Title: Erie v. Heffernan

State: maryland

Issuer: Maryland Supreme Court

Document:

Erie Insurance Exchange v. Edmund D. Heffernan, II, et al.
Misc. No. 2, September Term, 2006
HEADNOTE: 
AUTO INSURANCE COVERAGE – CHOICE OF LAW
Mallory Heffernan, a minor passenger in an automobile driven by John McMahon, Jr., was
fatally injured when McMahon apparently fell asleep at the wheel and collided with a tractor-
trailer.  The decedent’s parents, the Heffernans, instituted the underlying action for benefits
pursuant to two policies of insurance issued to them by Erie Insurance Exchange, contending
that the substantive tort law of the situs of the accident should apply to determine what the
claimants are “entitled to recover” in a breach of contract action for uninsured/underinsured
motorist benefits. 
Although the contract was formed in Maryland, the law of the situs of the accident controls
the tort aspects of the claim, i.e. what the claimants are “entitled to recover,” and,
specifically, questions of liability and damages raised in an uninsured motorist claim.
Therefore, in a breach of contract action against the insurer on the basis of an
uninsured/underinsured motorist claim, the insured must show what he or she is legally
entitled to recover, in accordance with the substantive law of where the accident occurred,
unless the contract provides otherwise.  In addition, we conclude, in the present case, that
Maryland’s public policy exception to the doctrine of lex loci delicti does not require the
application of Maryland’s statutory cap on non-economic damages.  Similarly, the public
policy exception does not require the application of Maryland’s contributory negligence
principles.
United States District Court for the District of Maryland
Civil No. CCB-05-1888
IN THE COURT OF APPEALS OF 
MARYLAND
Misc. No. 2
September Term, 2006
__________________________________
ERIE INSURANCE EXCHANGE
v.
EDMUND D. HEFFERNAN, II, et al.
__________________________________
Bell, C.J.
         Raker
         *Wilner
Cathell
Harrell
Battaglia
Greene,
   JJ.
__________________________________
Opinion by Greene, J. 
__________________________________
Filed:   June 13, 2007
*Wilner, J., now retired, participated in
the hearing and conference of this case
while an active member of this Court;
after being recalled pursuant to the
Constitution, Article IV, Section 3A, he
also participated in the decision and
 adoption of this opinion.
We have before us two questions of law certified by the United States District Court
for the District of Maryland pursuant to the Maryland Uniform Certification of Questions of
Law Act (Maryland Code, §§ 12-601 through 12-613 of the Cts. & Jud. Proc. Article).  The
questions arise from an action by Edmund and Diane Heffernan (“the Heffernans”),
Maryland residents, against Erie Insurance Exchange (“Erie”).  The Heffernans seek damages
pursuant to the uninsured/underinsured motorist coverage provisions in two insurance
policies issued by Erie.  The auto policy provides uninsured/underinsured motorists benefits
in the amount of $300,000 per person/$300,000 per accident. A second policy, the personal
catastrophe policy, provides an additional $1,000,000 in uninsured/underinsured motorists
benefits.  The parties were unable to come to an agreement on issues of liability and
damages.  As a result, the Heffernans filed suit against Erie in the Circuit Court for Baltimore
City.  Erie removed the case to the United States District Court for the District of Maryland.
The questions certified to us are:
1.  In a case involving a claim for benefits pursuant to the
uninsured/underinsured provisions of an automobile insurance contract
executed in Maryland, where the car accident occurred in Delaware,
should Maryland or Delaware law be applied to determine what the
claimants would be “entitled to recover” because of the accident?
2.  If Delaware law governs the tort issues of this case under lex loci
delicti, would Maryland’s public policy exception to that doctrine
nonetheless require application of:
a.  Maryland’s statutory cap on non-economic
damages, Md. Code Ann., Cts. & Jud. Proc. § 11-108,
where the insured and the insurer both reside in
Maryland, the covered automobiles are garaged in
Maryland, and the contract was executed and
administered in Maryland?
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b.  Maryland’s contributory negligence principles?
In answer to the first question, the substantive law of Delaware applies to determine
what the claimants would be “entitled to recover” because of the accident.   In answer to the
second question, Maryland’s public policy exception to the doctrine of lex loci delicti does
not require the application of Maryland’s statutory cap on non-economic damages.  Similarly,
the public policy exception does not require the application of Maryland’s contributory
negligence principles.
FACTS
We adopt the facts as recited in the Certification Order issued by the District Court in
this case:
On April 18, 2003 at about 6:30 a.m., Mallory Heffernan, a
minor, was fatally injured in an automobile accident that occurred on
Route 301 in the State of Delaware.  Ms. Heffernan (hereinafter
“Decedent”) was transported from the scene and taken to a Delaware
hospital, where she subsequently died.  The Decedent and another
minor, Curtis Jones, had been passengers in a vehicle driven by John
McMahon, Jr., also a minor, and owned by his mother, Angela
McMahon.  The accident occurred when John McMahon, Jr. apparently
fell asleep at the wheel and collided with a tractor-trailer.  At the time
of the accident, the Decedent resided with her parents, Edmund and
Diane Heffernan, in Queenstown, Maryland.  The driver, John
McMahon, Jr., and the other passenger, Curtis Jones, were step-brothers
who resided with Mr. McMahon’s father and Mr. Jones’s mother in
Ingleside, Maryland.
The group of teenagers, all Maryland residents, had driven from
Maryland to Pennsylvania after school on April 17, 2003 in order to
attend a concert in Allentown, Pennsylvania that night.  After the
concert, they began to make their way back to Maryland.  The group
first drove a friend home to Kutztown, Pennsylvania.  After doing so,
they became lost and called the Heffernans to help them get directions
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back to the highway.  The group then drove another friend home to
Swedesboro, New Jersey.  The occupants of the McMahon vehicle were
on their way back to Maryland, driving through Delaware, when the
accident occurred at approximately 6:30 a.m.  As planned prior to the
trip, John McMahon, Jr. was the only individual in the group who drove
the car throughout the entire trip to or from the concert.
At trial, [Erie] believes that it will introduce evidence that the
Decedent called her parents at home in Maryland at least twice between
midnight and 4:40 a.m., during their drive back to Maryland.  Further,
[Erie’s] evidence would show that, during these calls, the Decedent
informed her parents that they were too tired to continue and requested
her parents’ permission to stop traveling for the night and sleep at the
home of friends in either Kutztown, Pennsylvania or, later, in
Swedesboro, New Jersey.  [Erie]  believes that it will present evidence
showing that her parents refused these requests and demanded that the
group continue the drive home.
At trial, [the Heffernans] believe that they will introduce
evidence that there were telephone contacts between them and Mallory.
Further, [the Heffernans] believe that they would present evidence that
at no point during the entire evening were any requests made to them
for permission to stop nor at any point were [the Heffernans] advised
that the driver or any of the other persons in the vehicle being driven by
John McMahon were suffering from fatigue.
At the time of the accident, the Decedent’s parents, Edmund and
Diane Heffernan, carried a Pioneer Family Auto Policy (#Q01 080493
M) and a Personal Catastrophe Policy (#Q31 2350156 M) with [Erie].
These are Maryland policies, designed to comply with Maryland
mandatory insurance requirements, which were issued, sold and
delivered in Maryland to Maryland residents, Edmund and Diane
Heffernan.  Their auto policy included underinsured motorists coverage
in the amount of $300,000 per person/ $300,000 per accident; the
catastrophe policy provided $1,000,000 in underinsured motorists
coverage.  It is agreed that the vehicle driven by Mr. McMahon was an
underinsured motor vehicle with respect to the Erie policy. 
The Heffernans and Erie were unable to come to an agreement
on issues of liability and the amount of benefits to be paid, and the
Heffernans filed suit against Erie in the Circuit Court for Baltimore
City, Maryland, seeking damages pursuant to the underinsured motorists
coverage.  [Erie] then removed the case to the United States District
Court for the District of Maryland.  The underinsured motorists
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coverage in the Erie policies provided, in part that Erie would pay
damages (up to the applicable limits) “that the law entitles you” to
recover from the owner or operator of an underinsured motor vehicle.
