Shilling v. Nationwide Insurance

Beachley, J. ²⁶³ These consolidated appeals arise from a motor vehicle accident involving appellant, Margaret Shilling, and an underinsured motorist tortfeasor. Ms. Shilling's underinsured motorist provider (UIM), appellee Nationwide, gave its permission to Ms. Shilling to settle her claim with the tortfeasor and waived subrogation on April 23, 2013. Ms. Shilling ultimately agreed to accept the tortfeasor's insurance policy limits of $ 20,000 and executed a release in favor of the tortfeasor and the tortfeasor's insurer on February 3, 2014. On September 23, 2016, Ms. Shilling filed a complaint against Nationwide in the Circuit Court for Anne Arundel County, asserting that Nationwide was liable under the UIM provisions of its insurance policy for damages in excess of the $ 20,000 settlement with the tortfeasor's insurer.

Nationwide moved to dismiss based on limitations. The circuit court granted Nationwide's motion, finding that Ms. Shilling's claim was untimely because the statute of limitations started to run on Ms. Shilling's UIM claim when Nationwide consented to the settlement on April 23, 2013. After Ms. Shilling filed her first appeal, the parties ²⁶⁴ jointly moved to stay the appeal and remand the case to the circuit court to determine the "date of exhaustion" of the tortfeasor's liability insurance. This Court granted the motion and stayed the appeal.

On remand, the circuit court again agreed with Nationwide, finding that the date of exhaustion was April 23, 2013. Ms. Shilling then noted this second appeal, which we consolidated with her first appeal. We consolidate Ms. Shilling's questions presented for review into a single question: Did the circuit court err in holding that the statute of limitations on Ms. Shilling's UIM claim against Nationwide began running on April 23, 2013, the date on which Nationwide gave Ms. Shilling permission to settle with the tortfeasor? We answer "yes" to that question, reverse the circuit court's judgment, and remand to that court for further proceedings.

FACTS AND PROCEEDINGS On April 19, 2011, Ms. Shilling was involved in a motor vehicle accident with an underinsured tortfeasor at or near Gambrills, Maryland. On April 14, 2013, the tortfeasor's insurance company offered Ms. Shilling the maximum amount of liability coverage available under its policy - $ 20,000 - as full and final settlement of her claims against the tortfeasor. Nine days later, on April 23, 2013, Nationwide agreed to the proposed settlement and waived its subrogation rights against the tortfeasor. Approximately ten months later, on February 3, 2014, Ms. Shilling signed a "Full Release of All Claims and Demands" ("Release"), thereby releasing the tortfeasor and the tortfeasor's insurance company in exchange for payment of the $ 20,000 policy limit.

Ms. Shilling's attorney deposited the settlement check ⁸⁰⁵ into his escrow account on February 14, 2014. On January 26, 2015, Ms. Shilling sent a letter to Nationwide to start settlement negotiations for her underinsured motorist claim. Nationwide acknowledged receipt of Ms. Shilling's letter on February 2, 2015, and four days later requested ²⁶⁵ additional information to assist with review of her claim. The record shows multiple telephone conversations between Ms. Shilling's attorney and Nationwide between February and June 2015 concerning the status of Ms. Shilling's UIM claim.

On September 23, 2016, Ms. Shilling filed a complaint against Nationwide in the Circuit Court for Anne Arundel County alleging that Nationwide, under its UIM coverage, owed her damages she sustained in excess of the $ 20,000 settlement with the tortfeasor's insurance company. Nationwide moved to dismiss, asserting that Ms. Shilling's UIM claim was barred by limitations. According to Nationwide, the statute of limitations for Ms. Shilling's claim started running on April 23, 2013 - the date Nationwide consented to settlement and waived subrogation - and expired on April 23, 2016, five months before Ms. Shilling filed suit in the circuit court. After a hearing, the circuit court granted Nationwide's motion to dismiss.

