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THE COURT OF SPECIAL APPEALS","paragraph_id":"para_2"},{"text":"OF MARYLAND","paragraph_id":"para_3"},{"text":"No. 0511","paragraph_id":"para_4"},{"text":"September Term, 2013","paragraph_id":"para_5"},{"text":"JEANNINE MORSE","paragraph_id":"para_6"},{"text":"v.","paragraph_id":"para_7"},{"text":"ERIE INSURANCE EXCHANGE","paragraph_id":"para_8"},{"text":"Woodward,","paragraph_id":"para_9"},{"text":"Matricciani,","paragraph_id":"para_10"},{"text":"Moylan, Charles E., Jr.","paragraph_id":"para_11"},{"text":"(Retired, Specially Assigned),","paragraph_id":"para_12"},{"text":"JJ.","paragraph_id":"para_13"},{"text":"Opinion by Moylan, J.","paragraph_id":"para_14"},{"text":"Dissenting Opinion by Woodward, J.","paragraph_id":"para_15"},{"text":"Filed: April 29, 2014","paragraph_id":"para_16"},{"text":"In this uninsured motorist insurance coverage dispute, we must choose between two","paragraph_id":"para_17"},{"text":"diverging roads: one requiring compliance with a statutory scheme, the other excusing","paragraph_id":"para_18"},{"text":"compliance in favor of a more equitable (or at least less harsh) result. Unlike Robert Frost,1","paragraph_id":"para_19"},{"text":"we feel constrained to choose the first road, more traveled as it may be. For the parties here","paragraph_id":"para_20"},{"text":"– Jeannine Morse, the appellant, and Erie Insurance Exchange, the appellee – that will make","paragraph_id":"para_21"},{"text":"all the difference.","paragraph_id":"para_22"},{"text":"The Acceptance of the Settlement Offer","paragraph_id":"para_23"},{"text":"This case arises out of an April 28, 2007 automobile accident between Jeannine","paragraph_id":"para_24"},{"text":"Morse and Paula Smallwood in New Castle, Delaware. The accident itself is not relevant","paragraph_id":"para_25"},{"text":"to this appeal, and the parties agree that Smallwood was at fault. Smallwood maintained","paragraph_id":"para_26"},{"text":"an automobile insurance policy with Nationwide Insurance Company that provided up to","paragraph_id":"para_27"},{"text":"$15,000 in liability coverage. Morse maintained her own uninsured motorist coverage","paragraph_id":"para_28"},{"text":"through Erie Insurance Exchange. The uninsured motorist endorsement on Morse's policy","paragraph_id":"para_29"},{"text":"contained a consent to settle clause that mirrors the settlement procedures set forth in Md.","paragraph_id":"para_30"},{"text":"Code, § 19-511 of the Insurance Article.2","paragraph_id":"para_31"},{"text":"Robert Frost, \"The Road Not Taken.\"1","paragraph_id":"para_32"},{"text":"... Two roads diverged in a wood, and I –","paragraph_id":"para_33"},{"text":"I took the one less traveled by,","paragraph_id":"para_34"},{"text":"And that has made all the difference.","paragraph_id":"para_35"},{"text":"The \"Uninsured/Underinsured Motorists Coverage Endorsement\" of Morse's Erie2","paragraph_id":"para_36"},{"text":"policy contained the following clause under the heading \"Rights and Duties – General Policy","paragraph_id":"para_37"},{"text":"Conditions\":","paragraph_id":"para_38"},{"text":"(continued...)","paragraph_id":"para_39"},{"text":"On October 13, 2008, Nationwide offered Morse the full $15,000 policy limit in","paragraph_id":"para_40"},{"text":"settlement of her claim against Smallwood. On October 14 or 15, 2008, Morse's then-","paragraph_id":"para_41"},{"text":"attorney notified Erie of the settlement offer by telephone. On October 27, 2008, she","paragraph_id":"para_42"},{"text":"(...continued)2","paragraph_id":"para_43"},{"text":"The following duties are added:","paragraph_id":"para_44"},{"text":"...","paragraph_id":"para_45"},{"text":"3. \"Anyone we protect\" must notify \"us\" by certified mail of any offer","paragraph_id":"para_46"},{"text":"to settle a claim for bodily injury or death that, in combination with any other","paragraph_id":"para_47"},{"text":"settlement for the same loss, would exhaust the applicable bodily injury or","paragraph_id":"para_48"},{"text":"death limits of the liability insurance policy. Within 60 days after receipt of","paragraph_id":"para_49"},{"text":"such notice, \"we\" will send \"anyone we protect:\"","paragraph_id":"para_50"},{"text":"a. written consent to accept the settlement and to the execution","paragraph_id":"para_51"},{"text":"of releases; or","paragraph_id":"para_52"},{"text":"b. written refusal not to accept the settlement offer [sic]. Within","paragraph_id":"para_53"},{"text":"30 days of such notice of refusal, \"we\" will pay \"anyone we protect\" the","paragraph_id":"para_54"},{"text":"amount of the settlement offer. Payment of the amount of the settlement offer","paragraph_id":"para_55"},{"text":"to \"anyone we protect\" preserves \"our\" right of recovery from anyone else","paragraph_id":"para_56"},{"text":"held responsible. Once this payment is made, \"anyone we protect\" is required","paragraph_id":"para_57"},{"text":"to transfer the right of recovery up to the amount of such payment to \"us\" and","paragraph_id":"para_58"},{"text":"to do nothing to harm this right. Anyone receiving payment from \"us\" and","paragraph_id":"para_59"},{"text":"from someone else for the same accident or loss will reimburse \"us\" up to the","paragraph_id":"para_60"},{"text":"amount of \"our\" payment.","paragraph_id":"para_61"},{"text":"If \"we\" fail to meet all of the requirements imposed on \"us\" under this","paragraph_id":"para_62"},{"text":"section, \"anyone we protect\" may accept a settlement offer and execute","paragraph_id":"para_63"},{"text":"releases from [sic] anyone held responsible for the loss without prejudice to","paragraph_id":"para_64"},{"text":"any uninsured motorists claim.","paragraph_id":"para_65"},{"text":"(Emphasis supplied).","paragraph_id":"para_66"},{"text":"- 2 -","paragraph_id":"para_67"},{"text":"notified Erie of the offer by mail. Morse's attorney did not send the notice by certified mail,","paragraph_id":"para_68"},{"text":"however, and Erie claims it did not receive the notice until December 5 or 6, 2008.","paragraph_id":"para_69"},{"text":"In the meantime, on November 3, 2008, without obtaining Erie's consent to the","paragraph_id":"para_70"},{"text":"settlement, Morse accepted Nationwide's offer and signed a release of all claims against","paragraph_id":"para_71"},{"text":"Smallwood. Morse's attorney stamped the release with a notation: \"Nothing contained in","paragraph_id":"para_72"},{"text":"this release waives, limits, or extinguishes any future claims for UM/UIM or PIP benefits.\"","paragraph_id":"para_73"},{"text":"Erie learned that Morse had accepted the settlement on February 4, 2009, but did not receive","paragraph_id":"para_74"},{"text":"a copy of the executed release agreement until July 8, 2009.","paragraph_id":"para_75"},{"text":"On November 5, 2009, Erie denied Morse's claim for uninsured motorist benefits.","paragraph_id":"para_76"},{"text":"Erie gave three reasons: 1) \"Ms. Morse signed the Release agreement and negotiated the","paragraph_id":"para_77"},{"text":"Nationwide settlement check prior to sending ERIE the notice as required by [Md. Code, §","paragraph_id":"para_78"},{"text":"19-511 of the Insurance Article]\"; 2) \"the subject release agreement signed by Ms. Morse","paragraph_id":"para_79"},{"text":"was a global release and served to preclude any and all claims, including the subject","paragraph_id":"para_80"},{"text":"Underinsured Motorists claim\"; and 3) Morse \"settled her claim against the tortfeasor3","paragraph_id":"para_81"},{"text":"without ERIE's written consent,\" in violation of the policy.","paragraph_id":"para_82"},{"text":"The Jury's Verdict","paragraph_id":"para_83"},{"text":"Although the terms \"uninsured\" and \"underinsured\" may have distinct meanings in3","paragraph_id":"para_84"},{"text":"the insurance industry, and both terms are used in the Insurance Article of the Maryland","paragraph_id":"para_85"},{"text":"Code, for ease of reference, we shall employ the term \"uninsured\" to refer to both","paragraph_id":"para_86"},{"text":"\"uninsured\" and \"underinsured\" motorist insurance.","paragraph_id":"para_87"},{"text":"- 3 -","paragraph_id":"para_88"},{"text":"On June 17, 2011, through her present attorneys, Morse filed suit against Erie in the","paragraph_id":"para_89"},{"text":"Circuit Court for Cecil County for breach of the insurance contract. On April 22-23, 2013,","paragraph_id":"para_90"},{"text":"the case was tried to a jury on the issues of whether Erie breached the contract by denying","paragraph_id":"para_91"},{"text":"Morse's uninsured motorist claim and, if so, the extent of Morse's damages resulting from","paragraph_id":"para_92"},{"text":"the automobile accident. Morse moved for judgment on the ground that Erie had failed to","paragraph_id":"para_93"},{"text":"show any prejudice resulting from her failure to obtain its consent to settle with Nationwide.","paragraph_id":"para_94"},{"text":"The court denied the motion. The court also denied Morse's request for a jury instruction","paragraph_id":"para_95"},{"text":"to the effect that her failure to notify Erie of the settlement offer would relieve Erie from its","paragraph_id":"para_96"},{"text":"responsibility to provide coverage only if Erie showed actual prejudice. The jury found in4","paragraph_id":"para_97"},{"text":"favor of Erie. Morse has appealed from that adverse jury verdict.","paragraph_id":"para_98"},{"text":"The Statutory Milieu","paragraph_id":"para_99"},{"text":"Morse requested the following jury instruction, a modified version of MPJI-Civil4","paragraph_id":"para_100"},{"text":"14:11, Cooperation by Insured:","paragraph_id":"para_101"},{"text":"The insurance policy issued to the insured contains a provision","paragraph_id":"para_102"},{"text":"requiring the insured to send to her insurer a copy of the other driver's written","paragraph_id":"para_103"},{"text":"settlement offer.","paragraph_id":"para_104"},{"text":"The failure of the insured to give this notice frees the insurance","paragraph_id":"para_105"},{"text":"company from responsibility for the claimed injury, damage, or loss provided","paragraph_id":"para_106"},{"text":"that the failure actually prejudiced the insurance company in investigating or","paragraph_id":"para_107"},{"text":"defending against the claim. The insurer insurance company [sic] must","paragraph_id":"para_108"},{"text":"establish by a preponderance of the affirmative evidence that it actually was","paragraph_id":"para_109"},{"text":"prejudiced by the failure to give the necessary notice.","paragraph_id":"para_110"},{"text":"(Pattern instruction modified as indicated). The court was correct in not giving this","paragraph_id":"para_111"},{"text":"instruction because, as we shall explain, it is not a correct statement of the law as it applies","paragraph_id":"para_112"},{"text":"to this case.","paragraph_id":"para_113"},{"text":"- 4 -","paragraph_id":"para_114"},{"text":"Our analysis in this case revolves around two sections of the Insurance Article of the","paragraph_id":"para_115"},{"text":"Maryland Code. First, § 19-110 prohibits an insurer from disclaiming coverage on a liability","paragraph_id":"para_116"},{"text":"insurance policy on the ground that an insured failed to cooperate or to provide \"required","paragraph_id":"para_117"},{"text":"notice,\" unless the insurer shows \"actual prejudice\" resulting therefrom. Section 19-110","paragraph_id":"para_118"},{"text":"provides:","paragraph_id":"para_119"},{"text":"An insurer may disclaim coverage on a liability insurance policy on the","paragraph_id":"para_120"},{"text":"ground that the insured or a person claiming the benefits of the policy through","paragraph_id":"para_121"},{"text":"the insured has breached the policy by failing to cooperate with the insurer or","paragraph_id":"para_122"},{"text":"by not giving the insurer required notice only if the insurer establishes by a","paragraph_id":"para_123"},{"text":"preponderance of the evidence that the lack of cooperation or notice has","paragraph_id":"para_124"},{"text":"resulted in actual prejudice to the insurer.","paragraph_id":"para_125"},{"text":"Second, § 19-511 creates a procedure that allows an injured insured to settle her claim","paragraph_id":"para_126"},{"text":"against a tortfeasor's liability insurer for full policy limits without prejudice to her claim for","paragraph_id":"para_127"},{"text":"uninsured motorist benefits. Upon receiving from its insured a settlement offer from a","paragraph_id":"para_128"},{"text":"liability insurer for policy limits, the uninsured motorist insurer is afforded sixty days to","paragraph_id":"para_129"},{"text":"choose to consent to the settlement (thereby waiving its subrogation rights against the","paragraph_id":"para_130"},{"text":"tortfeasor), or to refuse to consent and instead pay its insured