Kritsings v. State Farm

• Decision Date: 01 December 2009
• Docket Number: No. 2315 September Term, 2008.,2315 September Term, 2008.
• Citation: 984 A.2d 395,189 Md. App. 367
• Parties: Rhonda KRITSINGS, et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Court of Special Appeals of Maryland

984 A.2d 395

189 Md. App. 367

Rhonda KRITSINGS, et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 2315 September Term, 2008.

Court of Special Appeals of Maryland.

December 1, 2009.

Katherine O. Porwick (Paul D. Bekman, Michael P. Smith, Salsbury, Clements, Bekman, Marder & Adkins, LLC, on the Brief), Baltimore, MD, for Appellant.

Robert K. Nead (Nead, Karey & Minton, LLP, on the brief), Towson, MD, for Appellee.

Panel: JAMES R. EYLER, KEHOE and CHARLES E. MOYLAN, JR., (Retired, Specially Assigned), JJ.

JAMES R. EYLER, Judge.

On October 5, 2002, eight-year-old Carrissa Woodward ("Carrissa") was injured when the bicycle on which she was riding collided with a motor vehicle being operated by Karen Smith ("Ms. Smith"), on Shirley Manor Road in or near Reisterstown. At the time of the accident, Carrissa was insured under a policy issued by State Farm Mutual Automobile Insurance Company, appellee, to Carrissa's mother, Rhonda Kritsings, appellant. The policy included uninsured/underinsured motorist coverage in the amount of $100,000 per person ("UM coverage").

On September 14, 2005, appellant, as mother and next friend of Carrissa, filed a complaint in the Circuit Court for Baltimore County against Ms. Smith and appellee, alleging that Ms. Smith's negligent operation of her vehicle caused the accident, and alleging breach of contract against appellee for failing to pay the amount of its UM coverage. Subsequently, appellant settled with Ms. Smith upon the payment of $50,000, the limit of her liability insurance coverage. Appellant then filed a motion for partial summary judgment against appellee, on the issue of Ms. Smith's liability, based on an assertion that appellee had consented to the settlement with Ms. Smith. The court denied the motion.

Prior to the beginning of trial, counsel for the parties stipulated that the claims against Ms. Smith would be dismissed; the case would be tried on the issue of Ms. Smith's liability, and not damages; and that in the event of a judgment against appellee, appellee would pay $50,000, the limit of its UM coverage less the amount received from Ms. Smith's liability carrier. At the conclusion of evidence at trial, appellee moved for judgment. The court denied it, and a jury returned a verdict, finding that Ms. Smith was negligent and Carrissa was not contributorily negligent. Appellee filed a motion for judgment notwithstanding the verdict, and the court granted it, on the ground that Carrissa was contributorily negligent as a matter of law.

On appeal, appellant contends the court erred in (1) denying her motion for partial summary judgment, and (2) granting appellee's motion for judgment notwithstanding the verdict. We shall affirm.

Facts relevant to motion for partial summary judgment

On February 27, 2008, appellant filed a motion for partial summary judgment against appellee and attached an affidavit by Michael Smith, counsel for appellant. The affidavit recited that, prior to February 23, 2006, Ms. Smith's liability insurer offered its policy limits in the amount of $50,000 to settle appellant's claim, which offer was confirmed in writing. After receiving the written offer, the affiant sent a letter dated February 23, 2006, certified mail, return receipt requested, and by first class mail, to appellee, notifying it of the offer. The letter recited that it was being sent pursuant to Maryland Code (2006 Repl. Vol.), § 19-511 of the Insurance Article,¹ and enclosed a copy of that statute. Appellee responded by letter dated March 9, 2006. The February 23 and March 9 letters were attached to the affidavit.

The March 9 letter from appellee stated, in pertinent part Enclosed please find a copy of our correspondence of April 10, 2003, previously forwarded to counsel for Ms. Woodward, indicating subrogation has been waived against Karen Smith, and we are denying a future claim for underinsurance benefits. Our investigation thus far indicates Ms. Woodward was negligent for failure to stay right of center when she initiated contact with Ms. Smith's vehicle.

The April 10, 2003 letter stated, in pertinent part:

It is our conclusion your client was negligent in this accident for failure to stay right of center when she crossed the center line and initiated contact with the vehicle driven by Karen Smith. Therefore, we are unable to honor your client's claim for Underinsurance Benefits.

Please note State Farm Mutual Automobile Insurance Company is waiving subrogation against Karen Smith.

