Morse v. Erie Insurance Exchange

90 A.3d 512 Jeannine MORSE ERIE INSURANCE EXCHANGE. Term, 0511, Sept.

No. 2013. Appeals Maryland. Special Court April Clements, Berkman, Marder &

Ryan (Salsbury, S. Perlin brief), Baltimore, MD, Adkins, LLC, for Appellant. on the Leone, Wilson, McCarthy, Leete (Amy Jonathan R. Clark LLP, brief), Rockville, MD, Appellee. for on the MATRICCIANI, WOODWARD, E.

Panel: CHARLES (Retired, MOYLAN, Specially Assigned), JR. JJ. (Retired, Specially Assigned), MOYLAN J. coverage dispute, this uninsured motorist insurance we diverging requiring

must choose between two roads: one scheme, com compliance statutory excusing with the other (or harsh) pliance in favor of a more at least less equitable Frost,1 result. Unlike Robert we feel constrained to choose road, may parties the first more traveled as it be. For the Morse, here—Jeannine and Erie Insurance appellant, Exchange, will make all appellee—that the difference. Acceptance

The of the Settlement Offer This case arises out of an 2007 automobile accident April Castle, between Jeannine Morse and Paula Smallwood New Delaware. The appeal, accident itself is relevant to this agree and the at fault. parties Smallwood was Smallwood maintained policy an automobile insurance with Nationwide $15,000 in Company provided up Insurance coverage. Morse maintained her own uninsured motorist coverage through Erie The Exchange. Insurance uninsured policy motorist endorsement on Morse’s contained a consent to settle clause that mirrors the settlement set forth procedures Md.Code, § 19-511 of the Insurance Article.2 Frost, 1. Robert "The Road Not Taken.” wood, diverged ... Two roads in a and I— by, I took the one less traveled

And that has made the difference. all Coverage 2. The Motorists Endorsement” of "Uninsured/Underinsured following heading Morse's Erie contained the clause under the "Rights Policy and Duties—General Conditions”: following duties are added: “Anyone protect” notify any we must “us” mail certified that, bodily injury to settle a claim for or death in combination offer loss, any other settlement for the same would exhaust applicable bodily injury or death limits insurance notice, policy. days receipt Within 60 such “we” will send after " “anyone protect: we accept a. written consent to the settlement and to the execution of releases; offered Morse the full Nationwide On October $15,000 against of her claim Small- limit settlement 15, 2008, then-attorney 14 or Morse’s October wood. On by telephone. offer On Octo- notified Erie of the settlement mail. 27, 2008, notified Erie of the offer Morse’s ber she mail, however, not send the notice certified attorney did until December 5 Erie claims it did not receive the notice and 6,or meantime, 3, 2008, obtaining on November without

In the settlement, accepted consent to the Morse Nationwide’s Erie’s of all signed against and a release claims Smallwood. offer stamped the release with a notation: “Noth- attorney Morse’s waives, limits, any or extinguishes contained in this release ing PIP for benefits.” Erie learned future claims UM/UIM 4, 2009, February on accepted had settlement Morse agreement of the executed release copy but did not receive 8, 2009. July until 5, 2009, for unin- Erie denied Morse’s claim

On November 1) three reasons: “Ms. gave motorist benefits. Erie sured Na- agreement negotiated Release and signed Morse sending ERIE the notice as prior tionwide settlement check 2) Article]”; [Md.Code, § 19-511 of the Insurance required by subject agreement signed by Ms. Morse was “the release claims, all preclude any and served to and global release accept offer Within [sic]. not to the settlement b. written refusal refusal, pay "anyone we days "we” will of such notice Payment of the protect” the amount of the settlement offer. preserves "anyone protect” settlement offer to we amount of the responsible. right recovery anyone else held Once from "our” made, "anyone protect” required to transfer payment we is this payment and right recovery up to the amount of such to "us” receiving right. Anyone payment from nothing to harm this to do will else for the same accident or loss "us” and from someone up payment. “our” to the amount of reimburse "us” requirements imposed "us” under all of the on If "we” fail to meet section, may accept and "anyone protect” a settlement offer we this anyone responsible for the loss from held [sic] execute releases any motorists claim. uninsured without supplied). (Emphasis 3) claim”;3 subject Motorists including the Underinsured against claim the tortfeasor without Morse “settled her consent,” in policy. ERIE’S written violation Jury’s

The Verdict 17, 2011, attorneys, her Morse through present On June County in for for against filed suit Erie the Circuit Court Cecil 22-23, 2013, the April breach of the insurance contract. On a on the issues of whether Erie jury case was tried to by denying breached the contract Morse’s uninsured motorist and, so, resulting if of Morse’s from damages claim the extent on the judgment the automobile accident. Morse moved for any prejudice resulting that Erie had failed to show ground from to to with Nation her failure obtain consent settle wide. The court denied the motion. The court also denied request jury Morse’s for a instruction to the effect that her notify failure to Erie of the settlement offer would relieve Erie only from its if Erie showed responsibility provide coverage prejudice.4 jury actual The found favor Erie. Morse has jury from that adverse verdict. appealed Although may the terms "uninsured” and "underinsured” have dis- meanings industry, tinct in the insurance and both terms are used in Code, reference, Maryland the Insurance Article of the for ease of we employ shall the term “uninsured” refer to both “uninsured” and “underinsured” motorist insurance. instruction, requested following jury 4. Morse a modified version of 14:11, Cooperation by MPJI-Civil Insured: policy provision The insurance issued to the insured contains a requiring copy the insured to send to her insurer a the other driver’s n writtensettlement offer. give The failure of the insured to this notice frees the insurance company responsibility injury, damage, from for the claimed or loss provided actually prejudiced company that the failure the insurance investigating defending against the claim. The insurer insur- company by preponderance [sic] ance must establish of the affirma- actually prejudiced by give tive evidence that it was the failure to necessary notice. (Pattern indicated). instruction modified as The court was correct in because, giving explain, not this instruction as we shall it is not a applies correct statement of the law as it to this case. Statutory Milieu around two sections of the in this case revolves analysis Our First, § 19-110 Maryland of the Code. Article Insurance coverage on a disclaiming an insurer from prohibits that an insured failed ground on the policy insurance notice,” unless the provide “required or to cooperate resulting therefrom. Section prejudice” shows “actual provides: on a insurance may coverage disclaim

An insurer claiming or a person that the insured ground on the policy the insured has breached policy,through of the benefits with the insurer or by failing cooperate only notice if the insurer estab- the insurer giving required that the lack of of the evidence preponderance lishes in actual to the prejudice or notice has resulted cooperation insurer. injured an

Second, § that allows procedure 19-511 creates liability against claim a tortfeasor’s insured to settle her claim for prejudice limits without to her policy insurer for full receiving from its insured Upon uninsured motorist benefits. limits, for the liability offer from a insurer a settlement days to choose to sixty motorist is afforded uninsured insurer subrogation (thereby waiving to the settlement consent tortfeasor), or to refuse to consent the rights against directly the amount of the offer pay instead its insured injured If subrogation rights). (thereby preserving its uninsured motor 19-511 but the complied insured has out, injured or timely responded paid ist insurer has offer without may accept the settlement insured still claim, if as the uninsured just uninsured motorist to her to the settlement. See Krits insurer had motorist consented Co., 378, Auto. Ins. 367, Farm Mut. Md.App. 189 ings State denied, cert. (2009), A.2d 413 Md. 991 A.2d 401 984 v. Brethren Mut. Ins. (2010). Buckley See also aff'd, 574, 586-87, (2014).5 332, 86 A.3d 665 provides,