the amount of the offer directly","paragraph_id":"para_131"},{"text":"(thereby preserving its subrogation rights). If the injured insured has complied with § 19-","paragraph_id":"para_132"},{"text":"511 but the uninsured motorist insurer has not timely responded or paid out, the injured","paragraph_id":"para_133"},{"text":"insured still may accept the settlement offer without prejudice to her uninsured motorist","paragraph_id":"para_134"},{"text":"claim, just as if the uninsured motorist insurer had consented to the settlement. See Kritsings","paragraph_id":"para_135"},{"text":"v. State Farm Mut. Auto. Ins. Co., 189 Md. App. 367, 378, 984 A.2d 395, 401 (2009), cert.","paragraph_id":"para_136"},{"text":"- 5 -","paragraph_id":"para_137"},{"text":"denied, 413 Md. 229 (2010). See also Buckley v. Brethren Mut. Ins. Co., 207 Md. App.","paragraph_id":"para_138"},{"text":"574, 586-87, 53 A.3d 456, 463 (2012), aff'd, ___ Md. ___, 86 A.3d 665 (2014).5","paragraph_id":"para_139"},{"text":"Section 19-511 provides, in full:5","paragraph_id":"para_140"},{"text":"(a) Settlement offers sent to insurers providing uninsured motorist","paragraph_id":"para_141"},{"text":"coverage – If an injured person receives a written offer from a motor vehicle","paragraph_id":"para_142"},{"text":"insurance liability insurer or that insurer's authorized agent to settle a claim for","paragraph_id":"para_143"},{"text":"bodily injury or death, and the amount of the settlement offer, in combination","paragraph_id":"para_144"},{"text":"with any other settlements arising out of the same occurrence, would exhaust","paragraph_id":"para_145"},{"text":"the bodily injury or death limits of the applicable liability insurance policies,","paragraph_id":"para_146"},{"text":"bonds, and securities, the injured person shall send by certified mail, to any","paragraph_id":"para_147"},{"text":"insurer that provides uninsured motorist coverage for the bodily injury or","paragraph_id":"para_148"},{"text":"death, a copy of the liability insurer's written settlement offer.","paragraph_id":"para_149"},{"text":"(b) Consent or refusal to consent to acceptance of settlement offer –","paragraph_id":"para_150"},{"text":"Within 60 days after receipt of the notice required under subsection (a) of this","paragraph_id":"para_151"},{"text":"section, the uninsured motorist insurer shall send to the injured person:","paragraph_id":"para_152"},{"text":"(1) written consent to acceptance of the settlement offer and to","paragraph_id":"para_153"},{"text":"the execution of releases; or","paragraph_id":"para_154"},{"text":"(2) written refusal to consent to acceptance of the settlement","paragraph_id":"para_155"},{"text":"offer.","paragraph_id":"para_156"},{"text":"(c) Payment of amount of settlement offer by uninsured motorist","paragraph_id":"para_157"},{"text":"insurer – Within 30 days after a refusal to consent to acceptance of a","paragraph_id":"para_158"},{"text":"settlement offer under subsection (b)(2) of this section, the uninsured motorist","paragraph_id":"para_159"},{"text":"insurer shall pay to the injured person the amount of the settlement offer.","paragraph_id":"para_160"},{"text":"(d) Preservation of uninsured motorist insurer’s subrogation rights –","paragraph_id":"para_161"},{"text":"(1) Payment as described in subsection (c) of this section shall","paragraph_id":"para_162"},{"text":"preserve the uninsured motorist insurer's subrogation rights against the","paragraph_id":"para_163"},{"text":"liability insurer and its insured.","paragraph_id":"para_164"},{"text":"(2) Receipt by the injured person of the payment described in","paragraph_id":"para_165"},{"text":"(continued...)","paragraph_id":"para_166"},{"text":"- 6 -","paragraph_id":"para_167"},{"text":"In construing this statutory scheme, we take our guiding principles from Government","paragraph_id":"para_168"},{"text":"Employees Ins. Co. v. Insurance Comm'r of Md., 332 Md. 124, 630 A.2d 713 (1993):","paragraph_id":"para_169"},{"text":"[T]he primary goal ... is determining the intent of the Legislature when it","paragraph_id":"para_170"},{"text":"enacted the subject statute. We begin our search for legislative intent with the","paragraph_id":"para_171"},{"text":"words of the statute to be interpreted, considered in light of the context in","paragraph_id":"para_172"},{"text":"which the statute appears. Context may include related statutes, pertinent","paragraph_id":"para_173"},{"text":"legislative history and \"other material that fairly bears on the ... fundamental","paragraph_id":"para_174"},{"text":"issue of legislative purpose or goal ...\" Where the statute to be construed is a","paragraph_id":"para_175"},{"text":"(...continued)5","paragraph_id":"para_176"},{"text":"subsection (c) of this section shall constitute the assignment, up to the amount","paragraph_id":"para_177"},{"text":"of the payment, of any recovery on behalf of the injured person that is","paragraph_id":"para_178"},{"text":"subsequently paid from the applicable liability insurance policies, bonds, and","paragraph_id":"para_179"},{"text":"securities.","paragraph_id":"para_180"},{"text":"(e) Acceptance of settlement offer and execution of releases – The","paragraph_id":"para_181"},{"text":"injured person may accept the liability insurer's settlement offer and execute","paragraph_id":"para_182"},{"text":"releases in favor of the liability insurer and its insured without prejudice to","paragraph_id":"para_183"},{"text":"any claim the injured person may have against the uninsured motorist insurer:","paragraph_id":"para_184"},{"text":"(1) on receipt of written consent to acceptance of the settlement","paragraph_id":"para_185"},{"text":"offer and to the execution of releases; or","paragraph_id":"para_186"},{"text":"(2) if the uninsured motorist insurer has not met the","paragraph_id":"para_187"},{"text":"requirements of subsection (b) or subsection (c) of this section.","paragraph_id":"para_188"},{"text":"(f) Construction of written consent to acceptance of settlement offer –","paragraph_id":"para_189"},{"text":"Written consent by an uninsured motorist insurer to acceptance of a settlement","paragraph_id":"para_190"},{"text":"offer under subsection (b)(1) of this section:","paragraph_id":"para_191"},{"text":"(1) may not be construed to limit the right of the uninsured","paragraph_id":"para_192"},{"text":"motorist insurer to raise any issue relating to liability or damages in an action","paragraph_id":"para_193"},{"text":"against the uninsured motorist insurer; and","paragraph_id":"para_194"},{"text":"(2) does not constitute an admission by the uninsured motorist","paragraph_id":"para_195"},{"text":"insurer as to any issue raised in an action against the uninsured motorist","paragraph_id":"para_196"},{"text":"insurer.","paragraph_id":"para_197"},{"text":"- 7 -","paragraph_id":"para_198"},{"text":"part of a statutory scheme, the legislative intention is not determined from that","paragraph_id":"para_199"},{"text":"statute alone, rather it is to be discerned by considering it in light of the","paragraph_id":"para_200"},{"text":"statutory scheme. When, in that scheme, two statutes, enacted at different","paragraph_id":"para_201"},{"text":"times and not referring to each other, address the same subject, they must be","paragraph_id":"para_202"},{"text":"read together, i.e., interpreted with reference to one another, and harmonized,","paragraph_id":"para_203"},{"text":"to the extent possible, both with each other and with other provisions of the","paragraph_id":"para_204"},{"text":"statutory scheme. Neither statute should be read, however, so as to render the","paragraph_id":"para_205"},{"text":"other, or any portion of it, meaningless, surplusage, superfluous or nugatory.","paragraph_id":"para_206"},{"text":"In attempting to harmonize them, we presume that, when the Legislature","paragraph_id":"para_207"},{"text":"enacted the later of the two statutes, it was aware of the one earlier enacted.","paragraph_id":"para_208"},{"text":"Even though two statutes may require conflicting results with regard","paragraph_id":"para_209"},{"text":"to their common subject, they are not thereby necessarily rendered","paragraph_id":"para_210"},{"text":"irreconcilable. Where provisions of one of the statutes deal with the common","paragraph_id":"para_211"},{"text":"subject generally and those of the other do so more specifically, the statutes","paragraph_id":"para_212"},{"text":"may be harmonized by viewing the more specific statute as an exception to the","paragraph_id":"para_213"},{"text":"more general one.","paragraph_id":"para_214"},{"text":"Id. at 131-33, 630 A.2d at 717-18.","paragraph_id":"para_215"},{"text":"Competing Contentions","paragraph_id":"para_216"},{"text":"Morse contends that the court should have granted her motion for judgment on the","paragraph_id":"para_217"},{"text":"breach of contract issue because Erie failed to present evidence of actual prejudice resulting","paragraph_id":"para_218"},{"text":"from her failure to obtain Erie's consent to settle with Nationwide. She does not contend","paragraph_id":"para_219"},{"text":"that she complied with § 19-511. Instead, she asks us to extend the safety net of § 19-110","paragraph_id":"para_220"},{"text":"to require a showing of actual prejudice for disclaimers of coverage based not only on an","paragraph_id":"para_221"},{"text":"insured's failure to provide required notice, but also on an insured's failure to obtain consent","paragraph_id":"para_222"},{"text":"to settlement. She classifies both as \"technical\" violations that should not merit the harsh","paragraph_id":"para_223"},{"text":"sanction of forfeiture of insurance coverage. She asserts that Erie could not have been","paragraph_id":"para_224"},{"text":"- 8 -","paragraph_id":"para_225"},{"text":"prejudiced by her settlement with Nationwide because the settlement was for the full limit","paragraph_id":"para_226"},{"text":"of the only liability insurance policy Smallwood had.","paragraph_id":"para_227"},{"text":"Erie takes a very different view of the statutory provisions. Erie contends that § 19-","paragraph_id":"para_228"},{"text":"511 created a mandatory procedure that an insured and insurer must follow in order for the","paragraph_id":"para_229"},{"text":"insured to accept a settlement offer from a tortfeasor without prejudice to her claim for","paragraph_id":"para_230"},{"text":"uninsured motorist benefits. Erie contends that § 19-110 is strictly limited to denials of","paragraph_id":"para_231"},{"text":"liability coverage based on an insured's failure to provide notice or to cooperate, and that it","paragraph_id":"para_232"},{"text":"cannot be extended to cover a denial of uninsured motorist coverage based on an insured's","paragraph_id":"para_233"},{"text":"failure to obtain consent to settle. Erie views a mere failure to provide notice as something","paragraph_id":"para_234"},{"text":"altogether different from Morse's denial of its opportunity to review the offer and decide","paragraph_id":"para_235"},{"text":"whether to grant or refuse consent to the settlement.","paragraph_id":"para_236"},{"text":"In a Nutshell","paragraph_id":"para_237"},{"text":"The issue before us is whether an injured insured's failure to obtain her uninsured","paragraph_id":"para_238"},{"text":"motorist insurer's consent to settle with a tortfeasor's liability insurer for policy limits, in","paragraph_id":"para_239"},{"text":"violation of her insurance policy and § 19-511, triggers either the § 19-110 or common law","paragraph_id":"para_240"},{"text":"prejudice rules. We hold that it does not. The § 19-110 prejudice rule is not a safe harbor","paragraph_id":"para_241"},{"text":"that would excuse noncompliance with § 19-511. By its terms, § 19-110 is limited to denials","paragraph_id":"para_242"},{"text":"of liability coverage based on an insured's failure to cooperate or failure to provide required","paragraph_id":"para_243"},{"text":"notice. Obtaining an uninsured motorist insurer's consent to settle with a tortfeasor's liability","paragraph_id":"para_244"},{"text":"- 9 -","paragraph_id":"para_245"},{"text":"insurer is not equivalent to providing required notice. Maryland's common law prejudice","paragraph_id":"para_246"},{"text":"rule is not noticeably broader than § 19-110.","paragraph_id":"para_247"},{"text":"Section 19-511, by contrast, sets forth a specific procedure an injured insured must","paragraph_id":"para_248"},{"text":"follow in order to settle with a tortfeasor's liability insurer without prejudice to her uninsured","paragraph_id":"para_249"},{"text":"motorist claim. Extending the prejudice rule to also excuse failure to obtain consent to settle","paragraph_id":"para_250"},{"text":"would render § 19-511 a nullity. Reading the statutory provisions in harmony with each","paragraph_id":"para_251"},{"text":"other, as we must, we hold that an uninsured motorist insurer may disclaim coverage based","paragraph_id":"para_252"},{"text":"on its insured's failure to comply with § 19-511, without having to show actual prejudice.","paragraph_id":"para_253"},{"text":"The Prejudice Rule","paragraph_id":"para_254"},{"text":"Since 1964, as a matter of statute, and since 2005, as a matter of common law,","paragraph_id":"para_255"},{"text":"Maryland has followed a \"prejudice rule,\" whereby","paragraph_id":"para_256"},{"text":"[a]n insurer may not disclaim coverage for either lack of notice or failure to","paragraph_id":"para_257"},{"text":"cooperate unless it demonstrates that the deficiency has resulted in actual","paragraph_id":"para_258"},{"text":"prejudice to the insurer.","paragraph_id":"para_259"},{"text":"See Allstate Ins. Co. v. State Farm Mut. Auto. Ins. Co., 363 Md. 106, 122, 767 A.2d 831,","paragraph_id":"para_260"},{"text":"840 (2001). In Maryland, it is the insurer who bears the burden of \"establish[ing] by a","paragraph_id":"para_261"},{"text":"preponderance of affirmative evidence that the delay in giving notice has resulted in actual","paragraph_id":"para_262"},{"text":"prejudice to the insurer.