The court found that "[o]n April 23, 2013 a contract was formed by the settlement agreement in this case.... Thus, if [Ms. Shilling] believed there was a breach by [Nationwide], [Ms. Shilling] needed to file suit by April 23, 2016." Because Ms. Shilling did not file suit until September 23, 2016, the circuit court determined that her suit was time-barred. Ms. Shilling filed a timely appeal. On January 10, 2018, Ms. Shilling and Nationwide filed a joint motion to stay the appeal and remand to the circuit court to determine "whether the date of exhaustion of the tortfeasor's policy limits is the date that the underinsured insurer consents to the settlement with the tortfeasor or the date the Release with the tortfeasor is signed or the check for the underlying policy limits is deposited." This Court granted the motion and stayed the appeal.

Pursuant to the stay, the circuit court held a hearing on February 28, 2018. Although no testimony or other evidence was adduced at the hearing, the parties agreed that: 1) Nationwide consented to the settlement and waived subrogation on April 23, 2013; 2) Ms. Shilling executed the Release and settled with the tortfeasor's insurer on February 3, 2014; ²⁶⁶ 3) Ms. Shilling's attorney deposited the settlement check into his escrow account on February 14, 2014; and 4) Ms. Shilling filed suit against Nationwide on September 23, 2016. Between April 2013 and February 2014, Ms. Shilling claimed that she investigated whether the tortfeasor had other insurance policies that could potentially provide additional coverage for her claim. Her attorney argued that we could not accept the settlement [without checking for other potential policies] because ... if we do, then we are in the worst of both situations and we just committed malpractice where we have no recourse against the tortfeasor because we have settled and a general release would settle ... those other claims.

Ms. Shilling asserted that, if she were to sign a release in favor of the tortfeasor where the tortfeasor had other available liability coverage, she would not be able to pursue a UIM claim against her insurer. Ms. Shilling therefore argued that the date she signed the Release in favor of the tortfeasor started the running of limitations. 1 ⁸⁰⁶ Nationwide continued to maintain that limitations began to run on April 23, 2013, when Nationwide consented to Ms. Shilling's settlement with the tortfeasor and waived any potential subrogation claim. Nationwide rejected Ms. Shilling's claim that limitations did not begin until she signed the Release on February 3, 2014, reasoning that such a rule would place "all the power in [Ms. Shilling's hand] ... because [she] could hypothetically wait 2, 6, 10 years to actually execute that release." It contended that "there has been a settlement as soon as the underinsured carrier consents because you are asking for their consent to settle." In Nationwide's view, Ms. Shilling had three years to find any additional coverage available to the tortfeasor and should not "get an additional year or two years because [she did] not want to sign the release yet." ²⁶⁷ On April 30, 2018, the circuit court accepted Nationwide's position concerning limitations and issued an order stating that "in a claim for breach of an uninsured motorist contract the date of the exhaustion of the tortfeasor's policy is the date the insurer consented to settlement with the tortfeasor." Because Nationwide consented to Ms. Shilling's settlement and waived subrogation on April 23, 2013, the court ruled that Ms. Shilling's claim against Nationwide was time-barred. 2 After Ms. Shilling filed a second timely appeal, we granted her motion to lift the stay and consolidated the two appeals. DISCUSSION I. State of Uninsured/Underinsured Motorist Law Generally In 1972, the General Assembly enacted Maryland's uninsured motorist statute.

Woznicki v. GEICO Gen. Ins. Co. , 443 Md. 93 , 109, 115 A.3d 152 (2015). The law has undergone multiple changes, most notably expanding coverage to underinsured motorists in 1981. 3 Id.

(noting that "the General Assembly recognized 'uninsured motor vehicles' as including ' under insured motor vehicles.' "). However, the purpose has remained constant: The purpose of the uninsured motorist statute is to provide minimum protection for individuals injured by uninsured motorists ... [the] statute creates a floor to liability not a ceiling. Consistent with the public policy of affording minimal protection for innocent victims, an insured can purchase a "higher amount of uninsured motorist insurance which will ²⁶⁸ become available when the insured's uninsured motorist coverage, as well as his damages, exceed the liability coverage of the tortfeasor." Id. at 110 , 115 A.3d 152 (internal citations omitted) (quoting Erie Ins. Exch. v. Heffernan , 399 Md. 598 , 612, 925 A.2d 636 (2007) ).

