judgment as a matter of law is proper "when without weighing the
credibility of the evidence there can be but one reasonable conclusion
as to the proper judgment." Singer v. Dungan , 45 F.3d 823, 826 (4th
Cir. 1995) (citation omitted). Our review of the district court's ruling
on a Rule 50 motion for judgment a matter of law is plenary. Benesh
v. Amphenol Corp. (In re Wildewood Litigation), 52 F.3d 499, 502
(4th Cir. 1995). We are constrained, however, to view the evidence
in the light most favorable to Nationwide in determining whether a
reasonable jury could reach but one conclusion. 8 Westfarm Assocs.
Ltd. Partnership v. Washington Suburban Sanitation Comm'n, 66
F.3d 669, 683 (4th Cir. 1995), cert. denied, 116 S. Ct. 1318 (1996);
Benesh, 52 F.3d at 502. On review, we may neither weigh the evi-
dence nor judge the credibility of witnesses. Tennant v. Peoria &
_________________________________________________________________
8 Although sometimes worded differently depending on the timing of
the motion, the standard for reviewing the denial of a pre-verdict and a
post-verdict motion for judgment as a matter of law is essentially the
same. See 5A Moore's Federal Practice ¶ 50.01-1 at 50-21 (1996)
(observing that 1991 changes to Rule 50 substitute the same terminology
for both motions partly because they are "judged under the same stan-
dards and raise precisely the same issues for the judge's consideration").
7
Pekin Union Ry., 321 U.S. 29, 35 (1944); GSM Dealer Servs. Inc. v.
Chrysler Corp., 32 F.3d 139, 142 (4th Cir. 1994).
Finally, because the matter is before us in diversity, we are bound
by the applicable state substantive law. 28 U.S.C.§ 1652; Erie R.R.
Co. v. Tompkins, 304 U.S. 64, 78 (1938).
A. Receipt of Insurance Documents
Under Maryland law, a presumption of delivery and receipt of mail
arises when material is properly mailed. Border v. Grooms, 297 A.2d
81, 83 (Md. 1972); McFerren v. Goldsmith-Stern Co., 113 A. 107,
109 (Md. 1921). Evidence of ordinary business practices concerning
the mailing of notices is sufficient to create the presumption of both
sending and receiving. Borg-Warner Acceptance Corp. v. Rossi, 365
F. Supp. 56, 61 (D. Md. 1972) (applying Maryland law), aff'd, 485
F.2d 1388 (4th Cir. 1973); Mohr v. Universal C.I.T. Credit Corp., 140
A.2d 49, 52 (Md. 1958). While the presumption may be rebutted so
as to create a question of fact, testimony by the addressee that he did
not receive, or does not remember receiving, the material is not con-
clusive. Border, 297 A.2d at 83; McFerren, 113 A. at 109. The trier
of fact should consider that proof along with all of the other evidence
offered in the case to determine whether the item was mailed and
received. Border, 297 A.2d at 83; McFerren, 133 A. at 109. Not only
has the presumption been applied in the insurance context, see Bock
v. Insurance Comm'r, 581 A.2d 857, 861-63 (Md. Ct. Spec. App.
1990), but the Maryland Insurance Code makes the general presump-
tion applicable to an insurers mailing of premium notices.9
On review of the record, we find the jury's determination that the
Benners received the endorsement and stuffer pertaining to the house-
hold exclusion reasonable. Despite having received the declaration
pages for the renewal period of December 26, 1991, to June 26, 1992,
_________________________________________________________________
9 The section imposes a duty on insurers to provide each policyholder
with notice that its renewal premium is due at least 17 days before the
due date. Md. Ann. Code art. 48A, § 240B(a) (Michie 1994). That duty
is deemed discharged if the insurer shows that its established procedures
would have resulted in the placing of the notice of renewal premium due
in the U.S. mail. § 240B(c).
8
and paying the stated premium on time, the Benners alleged that they
never received the accompanying documents pertaining to the change
in coverage. The Benners' denial of receipt failed as a matter of law
to overcome the presumption created by Nationwide's evidence that
it mailed the documents as part of its renewal of the Benners' policy
for that period, as it did for all other policy renewals at that time.
Nationwide presented proof that it ordinarily mailed amendatory
endorsements and stuffers along with renewal pages and that employ-
ees similarly mailed Endorsement 1952C from the company's Annap-
olis office to Maryland policyholders up for renewal during the
relevant time period. In addition, Charles Benner testified that he reg-
ularly saved important insurance documents and that he did not recall
receiving or reading the endorsement or the stuffer, but also conceded
that he was not certain that he had not received the documents and
that he had, at times, discarded material sent to him by Nationwide.
