Medical Mut. Liability Ins. Soc. of Maryland v. Evans

• Decision Date: 01 September 1991
• Docket Number: No. 1154,1154
• Citation: 604 A.2d 934,91 Md.App. 421
• Parties: MEDICAL MUTUAL LIABILITY INSURANCE SOCIETY OF MARYLAND v. Deborah L. EVANS. ,
• Court: Court of Special Appeals of Maryland

Page 421

91 Md.App. 421

604 A.2d 934

MEDICAL MUTUAL LIABILITY INSURANCE SOCIETY OF MARYLAND v. Deborah L. EVANS.

No. 1154, Sept. Term, 1991.

Court of Special Appeals of Maryland.

April 15, 1992.

David A. Levin and Jack L. Harvey (Wharton, Levin, Ehrmantraut & Klein, on the brief), Annapolis, for appellant.

Marvin Ellin (Ellin & Baker, on the brief), Baltimore, for appellee.

Argued before WILNER, C.J., and ALPERT and WENNER, JJ.

WILNER, Chief Judge.

This appeal, which involves a lawsuit against an insurance company, arose out of another action--a medical malpractice suit by appellee Deborah Evans against an anesthesiologist, Clarence Beverly. In a nutshell, Ms. Evans won a judgment against Dr. Beverly for $2.5 million. The doctor was insured by appellant for only one million dollars, leaving the balance of the judgment uninsured and, to a large extent, most likely uncollectible. At various points during the course of the malpractice action, Dr. Beverly demanded that appellant settle the case within the policy limits if it could do so. It is alleged that, at one point, appellant could have settled the case for $500,000, but that it declined the opportunity, offering only $400,000. As a result, Dr. Beverly asserted that he had a claim against appellant for gross negligence and failure to represent his interest in good faith. He filed no action to enforce that claim, however.

In March, 1989, following an attempt by Ms. Evans to seize personal assets of Dr. Beverly in satisfaction of the judgment, Ms. Evans and Dr. Beverly entered into an agreement whereby, in return for Ms. Evans suspending efforts to collect the balance of the judgment against his personal assets, the doctor assigned to her part of his claim against appellant. Beverly reserved to himself a claim for emotional distress and punitive damages but assigned

"all legal rights and interest in any action at law and/or equity against [appellant] for the unpaid portion of the verdict rendered against [Beverly]., in the amount of $1,500,000.00 and also all interest and costs to which [Beverly] would be entitled had he instituted the proceedings in his own name and not made this assignment."

Ms. Evans was given the full right to prosecute the claim assigned to her as well as to settle not only that claim but also the retained claim of Dr. Beverly. The agreement provided, in relevant part, that:

(1) if Ms. Evans pursued the case to judgment, any recovery would be applied to reduce the judgment against Dr. Beverly;

(2) if "she is successful in the action," she would pay to Dr. Beverly's personal attorney, Stuart M. Salsbury, $50,000 "in past, present and future legal expenses which have arisen and will arise by virtue of the necessity of counsel during the pendency of the above matter";

(3) if she settled the case, including Dr. Beverly's claim, for less than the unpaid part of the verdict (plus interest and costs), she would pay Beverly $50,000 in satisfaction of his retained claim; and

(4) if she settled for more than the unpaid part of the verdict (plus interest and costs), Beverly would get 60% of the excess and Ms. Evans would get the unpaid part of the verdict (plus interest and costs) plus 40% of the excess over that amount.

Armed with this assignment, Ms. Evans, as assignee, sued appellant in the Circuit Court for Baltimore City, alleging that the company breached its duty of good faith to Dr. Beverly and was grossly negligent by (1) failing to negotiate with Ms. Evans's counsel in good faith, and (2) once the $500,000 award was made by the Health Claims Arbitration Panel, failing to offer to settle for that amount despite (i) repeated urgings from Dr. Beverly and Mr. Salsbury, (ii) acquiring certain derogatory information about Dr. Beverly which, if revealed at trial, would make the defense more difficult, and (iii) Ms. Evans's willingness to settle for that amount prior to trial in the Circuit Court.

This action initially went to trial before Judge Mitchell in December, 1990, but on the third day of trial the judge declared a mistrial after he concluded that an improper question addressed by Ms. Evans's attorney, Mr. Ellin, to an expert witness he had called injected an unfairness into the case that could not be corrected by a curative instruction. We shall recite some of the details of that incident later.

