Title: Anderson v. General Casualty

State: maryland

Issuer: Maryland Supreme Court

Document:

Mark Anderson et al., v. General Casualty Insurance Co. f/k/a Southern Guaranty
Insurance Co., No. 25, September Term, 2007 
HEADNOTE: INSURANCE - NOTICE: Notice of cancellation sent to the insured, “care
of” a third party, is proper notice when that third party’s name and address is listed under
the heading “Mailing Address” in the insurance contract.  Furthermore, where the
insured’s actions demonstrate an intent to appoint that third party as his agent for
purposes of receiving such notices, he is charged with knowledge of the cancellation.
 
In the Circuit Court for Baltimore City 
No. 24-C-05-006826
IN THE COURT OF APPEALS OF
MARYLAND
No. 25
September Term, 2007 
____________________________________
MARK ANDERSON, ET AL.
v.
GENERAL CASUALTY INSURANCE
COMPANY f/k/a SOUTHERN GUARANTY
INSURANCE COMPANY, ET AL.
___________________________________
Bell, C.J.
Raker
        
Harrell
Battaglia
Greene
Wilner, Alan M. (Retired, Specially
Assigned)
Cathell, Dale R. (Retired, Specially
Assigned),
   JJ.
____________________________________
Opinion by Greene, J.
____________________________________
Filed:   November 14, 2007
1Southern Guaranty Insurance Company is now known as General Casualty
Insurance Company, but will hereinafter be referred to as “Southern Guaranty.”
2Anderson’s Exxon/JSM Enterprises Inc., hereinafter, will be referred to as
“Anderson’s Exxon.”
This matter arises from an administrative complaint filed with the Maryland Insurance
Administration as a result of Southern Guarantee Insurance Company’s 1 cancellation of an
insurance policy issued to Anderson’s Exxon/JSM Enterprises Inc.2  Southern Guarantee
mailed the notice of cancellation to Anderson, addressed “care of” Ben Brown Insurance
Agency, at the address listed on the declarations page of the policy.
After an investigation, the Maryland Insurance Administration determined that
Southern Guaranty had properly notified Anderson’s Exxon of the cancellation.  On judicial
review, the Circuit Court affirmed the decision, as did the Court of Special Appeals on
appeal.  We are now asked to decide whether notice mailed to the insured, “care of” a third
party listed in the declarations page, constitutes proper notice sufficient to meet the statutory
notice requirements.  We shall hold that, because the terms of the insurance contract at issue
provided a “mailing address” for the insured, written notice of intent to cancel the insurance
policy mailed to that address complied with the statutory notice requirements for cancellation
of the policy.  Furthermore, because the insured consented to the designation of a third party
as his agent to receive such notification or at least acquiesed in the designation, notice sent
to that third party, consistent with the terms of the insurance contract, is proper notice.
Accordingly, we shall affirm the judgment of the Court of Special Appeals.
3Because Anderson and Anderson’s Exxon have the same interests, for purposes of
this discussion they will be used interchangeably.
4There is no evidence in the record to indicate who gave Southern Guaranty the
address listed in the declarations page.
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FACTUAL AND PROCEDURAL BACKGROUND
Mark W. Anderson is the owner of an Exxon gasoline and service station located in
Ocean City, Maryland.3  Throughout the 26 years Anderson has operated the business, he has
used the services of Benjamin F. Brown Insurance Agency, Inc. (“Brown”) to procure
insurance for the gasoline and service station.  When Anderson needed insurance coverage
for automobile, towing, and road services, he contacted Brown.  Because Brown could not
directly procure insurance for these types of activities, Brown contacted Ashcraft &
Associates Insurance Agency, Inc., which placed the insurance with Southern Guarantee
Insurance Company.  Southern Guarantee then issued Anderson’s Exxon a Commercial
Garage Liability Policy with renewal effective dates of June 1, 2002, to June 1, 2003.  The
declarations page of the policy listed the Named Insured and Mailing Address as:4
Anderson’s Exxon/JSM Ent. Inc.
c/o Ben Brown Insurance Agency
304 Compton Avenue
Laurel, Maryland 20707-4330
Anderson received a copy of the policy from Brown, including the declarations page,
via U.S. Mail.  Anderson did not dispute the use of Brown’s mailing address as his point of
contact.  Because the premiums for Anderson’s policy were based on the size of his payroll,
Southern Guaranty attempted to conduct a financial audit of Anderson’s Exxon business,
5The legislature, through section 2, ch. 580, Acts 2006, has redesignated this
section, effective January 1, 2007, as §27-602 (b) through (d), and rewritten the section. 
