Woznicki v. GEICO Gen. Ins. Co.

• Decision Date: 27 May 2015
• Docket Number: No. 52, 54, Sept. Term, 2014,52, 54, Sept. Term, 2014
• Citation: 115 A.3d 152,443 Md. 93
• Parties: Jessica N. WOZNICKI v. GEICO GENERAL INSURANCE COMPANY. Jeannine Morse v. Erie Insurance Exchange.
• Court: Court of Special Appeals of Maryland

443 Md. 93

115 A.3d 152

Jessica N. WOZNICKI

v.GEICO GENERAL INSURANCE COMPANY.

Jeannine Morse

v.Erie Insurance Exchange.

No. 52, 54, Sept. Term, 2014

Court of Appeals of Maryland.

May 27, 2015.

Angus R. Everton (Morgan, Carlo, Downs & Everton, P.A., Hunt Valley, MD; Thomas L. Kemp, Kemp & Kemp, P.A., Elkton, MD), on brief, for Petitioner in No. 52, Sept. Term, 2014.

Frank F. Daily (Sean P. Edwards, The Law Offices of Frank F. Daily, P.A., Hunt Valley, MD), on brief, for Respondent in No. 52, Sept. Term, 2014.

Ryan S. Perlin (Salsbury, Clements, Bekman, Marder & Adkins, LLC, Baltimore, MD), on brief, for Petitioner in No. 54, Sept. Term, 2014.

Jonathan R. Clark (Amy Leete Leone, McCarthy Wilson, LLP, Rockville, MD), on brief, for Respondent in No. 54, Sept. Term, 2014.

Argued before: BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, McDONALD, WATTS and DALE CATHELL (Retired, Specially Assigned), JJ.

Opinion

GREENE, J.

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., 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.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Jessica N. Woznicki

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, 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 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.

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 concluded that (1) an insurer could waive the requirements of Section 19–511 of the Insurance Article, (2) Woznicki failed to demonstrate a dispute as to material fact concerning whether GEICO had waived such requirements, and (3) GEICO was not required to demonstrate prejudice caused by Woznicki's breach of Section 19–511 or the insurance policy in order to deny her UM coverage.

B. Jeannine Morse

Petitioner, Jeannine Morse (“Morse”), was injured in a motor vehicle collision on April 28, 2007 in New Castle, Delaware, when her vehicle was struck by a vehicle driven by Paula Smallwood (“Smallwood”). As a result of her injuries, Morse incurred medical expenses in excess of $22,500. At the time of the collision, Smallwood, the at-fault driver, carried automobile liability insurance with Nationwide Insurance Company (“Nationwide”). Smallwood's policy with Nationwide included a single incident liability limit of $15,000. Also at the time of the collision, Morse maintained UM/UIM coverage through her motor vehicle insurance policy with Respondent, Erie Insurance Exchange (“Erie”), with bodily injury limits of $250,000. Morse's “Uninsured/Underinsured Motorists Coverage Endorsement” in her policy with Erie contained a condition that required Morse to notify Erie of any settlement offer which would exhaust the tortfeasor's liability insurance policy limits and to obtain Erie's consent to settle prior to accepting any such settlement with the tortfeasor. For a discussion of the policy language see infra.

After the accident, Morse retained a Delaware attorney, Beverly A. Bove, Esq. (“Bove”), to represent her. Upon demand from Bove, on October 13, 2008, Nationwide offered Morse its entire $15,000 policy limit in settlement of Morse's claims against Smallwood. Nationwide also sent Bove a notarized letter confirming that Smallwood had no other insurance polices applicable to Morse's claims. On October 14 or 15, 2008, Bove contacted by telephone a claims adjuster at Erie to report Morse's UM claim and the settlement offer from Nationwide. In a letter dated October 27, 2008, Bove sent Erie a copy of the Nationwide settlement offer letter. The letter to Erie was not sent by certified mail and was addressed to an incorrect P.O. box. Erie contends that it did not receive the letter until December 5 or 6, 2008. Meanwhile, Morse accepted Nationwide's settlement offer and signed a Release of All Claims on November 3, 2008. Accordingly, at the time of Morse's acceptance of Nationwide's settlement offer, Erie had not given its consent. Morse's attorney wrote on the release:...