A new trial commenced two months later, following which the jury returned a verdict in Ms. Evans's favor in the amount of $1,787,671. That amount represented the unpaid balance of the judgment against Dr. Beverly plus interest on that judgment and costs. Upon denial of appellant's post-trial motions, this appeal ensued, in which appellant asserts that:

(1) the trial court erred in refusing to grant a second mistrial after plaintiff's counsel, in cross-examining a defense witness, injected into the case evidence regarding another incident in which appellant allegedly refused to settle a claim within policy limits and was successfully sued for acting in bad faith;

(2) the court improperly determined that the measure of damages in the case was the uninsured (unpaid) part of the judgment against Dr. Beverly when the evidence indicated that there was no likelihood of a recovery of that excess from him; and

(3) the assignment to Ms. Evans was against public policy and therefore was unenforceable.

Finding no reversible error, we shall affirm.

Motion for Mistrial

To some extent, appellant's first argument has its roots in what occurred at the first trial. Mr. Ellin had called another lawyer, George White, Esq., as an expert witness, presumably to testify as to the value of Ms. Evans's claim and whether appellant's refusal to settle it within the policy limits constituted bad faith. In the midst of questioning Mr. White about his experience as a litigator generally and in evaluating and handling malpractice cases in particular, Mr. Ellin asked: "And, Mr. White, insofar as your experience is concerned regarding Medical Mutual Insurance Company, did you not so long ago sue Medical Mutual for bad faith involving the case of Walker Robinson?"

Upon objection and further inquiry outside the jury's presence, it was revealed that Mr. White had not sued the company for bad faith because he learned that there was sufficient insurance to cover the entire judgment he had won against the insured doctor. Judge Mitchell therefore found the question improper and further declared that the error could not be corrected--that "[t]he impression that has been given to the jury is that this Defendant before the Court at this moment has been sued on another occasion, asserting bad faith as the basis of the allegation," and that appellant would not have "an opportunity to fairly present its case." He therefore declared a mistrial.

On the ninth day of the second trial, appellant called as a witness Robert Phillips, who had been appellant's claims manager when the case against Dr. Beverly was filed. Mr. Phillips described the procedures used by appellant in evaluating claims and testified in particular to the handling of Ms. Evans's claim. He said that, after consulting with his staff and with two attorneys, he concluded that the case was defensible and that it did not call for an offer of policy limits. He concurred in a recommendation to offer what he called a "high-low" settlement, which, as best we understand it from what he said was that the case would go to trial and that the company would pay a minimum of $400,000 and, to the extent the jury verdict warranted it, up to $1,000,000. Toward the end of his direct examination, he was asked his opinion of the claims representative who investigated the Evans claim, and he responded that she was very thorough and meticulous.

On cross-examination, Mr. Ellin brought out that he and Mr. Phillips had had a number of battles in the past. He then asked whether Phillips's testimony was "completely free of any bias or possible resentment or irritation toward me," to which Phillips responded in the affirmative. This colloquy then occurred:

"Q: Did I not, Mr. Phillips, many years ago, before the Beverly case, call you up involving a case where suit was brought, where you were the claims manager of a young woman who claimed that her reproductive organs were removed over at Bon Secours Hospital without her permission, she was 28 years old, took out her ovaries, her uterus?

MR. LEVIN [Defense Counsel]: Objection.

MR. ELLIN: Your Honor, this--

THE COURT: Overruled.

Q: And a suit was filed and I called you up, sir, and you said what, asked me what was the demand, and I said the client has advised me she will accept $300,000, and was your response, sir, did you say $23,000? You remember that episode, don't you?

A: I remember the case. I don't remember the $23,000 figure.

Q: And, Mr. Phillips, the jury down the hall here--

MR. LEVIN: Objection.

THE COURT: Overruled.

Q: --returned a million four hundred thousand dollars, or more than four hundred thousand dollars more than the doctor's coverage. You remember that, don't you?

A: Yes, I did.

Q: And as it turned out, the claim that that doctor assigned to my client, the same thing that the doctor in this case assigned to Mrs. Evans, the right to sue, and you subsequently paid the additional money.

MR. LEVIN: Objection."

At that point, the court called a bench conference, informed Mr. Ellin that it assumed the purpose of the questions posed was to show bias on the part of the witness but expressed concern as to the relevance of what occurred in the other case. Ellin responded that

"for a jury to appreciate the potential bias that he would have to have toward me in a virtually identical situation to the incident, one might well explain why he is here today, and I submit it's properly before this jury with regard to accepting or rejecting his testimony being free of bias."

Unimpressed, appellant's counsel asked for a mistrial, claiming that Mr. Ellin was...