Jessica N. WOZNICKI v. GEICO GENERAL INSURANCE CO.
No. 532, Sept. Term, 2013.
Court of Special Appeals of Maryland.
April 29, 2014.
90 A.3d 498
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
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
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.
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(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 discussed a 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 pursue3
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
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:
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
GEICO disputes these assertions and, additionally, contends that
I. Does § 19-511 Preclude Waiver by an Insurer?
GEICO contends that
To be clear, in order to comply with
§ 19-511 , after a UM carrier receives notice of a settlement offer from an injured insured, the UM carrier must do one of two things: it must either (1) consent to the settlement offer (and, as a result, waive its right to contest tort liability) or (2) refuse to consent and pay the injured insured the amount of the settlement offer within 30 days of issuing its refusal to consent....
Buckley I was concerned with an insurer‘s obligations when its insured sends it a notice of settlement that complied with
Moving beyond Buckley, we find GEICO‘s reliance on the language of
We are also aware that, when the General Assembly wants to make it clear that a statutory provision is non-waivable, it generally says so explicitly. See, e.g.,
This sort of language is absent from
II. Was there a genuine dispute of material fact as to waiver?
“Whether summary judgment was granted properly is a question of law” and our review is de novo. Livesay v. Baltimore County, 384 Md. 1, 9, 862 A.2d 33 (2004). We conduct an independent review of the record considered in the light most favorable to the non-moving party to decide whether there are issues of material fact. Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705, 714, 922 A.2d 538 (2007). In determining whether there are disputes as to material facts, we construe reasonable inferences in favor of the non-moving party. Educ. Testing Serv. v. Hildebrant, 399 Md. 128, 140, 923 A.2d 34 (2007). To avoid summary judgment, the non-moving party must establish the existence of a genuine dispute of material fact. Beatty v. Trailmaster Products, Inc., 330 Md. 726, 737, 625 A.2d 1005 (1993). To be “genuine” in this context, the dispute must be more than hypothetical or conjectural: “the mere existence of a scintilla of evidence in support of the [non-moving party‘s] claim is insufficient to preclude the grant of summary judgment; there must be evidence upon which the jury could reasonably find for the plaintiff.” Id. at 738. Put another way, “when a movant has carried its burden, the party opposing summary judgment ‘must do more than simply show there is some metaphysical doubt as to the material facts.’” Id. (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
“Waiver is the intentional relinquishment of a known right, or such conduct as warrants an inference of the
Ms. Woznicki contends that the court erred by granting GEICO‘s motion for summary judgment because she established the existence of a genuine dispute of material fact as to whether GEICO waived its rights under the Consent to Settle Clause and
Castle testified that, prior to the July telephone conversation with the GEICO employee, he had not read Ms. Woznicki‘s GEICO policy, but “probably” had reviewed the declaration page. Thus, he was unaware of the Consent to Settle Clause. He also testified that he was unaware of
[Counsel for GEICO]: Did, in fact, GEICO ever give you consent to settle [Ms.] Woznicki‘s claim against [ ] Houston, who was insured by Nationwide?
[Castle]: It was my understanding that they had, and it was done by telephone. And it was not Davis. It was somebody taking her place when she was unavailable.
[Counsel for GEICO]: Tell me those details.
[Castle]: My recollection is a telephone call to GEICO asking for Davis with whom I‘d been dealing with all along.
[Counsel for GEICO]: And when did that happen?
[Castle]: Well, it would have been probably within a week, ten days of July 7th prior to. I can‘t tell you exactly. And [Davis] was unavailable. And I spoke to someone who asked for the file number and policy number and so forth and told—it was a female. I know that. And told her that—what the situation was and asked her what she wanted from me to confirm this. And I was told that she wanted a copy of the Release and a copy of the Declaration Page from the Nationwide Policy. And that would be the extent of it.
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[Counsel for GEICO]: Do you have any documentation of that phone call?
[Castle]: Not that I‘m aware of.
[Counsel for GEICO]: Not knowing [about § ] 19-511, why would you have called GEICO even to get their permission then?