5. Section 19-511 in full: (a) providing Settlement sent to insurers uninsured motorist offers coverage—If injured person receives a written offer from a motor liability agent vehicle insurance insurer or that insurer’s authorized death, bodily injury to settle a claim for or and the amount of the offer, any arising settlement in combination with other settlements occurrence, bodily injury out of the same would exhaust the or death bonds, applicable liability policies, limits of the insurance and securi- ties, mail, injured person any shall send certified provides coverage bodily injury uninsured motorist for the or death, copy of the insurer’s written settlement offer. (b) acceptance Consent or to consent to settlement refusal of offer— days receipt required Within 60 after of the notice under subsection section, (a) of this the uninsured motorist insurer shall send to the injured person: (1) acceptance written consent to of the settlement offer and to the releases; execution of (2) acceptance written refusal to consent to of the settlement offer. (c) Payment amount settlement uninsured motorist of of offer days insurer—Within acceptance after a refusal to consent to of a section, (b)(2) settlement offer under subsection of this the uninsured pay injured person motorist insurer shall to the the amount of the settlement offer. (d) Preservation subrogation rights— uninsured motorist insurer’s (1) (c) Payment as described in subsection of this section shall preserve the uninsured subrogation rights insurer's against insurer and its insured. (2) Receipt by injured person payment of the described in (c) subsection assignment, of this section shall up constitute the payment, any recovery amount of the injured on behalf of the person subsequently paid that is applicable liability from the insur- bonds, policies, ance and securities. (e) Acceptance settlement and execution releases—The offer injured person may accept liability the insurer’s settlement offer and execute releases in favor of the insurer and its insured any injured person without claim may against the have the uninsured motorist insurer: (1) receipt on acceptance of written consent to of the settlement releases; offer and to the execution of or (2) if the uninsured motorist requirements insurer has not met (b) (c) of subsection (f) or subsection of this section. acceptance Construction written consent to settlement of of- by consent acceptance uninsured motorist insurer to fer—Written (b)(1) of a settlement offer under subsection of this section: (1) may right not be construed to limit the of the uninsured any motorist relating damages insurer to raise issue or insurer; against in an action the uninsured and scheme, guiding our statutory we take construing this v. Insurance Employees Ins. Co. from Government

principles (1993): 124, 630 A.2d 713 of Md., Comm’r of the determining ... the intent primary goal [T]he subject begin statute. We it enacted the Legislature when the words of the intent with legislative our search for in context light considered of the interpreted, to be statute may Context include related appears. the statute which material statutes, history and “other legislative pertinent legislative ... fundamental issue of on the fairly bears construed is ...” Where the statute be goal or purpose scheme, intention is legislative statutory of a part alone, rather it is to be from that statute determined statutory of the scheme. considering light it discerned statutes, scheme, at different When, in that two enacted other, the same to each address referring times and not i.e., together, interpreted read with subject, they must be harmonized, another, to the extent reference to one other provisions each other and with both with possible, read, statute should be scheme. Neither statutory it, other, however, any portion or so as to render In at- nugatory. superfluous meaningless, surplusage, them, that, we when presume to harmonize tempting statutes, it was later of the two enacted the Legislature enacted. of the one earlier aware results may require conflicting though two statutes Even thereby subject, they are not to their common regard provisions rendered irreconcilable. Where necessarily subject generally common deal with the one of the statutes the statutes specifically, do so more and those of the other (2) uninsured motorist an admission does not constitute against any in an action the uninsured as to issue raised motorist insurer. harmonized may by viewing specific be the more statute as exception to the more one. general Id. 630 A.2d at 717-18.

Competing Contentions granted Morse contends that the court should have her motion for on judgment the breach of contract issue because present Erie failed to of actual prejudice resulting evidence from her failure to obtain Erie’s consent to settle with Nation wide. does not complied § She contend that she 19-511. Instead, § she asks us to safety extend the net of 19-110 to require showing of actual for disclaimers of cover age only based not on an insured’s failure to provide required notice, but also on an insured’s failure to obtain consent to settlement. She classifies both as “technical” violations that should not merit the harsh sanction of forfeiture of insurance coverage. She asserts that Erie could not preju have been diced her settlement with Nationwide because the settle ment was for the full limit only of the liability insurance policy Smallwood had.

Erie a very takes different view of the statutory provisions. Erie contends that 19-511 created a mandatory procedure that an insured and insurer must follow order for the to accept insured a settlement offer from a tortfeasor without prejudice to her claim for uninsured motorist benefits. Erie contends that 19-110 is strictly limited denials of liability coverage based on an provide insured’s failure to notice or to and cooperate, that it cannot be extended to cover a denial of uninsured coverage on based an insured’s failure to obtain consent to settle. Erie views a provide mere failure to something notice as altogether different from Morse’s denial of its opportunity review the and offer decide whether to grant or refuse consent to the settlement.

In a Nutshell The issue before injured us is whether an insured’s failure to obtain her uninsured motorist insurer’s consent to settle with a tortfeasor’s limits, insurer for policy in violation § 19- either the triggers

of her insurance that it does not. rules. hold prejudice 110 common law We or is not a safe harbor that would § rule prejudice The 19-110 terms, § By § 19-110 with 19-511. noncompliance excuse an insured’s liability coverage based on limited to denials of is notice. required failure to provide cooperate failure to settle insurer’s consent an uninsured Obtaining provid- not liability equivalent insurer is a tortfeasor’s with common law rule Maryland’s prejudice notice. ing required § 19-110. than noticeably not broader contrast, 19-511, specific proce sets forth a Section a follow in order to settle with injured insured must dure an to her uninsured prejudice insurer without tortfeasor’s rule to also excuse Extending prejudice motorist claim. § a render consent to settle would failure to obtain harmony in statutory provisions nullity. Reading must, that an uninsured motorist other, we hold each as we on its insured’s failure coverage based may insurer disclaim actual having preju to show without comply with dice. Prejudice Rule

The statute, 2005, 1964, since as as a matter of Since law, Maryland “prejudice has followed a matter of common rule,” whereby for either lack coverage not disclaim may

[a]n it demonstrates that the cooperate unless notice or failure in actual to the insurer. prejudice has resulted deficiency Co., Mut. Auto. Ins. 363 v. State Farm Allstate Ins. Co. See (2001). it is the 106, 122, 831, Maryland, In 767 A.2d 840 Md. aby prepon- of “establishing] the burden insurer who bears notice delay giving that the in affirmative evidence derance of to the insurer.” See Sher- in actual has resulted Co., Brands, 347 Accident & Indem. Inc. v. wood Hartford (1997). 1078, avoids the 1083 The rule 42, Md. no- [a] that would result “when forfeiture “disproportionate” in which prejudice,” in the absence of is enforced provision tice 13 case “the insurer suffers no harm and the insured forfeits the premiums coverage.” George’s and loses See Prince County Trust, 162, 187, v. Local Gov’t Ins. 879 Md. A.2d (2005).

