Brethren Mut. Ins. Co. v. Buckley

• Decision Date: 04 March 2014
• Docket Number: No. 10,Sept. Term, 2013.,10
• Citation: 437 Md. 332,86 A.3d 665
• Parties: The BRETHREN MUTUAL INSURANCE COMPANY v. Ember Louise BUCKLEY.
• Court: Maryland Court of Appeals

437 Md. 332

86 A.3d 665

The BRETHREN MUTUAL INSURANCE COMPANY

v.Ember Louise BUCKLEY.

No. 10, Sept. Term, 2013.

Court of Appeals of Maryland.

March 4, 2014.

Kathleen M. McDonald (Kerr McDonald, LLP, Baltimore, MD), on brief, for petitioner.

David M. Kopstein, Esquire, Kopstein & Associates, LLC, Seabrook, MD, for Amicus Curiae brief of the Maryland Association for Justice, for petitioner.

John B. Bratt (Miller & Zois, LLC, Glen Burnie, MD), on brief, for respondent.

Argued before BARBERA, C.J., HARRELL, GREENE, ADKINS, JOHN C. ELDRIDGE (Retired, Specially Assigned) DALE R. CATHELL (Retired, Specially Assigned) JOHN F. McAULIFFE (Retired, Specially Assigned), JJ.

ADKINS, J.

In this case we examine the scope of a general release executed pursuant to Md.Code (1997, 2011 Repl. Vol.), § 19–511 of the Insurance Article (“§ 19–511”). Petitioner, The Brethren Mutual Insurance Company (“Brethren”), appeals the decision of the Court of Special Appeals that a general release executed by its policy holder, Ember L. Buckley (“Buckley”), in favor of a tortfeasor's liability insurer did not likewise waive Buckley's claim under her uninsured motorist policy with Brethren.

FACTS AND LEGAL PROCEEDINGS

Respondent, Buckley, was involved in a single-vehicle accident on March 18, 2007. Buckley was the front-seat passenger in a motor vehicle driven by her boyfriend, Harvey Betts (“Betts”). Betts was covered by a liability insurance policy issued by GEICO, with policy limits of $100,000. GEICO offered to settle Respondent's claim against Betts for the full policy limits. Notwithstanding this settlement, Buckley had medical bills related to this accident in excess of $200,000. Because the settlement with Betts did not cover the full extent of her injuries, Buckley sought coverage under her uninsured/underinsured motorist (“UM”) policy with Petitioner, Brethren.

In order to comply with Maryland's UM scheme,¹ Respondent sent notice of the settlement offer from GEICO to Brethren via certified mail on August 29, 2007.² In response, Brethren's claims adjuster stated in a letter dated October 30, 2007 that Brethren would waive any subrogation action against Betts. Having received this message, Buckley signed a full release of all claims against Harvey Betts and a hold harmless agreement in favor of Betts and GEICO on December 6, 2007 (“the Release”). The Release stated that:

I/we, Ember Buckley ... for and in consideration of a draft for the sum of one hundred thousand dollars ... do ... hereby remise, release, and forever discharge Harvey Betts. Releasee(s), successors and assigns, and/or his, her or their associates, heirs, executors and administrators, and all other persons, firms or corporations of and from any and every claim, demand, right or cause of action, of whatever kind of nature, on account of or in any way growing out of any and all personal injuries and consequences thereof ... resulting or to result from an accident that occurred on or about the eighteenth day of March, 2007, at or near Saw Mill Court Baldwin, MD....

(Emphasis in original). After executing the Release with GEICO, Buckley attempted to recover for the remainder of her outstanding medical bills from Brethren under her UM policy. Brethren denied coverage and refused to pay.

Buckley filed suit against Brethren in the Circuit Court for Baltimore County, alleging breach of contract and seeking the policy limit of $300,000 in compensatory damages, attorney's fees and interest. Brethren answered the complaint, asserting a general denial of liability, and raising the defenses of failure to state a claim, contributory negligence and assumption of the risk. Brethren did not raise the Release as an affirmative defense until its Amended Answer, filed two months after its initial Answer, and nearly three months after Buckley filed her complaint.

Both parties filed motions for summary judgment. Brethren argued that the Release, as written, was a general release, and thus released all persons, firms, and corporations from future claims, regardless of whether they were parties to the Release. Brethren further argued that Buckley's subjective intent in executing the Release was irrelevant—the words on the page should be interpreted exactly as written. Responding, Buckley contended that the Release only applied to Betts and his insurer, and that her execution of it was clearly in accordance with § 19–511. That statute reads, in pertinent part:

§ 19–511. Uninsured motorist coverage—Settlement procedures.