[Castle]: Because that‘s our practice in Delaware, and that has always been my customary practice when I‘m dealing with an underinsurance claim, to be very careful to advise the underinsurance carrier as soon as I have a sense that there‘s going to be an underinsured claim, which I think I did with GEICO, and also to find out whether there are any special circumstances or evidence that they want. And I also am very careful to make it clear in the Release that I‘m not releasing the underinsurance claim.
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[Counsel for GEICO]: When you spoke with them, had you already settled with Nationwide?
[Counsel for Woznicki]: You mean settled, you mean like accepted the tender?
[Counsel for GEICO]: Accepted the tender from Nationwide.
[Counsel for Woznicki]: Or gotten a check or—I don‘t know what you mean.
[Counsel for GEICO]: Reached an agreement with Nationwide that the claim of [Ms.] Woznicki against [ ] Houston was settled.
[Castle]: As a practical matter, I certainly would have told them that we have settled or [are] going to settle or [are] willing to settle, that we‘re going to take it. I certainly would have communicated that that phase of the case is or has been or will be settled, and we‘re going to be asserting a claim against GEICO for the underinsured coverage. What exact words I used, I can‘t tell you.
[Counsel for GEICO]: Okay. So you have given—you had advised Nationwide that for all practical purposes [Ms.] Woznicki‘s claim against Mr. Houston was settled, but you wanted to pursue a UIM claim against GEICO?
[Castle]: That‘s true.
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[Counsel for GEICO]: As I understand the conversation that you ... claim to have had with GEICO about settlement with Nationwide, you‘re not able to tell precisely whether you said it was your intention to settle or whether the claim had been settled? You just know you spoke with GEICO about settling the claim?
[Castle]: I know I spoke with GEICO, and I know I would have told them what the realities were and that the case was in the process of being settled. Whether I said has been settled or will be settled or we need your permission to settle—I don‘t think I said that, but I told them what the facts were.
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[Counsel for GEICO]: Did GEICO ever tell you that it did not require written notification?
[Castle]: Only the conversation I referred to in which I asked them what they needed, and I was told the Release and the Declaration Page.
[Counsel for GEICO]: But you would agree you were never told that you do not need to get written consent from GEICO?
[Castle]: I don‘t recall ever being told that in so many words, no.
To survive summary judgment, Ms. Woznicki, as the non-moving party, had the burden to demonstrate that there was a dispute of material fact as to whether GEICO waived its rights under the Consent to Settle Clause. Because of the absence of other evidence in the record, the answer to this question hinges on whether a fact finder could reasonably conclude from Castle‘s deposition testimony that the GEICO employee did so. Beatty v. Trailmaster Products, Inc., 330 Md. at 738-39. Ms. Woznicki‘s contentions that she met this standard are not persuasive.
Although it is clear from the Castle‘s deposition that he told Nationwide that he intended to assert a UIM claim against GEICO on Ms. Woznicki‘s behalf, it is not clear that Castle ever explicitly informed GEICO that he intended to assert a UIM against it. For the purposes of analysis, however, we will read Castle‘s testimony as supporting such an inference.
That notwithstanding, there is nothing in the deposition testimony that supports a reasonable inference that Castle asked GEICO to waive the procedural requirements set out in the Consent to Settle Clause and
Castle‘s subjective understanding that GEICO had waived compliance is without probative value because he did not provide any indication of what was said to him to justify the conclusion. To the extent that there was miscommunication, moreover, GEICO cannot be faulted because Castle had not read the policy and Castle is chargeable with knowledge of Maryland law, specifically
Ms. Woznicki also contends that, because Castle told the unnamed GEICO employee the claim and policy numbers, the unnamed GEICO employee would have known from the file (which presumably included a communication log) that Ms. Woznicki intended to assert a UIM claim because Castle had updated GEICO regarding Ms. Woznicki‘s medical progress. We think this is a reasonable inference. But, as we have explained, Ms. Woznicki must do more than demonstrate that the unidentified GEICO employee was aware that a UIM claim might be asserted. She must also demonstrate facts that give rise to a reasonable inference that the employee waived compliance with the contractual and statutory requirements.