Although majority of states follow form of preju some today,6 dice rule always was the case. Watson v. 266, 272, U.S.F. & G. A.2d Md. Appeals rejected

the Court of prejudice rule as “not decisions, Maryland accord with the nor with the weight of authority country.” elsewhere this Assembly General year by overruled that decision the next enacting the forerun 48A, present ner of Article former 482. See 1964 Md. Laws 185. The Chap. originally statute was limited to insurance”; “motor vehicle it was extended to all in liability insurance 1966. See 1966 Md. Chap. Laws 205. According Note, 19-110, § to the Code Revisor’s the current 1997, in adopted language is “new without derived substantive 48A, change” 2005, § from former Article In the Court Appeals of adopted prejudice rule as a matter of common (“In 187, law. Prince at George’s, Md. 879 A.2d at 96 accordance with the overwhelming weight authority of courts country across the and the expression public policy by § in Maryland Assembly General as stated we rule.”). Brands, adopt prejudice See also Sherwood Inc. 300, 18, v. Great American Ins. 322 n. Md.

1268, (2011). 1282 n. 18 Applies Only A. Section 19-110 Cooperate to Failure to and Failure to Provide Notice

Although Maryland fully courts have now embraced prejudice rule as they articulated have uni formly recognized terms, § its narrow scope. By its requires an insurer to show actual prejudice only where the liability coverage insurer disclaims as a consequence of its 2005, thirty-eight 6. As of adopted states and two territories had prejudice George’s, rule. See Prince 388 Md. at 183 n. 879 A.2d at 94 n. 9. or failure to to with the insurer” cooperate “fail[ure] insured’s notice.” required the insurer “giv[e] Harvey, Ins. Co. v. Employees In Government that the Appeals explained 366 A.2d 13 the Court by of failures already types had limited the Assembly General rule. The prejudice would be protected an insured that have originally proposed required would version of the statute “for it disclaimed to show when prejudice an insurer actually enacted The version of the statute any reason.” to disclaimers of the rule application prejudice restricted notice. provide or failure to cooperate on failure to based Assembly, before the General originally As introduced was company required that an insurance provided under a motor vehicle actual an action prove prejudice a disclaimer where it insurance filed ” were “any reason. The words reason” “any insurance for As amended prior passage. deleted the bill from final enacted, compa- insurance ultimately required where the disclaimer only actual prove nies with the cooperate on the insured’s “to was based failure notice to the insurer.” giving requisite insurer (emphasis supplied). 366 A.2d at 16-17 Id. notified her insurer that she Harvey, injured insured after it occurred. The days in an accident nine

had been neces- the insured with forms responded by providing injury regard personal of claim with sary proof to submit (“PIP”) retained an attor- The insured protection benefits. that, reminders attorney insurer sent the two ney, and the PIP governing coverage, a statute according policy to the and PIP needed to be submitted within of claim for benefits proof finally The insured submitted months of the accident. six accident. months after the of claim seven-and-a-half proof suit and brought The insured coverage. The insurer denied Baltimore in the District Court. The judgment obtained that insured’s failure to ground affirmed on the the City Court by statutory protected of claim was timely proof submit rule. prejudice reversed, Appeals holding prejudice

The Court of timely statute did not to an insured’s failure to apply provide loss, of and distinct from a notice of proof “separate which is explained: accident.” Court § it of history language

We think clear from the provisions apply that its do not to insurance disclaimers loss grounded proof on the insured’s to submit failure the time in the That a loss specified policy. proof within or accident separate claim and distinct notice from recognized. is well Thus, (emphasis supplied).

Id. at 366 A.2d at 17 PIP deny solely insurer was entitled to claim because the having of loss without proof untimely, prejudice. was show In Phillips Way, Equity Inc. v. American Ins. 515, 517, 795 A.2d this Court dealt with a no-action professional liability policy

with a insurance providing clause that the insured could not maintain an action to recover under the unless and until the amount of loss by fixed a final rendered or judgment “by was after trial agreement parties between the with the written consent of the however, Instead of the case to trying judgment, [insurer].” the insured “settled a claim made it against party a third but did so without the knowledge consent of its insurer.” Id. The insured sued to collect on the insurance policy. The court granted summary judgment circuit favor of the insurer, and this Court affirmed. rejected appeal, argument

On we the insured’s 19- to its applied failure to obtain consent to settle. We recalled the legislative history explained as Harvey. noted that the Assembly “specifical- We General had ly rejected” approach that would make 19-110 “applica- any ble to defense raised the insurer.” Id. at at 219. Harvey We reiterated the Court’s conclusion “[t]hat an insurer must show it a failure to prejudice only raises if cooperate defense or a defense based on lack of notice.” Id. We reasoned that rule to an extending insured’s nearly breach of a no-action clause would “put impossible showing of collusion [between burden on the [insurer] the other to the demonstrat- party settlement] insured and of the settled claim.” Id. fact, after the the true worth ing, at 221. Ins. v. ACE American Perini/Tompkins Joint Venture In (4th Cir.2013), of the United States Court 738 F.3d Phillips Way Fourth to similar Appeals applied for the Circuit result, concluding 19-110 facts and reached same to an insured’s failure to obtain its insurer’s apply did to settle in violation of a no-action clause. consent Equivalent “Obtaining “Providing Not to B. Notice” Is to Consent Settle” the outer limits of Morse has at

Sensing into one of the statute’s two tempted squeeze her situation only that her failure to applicability. argues areas of She provide to settle was a form of failure to obtain Erie’s consent notice, In our cooperate. not that it was a failure to required view, obtaining notice and consent settle providing required not the same simply thing. are rejected attempts equate courts have mere

Maryland rule, violations, § trigger prejudice notice which insureds, trigger which do not with other deficiencies Harvey, the Court refused to § 19-110 rule. a of loss or timely “proof an insured’s failure to submit equate a “notice of acci- provide claim” with an insured’s failure dent.” a separate

That a of loss or claim is and distinct from proof A recognized. proof is well of loss notice accident nature, to ascertain the extent and enables the accordingly. to set reserves character the loss and “is to the insurance purpose proof acquaint chief of loss and circumstances relative to the company with certain facts loss, steps for further to be taken forming basis ranging repudia- from full settlement to absolute company, loss, to a liability.” right proof tion of The insurer’s as “an required by policy, has been characterized where insurer, and one in which it is to be one to the important protected.” 553,

278 Md. at 366 A.2d at 17. F. & In Waters U.S. G. predates a case 700, (1992), Appeals 616 A.2d 884 the Court of 328 Md. uninsured provides to settle clause an noted that a consent against undesired greater protection insurer with The that case policy settlements than a mere notice clause. clause, to clause. a notice but not a consent settle contained liability pending of a insurer’s provided The insured notice offer, obtaining without its accepted settlement but the offer held that the uninsured motorist insurer’s consent. The Court settlement, it did by though still bound the even insurer was consent, it had notice of the settlement pending not because the insured and party offer and was a to the action between the tortfeasor. to include a the uninsured motorist carrier

When fails provi- consent to settle clause in the uninsured motorist carrier, sions and when the with notice of the policy, suit, litigate underlying tort at trial the attempt does damages, tort issues of the carrier will and/or ordinarily be bound a settlement of the tort suit entered into between its insured and the uninsured tortfeasor. (emphasis supplied).