Because this coverage is remedial in nature, it is "to be liberally construed to ⁸⁰⁷ ensure that innocent victims of motor vehicle accidents can be compensated for the injuries they suffer as a result of such accidents." Id. (quoting State Farm Mut. Auto. Ins.

Co. v. DeHaan , 393 Md. 163 , 194, 900 A.2d 208 (2006) ). At issue in the present case is Md. Code (1996, 2017 Repl. Vol.), § 19-511 of the Insurance Article ("IA"). IA § 19-511 imposes obligations upon the insurer after the insured provides his or her insurer a copy of the tortfeasor's liability insurer's written settlement offer pursuant to IA § 19-511(b).

The statute provides: (c) Response to settlement offer . - Within 60 days after receipt of the notice required under subsection (b) of this section, the uninsured 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. (d) Payment of settlement offer . - Within 30 days after a refusal to consent to acceptance of a settlement offer under subsection (c)(2) of this section, the uninsured motorist insurer shall pay to the injured person the amount of the settlement offer. * * * (f) 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 ²⁶⁹ (2) if the uninsured motorist insurer has not met the requirements of subsection (c) or subsection (d) of this section. IA § 19-511(c), (d), (f). This provision was enacted to resolve the common dilemma where [A]n injured person who ma[de] a claim against a liability carrier for limits available under the liability policy [wa]s frequently not allowed by their uninsured/underinsured motorist carrier to give the liability carrier a full release of their claim.

Therefore, if the injured person wishe[d] to make an additional claim for their injuries against their underinsured motorist coverage, they g[o]t caught in a situation where the liability carrier w[ould] not give them the limits of the at-fault party's policy without a release and the uninsured/underinsured motorist carrier w[ould] not allow them to give a release to the liability carrier. As a result, they [we]re unable to recover funds from either carrier. This dilemma c[ould] cause a lengthy delay in settlement. Woznicki , 443 Md. at 111 , 115 A.3d 152 (quoting Brethren Mut.

Ins. Co. v. Buckley , 437 Md. 332 , 347, 86 A.3d 665 (2014) ). Ms. Shilling's Nationwide policy conforms to the requirements of IA § 19-511. 4 ^{808 270} In Maryland, an uninsured/underinsured motorist claim is a contract claim and "is 'governed by the principles and procedures applicable to contract actions generally.' " Lane v. Nationwide Mut. Ins.

Co. , 321 Md. 165 , 170, 582 A.2d 501 (1990) (quoting Reese v. State Farm Mut. Auto. Ins. , 285 Md. 548 , 553, 403 A.2d 1229 (1979) ). Contract claims are subject to a three-year statute of limitations.

Md. Code (1973, 2013 Repl. Vol.), § 5-101 of the Courts and Judicial Proceedings Article ("CJP"); Shailendra Kumar, P.A. v. Dhanda , 426 Md. 185 , 194, 43 A.3d 1029 (2012) (applying CJP § 5-101 to a contract claim).

II

Lane and Pfeifer Two Maryland cases guide our resolution of the instant case: Lane , 321 Md. 165 , 582 A.2d 501 and Pfeifer v. Phoenix Ins. Co. , 189 Md. App. 675 , 985 A.2d 581 (2010). A. LANE V. NATIONWIDE MUT. INS.

CO. In Lane , the Court of Appeals analyzed when the statute of limitations starts to run for an uninsured motorist claim. Lane , 321 Md. at 166 , 582 A.2d 501 . There, the Lanes were permanently injured in an automobile accident with three potential tortfeasors.

Id. at 166-67 , 582 A.2d 501 . Sometime before they filed their tort action, the Lanes learned that at least two of the three potential tortfeasors were uninsured. Id. at 167 , 582 A.2d 501 . On December 14, 1982, the Lanes filed a tort action against the tortfeasors and, on December 17, 1982, sent Nationwide, their uninsured motorist provider, a copy of their complaint.

Id. They also informed Nationwide of the two uninsured motorists. Id. Nationwide did not intervene in the suit.

Id. On April 17, 1986, while the tort action was still pending, the Lanes filed an action against Nationwide "for breach of contract, seeking recovery of uninsured motorist benefits under their policy." Id. Nationwide moved for summary judgment, asserting that the statute of limitations had expired because it "began to run when the