People's Insurance Counsel Division v. State Farm Fire & Casualty Co.
109 A.3d 1208
Md.2015Background
- In the Feb. 2010 blizzard the Taylors’ carport collapsed under snow; State Farm denied coverage under the homeowners policy for “sudden, entire collapse of a building.”
- The Taylors filed a complaint with the Maryland Insurance Administration (MIA); the MIA denied relief after investigation and a hearing; the Circuit Court and Court of Special Appeals affirmed the MIA.
- The People’s Insurance Counsel Division sought certiorari to this Court raising (1) whether Maryland should adopt stricter construction of insurance policy language against insurers and (2) whether State Farm’s restrictive (oral) definition of “building” improperly excluded the carport.
- This Court granted certiorari, heard briefing and oral argument, but the majority dismissed the writ as improvidently granted (DIG); Per Curiam order dismissed with costs on Feb. 24, 2015.
- Justices Adkins and McDonald dissented from the dismissal, arguing the case presented issues of clear public importance, the record was adequate, and the Court should decide the merits rather than DIG the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maryland should modify contract-construction rules to require strict construction of insurance policy terms against insurers | Insurance policy terms are not the product of equal bargaining; ambiguities should be strictly construed against insurer | Existing Maryland law already applies drafter-against rule; no change necessary | DIG — Court declined to address; dissent would have resolved on merits |
| Whether State Farm’s oral, restrictive definition of “building” (excluding carport) was permissible to deny coverage for collapse | Taylors/People’s Counsel: denial relied on a post-storm oral definition applied arbitrarily to many insureds; MIA erred in upholding denial | State Farm: its interpretation excluded carport; denial was based on its reading of policy language | DIG — Court declined to address; dissent argued record supported review and possible relief |
| Whether the administrative claim under IN § 27-303 for unfair claim settlement practices was the proper vehicle and was preserved | Taylors: § 27-303 claim (bad faith/unfair practice) was properly pursued before the MIA and preserved on appeal | State Farm: plaintiffs chose wrong statutory vehicle (arguing § 27-1001 would be broader) and issues may be unpreserved | DIG — Court declined to address preservation merits; dissent found preservation adequate |
| Whether the record is adequate to provide useful guidance on the legal issues presented | Plaintiffs: MIA proceeding generated extensive evidence and testimony; record sufficient | State Farm: implied concerns about preservation or record gaps | DIG — Court declined to decide; dissent held record was adequate and issues of public importance warranted decision |
Key Cases Cited
- Sullins v. Allstate Ins. Co., 340 Md. 503 (1995) (recognizes rule construing policy terms against the drafter)
- Sturdivant v. Md. Dep’t of Health & Mental Hygiene, 436 Md. 584 (2014) (sets criteria for dismissing a case as improvidently granted)
- Koenig v. State, 368 Md. 150 (2002) (dissent criticizing DIG practice and urging courts to decide certworthy cases)
- Jacobson v. Sol Levinson & Bros., 871 Md. 442 (2002) (dissent against avoiding squarely presented issues once certiorari granted)