[The Heffernans] have asserted that Maryland’s non-economic damages
cap, Md. Code Ann., Cts. & Jud. Proc. § 11-108, does not limit the
damages available to them. [Erie] contends that § 11-108 applies to
limit the damages available.  In addition, [the Heffernans] assert that
Delaware’s tort law including the comparative negligence doctrine
should be applied to determine whether, and to what extent, they are
entitled to recover from the uninsured motorist.  [Erie] contends that
Maryland law, including the doctrines of contributory negligence and
assumption of risk, should be applied.
DISCUSSION
What is ultimately at issue in this case is whether, in determining what the law, and
therefore the policies, entitle the insureds to recover, Maryland would apply its own law or
Delaware law.  The automobile liability insurance policies issued to the Heffernans by Erie
in this case were issued in Maryland.  As discussed, supra, at the time of the collision, the
vehicle 
operated by Mr. McMahon 
was 
underinsured 
with 
respect 
to the
uninsured/underinsured motorist provisions of the Erie policy because the damages the
Heffernans seek exceed the tortfeasor’s liability insurance policy limits.  In West American
Ins. Co. v. Popa, 352 Md. 455, 462-63, 723 A.2d 1, 4-5 (1998), we said that 
[u]nder the Maryland uninsured/underinsured motorist statutory
provisions, when an insured under an automobile insurance policy has
incurred damages as a result of the allegedly tortious driving by an
uninsured or underinsured motorist, the insured has the option of
initially bringing a contract action against his or her insurer to recover
under the policy’s uninsured/underinsured motorist provisions or of
initially bringing a tort action against the tortfeasor.  When the insured
chooses the second option, and notifies his or her insurer of the tort
action, the issues of the uninsured/underinsured defendant’s liability
1“The Insured has a third option of bringing both actions at the same time in the
same case.”  Lane v. Nationwide Mut. Ins. Co., 321 Md. 165, 170, 582 A.2d 501, 503
(citing Allstate Ins. v. Miller, 315 Md. 182, 553 A.2d 1268 (1989)).  
2The renvoi doctrine provides that “when the forum court’s choice-of-law-rules
would apply the substantive law of a foreign jurisdiction to the case before the forum
court, the forum court may apply the whole body of the foreign jurisdiction’s substantive
(continued...)
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and the amount of damages are resolved in the tort action.
(Citations omitted.)  Here, the Heffernans chose to bring a contract action1 against their
insurer, Erie, and settled the tort claim against the underinsured tortfeasor, for the policy
limits, which were $35,000.00.  Erie waived any right to subrogation and allowed the
Heffernans to accept the amount offered.
Erie contends that to determine an insurer’s liability (what the Heffernans are “entitled
to recover”) amounts to an interpretation of the contract and that it was contemplated by both
parties that the policies would be interpreted by referencing Maryland law only, despite the
fact that the automobile collision occurred in Delaware.  The issue, Erie asserts, is properly
decided under Maryland contract law.  In Erie’s view, the interpretation of “entitled to
recover” requires reference to “general principles of tort law” only and is not a mixed
question of contract and tort law.  Erie argues that because only the law of Maryland is
implicated,  it is not a choice of law issue.  According to Erie, if the interpretation of “entitled
to recover” presents a choice of law question, Maryland should discontinue its adherence to
lex loci delicti and adopt a “most significant relationship” test.  Additionally, Erie argues that
the renvoi2 doctrine should apply.  Erie posits that, pursuant to the doctrine of renvoi, this
2(...continued)
law including the foreign jurisdiction’s choice-of-law rules.”  American Motorists Ins. Co.
v. ARTRA Group, Inc., 338 Md. 560, 570, 659 A.2d 1295, 1301-1302 (1995).  
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Court would apply Maryland tort law to the extent that the contract interpretation requires
reference to tort law.  Lastly, Erie asserts that Maryland’s public policy exception to lex loci
delicti requires application of Maryland’s statutory cap and the principles of contributory
negligence and assumption of the risk.
Conversely, the Heffernans contend that “contract and tort law converge in uninsured
motorist coverage” and, as a result, contract principles should apply to certain portions of an
action for uninsured motorist benefits and tort principles to other aspects.  In the Heffernans’
view, our interpretation of the phrase, “that the law entitles you,” as it appears in the
insurance policies (or “entitled to recover” as used in Md. Code (1997, 2006 Repl. Vol.), §
19-509 (c) of the Insurance Article) is a question of mixed law, contract and tort.  The
Heffernans take the position that because tort law varies from state to state, specifically the
tort law of Delaware, the situs of the collision, is different from that of Maryland, the place
where the contract was performed; hence, a conflict of laws exists.   The Heffernans urge that
this Court would apply the principle of lex loci delicti to resolve the conflict of laws, and, in
doing so, apply the substantive tort law of Delaware to determine what they are “entitled to
recover.”  Unlike Erie, the Heffernans urge that the doctrine of renvoi is inapplicable to the
present case.  Finally, the Heffernans argue that Maryland’s non-economic damages cap and
the rule of contributory negligence should not apply to preclude their recovery.   
3Md. Code (1997, 2006 Repl. Vol.), § 19-509 (c) of the Insurance Article,
provides:
(c) Coverage required. – In addition to any other coverage required
by this subtitle, each motor vehicle liability insurance policy issued, sold, or
delivered in the State after July 1, 1975, shall contain coverage for
damages, subject to the policy limits, that:
(1) the insured is entitled to recover from the owner or operator of an
uninsured motorist vehicle because of bodily injuries sustained in a motor
vehicle accident arising out of the ownership, maintenance, or use of the
uninsured motor vehicle; and
(2) a surviving relative of the insured, who is described in § 3-904 of
the Courts Article, is entitled to recover from the owner or operator of an
uninsured motor vehicle because the insured died as a result of a motor
vehicle accident arising out of the ownership, maintenance, or use of the
uninsured motor vehicle.
-7-
A.
Statutory Construction
This case calls for the construction of two identical phrases within two separate
insurance policies issued by Erie to the Heffernans.  Specifically, the policies provide that
Erie will pay damages “that the law entitles you” to recover from an uninsured/underinsured
motorist.  We assume arguendo, that the coverage provided for under the policies was
designed to comply with Maryland’s uninsured motorist statute, § 19-509 of the Insurance
Article.3  We note that “[t]he Erie policies obligate Erie to pay the Heffernans the damages
‘the law entitles [the Heffernans] to recover’ from the driver and/or owner of the uninsured
motor vehicle.”   Thus, the language contained in the automobile liability insurance policies
issued to the Heffernans by Erie mirrors the language of § 19-509 (c).  “To the extent, if any,
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that the wording of the Insurance Code may indicate broader coverage than the wording of
the insurance policy . . . the statutory language would prevail over the insurance policy
language.” Popa, 352 Md. at 465, n.2, 723 A.2d at 6 n.2.   Therefore, in order to determine
whether Maryland or Delaware law should be applied to determine what the Heffernans
would be “entitled to recover” under the uninsured motorist provisions of their policy, we
must interpret § 19-509 of the Insurance Article.  Accordingly, “[w]e turn first to the
principles of statutory construction.  Our goal when engaging in statutory interpretation is
‘to ascertain and effectuate the intention of the legislature.’”  Park & Planning v. Anderson,
395 Md. 172, 182, 909 A.2d 694, 699, (citing Johnson v. Mayor of Balt. City, 387 Md. 1, 11,
874 A.2d 439, 445 (2005); O’Connor v. Balt. County, 382 Md. 102, 113, 854 A.2d 1191,
1198 (2004)).  In Johnson v. Nationwide Mut. Ins. Co., 388 Md. 82, 88-89, 878 A.2d 615,
618-19, we noted that 
[t]o begin with, we must consider the plain language of the statute. As
noted in Chesapeake & Potomac Tel. Co. v. Dir. of Fin. for Mayor and
City Council of Baltimore, 343 Md. 567, 683 A.2d 512 (1996), ‘we
begin our inquiry with the words of the statute and, ordinarily, when the
words of the statute are clear and unambiguous, according to their
commonly understood meaning, we end our inquiry there also.’
