Brethren Mutual Insurance v. Buckley

ADKINS, J. In this case we examine the scope of a general release executed pursuant to Md.Code (1997, 2011 Repl. Vol), § 19-511 of the Insurance Article (“§ 19-511”). Petitioner, The Brethren Mutual Insurance Company (“Brethren”), appeals the decision of the Court of Special Appeals that a general release executed by its policy holder, Ember L. Buckley (“Buckley”), in favor of a tortfeasor’s liability insurer did not likewise waive Buckley’s claim under her uninsured motorist policy with Brethren. FACTS AND LEGAL PROCEEDINGS Respondent, Buckley, was involved in a single-vehicle accident on March 18, 2007.

Buckley was the front-seat passenger in a motor vehicle driven by her boyfriend, Harvey Betts (“Betts”). Betts was covered by a liability insurance policy issued by GEICO, with policy limits of $100,000. GEICO offered to settle Respondent’s claim against Betts for the full policy limits. Notwithstanding this settlement, Buckley had medical bills related to this accident in excess of $200,000.

Because the settlement with Betts did not cover the full extent of her injuries, Buckley sought coverage under her uninsured/underinsured motorist (“UM”) policy with Petitioner, Brethren. In order to comply with Maryland’s UM scheme, 1 Respondent sent notice of the settlement offer from GEICO to Brethren via certified mail on August 29, 2007. 2 In response, ³³⁶ Brethren’s claims adjuster stated in a letter dated October 30, 2007 that Brethren would waive any subrogation action against Betts. Having received this message, Buckley signed a full release of all claims against Harvey Betts and a hold harmless agreement in favor of Betts and GEICO on December 6, 2007 (“the Release”). The Release stated that: I/we, Ember Buckley ... for and in consideration of a draft for the sum of one hundred thousand dollars ... do ... hereby remise, release, and forever discharge Harvey Betts.

Releasee(s), successors and assigns, and/or his, her or their associates, heirs, executors and administrators, and all other persons, firms or corporations of and from any and every claim, demand, right or cause of action, of whatever kind of nature, on account of or in any way growing out of any and all personal injuries and consequences thereof ... resulting or to result from an accident that occurred on or about the eighteenth day of March, 2007, at or near Saw Mill Court Baldwin, MD---- (Emphasis in original). After executing the Release with GEICO, Buckley attempted to recover for the remainder of her outstanding medical bills from Brethren under her UM policy. Brethren denied coverage and refused to pay. Buckley filed suit against Brethren in the Circuit Court for Baltimore County, alleging breach of contract and seeking the policy limit of $300,000 in compensatory damages, attorney’s fees and interest.

Brethren answered the complaint, asserting a general denial of liability, and raising the defenses of failure to state a claim, contributory negligence and assump ³³⁷ tion of the risk. Brethren did not raise the Release as an affirmative defense until its Amended Answer, filed two months after its initial Answer, and nearly three months after Buckley filed her complaint. Both parties filed motions for summary judgment. Brethren argued that the Release, as written, was a general release, and thus released all persons, firms, and corporations from future claims, regardless of whether they were parties to the Release.

Brethren further argued that Buckley’s subjective intent in executing the Release was irrelevant — the words on the page should be interpreted exactly as written. Responding, Buckley contended that the Release only applied to Betts and his insurer, and that her execution of it was clearly in accordance with § 19-511. That statute reads, in pertinent part: § 19-511. 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 or death, and the amount of the settlement offer ... would exhaust the bodily injury or death limits of the applicable liability insurance policies ... the injured person shall send by certified mail, to any insurer that provides uninsured motorist coverage ... a copy of the liability insurer’s written settlement offer. (b) Response to settlement offer. — Within 60 days after receipt of the notice ... the uninsured motorist insurer shall send to the injured person: (1) written consent to acceptance of the settlement offer and to the execution of 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. ³³⁸ (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. (2) Receipt by the insured person of the payment described in subsection (c) of this section shall constitute the assignment, up to the amount of the payment, of any recovery on behalf of the injured person that is subsequently paid from the applicable liability insurance polic[y]---- (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 (e) of this section. § 19-511 of the Insurance Article.