\" See Sherwood Brands, Inc. v. Hartford Accident & Indem. Co.,","paragraph_id":"para_263"},{"text":"347 Md. 32, 42, 698 A.2d 1078, 1083 (1997). The rule avoids the \"disproportionate\"","paragraph_id":"para_264"},{"text":"forfeiture that would result \"when [a] notice provision is enforced in the absence of","paragraph_id":"para_265"},{"text":"prejudice,\" in which case \"the insurer suffers no harm and the insured forfeits the premiums","paragraph_id":"para_266"},{"text":"- 10 -","paragraph_id":"para_267"},{"text":"and loses coverage.\" See Prince George's County v. Local Gov't Ins. Trust, 388 Md. 162,","paragraph_id":"para_268"},{"text":"187, 879 A.2d 81, 96 (2005).","paragraph_id":"para_269"},{"text":"Although the majority of states follow some form of prejudice rule today, that was6","paragraph_id":"para_270"},{"text":"not always the case. In Watson v. U.S.F. & G. Co., 231 Md. 266, 272, 189 A.2d 625, 627","paragraph_id":"para_271"},{"text":"(1963), the Court of Appeals rejected a prejudice rule as \"not in accord with the Maryland","paragraph_id":"para_272"},{"text":"decisions, nor with the weight of authority elsewhere in this country.\" The General","paragraph_id":"para_273"},{"text":"Assembly overruled that decision the next year by enacting the forerunner of present § 19-","paragraph_id":"para_274"},{"text":"110, former Article 48A, § 482. See 1964 Md. Laws Chap. 185. The statute originally was","paragraph_id":"para_275"},{"text":"limited to \"motor vehicle liability insurance\"; it was extended to all liability insurance in","paragraph_id":"para_276"},{"text":"1966. See 1966 Md. Laws Chap. 205. According to the Code Revisor's Note, the current","paragraph_id":"para_277"},{"text":"§ 19-110, adopted in 1997, is \"new language derived without substantive change\" from","paragraph_id":"para_278"},{"text":"former Article 48A, § 482. In 2005, the Court of Appeals adopted the prejudice rule as a","paragraph_id":"para_279"},{"text":"matter of common law. Prince George's, 388 Md. at 187, 879 A.2d at 96 (\"In accordance","paragraph_id":"para_280"},{"text":"with the overwhelming weight of authority of courts across the country and the expression","paragraph_id":"para_281"},{"text":"of public policy by the Maryland General Assembly as stated in § 19-110, we adopt the","paragraph_id":"para_282"},{"text":"prejudice rule.\"). See also Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md. 300,","paragraph_id":"para_283"},{"text":"322 n.18, 13 A.3d 1268, 1282 n.18 (2011).","paragraph_id":"para_284"},{"text":"A. Section 19-110 Applies Only to Failure to Cooperate and Failure to","paragraph_id":"para_285"},{"text":"Provide Notice","paragraph_id":"para_286"},{"text":"As of 2005, thirty-eight states and two territories had adopted a prejudice rule. See6","paragraph_id":"para_287"},{"text":"Prince George's, 388 Md. at 183 n.9, 879 A.2d at 94 n.9.","paragraph_id":"para_288"},{"text":"- 11 -","paragraph_id":"para_289"},{"text":"Although Maryland courts have now fully embraced the prejudice rule as articulated","paragraph_id":"para_290"},{"text":"in § 19-110, they have uniformly recognized its narrow scope. By its terms, § 19-110","paragraph_id":"para_291"},{"text":"requires an insurer to show actual prejudice only where the insurer disclaims liability","paragraph_id":"para_292"},{"text":"coverage as a consequence of its insured's \"fail[ure] to cooperate with the insurer\" or failure","paragraph_id":"para_293"},{"text":"to \"giv[e] the insurer required notice.\"","paragraph_id":"para_294"},{"text":"In Government Employees Ins. Co. v. Harvey, 278 Md. 548, 366 A.2d 13 (1976), the","paragraph_id":"para_295"},{"text":"Court of Appeals explained that the General Assembly had already limited the types of","paragraph_id":"para_296"},{"text":"failures by an insured that would be protected by the prejudice rule. The version of the","paragraph_id":"para_297"},{"text":"statute originally proposed would have required an insurer to show prejudice when it","paragraph_id":"para_298"},{"text":"disclaimed liability \"for any reason.\" The version of the statute actually enacted restricted","paragraph_id":"para_299"},{"text":"application of the prejudice rule to disclaimers based on failure to cooperate or failure to","paragraph_id":"para_300"},{"text":"provide notice.","paragraph_id":"para_301"},{"text":"As originally introduced before the General Assembly, § 482 provided","paragraph_id":"para_302"},{"text":"that an insurance company was required to prove actual prejudice in an action","paragraph_id":"para_303"},{"text":"under a motor vehicle liability insurance policy where it filed a disclaimer of","paragraph_id":"para_304"},{"text":"insurance for \"any reason.\" The words \"any reason\" were deleted from the bill","paragraph_id":"para_305"},{"text":"prior to final passage. As amended and ultimately enacted, § 482 required","paragraph_id":"para_306"},{"text":"insurance companies to prove actual prejudice only where the disclaimer was","paragraph_id":"para_307"},{"text":"based on the insured's failure \"to cooperate with the insurer or by not giving","paragraph_id":"para_308"},{"text":"requisite notice to the insurer.\"","paragraph_id":"para_309"},{"text":"Id. at 552, 366 A.2d at 16-17 (emphasis supplied).","paragraph_id":"para_310"},{"text":"In Harvey, the injured insured notified her insurer that she had been in an accident","paragraph_id":"para_311"},{"text":"nine days after it occurred. The insurer responded by providing the insured with forms","paragraph_id":"para_312"},{"text":"necessary to submit proof of claim with regard to personal injury protection (\"PIP\") benefits.","paragraph_id":"para_313"},{"text":"- 12 -","paragraph_id":"para_314"},{"text":"The insured retained an attorney, and the insurer sent the attorney two reminders that,","paragraph_id":"para_315"},{"text":"according to the policy and a statute governing PIP coverage, proof of claim for PIP benefits","paragraph_id":"para_316"},{"text":"needed to be submitted within six months of the accident. The insured finally submitted","paragraph_id":"para_317"},{"text":"proof of claim seven-and-a-half months after the accident. The insurer denied coverage.","paragraph_id":"para_318"},{"text":"The insured brought suit and obtained a judgment in the District Court. The Baltimore City","paragraph_id":"para_319"},{"text":"Court affirmed on the ground that the insured's failure to timely submit proof of claim was","paragraph_id":"para_320"},{"text":"protected by the statutory prejudice rule.","paragraph_id":"para_321"},{"text":"The Court of Appeals reversed, holding that the prejudice statute did not apply to an","paragraph_id":"para_322"},{"text":"insured's failure to provide timely proof of loss, which is \"separate and distinct from a notice","paragraph_id":"para_323"},{"text":"of accident.\" The Court explained:","paragraph_id":"para_324"},{"text":"We think it clear from the history and language of § 482 that its","paragraph_id":"para_325"},{"text":"provisions do not apply to insurance disclaimers grounded on the insured's","paragraph_id":"para_326"},{"text":"failure to submit proof of loss within the time specified in the policy. That a","paragraph_id":"para_327"},{"text":"proof of loss or claim is separate and distinct from a notice of accident is well","paragraph_id":"para_328"},{"text":"recognized.","paragraph_id":"para_329"},{"text":"Id. at 553, 366 A.2d at 17 (emphasis supplied). Thus, the insurer was entitled to deny the","paragraph_id":"para_330"},{"text":"PIP claim solely because the proof of loss was untimely, without having to show prejudice.","paragraph_id":"para_331"},{"text":"In Phillips Way, Inc. v. American Equity Ins. Co., 143 Md. App. 515, 517, 795 A.2d","paragraph_id":"para_332"},{"text":"216, 217 (2002), this Court dealt with a professional liability insurance policy with a no-","paragraph_id":"para_333"},{"text":"action clause providing that the insured could not maintain an action to recover under the","paragraph_id":"para_334"},{"text":"policy unless and until the amount of loss was fixed by a final judgment rendered after trial","paragraph_id":"para_335"},{"text":"or \"by agreement between the parties with the written consent of the [insurer].\" Instead of","paragraph_id":"para_336"},{"text":"- 13 -","paragraph_id":"para_337"},{"text":"trying the case to judgment, however, the insured \"settled a claim made against it by a third","paragraph_id":"para_338"},{"text":"party but did so without the knowledge or consent of its insurer.\" Id. The insured sued to","paragraph_id":"para_339"},{"text":"collect on the insurance policy. The circuit court granted summary judgment in favor of the","paragraph_id":"para_340"},{"text":"insurer, and this Court affirmed.","paragraph_id":"para_341"},{"text":"On appeal, we rejected the insured's argument that § 19-110 applied to its failure to","paragraph_id":"para_342"},{"text":"obtain consent to settle. We recalled the legislative history of § 19-110, as explained in","paragraph_id":"para_343"},{"text":"Harvey. We noted that the General Assembly had \"specifically rejected\" an approach that","paragraph_id":"para_344"},{"text":"would make § 19-110 \"applicable to any defense raised by the insurer.\" Id. at 521, 795 A.2d","paragraph_id":"para_345"},{"text":"at 219. We reiterated the Harvey Court's conclusion \"[t]hat an insurer must show prejudice","paragraph_id":"para_346"},{"text":"only if it raises a failure to cooperate defense or a defense based on lack of notice.\" Id. We","paragraph_id":"para_347"},{"text":"reasoned that extending the prejudice rule to an insured's breach of a no-action clause would","paragraph_id":"para_348"},{"text":"\"put the nearly impossible burden on the [insurer] of showing collusion [between the insured","paragraph_id":"para_349"},{"text":"and the other party to the settlement] or demonstrating, after the fact, the true worth of the","paragraph_id":"para_350"},{"text":"settled claim.\" Id. at 524, 795 A.2d at 221.","paragraph_id":"para_351"},{"text":"In Perini/Tompkins Joint Venture v. ACE American Ins. Co., 738 F.3d 95 (4th Cir.","paragraph_id":"para_352"},{"text":"2013), the United States Court of Appeals for the Fourth Circuit applied Phillips Way to","paragraph_id":"para_353"},{"text":"similar facts and reached the same result, concluding that § 19-110 did not apply to an","paragraph_id":"para_354"},{"text":"insured's failure to obtain its insurer's consent to settle in violation of a no-action clause.","paragraph_id":"para_355"},{"text":"B. \"Providing Notice\" Is Not Equivalent to \"Obtaining Consent to Settle\"","paragraph_id":"para_356"},{"text":"- 14 -","paragraph_id":"para_357"},{"text":"Sensing the outer limits of § 19-110, Morse has attempted to squeeze her situation","paragraph_id":"para_358"},{"text":"into one of the statute's two areas of applicability. She argues only that her failure to obtain","paragraph_id":"para_359"},{"text":"Erie's consent to settle was a form of failure to provide required notice, not that it was a","paragraph_id":"para_360"},{"text":"failure to cooperate. In our view, providing required notice and obtaining consent to settle","paragraph_id":"para_361"},{"text":"are simply not the same thing.","paragraph_id":"para_362"},{"text":"Maryland courts have rejected attempts to equate mere notice violations, which","paragraph_id":"para_363"},{"text":"trigger the § 19-110 prejudice rule, with other deficiencies by insureds, which do not trigger","paragraph_id":"para_364"},{"text":"the § 19-110 prejudice rule. In Harvey, the Court refused to equate an insured's failure to","paragraph_id":"para_365"},{"text":"timely submit a \"proof of loss or claim\" with an insured's failure to provide a \"notice of","paragraph_id":"para_366"},{"text":"accident.