In support of her motion for partial summary judgment as to liability, appellant argued that appellee had consented to a settlement with Ms. Smith and, relying on § 19-511 and the decision in Maurer v. Pennsylvania National Mutual Casualty Insurance Co., 404 Md. 60, 945 A.2d 629 (2007), argued that appellee, by virtue of its consent to settle, could not contest Ms. Smith's liability.

On March 10, 2008, appellee filed an opposition to appellant's motion. In it, appellee referenced its letters dated April 10, 2003 and March 9, 2006 and to answers to interrogatories filed in the case, in which it denied liability on the ground that Ms. Smith was not liable to appellant. Appellee acknowledged that, in July, 2006, counsel for the parties agreed that appellant could settle with Ms. Smith and the parties would dismiss their claims against Ms. Smith, but that it was pursuant to a stipulation between counsel that would govern how the case was going to be tried. Appellee asserted that it was specifically understood by all parties that the stipulation was not an admission that Ms. Smith was liable.² Appellee explained that, following depositions on June 19, 2006, counsel for the present parties entered into a stipulation to try the case on the issue of liability only with a judgment to be entered in the amount of $50,000 in the event liability was determined in favor of appellant. Appellee attached a letter dated July 12, 2006 from its counsel to appellant's counsel, advising it had authority to enter into the above stipulation, and it attached a letter dated July 14, 2006, from appellant's counsel confirming the above stipulation.³ Appellee also attached a copy of the relevant portions of its policy.

On April 1, 2008, appellant filed a reply, in which she stated that appellee had either consented to settlement or had refused to respond in the manner required by § 19-511, and in either case, pursuant to § 19-511 and Maurer, appellee had waived its right to contest the liability of Ms. Smith. With respect to the letters between counsel in July, 2006, appellant stated they were "inapplicable" because Maurer was not issued until December, 2007, and "Plaintiff's counsel could not have foreseen the explanation in Maurer and now Defendant cannot escape it."

On May 6, 2008, the court denied appellant's motion on the ground that appellee's denial of Ms. Smith's liability was not a consent to settle, and the later agreement between counsel, in 2006, was with the understanding that liability of Ms. Smith was being denied.

On September 17, 2008, appellant filed a motion for reconsideration of the court's ruling, reiterating her earlier arguments. The case was scheduled for trial on September 22, 2008, and the court heard argument on appellant's motion on September 22, prior to trial. Appellee renewed its motion for summary judgment, see note 3, supra, and the court heard argument on that as well. The court denied both motions.

Analysis of denial of motion for partial summary judgment

Appellee, under its UM coverage, agreed to pay damages, up to its limits, for bodily injury and property damage that its insured was legally entitled to collect from the owner or operator of an uninsured/underinsured motor vehicle. The policy provided that the insured could not settle with any person who may be liable for bodily injury without appellee's written consent, but it also contained language tracking the language in § 19-511. The policy contained a subrogation provision which, inter alia, entitled appellee, to the extent it made payment under its UM coverage, to the proceeds of any settlement recovered by the injured insured from a tortfeasor.

Before discussing the specific issue before us, providing some background information may be helpful. Since 1975, Maryland has mandated that motor vehicle liability insurance policies issued in this State contain UM coverage, providing an amount of coverage equal to the minimum amount required under the financial responsibility laws for liability coverage. Maryland Code (1957, 1979 Repl. Vol.) Art. 48A, § 541(c); Nationwide Mutual Ins. Co. v. Webb, 291 Md. 721, 724, 436 A.2d 465 (1981). In 1981, the legislature amended § 541(c) to require insurers to make available to insureds the opportunity to purchase higher amounts of UM coverage than the minimum required, up to the amount of liability coverage provided to the insured. Laws of 1981, ch. 510; Waters v. United States Fid. & Guar. Co., 328 Md. 700, 711, 616 A.2d 884 (1992). The 1981 amendment also required UM coverage to provide underinsurance coverage as well as uninsured coverage. Specifically, it provided that a tortfeasor is uninsured whenever the amount of UM coverage purchased by an insured exceeds the amount of the tortfeasor's liability coverage. Waters, 328 Md. at 713, 616 A.2d 884. The effect was to provide an injured insured with compensation equal to that which would have been available had the tortfeasor carried liability insurance in an amount equal to the amount of the injured insured's UM coverage.⁴

Policies containing UM endorsements frequently contain consent to sue and/or consent to settle clauses. A consent to sue clause usually takes one of two forms. It provides that if an insured prosecutes to judgment a tort action against the alleged tortfeasor without the consent of the UM insurer, either (1) coverage is lost or (2) the judgment is not binding on the insurer. Webb, 291 Md. at 732, 436...