Anderson v. General Casualty

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Mark A nderson e t al., v. Genera l Casualty In surance C o. f/k/a South ern Gua ranty Insurance Co., No. 25, September Term, 2007 HEADNOTE: INSUR ANCE - NOTIC E: Notice of can cellation 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 Cir cuit C ourt for B altim ore C ity 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, A lan M. (R etired, Spec ially Assigned) Cathell, D ale R. (Retire d, Specially Assigned), JJ. ____________________________________ Opinion by Greene, J. ____________________________________ Filed: November 14, 2007 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 Guara ntee mailed the notic e of ca ncellatio n to An derson , addressed care of Ben Brown Insurance Age ncy, a t the a ddre ss listed o n the decl arati ons p age o f 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 prop er 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. Furtherm ore, becau se the insure d consen ted to the de signation 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. 1 Southern Guaran ty Insurance C ompany is n ow kno wn as G eneral Ca sualty Insuran ce Co mpan y, but will h ereinaf ter be re ferred t o as S outher n Gua ranty. 2 Anderson s Exxon/JSM Enterprises Inc., hereinafter, will be referred to as And erson s Exxo n. FACTUAL AND PROCEDURAL BACKGROUND Mark W. Anderson is the own er of an E xxon ga soline and s ervice station located in Ocean City, Maryland.3 Throughout the 26 years Anderson has operated the business, he has used the services of Benjamin F. Brow n Insurance Ag ency, Inc. ( Brown ) to pro cure 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 fo r these types of activities, Brown contacted Ashcraf t & 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, 3 Because Anderson and Anderson s Exxon have the same interests, for purposes of this d iscussion the y will be used interchan geab ly. 4 There is no evidence in the record to indicate who gave Southern Guaranty the address listed in the declarations page. -2- through Profitworks, an outside audit company. Compliance with the audit was a condition of the policy, and if Anderso n failed to co mply with the audit cond ition, Southe rn Guara nty was permitted to cancel the policy in compliance with statutory notice requirements of Md. Code (1974, 20 06 Rep l. Vol.), §27-601 of the Insurance Article.5 Therefore, wh en Southern 5 The legisla ture, through section 2, ch . 580, Acts 2 006, has re designated this section , effect ive Jan uary 1, 20 07, as § 27-60 2 (b) thro ugh (d ), and re written the secti on. 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 insu rer 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 p olicy, 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 ins urer 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- Guaran ty did not receive any response to its inquiries regardin g Anderson s payroll, 6 it issued a notice of c ancellation f or failure to comply with the audit provision. On January 16, 2003, Southern Guara nty m ailed the notice, addressed to A nderson s Exxo n c/o Ben Bro wn 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, ev en though Sou thern Guaran ty 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 S outhern G uaranty receive d the claim, it informed the claimant that the policy had been cancelled. Anderson then filed a Complaint with the Maryland Insurance Admin istration alleging that Southe rn Guara nty had impro perly cancelled the policy beca use it had no t provided h im with the required notice. The Maryland Insurance Administration conducted an investigation, and determined that the cancellation was p roper b ecause South ern Gu aranty pro vided p roper n otice. 5 (...continued) (4) Notwithstanding paragraph (3) of this subsection, no notice is required under this section if the insured has replaced the insurance. 6 Profitw orks ne ver con tacted A nderso n directl y to obtain payroll inf ormatio n. Southern Guaranty issued two notices to Ashcraft for assistance in obtaining the information, but received no such information. -4- 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 dec ision of the M aryland In suranc e Adm inistratio n. The Administrative Law Judge found that the Licensee sent a notice of cancellation of policy 00CPP56144 to the Complainant s addres s as state d on the policy. Based o n this and o ther finding s 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 Circu it Court for Baltimore City. After a hearing, th e 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 judgm ent of the C ircuit 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 reco rd, it upheld the Circuit Court s decision. Thereafter, Anderson filed a petition for writ of certiorari in this C ourt, which petition 7 Specifically, 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 J udge is therefo re affirm ed. 8 Section 27-60 1 is part o f the Ins urance Article. -5- we granted.9 Anderso n v. Gene ral Casua lty, 399 Md. 592 , 925 A.2d 632 (2007). DISCUSSION Petitioner argues that Southern Guaranty was required to provide notice to Anderson directly, and that sen ding the no tice of canc ellation to Brown did not satisfy the req uirements 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 nonrenewed 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 le gislature must h ave inte nded th at the ins urer pe rsonally n otify the in sured. Petitioner further argues that the Court of Special Appeals erred when it found that there was su bstantia l eviden ce . . . to su pport th e agen cy s findi ngs. According to Petitioner, the issue in this case is pure ly a question o f law, and therefore P etitioner asserts 9 The 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. C ode A nn., when that Statute sp ecifically 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? -6- that the Court of Special Appeals should have substituted its judgment for that of th e age ncy. Respondent argues that because the