Woznicki v. Geico General Insurance

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 ⁷¹⁸ GEICO was otherwise entitled to judgment, the Circuit Court for Cecil County granted the insurer’s motion for summary judgment. Ms. Woznicki has appealed, arguing that the circuit court was incorrect on both scores.

We think the circuit court was correct and will affirm its judgment. 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 GEI-CO. Section IV of the GEICO policy provided her with uninsured/underinsured motorist (“UM7UIM”) 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 Md.Code Ann. ⁷¹⁹ (2011) § 19-511 of the Insurance Article, 2 which provides in pertinent part: 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.

(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: ⁷²⁰ (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 pursue ⁷²¹ a UIM claim against GEICO.

We will discuss what we know about this conversation later in the opinion. On July 7, 2011, Ms. Woznicki signed the release and, on the same day, Castle wrote to Davis stating: 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 § 19-511 “because you failed to obtain our consent to settle, which is required by both the statute and the policy contract.” 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: ⁷²² It’s clear and undisputed that Section 19-511 was not complied with. In other words, there is—the plaintiffs attorney did not comply with that section.

And that’s also referenced—incorporated into the policy; therefore, the terms of the policy were not complied with. That’s undisputed, I believe. But the court finds that there could be a question of waiver. And I believe that these matters could be waived.

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 § 19-511. Ms. Woznicki also argues that § 19-110 required GEICO to demonstrate actual prejudice before it could defend its denial of coverage based on her failure to comply with the Consent to Settle Clause and § 19-511 and that GEICO failed to do so. GEICO disputes these assertions and, additionally, contends that § 19-511 is nonwaivable as a matter of law. We will discuss each of these arguments, beginning with GEICO’s.

I. Does § 19-511 Preclude Waiver by an Insurer? GEICO contends that § 19-511 is non-waivable. In so arguing, it relies upon the legislature’s use of the word “shall” in the statute itself as well as a statement of this Court in our opinion in Buckley v. Brethren Mut. Ins.

Co., 207 Md.App. ⁷²³ 574, 600, 53 A.3d 456 (2012) (“Buckley I ”), aff'd 437 Md. 332 , 86 A.3d 665 (2014) (“Buckley II ”), wherein we stated (emphasis added): 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 § 19-511’s requirements. Whether an insurer can waive strict compliance with the statute is a distinct question that neither Buckley I nor Buckley II addresses. Moving beyond Buckley , we find GEICO’s reliance on the language of § 19-511 to be unwarranted.

To be sure, “shall,” as a general rule, suggests a mandatory duty. See Perez v. State, 420 Md. 57, 63 , 21 A.3d 1048 (2011) (“ When the Legislature commands that something be done, using words such as “shall” or “must” rather than “may” or “should,” the obligation to comply with the statute or rule is mandatory.’ ”) (quoting State v. Green, 367 Md. 61, 82 , 785 A.2d 1275 (2001)). That performance of a duty is mandatory is one thing; that a private entity to whom the duty is owed cannot waive strict performance is quite another. 4 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., Insurance Article § 18-119(b)(2) (“The right of surrender may not be waived.”); Md.Code Ann. (2006, 2013 Supp.) § 5-1105 of the Courts & ⁷²⁴ Judicial Proceedings Article (providing that “[t]he provisions of this subtitle may not be waived”); Md.Code Ann. (1974, 2010 Repl.2013 Supp.) § 11B-I08(d) of the Real Property Article (“RP”) (providing that “[t]he rights of a purchaser under this section may not be waived in the contract and any attempted waiver is void....”); RP § 11 B-103 (“Except as expressly provided in this title, the provisions of this title may not be varied by agreement, and rights conferred by this title may not be waived.”); Md.Code Ann. (1975, Repl.2013) § 14-2402(c) of the Commercial Law Article (providing that “[t]he right of cancellation [of vacation club membership] may not be waived or otherwise surrendered.”).

This sort of language is absent from § 19-511. Moreover, Maryland’s case law interpreting § 19-511, as well as the statute’s legislative history, make it clear that the statute is intended to benefit an insured by facilitating settlements of claims against a tortfeasor when a UIM claim has been or may be asserted. See Buckley II, 437 Md. at 346-49 , 86 A.3d 665 ; Keeney v. Allstate Ins. Co., 130 Md.App. 396, 401 , 746 A.2d 947 (2000). 5 We are not persuaded that § 19-511’s remedial purposes would be served by holding that an insurer cannot, as a matter of law, waive strict compliance in ⁷²⁵ an appropriate situation.

Even if we were so inclined, we “may neither add nor delete language so as to reflect an intent not evidenced in the plain and unambiguous language of the statute, nor ... construe the statute with forced or subtle interpretations that limit or extend its application.” City of Baltimore Dev. Corp. v. Carmel Realty Assocs., 395 Md. 299, 318 , 910 A.2d 406 (2006) (internal quotation marks and citation omitted).

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 , 625 A.2d 1005 . 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 , 106 S.Ct. 1348 , 89 L.Ed.2d 538 (1986)). “Waiver is the intentional relinquishment of a known right, or such conduct as warrants an inference of the ⁷²⁶ relinquishment of such right, and may result from an express agreement or be inferred from circumstances.” Hovnanian Land Inv. Group, LLC v. Annapolis Town Centre at Parole, LLC, 421 Md. 94, 122 , 25 A.3d 967 (2011) (internal quotation marks and citation omitted). To demonstrate the existence of an implied waiver, there must be evidence that the actions of the purportedly waiving party were “inconsistent with an intention to insist upon enforcing” the provisions of a contract.

Id. (internal quotation marks and citations omitted). Generally, the question of waiver requires “resolution of many factual disputes and drawing of factual inferences.” Hovnanian, 421 Md. at 122 , 25 A.3d 967 . 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 § 19-511.

She asserts that this waiver occurred during the course of Castle’s telephone conversation with the unidentified GEICO employee in July, 2011. The only source of information about that conversation in the record is Castle’s deposition. 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 § 19-511. With that background, we set out the relevant portions of his testimony (emphasis added): [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. ⁷²⁷ [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. [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. [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? ⁷²⁸ [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