Finally, Nationwide elicited testimony that an activity log which the
Benners claimed failed to verify that the documents were sent to them
did not include the 1991 mailing of Endorsement 1952C.
In short, while the evidence may not be overwhelmingly in favor
of Nationwide, it is sufficient to support the jury's verdict.
B. Notice
In Maryland, an insured person is "protected by a dual scheme of
statutory and common law notice requirements." Ropka, 536 A.2d at
1223. The Benners have argued that, in inserting the household exclu-
sion, Nationwide failed as a matter of law to satisfy the governing
requirements and thus provided inadequate notice of the change.
Maryland has statutory and regulatory standards encompassing
automobile insurance policies. The Maryland Insurance Code sets
forth enhanced notice requirements for insurers seeking to change
coverage in a motor vehicle liability insurance policy. Md. Ann. Code
art. 48A, § 240AA. The statute provides that no insurer may cancel,
fail to renew, reduce coverage, or increase a premium for coverage
under a motor vehicle liability policy without giving notice of the
action on or before 45 days prior to its proposed date. § 240AA(a).
The law expressly exempts certain types of actions, however. The
9
statute provides that the special notice requirements do not apply
when the decrease in coverage is either "part of a general reduction
in coverage approved by the Commissioner" or intended to satisfy
requirements set forth elsewhere in the article.§ 240AA(a)(iii). The
statute also excludes increases in premiums which are "part of a gen-
eral increase in premiums which have been approved by the Commis-
sioner." § 240AA(a)(ii). The distinction thus appears to turn on
whether the change in coverage is applicable to all policies across the
board, or pertains only to an individual policyholder.
Although the Benners maintain that the special notice requirement
applies, the district court correctly concluded that the household
exclusion at issue falls outside the statute. Nationwide sought and
received approval from the Maryland Insurance Commissioner for a
general rate increase of 2.3 percent and the household exclusion at the
same time. The exclusion can be fairly characterized as part of "a gen-
eral reduction in coverage approved by the Commissioner" as it was
included in Endorsement 1952C approved on August 6, 1991, and
was part of the changes made applicable to all new policies and all
existing policies renewed after the approval. Similarly, the premiums
charged can be said to have been approved by the Commissioner as
part of a general rate approval because their calculation was reflected
in the documentation submitted in support of the rate increase. There-
fore, the policy is governed by the general notice requirements set
forth in the Maryland Code of Regulations.10
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10 The Benners rely on Ropka , 536 A.2d at 1226, to support their posi-
tion that Section 240AA applies. In that opinion, however, the Maryland
Court of Special Appeals never ruled upon the applicability of Section
240AA. Instead, the court remanded the issue to the trial court. While the
trial court did apply Section 240AA to the general reduction of coverage
approved by the Commissioner on remand, it offered only cursory expla-
nation for doing so. Government Employees Ins. Co. v. Ropka, No. CV-
0825, slip op. at 3-4 (Cir. Ct. Carroll County Nov. 29, 1988). In addition,
the Court of Special Appeals affirmed the lower court's decision without
addressing the application. Government Employees Ins. Co. v. Ropka,
No. 26, Sept. Term 1989, slip op. at 3 (Md. Ct. Spec. App. Sept. 29,
1989). Therefore, because we can find no reasoned analysis of Section
240AA concluding that it applies to a general reduction in coverage
approved by the Commissioner and because the plain meaning derived
10
Maryland's notice regulations expressly apply to all insurance poli-
cies except motor vehicle liability policies governed by Section
240AA. The relevant administrative regulations require casualty
insurers who intend to reduce or eliminate coverage to "clearly notify
the policyholder of the action that has been taken." Md. Regs. Code,
tit. 9, § 30.32.01 (1981). They further mandate that insurers decreas-
ing coverage in a primary casualty policy upon renewal or by
endorsement not at the request of the insured must"give the insured,
in general terms, written notice of the change in the policy.11
§ 30.32.02.
The applicable common law notice requirements are similar. Mary-
land recognizes that a continuing insurance policy may properly be
deemed a renewal, even if it contains terms different from the original
policy. American Casualty Co. v. Resolution Trust Corp., 845 F.