\"","paragraph_id":"para_367"},{"text":"That a proof of loss or claim is separate and distinct from a notice of accident","paragraph_id":"para_368"},{"text":"is well recognized. A proof of loss enables the insurer to ascertain the nature,","paragraph_id":"para_369"},{"text":"extent and character of the loss and to set reserves accordingly. The chief","paragraph_id":"para_370"},{"text":"purpose of a proof of loss \"is to acquaint the insurance company with certain","paragraph_id":"para_371"},{"text":"facts and circumstances relative to the loss, forming a basis for further steps","paragraph_id":"para_372"},{"text":"to be taken by the company, ranging from full settlement to absolute","paragraph_id":"para_373"},{"text":"repudiation of liability.\" The insurer's right to a proof of loss, where required","paragraph_id":"para_374"},{"text":"by the policy, has been characterized as \"an important one to the insurer, and","paragraph_id":"para_375"},{"text":"one in which it is to be protected.\"","paragraph_id":"para_376"},{"text":"278 Md. at 553, 366 A.2d at 17.","paragraph_id":"para_377"},{"text":"In a case that predates § 19-511, Waters v. U.S.F. & G. Co., 328 Md. 700, 616 A.2d","paragraph_id":"para_378"},{"text":"884 (1992), the Court of Appeals noted that a consent to settle clause provides an uninsured","paragraph_id":"para_379"},{"text":"motorist insurer with greater protection against undesired settlements than a mere notice","paragraph_id":"para_380"},{"text":"clause. The policy in that case contained a notice clause, but not a consent to settle clause.","paragraph_id":"para_381"},{"text":"- 15 -","paragraph_id":"para_382"},{"text":"The insured provided notice of a liability insurer's pending settlement offer, but accepted the","paragraph_id":"para_383"},{"text":"offer without obtaining its uninsured motorist insurer's consent. The Court held that the","paragraph_id":"para_384"},{"text":"insurer still was bound by the settlement, even though it did not consent, because it had","paragraph_id":"para_385"},{"text":"notice of the pending settlement offer and was a party to the action between the insured and","paragraph_id":"para_386"},{"text":"the tortfeasor.","paragraph_id":"para_387"},{"text":"When the uninsured motorist carrier fails to include a consent to settle clause","paragraph_id":"para_388"},{"text":"in the uninsured motorist provisions of the policy, and when the carrier, with","paragraph_id":"para_389"},{"text":"notice of the tort suit, does not attempt to litigate at trial the underlying tort","paragraph_id":"para_390"},{"text":"issues of liability and/or damages, the carrier will ordinarily be bound by a","paragraph_id":"para_391"},{"text":"settlement of the tort suit entered into between its insured and the uninsured","paragraph_id":"para_392"},{"text":"tortfeasor.","paragraph_id":"para_393"},{"text":"Id. at 719, 616 A.2d at 893 (emphasis supplied). The Court explained that the insurer could","paragraph_id":"para_394"},{"text":"have \"protect[ed] itself from an allegedly inappropriate settlement between its insured and","paragraph_id":"para_395"},{"text":"the uninsured tortfeasor\" by inserting a consent to settle clause into its policy, or by","paragraph_id":"para_396"},{"text":"intervening in the action and litigating the liability and damages issues, but it chose not to","paragraph_id":"para_397"},{"text":"do so. Id. at 718-19, 616 A.2d at 892-93.","paragraph_id":"para_398"},{"text":"In West American Ins. Co. v. Popa, 352 Md. 455, 723 A.2d 1 (1998), another pre-","paragraph_id":"para_399"},{"text":"§ 19-511 case, the uninsured motorist policy provided that no judgment against a tortfeasor","paragraph_id":"para_400"},{"text":"would be binding upon the uninsured motorist insurer unless the insured had provided","paragraph_id":"para_401"},{"text":"\"reasonable notice of the pendency of the suit\" and the insurer had a \"reasonable","paragraph_id":"para_402"},{"text":"opportunity\" to protect its interests. The policy did not contain a consent to settle clause.","paragraph_id":"para_403"},{"text":"After trial against the tortfeasor proceeded to judgment, the insured made a claim for","paragraph_id":"para_404"},{"text":"uninsured motorist benefits. The insurer argued that it could not be bound by the judgment","paragraph_id":"para_405"},{"text":"- 16 -","paragraph_id":"para_406"},{"text":"because, at the time, it did not know that an uninsured motorist claim would eventually be","paragraph_id":"para_407"},{"text":"made. The Court rejected that argument and held that the insurer was afforded due process","paragraph_id":"para_408"},{"text":"because it had notice of the tort suit and an opportunity to intervene prior to trial. Id. at 464,","paragraph_id":"para_409"},{"text":"723 A.2d at 5.","paragraph_id":"para_410"},{"text":"The insurer also argued that its insured had no right to recover more on a judgment","paragraph_id":"para_411"},{"text":"against one of the parties than it already had recovered, because the insured had filed an","paragraph_id":"para_412"},{"text":"\"order of satisfaction\" as to that judgment. The Court reiterated","paragraph_id":"para_413"},{"text":"that when an insured plaintiff gives his uninsured/underinsured motorist","paragraph_id":"para_414"},{"text":"carrier timely notice of the tort action, and when the uninsured/underinsured","paragraph_id":"para_415"},{"text":"provisions of the insurance policy do not contain a clause requiring the","paragraph_id":"para_416"},{"text":"carrier's consent before the insured can settle with the tortfeasor, the insured","paragraph_id":"para_417"},{"text":"is entitled to enter a settlement or a consent judgment with the tortfeasor","paragraph_id":"para_418"},{"text":"without obtaining the consent of or without further notice to the carrier.","paragraph_id":"para_419"},{"text":"Id. at 468, 723 A.2d at 7 (emphasis supplied).7","paragraph_id":"para_420"},{"text":"In Phillips Way, we rejected an insured's attempt to equate its failure to obtain","paragraph_id":"para_421"},{"text":"consent to settle with a failure to provide notice. As we have noted, the insured in that case","paragraph_id":"para_422"},{"text":"had violated a no-action clause in a professional liability policy that, under the","paragraph_id":"para_423"},{"text":"circumstances, operated as a consent to settle clause. We explained that, even if the insured","paragraph_id":"para_424"},{"text":"had notified its insurer of the pending settlement agreement and had cooperated by giving","paragraph_id":"para_425"},{"text":"Although the Popa Court also discussed how other states had handled the situation7","paragraph_id":"para_426"},{"text":"we face here, where an insured settles with a tortfeasor for policy limits in violation of a","paragraph_id":"para_427"},{"text":"consent to settle clause, the Court made clear that it was not presented with that situation and","paragraph_id":"para_428"},{"text":"that it \"need not ... address [it].\" 352 Md. at 468 n.3, 723 A.2d at 7 n.3. The Court made","paragraph_id":"para_429"},{"text":"no mention of the § 19-511 settlement procedure, which existed but was not applicable","paragraph_id":"para_430"},{"text":"because the accident at issue occurred before the statute's effective date.","paragraph_id":"para_431"},{"text":"- 17 -","paragraph_id":"para_432"},{"text":"the insurer an opportunity to decide whether to consent, the policy still would have been","paragraph_id":"para_433"},{"text":"breached because the insurer had not consented. Thus, the failure to obtain consent was","paragraph_id":"para_434"},{"text":"something more than a failure to provide notice or to cooperate and it did not trigger the","paragraph_id":"para_435"},{"text":"prejudice rule.","paragraph_id":"para_436"},{"text":"The appellant's argument, while ingenious, is unpersuasive. First of all,","paragraph_id":"para_437"},{"text":"it is not technically true that to obtain American Equity's consent to the","paragraph_id":"para_438"},{"text":"settlement, Phillips Way would have had to notify the insurer of the pending","paragraph_id":"para_439"},{"text":"settlement – such notification could have been made by UMCP or even by an","paragraph_id":"para_440"},{"text":"officious intermeddler. But even if it were technically true that in order for","paragraph_id":"para_441"},{"text":"American Equity to give its consent to the intended settlement, Phillips Way","paragraph_id":"para_442"},{"text":"would have had to notify and cooperate with its insurer, that fact is irrelevant.","paragraph_id":"para_443"},{"text":"If Phillips Way had notified American Equity of the intended settlement and","paragraph_id":"para_444"},{"text":"gave the latter its full cooperation, the condition precedent would still have","paragraph_id":"para_445"},{"text":"been breached if American Equity failed to give its written consent to that","paragraph_id":"para_446"},{"text":"settlement.","paragraph_id":"para_447"},{"text":"143 Md. App. at 520, 795 A.2d at 218 (emphasis supplied).","paragraph_id":"para_448"},{"text":"An insurer's right to consent to settle takes on even greater importance in the context","paragraph_id":"para_449"},{"text":"of uninsured motorist insurance. By contrast to a mere right to notice, which does not","paragraph_id":"para_450"},{"text":"necessarily trigger anything in terms of the ongoing litigation, an uninsured motorist","paragraph_id":"para_451"},{"text":"insurer's statutory right to consent to certain settlements can effectively put the action on","paragraph_id":"para_452"},{"text":"hold for up to sixty days while the insurer makes a decision. See § 19-511(b). An insurer's","paragraph_id":"para_453"},{"text":"decision whether to grant or refuse consent is not as simple or inconsequential as Morse","paragraph_id":"para_454"},{"text":"would have it. The insurer must consider much more than the obvious question whether to","paragraph_id":"para_455"},{"text":"waive or to preserve its subrogation rights against the tortfeasor, who may or may not be","paragraph_id":"para_456"},{"text":"\"judgment-proof.\" By refusing consent and advancing the amount of the settlement offer","paragraph_id":"para_457"},{"text":"- 18 -","paragraph_id":"para_458"},{"text":"to its insured, the insurer assumes the risk that it could recover less than that amount, or","paragraph_id":"para_459"},{"text":"nothing at all, in a subrogation action against the tortfeasor. Under the law that applies to","paragraph_id":"para_460"},{"text":"this case, by granting consent, an insurer became bound by the settlement and waived any","paragraph_id":"para_461"},{"text":"right to assert the tortfeasor's lack of negligence or its own insured's contributory negligence","paragraph_id":"para_462"},{"text":"as a defense to liability on the policy.","paragraph_id":"para_463"},{"text":"By refusing consent to settle, an insurer takes on the risk that it may later recover less","paragraph_id":"para_464"},{"text":"than the non-refundable amount it must advance to its insured, or even that it may later","paragraph_id":"para_465"},{"text":"recover nothing at all. In Ohio Cas. Ins. Co. v. Chamberlin, 172 Md. App. 229, 914 A.2d","paragraph_id":"para_466"},{"text":"160 (2007), the uninsured motorist insurer refused to consent to a liability insurer's offer to","paragraph_id":"para_467"},{"text":"settle for policy limits of $20,000 and, in accordance with § 19-511(c), advanced the","paragraph_id":"para_468"},{"text":"$20,000 to its insured. The action against the tortfeasor proceeded to trial, and a jury","paragraph_id":"para_469"},{"text":"returned a verdict in favor of the insured for only $5,445. The uninsured motorist insurer","paragraph_id":"para_470"},{"text":"then sought repayment from its insured of the $20,000 it had advanced. The circuit court","paragraph_id":"para_471"},{"text":"denied that request, and we affirmed. We held","paragraph_id":"para_472"},{"text":"that when a UIM [carrier] chooses to thwart a proposed settlement between","paragraph_id":"para_473"},{"text":"a plaintiff and an alleged tortfeasor by substituting payment of the settlement","paragraph_id":"para_474"},{"text":"amount, it bears the risk that a jury might return a verdict in an amount less","paragraph_id":"para_475"},{"text":"than the amount advanced or in favor of the defendant(s) and it is not entitled","paragraph_id":"para_476"},{"text":"to a refund of any amount paid.","paragraph_id":"para_477"},{"text":"Id. at 240, 914 A.2d at 167.","paragraph_id":"para_478"},{"text":"By granting consent to settle – under the law as it stood at the time that, had Morse","paragraph_id":"para_479"},{"text":"complied with § 19-511, Erie would have had to decide whether to grant or refuse consent","paragraph_id":"para_480"},{"text":"- 19 -","paragraph_id":"para_481"},{"text":"– an insurer was precluded from later contesting tort liability. In Maurer v. Pennsylvania","paragraph_id":"para_482"},{"text":"Nat. Mut. Cas. Ins. Co., 404 Md. 60, 945 A.2d 629 (2007), the insured followed the","paragraph_id":"para_483"},{"text":"procedures set forth in § 19-511 and obtained his uninsured motorist insurer's consent to","paragraph_id":"para_484"},{"text":"settle with the tortfeasor's insurer. After that settlement, the insured sued his insurer on the","paragraph_id":"para_485"},{"text":"policy. The court granted partial summary judgment in favor of the insured, ruling that the","paragraph_id":"para_486"},{"text":"tortfeasor had been negligent as a matter of law. Nevertheless, the court submitted the case","paragraph_id":"para_487"},{"text":"to a jury on the issues of whether the insured had been contributorily negligent or had","paragraph_id":"para_488"},{"text":"assumed the risk of his injuries. An affirmative finding on either question would preclude","paragraph_id":"para_489"},{"text":"recovery. The jury found contributory negligence and the insured appealed.","paragraph_id":"para_490"},{"text":"The Court of Appeals reversed based on erroneous jury instructions, but went on to","paragraph_id":"para_491"},{"text":"address the effect of the uninsured motorist insurer's consent to settle with the tortfeasor.","paragraph_id":"para_492"},{"text":"By consenting to a settlement, an uninsured motorist insurer became bound by it. Id. at 74,","paragraph_id":"para_493"},{"text":"945 A.2d at 637 (quoting Nationwide Mut. Ins. Co. v. Webb, 291 Md. 721, 739-40, 436","paragraph_id":"para_494"},{"text":"A.2d 465, 476 (1981) (holding that \"consent to sue\" clauses in uninsured motorist policies","paragraph_id":"para_495"},{"text":"are invalid, but noting that \"consent to settle\" clauses have generally been upheld)). A","paragraph_id":"para_496"},{"text":"consenting insurer was thus precluded from \"contest[ing] the issues of tort liability\" in the","paragraph_id":"para_497"},{"text":"insured's action to recover on the policy. Id. at 75, 945 A.2d at 638. The Court concluded","paragraph_id":"para_498"},{"text":"that the insurer in Maurer should not have been allowed to raise the issues of its insured's","paragraph_id":"para_499"},{"text":"- 20 -","paragraph_id":"para_500"},{"text":"contributory negligence or assumption of risk, and the Court directed that \"[a]ny new trial","paragraph_id":"para_501"},{"text":"shall be limited to the matter of damages.\" Id.8","paragraph_id":"para_502"},{"text":"In 2012, the General Assembly tempered the effect of an insurer's written consent to","paragraph_id":"para_503"},{"text":"settle with a tortfeasor. By 2012 Md. Laws Chaps. 268, 269, the legislature added","paragraph_id":"para_504"},{"text":"subsection (f) to § 19-511, which provides:","paragraph_id":"para_505"},{"text":"(f) Construction of written consent to acceptance of settlement offer –","paragraph_id":"para_506"},{"text":"Written consent by an uninsured motorist insurer to acceptance of a settlement","paragraph_id":"para_507"},{"text":"offer under subsection (b)(1) of this section:","paragraph_id":"para_508"},{"text":"(1) may not be construed to limit the right of the uninsured","paragraph_id":"para_509"},{"text":"motorist insurer to raise any issue relating to liability or damages in an action","paragraph_id":"para_510"},{"text":"against the uninsured motorist insurer; and","paragraph_id":"para_511"},{"text":"(2) does not constitute an admission by the uninsured motorist","paragraph_id":"para_512"},{"text":"insurer as to any issue raised in an action against the uninsured motorist","paragraph_id":"para_513"},{"text":"insurer.","paragraph_id":"para_514"},{"text":"The legislation provided \"[t]hat this Act shall take effect October 1, 2012.\" Under current","paragraph_id":"para_515"},{"text":"law, an insurer will not be bound by a settlement to which it has given written consent.","paragraph_id":"para_516"},{"text":"Notwithstanding its consent, an insurer still may raise in its defense \"any issue relating to","paragraph_id":"para_517"},{"text":"liability or damages.\" Consent to settlement \"does not constitute an admission ... as to any","paragraph_id":"para_518"},{"text":"issue raised in an action against the uninsured motorist insurer.\"","paragraph_id":"para_519"},{"text":"As we have noted, the Court had earlier held in Waters, before the enactment of §8","paragraph_id":"para_520"},{"text":"19-511, that an uninsured motorist insurer that did not employ a consent to settle clause in","paragraph_id":"para_521"},{"text":"its policy would be bound by a settlement to which it did not consent if it had notice of the","paragraph_id":"para_522"},{"text":"pending offer and an opportunity to intervene in the tort action. 328 Md. at 718-19, 616","paragraph_id":"para_523"},{"text":"A.2d at 892-93.","paragraph_id":"para_524"},{"text":"- 21 -","paragraph_id":"para_525"},{"text":"Although, today, an uninsured motorist insurer may consent to settlement with a","paragraph_id":"para_526"},{"text":"tortfeasor without waiving its right to contest tort liability, that was not true at the time Erie","paragraph_id":"para_527"},{"text":"would have decided whether to grant consent to Morse's settlement with Nationwide, had","paragraph_id":"para_528"},{"text":"Morse given it the opportunity. By its terms, the 2012 legislation did not take effect until","paragraph_id":"para_529"},{"text":"October 1, 2012 – well after Morse's 2007 accident, 2008 settlement, and 2011 filing of suit","paragraph_id":"para_530"},{"text":"against Erie. If Morse had complied with § 19-511 and given Erie an opportunity to grant","paragraph_id":"para_531"},{"text":"or refuse consent to settle, Erie would have had to consider the more weighty, pre-§ 19-","paragraph_id":"para_532"},{"text":"511(f) consequences of its decision.","paragraph_id":"para_533"},{"text":"The 2012 amendment has no effect on this case. Statutes are presumed to apply only","paragraph_id":"para_534"},{"text":"prospectively, absent \"clear expressions in the statute to the contrary ... particularly ... where","paragraph_id":"para_535"},{"text":"the statute adversely affects substantive rights.\" See State Farm Mut. Auto Ins. Co. v.","paragraph_id":"para_536"},{"text":"Hearn, 242 Md. 575, 582, 219 A.2d 820, 824 (1966). See also Keeney v. Allstate Ins. Co.,","paragraph_id":"para_537"},{"text":"130 Md. App. 396, 402-07, 746 A.2d 947, 951-53 (2000). The addition of subsection (f)","paragraph_id":"para_538"},{"text":"clearly affected substantive rights, as it drastically altered the effect of an insurer's granting","paragraph_id":"para_539"},{"text":"consent to settle, vis-à-vis both insurer and insured, and did not merely \"alter[] procedural","paragraph_id":"para_540"},{"text":"machinery.\" Hearn, 242 Md. at 582, 219 A.2d at 824. There is absolutely no indication that","paragraph_id":"para_541"},{"text":"the General Assembly intended for 2012 Md. Laws Chaps. 268, 269, to apply","paragraph_id":"para_542"},{"text":"retrospectively. On the contrary, the legislation specifically provided that it would take","paragraph_id":"para_543"},{"text":"effect October 1, 2012. The 2012 change in the law is immaterial to our analysis.","paragraph_id":"para_544"},{"text":"- 22 -","paragraph_id":"para_545"},{"text":"In this case, to be sure, Erie never contested Smallwood's negligence or raised","paragraph_id":"para_546"},{"text":"Morse's contributory negligence as an affirmative defense to its liability on the policy. Even","paragraph_id":"para_547"},{"text":"if Erie had determined, before Nationwide extended the settlement offer, that Morse had not","paragraph_id":"para_548"},{"text":"been at all negligent and Smallwood was completely at fault, that is not material to our","paragraph_id":"para_549"},{"text":"analysis. Although this may be evidence that Erie was not prejudiced by Morse's settlement","paragraph_id":"para_550"},{"text":"with Nationwide, our task here is only to determine whether, in the abstract, obtaining","paragraph_id":"para_551"},{"text":"consent to settle is equivalent to providing required notice. As we have determined that they","paragraph_id":"para_552"},{"text":"are not equivalent, the prejudice rule is not implicated and Erie's lack of prejudice in this","paragraph_id":"para_553"},{"text":"case is irrelevant.","paragraph_id":"para_554"},{"text":"C. The Common Law Prejudice Rule is Unavailing","paragraph_id":"para_555"},{"text":"Morse also invokes Prince George's County v. Local Gov't Ins. Trust, 388 Md. 162,","paragraph_id":"para_556"},{"text":"879 A.2d 81 (2005), which, she claims, created a common law prejudice rule that is broader","paragraph_id":"para_557"},{"text":"than § 19-110. In that case, Prince George's County was found liable for the actions of three","paragraph_id":"para_558"},{"text":"county police officers that deprived a citizen of his state and federal constitutional rights.","paragraph_id":"para_559"},{"text":"The County did not inform its excess liability insurer, the Local Government Insurance","paragraph_id":"para_560"},{"text":"Trust, of the incident or the lawsuit until ten days after the jury returned its verdict. The","paragraph_id":"para_561"},{"text":"Trust denied coverage on the ground that the County had failed to give notice, as required","paragraph_id":"para_562"},{"text":"by the policy, and the County filed suit.","paragraph_id":"para_563"},{"text":"The trial court granted summary judgment in favor of the Trust. This Court affirmed,","paragraph_id":"para_564"},{"text":"as did the Court of Appeals. The Court of Appeals held that the County had indeed violated","paragraph_id":"para_565"},{"text":"- 23 -","paragraph_id":"para_566"},{"text":"the notice requirements of the policy, but that § 19-110 did not apply because the Trust did","paragraph_id":"para_567"},{"text":"not fit the statutory definition of an \"insurer.\" Nevertheless, the Court held that the Trust9","paragraph_id":"para_568"},{"text":"was required to show prejudice under the common law. In any event, the Trust was","paragraph_id":"para_569"},{"text":"prejudiced as a matter of law by the County's failure to provide notice until after an adverse","paragraph_id":"para_570"},{"text":"verdict was rendered, and it was thus entitled to deny coverage.","paragraph_id":"para_571"},{"text":"In holding that the Trust was required to show prejudice under the common law, the","paragraph_id":"para_572"},{"text":"Court overruled its earlier rejection of a prejudice rule in Watson v. U.S.F. & G. Co., 231","paragraph_id":"para_573"},{"text":"Md. 266, 189 A.2d 625 (1963). The Court took note of the fact that, although no-prejudice","paragraph_id":"para_574"},{"text":"was the majority rule at the time Watson was decided, the majority of states now support a","paragraph_id":"para_575"},{"text":"prejudice rule. 388 Md. at 182-83, 879 A.2d at 93. Furthermore, the General Assembly's","paragraph_id":"para_576"},{"text":"swift rejection of Watson, by enacting the forerunner of § 19-110, \"announced the public","paragraph_id":"para_577"},{"text":"policy of this state that an insurer must show prejudice before disclaiming coverage based","paragraph_id":"para_578"},{"text":"on the insured's breach of a notice provision.\" Id. at 187, 879 A.2d at 96. Thus, the Court","paragraph_id":"para_579"},{"text":"held:","paragraph_id":"para_580"},{"text":"An insurer may not disclaim coverage to an insured based on the insured's","paragraph_id":"para_581"},{"text":"violation of a notice provision, unless the insurer has been prejudiced by the","paragraph_id":"para_582"},{"text":"violation.","paragraph_id":"para_583"},{"text":"Id., 879 A.2d at 96-97 (emphasis supplied).","paragraph_id":"para_584"},{"text":"The Court found that the Trust was an insurance pool formed by public entities under9","paragraph_id":"para_585"},{"text":"Ins. § 19-602, not an \"insurer\" engaged in the insurance business under Ins. § 1-101. 388","paragraph_id":"para_586"},{"text":"Md. at 180-81, 879 A.2d at 92.","paragraph_id":"para_587"},{"text":"- 24 -","paragraph_id":"para_588"},{"text":"To the extent that a common law prejudice rule even exists, it does not extend to an","paragraph_id":"para_589"},{"text":"insured's failure to obtain consent to settle. By its facts, the Prince George's decision","paragraph_id":"para_590"},{"text":"extended the § 19-110 prejudice rule to cover entities that do not meet the strict definition","paragraph_id":"para_591"},{"text":"of \"insurer\" contained in Ins. § 1-101, and made clear that the prejudice rule applies to both","paragraph_id":"para_592"},{"text":"primary and excess liability insurers. This may support Morse's argument that the prejudice","paragraph_id":"para_593"},{"text":"rule applies to uninsured motorist insurance policies, which are not, strictly speaking,","paragraph_id":"para_594"},{"text":"liability insurance policies. Nevertheless, nothing in the Prince George's decision remotely10","paragraph_id":"para_595"},{"text":"suggested that the rule could be extended to anything other than \"the insured's violation of","paragraph_id":"para_596"},{"text":"a notice provision.