Finally, Ms. Woznicki presented no evidence to support a reasonable inference that Castle‘s interlocutor had either express or apparent authority to waive compliance with either the Consent to Settle Clause or
III. Insurance Article § 19-110 and the Requirement of Prejudice
An insurer may disclaim coverage on a liability insurance policy on the ground that the insured or a person claiming the benefits of the policy through the insured has breached the policy by failing to cooperate with the insurer or by not giving the insurer required notice only if the insurer establishes by a preponderance of the evidence that the lack of cooperation or notice has resulted in actual prejudice to the insurer.6
Ms. Woznicki contends that
GEICO‘s position is that
When an insurer denies coverage on the basis of something other than a failure of notice or a failure of cooperation,
“enables the insurer to ascertain the nature, extent and character of the loss and to set reserves accordingly. The chief purpose of a proof of loss is to acquaint the insurance company with certain facts and circumstances relative to the loss, forming a basis for further steps to be taken by the company, ranging from full settlement to absolute repudiation of liability.”
In Phillips Way, Inc. v. Am. Equity Ins. Co., 143 Md. App. 515, 795 A.2d 216 (2002), this Court considered whether
Returning to the present appeal, and guided by the reasoning of Harvey and Phillips Way, we conclude that the Consent to Settle Clause in the GEICO policy is conceptually similar to the “no action” provision at issue in Phillips Way. Like a “no action” provision, the Consent to Settle Clause protects an insurer against the possibility of collusive and unreasonable settlements. The Consent to Settle Clause must be read in conjunction with
Prejudice to an insurer can occur when “the insured has presented the insurer with a fait accompli by delaying notice until after the judgment. The delay vitiates the purpose of the contractual notice requirement, as the insurer cannot exercise any of its rights to investigate, defend, control, or settle the suit.” Prince George‘s County v. Local Gov‘t Ins. Trust, 388 Md. at 190. Ms. Woznicki effectively presented GEICO with a similar fait accompli by releasing the tortfeasor before GEICO had an opportunity to assess whether to assert a subrogation claim.
On the record before us, Ms. Woznicki presents a sympathetic figure. But this is not a basis for us to provide her the remedy she seeks in light of the facts of this case and the law as we understand it.
THE JUDGMENT OF THE CIRCUIT COURT FOR CECIL COUNTY IS AFFIRMED. APPELLANT TO PAY COSTS.
Notes
130 Md. App. at 403.[T]he legislative goal of [the statutory predecessor to
§ 19-511 ] was to resolve a common problem that beset litigants attempting to settle tort claims. The liability carrier for the allegedly negligent party typically was not willing to pay its policy limits unless it received a release from the injured party. The liability carrier‘s reluctance ... was based on a well-founded fear that, if it paid its limits without a release, it would subject its insured to a subrogation claim by the injured party‘s UM carrier; and if, as a defendant in a subrogation suit, the insured had to pay money out of his/her pocket, it might well subject the insurer to liability in a bad-faith action filed against it by its own insured.... On the other hand, prior to the enactment [of§ 19-511‘s statutory predecessor], the UM carrier typically would not consent to a release being signed because that would destroy any possibility of obtaining in a subrogation suit any of its money back from the alleged negligent party. In sum, the main purpose and effect of the statute was to resolve a recurrent problem that arose when parties attempted to settle tort cases.
Harvey, 278 Md. at 551-52.Where any insurer seeks to disclaim coverage on any policy of liability insurance issued by it, on the ground that the insured or anyone claiming the benefits of the policy through the insured has breached the policy by failing to cooperate with the insurer or by not giving requisite notice to the insurer, such disclaimer shall be effective only if the insurer establishes, by a preponderance of affirmative evidence that such lack of cooperation or notice has resulted in actual prejudice to the insurer.
143 Md. App. at 517 (emphasis omitted).No action shall be maintained against the Company by the Insured to recover for any loss under this Insurance Policy unless, as a condition precedent thereto, the Insured shall have fully complied with all the terms and conditions of this Insurance Policy, nor until the amount of such loss has been fixed or rendered certain by either final judgment against the Insured after trial of the issues and the time to appeal therefrom has expired without an appeal having been taken, or, if an appeal has been taken, then after the appeal has been determined or by agreement between the parties with the written consent of the Company.