Chesapeake & Potomac Tel., 343 Md. at 578, 683 A.2d at 517; see also
Jones v. State, 336 Md. 255, 261, 647 A.2d 1204, 1206-07 (‘If the
words of the statute, construed according to their common and everyday
meaning, are clear and unambiguous and express a plain meaning, we
will give effect to the statute as it is written.’)  Moreover, ‘[w]here the
statutory language is plain and unambiguous, a court may neither add
nor delete language so as to ‘reflect an intent not evidenced in that
language.’ ’  Chesapeake & Potomac Tel., 343 Md. at 579, 683 A.2d at
517 (quoting Condon v. State, 332 Md. 481, 491, 632 A.2d 753, 755
(1993)).
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B.
The Uninsured Motorist Statute
As we noted in State Farm Mut. Auto. Ins. Co. v. DeHaan, 393 Md. 163, 171-72, 900
A.2d 208, 213 (2006), the Maryland General Assembly 
first enacted the uninsured motorist statute as Chapter 73 of the Acts of
1972.  This section was part of a large bill which also created the
Maryland Automobile Insurance Fund (MAIF), the bill provided:
‘(c) In addition to any other coverage required by
this subtitled, every policy or motor vehicle
liability insurance, sold, or delivered in this State
after January 1, 1973 may contain coverage, in at
least the amounts required under Section 7-101 of
Article 66 ½ of the Annotated Code of Maryland
(1970 
Replacement 
Volume 
and 
1972
Supplement), for damages which the insured is
entitled to recover from the owner or operator of
an uninsured motor vehicle because of bodily
injuries sustained in an accident arising out of the
ownership, maintenance, or use of such uninsured
motor vehicle.’
The statute was later amended and codified as Maryland Code (1957,
1972 Repl. Vol., 1978 Cum. Supp.), Art. 48A, § 541 (c).
The enactment of this section complied with one of the
recommendations made in a Report of the Special Committee on No-
Fault Insurance dated January 31, 1972.  The committee’s
recommendation stated:  ‘To complement the first party coverage and
to protect more fully a Maryland driver, the second bill requires the
driver to carry uninsured motorist coverage in the event he suffers
damage caused by an out-of-state driver not protected by liability
insurance.’
(Citations omitted.)  The purpose of the uninsured motorist statute is to provide minimum
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protection for individuals injured by uninsured motorists and should be liberally construed
to ensure that innocent victims of motor vehicle collisions are compensated for their injuries.
See DeHaan, 393 Md. 163, 900 A.2d 208; Johnson v. Nationwide Mut. Ins. Co., 388 Md. 82,
878 A.2d 615 (2005); Yarmuth v. Gov’t Employees Ins. Co., 286 Md. 256, 407 A.2d 315
(1979).  The uninsured motorist statute creates a floor to liability and not a ceiling.  See
Wilson v. Nationwide Ins. Co., 395 Md. 524, 910 A.2d 1122 (2006).  Consistent with the
public policy of affording minimal protection for innocent victims, an insured can purchase
“a higher amount of uninsured motorist insurance which will become available when the
insured’s uninsured motorist coverage, as well as his damages, exceed the liability coverage
of the tortfeasor.”  Waters v. U.S. Fid. & Guar. Co., 328 Md. 700, 712, 616 A.2d 884, 899
(1992).  
This Court has considered the construction of the uninsured motorist statute on
numerous occasions dating back to its enactment.  See, e.g. State Farm Mut. Auto. Ins. Co.
v. Md. Auto. Ins. Fund, 277 Md. 602, 605, 356 A.2d 560, 562, (1976) (holding that an
insurer’s “limitation of coverage to instances of physical impact between the insured and the
phantom vehicle plainly violated the legislative mandate of [the uninsured motorist statute]
and is void”); Yarmuth, 286 Md. at 264, 407 A.2d at 319 (interpreting the uninsured motorist
statute as “having the purpose of providing minimum protection to individuals injured by
uninsured motorist” up to a specified amount and that a clause in an insurance policy
reducing the insurance coverage to that minimum is consistent with legislated public policy);
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State Farm v. Webb, 291 Md. 721, 436 A.2d 465 (1981) (holding that “consent to sue”
clauses contained within an uninsured motorist endorsement are unenforceable and contrary
to the public policy expressed in the uninsured motorist statute); Lee v. Wheeler, 310 Md.
233, 528 Md. 912 (1987) (holding that an insurance provision requiring physical contact
between an insured vehicle and a phantom vehicle when the accident occurred out of state
was contrary to the public policy expressed in the uninsured motorist statute).     
The Uninsured Motorist (UM) Statute and the Instant Case
We next turn our attention to the applicable provisions of the UM statute to determine
whether the Legislature, when it enacted the UM statute, intended for the phrase “entitled to
recover” to implicate tort law.  In determining the intent of the Legislature, we begin our
analysis with the plain language of the statute.  State Dept. of Assessments & Taxation v.
Maryland-Nat’l Capital Park & Planning Comm’n, 348 Md. 2, 12, 702 A.2d 690, 695
(1997).  The crux of this appeal is our interpretation of subsection 19-509 (c)(1) which
provides that “the insured is entitled to recover from the owner or operator of an uninsured
motor vehicle because of bodily injuries sustained in a motor vehicle accident arising out of
the ownership, maintenance, or use of the uninsured motor vehicle.” (Emphasis added.)  In
our view, the phrase “entitled to recover” is a tort principle.  Our decision in West American
v. Popa, 352 Md. 455, 723 A.2d 1 (1998), supports this view.  Notwithstanding, Erie
contends that in Popa, we adopted a “broad definition of ‘entitled to recover’” and that from
our holding in Popa “it logically flows that fault and damages under this Maryland contract
4 In Popa, 352 Md. at 467, 723 A.2d at 7, the Popas “established fault on the part
(continued...)
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should be established in accordance with Maryland law.” 
 In Popa, the insurer, West American, issued an automobile liability insurance policy
to the Popas, that stated in relevant part “that West American ‘will pay damages which a
covered person is legally entitled to recover from the owner or operator of’ an uninsured or
underinsured motor vehicle.”  Popa, 352 Md. at 464, 723 A.2d at 5.  The Popas filed suit
against West American to collect uninsured motorist benefits for the death of their son,
which resulted from a traffic collision with a Maryland State Police car, driven by a state
trooper.  West American argued, inter alia, that it was not required to pay any benefits to the
Popas because the Popas were not “legally entitled to recover” any amounts beyond the
$50,000 already paid by the State resting “upon the premise that the policy language ‘legally
entitled to recover’ [meant] that if there is any legal bar to actual recovery from the uninsured
or underinsured motorist, then the insured is not ‘legally entitled to recover’ his actual
damages from the uninsured or underinsured tortfeasor.”  Popa, 352 Md. at 465, 723 A.2d
at 5-6.  
The Court rejected West American’s definition of “legally entitled to recover,” instead
reaffirming our holding in Reese v. State Farm Mut. Auto. Ins. Co., 285 Md. 548, 403 A.2d
1229 (1979), citing that definition of “legally entitled to recover[,]” i.e., proof that the
uninsured motorist was at fault and the amount of damages as determinative and noting that
in Reese we adopted a “broader definition of the policy language.”4  Popa, 352 Md. at 467,
(...continued)
of the state employee and established their damages[,]” and, therefore, the Popas
sufficiently showed that they were entitled to recover, within the meaning of the phrases
“legally entitled to recover” or “entitled to recover” as set forth in Reese.  
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723 A.2d at 7.  We do not agree with Erie, however, that our holding in Popa, no matter the
breadth of the definition of “legally entitled to recover,” indicates that Maryland substantive
tort law applies in this case.  Our holdings in Reese and Popa certainly provide definitions
of the terms  “entitled to recover” and “legally entitled to recover.”  Neither of those cases,
nor the definitions contained therein, indicate that only Maryland contract law will apply to
all aspects of a contract action involving an uninsured/underinsured motorist claim no matter
what issue is in dispute.  Reese and Popa, however, stand for the proposition that “entitled
to recover” is, itself, a tort concept.  Because “entitled to recover,” as it is used in the
insurance policies, is a tort concept, it is subject to application of the appropriate tort law as
determined by Maryland’s choice of law principles.
C.