Id. at 616 A.2d at 893 The Court explained “protect[ed] that the insurer could have itself from allegedly an and inappropriate settlement between insured the uninsured tortfeasor” a consent to settle by inserting clause into its in the action and policy, by intervening issues, litigating damages but it chose not to do so. Id. at 616 A.2d at 892-93. Popa, West American Ins. Co. v. 723 A.2d case, pre another the uninsured motorist

policy provided judgment against that no a tortfeasor would binding upon be the uninsured motorist insurer unless the provided pendency insured had “reasonable notice of the opportunity” the suit” and the insurer had a “reasonable not contain a consent to protect its interests. The did against proceeded settle clause. After trial tortfeasor insured made a claim for uninsured motorist judgment, that it could not argued benefits. The insurer be bound because, time, it did not that an judgment know eventually uninsured motorist claim would be made. The that the insurer rejected argument Court and held was it had notice of the tort suit and process afforded due because prior an to intervene to trial. Id. at opportunity at 5. also that its insured had no argued right against parties

recover more on a one of the than it judgment recovered, already had because the insured had filed “order judgment. of satisfaction” as to that The Court reiterated plaintiff gives that when an insured his uninsured/underin- action, timely sured motorist carrier notice of the tort and the the insur- provisions when uninsured/underinsured of a clause policy requiring ance do not contain the carrier’s tortfeasor, consent before the insured can settle with the the insured is entitled to enter settlement or a consent judgment obtaining with the without the consent tortfeasor or without notice to the carrier. further at at 7 (emphasis supplied).7 Id. 723 A.2d an Phillips Way, rejected attempt equate we insured’s to its to obtain consent to settle with a failure to provide failure noted, in notice. As we have the insured that case had in professional liability policy violated a no-action clause circumstances, that, operated under the as a consent to settle that, if explained clause. even the insured had notified its We pending agreement cooper- insurer of the settlement and had to by giving opportunity ated the insurer decide whether Although Popa also discussed how other had handled the Court states here, we face where an insured settles with a tortfeasor for situation clause, policy limits in violation of a consent to settle the Court made presented clear it was with that situation and that it "need not not ... address 352 Md. at 468 n. 723 A.2d at n. 3. The Court [it].” procedure, made no mention of the 19-511 settlement which existed applicable because the accident at issue occurred before but was not the statute’s effective date. consent, still would have been breached because the Thus, insurer had consented. the failure to obtain consent something was more than a failure to notice or to provide cooperate trigger and it did not rule. argument,

The appellant’s ingenious, unpersua- while is all, sive. it is not that to technically First true obtain settlement, American consent to the Equity’s Phillips Way notify would have had to pending settle- ment—such notification could have been made UMCP or even an officious intermeddler. But even if it were in technically true that order for Equity give American settlement, its consent to the Phillips Way intended would insurer, notify cooperate have had to with its fact irrelevant. Phillips Way had American Equity If notified the intended settlement and gave latter its full cooperation, the condition precedent would still have been breached American Equity give written if failed consent to that settlement. (emphasis at 218 supplied).

An right insurer’s to consent to settle takes on even greater importance the context of uninsured motorist insur By notice, ance. contrast to a mere right to which does not necessarily trigger anything terms of the ongoing litigation, an uninsured motorist insurer’s statutory right to consent to certain settlements can effectively put the action on hold for up sixty days while the insurer makes a decision. See 19-511(b). An insurer’s decision grant whether to or refuse consent is not as or simple inconsequential as Morse would have it. The insurer must consider much more than the question obvious whether to preserve waive or to its subroga tion rights against tortfeasor, the who or not may may be “judgment-proof.” By refusing consent and advancing the insured, amount of the settlement offer to its the insurer assumes amount, the risk that it could recover less than that all, in nothing subrogation at a action against the tortfeasor. case, Under applies consent, the law that to by granting this an insurer became bound any settlement and waived right to assert the tortfeasor’s negligence lack of or its own a on negligence as defense contributory

insured’s policy. settle, takes on the risk an insurer By refusing consent non-refundable amount less than the may that it later recover insured, that it later may or even it must advance to Chamberlin, In Cas. Ins. Co. v. nothing at all. Ohio recover (2007), A.2d 160 the uninsured to settle to a insurer’s offer refused to consent $20,000 and, in 19- accordance with limits of for $20,000 511(c), against to its insured. The action advanced the trial, a verdict jury and a returned proceeded tortfeasor $5,445. The motor- only for uninsured in favor of the insured from its insured of sought repayment then ist insurer that re- $20,000 The circuit court denied it had advanced. held and we affirmed. We quest, proposed chooses to thwart a when a [carrier] UIM alleged and an tortfeasor plaintiff between a settlement amount, it settlement bears substituting payment a in an amount less might return verdict jury risk that defendant(s) advanced or favor of the than the amount any paid. amount to a refund and it is entitled A.2d at 167. Id. at it to settle—under the law as stood consent

By granting that, Erie would complied the time had Morse grant or refuse consent—an have had to decide whether contesting liability. from later tort precluded insurer was Nat. Mut. Cas. Ins. Pennsylvania Maurer v. set procedures the insured followed the

945 A.2d 629 motorist insur- §in and obtained his uninsured forth the tortfeasor’s insurer. After er’s consent to settle with settlement, policy. his insurer on the the insured sued of the summary judgment favor granted partial court as a insured, negligent that the tortfeasor had been ruling Nevertheless, the case to the court submitted matter of law. contribu- of whether the insured had been jury on the issues injuries. An assumed the risk of his negligent or had torily recov- question preclude either would finding affirmative on 21 ery. contributory negligence found and the insured jury appealed. of on Appeals jury

The Court reversed based erroneous instructions, went on to address effect of the unin but sured motorist insurer’s consent to settle the tortfeasor. settlement, By to a an consenting uninsured motorist insurer 74, by became it. Id. at 945 A.2d at (quoting bound Webb, 739-40, 721, Nationwide Mut. Ins. Co. v. (1981) 465, A.2d (holding that to sue” in “consent clauses invalid, policies uninsured motorist are noting but that “con to A generally upheld)). sent settle” clauses have con been senting insurer was thus precluded “contest[ing] from of liability” issues tort in the insured’s action recover on the 75, policy. Id. at 945 A.2d at 638. The Court concluded the insurer in Maurer should not have been allowed to raise the issues of its contributory negligence insured’s or assump risk, tion and the “[a]ny Court directed that trial new shall be limited to the damages.” matter of Id.8 the General Assembly tempered the of an effect insurer’s consent By written to settle with a tortfeasor. (f)

Md. Laws Chaps. legislature added subsection 19-511, § provides: which

(f) Construction acceptance written consent to settle- ment consent an uninsured motorist in- offer—Written surer to acceptance of a settlement offer under subsection (b)(1) of this section:

(1) not may be construed to limit the right any uninsured motorist insurer to relating raise issue damages in action against the uninsured insurer; motorist noted, Waters,

8. As we have the Court had earlier held before the enactment of that an uninsured did employ consent settle clause would be bound pending settlement to which it did not consent if it had notice of the opportunity offer and an to intervene in the tort action. 328 Md. at 892-193.

