This appeal requires us to decide whether the vehicle that struck appellant Thomas O’Quinn was a “temporary substitute” for a vehicle insured by appellee Maryland Automobile Insurance Fund (MAIF), in which case the MAIF policy provided liability coverage. The Circuit Court for Prince George’s County concluded that the vehicle was not a temporary substitute and granted summary judgment in favor of MAIF on O’Quinn’s declaratory judgment action. We shall reverse that judgment.
FACTS AND LEGAL PROCEEDINGS
On August 8, 1998, while Thomas O’Quinn was walking in a parking lot, he was struck by a 1996 Ford Escort driven by Mosele Kabila. O’Quinn suffered severe leg injuries.
Averaging 150 miles each weekday, Kabila was an “independent contractor” for Washington Express, a courier service. In 1997, Kabila had purchased a high mileage 1988 Hyundai for $400, to use in this work. He was paid based solely on the number of routes he completed.
At the time of the accident, there
Kabila rented the Escort two weeks after the Hyundai broke down, on June 10, 1998. 1 He wanted to buy the Escort, but did not have the money or the credit necessary to make the purchase. In order to establish credit, Kabila made rental payments on the vehicle every two weeks. Once he made a number of timely payments he could qualify to buy the Escort. At the time of the August 8 accident, then, Kabila was still renting the Escort. Kabila did not inform MAIF that he had the Escort until he actually purchased the vehicle in October 1998.
O’Quinn sued MAIF and Kabila in the Circuit Court for Prince George’s County.
DISCUSSION
The MAIF liability policy defines as a “[cjovered automobile” either the vehicle described in the policy or any of the following:
3. an automobile that you acquire during the policy period provided that it:
(a) replaces an automobile owned by you and described in the Declarations; or
(b) is in addition to the automobile(s) described in the Declarations but only if:
(1) we insure all automobiles owned by you on the date the newly acquired automobile is delivered to you; and
(2) you notify us within thirty days following its delivery;
4. a temporary substitute automobile that you do not own, provided that you are using it with the permission of the owner as a substitute for an automobile described in the Declarations that has been withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;
5. any other automobile that you do not own, provided that it is being used by you with the permission of the owner and;
(a) it is not furnished for your regular use; and
(b) it is not owned by or furnished for the regular use of a member of your household other than your private chauffeur or domestic employee; and
(c) it is not rented to you for a period of more than thirty consecutive days. (Emphasis added.)
Maryland applies the principle of objective contract construction to insurance contracts.
In construing contracts of insurance, Maryland follows the general contract rule that the agreement should be viewed as a whole to determine the intention of the parties to the contract and the purpose which they sought to accomplish. When the provisions are not ambiguous, a court should enforce them according to their plain meaning. If, however, the terms of the contract are ambiguous, the ambiguity shall be resolved against the drafter of the policy and in favor of the insured.
St. Paul Fire & Marine Ins. Co. v. Nationwide Mut. Ins. Co.,
As grounds for their contradictory conclusions regarding the coverage afforded by the policy, O’Quinn and MAIF both cite the undisputed inoperability of the
O’Quinn contends that the circuit court erred when it ruled that the Escort was not covered by the MAIF policy, either as a “temporary substitute” under section 4 of the “covered automobile” definition, or as a “replacement” vehicle under section 3(a). 2 MAIF counters that Kabila’s rental of the Escort for more than 30 days, without notice to MAIF, excluded the Escort from coverage. More specifically, MAIF argues that subsection 3(a) does not apply because Kabila did not notify MAIF within 30 days that he was using the Escort and he did not own the Escort. Section 4 does not apply in MAIF’s view, because Kabila rented the Escort for more than 30 days, planning to buy it, so that his use of it was not “temporary.”
We shall assume arguendo that the Escort is not a covered automobile within the meaning of subsection 3(a). 3 We nevertheless conclude that the Escort was a “temporary substitute automobile” within the coverage afforded by section 4.
The so-called “substitution” provision is concerned with the situation where the vehicle described in the policy becomes unavailable for use for any one of a number of specified reasons, and another vehicle, not owned by the insured, is temporarily used in its place. It is not necessary that the insured still own the original automobile at the time of the use of the temporary substitute taking the place of the “destroyed” car.
As a threshold matter, we note that there is no debate that the rented Escort qualified as a “substitute” vehicle. We have held that, in the “covered automobile” definition of a liability policy, “[t]he term ‘substitute’ connotes the replacement of one thing for another.”
