Woznicki v. Geico Gen. Ins. Co., 52
| Decision Date | 27 May 2015 |
| Docket Number | No. 54,No. 52,52,54 |
| Court | Court of Special Appeals of Maryland |
| Parties | JESSICA N. WOZNICKI v. GEICO GENERAL INSURANCE COMPANY JEANNINE MORSE v. ERIE INSURANCE EXCHANGE |
JESSICA N. WOZNICKI
v.
GEICO GENERAL INSURANCE COMPANY
JEANNINE MORSE
v.
ERIE INSURANCE EXCHANGE
No. 52
No. 54
COURT OF APPEALS OF MARYLAND
Argued: March 9, 2015
September Term, 2014
May 27, 2015
INSURANCE LAW - INS. ART. § 19-511 (UNINSURED MOTORIST COVERAGE - SETTLEMENT PROCEDURES) - WAIVER
Consistent with the Legislature's goal of promoting prompt settlement and recovery for the victim, see Buckley v. Brethren Mut. Ins. Co., 207 Md. App. 574, 590, 53 A.3d 456, 465 (2012) ("Buckley I"), aff'd, 437 Md. 332, 86 A.3d 665 (2014), an insurer may waive its right, under § 19-511, to receive written notice of an uninsured tortfeasor's liability insurer's settlement offer where "the amount of the settlement offer, in combination with any other settlements arising out of the same occurrence, would exhaust the bodily injury or death limits of the applicable liability insurance policies[.]" § 19-511(a). In the instant case, no rational trier of fact could conclude that the insured's attorney's sole statement that it was his understanding that he had obtained the insurer's consent during a conversation with an unknown claims representative, standing alone, constituted a waiver, express or implied, of the statutory or contractual requirement to send the insurer a copy of the uninsured tortfeasor's settlement offer and obtain the insurer's written consent to acceptance of the settlement prior to accepting any such offer.
INSURANCE LAW - INS. ART. § 19-511 (UNINSURED MOTORIST COVERAGE - SETTLEMENT PROCEDURES) - PREJUDICE UNDER INS. ART. § 19-110 (DISCLAIMERS OF COVERAGE ON LIABILITY POLICIES)
The prejudice rule contained in § 19-110 of the Insurance Article does not apply to an insurer seeking to disclaim coverage to its insured as a result of the insured's failure to obtain the insurer's consent to settle as required by § 19-511 or the insurance policy. Section 19-110 applies only where an insurer "disclaim[s] coverage on a liability insurance policy on the ground that the insured or a person claiming the benefits of the policy through the insured has breached the policy by failing to cooperate with the insurer or by not giving the insurer required notice[.]" § 19-110. The decision to limit the scope of the statute was deliberate. Gov't Employees Ins. Co. v. Harvey, 278 Md. 548, 552, 366 A.2d 13, 16-17 (1976). A failure to comply with a consent to settle clause or § 19-511 is not equivalent to a failure to notify or cooperate, therefore § 19-110 is inapplicable. Similarly our decision in Prince George's Cnty. v. Local Gov't Ins. Trust, 388 Md. 162, 879 A.2d 81 (2005) is inapplicable. Local Gov't Ins. Trust, in effect, applied the statutory prejudice rule to an insurance pool not engaged in the "insurance business," despite not falling under the definition of "insurer" as defined for the purposes of § 19-110. See § 1-101 (defining insurer as "each person engaged as indemnitor, surety, or contractor in the business of entering into insurance contracts") (emphasis added). The disclaimer in Local Gov't Ins. Trust was grounded on the insured's failure to give notice. A failure to comply with a consent to settle clause is not equivalent to a failure to give notice.
Page 2
Circuit Court for Cecil County
Case No. 07-C-12-000568 Case No. 07-C-11-000221
Barbera, C.J. Harrell Battaglia Greene McDonald Watts Cathell, Dale (Retired, Specially Assigned), JJ.
Opinion by Greene, J.
McDonald, J., concurs and dissents.
Page 3
We are called upon to resolve an issue of critical importance for those traversing the many roads of Maryland, namely, the circumstances under which an insurer providing uninsured ("UM") motorist coverage may disclaim any such liability owed to its insured.1 Because of the common issues of law, we have consolidated two civil cases for the purpose of this opinion. We granted separate petitions for certiorari in Woznicki v. GEICO Gen. Ins. Co., 439 Md. 694, 98 A.3d 233 (2014) and Morse v. Erie Ins. Exch., 439 Md. 694, 98 A.3d 233 (2014), to answer the following questions:
(1) Did the Court of Special Appeals err when it held that, as a matter of law, the UM carrier did not waive its right to receive written notice of a pending settlement with the tortfeasor's insurance carrier where there was unequivocal testimony from Petitioner's counsel that he received oral consent to settle from a UM carrier claims representative?(2) Did the Court of Special Appeals err when it held that the uninsured motorist (UM) carrier did not bear the burden of proving prejudice arising from Petitioners' failure to give written notice of the pending settlement with the tortfeasors' insurance carrier?