agency s decision was based on substantial evidence, we should defer to its decision. Furthe rmore, Re sponden t maintains th at 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 agen t fulfilled the re quiremen ts of the statut e. Fin ally, 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 cas e 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 cou rt or the interm ediate appe llate 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 o f fact, we m ust determin e whethe r the agenc y decision is supported by substa ntial evid ence in the reco rd. Board of Physician Quality Assurance v. Mullan, 381 Md. 157, 164, 848 A.2d 642, 646 (2004). As to conclusions of la w, we give significant weight to an agency s experience in interpreting a statute the agency administers. John A. v . Bd. of Edu c. for How ard Cou nty, 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 -7- that con clusion . Id. Maryland law requires that an insurance provider se nd notice o f the intention to cancel, to the insured, at least 45 days before it intends to cancel a policy. Md. Code (1974, 2006 Repl. V ol.), §27-601 of the Insu rance Ar ticle, now § 27-602. W e are asked in the case at bar to interpret the meaning of the phrase to the insured. The guid ing principle of statutory interpretation is to ascertain and effectuate the legislature s intent. Sprenger v. Pub. Serv. Comm n, 400 M d. 1, 29, 9 26 A.2 d 238, 2 54 (20 07). If the language of the statute, construed in light of its plain meaning, is unam biguou s, our an alysis end s there. Id. at 29-30, 926 A.2d at 25 4-55. Bec ause we determine that the plain la nguage o f the statute is unambiguous, in that it requires an insurer to notify the insured, we need not look to outside sou rces for fu rther eviden ce of legislativ e 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: Clea rly, the 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 reasonab le opportun ity to replace that insurance, either through another company or through the facility then in existence for insuring substanda rd risks. It was also, we thin k, for the pu blic benefit; by affording individual insureds this opp ortunity to replace their insuranc e and thus continue their coverage, the statute reduced the risk of injury to innocent victims by uninsured motorists. Admiral, 77 Md . App. at 73 9, 551 A .2d at 930. P etitioner is corre ct in asserting th at the -8- legislative intent is to notify the insured of a potential cancellation; however, Petitioner overlook s that we ca nnot 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 insu red, at an y address . Admiral, 77 M d. App . at 735, 5 51 A.2 d at 927 . Turning to the question of notice, in the context of the terms of the insurance policy at hand, w e hold that Southern Guaranty met its obligations under the statute by mailing notice to Ande rson at Bro wn s add ress. We b egin our an alysis with the well-settled principle that, under Maryland law, an insurance policy is a c ontract. Moscarillo v. Prof l Risk Mgmt. Servs., Inc., 398 Md. 529 , 540, 921 A.2d 2 45, 251 (2007); United Se rvs. 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 req uire that a contract be interpreted a s a whole , in accordan ce with the objective law of contrac ts, to determ ine its ch aracter a nd pur pose. Riley, 393 M d. at 79, 8 99 A.2 d at 833 . Southern Guaran ty was awa re of An derson s E xxon s ph ysical location in Ocean City. The very purpose of the insurance contract, however, was to insure activities that were taking place at that location , making d isclosure of the Ocean City loca tion to Sou thern Gu aranty necessary as the location of the activities to be insured. The use of B rown s a ddress in the declarations page, indeed under the heading Mailing Address, indicates the parties mutual -9- 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 Guaran ty mailed the no tice of canc ellation to the Mailing Address design ated in th e insura nce po licy, it fulfille d its oblig ations u nder th e statute . To interpret an insurance contract otherwise would not only contra dict its overall purpose but a lso w ould be unduly burdensom e to insuran ce comp anies. Petitione r 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. Th is interpretation ignores the probability that many addresses may be listed in an insurance contrac t for pu rposes other th an listing a mailin g addre ss. Whether Anderso n directed th at Brow n s address be written in to 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 prin cipal s behalf. Ins. Co. of N. Am. v. Miller, 362 Md. 361, 373, 765 A .2d 587 , 593 (2 001). Although such a relationship is not alw ays contra ctual in n ature, it m ust be c onsen sual. Id. Ultima tely, 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 acquiescen ce. Green v. H & R -10- Block, Inc., 355 Md. 488 , 506, 735 A.2d 1 039, 1049 (199 9). In this case, the Administrative Law Judge found that Anderson had used Brown, for 26 years, to obtain Anderson s insurance policies, receive notices, an d provide him with copies. And erso n rec eive d a co py of the p olicy, including the declarations page. Anderson is presumed to know the contents of the contract he received, at least the declarations page. Upon receipt, An derson ap parently 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. T ogethe r, these f acts, and reasonable inferen ces draw n therefrom , indicate Anderson s consent to a ppoint Brown as his agent for his insurance needs, including receivin g notice s 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 scop e of a utho rity, 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 -11- it requires insurers to send no tice 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 agenc y s findings of fact, and the ag ency made no error of law in reac hing its decisio n, the agen cy s decision sh ould be affirmed. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS TO BE PAID BY PETITIONER. -12-

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