Opinion
No. 89-7085.
Argued February 27, 1990.
Decided March 3, 1992.
Linda Lazarus, Asst. Gen. Counsel, Washington Metropolitan Area Transit Authority, with whom, Gerard J. Stief, Associate Gen. Counsel, Robert J. Kniaz, Acting Deputy Gen. Counsel, and Robert L. Polk, Gen. Counsel, Thomas A. Medford, Asst. Gen. Counsel, Washington Metropolitan Area Transit Authority, Washington, D.C., were on the brief for appellant, Washington Metropolitan Area Transit Authority.
M. Michael Cramer, Washington, D.C., was on the brief for appellant, Jackson Bullock.
Richard L. Swick, with whom Patrick G. Senftle, Washington, D.C., was on the brief for appellee.
Appeal from the United States District Court for the District of Columbia.
Regina Queen was hit by a car and brought a direct action against the Washington Metropolitan Area Transit Authority (WMATA), the driver's insurer, in the district court. She won a jury verdict, and WMATA appealed. A panel of this Court held that federal jurisdiction would lie only if Maryland law allowed a direct action against WMATA in the circumstances of Ms. Queen's case, and certified the direct-action question to the Maryland Court of Appeals. Queen v. Washington Metro. Area Transit Authority, 901 F.2d 135 (D.C. Cir. 1990). "If the Maryland Court of Appeals responds negatively," we noted, "we will be constrained to vacate Queen's verdict." Id. at 140.
The Maryland Court of Appeals did respond negatively, Washington Metro. Area Transit Authority v. Queen, 324 Md. 326, 597 A.2d 423 (1991) (Certified Question Decision). It noted that Yingling v. Phillips, 65 Md. App. 451, 501 A.2d 87 (1985) had created a procedural anomaly for Ms. Queen that might have justified an exception to Maryland's bar against direct actions, but Yingling has since been overruled. 597 A.2d at 427 (citing Lane v. Nationwide Mut. Ins. Co., 321 Md. 165, 582 A.2d 501 (1990)). Ms. Queen now argues that the overruling of Yingling should not be applied retroactively. But whether or not it is applied retroactively, we are forced to conclude that she cannot maintain a direct action against WMATA. We hold, therefore, that the jury verdict must be vacated for lack of jurisdiction.
I. BACKGROUND
In September, 1982, Regina Queen was hit by a car and badly injured. The car belonged to WMATA, and was driven by Jackson Bullock, a WMATA claims adjuster. WMATA refused to compensate Ms. Queen, and filed a declaratory judgment action in Maryland Court. The Maryland court held that Mr. Bullock was acting outside the scope of his employment, but that WMATA was Mr. Bullock's liability insurer. Meanwhile, Ms. Queen had sued Mr. Bullock and WMATA in the district court, claiming jurisdiction under the WMATA Compact. The district court dismissed Mr. Bullock for lack of jurisdiction, but allowed Ms. Queen to bring a direct action against WMATA. Ms. Queen won a jury verdict, and WMATA appealed. See Queen v. WMATA, 901 F.2d 135 (D.C. Cir. 1990).
We held that the WMATA Compact incorporated Maryland law: "Queen could . . . sue WMATA directly only in circumstances where Maryland law countenances such a direct action." 901 F.2d at 138. Moreover, because WMATA's declaratory judgment action was res judicata, "[a]ny direct action by Queen against WMATA . . . must be grounded in WMATA's insurance obligation to Bullock." Id. Therefore, we concluded, "federal jurisdiction over Queen's suit against WMATA exists only insofar as Maryland law permits in the circumstances of this case direct action by an injured tort victim against the tortfeasor's insurer." Id.
We then examined Maryland law and recognized that Maryland has traditionally barred a direct action by an injured party against the tortfeasor's liability insurer, before judgment against the tortfeasor. Id. at 138-39. But this case presented a twist. In Yingling v. Phillips, 65 Md. App. 451, 501 A.2d 87 (1985), the Maryland Court of Special Appeals held that the insurer's filing of a declaratory judgment action would trigger the statute of limitations for suits against the insurer. The Yingling rule, applied to Ms. Queen's case, would create the following anomaly:
A party injured by an impecunious insured cannot directly sue the insurer because of the direct action bar. Instead, the plaintiff is constrained first to obtain a judgment against the insured, then to attempt to satisfy that judgment, and finally to sue the insurer. The insurer, however, can bring suit immediately after the accident disclaiming liability. Under Yingling, if the injured plaintiff does not obtain a judgment from the insured within three years of the filing of the insurer's declaratory action, the plaintiff would be time-barred from suing the insurer directly to satisfy his judgment.
