eNotes: Liability – October 2022 – Maryland

SIGNIFICANT CASE SUMMARIES

MD CASE SUMMARY

De Macedo v. Auto Ins. Co.
Maryland Court of Appeals
No. 52, September Term, 2021, 2022 Md. LEXIS 321

Decided: August 11, 2022

Court of Appeals upholds the enforceability of an umbrella policy clause excluding claims against named insureds by members of the same household.

Background

Michael Buarque De Macedo, his wife Alessandra, and their two children were involved in a tragic car accident. One child survived, but sustained permanent injuries. At the time of the collision, Michael and Alessandra held an automotive liability policy issued by Travelers Indemnity Company (“TIC”). In addition, Michael held an umbrella policy issued by Automobile Insurance Company (“AIC”), a Travelers Property Casualty Company. Following the accident, the surviving child, her guardian, and the personal representative of the estates of Alessandra and the deceased child (“the Macedos”) made policy limits demands to both TIC and AIC. TIC settled for policy limits. AIC refused and asserted that there was no coverage under the household exclusion in the umbrella policy. The exclusion states that the umbrella policy does not apply to “bodily injury or personal injury to any person who is related by blood, marriage, or adoption to an insured and who is a resident of the household of that person.”

The Macedos filed a civil action in the Circuit Court of Montgomery County against Michael’s Estate and the State of Maryland seeking, among other things, a declaratory judgment against AIC on the grounds that the household exclusion in the umbrella policy was void. The Macedos and AIC filed Cross-Motions for summary judgment on the declaratory judgment count. The Macedos claimed that Md. Code Ann., Cts. & Jud. Proc. § 5-806 voided the household exclusion. Section 5-806 provides that an action by an un-emancipated child against a parent for personal injury or wrongful death arising out of the operation of a motor vehicle may not be restricted by the doctrine of parent-child immunity or by any insurance policy provisions, up to the limits of motor vehicle liability coverage or uninsured motor vehicle coverage. The Circuit Court denied the Macedos’ Motion for summary judgment and granted AIC’s Motion for summary judgment, finding that the household exclusion provision in the umbrella policy was enforceable. The Court of Special Appeals, Maryland’s intermediate court, affirmed the decision the Circuit Court. The Macedos sought review in the Court of Appeals, Maryland’s highest court.

Holding

The Court of Appeals affirmed the judgment of the Court of Special Appeals. The Court found that the Circuit Court properly held that the household exclusion in the AIC umbrella policy was valid and enforceable. The Court found that Section 5-806 applied to primary motor vehicle coverage policies but not personal umbrella policies. Therefore, the Circuit Court was correct in entering summary judgment in favor of AIC on the grounds that there was no coverage under the household exclusion.

Questions about this case can be directed to Andrew White at (443) 641-0572 or awhite@tthlaw.com.