Morse v. Erie Insurance Exchange
90 A.3d 512
Md. Ct. Spec. App.2014Background
- Morse (appellant) insured with Erie; Smallwood at fault in an April 2007 accident.
- Nationwide offered its full policy limit ($15,000); Morse sought UM benefits from Erie.
- Morse notified Erie of Nationwide’s offer in Oct 2008; notice timing disputed.
- Morse settled with the tortfeasor (Nov 3, 2008) without Erie’s consent; released all claims
- Erie denied UM benefits (Nov 5, 2009) citing § 19-511 violation and lack of prejudice.
- Jury ruled for Erie; Morse appealed asserting § 19-110 prejudice should apply to § 19-511 settlement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to obtain consent to settle triggers prejudice rule | Morse: prejudice not shown; § 19-110 not applicable to § 19-511. | Erie: § 19-511 creates mandatory settlement procedure; prejudice rule unnecessary. | Consent to settle not equivalent to notice; no prejudice needed under § 19-110. |
| Whether § 19-110 prejudice rule applies to uninsured motorist settlements | Prejudice required to deny UM; extend prejudice to § 19-511 breach. | Prejudice not required; § 19-511 governs the process; no extension. | § 19-110 prejudice rule does not apply to § 19-511 breach. |
| Whether common law prejudice extends to failure to obtain consent to settle | Prince George’s County extends prejudice beyond statutory text. | Sherwood and later cases limit common-law prejudice to notice breaches; not to consent to settle. | Common-law prejudice not extend § 19-511 breach; prejudice rule not triggered. |
| Whether the 2012 amendment (§ 19-511(f)) retroactively affects Morse’s case | Legislation clarifies consent effects; could impact retroactivity if applied. | Amendment prospective only; not retroactive to Morse’s pre-2012 facts. | Amendment not retroactive; not controlling for Morse. |
Key Cases Cited
- Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 53 A.3d 456 (2012) (outlines § 19-511 procedure and consent impact)
- Prince George’s Cnty. v. Local Gov’t Ins. Trust, 388 Md. 162, 879 A.2d 81 (2005) (adopts prejudice rule for notice breaches; limits scope)
- Waters v. U.S.F. & G. Co., 328 Md. 700, 616 A.2d 884 (1992) (consent-to-settle vs. notice; insurer bound if notice but no consent)
- Maurer v. Pennsylvania Nat. Mut. Cas. Ins. Co., 404 Md. 60, 945 A.2d 629 (2007) (consent to settle binds insurer; later developments 2012)
- West American Ins. Co. v. Popa, 352 Md. 455, 723 A.2d 1 (1998) (consent/notice interplay; due process against untimely action)
- Government Employees Ins. Co. v. Harvey, 278 Md. 548, 366 A.2d 13 (1976) (prejudice rule limited to notice/cooperation failures)
- Kretsings v. State Farm Mut. Auto. Ins. Co., 189 Md.App. 367, 984 A.2d 395 (2009) (statutory context of settlement procedures)