The relevant part of §27-601, effective through December 31, 2006, and at all times
relevant to this case, was subsection (c), and read as follows:
Notice of intention to cancel or not to renew. - (1) At least 45
days before the date of the proposed cancellation or expiration
of the policy, the insurer shall cause to be sent to the insured, by
certificate of mailing, a written notice of intention to cancel for
a reason other than nonpayment of premium or notice of
intention not to renew a policy issued in the State.
(2) Notice given to the insured by an insurance producer
on behalf of the insurer is deemed to have been given by the
insurer for purposes of this subsection.
(3) Notwithstanding paragraph (2) of this subsection, no
notice is required under this section if the insurance producer
has replaced the insurance.
The relevant subsection is now §27-602(c), which reads:
Notice of intention to cancel or not to renew. - (1) At least 45
days before the date of the proposed cancellation or expiration
of the policy, the insurer shall send to the insured, by certificate
of mail, a written notice of intention to cancel for a reason other
than nonpayment of premium or notice of intention not to renew
a policy issued in the State.
(2) An insurer shall maintain proof of mailing in a form
authorized or accepted by the United States Postal Service.
(3) Notice given to the insured by an insurance producer
on behalf of the insurer is deemed to have been given by the
insurer for purposes of this subsection.
(continued...)
-3-
through Profitworks, an outside audit company.  Compliance with the audit was a condition
of the policy, and if Anderson failed to comply with the audit condition, Southern Guaranty
was permitted to cancel the policy in compliance with statutory notice requirements of Md.
Code (1974, 2006 Repl. Vol.), §27-601 of the Insurance Article.5  Therefore, when Southern
5(...continued)
(4) Notwithstanding paragraph (3) of this subsection, no
notice is required under this section if the insured has replaced
the insurance.
6Profitworks never contacted Anderson directly to obtain payroll information. 
Southern Guaranty issued two notices to Ashcraft for assistance in obtaining the
information, but received no such information.
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Guaranty did not receive any response to its inquiries regarding Anderson’s payroll,6 it issued
a notice of cancellation for failure to comply with the audit provision.  On January 16, 2003,
Southern Guaranty mailed the notice, addressed to Anderson’s Exxon c/o Ben Brown’s
Insurance Agency, at the address listed in the declarations page.  The cancellation was
effective March 4, 2003.  On March 17, 2003, Southern Guaranty mailed Anderson a check
for the unearned insurance premiums on the cancelled policy.  The refund check was also
sent to the address listed in the declarations, even though Southern Guaranty was aware of
Anderson’s business address in Ocean City.  The refund check was eventually cashed by
Anderson’s Exxon.
As a result of an accident that occurred on July 24, 2003, a third party filed a personal
injury claim against Anderson’s Exxon.  When Southern Guaranty received the claim, it
informed the claimant that the policy had been cancelled.  Anderson then filed a Complaint
with the Maryland Insurance Administration alleging that Southern Guaranty had improperly
cancelled the policy because it had not provided him with the required notice.  The Maryland
Insurance Administration conducted an investigation, and determined that the cancellation
was proper because Southern Guaranty provided proper notice.  
7Specifically, the Circuit Court ordered “that the decision of the Administrative
Law Judge is not affected by any error of law and that the decision of the Administrative
Law Judge is therefore affirmed.”
8Section 27-601 is part of the Insurance Article. 
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Anderson requested a hearing, and the matter was referred to the Office of
Administrative Hearings.  After a hearing on the matter, the Administrative Law Judge
affirmed the decision of the Maryland Insurance Administration.  The Administrative Law
Judge found that “the Licensee sent a notice of cancellation of policy 00CPP56144 to the
Complainant’s address as stated on the policy.”  Based on this and other findings of fact, the
Administrative Law Judge concluded as a matter of law that Southern Guaranty complied
with the statutory requirements.  Anderson filed a Petition for Judicial Review in the Circuit
Court for Baltimore City.  After a hearing, the Circuit Court affirmed the decision of the
Administrative Law Judge.7  Anderson appealed to the Court of Special Appeals.  In an
unreported opinion, the intermediate appellate court affirmed the judgment of the Circuit
Court.  The Court of Special Appeals concluded that “it was a factual question to determine
whether notice to Brown under section 27-601[8] constituted notice to Anderson because
Brown was Anderson’s agent.”  Because the Court of Special Appeals determined that the
Administrative Law Judge’s findings were supported by the evidentiary record, it upheld the
Circuit Court’s decision.
Thereafter, Anderson filed a petition for writ of certiorari in this Court, which petition
9The petitioner presents the following questions in his petition for writ of
certiorari: 
1. Does notice to the insured’s insurance agent comply with the
notice requirements of §27-601, Insurance, Md. Code Ann.,
when that Statute specifically requires notice to the insured of a
proposed cancellation?
2. In reviewing the decision of the Administrative Law Judge,
did the Court of Special Appeals apply the correct standard?
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we granted.9  Anderson v. General Casualty, 399 Md. 592, 925 A.2d 632 (2007).