Therefore, we certified to the Maryland Court of Appeals the following question:
Under Maryland law, when an insurer files a declaratory action effectively disclaiming liability, may a plaintiff (1) be excused from obtaining a preliminary judgment against the insured before suing the insurer, and (2) determine the extent of the insured's liability in the context of the suit against the insurer?
Id. at 140. Recognizing that the statute of limitations for Ms. Queen's action against Mr. Bullock had already run, we also stated that "[i]f the Maryland Court of Appeals responds negatively. . . we will be constrained to vacate Queen's verdict." Id.
The Maryland Court of Appeals did respond negatively, noting that Yingling had since been overruled, see Lane v. Nationwide Mut. Ins. Co., 321 Md. 165, 582 A.2d 501 (1990), and that there was no longer a Yingling anomaly to justify an exception to Maryland's rule against direct actions:
Under the principles set forth in Lane, it is clear that the statute of limitations with regard to a tort plaintiff's claim against the tort defendant's liability insurer would not begin to run prior to a determination of liability in the tort case. Consequently, there is no tension between the rule restricting direct actions and the running of limitations against the tort defendant's liability insurer.
Ms. Queen now urges this Court to affirm the jury verdict, arguing that the Certified-Question Decision should be applied prospectively, under Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). WMATA has filed a cross-motion for summary reversal.
II. ANALYSIS
Before considering Ms. Queen's arguments about retroactivity, we must decide whether or not the retroactive application of the Certified-Question decision would make any difference to the disposition of her case. The new law, announced by the Certified-Question Decision, is that (a) an injured party cannot bring a direct action against the liability insurer, before suing the tortfeasor and (b) the liability insurer does not trigger the statute of limitations by bringing a declaratory judgment action. If the old law, which existed at the time Ms. Queen filed her direct action, would have allowed her to bring that action, then the retroactivity problem arises. However, if the old law would have prohibited a direct action, then we need not decide whether the Certified-Question Decision should apply prospectively. In that case, Ms. Queen's action would be dismissed under the old law or the new law.
The old law was composed of two elements. The first was Maryland's traditional prohibition against direct actions; the second was Yingling. If these two elements interacted to create an exception to the direct-action bar for Ms. Queen, we must address the retroactivity question. But if Yingling did not create an exception, retroactivity is irrelevant to our decision.
We have already recognized that Yingling did not create an exception to the direct-action bar: "Considered together with the general bar on direct actions, the Yingling rule creates the following anomaly. A party injured by an impecunious insured cannot directly sue the insurer because of the direct action bar." 901 F.2d at 139. Thus, we suggested that Maryland might either "limit or redefine the scope of Yingling," or "waive . . . the direct action proscription." Id. If Yingling, of course, had allowed Queen to bring a direct action, there would have been no "anomaly" to resolve.
The Maryland Court of Appeals reached the same conclusion:
There is obviously a degree of conflict between the Yingling holding and the rule precluding direct actions by injured persons against liability insurers. If a liability insurer disclaims liability prior to the outcome of the tort case, and if the Yingling holding were correct, the statute of limitations regarding the injured party's claim on the liability insurance policy could run before the injured party was entitled to bring an action against the liability insurer.
Ms. Queen argues in the alternative that a direct action would have been available to her, even without Yingling, because a Maryland precedent allowed a tort victim's direct action against a repudiating insurer. See Reese v. State Farm Mut. Auto. Ins. Co., 285 Md. 548, 403 A.2d 1229 (1979). But Reese allowed a direct action against the uninsured-motorist insurer, not against the liability insurer. In any event, we have already held that Ms. Queen would not normally have a direct action against WMATA, see 901 F.2d at 138-39, and our holding is the law of the case.
III. CONCLUSION
In light of the Certified Question Decision and our earlier decision, the judgment for Ms. Queen must be reversed. We hold, therefore, that the jury verdict must be vacated for lack of jurisdiction, and we remand to the district court for proceedings not inconsistent with this opinion.
So ordered