Choice-of-Law
Erie contends that the District Court should not refer to Maryland’s tort choice of law
principles to determine whether Maryland or Delaware tort law applies because the District
Court can resolve this case by application of Maryland contract law.  Further, Erie asserts
that this case has been filed pursuant to a Maryland contract and that “fault” should be
determined in accordance with Maryland law, as that is the law that the parties contemplated
would apply; but, that such a determination does not indicate that Delaware tort law should
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be applied.  Conversely, the Heffernans argue that “contract and tort law converge whenever
an uninsured motorist claim is presented,” and that “the forum court must apply contract
principles to certain portions of the uninsured motorist claim and tort principles to other
aspects.”  The result, the Heffernans contend, is that the forum court has to make two choice
of law analyses.  As discussed infra, we agree with the Heffernans.
Generally, in a conflict-of-laws situation, a court must determine at the outset the
nature of the problem presented to it for solution, specifically, if it relates to torts, contracts,
property, or some other field, or to a matter of substance or procedure.  See Handy v.
Uniroyal, Inc., 327 F.Supp. 596 (D. Del. 1971).  Accordingly, we first address the nature of
an action by an insured against his own insurer for uninsured motorist benefits.  The action
by the insured against the insurer is a contract action.  Recovery is based upon the element
of tortious conduct, in this case, the negligence of a third party. 
 In Reese, supra, we were presented with circumstances factually similar to those of
the instant case.  William Reese, the plaintiff in that action, was injured in an accident that
occurred in Danville, Virginia.  Reese alleged that his injuries occurred as a result of the
negligence of the other driver and that State Farm Mutual Automobile Insurance Company,
his insurer at the time of the collision, breached its contract by denying him coverage under
the uninsured motorist provision of that policy.   In Reese, the issue before this Court was
whether “as a condition precedent to the insurer’s liability . . . [an injured] plaintiff must first
bring suit and recover a judgment against the uninsured motorist.”  Reese, 285 Md. at 553,
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403 A.2d at 1232.  Preliminarily, we determined that the language of the uninsured motorist
statute in force at that time, Md. Code (1957, 1972 Repl. Vol., 1978 Cum. Supp.), Art. 48A
§ 541(c), and the language of the automobile insurance policy were “substantially identical,”
obligating State Farm “‘to pay all sums which the insured . . . shall be legally entitled to
recover as damages from the owner or operator of an uninsured motor vehicle because of’
bodily injury or injury to the covered vehicle.” Reese, 285 Md. at 552, 403 A.2d at 1231.
Rejecting State Farm’s contention that there must first be a determination of the alleged
tortfeasor’s liability, we stated that uninsured motorist coverage is “‘first party coverage’ like
collision, comprehensive, medical payments or personal injury protection and not ‘third party
coverage’ such as personal injury or property damage liability insurance.”  Reese, 285 Md.
at 552, 403 A.2d at 1231-32.  We held that “an insured need not, as a condition for recovery
against his insurer under the uninsured motorist endorsement, sue and obtain a judgment
against the uninsured tortfeasor.”  Reese, 285 Md. at 554, 403 A.2d at 1233.  In so holding,
we determined that “[a] suit based upon the insured’s allegation that he is entitled to payment
under one of the first party coverage clauses in the contract he entered into with his insurance
carrier, and that the carrier has refused payment thereby breaching its promise, is clearly a
contract action.”  Reese, 285 Md. at 552-53, 403 A.2d at 1232 (emphasis added). 
 Furthermore, in Reese, we cited with approval the decision of the Supreme Court of
Kansas in Winner v. Ratzlaff, 505 P.2d 606 (Kan. 1973).  Winner pointed out that the words
“legally entitled to recover as damages” meant that “the insured must be able to establish
5Cf.  West American v. Popa, 352 Md. 455, 723 A.2d 1 (1998) (holding that an
insurer does not have every defense at its disposal in its attempt to preclude an insured
from recovering uninsured/underinsured motorist benefits).  
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fault on the part of the uninsured motorist which gives rise to the damages and to prove the
extent of those damages.”  Reese, 285 Md. at 555, 403 A.2d at 1233 (citation omitted).
Further, we noted that “[i]n resisting the claim the insurer would have available to it, in
addition to policy defenses compatible with the statute, [the insurer could raise] the
substantive defenses that would have been available to the uninsured motorist such as
contributory negligence, etc.5”  Reese, 285 Md. at 556, 403 A.2d at 1233; see also,
Nationwide Mut. Ins. Co. v. Webb, 291 Md. 721, 736, 436 A.2d 465, 474  (1981) (noting, in
accordance with Reese, supra, that the uninsured motorist statute requires the claimant to
establish that he or she is “entitled to recover.”  This Court held in Reese and Webb that the
injured party can establish that he or she is “entitled to recover” (and thereby satisfy the
statutory requirement) by obtaining a “valid final tort judgment,” entered against the
uninsured motorist.  After obtaining a final tort judgment, the injured party must then prove
the contract in order to recover uninsured motorist benefits from the insurer.).  
Notably absent, however, from our decisions in Reese and Webb, is any discussion of
choice of law principles, specifically whether the substantive tort law of Maryland or
Virginia applied to determine what William Reese was “legally entitled to recover as
damages.”  We surmise that the issue was not squarely before the Court because there was
no dispute with regard to the issue of fault.  The substantive tort law of Maryland and the law
-17-
of Virginia, the situs of the accident, at the time of the accident were the same.  Specifically,
Virginia, like Maryland, adhered to the common law doctrine of contributory negligence.
See generally City of Bedford v. Zimmerman, 547 S.E.2d 211 (Va. 2001); Sawyer v. Comerci,
563 S.E.2d 748 (Va. 2002); Ponirakis v. Choi, 546 S.E.2d 707 (Va. 2001); Anderson v.
Payne, 54 S.E.2d 82 (Va. 1949).  In the case sub judice, unlike in Reese, the substantive tort
law of the place of the automobile collision, Delaware, differs from the law of Maryland and,
here, there are allegations that the insured was contributorily negligent.  Despite not squarely
addressing the question presented before us in this case, our holding in Reese stands for the
proposition that although an action by an insured against the insurer for
uninsured/underinsured motorist benefits sounds in contract, the determination of contractual
liability hinges on substantive tort law.  
In Allstate Ins. Co. v. Hart, 327 Md. 526, 611 A.2d 100 (1992), the issue before the
Court was whether the household exclusion provision in a Florida automobile insurance
policy should be enforced in light of Maryland’s public policy against household exclusion
clauses contained in such policies.  We noted that “[i]n deciding questions of interpretation
and validity of contract provisions, Maryland courts ordinarily should apply the law of the
jurisdiction where the contract was made.  This is referred to as the principle of lex loci
contractus.”  Hart, 327 Md. at 529, 611 A.2d at 101 (citations omitted).  Both the Heffernans
and Erie concede that the automobile insurance policy issued to the Heffernans by Erie was
issued, delivered and executed in Maryland and is, therefore, a Maryland contract.  To that
-18-
end, for choice of law purposes, we generally would apply Maryland law to decide questions
of the interpretation and validity of the policies issued by Erie to the Heffernans.  
A contract action for uninsured/underinsured motorist benefits may raise issues of both
tort and contract law, even though the action sounds in contract.  See Reese, 285 Md. at 552-
53; 403 A.2d at 1231;  Lee v. Saliga, 373 S.E.2d 345, 349 (W.Va. 1988) (holding that the
physical contact requirement is a contract question as opposed to a liability question for
conflicts of law purposes); see also Eugene F. Scoles et al, Conflict of Laws, § 17.56 (4th
ed. 2004) (discussing the split of authority as to whether the insured must prove he or she is
legally entitled to recover under the law of the state where the policy was issued  or the state
in which the accident occurred, for purposes of uninsured/underinsured motorist coverage);
Crossley v. Pacific Employees Ins. Co., 251 N.W. 2d 383, 386 (Neb. 1977) (holding that in
an action to recover uninsured motorist benefits, the law of the state where the accident
occurred controls the right to recover and the amount of the recovery (in that case,
Colorado’s no-fault law governed the threshold issue of the tortfeasor’s liability)).  
As discussed supra, uninsured motorist coverage is first party coverage that exists
where a third party is at fault and the third party was not adequately insured.  A breach of
contract action filed against the insurer on the basis of an uninsured/underinsured motorist
claim “differs from that which [the insured] would normally prosecute against the tortfeasor
in that he must prove the contract and then his tort claim, which is an element of his
contractual right to recover damages.”   State Farm Mut. Auto. Ins. Co. v. Fass, 243 So.2d
-19-
223, 224 (Fla. 1971); see also Reese, 285 Md. at 554, 403 A.2d at 1232.  By contrast, in a
direct action against the tortfeasor, the injured party “must prove four well-established
elements: ‘‘ (1) that the defendant was under a duty to protect the plaintiff from injury, (2)
that the defendant breached that duty, (3) that the plaintiff suffered actual injury or loss, and
(4) that the loss or injury proximately resulted from the defendant’s breach of the duty.’’” 