DISCUSSION
Petitioner argues that Southern Guaranty was required to provide notice to Anderson
directly, and that sending the notice of cancellation to Brown did not satisfy the requirements
of §27-601 of the Insurance Article, currently §27-602.  As support for his position, the
petitioner cites Admiral Ins. Co. v. Stromberg & Assocs., 77 Md. App. 726, 551 A.2d 923
(1989), in which the court wrote: “[T]he statute was intended to benefit the individual
insureds by giving them advance notice that their policy was going to be cancelled or non-
renewed and affording them a reasonable opportunity to replace that insurance.”  Admiral,
77 Md. App. at 739, 551 A.2d at 930.  Petitioner attempts to bolster his position by arguing
that the legislature must have intended that the insurer personally notify the insured. 
Petitioner further argues that the Court of Special Appeals erred when it found that
“there was substantial evidence . . . to support the agency’s findings.”  According to
Petitioner, the issue in this case is purely a question of law, and therefore Petitioner asserts
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that the Court of Special Appeals should have substituted its judgment for that of the agency.
Respondent argues that because the agency’s decision was based on substantial
evidence, we should defer to its decision.  Furthermore, Respondent maintains that it
complied with the notice requirements by mailing the notice of cancellation to the insured,
at the address listed in the declarations.  In support of its position, Respondent argues that
Brown was acting as Anderson’s agent for purposes of procuring insurance and receiving
insurance notices, and therefore sending notice to Anderson’s agent fulfilled the requirements
of the statute.  Finally, Respondent posits that the public policy interests that Petitioners
allude to were met when Southern Guaranty mailed the notice of cancellation to Brown.
The present case comes to this Court on review of an administrative agency decision.
When this Court reviews a decision of an administrative agency, we take the same posture
as the circuit court or the intermediate appellate court, and limit our review to the agency’s
decision.  Watkins v. Sec’y, Dep’t of Pub. Safety & Corr. Servs., 377 Md. 34, 45-46, 831
A.2d 1079, 1086 (2003).  In general, review of administrative agency decisions is narrow.
Id.  With respect to findings of fact, we must determine whether the agency decision is
supported by substantial evidence in the record.  Board of Physician Quality Assurance v.
Mullan, 381 Md. 157, 164, 848 A.2d 642, 646 (2004).  As to conclusions of law, we give
significant weight to an agency’s experience in interpreting a statute the agency administers.
John A. v. Bd. of Educ. for Howard County, 400 Md. 363, 382, 929 A.2d 136, 147 (2007).
Nonetheless, if an agency has made an erroneous conclusion of law, it is our duty to correct
-8-
that conclusion.  Id.
Maryland law requires that an insurance provider send notice of the intention to
cancel, “to the insured,” at least 45 days before it intends to cancel a policy.  Md. Code
(1974, 2006 Repl. Vol.), §27-601 of the Insurance Article, now §27-602.  We are asked in
the case at bar to interpret the meaning of the phrase “to the insured.”  The guiding principle
of statutory interpretation is to ascertain and effectuate the legislature’s intent.  Sprenger v.
Pub. Serv. Comm’n, 400 Md. 1, 29, 926 A.2d 238, 254 (2007).  If the language of the statute,
construed in light of its plain meaning, is unambiguous, our analysis ends there.  Id. at 29-30,
926 A.2d at 254-55.  Because we determine that the plain language of the statute is
unambiguous, in that it requires an insurer to notify “the insured,” we need not look to
outside sources for further evidence of legislative intent.
Petitioner’s reliance on Admiral is misplaced because its language merely confirms
the legislative intent, which is undisputed.  Admiral clarifies the intent of the statute at issue
by declaring:
Clearly, the statute was intended to benefit the individual
insureds, by giving them advance notice that their policy was
going to be cancelled or nonrenewed and affording them a
reasonable opportunity to replace that insurance, either through
another company or through the “facility” then in existence for
insuring substandard risks. It was also, we think, for the public
benefit; by affording individual insureds this opportunity to
replace their insurance and thus continue their coverage, the
statute reduced the risk of injury to innocent victims by
uninsured motorists.
Admiral, 77 Md. App. at 739, 551 A.2d at 930.  Petitioner is correct in asserting that the
-9-
legislative intent is to notify the insured of a potential cancellation; however, Petitioner
overlooks that we cannot apply the statute in a vacuum.  We consider the context in which
the question of statutory notice arises.  Moreover, as to context and factual predicate,
Admiral is factually distinguishable, in that the insurer in Admiral never sent any notice to
the insured, at any address.  Admiral, 77 Md. App. at 735, 551 A.2d at 927.  