(2) by an uninsured does not constitute admission any raised in an action insurer as to issue motorist the uninsured motorist insurer. against Act shall effect provided The this take legislation “[t]hat 1, law, an insurer not be 2012.” current will October Under it consent. given to which has written bound settlement consent, an still raise in its Notwithstanding may its insurer damages.” to “any relating issue Consent defense any “does constitute an admission ... as to to settlement not insur- against in an the uninsured motorist issue raised action er.” may uninsured insurer consent

Although, today, an to waiving right its to with a tortfeasor without settlement liability, was not at the Erie would tort that true time contest to settlement grant have whether to consent Morse’s decided Nationwide, its given By it the opportunity. with had Morse 1, terms, legislation did not take effect until October the 2012 settlement, accident, and after 2007 2008 2012—well Morse’s Erie. had complied 2011 of suit If Morse filing against grant to or refuse given opportunity 19-511 and Erie settle, to the more consent to Erie would have had consider 19—511(f) consequences of decision. weighty, pre- has on case. Stat The 2012 amendment no effect this “clear only utes absent presumed apply prospectively, are ... ... contrary particularly in the to the expressions statute adversely rights.” statute affects substantive See where the Hearn, 582, 575, Ins. Co. v. Md. State Farm Mut. Auto. (1966). 820, Keeney also v. Allstate Ins. 219 A.2d See (2000). 396, 402-07, 947, (f) clearly as rights, of subsection affected substantive addition of an consent drastically granting it altered the effect insurer’s insured, settle, and did vis-a-vis both Hearn, 242 at machinery.” Md. merely procedural “alter[] 582, is no absolutely A.2d at 824. There indication for Chaps. intended 2012 Md. Laws Assembly the General contrary, legislation On the apply retrospectively. specifically provided that it would take effect October change The 2012 is analysis. law immaterial to our case, sure, In this Erie to be never contested Smallwood’s negligence or contributory raised Morse’s as an negligence affirmative to its on policy. defense Even if Erie determined, had before Nationwide extended the settlement offer, that had not at Morse been all negligent and Smallwood fault, completely was analysis. not material to our Although this be that Erie may prejudiced evidence was not Nationwide, Morse’s settlement with our only task here is whether, abstract, determine obtaining consent to equivalent settle is to providing required notice. As we have they equivalent, determined that are not the prejudice rule is not implicated prejudice and Erie’s lack of in this case is irrelevant. Prejudice Unavailing

C. The Common Law Rule is Morse County also invokes Prince v. George’s Local Trust, (2005), which, Gov’t Ins. 879 81 A.2d she claims, prejudice created a common law rule that broader case, § than George’s 19-110. In that County Prince was found liable for three county police the actions of officers that deprived a his citizen of state and federal rights. constitutional County insurer, The not inform its did excess the Trust, Local Government Insurance of the incident the days lawsuit until ten after jury the returned its verdict. The coverage ground Trust denied on County the the had notice, give failed to as required by the policy, County and the filed suit.

The granted summary trial court judgment favor of the affirmed, Trust. This Court did as the of Appeals. Court Court Appeals of held that County the had indeed violated the requirements § notice of policy, the but that 19-110 did apply because Trust not fit statutory the did the definition of Nevertheless, an “insurer.”9 the Court held the Trust pool 9. The Court found that the Trust was an insurance formed 19-602, public engaged entities under Ins. not an "insurer” in the 24 In under the common law. to show required prejudice

was event, a of as matter law prejudiced the Trust was any ver- notice until after adverse provide failure to County’s rendered, deny coverage. entitled to and it was thus dict was to show required prejudice that the Trust was holding rejec law, overruled its earlier the Court under common Co., Md. F. & G. prejudice a rule Watson U.S. tion of that, (1963). took of the fact 266, 189 The Court note A.2d 625 majority rule at the time Wat was although no-prejudice decided, majority support preju of states now was son Furthermore, A.2d rule. Md. at dice Watson, rejection by enacting Assembly’s swift the General public policy “announced the the forerunner prejudice an insurer must show before disclaim this state that provi breach of a notice on the insured’s ing coverage based Thus, the Court held: A.2d at 96. Id. at sion.” coverage an insured based may not disclaim to An insurer provision, notice unless the insured’s violation on by the violation. prejudiced insurer has been Id., (emphasis supplied). A.2d at 96-97 388 Md. at even prejudice To that a common law rule the extent failure obtain exists, it not extend an insured’s does facts, George’s the Prince decision By consent settle. that do rule cover entities extended Ins. “insurer” contained in meet strict definition of the rule prejudice applies made the § and clear may This support insurers. primary liability excess both rule to uninsured prejudice applies that the argument Morse’s not, strictly are policies, speaking, which motorist insurance Nevertheless, in the nothing policies.10 insurance § 388 Md. at 879 A.2d under Ins. 1-101. insurance business 92. 603, 614-15, Scott, 669 107 Accident Ins. Co. In General 10. (1996), 773, 779, denied, 707 we noted cert. A.2d 48A,] that, applies § uninsured motorist "[ajrguably, [Article coverage part is of coverage, that kind of because Prince George’s remotely suggested decision the rule to anything could be extended other than “the insured’s of violation a notice provision.” fact, case, subsequent

In in a the Court has taken an even more view George’s limited of its Prince In holding. Sher Brands, wood Inc. v. Great American Ins. Md. 18, 13

322 n. A.3d 1282 n. explained: the Court ], § George’s we—noting [Prince 19-110’s embodiment public “the this state that an insurer must show prejudice disclaiming before on in- coverage based provision”—did sured’s of a breach notice “adopt preju- however, that, is dice rule.” That not to say, prior to we George’s], require showing [Prince did not of preju- Rather, requires dice. Section 19-110 much. as we stated that, merely requiring an insurer show prejudice when it on coverage denies based a breach a notice we provision, were not unlike the overwhelming majority of our sister states.

(Emphasis supplied). Whatever common law rule prejudice have, Maryland may it is not noticeably § broader than 19- Statutory Settlement Procedure Our conclusion of coverage that Erie’s denial did not trigger § or 19-110 common law rules is strengthened fact procedure that the for settling with an uninsured tortfeasor is itself a creature statute. We cannot one apply statute to statute, excuse Morse’s noncompliance with another especially where two statutes do not or overlap conflict. As explained, requires we have 19-110 an insurer to show prejudice only actual where it liability coverage disclaims on based an insured’s to cooperate provide failure required notice. It does not apply where a disclaimer of coverage based on an insured’s failure to comply with the settlement procedure. Nevertheless, policy.”

insurance we did not "decide whether actually applies coverage.” to uninsured motorist Id. § preju held that the 19-110 Harvey, In the Court coverage. of PIP to an insurer’s denial rule not apply dice did insurance, coverage PIP is mandato uninsured motorist Like waived, governed and affirmatively is Maryland, unless ry seq. §§ 19-505 et Ins. statutory provisions. own See by its statute, the insurer had coverage PIP with the Consistent submitting limit for into a six-month time policy written its the insurer was entitled claim. held that proof of The Court timely on insured’s failure PIP based deny coverage claim, having prejudice. without to show proof submit of ization contained In view of the cases, in [Art. and of 48A, the §] express legislative 544(a)(1) ^[11] permitting a author loss, original proof of we for submission of the time limit to deny based right think had a contractual GEICO precedent with condition comply on failure appellee’s made within six months proof of claim be requiring that hold, so, irrespective we the accident. This is after of PIP is notwithstanding coverage and prejudice fact compulsory. Similarly, at 17 (emphasis supplied). 366 A.2d Md. on an may deny coverage based motorist insurer

an uninsured proce- settlement comply statutory failure to insured’s notwithstanding dure, irrespective § compulsory. coverage uninsured motorist the fact that § 19-511 removes all uninsured suggest do not We from ambit of 19-110. On coverage disputes coverage insurer denies if an uninsured motorist contrary, cooperate, notice or to provide failure based on insured’s Accident prejudice. have actual General it will to show denied, Scott, 603, 669 A.2d cert. Ins. Co. a circuit this Court affirmed injured summary in favor of an judgment grant court’s 19-508(a)(2) pertinent part: Today, provides, Ins. (2) coverage described in A that contains may: this subtitle (i) after date of the period not less than 12 months set a original claim for benefits accident within which the motor vehicle insurer[.] filed with the must be 27 insured whose uninsured motorist insurer denied coverage based on the twenty-nine-month insured’s delay in providing notice of the accident. Without deciding whether the forerun § ner of actually 19-110 applied to uninsured motorist cover age, we concluded that “an insurer cannot avoid coverage under an uninsured motorist policy grounds on the of an unreasonably notice, late unless the proves it ” prejudice.’ 615, suffered ‘actual Id. at 669 A.2d at 779.12