St. Paul Fire & Marine Ins. Co.,
In St. Paul Fire & Marine Ins. Co., Patricia Caldwell rented a car after the vehicle described in her policy was damaged in an accident. She initially rented from the dealer who was repairing her car, but later arranged for a less expensive rental from Snappy Car Rental. The Snappy car was delivered to Caldwell’s home. Caldwell drove the dealer car back to the dealer, while her housemate followed in the Snappy car. En route, the housemate was involved in an accident.
Snappy’s insurer refused to provide a defense, claiming that the dealer rental car, rather than the Snappy car, was the only “temporary substitute” for the insured vehicle at the time of the accident. We agreed, holding that “[t]he problem in the instant case arose because at the time of the accident, Caldwell had rented two vehicles to replace the one vehicle covered by her insurance policy” and “[b]oth rental vehicles were on the road at the same time.”
Id.
at 740,
[w]hen Caldwell rented the car from [the dealer], it is clear that her insurance coverage ... extended to that vehicle. If Caldwell had returned the [dealer] car and thereafter rented another vehicle, that second vehicle would have been covered under her policy.
Id. Here, it is undisputed that Kabila substituted only the rented Escort for the broken down Hyundai, using it for precisely the same purposes.
The controversy in this case centers instead on the duration of Kabila’s use of the vehicle and his plan to purchase it. MAIF adopts a narrow construction of the undefined word “temporary” in its substitute vehicle clause. It contends that Kabila’s rental of the Escort for more than 30 days, with plans to eventually convert this rental into a purchase, prevented the Escort from being a “temporary” substitute for the Hyundai. We disagree.
To the extent that MAIF’s construction of its temporary substitute provision effectively defines “temporary” as a period of less than 30 days, we reject that interpretation. In effect, that reading of the policy would apply the same 30 day limit on rented vehicles that appears in section 5 to all temporary substitute rentals under section 4.
By its terms, however, section 5 provides coverage in circumstances “other” than those covered by the temporary substitute provisions of section 4.
4
Section 4 affords liability coverage when, as in this case, the policy holder’s described automobile is withdrawn from normal use due to
In our view, the presence of clear language creating a 30 day rental limitation in section 5 underscores the conspicuous absence of similar language in section 4. Read in context and in pari materia with sections 3 and 5, the temporary substitute coverage in section 4 protects a policy holder whose covered vehicle has broken down, during the indefinite time that he is temporarily driving another vehicle that he does not own as a substitute for the described automobile. 5
We therefore agree with courts and scholars who have concluded that, in the absence of a contrary definition, “[t]he word ‘temporarily’ ... does not place a time limit as to withdrawal of the insured vehicle.”
Couch, supra,
§ 117:81. Thus, “the duration of the use is not controlling in determining whether the use is temporary.”
Id.
at § 80. Rather, the word “temporary” in this context has been treated with “elasticity” as “an antonym for the word ‘permanent.’ ”
See id.
at
§ 79-80 (collecting cases);
State Farm Mut. Automobile Ins. Co. v. Johnston,
We disagree with MAIF and the circuit court that Kabila’s plan to purchase the Escort establishes that, at the time of the accident, his use of that vehicle was “permanent” rather than “temporary.” On the day of the accident, Kabila was still renting the vehicle in the hope of purchasing it, but he had no contractual right to purchase the car. Rather the record shows that Kabila was unable to do so due to lack of money and credit. Instead, he was renting the vehicle for two weeks at a time. Kabila had no contractual right to purchase the car. These facts are undisputed.
In our view, Kabila’s use of the Escort was temporary in the very real sense that he was driving this rented vehicle for an uncertain period of time, until he could secure a permanent replacement for the Hyundai. Whether that replacement turned out to be the Escort or another car is not material; the dispositive fact is that Kabila was still renting the Escort on a temporary basis at the time of the accident.
Construing Kabila’s use as a temporary substitute use is consistent with the policy objective underlying such coverage, which is to benefit the insured by
affording] temporary coverage to the insured while he or she is using a borrowed [or rented] automobile until the automobile designated in the policy is restored to normal use. Evenhanded fulfillment of its purposes requires that the provision not be unreasonably extended to increase materially the risk contemplated by the insurer, nor should it be narrowly applied against the insured, because the clause is designed for the insured’s protection.... “The purpose of the ‘temporary substitute’ clause in an automobile liability policy is to afford continuous coverage to an insured while limiting risk to one operating vehicle at a time for a single premium, and, therefore the insuredvehicle for which the substitution is made must be withdrawn from use by some overt act which would reasonably preclude the possibility of both vehicles being driven at the same time.”