The Circuit Court agreed with Brethren and entered summary judgment in its favor, dismissing Buckley’s breach of contract claims. 3 ³³⁹ Buckley appealed the Circuit Court’s grant of summary judgment to Brethren. The Court of Special Appeals, applying the facts of this case to § 19-511, held that “in the context of § 19-511(e), executing a boilerplate, general release in favor of the liability insurer does not relieve the UM carrier from its contractual duty to issue a UM payment to its insured.” Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 587 , 53 A.3d 456, 463 (2012).

The court based its decision on three considerations, “(1) the text of the statute; (2) the purpose of the statute; and (3) matters of public policy.” Buckley, 207 Md.App. at 587 , 53 A.3d at 463-64 . Thus, the Court of Special Appeals held that the general release executed between Buckley and GEICO did not prejudice Buckley’s claim against Brethren. Consequently, Brethren could not use the Release to relieve itself of its duty to pay under the UM policy owned by Buckley. Buckley, 207 Md.App. at 598 , 53 A.3d at 470 .

On Brethren’s petition, we granted certiorari, to consider the following question: Did the Court of Special Appeals err in ruling that the general release that Buckley executed did not prejudice her breach of contract claim against Brethren for benefits under her UM policy? 4 ³⁴⁰ Because we answer this question in the negative, we affirm the decision of the Court of Special Appeals. DISCUSSION Under Maryland Rule 2 — 501(f), a trial court may grant summary judgment if “there is no dispute as to material fact and the moving party is entitled to judgment as a matter of law.” Mathews v. Cassidy Turley Maryland, Inc., 435 Md. 584, 598 , 80 A.3d 269, 276 (2013). The court views the record in the light most favorable to the non-moving party, including any reasonable inferences that can be drawn against the moving party. Mathews, 435 Md. at 598 , 80 A.3d at 276 .

Because no material facts are in dispute, we review the order granting summary judgment for legal correctness without “according any special deference to the circuit court’s conclusions.” Mathews, 435 Md. at 598 , 80 A.3d at 277 (citation omitted). Buckley argues that the Court of Special Appeals correctly held that § 19-511(e) and the public policy of the State of Maryland preclude Brethren from asserting the Release as a defense to her UM claim. Buckley points to the plain language of § 19-511 (e), the purpose of § 19-511 as evidenced by its legislative history, and the Maryland Insurance Administration’s interpretation of § 19-511 to support her position that a release signed in accordance with § 19-511 cannot be read to release her UM insurer. Brethren counters that Buckley signed a general release that, under its plain language, released all known claims against all persons or entities, even if those persons or entities were not aware of the Release and paid nothing for it.

Brethren argues that the plain language of the Release should rule the day, the statutory protections and legislative purposes of § 19-511 notwithstanding. Additionally, Brethren alleges that Buckley cannot claim the protection of § 19-511(e) because the Release went far beyond that permitted under § 19-511(e). ³⁴¹ We are called upon to construe both the Release and the statute, and how they interact. We start our analysis by examining the nature of releases. Releases are contracts that should be interpreted according to the intent of the parties.

See Owens-Illinois, Inc. v. Cook, 386 Md. 468, 495-96 , 872 A.2d 969, 985 (2005) (“[I]t is well settled that ‘[a] release is to be construed according to the intent of the parties and the object and purpose of the instrument, and that intent will control and limit its operation.’ ” (quoting Shriver v. Carlin & Fulton Co., 155 Md. 51, 64 , 141 A. 434, 440 (1928))). Under the objective law of contract interpretation, courts are to interpret contracts based on “what a reasonable person in the position of the parties would have meant at the time it was effectuated.” General Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261 , 492 A.2d 1306, 1310 (1985). If the language of a contract is plain and unambiguous, we presume that the parties meant what they expressed. See Bd. of Trustees v. Sherman, 280 Md. 373, 380 , 373 A.2d 626, 629 (1977).

