187 A.3d 741
Md. Ct. Spec. App.2018Background
- Gary Dolan, a family-member insured under his parents’ Kemper auto policy, was injured in a 2010 accident and sought underinsured motorist (UIM) benefits.
- Kemper requested an examination under oath (EUO) as part of its claim investigation; Dolan’s counsel repeatedly refused or failed to schedule an EUO and instead offered a deposition after litigation began.
- Kemper advanced $50,000 to preserve its rights after Nationwide tendered its policy limits; Dolan accepted that payment, triggering his UIM claim against Kemper.
- Dolan filed suit against Kemper and the vehicle driver; Kemper maintained it was entitled to an EUO and eventually denied coverage for Dolan’s UIM claim based on his refusal to submit to an EUO.
- The circuit court held that submission to an EUO was a condition precedent under the Kemper policy and that Dolan’s refusal constituted a material breach, denying UIM benefits; Dolan appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether submission to an EUO is a condition precedent to suit and coverage | Dolan: policy language does not create a pre-suit condition; deposition suffices | Kemper: policy requires EUO as a condition precedent and EUO is distinct from a deposition | Court: EUO is a condition precedent; refusal to submit materially breached policy; coverage denied |
| Whether refusing an EUO after suit was filed voids recovery | Dolan: filing suit before an EUO didn’t breach because post-filing EUOs can be requested; McCullough distinguishes | Kemper: continued refusal to comply post-filing is a breach that permits disclaimer | Court: refusal post-filing still breached the policy and permits disclaimer |
| Whether a deposition can substitute for an EUO | Dolan: deposition provided equivalent information | Kemper: deposition and EUO serve different purposes and procedures | Court: deposition does not satisfy contractual EUO requirement |
| Whether EUO language is ambiguous and must be construed against insurer | Dolan: term is ambiguous | Kemper: term has settled meaning in authority | Court: term is not ambiguous given prevailing law; construed as EUO requirement |
Key Cases Cited
- Phillips v. Allstate Indem. Co., 156 Md. App. 729 (Md. Ct. Spec. App.) (insured breached policy by refusing to answer relevant EUO questions; insurer need not show prejudice in first-party context)
- Brizuela v. CalFarm Ins. Co., 116 Cal. Rptr. 3d 661 (Cal. Ct. App.) (EUO and deposition serve different purposes; EUO is an investigative tool for insurer)
- Goldman v. State Farm Fire & Gen. Ins. Co., 660 So. 2d 300 (Fla. Dist. Ct. App.) (distinguishing EUO from pretrial deposition; EUO aids insurer’s claim investigation)
- McCullough v. Travelers Cos., 424 N.W.2d 542 (Minn. 1988) (under different policy language and factual posture, EUO was a condition to recovery but not a pre-suit bar; distinguishes facts here)
- Laine v. Allstate Ins. Co., 355 F. Supp. 2d 1303 (N.D. Fla.) (failure to appear for EUO constitutes material breach permitting insurer to disclaim coverage)