Supp. 318, 323 (D. Md. 1993); World Ins. Co. v. Perry, 124 A.2d
259, 262 (Md. 1956). An insured is entitled to assume that a renewal
of his insurance contract will contain the same coverage as the prior
contract unless the insurer has sent proper notice of any modifica-
tions. J.A.M. Assocs. of Baltimore v. Western World Ins. Co., 622
A.2d 818, 822 (Md. Ct. Spec. App. 1993); Ropka , 536 A.2d at 1222-
23; see also Perry, 124 A.2d at 262. If an insurer intends to make a
significant change in a policy upon renewal, it must provide reason-
_________________________________________________________________
from the clear and unambiguous language of the statute suggests that it
is inapplicable here, we conclude that Section 240AA does not apply.
See Commissioner v. Bosch, 387 U.S. 456, 464-65 (1967) (state lower
court decisions are not controlling when the highest state court has not
"spoken on the point" and other persuasive authority suggests that the
highest court "would decide otherwise").
11 The regulation specifies that the insurer provide notice by way of the
following phrase or its equivalent:
Notice: Certain coverage in this policy has been eliminated or
reduced, or a change has been made in the deductible. The
description of the change in coverage or deductible is as follows:
....
§ 30.32.02. If an insurer changes a policy without giving proper notice,
the policy "shall be treated as being in effect without the . . . reduction
in coverage." § 30.32.03.
11
able notice as "a matter of fairness and of assuring mutual assent to
what is in reality, a new contract." J.A.M. , 622 A.2d at 822. The noti-
fication should be made by "simply expressing" the changes under a
conspicuous heading on the declaration pages or by separate endorse-
ment mailed with the premium notice. Id.
Upon receipt of proper notice, the insured has the duty to read the
notice, and the insurer is not responsible for an insured's failure to do
so. Twelve Knotts Ltd. Partnership v. Fireman's Fund Ins. Co., 589
A.2d 105, 113 (Md. Ct. Spec. App. 1991); see also Shepard v. Key-
stone Ins. Co., 743 F. Supp. 429, 432 (D. Md. 1990) (applying Mary-
land law). Furthermore, when the insured accepts a policy, the insurer
is entitled to assume that he accepts all of its stipulations, provided
that they are legal and not contrary to public policy. Twelve Knotts,
589 A.2d at 113. If changes appear in the contract, the insured has a
duty to examine them promptly and notify the insurer of his refusal
to accept them. If the insured accepts the policy or retains it for an
unreasonable length of time, the insurer may presume that he ratified
any changes and agreed to all of the terms. Id.
We disagree with the Benners' assertion that Nationwide failed as
a matter of law to meet both the statutory and common law notice
requirements. Viewing the evidence in the light most favorable to
Nationwide, we find sufficient support for the jury's finding of proper
notice.
Again, despite the Benners' contention that they were never noti-
fied of the reduction in coverage, Nationwide's evidence and the Ben-
ners' timely payment of their renewal premium lead to an inference
of receipt of notice. In addition, a reasonable jury could conclude that
the documents themselves met the applicable notice requirements.
The exclusion provision, which appears in the amendatory endorse-
ment under the bold-faced heading entitled "Coverage Exclusions," is
straightforward and expressed in unambiguous terms. It informs the
policyholder that the policy will "not cover" bodily injury to any
insured or resident family member beyond the limits required by
Maryland law. Charles Benner testified at trial that, if he had read the
policy exclusion in 1991, he would have understood that it reduced
his coverage. The endorsement further highlights the significance of
12
its contents by stating at the top, "[p]lease attach this important addi-
tion to your auto policy."
The stuffer provides independent notice, explaining that the amen-
datory endorsement excludes certain matters from coverage and pro-
viding a brief description of the household exclusion. Not only does
the insertion of a new exclusion imply a reduction in coverage by its
very nature, but the stuffer specifically requests the policyholder "to
read each endorsement to see how your coverage may be affected,"
to save the endorsements and to contact a Nationwide agent concern-
ing any questions. Finally, the declarations pages refer to Endorse-
ment 1952C.
While none of the documents use the word "reduction" nor fully
explain how the household exemption will affect the Benners' cover-
age, the applicable regulation does not mandate such precision. It
requires only that insurers advise their policyholders, "in general
terms," of any changes in the coverage. The jury could reasonably
conclude that Nationwide did so with the declaration pages, the
endorsement and the stuffer.