\"","paragraph_id":"para_597"},{"text":"In fact, in a subsequent case, the Court has taken an even more limited view of its","paragraph_id":"para_598"},{"text":"Prince George's holding. In Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md.","paragraph_id":"para_599"},{"text":"300, 322 n.18, 13 A.3d 1268, 1282 n.18 (2011), the Court explained:","paragraph_id":"para_600"},{"text":"In [Prince George's], we – noting § 19-110's embodiment of \"the public policy","paragraph_id":"para_601"},{"text":"of this state that an insurer must show prejudice before disclaiming coverage","paragraph_id":"para_602"},{"text":"based on the insured's breach of a notice provision\" – did \"adopt the prejudice","paragraph_id":"para_603"},{"text":"rule.\" That is not to say, however, that, prior to [Prince George's], we did not","paragraph_id":"para_604"},{"text":"require a showing of prejudice. Section 19-110 requires as much. Rather, we","paragraph_id":"para_605"},{"text":"stated merely that, in requiring an insurer to show prejudice when it denies","paragraph_id":"para_606"},{"text":"coverage based on a breach of a notice provision, we were not unlike the","paragraph_id":"para_607"},{"text":"overwhelming majority of our sister states.","paragraph_id":"para_608"},{"text":"In General Accident Ins. Co. v. Scott, 107 Md. App. 603, 614-15, 669 A.2d 773,10","paragraph_id":"para_609"},{"text":"779, cert. denied, 342 Md. 115 (1996), we noted that, \"[a]rguably, [Article 48A,] § 482","paragraph_id":"para_610"},{"text":"applies to uninsured motorist coverage, because that kind of coverage is a part of the liability","paragraph_id":"para_611"},{"text":"insurance policy.\" Nevertheless, we did not \"decide whether § 482 actually applies to","paragraph_id":"para_612"},{"text":"uninsured motorist coverage.\" Id.","paragraph_id":"para_613"},{"text":"- 25 -","paragraph_id":"para_614"},{"text":"(Emphasis supplied). Whatever common law prejudice rule Maryland may have, it is not","paragraph_id":"para_615"},{"text":"noticeably broader than § 19-110.","paragraph_id":"para_616"},{"text":"The Statutory Settlement Procedure","paragraph_id":"para_617"},{"text":"Our conclusion that Erie's denial of coverage did not trigger the § 19-110 or common","paragraph_id":"para_618"},{"text":"law prejudice rules is strengthened by the fact that the procedure for settling with an","paragraph_id":"para_619"},{"text":"uninsured tortfeasor is itself a creature of statute. We cannot apply one statute to excuse","paragraph_id":"para_620"},{"text":"Morse's noncompliance with another statute, especially where the two statutes do not","paragraph_id":"para_621"},{"text":"overlap or conflict. As we have explained, § 19-110 requires an insurer to show actual","paragraph_id":"para_622"},{"text":"prejudice only where it disclaims liability coverage based on an insured's failure to cooperate","paragraph_id":"para_623"},{"text":"or provide required notice. It does not apply where a disclaimer of coverage is based on an","paragraph_id":"para_624"},{"text":"insured's failure to comply with the § 19-511 settlement procedure.","paragraph_id":"para_625"},{"text":"In Harvey, the Court held that the § 19-110 prejudice rule did not apply to an insurer's","paragraph_id":"para_626"},{"text":"denial of PIP coverage. Like uninsured motorist insurance, PIP coverage is mandatory in","paragraph_id":"para_627"},{"text":"Maryland, unless affirmatively waived, and is governed by its own statutory provisions. See","paragraph_id":"para_628"},{"text":"Ins. §§ 19-505 et seq. Consistent with the PIP coverage statute, the insurer had written into","paragraph_id":"para_629"},{"text":"its policy a six-month time limit for submitting proof of claim. The Court held that the","paragraph_id":"para_630"},{"text":"insurer was entitled to deny PIP coverage based on its insured's failure to timely submit","paragraph_id":"para_631"},{"text":"proof of claim, without having to show prejudice.","paragraph_id":"para_632"},{"text":"- 26 -","paragraph_id":"para_633"},{"text":"In view of the cases, and of the express legislative authorization","paragraph_id":"para_634"},{"text":"contained in [Art. 48A, §] 544(a)(1) permitting a time limit for submission[11]","paragraph_id":"para_635"},{"text":"of the original proof of loss, we think GEICO had a contractual right to deny","paragraph_id":"para_636"},{"text":"liability based on appellee's failure to comply with the condition precedent","paragraph_id":"para_637"},{"text":"requiring that proof of claim be made within six months after the accident.","paragraph_id":"para_638"},{"text":"This is so, we hold, irrespective of prejudice and notwithstanding the fact that","paragraph_id":"para_639"},{"text":"PIP coverage is compulsory.","paragraph_id":"para_640"},{"text":"278 Md. at 554, 366 A.2d at 17 (emphasis supplied). Similarly, an uninsured motorist","paragraph_id":"para_641"},{"text":"insurer may deny coverage based on an insured's failure to comply with a statutory","paragraph_id":"para_642"},{"text":"settlement procedure, § 19-511, irrespective of prejudice and notwithstanding the fact that","paragraph_id":"para_643"},{"text":"uninsured motorist coverage is compulsory.","paragraph_id":"para_644"},{"text":"We do not suggest that § 19-511 removes all uninsured motorist coverage disputes","paragraph_id":"para_645"},{"text":"from the ambit of § 19-110. On the contrary, if an uninsured motorist insurer denies","paragraph_id":"para_646"},{"text":"coverage based on an insured's failure to provide notice or to cooperate, it will have to show","paragraph_id":"para_647"},{"text":"actual prejudice. In General Accident Ins. Co. v. Scott, 107 Md. App. 603, 669 A.2d 773,","paragraph_id":"para_648"},{"text":"cert. denied, 342 Md. 115 (1996), this Court affirmed a circuit court's grant of summary","paragraph_id":"para_649"},{"text":"judgment in favor of an injured insured whose uninsured motorist insurer denied coverage","paragraph_id":"para_650"},{"text":"based on the insured's twenty-nine-month delay in providing notice of the accident. Without","paragraph_id":"para_651"},{"text":"Today, Ins. § 19-508(a)(2) provides, in pertinent part:11","paragraph_id":"para_652"},{"text":"(2) A policy that contains the coverage described in § 19-505 of this","paragraph_id":"para_653"},{"text":"subtitle may:","paragraph_id":"para_654"},{"text":"(i) set a period of not less than 12 months after the date of the","paragraph_id":"para_655"},{"text":"motor vehicle accident within which the original claim for benefits must be","paragraph_id":"para_656"},{"text":"filed with the insurer[.]","paragraph_id":"para_657"},{"text":"- 27 -","paragraph_id":"para_658"},{"text":"deciding whether the forerunner of § 19-110 actually applied to uninsured motorist","paragraph_id":"para_659"},{"text":"coverage, we concluded that \"an insurer cannot avoid coverage under an uninsured motorist","paragraph_id":"para_660"},{"text":"policy on the grounds of an unreasonably late notice, unless the insurer proves that it","paragraph_id":"para_661"},{"text":"suffered 'actual prejudice.'\" Id. at 615, 669 A.2d at 779.12","paragraph_id":"para_662"},{"text":"Section 19-511 exists primarily for the benefit of an injured insured. It was first","paragraph_id":"para_663"},{"text":"enacted in 1995 as Article 48A, § 542(b). See 1995 Md. Laws Chap. 516. It was conceived,","paragraph_id":"para_664"},{"text":"in part, as a short cut allowing an injured insured to obtain at least some compensation for","paragraph_id":"para_665"},{"text":"her injury without having to wait for a global settlement involving both the tortfeasor's","paragraph_id":"para_666"},{"text":"liability insurer and her own uninsured motorist insurer. See Kritsings v. State Farm Mut.","paragraph_id":"para_667"},{"text":"Auto Ins. Co., 189 Md. App. 367, 378-79, 984 A.2d 395, 401-02 (2009), cert. denied, 413","paragraph_id":"para_668"},{"text":"Md. 229 (2010). It is a carefully brokered legislative solution that \"sets forth a settlement","paragraph_id":"para_669"},{"text":"procedure to be followed by claimants.\" See Brethren Mut. Ins. Co. v. Buckley, ___ Md.","paragraph_id":"para_670"},{"text":"___, 86 A.3d 665, 674 (2014).","paragraph_id":"para_671"},{"text":"In Keeney v. Allstate Ins. Co., 130 Md. App. 396, 403-04, 746 A.2d 947, 951 (2000),","paragraph_id":"para_672"},{"text":"we explained the situation before § 19-511, when liability insurers' unwillingness to settle","paragraph_id":"para_673"},{"text":"Section 19-511 did not apply in the Scott case because the action was commenced12","paragraph_id":"para_674"},{"text":"well before the statute took effect in 1995. Even if it had applied, however, § 19-511 would","paragraph_id":"para_675"},{"text":"not have been implicated because the case was argued and decided based on the insured's","paragraph_id":"para_676"},{"text":"failure to provide notice, not the insured's failure to obtain consent to settle.","paragraph_id":"para_677"},{"text":"- 28 -","paragraph_id":"para_678"},{"text":"without a release was pitted against uninsured motorist insurers' unwillingness to grant a","paragraph_id":"para_679"},{"text":"release and waive subrogation. We recounted the legislative purpose behind the bill:13","paragraph_id":"para_680"},{"text":"Senate Bill 253 [of 1995], which was to become Article 48A, Section","paragraph_id":"para_681"},{"text":"542(b), was sponsored by Senator Vernon Boozer of Baltimore County. The","paragraph_id":"para_682"},{"text":"purpose of Senator Boozer's bill, according to the \"Senate floor report,\" was","paragraph_id":"para_683"},{"text":"to provide a","paragraph_id":"para_684"},{"text":"remedy to a problem that has existed in Maryland's tort system","paragraph_id":"para_685"},{"text":"for some time. Currently, an injured person who makes a claim","paragraph_id":"para_686"},{"text":"against a liability carrier for limits available under the liability","paragraph_id":"para_687"},{"text":"policy is frequently not allowed by their uninsured/","paragraph_id":"para_688"},{"text":"underinsured motorist carrier to give the liability carrier a full","paragraph_id":"para_689"},{"text":"release of their claim. Therefore, if the injured person wishes","paragraph_id":"para_690"},{"text":"to make an additional claim for their injuries against their","paragraph_id":"para_691"},{"text":"underinsured motorist coverage, they get caught in a situation","paragraph_id":"para_692"},{"text":"where the liability carrier will not give them the limits of the","paragraph_id":"para_693"},{"text":"at-fault party's policy without a release and the","paragraph_id":"para_694"},{"text":"uninsured/underinsured motorist carrier will not allow them to","paragraph_id":"para_695"},{"text":"give a release to the liability carrier. As a result, they are unable","paragraph_id":"para_696"},{"text":"to recover funds from either carrier. This dilemma can cause a","paragraph_id":"para_697"},{"text":"lengthy delay in settlement.","paragraph_id":"para_698"},{"text":"Senate Bill 253 would eliminate this dilemma by","paragraph_id":"para_699"},{"text":"requiring the uninsured/underinsured motorist carrier to: (1)","paragraph_id":"para_700"},{"text":"allow their injured insured to settle with the liability carrier and","paragraph_id":"para_701"},{"text":"provide a release; or (2) pay their injured insured themselves to","paragraph_id":"para_702"},{"text":"fully maintain their subrogation rights against the liable party.","paragraph_id":"para_703"},{"text":"Therefore, the insured party gets his money more quickly and","paragraph_id":"para_704"},{"text":"Even after the enactment of § 19-511, some insurers (including Erie in its initial13","paragraph_id":"para_705"},{"text":"denial of Morse's claim) have argued that an insured's general release of a tortfeasor can also","paragraph_id":"para_706"},{"text":"release the uninsured motorist insurer's obligation to provide coverage. The Court of","paragraph_id":"para_707"},{"text":"Appeals rejected that argument in Brethren Mut. Ins. Co. v. Buckley, ___ Md. ___, 86 A.3d","paragraph_id":"para_708"},{"text":"665 (2014), holding that an insured may execute a general release, not explicitly limited to","paragraph_id":"para_709"},{"text":"the tortfeasor and the tortfeasor's liability insurer, without prejudice to her claim for","paragraph_id":"para_710"},{"text":"uninsured motorist benefits.","paragraph_id":"para_711"},{"text":"- 29 -","paragraph_id":"para_712"},{"text":"the uninsured/underinsured motorist carrier would have \"up","paragraph_id":"para_713"},{"text":"front\" the