Section 19-511 exists primarily for the benefit of an injured insured. It was first 48A, enacted in 1995 as Article 542(b). § See 1995 conceived, Md. Laws 516. It Chap. was part, as a short cut allowing an injured insured to obtain at least some compensation for her injury having without to wait for a global settlement involving both the tortfeasor’s insurer and her own uninsured motorist insurer. See Krits ings Co., v. 367, State Farm Mut. Auto. Ins. 189 Md.App. 378- 79, 395, 984 (2009), denied, A.2d 229, cert. 413 Md. 991 (2010). A.2d 1274 It is a carefully legislative brokered solu tion that “sets forth a settlement procedure to be followed by claimants.” See Brethren Mut. Ins. Buckley, Co. v. 437 Md. 332, (2014). 665, 674 Keeney Allstate Ins. 130 Md.App. (2000),

A.2d we explained the situation before 19- 511, when liability insurers’ unwillingness settle without a pitted release was against uninsured motorist insurers’ unwill ingness grant a release and waive subrogation.13 We recounted the legislative purpose behind the bill: apply Section 19-511 did not in the Scott case because the action was commenced well before the statute took effect in 1995. Even if it however, applied, had implicated 19-511 would not have been be- argued cause the case was and decided based on the insured’s failure to notice, provide not the insured's failure to obtain consent to settle. 13. Even after the enactment of (including some insurers Erie claim) in its initial argued denial of Morse's have that an insured’s general release of a tortfeasor can also release the uninsured motorist obligation insurer's provide coverage. Appeals rejected The Court of argument Buckley, in Brethren Mut. Ins. Co. v. release, A.3d holding may general that an insured execute a Article 1995], to become which was Bill 253 [of Senate 542(b), by Senator Vernon sponsored 48A, was Section Booz- purpose of Senator County. Boozer of Baltimore towas report,” floor bill, to the “Senate according er’s provide tort Maryland’s that has existed to a

remedy problem who injured person Currently, for some time. system limits avail- liability carrier for against makes a claim not allowed frequently under the able give motorist carrier their uninsured/underinsured Therefore, if their claim. a full release of carrier liability for claim to make additional wishes injured person the motorist cover- underinsured against their injuries their liability in a situation where caught age, they get party’s at-fault the limits of the give not them carrier will and the without a release policy uninsured/underinsured to to a release give not allow them carrier will result, unable to they are As a liability carrier. can This dilemma either carrier. funds from recover in settlement. lengthy delay a cause by requir- this dilemma eliminate Bill 253 would Senate (1) to: motorist carrier ing the uninsured/underinsured liability with the insured to settle injured allow their (2) release; injured their pay or provide carrier and subrogation maintain their fully to insured themselves Therefore, the insured party. the liable rights against and the quickly more money his party gets uninsured/un- have front” “up would motorist carrier derinsured liability settlement. floor in the Senate provided of the bill summary terse, viz:

report was A SETTLEMENT BILL 253 ESTABLISHES SENATE A CLAIM- WHEN BE FOLLOWED TO PROCEDURE LIABILITY PARTY BY A WHOSE INJURED ANT IS tortfeasor’s and the explicitly to the tortfeasor not limited insurer, benefits. uninsured motorist prejudice to her claim for without INSURANCE LIMIT THE IS LESS THAN CLAIM- ANT’S UNINSURED MOTORIST LIMITS.

Id. at 746 A.2d at 950.

In exchange allowing injured for insureds to obtain compensation some earlier on in process, without benefits, remaining their claims for uninsured motorist 19—511(b) grants an right uninsured motorist carrier the consent to sixty-day settlement and a period make decision. This is true even if the policy does not contain a consent to settle clause. Section 19-511 effectively writes into all uninsured motorist policies consent to settle clause applies where the settlement offer would exhaust Maurer, limits. See 404 Md. at 73 n. 945 A.2d at 637 (“Under circumstances, n. some where the amount settlements, settlement or arising occurrence, out of the same would limits, exhaust liability policy the uninsured/underin sured carrier given statute option consent to consent to the circumstances, settlement. Under such there statute.”). exists a ‘consent to settle’ clause

If an injured insured follows proce the settlement dures of she cannot lose. If the uninsured motorist insurer grants settlement, consent to the she will obtain prompt compensation from the tortfeasor’s liability insurer. If the uninsured motorist refuses consent to the settlement, it promptly must remit to her the same compensa tion, as an advance against any future If recovery. the unin sured motorist insurer not respond does statutorily within the limit, established time she may accept insurer’s offer if as her insurer had consented. Upon settling with a insurer, pursuant 19-511(e), accepting equiva or payment lent from insurer, her uninsured pursuant motorist 19-511(c), §to injured insured no longer any bears risk that her claim will later be found to be worth less than the limit of liability policy. tortfeasor’s accepts Once she payment, the money short, is hers to In keep.14 injured an Although payment amount the insured receives will be set off against any higher recovery against responsible party later a or the

30 motorist claim for uninsured her insured cannot following 19-511. by benefits § 19- case, attempt comply no Morse made In this extended when Nationwide triggered 19-511 was 511. Section only liability policy full limit of the for the an offer to settle Erie a of Nation- sending copy had. Instead Smallwood 19—511(a), mail, §by as required by wide’s offer certified and by telephone Erie attorney first notified previous Morse’s sixty days Erie giving Instead of non-certified mail. later settlement, refuse consent to the grant or to decide whether offer 19—511(b), Nationwide’s accepted Morse required by as offer was release, days after the twenty-one signed and notified extended, days attorney after her twenty or nineteen attorney sent notice after her days seven by telephone, Erie days mail, thirty-three thirty-two non-certified the written offer. actually received before Erie uninsured purpose that “the are mindful We coverage under such ‘that each insured statutes is the same exactly minimum to statutory the full have available the tortfeasor com available had as would have been extent respon of the financial requirements minimum plied with the ” Webb, v. law,’ see, Mut. Ins. Co. e.g., Nationwide sibility (1981), as well as “the remedial 721, 737, Md. dictates a liberal construc statutory which plan, nature of the recovery for assuring purpose to effectuate its tion order accidents,” see, e.g., State vehicle innocent victims of motor Fund, 277 Auto. Ins. Maryland Farm Mut. Auto. Ins. Co. (1976). Nevertheless, even a 602, 605, 356 A.2d Md. excuse total of a remedial statute cannot construction liberal noncompliance. 574, 53 Mut. Ins. v. Brethren Buckley general held that insured’s this Court

A.3d insurer, 19-511(d)(2), 19-509(g), §§ the insured see uninsured motorist litigation money subsequent result in any should will not have to return recovery all. payment, or even no recovery the initial lower than Chamberlin, A.2d 160 Cas. Ins. Co. v. See Ohio (2007). release, in a tortfeasor’s given exchange for settlement with insurer, the tortfeasor “and all other liability that released in- did not also release the persons, corporations,” firms providing sured’s uninsured motorist carrier from benefits. explained contrary We that to hold otherwise would be to the text, Nevertheless, §of 19-511. we re- spirit, purpose factfinding regard manded for further with to whether the had consented to the settlement with the tortfeasor. The answer to that would determine whether the question liability insurer could contest tort at trial or be limited to a damages only. Appeals trial on The Court of affirmed our in it did not respects, though question decision all reach the actually whether the insurer had consented to the settlement. Buckley, Brethren Mut. Ins. Co. v. 86 A.3d 665 (2014). in Nothing opinion any either casts doubt on an § obligation comply insured’s with 19-511.