As explained in greater detail below we shall answer each of the questions in the negative and affirm the respective judgments of the Court of Special Appeals.
Page 4
Woznicki's dispute with GEICO arises out of injuries sustained in a motor vehicle collision between Woznicki and James Bowman Houston ("Houston"), which occurred on November 12, 2010. Woznicki was struck, while operating an automobile in Cecil County, after Houston failed to yield the right-of-way while making a turn. It is undisputed that the accident was caused entirely by the negligence of Houston.
At the time of the accident, Houston was insured by Nationwide Insurance Company ("Nationwide") under a motor vehicle liability insurance policy which carried a liability limit of $20,000. Woznicki was covered by a motor vehicle liability insurance policy issued by GEICO.2 Under the insurance policy, GEICO provided uninsured/underinsured motorist ("UM/UIM") coverage of $300,000. As a condition to UM coverage under the GEICO policy, Woznicki was required to notify GEICO of any settlement offer which would exhaust the tortfeasor's liability insurance policy limits and obtain GEICO's consent to settle prior to accepting any such settlement with the tortfeasor. For a discussion of the policy language see infra.
As a result of the injuries sustained during the accident, Woznicki asserted a claim against Houston, through her then-counsel, Ben T. Castle ("Castle"), a Delaware attorney. Nationwide offered to settle all claims for $20,000—Houston's liability policy limit—in exchange for a release of all claims against Nationwide and Houston at some time in March,
Page 5
2011. In a letter dated March 29, 2011, Nationwide wrote to Castle stating "[t]he enclosed Release of All Claims document confirms our settlement with you/your client." On the same day, Castle sent a letter to the GEICO claims adjuster handling the matter, Ms. Rebecca Davis, stating, in part:
At this time it appears that the driver of the car that caused the accident injuring Ms. Woznicki, James Houston, has only limited liability coverage through Nationwide Insurance Company. We will provide more information as it becomes available.
The letter does not mention the Nationwide settlement offer letter received by Castle on the same day.
Central to the dispute between Woznicki and GEICO before this Court, Castle contacted GEICO by phone at some point on or about July 7, 2011,3 and obtained, what Castle and Woznicki characterize as GEICO's oral consent to settle without prejudice to any potential UM claim against GEICO. Castle, who was unable to reach Ms. Davis, the claims adjuster assigned to Woznicki's case, could not recall who he spoke with about the matter. Castle only remembered that the person was a woman.
By letter dated July 7, 2011, Woznicki executed a Release of all claims against Houston. The same day, Castle wrote to GEICO, stating:
The tortfeasor's insurance carrier, Nationwide, has a limited bodily injury liability policy of $20,000 and has tendered those limits to the injured
Page 6
driver, Jessica Woznicki. We are writing to request GEICO's consent to acceptance of the settlement.Enclosed for your file is a copy of the Nationwide Policy insuring tortfeasor, James B. Houston, and the Release in exchange for the $20,000.
GEICO responded on August 15, 2011, denying "any and all Underinsured Motorist (UIM) coverage to [Woznicki] . . . because [Woznicki] failed to obtain our consent to settle, which is required by both [§ 19-511 of the Insurance Article] and [Section IV of] the policy contract."
Woznicki, represented by new counsel, filed a Complaint and Demand for Jury Trial against GEICO on April 3, 2012, for breach of the insurance policy. Woznicki sought to hold GEICO liable for damages in excess of the $20,000 she received from Nationwide. After filing its answer, GEICO moved for summary judgment on the grounds that Woznicki was precluded from receiving UM benefits under the insurance policy because she failed to obtain GEICO's consent to settle as required by Maryland law and the insurance policy. Following a hearing on the matter, the trial judge granted GEICO's motion. Judge J. Frederick Price explained from the bench:
It's clear and undisputed that Section 19-511 was not complied with. In other words, there is—the plaintiff's attorney did not comply with that section. And that's also referenced—incorporated into the policy; therefore, the terms of the policy were not complied with. That's undisputed, I believe. But the court finds that there could be a question of waiver. And I believe that these matters could be waived.The question then arises is does the vague reference to a telephone conversation constitute—or viewed in a light most favorable to the plaintiff, does that constitute sufficient evidence to be material in a decision.
Page 7
And quite simply, the court finds that under the facts of this case that that reference to a telephone call, with nothing more than has been put forth today, does not constitute sufficient evidence to be material, to affect the decision.
The Court of Special Appeals upheld the decision of the trial court. Woznicki v. GEICO Gen. Ins. Co., 216 Md. App. 712, 90 A.3d 498 (2014). Specifically, the intermediate appellate court...
To continue reading
Request your trial