Finally, the declaration pages alone are sufficient to support a jury
finding that the Benners either were, or should have been, on notice
of the exclusion. Not only is it undisputed that the Benners received
the renewal declaration pages which refer to Endorsement 1952C, but
Charles Benner testified that he regularly looks to the last sheet of the
declaration pages for notice of changes in his policy. Because the
Benners paid the renewal premium on time and without objection to
the reduction in coverage, the jury could reasonably find Nationwide
entitled to presume that the Benners ratified the changes and agreed
to the terms of renewal.
C. Ambiguity of Endorsement 1952C
In the interpretation of insurance contracts under Maryland law,
"words are to be given their customary and normal meaning." Gov't
Employees Ins. Co. v. DeJames, 261 A.2d 747, 749 (Md. 1970); see
also National Grange Mut. Ins. Co. v. Pinkney, 399 A.2d 877, 882
(Md. 1979). The interpreter should focus on the written language set-
ting forth the terms of the agreement and use an objective test to
13
determine the intent of the parties based on the meaning a reasonable
person would attribute to the words used. DeLeon Enters., Inc. v.
Zaino, 608 A.2d 828, 832 (Md. Ct. Spec. App.), cert. denied, 614
A.2d 84 (Md. 1992). Absent ambiguity, the construction of an insur-
ance contract is a matter within the province of the court. DeJames,
261 A.2d at 749. If the language is ambiguous, however, the contract
must be submitted to the jury. Id. "Maryland law . . . is not hostile
to insurers in the initial judicial construction of policy provisions.
. . . Of course, if a true ambiguity is found, then it is generally to be
resolved against the insurer." Alcolac Inc. v. California Union Ins.
Co., 716 F. Supp. 1546, 1547 (D. Md. 1989) (applying Maryland
law).
Not only did the Benners fail to prove conclusively that the exclu-
sion is ambiguous as a matter of law, but Nationwide similarly failed
to establish that the provision is unambiguous. We find that the jury's
resolution of the matter in favor of the insurer is reasonable and sup-
ported by sufficient evidence.
The provision specifies in plain, unambiguous and easily under-
stood language that the policy does not cover bodily injury to any
insured or member of an insured's household subject to the minimum
coverage required by state law. Although the exclusion refers to "the
limits of liability required by Maryland Law" without specifying that
such limits may be found in the Maryland Financial Responsibility
Law, the omission does not render the exclusion ambiguous or open
to interpretation as there is no state law requiring identification of the
statute in insurance documents. In enforcing exclusions in insurance
policies, Maryland courts generally read in the limits set by the state's
financial responsibility laws, whether or not those restrictions are spe-
cifically referenced. See, e.g., State Farm Mut. Auto. Ins. Co. v.
Nationwide Mut. Ins. Co., 516 A.2d 586, 591-92 (Md. 1986); West
American Ins. Co. v. Popa, 670 A.2d 1021, 1028-29 (Md. Ct. Spec.
App. 1996). Furthermore, Maryland courts follow the general rule of
permitting contracts to incorporate by reference the content of other
documents. See Wheaton Triangle Lanes, Inc. v. Rinaldi, 204 A.2d
537, 540 (Md. 1964); Ray v. William G. Eurice & Bros., 93 A.2d 272,
279 (Md. 1952).
Moreover, an insurance policy is not rendered ambiguous merely
by virtue of the fact that it requires careful reading, Viger v. Commer-
14
cial Ins. Co. of Newark, N.J., 707 F.2d 769, 774 (3rd Cir. 1983)
(applying Pennsylvania law), or analysis, Alpha Therapeutic Corp. v.
St. Paul Fire & Marine Ins. Co., 890 F.2d 368, 370 (11th Cir. 1989)
(construing Florida law). Charles Benner testified at trial that he
would have understood the household exclusion if he had read it
when renewing his policy in December 1991. He also stated that the
exclusion would not have been any clearer to him if it mentioned the
Maryland Financial Responsibility Law instead of merely "Maryland
Law." He said that, with either wording, he would have called his
insurance agent to find out the applicable limits of Maryland law.
Viewing the evidence in the light most favorable to Nationwide, the
jury's determination that the exclusion is sufficiently explanatory is
reasonable.
D. Consideration for Reduction in Coverage
Modification of an insurance policy generally requires consider-
ation, although the consideration required differs with the timing of
the change. See 13A Appleman Insurance Law & Practice § 7603, at
275-83 (1976). Maryland courts have recognized that the renewal of
an insurance policy is not a new contract, but an extension of the poli-
cy's life when made pursuant to a policy provision concerning
renewal. Ropka, 536 A.2d at 1225; Perry , 124 A.2d at 262; see also
American Casualty, 845 F. Supp. at 323. Therefore, when terms are
changed in a renewal policy, Maryland law requires both proper
notice and valid consideration, but not additional consideration.