Previously, we have held that general releases, similar in language to that signed by Buckley, must be read to release even claims against parties who gave no consideration for, had no knowledge of, and were not parties to the contract. See Pemrock, Inc. v. Essco Co., 252 Md. 374 , 249 A.2d 711 (1969). We recognize the appeal of — and Brethren’s zealous advocacy for — interpreting the Release according to these tenets of our “freedom of contract” jurisprudence. Indeed, these tenets have persuaded us in similar, though not identical, factual settings.

Brethren has argued that those cases should control our decision here. We now examine three of the leading decisions in this line of cases. In the first case, Bernstein v. Kapneck, the parents of an infant injured in a car accident settled with an at-fault driver and her insurer by executing a general release with language similar to the one here. 5 290 Md. 452, 454 , 430 A.2d 602 , 603- ³⁴² 04 (1981). After signing the release, the injured child began suffering medical symptoms that had not been diagnosed or foreseen at the time that the release was executed.

Bernstein, 290 Md. at 455 , 430 A.2d at 604 . This Court refused to set aside the release on the grounds of mutual mistake of fact. Bernstein, 290 Md. at 464 , 430 A.2d at 609 . We observed: [T]he release could not be more clear, more specific, more complete, more all-inclusive or more all-embracing.

It would require turning the English language on its head to conclude that, from these words used, the releasors did not by this document exhibit a clear desire to extinguish the claim for the damages they now seek. Id. (footnote omitted). In the second case, Pemrock, Inc. hired Essco Co., Inc. to build poultry houses that were manufactured by Anderson Box Company, Inc. and later insured by New Castle Mutual Insurance.

Pemrock, 252 Md. at 375-76 , 249 A.2d at 712 . The poultry houses later collapsed in a windstorm. Id. Pem-rock sued New Castle, which then impleaded Essco and Anderson.

Pemrock, 252 Md. at 376 , 249 A.2d at 712 . Pem-rock then settled with New Castle, signing a general release similar to the one signed by Buckley. 6 Pemrock, 252 Md. at 376-77 , 249 A.2d at 712 . Essco and Anderson later moved for summary judgment based on the release, which the trial court granted and we affirmed. Pemrock, 252 Md. at 379-80 , 249 A.2d at 714 .

We held that the release “in literal, plain, unambiguous words acquitted and discharged forever not only New Castle but all other persons....” Pemrock, 252 Md. at 380 , 249 A.2d at 714 . ³⁴³ In the third case, Peters v. Butler, a woman drove a car into a brick wall of an apartment complex, near where her mother was standing. 253 Md. 7, 8 , 251 A.2d 600, 601 (1969). The brick wall subsequently collapsed, injuring the mother’s leg. Id. The mother settled with the automobile insurer, Nationwide Mutual Insurance Company, and the driver’s insurer, American Mutual Insurance Company of Boston, executing a release of not only the driver, but “ ‘all other persons, firms or corporations liable or who might be claimed to be liable ... on account of all injuries, known and unknown[.]’” Peters, 253 Md. at 9 , 251 A.2d at 601 .

The mother later attempted to sue the apartment complex, but the defendant pleaded the release and moved for summary judgment. Id. When the mother moved to reform the release, the circuit court denied relief. Peters, 253 Md. at 8-9 , 251 A.2d at 601 .

On appeal, this Court rejected the mother’s contention that because the apartment complex paid nothing for the release, and was not expressly named, it was not released from the mother’s claim. Peters, 253 Md. at 9-10 , 251 A.2d at 602 . Brethren, relying on this line of cases, urges us to hold that general releases must invariably be read to release all claims against all parties, regardless of whether the released parties were contemplated, parties to, or paid consideration for the release. To be sure, applying this principle to the Release would render this a straightforward case.

But other strands of our jurisprudence, glossed over by Brethren, preclude such tidy dispatch of this dispute. The most significant hurdle is posed by Bernstein itself. In that case, we did not announce a blanket rule that general releases would always be given the full effect that the language would allow. Bernstein, 290 Md. at 459 , 430 A.2d at 606 .

Instead, we stated that “in the absence of constitutional, statutory or clear important policy barriers, parties are privileged to make their own agreement and thus designate the extent of the peace being purchased[.]” Id.