We are not moved Morse’s assertion that Erie could not have been her settlement Nationwide prejudiced by with for full only because settlement was limits of the insurance Smallwood had. As we have ex- plained, prejudice triggered no rule was in this case and Erie’s note, however, that, lack of if prejudice is irrelevant. we We a apply prejudice suggests, were rule as Morse such a lack of prejudice always would almost excuse noncompliance § § only applies because 19-511 where “the amount of offer, any settlement combination with other settle- occurrence, arising ments out of the same would exhaust the bodily injury applicable or death limits of the insur- 19-511(a). bonds, policies, ance and securities.” cannot We apply a strained construction prejudice of the rule to carefully legislative eviscerate brokered compro- already injured mise that is stacked favor of an insured who complies with it.

Out-of-State Cases are Not Here Persuasive presents twenty-eight Morse us with decisions of states which, claims, apply she rule to a denial of coverage uninsured motorist based on violation of a consent to 32 easily distinguished

settle clause.15 Those decisions are from states, Only the case at bar. two of those Nebraska16 and Dakota,17 statutory North have consent provisions concerning to settle with a tortfeasor. All the rest have dealt with the 19-511, § Maryland’s common law. the matter Unlike explicitly Nebraska and North Dakota statutes contain a prejudice provision. Brands, Co.,

In Sherwood Inc. v. Great American Ins. 418 300, 327-28, 1268, Md. 1285 the Court of is, Appeals against “squeezing] square peg—that cautioned a statute, 19-110, §in Maryland’s notice-prejudice as embodied acknowledges rejected prejudice 15. She also six states that have a rule. Co., (Ala.2011); Downey Prop. See v. Travelers Cas. 74 So.3d Ins. 952 Co., 742, (1997); Kan.App.2d Dalke v. 23 P.2d Lee Allstate Ins. Co., (1996); Mich.App. 554 N.W.2d 610 Auto-Owners Ins. Co., (1991); Stevens v. Merchants Mut. Ins. 135 N.H. 599 A.2d 490 Co., (R.I.2000); Metropolitan Prop. Fraioli v. & Cas. Ins. 748 A.2d 273 Osborne v. National Union Fire Ins. 251 Va. 465 S.E.2d 835 (1996). very Dalke involved an uninsured motorist settlement statute 84(f), Maryland’s § § similar to Kan. Stat. which does not prejudice provision. imply contain a The court declined to one. provides coverage 16. Nebraska law that uninsured motorist "shall not apply” where makes, representative the her insured or his or without the written insurer, any any judgment consent of the settlement with or obtains against any person may legally any injuries who be liable for such if insurer, adversely rights except settlement the that this affects apply coverage subdivision shall not to underinsured motorist when insurer, given compliance the insured has notice to the in (2) subsection of section and the make insurer has failed to protect right required payment subrogation[.] its 44-6413(l)(a) (emphasis supplied). Neb.Rev.Stat. provides coverage 17. North Dakota law that uninsured motorist "do[es] apply” not where insured, insurer, without the written consent of the shall make any agreement any person may legally or settlement with who be therefor, agreement adversely rights liable such if affects by any agreement insurer. The insurer is not bound or settlement prior knowledge without its and consent. This limitation does not apply coverage to underinsured motorist when the has ad- insured insurer, compliance vised the with subsection of section 26.1-40- 15.5, required payment and the insurer has failed to advance the protect right subrogation[.] of reimbursement and 26.1-40-15.6(7) (emphasis supplied). N.D. Cent.Code is, the notice- a round hole—that jurisprudence—into and our jurisdictions.” of other states prejudice jurisprudence states that, more than three-dozen “[o]f noted Court two did rule, only appears it notice-prejudice adopting ap- has.” Id. That assessment Maryland as legislatively, so may here. We Morse has cited to the cases plies equally other authority that into 19-511 on the rule read statutes, or that included one their legislatures have state judicially-crafted in their have included one other state courts not seen Assembly has remedies, General Maryland when the fit to do so.

Conclusion Erie, to inequitable. our result would be argues Morse by sure, prejudiced at all that it was showing made no be to settle with Nationwide. failure to obtain its consent Morse’s easily avoided is harsh could have been result Morse feels procedure settlement straightforward with the by complying will not §in 19-511. We Assembly provided the General statutory procedure completely tuned and valid nullify finely a particular in this noncompliance simply to excuse Morse’s trigger prejudice noncompliance As Morse’s did case. of that rule, liability on the basis Erie was entitled to disclaim prejudice. or without noncompliance, with AFFIRMED; BE PAID BY TO COSTS JUDGMENT APPELLANT. WOODWARD, J.

Dissenting Opinion WOODWARD, J., dissenting.

I dissent. respectfully facts of outset, that under the important At the it is note claim, in the case, anything nor is there this Erie does not claim, actually prejudiced that Erie was support record to to set- prior Erie’s written consent Morse’s failure to obtain limits of the the tortfeasor for the against her claim tling Thus, if the consent to settle policy. tortfeasor’s in the absence of actual § 19-511 is enforced requirement prejudice, holds, as urges majority Erie and the “the insurer suffers no harm and the insured [Erie] forfeits the [Morse] premiums and loses coverage.” George’s Cnty. Prince v. Trust, 162, (2005). Local Gov’t Ins. 879 A.2d 81 Notwithstanding majority’s assertion that Erie’s lack of “irrelevant,” prejudice actual is I believe that such lack of very actual relevant to a proper construction of § 19-511. Koste, Town 42 A.3d 637 of Oxford

(2012), aff'd, 431 Md. 63 A.3d 582 this Court set forth the principles guide the construction of a statute: presents statutory construction,

This case an issue of many, judicial like resolvable on the basis of consider- 1) 2) general text; ation of three purpose; factors: 3) consequences. plain Text is the language of the relevant provision, typically given its ordinary meaning, viewed in context, statute, considered in light the whole and gener- ally evaluated for ambiguity. Legislative purpose, either apparent sources, from the text or gathered from external informs, controls, often if not our reading of the statute. An examination of interpretive consequences, either aas comparison construction, of the results of each proffered or a principle as of avoidance of absurd or unreasonable reading, grounds the court’s interpretation in reality. 585-86, added) (citations Id. at 42 A.3d 637 (emphasis omit- ted). When the text is ambiguous, beyond we must look the plain statute’s language to determine legislative intent: “While the language of the statute is the primary source for intention, determining legislative plain the meaning rule of absolute; rather, construction is not the statute must be reasonably construed purpose, aim, with reference to the enacting body. or of the The Court will look at larger context, including the legislative purpose, the statutory language within appears. which Construction unreasonable, of a statute illogical, unjust, which is or inconsistent with common sense should be avoided.”