Turning to the question of notice, in the context of the terms of the insurance policy
at hand, we hold that Southern Guaranty met its obligations under the statute by mailing
notice to Anderson at Brown’s address.  We begin our analysis with  the well-settled
principle that, under Maryland law, an insurance policy is a contract.  Moscarillo v. Prof’l
Risk Mgmt. Servs., Inc., 398 Md. 529, 540, 921 A.2d 245, 251 (2007); United Servs. Auto
Ass’n v. Riley, 393 Md. 55, 79, 899 A.2d 819, 833 (2006); Harleysville Mut. Ins. Co. v.
Zelinski, 393 Md. 83, 88, 899 A.2d 835, 838 (2006).  Because the insurance policy is a
contract, it is to be interpreted under the principles of contract law, which require that a
contract be interpreted as a whole, in accordance with the objective law of contracts, to
determine its character and purpose.  Riley, 393 Md. at 79, 899 A.2d at 833.  
Southern Guaranty was aware of Anderson’s Exxon’s physical location in Ocean City.
The very purpose of the insurance contract, however, was to insure activities that were taking
place at that location, making disclosure of the Ocean City location to Southern Guaranty
necessary as the location of the activities to be insured.  The use of Brown’s address in the
declarations page, indeed under the heading “Mailing Address,” indicates the parties’ mutual
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intent to use that address as Anderson’s mailing address.  Considering the contract as a
whole, it is clear that the Ocean City location was merely the place to be insured, and that the
parties intended Brown’s address to be used as the mailing address for Anderson’s Exxon.
Because Southern Guaranty mailed the notice of cancellation to the “Mailing Address”
designated in the insurance policy, it fulfilled its obligations under the statute.  
To interpret an insurance contract otherwise would not only contradict its overall
purpose but also would be unduly burdensome to insurance companies.  Petitioner would
have the insurer comb through pages of documents and mail the notice to any address
mentioned in the contract, regardless of its purpose, within the context of the contract.  This
interpretation ignores the probability that many addresses may be listed in an insurance
contract for purposes other than listing a mailing address. 
Whether Anderson directed that Brown’s address be written into the contract or
otherwise caused it to be so written is immaterial to this analysis because Anderson
consented to using Brown as his agent for purposes of procuring insurance and receiving
notices concerning insurance policies.  An agency relationship is one that arises from the
manifestation of the principal to the agent that the agent will act on the principal’s behalf.
Ins. Co. of N. Am. v. Miller, 362 Md. 361, 373, 765 A.2d 587, 593 (2001).  Although such
a relationship is not always contractual in nature, it must be consensual.  Id.  Ultimately, a
reviewing court must determine that there was an intent to enter into an agency relationship.
Id.  That intent may be inferred from conduct, including acquiescence.  Green v. H & R
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Block, Inc., 355 Md. 488, 506, 735 A.2d 1039, 1049 (1999).
In this case, the Administrative Law Judge found that Anderson had used Brown, for
26 years, to obtain Anderson’s insurance policies, receive notices, and provide him with
copies.  Anderson received a copy of the policy, including the declarations page.  Anderson
is presumed to know the contents of the contract he received, at least the declarations page.
Upon receipt, Anderson apparently never questioned the use of Brown’s mailing address
listed in the declarations page, despite presumably knowing he could change it if he chose
to do so.  Together, these facts, and reasonable inferences drawn therefrom, indicate
Anderson’s consent to appoint Brown as his agent for his insurance needs, including
receiving notices on his behalf.  
One of the general principles of an agency relationship is that the “knowledge of the
agent is knowledge of the principal.”  Unsatisfied Claim & Judgment Fund Bd.v. Fortney,
264 Md. 246, 255, 285 A.2d 641, 646 (1972).  Where the matter is one that falls within the
agent’s scope of authority, the principal is charged with that knowledge.  See Fortney, 264
Md. at 255-56, 285 A.2d at 646.  Because Anderson intended to appoint Brown as his agent
for purposes of procuring insurance and receiving related notices, and Brown did actually
receive notice within the scope of that agency, Anderson is charged with knowledge of the
notice of cancellation.
CONCLUSION
Because we determine that the plain language of the statute is unambiguous, in that
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it requires insurers to send notice “to the insured,” we need not look any further to determine
legislative intent.  Looking at the insurance contract as a whole, we hold that because
Southern Guaranty mailed the notice of cancellation to the “Mailing Address” designated in
the policy, such notice was sufficient for Southern Guaranty to properly cancel the insurance.
Furthermore, Anderson’s actions demonstrate an intent to appoint Brown as his agent for
purposes of receiving such notices, and as such Anderson is charged with knowledge of the
cancellation.  Because there is substantial evidence supporting the agency’s findings of fact,
and the agency made no error of law in reaching its decision, the agency’s decision should
be affirmed.
JUDGMENT OF THE COURT
O F  
S PE CIAL 
APPE A L S
AFFIRMED.  COSTS TO BE
PAID BY PETITIONER.