Woznicki v. Geico Gen. Ins. Co.

• Decision Date: 29 April 2014
• Docket Number: No. 532,Sept. Term, 2013.,532
• Parties: Jessica N. WOZNICKI v. GEICO GENERAL INSURANCE CO.
• Court: Court of Special Appeals of Maryland

216 Md.App. 712

90 A.3d 498

Jessica N. WOZNICKI

v.GEICO GENERAL INSURANCE CO.

No. 532, Sept. Term, 2013.

Court of Special Appeals of Maryland.

April 29, 2014.

Angus R. Everton (Morgan, Carlo, Downs & Everton PA, Hunt Valley, MD and Thomas L. Kemp, Kemp & Kemp, PA, Elkton, MD), on the brief, for Appellant.

Frank F. Daily (Sean P. Edwards, Law Office of Frank F, Daily, on the brief), Hunt Valley MD, for Appellee.

Panel: MATRICCIANI, KEHOE, and BERGER, JJ.

KEHOE, J.

Appellant, Jessica N. Woznicki, concedes that her lawyer failed to comply with a notice requirement in her automobile liability policy. She asserts, however, that her insurer, appellee, GEICO General Insurance Company, waived compliance or, alternatively, that the law does not permit an insurance company to deny coverage in cases like hers unless it can show prejudice. Reasoning that the record before it did not establish disputes of material fact as to waiver and that GEICO was otherwise entitled to judgment, the Circuit Court for Cecil County granted the insurer's motion for summary judgment. Ms. Woznicki has appealed, arguing that the circuit court was incorrect on both scores. We think the circuit court was correct and will affirm its judgment.

Background

On November 12, 2010, Ms. Woznicki was injured in an automobile accident in Cecil County, Maryland. The other driver, James B. Houston, was at fault.

Houston was insured by a liability policy issued by Nationwide Insurance Company, with policy limits of $20,000. Ms. Woznicki was covered by an insurance policy issued by GEICO. Section IV of the GEICO policy provided her with uninsured/underinsured motorist (“UM/UIM”) benefits in the amount of $300,000, subject to certain exclusions.¹ In relevant part, the GEICO policy stated (emphasis in original):

Section IV does not apply:

1. To bodily injury to an insured if the insured or his legal representative has made a settlement of his claim which exhausts the applicable bodily injury or death limits of the liability insurance without our prior written consent unless:

(a) We are notified in writing by Certified Mail that a tentative agreement to settle for the liability limits of the owner or operator of the other vehicle has been reached; (b) We did not make a payment equal to the tentative settlement amount to our insured within 30 days of our refusal to consent to the settlement offer; and

(c) We responded to the written notice of settlement within 60 days.

(We will refer to this provision as the “Consent to Settle Clause.”) The Consent to Settle Clause tracks Md.Code Ann. (2011) § 19–511 of the Insurance Article,² which provides in pertinent part:

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 ..., and the amount of the settlement offer ... would exhaust the bodily injury ... limits of the applicable liability insurance policies ..., the injured person shall send by certified mail, to any insurer that provides uninsured motorist coverage for the bodily injury ..., a copy of the liability insurer's written settlement offer.

(b) Response to settlement offer.—Within 60 days after receipt of the notice required under subsection (a) of this section, the uninsured motorist insurer shall send the injured person:

(1) written consent to acceptance of the settlement offer and to the execution of the 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.

* * *

(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.³

Ms. Woznicki notified GEICO that she had been injured in an accident. Her claim was assigned to Rebecca Davis, a GEICO adjuster. Ms. Woznicki retained a Delaware attorney, Ben T. Castle, Esquire, to represent her. At some point in March, 2011, Nationwide offered to settle all of Ms. Woznicki's claims against Houston for $20,000, that is, its policy limits, in return for a release for Houston and Nationwide. Castle agreed, at least in principle. On March 29, 2011, Nationwide sent a letter to Castle enclosing a release that “confirms our settlement with you/your client[ ]” and requesting that it be signed by Ms. Woznicki, witnessed, and returned. The record does not show that Castle discusseda possible settlement with GEICO before reaching the agreement with Nationwide.

On the same day that Nationwide sent Castle the release, he wrote to Davis, the GEICO adjuster, stating:

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.

This letter did not mention a settlement with Nationwide. At this point, the exact sequence of events becomes unclear.

On or a few days before July 7, 2011—our only source of information is his deposition which is a bit vague on the point—Castle contacted GEICO by telephone and received what Ms. Woznicki asserts was GEICO's consent to settle her claim against Houston without prejudice to her right to pursue a UIM claim against GEICO. We will discuss what we know about this conversation later in the opinion. On July 7, 2011, Ms. Woznicki signed the release and, on the same day, Castle wrote to Davis 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 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.

At some point thereafter—again, the chronology is unclear from the record—Castle sent the signed release back to Nationwide.

On August 15, 2011, GEICO wrote Castle, denying UIM coverage to Ms. Woznicki based on what it asserted was her breach of the Consent to Settle Clause and § 19–511 “because you failed to obtain our consent to settle, which is required by both the statute and the policy contract.”

On April 3, 2012, Ms. Woznicki, represented by new counsel, filed a complaint for breach of contract against GEICO seeking reimbursement of her damages in excess of the $20,000 that she received from Nationwide. GEICO filed its answer and later filed a motion for summary judgment. GEICO asserted that there were no disputes of material fact and that summary judgment was appropriate because Ms. Woznicki was precluded from receiving UIM benefits because she had settled with Nationwide without giving GEICO the opportunity to either consent to or refuse acceptance of the settlement.

Ms. Woznicki opposed the motion. She presented essentially the same arguments as she now presents to this Court, which we will discuss in detail later.

On April 5, 2013, after a hearing, the court granted summary judgment in favor of GEICO, stating:

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 [which] 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.

And quite simply, the court finds that under the facts of this case that the 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.

Ms. Woznicki filed a motion to alter or amend the judgment, which the court denied. She then filed this appeal.

Analysis

Ms. Woznicki contends that the circuit court erred in granting summary judgment because she had established genuine dispute of material fact as to whether GEICO waived compliance with the Consent to Settle Clause and § 19–511. Ms. Woznicki also argues that § 19–110 required GEICO to demonstrate actual prejudice before it could defend its denial of coverage based on her failure to comply with the Consent to Settle Clause and § 19–511 and that GEICO failed to do so.

GEICO disputes these assertions and, additionally, contends that § 19–511 is nonwaivable as a matter of law. We will discuss each of these arguments, beginning with GEICO's.

I. Does § 19–511 Preclude Waiver by an Insurer?

GEICO contends that § 19–511 is non-waivable. In so arguing, it relies upon the legislature's use of the word “shall” in the statute itself as well as a statement of this Court in our opinion in Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 600, 53 A.3d 456 (2012) (“Buckley I ”), aff'd437 Md. 332, 86 A.3d 665 (2014) (“Buckley II ”), wherein we stated (emphasis added):

To be clear, in...