liability settlement.","paragraph_id":"para_714"},{"text":"The summary of the bill provided in the Senate floor report was terse,","paragraph_id":"para_715"},{"text":"viz:","paragraph_id":"para_716"},{"text":"SENATE BILL 253 ESTABLISHES A SETTLEMENT","paragraph_id":"para_717"},{"text":"PROCEDURE TO BE FOLLOWED WHEN A CLAIMANT","paragraph_id":"para_718"},{"text":"IS INJURED BY A PARTY WHOSE LIABILITY","paragraph_id":"para_719"},{"text":"INSURANCE LIMIT IS LESS THAN THE CLAIMANT'S","paragraph_id":"para_720"},{"text":"UNINSURED MOTORIST LIMITS.","paragraph_id":"para_721"},{"text":"Id. at 401-02, 746 A.2d at 950.","paragraph_id":"para_722"},{"text":"In exchange for allowing injured insureds to obtain some compensation earlier on in","paragraph_id":"para_723"},{"text":"the process, without prejudice to their remaining claims for uninsured motorist benefits, §","paragraph_id":"para_724"},{"text":"19-511(b) grants an uninsured motorist carrier the right to consent to settlement and a sixty-","paragraph_id":"para_725"},{"text":"day period to make that decision. This is true even if the policy does not contain a consent","paragraph_id":"para_726"},{"text":"to settle clause. Section 19-511 effectively writes into all uninsured motorist policies a","paragraph_id":"para_727"},{"text":"consent to settle clause that applies where the settlement offer would exhaust liability policy","paragraph_id":"para_728"},{"text":"limits. See Maurer, 404 Md. at 73 n.4, 945 A.2d at 637 n.4 (\"Under some circumstances,","paragraph_id":"para_729"},{"text":"where the amount of the settlement or settlements, arising out of the same occurrence, would","paragraph_id":"para_730"},{"text":"exhaust liability policy limits, the uninsured/underinsured carrier is by statute given the","paragraph_id":"para_731"},{"text":"option to consent or not to consent to the settlement. Under such circumstances, there exists","paragraph_id":"para_732"},{"text":"a 'consent to settle' clause by statute.\").","paragraph_id":"para_733"},{"text":"If an injured insured follows the settlement procedures of § 19-511, she cannot lose.","paragraph_id":"para_734"},{"text":"If the uninsured motorist insurer grants consent to the settlement, she will obtain prompt","paragraph_id":"para_735"},{"text":"- 30 -","paragraph_id":"para_736"},{"text":"compensation from the tortfeasor's liability insurer. If the uninsured motorist insurer refuses","paragraph_id":"para_737"},{"text":"consent to the settlement, it must promptly remit to her the same compensation, as an","paragraph_id":"para_738"},{"text":"advance against any future recovery. If the uninsured motorist insurer does not respond","paragraph_id":"para_739"},{"text":"within the statutorily established time limit, she may accept the liability insurer's offer as if","paragraph_id":"para_740"},{"text":"her insurer had consented. Upon settling with a liability insurer, pursuant to § 19-511(e),","paragraph_id":"para_741"},{"text":"or accepting equivalent payment from her uninsured motorist insurer, pursuant to § 19-","paragraph_id":"para_742"},{"text":"511(c), the injured insured no longer bears any risk that her claim will later be found to be","paragraph_id":"para_743"},{"text":"worth less than the limit of the tortfeasor's liability policy. Once she accepts payment, the","paragraph_id":"para_744"},{"text":"money is hers to keep. In short, an injured insured cannot prejudice her claim for14","paragraph_id":"para_745"},{"text":"uninsured motorist benefits by following § 19-511.","paragraph_id":"para_746"},{"text":"In this case, Morse made no attempt to comply with § 19-511. Section 19-511 was","paragraph_id":"para_747"},{"text":"triggered when Nationwide extended an offer to settle for the full limit of the only liability","paragraph_id":"para_748"},{"text":"policy Smallwood had. Instead of sending Erie a copy of Nationwide's offer by certified","paragraph_id":"para_749"},{"text":"mail, as required by § 19-511(a), Morse's previous attorney first notified Erie by telephone","paragraph_id":"para_750"},{"text":"and later by non-certified mail. Instead of giving Erie sixty days to decide whether to grant","paragraph_id":"para_751"},{"text":"or refuse consent to the settlement, as required by § 19-511(b), Morse accepted Nationwide's","paragraph_id":"para_752"},{"text":"offer and signed a release, twenty-one days after the offer was extended, nineteen or twenty","paragraph_id":"para_753"},{"text":"Although the amount of payment the insured receives will be set off against any14","paragraph_id":"para_754"},{"text":"later higher recovery against a responsible party or the uninsured motorist insurer, see §§ 19-","paragraph_id":"para_755"},{"text":"509(g), 19-511(d)(2), the insured will not have to return any money should subsequent","paragraph_id":"para_756"},{"text":"litigation result in a recovery lower than the initial payment, or even no recovery at all. See","paragraph_id":"para_757"},{"text":"Ohio Cas. Ins. Co. v. Chamberlin, 172 Md. App. 229, 914 A.2d 160 (2007).","paragraph_id":"para_758"},{"text":"- 31 -","paragraph_id":"para_759"},{"text":"days after her attorney notified Erie by telephone, seven days after her attorney sent notice","paragraph_id":"para_760"},{"text":"by non-certified mail, and thirty-two or thirty-three days before Erie actually received the","paragraph_id":"para_761"},{"text":"written offer.","paragraph_id":"para_762"},{"text":"We are mindful that \"the purpose of uninsured motorist statutes is 'that each insured","paragraph_id":"para_763"},{"text":"under such coverage have available the full statutory minimum to exactly the same extent","paragraph_id":"para_764"},{"text":"as would have been available had the tortfeasor complied with the minimum requirements","paragraph_id":"para_765"},{"text":"of the financial responsibility law,'\" see, e.g., Nationwide Mut. Ins. Co. v. Webb, 291 Md.","paragraph_id":"para_766"},{"text":"721, 737, 436 A.2d 465, 474 (1981), as well as \"the remedial nature of the statutory plan,","paragraph_id":"para_767"},{"text":"which dictates a liberal construction in order to effectuate its purpose of assuring recovery","paragraph_id":"para_768"},{"text":"for innocent victims of motor vehicle accidents,\" see, e.g., State Farm Mut. Auto. Ins. Co.","paragraph_id":"para_769"},{"text":"v. Maryland Auto. Ins. Fund, 277 Md. 602, 605, 356 A.2d 560, 562 (1976). Nevertheless,","paragraph_id":"para_770"},{"text":"even a liberal construction of a remedial statute cannot excuse total noncompliance.","paragraph_id":"para_771"},{"text":"In Buckley v. Brethren Mutu. Ins. Co., 207 Md. App. 574, 53 A.3d 456 (2012), this","paragraph_id":"para_772"},{"text":"Court held that an insured's general release, given in exchange for settlement with a","paragraph_id":"para_773"},{"text":"tortfeasor's liability insurer, that released the tortfeasor \"and all other persons, firms or","paragraph_id":"para_774"},{"text":"corporations,\" did not also release the insured's uninsured motorist carrier from providing","paragraph_id":"para_775"},{"text":"benefits. We explained that to hold otherwise would be contrary to the text, spirit, and","paragraph_id":"para_776"},{"text":"purpose of § 19-511. Nevertheless, we remanded for further factfinding with regard to","paragraph_id":"para_777"},{"text":"whether the insurer had consented to the settlement with the tortfeasor. The answer to that","paragraph_id":"para_778"},{"text":"question would determine whether the insurer could contest tort liability at trial or be limited","paragraph_id":"para_779"},{"text":"- 32 -","paragraph_id":"para_780"},{"text":"to a trial on damages only. The Court of Appeals affirmed our decision in all respects,","paragraph_id":"para_781"},{"text":"though it did not reach the question whether the insurer had actually consented to the","paragraph_id":"para_782"},{"text":"settlement. Brethren Mut. Ins. Co. v. Buckley, ___ Md. ___, 86 A.3d 665 (2014). Nothing","paragraph_id":"para_783"},{"text":"in either opinion casts any doubt on an insured's obligation to comply with § 19-511.","paragraph_id":"para_784"},{"text":"We are not moved by Morse's assertion that Erie could not have been prejudiced by","paragraph_id":"para_785"},{"text":"her settlement with Nationwide because the settlement was for the full limits of the only","paragraph_id":"para_786"},{"text":"liability insurance policy Smallwood had. As we have explained, no prejudice rule was","paragraph_id":"para_787"},{"text":"triggered in this case and Erie's lack of prejudice is irrelevant. We note, however, that, if we","paragraph_id":"para_788"},{"text":"were to apply a prejudice rule as Morse suggests, such a lack of prejudice would almost","paragraph_id":"para_789"},{"text":"always excuse noncompliance with § 19-511, because § 19-511 only applies where \"the","paragraph_id":"para_790"},{"text":"amount of the settlement offer, in combination with any other settlements arising out of the","paragraph_id":"para_791"},{"text":"same occurrence, would exhaust the bodily injury or death limits of the applicable liability","paragraph_id":"para_792"},{"text":"insurance policies, bonds, and securities.\" § 19-511(a). We cannot apply a strained","paragraph_id":"para_793"},{"text":"construction of the § 19-110 prejudice rule to eviscerate § 19-511, a carefully brokered","paragraph_id":"para_794"},{"text":"legislative compromise that already is stacked in favor of an injured insured who complies","paragraph_id":"para_795"},{"text":"with it.","paragraph_id":"para_796"},{"text":"Out-of-State Cases are Not Persuasive Here","paragraph_id":"para_797"},{"text":"Morse presents us with decisions of twenty-eight states which, she claims, apply a","paragraph_id":"para_798"},{"text":"prejudice rule to a denial of uninsured motorist coverage based on violation of a consent to","paragraph_id":"para_799"},{"text":"- 33 -","paragraph_id":"para_800"},{"text":"settle clause. Those decisions are easily distinguished from the case at bar. Only two of15","paragraph_id":"para_801"},{"text":"those states, Nebraska and North Dakota, have statutory provisions concerning consent16 17","paragraph_id":"para_802"},{"text":"to settle with a tortfeasor. All the rest have dealt with the matter by common law. Unlike","paragraph_id":"para_803"},{"text":"She also acknowledges six states that have rejected a prejudice rule. See Downey15","paragraph_id":"para_804"},{"text":"v. Travelers Prop. Cas. Ins. Co., 74 So. 3d 952 (Ala. 2011); Dalke v. Allstate Ins. Co., 935","paragraph_id":"para_805"},{"text":"P.2d 1067 (Kan. Ct. App. 1997); Lee v. Auto-Owners Ins. Co., 554 N.W.2d 610 (Mich. Ct.","paragraph_id":"para_806"},{"text":"App. 1996); Stevens v. Merchants Mut. Ins. Co., 599 A.2d 490 (N.H. 1991); Fraioli v.","paragraph_id":"para_807"},{"text":"Metropolitan Prop. & Cas. Ins. Co., 748 A.2d 273 (R.I. 2000); Osborne v. National Union","paragraph_id":"para_808"},{"text":"Fire Ins. Co., 465 S.E. 2d 835 (Va. 1996). Dalke involved an uninsured motorist settlement","paragraph_id":"para_809"},{"text":"statute very similar to Maryland's § 19-511, Kan. Stat. § 40-284(f), which does not contain","paragraph_id":"para_810"},{"text":"a prejudice provision. The court declined to imply one.","paragraph_id":"para_811"},{"text":"Nebraska law provides that uninsured motorist coverage \"shall not apply\" where16","paragraph_id":"para_812"},{"text":"the insured or his or her representative makes, without the written consent of","paragraph_id":"para_813"},{"text":"the insurer, any settlement with or obtains any judgment against any person","paragraph_id":"para_814"},{"text":"who may be legally liable for any injuries if such settlement adversely affects","paragraph_id":"para_815"},{"text":"the rights of the insurer, except that this subdivision shall not apply to","paragraph_id":"para_816"},{"text":"underinsured motorist coverage when the insured has given notice to the","paragraph_id":"para_817"},{"text":"insurer, in compliance with subsection (2) of section 44-6412, and the insurer","paragraph_id":"para_818"},{"text":"has failed to make the required payment to protect its right of subrogation[.]","paragraph_id":"para_819"},{"text":"Neb. Rev. Stat. § 44-6413(1)(a) (emphasis supplied).","paragraph_id":"para_820"},{"text":"North Dakota law provides that uninsured motorist coverage \"do[es] not apply\"17","paragraph_id":"para_821"},{"text":"where","paragraph_id":"para_822"},{"text":"the insured, without the written consent of the insurer, shall make any","paragraph_id":"para_823"},{"text":"agreement or settlement with any person who may be legally liable therefor,","paragraph_id":"para_824"},{"text":"if such agreement adversely affects the rights of the insurer. The insurer is not","paragraph_id":"para_825"},{"text":"bound by any agreement or settlement without its prior knowledge and","paragraph_id":"para_826"},{"text":"consent. This limitation does not apply to underinsured motorist coverage","paragraph_id":"para_827"},{"text":"when the insured has advised the insurer, in compliance with subsection 2 of","paragraph_id":"para_828"},{"text":"section 26.1-40-15.5, and the insurer has failed to advance the required","paragraph_id":"para_829"},{"text":"payment to protect its right of reimbursement and subrogation[.]","paragraph_id":"para_830"},{"text":"N.D. Cent. Code § 26.1-40-15.6(7) (emphasis supplied).","paragraph_id":"para_831"},{"text":"- 34 -","paragraph_id":"para_832"},{"text":"Maryland's § 19-511, the Nebraska and North Dakota statutes explicitly contain a prejudice","paragraph_id":"para_833"},{"text":"provision.","paragraph_id":"para_834"},{"text":"In Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md. 300, 327-28, 13 A.3d","paragraph_id":"para_835"},{"text":"1268, 1285 (2011), the Court of Appeals cautioned against \"squeez[ing] a square peg – that","paragraph_id":"para_836"},{"text":"is, Maryland's notice-prejudice statute, as embodied in § 19-110, and our jurisprudence –","paragraph_id":"para_837"},{"text":"into a round hole – that is, the notice-prejudice jurisprudence of other states and","paragraph_id":"para_838"},{"text":"jurisdictions.