St. Paul Fire & Marine Ins. Co.,
MAIF acknowledges that Kabila did not use or attempt to use both the Hyundai and the Escort simultaneously. Because the single premium paid by Kabila at all times covered only a single operating vehicle, and the Escort was being used in the same manner as the Hyundai, Kabila’s use of the Escort did not increase the liability risk that MAIF assumed when it issued Kabila’s policy. Indeed, MAIF’s policy undisputedly would cover the Escort under section 3 as soon as Kabila purchased it as a replacement vehicle. Allowing MAIF to avoid liability coverage in these circumstances, then, would create an anomalous “Catch-22,” in which Kabila could not have coverage under the permanent replacement provision in section 3 due to his lack of ownership, yet he could not have coverage under the temporary substitute provision in section 4 due to his desire for ownership. Consequently, treating Kabila’s “rent before purchase” arrangement as a permanent use would result in MAIF retaining a premium for liability coverage that it did not provide.
Finally, we disagree with MAIF’s contention that Kabila’s intent not to repair the Hyundai bars coverage. 6 MAIF argues that the Escort cannot be a temporary substitute vehicle because, with this type of coverage, “the objective is to afford temporary coverage until the automobile designated in the policy is restored to normal use.” It contends that, because Kabila had no intent to repair the Hyundai, his use of the Escort was not temporary. The policy language, however, refutes that argument.
The policy, in defining a “temporary substitute automobile,” only requires that the insured use it “as a substitute for an automobile described in the Declarations that has been withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction____” There is no requirement that the automobile described in the Declarations be repaired in order for the temporary substitute automobile to qualify for coverage.
See, e.g., Ambrosio v. Affordable Auto Rental Inc.,
MAIF, in opposing O’Quinn’s motion for summary judgment, did not dispute O’Quinn’s assertion, supported by deposition testimony, that the Hyundai broke
We therefore hold that the MAIF policy covered Kabila’s use of the Escort, given that the Hyundai had been “withdrawn from normal use due to its breakdown,” and the rented Escort was still being used as a “temporary substitute” at the time of the accident. Although we found no precedent involving this type of “rent before purchase” arrangement, we view
our decision as a logical extension of those decisions recognizing that a rental vehicle may be a temporary substitute when used for the same purposes as a described vehicle that has broken down or is otherwise unavailable to the insured.
See St. Paul Fire & Marine Ins.,
We shall reverse the judgment in favor of MAIF and remand to the circuit court for entry of a judgment in favor of O’Quinn on the coverage issue.
JUDGMENT REVERSED. CASE REMANDED FOR ENTRY OF JUDGMENT CONSISTENT WITH THIS OPINION. COSTS TO BE PAID BY APPELLEE.
Notes
. There was a $20,000 liability policy in effect oil the Escort. That insurance carrier tendered the policy limits.
. For the purpose of automobile liability insurance, “substitute” automobiles are distinct from “replacement” automobiles. A substitute automobile may be generally defined as an automobile actually but only temporarily used in place of the specified automobile for the same purpose as the insured automobile would have been used but for its withdrawal from normal use because of its breakdown, repair, servicing, loss, or destruction.
James L. Isham,
Construction and Application of Substitution Provision of Automobile Liability Policy,
. We note, however, that MAIF misreads the "replacement vehicle” provision in the policy when it contends that “Coverage 3 requires notification within thirty (30) days of its delivery[.]” Aeb8. As drafted by MAIF, only the “additional vehicle” provision in subsection 3(b) requires the policy holder to give MAIF notice within 30 days. The "replacement vehicle” provision in subsection 3(a) is followed by the disjunctive word "or” before the "additional vehicle” provision in subsection (b). The 30 day notice requirement appears only in subsection 3(b). Thus, a second vehicle can fall within the definition of "covered automobile” only if the policy holder notifies MAIF within 30 days of its acquisition. In contrast, a single vehicle that replaces a single described vehicle would be a covered automobile under paragraph 3(a) even if the policy holder did not give MAIF 30 days notice.
. For example, section 5 would apply if a policy holder chose to rent or borrow a vehicle even though the automobile described in the policy remained operable and available.
. We are also mindful that, to the extent the conflicting interpretations advanced by MAIF and O’Quinn might be said to reveal an ambiguity in section 4, we must resolve that uncertainty in favor of coverage because MAIF was the drafter of the policy.
See GEICO, Inc. v. Reilly,
. We recognize that "summary judgment generally is inappropriate when matters—such as knowledge, intent or motive—that ordinarily are reserved for resolution by the fact-finder are essential elements of the Plaintiff's case or of the defense.”
Brown v. Dermer,