In general, sufficient consideration consists of a detriment to the
insurer and a benefit to the insured. Ropka, 536 A.2d at 1227. An
insured's premium typically provides consideration for the benefits
provided by the policy. Id. Maryland courts hold that an attempted
policy modification should be voided for lack of consideration if the
insured can show that he received less coverage than was commensu-
rate with the amount he paid. Id.
The record before us shows that the Benners' premium for primary
coverage of their Honda Accord increased by 4.3 percent for the rele-
vant renewal period. The Benners therefore contend that no consider-
ation supported the renewal contract with its decreased coverage
because they "paid more and got less." Nationwide responds that
15
under Maryland law, "a decrease in premium owing to a decrease in
coverage can be completely obliterated by a rate increase that goes
into effect at the same time." Ropka, 536 A.2d at 1226-27. The
insurer maintains that just such an offset occurred in the present mat-
ter because the Benners' premium increase would have been 6.7 per-
cent had the reduced coverage from the household exclusion not been
taken into account.12 Because the record does not compel a different
conclusion and the jury's finding of valid consideration is reasonable
and supported by sufficient evidence, the district court properly
entered judgment in accordance with it.
At trial, a Nationwide employee testified that in determining the
proper premium to be charged, the company used the rate of accidents
and projected the amount of losses requiring coverage. The employee
said that Nationwide would have sought a 6.7 percent increase in the
Benners' premium if the household exclusion had not been added.
Instead, the company added the household exclusion and then, in cal-
culating rates, factored in a 5 percent decrease in the amount of pro-
jected bodily injury losses to offset the reduced coverage caused by
the new exclusion. The Nationwide representative testified that as a
result of the general rate increase, the household exclusion and other
factors, all Nationwide auto policy holders ended up with a 4.3 per-
cent premium increase.
Although the Benners argue that Nationwide's consideration was
illusory because the insurer never actually sought the higher rate
increase, Nationwide's evidence is sufficient to support the jury's
conclusion that merely foregoing the opportunity to seek a greater
_________________________________________________________________
12 The Benners' bodily injury liability premium for the Honda Accord
increased from $127.50 to $133.00 for the December 26, 1991, to June
6, 1992, renewal period. Nationwide presented evidence that the $5.50,
or 4.3 percent, increase in premium resulted from a general base rate
increase of 2.3 percent for all Nationwide auto policyholders in Mary-
land and other factors. Nationwide relies on the 4.3 percent increase in
premium as consideration for its $480,000 reduction in the Benners' cov-
erage, on the basis that it gave up the opportunity to impose an even
greater increase in premiums. Nationwide sought and received approval
for the general rate increase and the household exclusion at the same
time.
16
increase constitutes valid consideration. Moreover, while there is no
way of knowing whether the Commissioner would have approved a
greater premium increase if sought, there is no evidence indicating
that the Commissioner would have refused. The jury could infer that
approval would be likely from the fact that the Commissioner did
consent to the general increase of 2.3 percent which Nationwide sup-
ported with documentation showing that it had reduced the overall
premium by factoring in a 5-percent decrease to reflect the reduced
coverage from the household exclusion.
III.
The Benners' umbrella policy purports to provide excess liability
and additional coverage, but it too has a household exclusion provi-
sion. That exclusion exempts damages from "[b]odily injury or per-
sonal injury to an insured who lives in your household." The Benners
concede that the exclusion applies to the damages sought in their sur-
vival claim because their son experienced a bodily injury, i.e., death.
However, they maintain that they are entitled to wrongful death dam-
ages to compensate for the emotional loss they suffered because such
recovery would not amount to damages for the bodily injury itself.
They argue that the umbrella policy's exclusion, unlike the exclusion
provision in the primary policy, does not bar derivative claims.
We review the district court's denial of summary judgment de
novo. Fuisz v. Selective Ins. Co. of Am., 61 F.3d 238, 241 (4th Cir.