Hennings v. Pelham Wood Ltd. Liab. Ltd. P’ship, 375 Md. 522, 535, 826 A.2d 443, 451
(2003) (citations omitted). 
Here, we are not asked to interpret the validity of a contractual term or decide questions
of coverage.  The  question here is the applicability of the appropriate substantive law to
resolve the issues of tort liability and damages.  Because the nature of the problem relates to
tort, rather than contract principles, we look to tort choice of law principles, namely, the law
of the place of the accident to answer the question.  In that regard, Delaware is the place of
the tort and the place of injury.
Lex Loci Delicti
Maryland law is clear that in a conflict of law situation, such as the one presented in
the case sub judice,“where the events giving rise to a tort action occur in more than one State,
we apply the law of the State where the injury-the last event required to constitute the tort
occurred.”  Laboratory Corp. of America v. Hood, 395 Md. 608, 614, 911A.2d. 841, 845
(2006).  This principle is lex loci delicti.  Consistent with the principle of lex loci delicti,
because the automobile collision occurred in Delaware, under Maryland law, a Maryland
6Depecage is defined as “[a] court’s application of different state laws to different
issues in a legal dispute; choice of law on an issue-by-issue basis.” BLACK’S LAW
DICTIONARY 469 (8th ed. 1999). 
-20-
Court would apply the substantive tort law of Delaware to determine what the claimants are
“entitled to recover” in an action for uninsured motorist benefits.  We conclude, pursuant to
Maryland law, that an action by an insured against his insurance company for uninsured
motorist benefits is a contract action.  Although principles of lex loci contractus apply to
contract disputes, because the uninsured motorist statute and the insurance policies, by the
incorporation of the phrase “entitled to recover,” references tort law, the substantive tort law
of where the accident occurred applies, generally, to the issues of fault and damages.   
Depecage6  
Our decision in this case embraces the concept of  “depecage.”  Discussing depecage,
the Supreme Court of Virginia noted that “‘[i]t has always been understood. . . that different
substantive issues could be properly decided under the laws of different states, when the
choice-influencing considerations differ as they apply to the different issues.’” Buchanan v.
Doe, 431 S.E.2d 289 (Va. 1993) (internal citations omitted).    See generally, Berg Chilling
Sys. v. Hull Corp., 435 F.3d 455 (3rd Cir. 2006); Reese, Depecage: A Common Phenomenon
in Choice of Law, 73 Column. L. Rev. 58 (1973).   Erie warns against this Court’s adoption
of depecage.  According to Erie, the depecage framework is inappropriate in this case
because it would act to “legitimize a smorgasbord approach which inures only to the benefit”
7  The theory advanced by Erie, however, is plainly inconsistent with our previous
holdings.  As discussed, supra, the definition of “entitled to recover” urged by Erie leads
to bizarre results.  Under Erie’s theory, clearly inconsistent with Maryland law, if the
Heffernans elected to bring a tort suit against the tortfeasor in Delaware, Maryland tort
law would govern the action.  Our decision today avoids such anomalies.  
-21-
of the Heffernans.7 To the contrary, our holding today presents a clear framework for
resolving choice of law issues such as the one presented in the instant case.  This
determination will allow insurers and insureds to predict with reasonable certainty the law
that will apply in a breach of contract action against the insurer on the basis of an
uninsured/underinsured motorist claim.  Specifically, all parties to a contract which provides
uninsured/underinsured motorist benefits can anticipate that, absent a contractual choice of
law provision, any dispute as to the validity of the policy or the meaning of its terms will be
resolved based on the law of where the contract was made, but that the substantive tort law
of the place where the automobile collision occurred will control what the claimants are
“entitled to recover.”  
This is not the first time that this Court has embraced the principles of depacage.  In
Hauch v. Connor, 295 Md. 120, 453 A.2d 1207 (1983), we adopted a similar framework,
applying the tort law of a foreign jurisdiction to certain issues while applying Maryland law
to other issues.  In Hauch the issue before the Court was whether Maryland residents, who
were injured in an automobile collision in Delaware could maintain a personal injury action
in Maryland against their co-employee, who was the driver when such an action was not
allowed by Delaware law.  In that case, we held that “all questions concerning substantive
-22-
tort law [should] be governed by the law of Delaware, as it is the state where the collision
occurred.”  Hauch, 295 Md. at 125, 453 A.2d at 1210.  Although the law of Delaware applied
to all questions concerning substantive tort law, we also applied M aryland’s worker’s
compensation law because, even though the injury did not occur in Maryland, there were
greater Maryland interests.  Specifically, we acknowledged that the worker’s compensation
statute is analogous to a statute of limitations in that both matters implicate the public policy
of the forum rather than the public policy of another jurisdiction.  We concluded, therefore,
as we do in the case sub judice, that Delaware law should apply to certain aspects and
Maryland law to other aspects, depending upon the issues raised in the proceedings.  See also
Bishop v. Twiford, 317 Md. 170, 175, 562 A.2d 1238, 1241 (1989) (relying on Hauch,
holding that Delaware law controlled questions of substantive tort law but that “the choice
of law principles, relevant to whether a co-employee suit was allowable, were not those of
tort law but those of worker’s compensation law” and, thus, Maryland’s worker’s
compensation statute applied to an employee’s action against a negligent co-employee
(citations omitted)).               
Other jurisdictions that have decided whether an action for uninsured motorist benefits
by an insured against his or her insurer raises questions of tort law, and therefore application
of tort choice of law principles, or in the alternative, raises only questions of contract law,
are consistent with this approach.  In Lee v. Saliga, 373 S.E.2d 345 (W.Va. 1988), one of the
certified questions presented to the court, involved a question of coverage under uninsured
-23-
motorist policies.  As to the nature and scope of uninsured motorist insurance, the court noted
that “[t]here is in any uninsured motorist case a related tort aspect” and that “[t]he
determination of the uninsured motorist’s liability is to be made by reference to the general
rules of tort law. . . [but] the insured ‘must allege and prove the same elements of fault and
damages that are required to be proved in common law tort actions against tortfeasors.’”
Saliga, 373 S.E.2d at 348 (internal citations omitted).  Erie argues that the court in Saliga
engaged in a two part choice of law analysis “because, under the particular uninsured
motorist law, the insured is required to establish the actual liability of the tortfeasor.”  
Further, Erie argues that, pursuant to Popa, this is not the case in Maryland, because
the insured is required to prove “fault” on the part of the uninsured motorist and damages,
and not prove the uninsured motorist’s actual liability.  We agree insofar as Popa stands for
the principle that in Maryland the insured need not first prove all the elements of a tort cause
of action and obtain a judgment against the tortfeasor in order to pursue a claim against the
insurer for uninsured/underinsured motorist benefits.  In the breach of contract action,
however, the insured, nonetheless, must prove his or her tort claim in order to establish that
the contract was breached.   Proof of the underlying tort claim is an element of the insured’s
contractual right to recover.  See Popa, 352 Md. at 464, 723 A.2d at 5; Reese, 285 Md. at
553, 403 A.2d at 1232; Fass, 243 So. 2d at 224. 
We acknowledge that the application of tort choice of law principles in Saliga resulted
in the court’s application of the tort law of the forum state even though the tort occurred in
-24-
another state.  We  agree, however, with the Heffernans that the court in Saliga applied the
tort law of the forum state only after engaging in a tort choice of law analysis.  The
application of the forum state’s tort law rather than the application of the law of the situs of
the collision, contrary to Erie’s urging, is not consequential.  In our view, Saliga is instructive
insofar as it provides the proper framework for analysis of a breach of contract action against
the insurer on the basis of an uninsured/underinsured motorist claim, not because of that
court’s disposition.  Further, we are persuaded by Saliga that a breach of contract action
against the insurer on the basis of an uninsured/underinsured motorist claim may involve
issues of coverage as to the contract and issues of liability as to the underlying tort.  See
Johnson v. United States Fidelity and Guaranty Co., 696 N.W.2d 431, 437 (Neb. 2005)
(noting that “[a]ctions for uninsured (UM) and underinsured (UIM) coverage can involve
both tort and contract liability); Buchanan v. Doe, 431 S.E. 2d 289, 291 (Va. 1993) (“‘forum
state applies its own law to ascertain whether the issue is one of tort or contract’”).  
