eNotes: Liability – May 2024 – Maryland

SIGNIFICANT CASE SUMMARIES

Maryland Case Summary

Beahm v. Erie Ins. Exch.
Maryland Appellate Court
No. 1832, September Term 2022

Decided: January 30, 2024

Plaintiff, as an individual, was not entitled to coverage under his corporation’s automobile liability insurance policy, and Plaintiff failed to produce evidence that the insurer owed the necessary duty of care for his negligent misrepresentation claim.

Background

In August 2020, Plaintiff Jeffrey Beahm, as a pedestrian, was injured by a vehicle driven by his nephew Zacharia Smith. At the time of Plaintiff’s injury, he was the sole owner of Starboard Business Technologies, Inc. (“Starboard”), which Defendant Erie Insurance Exchange had insured with a commercial automobile insurance policy. That policy had been purchased by Plaintiff through the Eichhorn Insurance Agency at the time of the corporation’s founding. Starboard was listed as the named insured on the Erie policy. As the limits of Zacharia Smith’s automobile policy were insufficient to cover Plaintiff’s damages, Plaintiff filed a uninsured/underinsured motorist (“UIM”) claim under Starboard’s policy. Erie denied the claim on the grounds that Plaintiff was not a named insured and therefore did not qualify for coverage under the commercial automobile policy.

Plaintiff filed suit in the Circuit Court for Anne Arundel County initially alleging negligence against Zacharia Smith, which Plaintiff voluntarily dismissed, and breach of contract against Erie. Plaintiff was given leave to amend his Complaint to include a count of negligent misrepresentation against Erie. At the close of Plaintiff’s case at the jury trial, the Circuit Court granted judgment in favor of Erie on the breach of contract and negligent misrepresentation counts. The Circuit Court found that the insurance policy was issued to the company (Starboard) and not to Plaintiff, without sufficient evidence that Plaintiff would have been covered by the policy. The Circuit Court also held that Plaintiff failed to provide sufficient evidence Erie had any ownership or control over the independent insurance agency, or that any statements by the insurance agent could be attributed to Erie. Plaintiff timely filed an appeal.

Holding

The Appellate Court of Maryland held that while Plaintiff had signed the commercial automobile policy as the subscriber, that did not make Plaintiff a named insured. Plaintiff’s sole ownership of the corporation did not change this analysis as the corporation was a separate entity from Plaintiff, and the corporation was the owner of the vehicles insured by the policy. The Appellate Court noted that Plaintiff had not been driving a vehicle insured by the policy at the time of the injury, as Plaintiff was a pedestrian. The Appellate Court further held that Plaintiff failed to establish that Erie had any ownership or control over the Eichhorn Insurance Agency and, as such, Erie could not be held liable for Eichhorn Insurance Agency’s statements regarding the policy. The Lower Court’s judgment was affirmed.

Questions about this case can be directed to Lucas Duty at (443)-641-0572 or lduty@tthlaw.com.