In Rigby v Allstate Indemnity Company, (Maryland Court of Special Appeals, No. 0263, September 30, 2015, Krauser, C.J.) the intermediate appellate court (the “Court”) was called upon to decide a case of first impression in Maryland.  The Court held that under the facts of the case a person who had caused an automobile accident was not a “dependent person, under your care” so as to render that person an insured under a personal umbrella insurance policy.  The result was that the accident was not a “covered occurrence” under the terms of the policy.

Rigby, and others, were injured when a vehicle operated by Robert Vanderford and owned by Lawrence Archembeault, with whom Vanderford was residing, and whose “umbrella” insurance policy with Allstate was the subject of the appeal, collided with Rigby’s police cruiser on a road shoulder, injuring her, another person, and a tow truck operator.

Appellants asserted that Vanderford’s youth, the length of his residency with Archembeault, as well as his past and present economic reliance on and close personal relationship with him, made Vanderford a “dependent person” and in the care of Archembeault at the time of the accident and, therefore, an “insured person” as defined by the Allstate policy.

Archembeault held an automobile insurance policy that provided up to $500,000 of liability coverage and an “umbrella” policy with coverage up to $5,000,000 for negligence.  The umbrella policy, the focus of the appeal, defined an “insured person” to include “any dependent person in your care, if that person is a resident of your household.”  Rigby sought a ruling that the umbrella policy’s coverage applied to the accident because the automobile policy’s coverage was insufficient to provide for the victims’ damages.  She lost her arguments.

The facts of the case reflected that for a three year period Vanderford lived principally at the residence of Archembeault together with his domestic partner and Archembeault’s mother.  However, the continuity of that residency was interrupted on three separate occasions when Vanderford moved out.

Fourteen months before the accident, Vanderford obtained full-time employment and thereafter agreed to pay a rent of $600 per month toward the residence. Prior to that, he lived at the residence rent free.  He then also assumed responsibility for the payment of such personal expenses as the cost of his telephone, food, and clothing (which had previously been paid by Archembeault).  Vanderford paid for fuel for the vehicle which Archembeault allowed him to use and which was involved in the accident.

According to the Court, the facts tended to indicate the existence of “…the semblance of a familial relationship…”.  However,  Archembeault “…never claimed Vanderford as a dependent on his tax return, never gave Vanderford any money, credit cards, or an ‘allowance,’ nor paid for Vanderford’s medical care or designated him as a beneficiary of his health insurance policy. Moreover, [Archembeault] admitted that he did not exercise any control over Vanderford’s comings and goings. In fact, Vanderford was, in [Archembeault’s] words, ‘free to leave at any time he cho[se]’ and did move out on three separate occasions.”

In discussing rules of construction of the wording relevant to the case, the Court noted that:  “…an insurance policy, like any contract, must be construed ‘in its entirety,’ and, ‘if reasonably possible,’ [a court must]… give effect ‘to each clause,’ ‘avoiding 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.”  Any ambiguity in the terms of the policy are to be liberally construed in favor of the insured and against the insurer as drafter of the instrument.  Furthermore, a “…policy term is considered ‘ambiguous’ if, to a reasonably prudent person, the term is susceptible to more than one meaning.”

The policy in Rigby defined an “insured person” as: “…c) any dependent person in your care, if that person is a resident of your household.”  The Court stated that the terms “dependent” and “in the care of” “…are not synonymous though they arguably partially overlap.”

In light of the fact that the issues before the Court had not been previously addressed in Maryland, it turned to two out-of-state opinions for guidance.  In Girrens v. Farm Bureau Mutual Insurance Company, 715 P.2d 389 (Kan. 1986), the Kansas Supreme Court addressed the issue of the interpretation of the term “dependent person” in an automobile insurance policy.  In Henderson v. State Farm Fire and Casualty Company, 596 N.W.2d 190 (Mich. 1999), the Michigan Supreme Court considered the issue of how to construe the term “in the care of” in a homeowner’s insurance policy.

The Kansas Supreme Court held that,

“…in ‘the context used in the present policy,’ the standard articulated by the trial court, that ‘a dependent person’ requires a ‘substantial contribution’ to ‘provide the necessities of life,’ was not ‘unreasonable’ and that, given that [the potential insured] ‘was employed full time as a machinist with supplemental income provided from farming,’ the mere fact that he still lived in his parents’ home did not mean that he was a ‘dependent person.’”

Consequently that individual was not a “dependent” under the policy and coverage was properly denied.

In Rigby, the Court stated that merely because the term “dependent”  “…has several slightly different dictionary definitions that “…does not render that term ambiguous.”  Consequently, the Court stated that “…Vanderford’s circumstances lead us to conclude that the circuit court did not err in finding that Vanderford was not “dependent” upon [Archembeault] to the extent that it rendered [the former] a “dependent person” under the Allstate policy at issue.”

The Court also rejected the claim that the term “in the care of” is ambiguous.  In so doing, it applied factors recited in Henderson in construing the terms of a homeowner’s insurance policy.  According to the Court, seven of the eight factors weighed against a finding that Vanderford was, at the time of the accident, “in the care of” Archembeault, and, therefore, an insured under Archembeault’s umbrella policy as:

“(1) [Archembeault] had no legal responsibility to care for Vanderford; (3) [Archembeault] had no supervisory or disciplinary responsibility over Vanderford; (4) [Archembeault] was not providing “substantial essential financial support” to Vanderford (or, at least, it was not clearly erroneous for the court below to so conclude); (5) Vanderford’s living arrangement was temporary (or, at least, it was not clearly erroneous for the court below to so conclude); (6) Vanderford was a twenty-two-year-old emancipated adult; (7) Vanderford was in good health; and (8) Vanderford was working full-time and earning $26,000 per year. Only the second of the eight Henderson factors, that is, that there was “some form of dependency,” tilts in favor of appellants’ position, as [Archembeault] had, in fact, allowed Vanderford to live in his home for a modest rent and to drive his car to work. Thus, there was ample evidence to support the circuit court’s conclusion that Vanderford was not “in the care of” [Archembeault].”