Erie urges this Court to abandon the lex loci delicti approach, arguing that the most
significant relationship test is the most appropriate choice of law analysis for uninsured
motorist claims.  We disagree.  “The rule of lex loci delicti is well established in Maryland.
When its rationale has been put into question, ‘this Court has consistently followed the
rule.’” Hauch,  295 Md. at 123-24, 453 A.2d at 1209 (quoting White v. King, 244 Md. 348,
352, 223 A.2d 763 (1966)).  Since White, we have continued to adhere to the rule of lex loci
delicti.  Hood, 395 Md. at 615, 911 A.2d at 845, is a recent reaffirmation of that rule.  In
-25-
Hood, Judge Wilner, writing for the Court, noted that “unlike most other States, which have
abandoned the lex loci delicti approach espoused in §§ 6, 145 and 146 of the
RESTATEMENT (SECOND) OF CONFLICT OF LAWS, Maryland continues to adhere
generally to the lex loci delicti principle in tort cases. ” Id. (citations omitted).  Erie states that
adopting the most significant relationship test “would allow for proper consideration of the
importance of applying the law of the state where the risk is located.”  Erie cites our decision
in Hauch as supporting its position.  We agree that Hauch is instructive on this point.  That
case, however, dictates a result different than that urged by Erie.  In Hauch we said that 
[a] virtue of the rule, for the courts and all parties concerned, is the
predictability and certainty as to which state’s tort law will govern.
Furthermore, lex loci delicti recognizes the legitimate interests which
the foreign state has in the incidents of the act giving rise to the injury.
The foreign state’s resources in the form of police protection, medical
assistance and highway maintenance, to mention a few, are expended
whenever an automobile collision occurs within its boarders.  Also,
when wrongful conduct occurs in a foreign state, it poses a direct threat
to persons and property in that state.  It follows that the citizens of the
foreign state should be the ones to determine, through their tort law,
whether particular conduct is tortious and the extent of the monetary
sanction. 
Hauch, 295 Md. at 125, 453 A.2d at 1210 (citations omitted).  We see no reason to
discontinue our adherence to the principles of lex loci delicti.  Our application of the
principles of lex loci delicti in this case leads to a consistent, predictable approach.
Consistent with these principles, the insured must establish the tortfeasor’s fault and damages
8In Dwayne Clay v. Government Employees Ins. Co., 356 Md. 257, 265, 739 A.2d
5, 9-10 (1999), we said that 
Maryland's mandated uninsured motorist coverage embodies a public
policy  ‘ ‘to assure financial compensation to the innocent victims of
motor vehicle accidents who are unable to recover from financially
irresponsible uninsured motorists.’ ’  Lee v. Wheeler, 310 Md. 233,
238, 528 A.2d 912, 915 (1987) (quoting Pennsylvania Nat'l Mut. Cas.
Ins. Co. v. Gartelman, 288 Md. 151, 157, 416 A.2d 734, 737 (1980)).
See also Nationwide Mut. Ins. Co. v. Webb, 291 Md. 721, 737, 436
A.2d 465, 474 (1981) (‘The courts have repeatedly stated that the
purpose of uninsured motorist statutes is ‘that each insured under such
coverage have available the full statutory minimum to exactly the
same extent as would have been available had the tortfeasor complied
with the minimum requirements of the financial responsibility [l]aw.’
’  (quoting Webb v. State Farm Mut. Auto. Ins. Co., 479 S.W.2d 148,
152 (Mo.Ct.App. 1972))). The uninsured motorist statutory plan is
remedial in nature and ‘dictates a liberal construction in order to
effectuate its purpose of assuring recovery for innocent victims of
motor vehicle accidents.’ State Farm Mut. Auto. Ins. Co. v. Maryland
Auto. Ins. Fund, 277 Md. 602, 605, 356 A.2d 560, 562 (1976).
Our interpretation of “entitled to recover” effectuates the Legislature’s intention to assure
recovery for innocent victims of motor vehicle accidents.
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pursuant to the substantive tort law of the situs of the accident.8 
Renvoi
       Erie also argues that under the circumstances presented by this case, this Court should
apply the doctrine of renvoi.  In American Motorists Ins. Co. v. ARTRA Group, Inc., 338 Md.
560, 570, 659 A.2d 1295, 1301-1302 (1995), we said 
[r]envoi is a French word meaning ‘send back’ or ‘remit.’  It has been
suggested that the doctrine of renvoi was formulated to avoid the
harshness of the traditional common law choice-of-law principles.  The
doctrine of renvoi is basically that, when the forum court’s choice-of-
law-rules would apply the substantive law of a foreign jurisdiction to the
9The Heffernans argue that “two factors must be present: (1) Maryland must have
either ‘the most significant relationship, or, at least, a substantial relationship’ to the tort
at issue, and (2) Delaware ‘would not apply its own substantive law, but instead would
apply Maryland substantive law to the issue before the court.’” See ARTRA, 338 Md. at
579, 659 A.2d at 1301.  We choose not to apply the doctrine of renvoi in the instant case.
-27-
case before the forum court, the forum court may apply the whole body
of the foreign jurisdiction’s substantive law including the foreign
jurisdiction’s choice-of-law rules.  If, in applying renvoi principles, the
foreign jurisdiction’s conflict of law rules would apply the forum’s law,
this reference back of the forum to its own laws is called a remission .
. .  If the choice-of-law rules of the foreign jurisdiction whose laws the
forum would apply refers the forum court to the law of a third
jurisdiction that is called a transmission.  
(Citations omitted.)  Erie argues that the Court should apply the principle of renvoi and that
a Maryland court should look to the entire body of Delaware law, including Delaware
conflict of law principles and determine whether Delaware would apply Maryland law to
decide the coverage issue presented.  Erie argues that, in the instant case, Delaware would
apply the law of Maryland to the underlying dispute since Delaware conflict of law rules
apply the “most significant contacts test” of Restatement (Second) Conflict of Laws.  To the
contrary, the Heffernans argue that renvoi is a limited exception and that the instant case is
an inappropriate situation in which to apply the doctrine.  Further, the Heffernans contend
that if Maryland were to adopt renvoi in the instant case, the factors, as outlined in ARTRA,9
necessary for a Maryland court to override lex loci delicti and apply its own law, are not
present.
In ARTRA, which Erie contends supports its position, we applied only a limited form
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of renvoi that allowed the Court “to apply Maryland law where the application of lex loci
contractus indicate[d] that the foreign jurisdiction would apply Maryland law to the
substantive issues of the controversy.”  ARTRA, 338 Md. at 573, 659 A.2d at 1301.  ARTRA
is distinguishable from the case sub judice.  In that case, the issue was whether a commercial
general liability insurer had a duty to defend or indemnify the insured seller of a paint factory
under circumstances where the allegations of the underlying suit did not give rise to a
potentiality of coverage.  In interpreting the issue of coverage, which involved the clean up
of polluted land in Maryland, we concluded that it was appropriate to apply Maryland law
even though the insurance contracts at issue were entered into in Illinois.  To reach that
result, this Court “assume[d] that Illinois choice-of-law rules would dictate the application
of Maryland law to the substantive issues in [that] case.”  ARTRA, 338 Md. at 568, 659 A.2d
at 1298.  
The contract at issue in the present case involves enforcement of an underinsured
motorist provision of an automobile liability insurance policy, which, unlike the contract in
ARTRA,  was entered into in Maryland.  Ordinarily, where the contract between the parties
was entered into in Maryland, under the doctrine of lex loci contractus, we would, as a first
step in our analysis, look to the law of Maryland to interpret the terms of the contract.  The
reason that we look to the law of the foreign jurisdiction, in this case, is because of our
consistent adherence to the principle of lex loci delicti, which requires that we look at the
substantive law of the place of the injury to resolve the tort aspects of the case.  ARTRA is
-29-
also distinguishable from the instant case because in ARTRA the Court was concerned that
the strict application of the doctrine of lex loci contractus would encourage forum shopping
and would lead to an anomalous result. 