(a) Notice of settlement offer required.—If an injured person receives a written offer from a motor vehicle insurance liability insurer ... to settle a claim for bodily injury or death, and the amount of the settlement offer ... would exhaust the bodily injury or death limits of the applicable liability insurance policies ... the injured person shall send by certified mail, to any insurer that provides uninsured motorist coverage ... a copy of the liability insurer's written settlement offer.

(b) Response to settlement offer.—Within 60 days after receipt of the notice ... the uninsured motorist insurer shall send to the injured person:

(1) written consent to acceptance of the settlement offer and to the execution of releases; or

(2) written refusal to consent to acceptance of the settlement offer.

(c) Payment of settlement offer.—Within 30 days after a refusal to consent to acceptance of a settlement offer ... the uninsured motorist insurer shall pay to the injured person the amount of the settlement offer.

(d) Subrogation rights of uninsured motorist insurer.—

(1) Payment as described in subsection (c) of this section shall preserve the uninsured motorist insurer's subrogation rights against the liability insurer and its insured.

(2) Receipt by the insured person of the payment described in subsection (c) of this section shall constitute the assignment, up to the amount of the payment, of any recovery on behalf of the injured person that is subsequently paid from the applicable liability insurance polic[y]....

(e) Acceptance of settlement offer.—The injured person may accept the liability insurer's settlement offer and execute releases in favor of the liability insurer and its insured without prejudice to any claim the injured person may have against the uninsured motorist insurer:

(1) on receipt of written consent to acceptance of the settlement offer and to the execution of releases; or

(2) if the uninsured motorist insurer has not met the requirements of subsection (b) or subsection (c) of this section.

§ 19–511 of the Insurance Article. The Circuit Court agreed with Brethren and entered summary judgment in its favor, dismissing Buckley's breach of contract claims.³

Buckley appealed the Circuit Court's grant of summary judgment to Brethren. The Court of Special Appeals, applying the facts of this case to § 19–511, held that “in the context of § 19–511(e), executing a boilerplate, general release in favor of the liability insurer does not relieve the UM carrier from its contractual duty to issue a UM payment to its insured.” Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 587, 53 A.3d 456, 463 (2012). The court based its decision on three considerations, “ (1) the text of the statute; (2) the purpose of the statute; and (3) matters of public policy.” Buckley, 207 Md.App. at 587, 53 A.3d at 463–64.

Thus, the Court of Special Appeals held that the general release executed between Buckley and GEICO did not prejudice Buckley's claim against Brethren. Consequently, Brethren could not use the Release to relieve itself of its duty to pay under the UM policy owned by Buckley. Buckley, 207 Md.App. at 598, 53 A.3d at 470.

On Brethren's petition, we granted certiorari to consider the following question:

Did the Court of Special Appeals err in ruling that the general release that Buckley executed did not prejudice her breach of contract claim against Brethren for benefits under her UM policy? ⁴

Because we answer this question in the negative, we affirm the decision of the Court of Special Appeals.

DISCUSSION

Under Maryland Rule 2–501(f), a trial court may grant summary judgment if “there is no dispute as to material fact and the moving party is entitled to judgment as a matter of law.” Mathews v. Cassidy Turley Maryland, Inc., 435 Md. 584, 598, 80 A.3d 269, 276 (2013). The court views the record in the light most favorable to the non-moving party, including any reasonable inferences that can be drawn against the moving party. Mathews, 435 Md. at 598, 80 A.3d at 276. Because no material facts are in dispute, we review the order granting summary judgment for legal correctness without “according any special deference to the circuit court's conclusions.” Mathews, 435 Md. at 598, 80 A.3d at 277 (citation omitted).

Buckley argues that the Court of Special Appeals correctly held that § 19–511(e) and the public policy of the State of Maryland preclude Brethren from asserting the Release as a defense to her UM claim. Buckley points to the plain language of § 19–511(e), the purpose of § 19–511 as evidenced by its legislative history, and the Maryland Insurance Administration's interpretation of § 19–511 to support her position that a release signed in accordance with § 19–511 cannot be read to release her UM insurer.

Brethren counters that Buckley signed a general release that, under its plain language, released all known claims against all persons or entities, even if those persons or entities were not aware of the Release and paid nothing for it. Brethren argues that the plain language of the Release should rule the day, the statutory protections and legislative purposes of § 19–511 notwithstanding. Additionally, Brethren alleges that Buckley cannot claim the protection of § 19–511(e) because the Release went far beyond that permitted under § 19–511(e).

We are called upon to construe both the Release and the statute, and how they interact. We start our analysis by examining...