1995).13 Summary judgment is appropriate when there is no genuine
issue of material fact and the moving party is entitled to judgment as
a matter of law. Fed. R. Civ. P. 56(c). Like the district court, we make
this determination viewing the evidence and making all inferences in
the light most favorable to the nonmoving party. United States v. Die-
bold Inc., 369 U.S. 654, 655 (1962) (per curiam); Hinkleman v. Shell
_________________________________________________________________
13 With regard to the umbrella policy, the district court did grant
Nationwide's corresponding motion for summary judgment. Therefore,
the rule articulated in Chesapeake precluding appellate review of sum-
mary judgment denial does not apply. 51 F.3d at 1237 n. 11 ("Our hold-
ing does not apply to decisions reviewing denied motions for summary
judgment when the district court granted the opposing party's corre-
sponding summary judgment motion.").
17
Oil Co., 962 F.2d 372, 375 (4th Cir.), cert. denied, 506 U.S. 1041
(1992).
Even if we assume that the Benners are correct in their assertion
that wrongful death actions are distinct from claims for bodily injury,
we cannot read the umbrella policy to extend coverage to their wrong-
ful death claim. Again, Maryland follows the objective law of con-
tracts and requires courts to interpret insurance contracts by giving
words their customary and normal meaning. DeJames, 261 A.2d at
749. "[W]here an insurance company, in attempting to limit coverage,
employs ambiguous language, the ambiguity will be resolved against
it as the one who drafted the instrument, as is true in construction of
contracts generally. Where there is no ambiguity in an insurance con-
tract, however, the Court has no alternative but to enforce the policy's
terms." Blue Bird Cab. Co. v. Amalgamated Casualty Ins. Co., 675
A.2d 122, 1996 WL 148962, at *2 (Md. Ct. Spec. App. Apr. 2, 1996).
Like the district court, we find no ambiguity in the umbrella policy
and thus must give effect to its "plain meaning." Aetna Casualty &
Surety Co. v. Insurance Comm'r, 445 A.2d 14, 19 (Md. 1982).
The policy clearly sets forth the applicable definitions and terms of
coverage. Its provisions specify that coverage is available only for
damages "due to an occurrence" and explain that an occurrence "must
result in bodily injury, property damage or personal injury caused by
an insured." The policy defines "bodily injury" as meaning "bodily
harm, including resulting sickness, disease or death." In the present
matter, therefore, coverage could only exist for damages arising out
of bodily injury because the Benners brought no claims for property
damage or personal injury. Because the household exclusion
expressly eliminates payment of damages arising from bodily injury
to a member of the household, the umbrella policy provides no cover-
age for the Benners' wrongful death claim.
Moreover, even if ambiguity did exist, we must still find in Nation-
wide's favor. If damages from bodily injury are different from dam-
ages from wrongful death as the Benners argue,14 then there can be
_________________________________________________________________
14 Maryland courts ordinarily interpret provisions permitting an action
for "bodily injury" and "personal injury" as not including an action for
18
no umbrella coverage for wrongful death damages because the policy
clearly excludes any claim other than those for damages resulting
from bodily injury, property damage or personal injury. On the other
hand, if bodily injury damages include damages for wrongful death,
as the umbrella policy seems to indicate by including "death" in its
definition of "bodily injury",15 then the damages sought are excluded
by virtue of the policy's household exclusion. Using the same terms
and definitions as the rest of the policy, the provision expressly
excludes damages from bodily injury to an insured in the household.
Under any interpretation, the umbrella policy denies the Benners
coverage for their wrongful death claim. Thus, the district court prop-
erly granted Nationwide's motion for summary judgment and ruled
that the umbrella policy provided no payment.
IV.
While we find the outcome in the matter before us unhappy for the
Benners, we believe it to be necessary under the governing law and
facts as they were properly presented to the jury. For the reasons
described above, the judgment is
AFFIRMED.
_________________________________________________________________
wrongful death. United States v. Streidel, 620 A.2d 905, 910-15 (Md.
1993) (explaining that actions for "personal injury" and "bodily injury"
are different from wrongful death actions and encompass damages for
wrongful death only when such an interpretation is clearly intended); see
also Daley v. United Servs. Auto. Ass'n, 541 A.2d 632, 636-37 (Md.
1988) (refusing to equate solatium damages claimed in a wrongful death
action with "bodily injury" damages covered by the insurance policy at
issue).
15 Maryland courts do construe the term "bodily injury" to encompass
an action for wrongful death when there is an indication that such inter-
pretation was intended, such as by inclusion of the phrase "or death" or
"including death" in the provision. See Streidel, 620 A.2d at 909-15 &
n.7 (explaining distinction and providing examples).
19