A search of this Court’s previous decisions fails to yield any case in which this Court
has applied renvoi in a case involving the application of lex loci delicti.  Further, in this case
we are not of the opinion that the application of lex loci delicti will result in any harshness
that the application of the doctrine of renvoi would avoid.  Instead the insured will be entitled
to recover the amount for which he has contracted, provided he establishes fault and the
amount of his damages.  Accordingly, the application of lex loci delicti produces both fair
and clear results.  In our view, an application of the substantive tort law of the state in which
the injury occurred, produces a result that is predictable and cannot be fairly described as
anomalous.  
D.
Maryland’s Public Policy Exception
As discussed supra, under lex loci delicti, Delaware law should govern what the
Heffernans are “entitled to recover.”  In answer to the second certified question, Maryland’s
public policy exception to the doctrine of lex loci delicti does not require the application of
Maryland’s statutory cap on non-economic damages, Md. Code. Ann., Cts. & Jud. Proc. §
11-108.  As discussed infra, Maryland’s statutory cap is inapplicable for a number of reasons.
First, it does not apply because it is part of the substantive law of Maryland, not our
10Lex loci delicti, as a rule, embraces the concepts of contributory negligence and
comparative negligence, showing no preference to either doctrine.  Lex loci delicti seeks
only to apply the law of the place of the accident.    
-30-
procedural law.  Next, the insurer is not entitled to assert as a defense every statutory
limitation on the recovery of damages.  Lastly, this is not a situation in which the Maryland
Legislature has stated that the statutory cap should be applied in a breach of contract action
against the insurer on the basis of an uninsured/underinsured motorist claim.  
There exists a well established exception to the traditional rule of lex loci delicti.10
Under the exception, the law of the forum will be applied whenever the law of the place of
the wrong is contrary to a strong public policy of the forum state.  See Schmidt v. Driscoll
Hotel, Inc., 82 N.W.2d 365 (Minn. 1957).  Erie argues that even if we apply lex loci delicti,
Maryland’s public policy exception to that doctrine, nonetheless, requires application of
Maryland’s statutory cap and Maryland’s contributory negligence principles.  We disagree
because pursuant to lex loci delicti, we apply the substantive law of the place of the injury.
The Heffernans contend that Maryland’s “public policy must be very strong and not
merely a situation in which Maryland law is different from the law of another jurisdiction.”
In Bethlehem Steel Corp. v. G.C. Zarnas & Co., Inc., 304 Md. 183, 498 A.2d 605 (1985),
before the Court was a conflict of law question; specifically, whether a provision of a
construction contract executed in Pennsylvania was contrary to Maryland public policy and
therefore unenforceable.  In that case we said, “that merely because Maryland law is
dissimilar to the law of another jurisdiction does not render the latter contrary to Maryland
-31-
public policy and thus unenforceable in our courts.  Rather, for another state’s law to be
unenforceable, there must be ‘a strong public policy against enforcement in Maryland,’ or
‘a public policy sufficient to require the application of law other than the law of the place of
the contract,’” Bethlehem Steel Corp., 304 Md. at 189, 498 A.2d at 608 (citations omitted).
In that case, the Court determined that, in § 5-305 of the Courts and Judicial Proceedings
Article, the General Assembly explicitly determined the public policy regarding the type of
indemnity clause at issue and accordingly held that Maryland public policy is sufficiently
strong to preclude an application of Pennsylvania law under the circumstances of that case.
In Texaco, Inc. v. Vanden Bosche, 242 Md. 334, 340, 219 A.2d 80, 83 (1966), this Court
noted “that a public policy which will permit a state to refuse to enforce rights created by the
law of a sister state must be very strong indeed”(citations omitted) (finding persuasive
indications that Virginia law imposing personal liability on directors, officers and agents of
foreign corporations would be valid in a lawsuit in Maryland).  In Harford Mut. Ins. Co. v.
Bruchey, 248 Md. 669, 674, 238 A.2d 115, 117 (1968), this Court considered whether
Maryland had “such a strong public policy in favor of recovery by a husband for loss of
consortium as to require its courts to refuse to apply the law of a sister State which does not
recognize such a right.”  The Court, relying on Vanden Bosche, saw “merely a difference of
law between the place of the wrong and the forum and not an overriding public policy of the
forum,” and therefore held that the public policy was insufficient to invalidate the application
of lex loci delicti.  Bruchey, 248 Md. at 676, 238 A.2d at 119.  
-32-
 We have applied the same public policy exception analysis under the lex loci
contractus rule.  In Kramer v. Bally’s Park Place, Inc., 311 Md. 387, 535 A.2d 466 (1988),
the question was whether a New Jersey gambling contract violated Maryland public policy
such that a Maryland court should refuse to apply New Jersey law.  Richard Kramer wrote
a check in the amount of $5000, payable to Bally’s Park Place, as “consideration under a
gambling contract or payment of a gambling debt.”  Kramer, 311 Md. at 389, 535 A.2d at
467.  Kramer argued, inter alia, that gambling debts are not recognized as legal or valid in
Maryland.  Citing Zarnas, supra, we noted that “for Maryland public policy to override the
lex loci contractus rule, the public policy must be very strong and not merely a situation in
which Maryland law is different from the law of another jurisdiction.” Kramer, 311 Md. at
390, 535 A.2d at 467 (citations omitted).  In Kramer, we reviewed previous decisions
regarding gambling debts as well as statutory provisions relating to the enforcement of
gambling debts or contracts.  The Court noted that the statute regarding gambling debts at
issue in that case, Md. Code (1957, 1982 Repl. Vol.), Art. 27, §243, “differ[ed] significantly
from the statute at issue in [Zarnas] . . . [and that statute] unequivocally told the Maryland
judiciary that certain indemnification provisions were ‘void and unenforceable’ and expressly
stated that such provisions [were] ‘against public policy.’” Kramer, 311 Md. at 395, 535
A.2d at 470 (citations omitted).  Further, the Court determined that the controlling statute did
not clearly prohibit the gambling contract at issue, as the statute did in Zarnas, and that our
holding in Bender v. Arundel Arena, 248 Md. 181, 236 A.2d 7,11 (1967), established as a
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public policy that the “enforceability of gambling debts and contracts largely depends on
whether the type of gambling engaged in is legal or illegal.”  In light of our holding in
Bender and because Maryland allowed some forms of gambling, we concluded that
Maryland’s public policy against gambling debts was not sufficiently strong to override the
lex loci contractus  principle.          
 Erie contends that to achieve the goal of the non-economic damages cap, purportedly
to reduce premiums and increase the amount of affordable insurance, it is imperative that this
Court apply the cap in breach of contract actions against the insurer on the basis of
uninsured/underinsured motorist claims.  Further, Erie argues that “the fact that the Maryland
Legislature has created [a] statutory cap on non-economic damages[,] demonstrates
Maryland’s strong public policy to limit such damages as a means to ensure affordable
insurance coverage.”  The Heffernans argue that the only reasonable construction of
Maryland’s non-economic damages statute is that the cap “does not apply to contract claims
for uninsured motorist benefits and that, even if Maryland tort law generally applies to the
issue of ‘entitled to recover,’ the cap cannot be used to diminish the recovery of the limits
of insurance purchased by the insureds.”  Even assuming that the Heffernans’ position on this
point is correct, we need not and do not decide that issue in this case. 
In Murphy v. Edmonds, 325 Md. 342, 601 A.2d 102 (1992), the issue was whether
Maryland’s statutory cap on non-economic damages violated the Maryland Constitution.  In
holding that the statutory limit on non-economic damages in personal injury actions does not
11In1994 the General Assembly enacted amendments to § 11-108 which made the
limitation on non-economic damages applicable to wrongful death claims.  See 1994 Md.
Laws, ch. 477.
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violate Maryland’s constitutional guarantee of equal protection, the Court reviewed the
Legislature’s decision to enact the cap.  In that case, we said that “[s]ection 11-108 was
enacted in response to a legislatively perceived crisis concerning the availability and cost of
liability insurance in this State.  This crisis resulted in the unavailability of liability insurance
for some individuals and entities . . . .”  Murphy, 325 Md. at 368, 601 A.2d at 114.  To that
end, we opined that “[t]he General Assembly’s objective in enacting the cap was to assure
the availability of sufficient liability insurance, at a reasonable cost, in order to cover claims
for personal injuries to members of the public.”  Murphy, 325 Md. at 369, 601 A.2d at 115.