35 Servs., 434, 457, Simpson, Consol. Constr. Inc. v. 372 Md. (2002) added) A.2d 260 (emphasis (quoting Tracey Tracey, (1992)). 380, 387, 614 A.2d 590 of Appeals The Court emphasized importance legislative has the of purpose, stating statutory cardinal rule is to interpretation] “[t]he [of legislative ascertain and effectuate intent.” Id. at (alterations (internal A.2d 260 original) quotation marks omitted). §of

Regarding the text v. Brethren Buckley (2012), Mutual Insurance A.3d 456 aff'd, 437 Md. 86 A.3d 665 we summarized the procedure to be followed the insured and the uninsured (“UM carrier”) motorist carrier when the insurer of alleged the tortfeasor offers the policy injured limits to the person. We stated: 19-511(a), §

Pursuant when the insurer of the alleged tortfeasor offers its policy injured limits to the injured person, copy insured must send a of the offer by injured § certified letter to the insured’s UM carrier. 19- 511(a). days notice, after receipt Within the UM (1) injured carrier “shall send to person: written con- sent to acceptance the settlement offer and to the execu- (2) releases; tion of written refusal to consent to accep- 19—511(b). tance of the settlement offer.” If the UM carrier refuses to acceptance consent to of the settlement offer, the UM carrier pay must the amount of the settle- injured ment offer to the person within 30 days following the refusal. If the UM insurer consents to the settlement offer, or otherwise fails respond to the settlement offer as (b) (c) required by subsections then the injured may insured accept settlement offer from the liability insurer and execute a “in release favor liability insurer and its insured any without claim injured person may against have the uninsured 19-511(e). motorist insurer.” (footnote omitted). 586-87, at

Id. 53 A.3d 456 There is no language 19-511 that forth sets the conse- quences of an insured’s failure to follow the statute’s proce- limits. liability policy the tortfeasor’s accepting

dure prior of such failure is majority, consequence to the According of whether may deny coverage regardless carrier that the UM hand, Morse, con on the other prejudice. it suffered actual actual to the UM carrier require § 19-511 to strues statutory the absence of deny coverage. before it can Given pre and the thus ambiguous, question § 19-511 is language, with the purpose is which construction is consistent sented of each §of and how do the results policy and Simpson, construction with each other.1 See compare ambiguity a statute (holding at 813 A.2d 260 purpose policy to consider the and behind requires the court Koste, results); unjust the statute and avoid should (noting statutory interpretation 42 A.3d 637 conse interpretive in a consideration of the grounded be constructions). proffered of the statutes’s quences Buckley, purpose policy this Court articulated statute, underlying motorist as well as the the uninsured § 19-511. said: enacting reasons for We is to purpose of the uninsured motorist statute injured provide protection for individuals minimum liberally motorists and should be construed uninsured victims of motor vehicle collisions ensure that innocent injuries. compensated are for their Consistent with affording minimal for innocent public protection victims, amount of unin- purchase higher can an insured which will become available when sured motorist insurance as his coverage, as well the insured’s uninsured liability coverage of the tortfeasor. damages, exceed injured compensa- insured with provide The effect [i]s had the tion to that which would have been available equal equal in an amount tortfeasor carried insurance coverage. injured the amount of the insured’s UM Although arrive at her construction of Morse relies on 19-110 to necessary to the believe that such reliance is to come I do not same conclusion.

37 (alteration 589, 53 456 Md.App. original) 207 A.3d added) (citations (emphasis quotation and internal omit marks ted). Similarly, Maryland “strong public has a policy favoring injured by 591, of those drivers.” Id. at compensation UM A.3d 456. § enacting reason for 19-511 was to primary eliminate “ potential lengthy delay by caused ‘a situation where the give injured carrier persons] w[ould] [the party’s policy

limits of the at-fault without a release and the give carrier not allow them to [UM] w[ould] release to the ” (first 590, Id. at liability carrier.’ 53 A.3d 456 and fourth Co., in original) (quoting Keeney alterations v. Allstate Ins. (2000)). 396, 401, Md.App. Moreover, § 746 A.2d 947 19- sought to strike a balance right between the of the insured speedy recovery to a of the liability policy limits and the protection of the UM carrier’s subrogation rights.

When the constructions of 19-511 by major- advanced ity and Morse are considered in the context of the purpose and policy Maryland’s uninsured motorist statute and the reasons underlying clearly result favors Morse’s construction. Morse’s construction would further the public affording protection for innocent victims by allowing recovery of uninsured motorist compensation unless the UM carrier can prejudice show actual occasioned the insured’s comply failure to with the procedural requirements of 19- 511. Where there is no actual prejudice, an insured paid who for uninsured motorist coverage equal to his or her liability “ coverage would receive what the statute intended: ‘[Com- pensation equal that which would have been available had the tortfeasor carried liability insurance in an equal amount ” the amount of injured coverage.’ insured’s UM Id. at (quoting A.3d 456 Kritsings State Farm Mut. Auto. Ins. (2009)). 189 984 A.2d 395 In addition, the balance between the right insured’s to speedy recovery and the protection the UM subrogation carrier’s rights construction, would be maintained Morse’s because the UM carrier would still be able to deny coverage where its subroga- tion rights were actually prejudiced. of the different constructions

A of the results comparison of the Adoption construction. support § 19-511 also Morse’s results, effect, in a to the UM windfall majority’s view keep premiums paid allowed to UM carrier is carrier—the obligation coverage avoiding while for uninsured claim, the actions of the valid where pay an otherwise coverage such the risk inherent with did not increase insured carrier. rights of the UM any subrogation from any a UM carrier protect construction would Morse’s allowing while subrogation rights on its impact real adverse motorist cover- under uninsured recovery compensation by for the insured. bought paid and age that was in this dissent are consistent expressed the views Finally, treatise, in his who wrote Janquitto, those of Andrew Insurance: Motor Vehicle Maryland by a an unauthorized settlement of whether The issue of its obli relieve the claimant’s insurer claimant can A pay is a difficult one.... short gation to UM benefits that created what is that the 1995 amendment answer is mandatory procedure provides now Section followed, and, insurer is if it is not the UM must followed be This short pay to UM benefits. obligation of its relieved note, 19-511 does correct. Of Section may not be answer provisions the failure to abide its not indicate to obligation pay. of its contractual the UM insurer relieves it must obligation, can Hence, escape if the insurer UM clause[2] consent-to-settle relying on a contractual do so clause to avoid a breach of a consent-to-settle using But only Not problematic. is also pay to UM benefits obligation an that creates no the UM Statute provision is there no that states provision there is subrogation right, insurer’s is release of a tortfeasor unauthorized that a claimant’s UM benefits. escape paying insurer for the grounds escape its contractual assuming could Even an insurer enforcing statutory obligations by a consent-to-set- case, upon consent-to-settle its contractual Erie relied In the instant deny her UM claim. Morse clause provision, only tie it should be able to do so if that is an equitable result. Subrogation, even when it arises out [ ] statute, of a [A] contract or a equitable nature.... court must seek to strike a balance between the claim- right compensation right ant’s and the insurer’s subrogation. Certainly, a mere loss of a right theoretical of subrogation rights should not injured cause the loss of an claimant’s right recovery, for such a holding would not be insurer, an An equitable one. simply put, must show that there was a realistic likelihood that it would have recovered words, had it other exercised the subrogation rights. actually must show that it has been or material- ly prejudiced by the release of the tortfeasor.

Andrew Janquitto, Maryland Motor Vehicle Insurance (3d 8.12(B), 2011) (footnote omitted). at 471 ed. reasons,

For foregoing I would judgment reverse the the circuit court.

90 A.3d 534 HOME, JOHN B. PARSONS LLC FOUNDATION, JOHN B. PARSONS et al. 109, Sept. Term,

No. 2013. Special Appeals

Court of Maryland.

April

Case Details

Case Name: Morse v. Erie Insurance Exchange

Court Name: Court of Special Appeals of Maryland

Date Published: Apr 29, 2014

Citation: 90 A.3d 512

Docket Number: 0511/13

Court Abbreviation: Md. Ct. Spec. App.