Opinion ID: 2794540
Heading Depth: 2
Heading Rank: 4

Heading: Our Interpretation

Text: As a general rule, we interpret the language of an insurance policy with the same principles and rules of construction that we use to interpret other contracts. See DeHaan, 393 Md. at 193, 900 A.2d at 225–26; Megonnell v. United States Auto Ass’n, 368 Md. 633, 655, 796 A.2d 758, 772 (2002); Cole v. State Farm Mut. Ins. Co., 359 Md. 298, 305, 753 A.2d 533, 537 (2000). Like any other contract, an insurance contract is “measured by its terms unless a statute, a regulation, or public policy is violated thereby.” Pacific Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 488 (1985). We give the words of insurance contracts their customary, ordinary, and accepted meaning, as determined by the fictional “reasonably prudent lay person.” Beale v. Am. Nat’l Lawyers Ins. Reciprocal, 379 Md. 643, 660, 843 A.2d 78, 89 (2004). When contractual language is plain and unambiguous, we enforce the terms of the contract as a matter of law. Calomoris v. Woods, 353 Md. 425, 445, 727 A.2d 358, 368 (1998); Pacific Indem. Co., 302 Md. at 389, 488 A.2d at 489. When interpreting contracts, the contract must be construed in its entirety and, if reasonably possible, effect must be given to each clause so that a court will not find an interpretation which casts out or disregards a meaningful part of the language of the writing unless no other course can be sensibly and reasonably followed. 12 Cochran v. Norkunas, 398 Md. 1, 17, 919 A.2d 700, 710 (2007). If the language of the contract is ambiguous, we may turn to extrinsic evidence to determine the intent of the parties. Clendenin Bros., Inc. v. U.S. Fire Ins. Co., 390 Md. 449, 459, 889 A.2d 387, 393 (2006); Pacific Indem. Co., 302 Md. at 389, 488 A.2d at 489. A policy term is considered “ambiguous if, to a reasonably prudent person, the term is susceptible to more than one meaning.” Cole, 359 Md. at 305–06, 753 A.2d at 537. Some of our sister states maintain that insurance policies should, as a matter of course, be construed against the insurer. Megonnell, 368 Md. at 655, 796 A.2d at 771. Maryland does not follow this rule.12 Id. Instead, in the event that an insurance policy 12 The Connors argued in their brief that Maryland should adopt the “majority view that ambiguous language in an insurance contract shall be strictly construed against the insurer and liberally construed in favor of the insured” and asked us to “take the opportunity to make Maryland law consistent with the modern majority view.” As discussed above, we conclude that the subject policy in this case is not ambiguous. Even if it was, this case would not be the correct vehicle to consider such a modification of Maryland’s common law. In their petition for writ of certiorari, the Connors asked us only to interpret their contract. The Connors did not ask us, for example, to re-examine Maryland common law and recognize that terms contained in an insurance contract are not the product of equal bargaining, but instead must be construed strictly against the insurer. GEICO recognized rightly in their brief that the Connors failed to raise this larger, more existential question before the Court of Special Appeals or in their Petition for Writ of Certiorari. See Maryland Rule 8-131(b) (“Unless provided by the order granting the writ of certiorari, in reviewing a decision rendered by the Court of Special Appeals . . . , the Court of Appeals ordinarily will consider only an issue that has been raised in the petition for certiorari or any cross-petition and that has been preserved for review by the Court of Appeals. . . .”); Worsham v. Greenfield, 435 Md. 349, 355 n.4, 78 A.3d 358, 362 n.4 (2013); Casey v. Mayor of Rockville, 400 Md. 259, 322–24, 929 A.2d 74, 112–13 (2007); Giddins v. State, 393 Md. 1, 17 n.6, 899 A.2d 139, 148 n.6 (2006). With each exchange of briefs here, the parties focused more intensely on People’s Insurance Counsel Div. v. State Farm Fire & Casualty Co., 436 Md. 501, 83 A.3d 779 (2014), where we granted certiorari to consider the following question, among others: (Continued…) 13 (…continued) “[s]hould this Court reexamine Maryland common law on construing insurance contracts and, recognizing that such contracts are not the product of equal bargaining, hold that terms contained in an insurance policy must be strictly construed against the insurer?” Id. In their initial brief, the Connors provided us with a list of states (attached originally to the Petitioner’s Brief in People’s Insurance) following purportedly the rule that insurance policies are contracts of adhesion and are to be construed strictly against the insurer. GEICO, in its brief, argues that, if the Connors had wanted us to re-examine Maryland common law regarding whether insurance policies should be construed strictly against the insurer, the Connors should have raised the issue before the Court of Special Appeals or in their petition for certiorari, as did the petitioners in People’s Insurance. The Connors, in their reply brief, concede that they only argued the issue in their briefs after we granted certiorari in People’s Insurance. They note, however, that Rule 8- 131(a) permits appellate courts to consider unpreserved issues “if necessary or desirable to guide the trial court or to avoid the expenses and delay of another appeal.” The Connors argue further that the fact that we granted certiorari in People’s Insurance “indicat[es] [we] intend[] to consider whether the archaic rule established one hundred and seventy-seven (177) years ago should be maintained.” Finally, the Connors argue that no party is prejudiced by raising this issue on appeal as GEICO was afforded the opportunity to brief fully its response to this argument in its reply to the amicus curiae brief filed by the Maryland Association for Justice, Inc. (the “MAJ”). The MAJ argued first that Maryland should adopt the view that a consumer insurance policy should be construed liberally in favor of the insured and construed strictly against the insurer, and second that judicial action is required to modify the “insurer-friendly approach” to construing insurance policies currently embodied in Maryland common law. GEICO responded that the MAJ’s amicus curiae “should not be permitted to otherwise revive an issue that has not otherwise been preserved for review.” GEICO advanced further a host of arguments for why we should reject the arguments advanced by the MAJ and the Connors encouraging us to re-examine Maryland common law. GEICO argued that (1) stare decisis dictates that we construe insurance contracts in the same manner as other contracts; (2) Maryland already construes strictly ambiguous policy terms against insurers as the drafters; and (3) the MAJ overstates the “majority” rule from other jurisdictions. GEICO then provided us with amici briefs from People’s Insurance as well as charts describing the interpretation methodologies of various other states.