Furthermore, in United States v. Streidel, 329 Md. 533, 620 A.2d 905 (1993), where the issue
before the Court was the applicability of  the non-economic damages cap in wrongful death
actions, the Court reaffirmed the historical findings set forth in Murphy (declining to restrict
the type of damages recoverable in a wrongful death action by application of the statutory
cap and holding that the cap is inapplicable to a wrongful death action; and, further
concluding that the Legislature did not intend “personal injury,” as used in the cap statute,
to include damages recoverable in a wrongful death action).11
The Court of Special Appeals’ decision in Black v. Leatherwood Motor Coach Corp.,
92 Md. App. 27, 606 A.2d 295 (1992), is particularly illustrative for present purposes.  In
Black, Virginia and District of Columbia residents brought an action against the Leatherwood
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company after they were injured while riding on a bus owned by that company.  Black, 92
Md. App. at 31, 606 A.2d at 296-7.  Following the trial, Leatherwood sought to have the
jury’s award to one of the injured parties and her husband reduced pursuant to Md. Code.
Ann., Cts. & Jud. Proc. § 11-108.  Leatherwood, on appeal, claimed “that the trial judge erred
when he failed to apply the ‘cap’ on non-economic damages and reduce the jury’s award .
. . .”  Leatherwood further argued that Maryland’s non-economic damages cap is part of the
procedural law of Maryland and, therefore, under lex loci delicti, the procedural law of the
forum, in that instance, Maryland, should govern.  At trial, all parties agreed that “pursuant
to the conflict of laws principle of lex loci delicti, the substantive tort law governing th[at]
case was th[e law] of New Jersey.”  Black, 92 Md. App. at 37, 606 A.2d at 300.  
We agree with the Court of Special Appeals’ assessment, in Black, that the substantive
law was to be determined by the place of wrong, and the procedural law was to be
determined by the law of the forum.  Id. (citing Jacobs v. Adams, 66 Md. App. 779, 790, 505
A.2d 930 (1986) (holding that under the rule of lex loci delicti the substantive tort law is
determined by the place of the wrong, in that case New Jersey, and the procedural law is
governed by the law of the forum, in that case Maryland )).  We further agree with the
intermediate appellate court’s holding “that the statutory cap on non-economic damages is
part of the substantive law of Maryland” and that under the circumstances of that case there
was no overriding public policy reason to apply the law of the forum.  Further, the
intermediate appellate court said that it “found no modern Maryland cases which have, in
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fact, invalidated the lex loci delicti rule on public policy grounds . . . .”  Black, 92 Md. App.
at 43, 606 A.2d at 303.  Specifically, we emphasize that the statutory cap is part of the
substantive law of Maryland and it is, therefore, inapplicable to this case, which is governed
by the substantive law of Delaware.  
Section 412 of the First Restatement of Conflicts of Laws supports our holding.
Section 412 provides that “[t]he measure of damages for a tort is determined by the place of
the wrong.”  This Court approved the First Restatement of Conflict of Laws in Steger v.
Egund, 219 Md. 331, 337, 149 A.2d 762 (1959) (holding that “New Jersey law applies and
controls all matters of substance, including the extent of liability and the right to, and
measure of contribution”). 
We adhere to the principle of lex loci delicti.  The substantive  law of Delaware applies
to the tort aspects of this direct action against the insurer for breach of contract.  As discussed
supra, Maryland’s non-economic damages cap is substantive in nature and not part of the
procedural law of Maryland.  We agree with the rationale of the intermediate appellate court
in Black that “failure to apply the cap will [not] result in an increase in insurance premiums
or decrease the availability of insurance for Maryland residents.”  Black, 92 Md. App. at 48,
606 A.2d at 305.  Similar to the reasoning in Black, we conclude that the policies behind the
cap on non-economic damages will not be offended by our reasoning in this case.  The
contract for uninsured/underinsured motorist coverage was based on the insurer’s duty to pay
benefits in situations where there was no or insufficient liability coverage.
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Uninsured/underinsured motorist benefits are designed to place the injured insured in the
same position he would have been in had the tortfeasor maintained liability insurance or
adequate liability insurance.  Forbes v. Harleysville, 322 Md. 689, 709-10, 589 A.2d 944,
954 (1991).  We find the rationale of Black persuasive, and hold that Erie has not met its
“heavy burden” of establishing that Maryland public policy is sufficiently strong to warrant
overriding the rule of lex loci delicti to require the application of Maryland substantive law
to the tort aspects of this case.  
Although the statute at issue in Zarnas expressed a clear public policy sufficient to
override the principle of lex loci contractus, as to Maryland’s statutory cap on non-economic
damages, Md. Code. Ann., Cts. & Jud. Proc. § 11-108, we do not see such a strong public
policy expressed therein such that we should, by analogy, override the principle of lex loci
delicti.  Cf.  Hood, 395 Md. at 625, 911 A.2d. at 851 (holding that denying Maryland
residents the right to bring a wrongful birth action by applying North Carolina law would “be
contrary to a clear, strong and important Maryland public policy” as reflected in statutory and
case law).  This Court is not persuaded that allowing the Heffernans, or others similarly
situated,  potentially to recover the full amount of the benefits, for which they contracted,
will impact significantly the availability or affordability of liability insurance in the State of
Maryland.  This is merely a situation in which the law of Maryland and Delaware are
different.  The Maryland General Assembly has not addressed specifically the issue of the
applicability of the non-economic damages cap to claims for uninsured/underinsured motorist
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damages and has not given an unequivocal directive to the Maryland Judiciary to apply the
cap in these cases.  See Bethlehem Steel, 304 Md. at 190, 498 A.2d 605.  The principle of lex
loci delicti, therefore, is enforceable in a breach of contract action against the insurer on the
basis of an uninsured/underinsured motorist claim despite Maryland’s cap on  non-economic
damages.
Lastly, Erie contends that “Maryland has a strong policy of adhering to the common
law doctrines of contributory negligence and assumption of the risk.”  Erie relies, inter alia,
on our decision Harrison v. Montgomery County Bd. of Ed., 295 Md. 442, 456 A.2d 894
(1983).  Similarly, Erie argues that the decision of the Supreme Court of West Virginia in
Mills v. Quality Supplier Trucking, Inc., 510 S.E.2d 280 (W.Va. 1998) is persuasive, insofar
as that case provides the proper framework for our decision in this case.  The Heffernans, on
the other hand, contend that the Court of Special Appeals’ decision in Linton v. Linton, 46
Md. App. 660, 420 A.2d 1249 (1980), is more persuasive.  The Heffernans urge this Court
to adopt the same conclusion that the intermediate appellate court adopted in Linton;
specifically, that “Delaware’s law is different than Maryland’s, but Maryland’s public policy
is not offended by the application of Delaware’s law.”
It is consistent with Maryland’s public policy to apply the relevant substantive law of
Delaware to the questions of liability and damages in this case.  As we stated in Hauch, 295
Md. at 125, 453 A.2d at 1210, “all questions concerning substantive tort law [should] be
governed by the law of Delaware, as it is the state where the collision occurred.” The
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principle of contributory negligence is a matter which relates to Maryland substantive law.
The principle of comparative negligence, however, is a matter which relates to Delaware
substantive law.  See 10 Del. C. § 8132; Laws v. Webb, 658 A.2d 1000,1005 (Del.
1995)(noting that “[t]he enactment of the comparative negligence statute manifest[ed] a
legislative intent to change Delaware’s common law rule of contributory negligence”). Thus,
Erie’s suggestion that this Court would apply Maryland substantive law to resolve the issues
of liability and damages in this case is incorrect. There is a strong public policy in Maryland
to apply the law of the place of the injury in tort conflict of law cases.  With that policy in
mind, we see no good reason to reject the application of Delaware substantive law to resolve
the question of entitlement to recover damages.
CERTIFIED QUESTIONS OF
LAW 
ANSWERED 
AS 
SET
FORTH ABOVE; COSTS TO BE
EQUALLY DIVIDED BY THE
PARTIES.