\" The Court noted that, \"[o]f the more than three-dozen states adopting a","paragraph_id":"para_839"},{"text":"notice-prejudice rule, it appears that only two did so legislatively, as Maryland has.\" Id.","paragraph_id":"para_840"},{"text":"That assessment applies equally to the cases Morse has cited here. We may not read a","paragraph_id":"para_841"},{"text":"prejudice rule into § 19-511 on the authority that other state legislatures have included one","paragraph_id":"para_842"},{"text":"in their statutes, or that other state courts have included one in their judicially-crafted","paragraph_id":"para_843"},{"text":"remedies, when the Maryland General Assembly has not seen fit to do so.","paragraph_id":"para_844"},{"text":"Conclusion","paragraph_id":"para_845"},{"text":"Morse argues that our result would be inequitable. Erie, to be sure, made no showing","paragraph_id":"para_846"},{"text":"at all that it was prejudiced by Morse's failure to obtain its consent to settle with Nationwide.","paragraph_id":"para_847"},{"text":"The result Morse feels is harsh could have been easily avoided by complying with the","paragraph_id":"para_848"},{"text":"straightforward settlement procedure the General Assembly provided in § 19-511. We will","paragraph_id":"para_849"},{"text":"not nullify a finely tuned and completely valid statutory procedure simply to excuse Morse's","paragraph_id":"para_850"},{"text":"noncompliance in this particular case. As Morse's noncompliance did not trigger a prejudice","paragraph_id":"para_851"},{"text":"- 35 -","paragraph_id":"para_852"},{"text":"rule, Erie was entitled to disclaim liability on the basis of that noncompliance, with or","paragraph_id":"para_853"},{"text":"without prejudice.","paragraph_id":"para_854"},{"text":"JUDGMENT AFFIRMED; COSTS TO","paragraph_id":"para_855"},{"text":"BE PAID BY APPELLANT.","paragraph_id":"para_856"},{"text":"- 36 -","paragraph_id":"para_857"},{"text":"REPORTED","paragraph_id":"para_858"},{"text":"IN THE COURT OF SPECIAL APPEALS","paragraph_id":"para_859"},{"text":"OF MARYLAND","paragraph_id":"para_860"},{"text":"No. 0511","paragraph_id":"para_861"},{"text":"September Term, 2013","paragraph_id":"para_862"},{"text":"JEANNINE MORSE","paragraph_id":"para_863"},{"text":"v.","paragraph_id":"para_864"},{"text":"ERIE INSURANCE EXCHANGE","paragraph_id":"para_865"},{"text":"Woodward,","paragraph_id":"para_866"},{"text":"Matricciani,","paragraph_id":"para_867"},{"text":"Moylan, Charles E., Jr.","paragraph_id":"para_868"},{"text":"(Retired, Specially Assigned),","paragraph_id":"para_869"},{"text":"JJ.","paragraph_id":"para_870"},{"text":"Dissenting Opinion by Woodward, J.","paragraph_id":"para_871"},{"text":"Filed: April 29, 2014","paragraph_id":"para_872"},{"text":"I respectfully dissent.","paragraph_id":"para_873"},{"text":"At the outset, it is important to note that under the facts of this case, Erie does not","paragraph_id":"para_874"},{"text":"claim, nor is there anything in the record to support a claim, that Erie was actually prejudiced","paragraph_id":"para_875"},{"text":"by Morse’s failure to obtain Erie’s written consent prior to settling her claim against the","paragraph_id":"para_876"},{"text":"tortfeasor for the limits of the tortfeasor’s liability policy. Thus, if the consent to settle","paragraph_id":"para_877"},{"text":"requirement of § 19-511 is enforced in the absence of actual prejudice, as Erie urges and the","paragraph_id":"para_878"},{"text":"majority holds, “the insurer [Erie] suffers no harm and the insured [Morse] forfeits the","paragraph_id":"para_879"},{"text":"premiums and loses coverage.” Prince George’s Cnty. v. Local Gov’t Ins. Trust, 388 Md.","paragraph_id":"para_880"},{"text":"162, 187 (2005). Notwithstanding the majority’s assertion that Erie’s lack of actual prejudice","paragraph_id":"para_881"},{"text":"is “irrelevant,” I believe that such lack of actual prejudice is very relevant to a proper","paragraph_id":"para_882"},{"text":"construction of § 19-511.","paragraph_id":"para_883"},{"text":"In Town of Oxford v. Koste, 204 Md. App. 578 (2012), aff’d, 431 Md. 14 (2013), this","paragraph_id":"para_884"},{"text":"Court set forth the principles that guide the construction of a statute:","paragraph_id":"para_885"},{"text":"This case presents an issue of statutory construction, like","paragraph_id":"para_886"},{"text":"many, resolvable on the basis of judicial consideration of three","paragraph_id":"para_887"},{"text":"general factors: 1) text; 2) purpose; and 3) consequences. Text is","paragraph_id":"para_888"},{"text":"the plain language of the relevant provision, typically given its","paragraph_id":"para_889"},{"text":"ordinary meaning, viewed in context, considered in light of the whole","paragraph_id":"para_890"},{"text":"statute, and generally evaluated for ambiguity. Legislative purpose,","paragraph_id":"para_891"},{"text":"either apparent from the text or gathered from external sources, often","paragraph_id":"para_892"},{"text":"informs, if not controls, our reading of the statute. An examination of","paragraph_id":"para_893"},{"text":"interpretive consequences, either as a comparison of the results of","paragraph_id":"para_894"},{"text":"each proffered construction, or as a principle of avoidance of an","paragraph_id":"para_895"},{"text":"absurd or unreasonable reading, grounds the court’s interpretation in","paragraph_id":"para_896"},{"text":"reality.","paragraph_id":"para_897"},{"text":"Id. at 585-86 (emphasis added) (citations omitted). When the text is ambiguous, we must","paragraph_id":"para_898"},{"text":"look beyond the statute’s plain language to determine legislative intent:","paragraph_id":"para_899"},{"text":"“While the language of the statute is the primary source for","paragraph_id":"para_900"},{"text":"determining legislative intention, the plain meaning rule of","paragraph_id":"para_901"},{"text":"construction is not absolute; rather, the statute must be construed","paragraph_id":"para_902"},{"text":"reasonably with reference to the purpose, aim, or policy of the","paragraph_id":"para_903"},{"text":"enacting body. The Court will look at the larger context,","paragraph_id":"para_904"},{"text":"including the legislative purpose, within which statutory language","paragraph_id":"para_905"},{"text":"appears. Construction of a statute which is unreasonable,","paragraph_id":"para_906"},{"text":"illogical, unjust, or inconsistent with common sense should be","paragraph_id":"para_907"},{"text":"avoided.”","paragraph_id":"para_908"},{"text":"Consol. Constr. Servs., Inc. v. Simpson, 372 Md. 434, 457 (2002) (emphasis added) (quoting","paragraph_id":"para_909"},{"text":"Tracey v. Tracey, 328 Md. 380, 387 (1992)). The Court of Appeals has emphasized the","paragraph_id":"para_910"},{"text":"importance of legislative purpose, stating that “[t]he cardinal rule [of statutory interpretation]","paragraph_id":"para_911"},{"text":"is to ascertain and effectuate legislative intent.” Id. at 456 (alterations in original) (internal","paragraph_id":"para_912"},{"text":"quotation marks omitted).","paragraph_id":"para_913"},{"text":"Regarding the text of § 19-511, in Buckley v. Brethren Mutual Insurance Co., 207 Md.","paragraph_id":"para_914"},{"text":"App. 574 (2012), aff’d, ___ Md. ___, No. 10, September Term 2013 (filed March 4, 2014),","paragraph_id":"para_915"},{"text":"we summarized the procedure to be followed by the insured and the uninsured motorist","paragraph_id":"para_916"},{"text":"carrier (“UM carrier”) when the liability insurer of the alleged tortfeasor offers the policy","paragraph_id":"para_917"},{"text":"limits to the injured person. We stated:","paragraph_id":"para_918"},{"text":"Pursuant to § 19-511(a), when the liability insurer of the alleged","paragraph_id":"para_919"},{"text":"tortfeasor offers its policy limits to the injured person, the injured","paragraph_id":"para_920"},{"text":"insured must send a copy of the offer by certified letter to the injured","paragraph_id":"para_921"},{"text":"insured’s UM carrier. § 19-511(a). Within 60 days after receipt of","paragraph_id":"para_922"},{"text":"the notice, the UM carrier “shall send to the injured person: (1)","paragraph_id":"para_923"},{"text":"written consent to acceptance of the settlement offer and to the","paragraph_id":"para_924"},{"text":"execution of releases; or (2) written refusal to consent to acceptance","paragraph_id":"para_925"},{"text":"of the settlement offer.” § 19-511(b). If the UM carrier refuses to","paragraph_id":"para_926"},{"text":"consent to acceptance of the settlement offer, the UM carrier must pay","paragraph_id":"para_927"},{"text":"the amount of the settlement offer to the injured person within 30 days","paragraph_id":"para_928"},{"text":"- 2 -","paragraph_id":"para_929"},{"text":"following the refusal. If the UM insurer consents to the settlement","paragraph_id":"para_930"},{"text":"offer, or otherwise fails to respond to the settlement offer as required","paragraph_id":"para_931"},{"text":"by subsections (b) and (c) of § 19-511, then the injured insured may","paragraph_id":"para_932"},{"text":"accept the settlement offer from the liability insurer and execute a","paragraph_id":"para_933"},{"text":"release “in favor of the liability insurer and its insured without","paragraph_id":"para_934"},{"text":"prejudice to any claim the injured person may have against the","paragraph_id":"para_935"},{"text":"uninsured motorist insurer.” § 19-511(e).","paragraph_id":"para_936"},{"text":"Id. at 586-87 (footnote omitted).","paragraph_id":"para_937"},{"text":"There is no language in § 19-511 that sets forth the consequences of an insured’s","paragraph_id":"para_938"},{"text":"failure to follow the statute’s procedure prior to accepting the tortfeasor’s liability policy","paragraph_id":"para_939"},{"text":"limits. According to the majority, the consequence of such failure is that the UM carrier may","paragraph_id":"para_940"},{"text":"deny coverage regardless of whether it suffered actual prejudice. Morse, on the other hand,","paragraph_id":"para_941"},{"text":"construes § 19-511 to require actual prejudice to the UM carrier before it can deny coverage.","paragraph_id":"para_942"},{"text":"Given the absence of statutory language, § 19-511 is ambiguous, and the question thus","paragraph_id":"para_943"},{"text":"presented is which construction is consistent with the purpose and policy of § 19-511, and","paragraph_id":"para_944"},{"text":"how do the results of each construction compare with each other. See Simpson, 372 Md. at1","paragraph_id":"para_945"},{"text":"457 (holding that ambiguity in a statute requires the court to consider the purpose and policy","paragraph_id":"para_946"},{"text":"behind the statute and avoid unjust results); Koste, 204 Md. App. at 586 (noting that statutory","paragraph_id":"para_947"},{"text":"interpretation should be grounded in a consideration of the interpretive consequences of the","paragraph_id":"para_948"},{"text":"statutes’s proffered constructions).","paragraph_id":"para_949"},{"text":"Although Morse relies on § 19-110 to arrive at her construction of § 19-511, I do1","paragraph_id":"para_950"},{"text":"not believe that such reliance is necessary to come to the same conclusion.","paragraph_id":"para_951"},{"text":"- 3 -","paragraph_id":"para_952"},{"text":"In Buckley, this Court articulated the purpose and policy of the uninsured motorist","paragraph_id":"para_953"},{"text":"statute, as well as the underlying reasons for enacting § 19-511. We said:","paragraph_id":"para_954"},{"text":"The purpose of the uninsured motorist statute is to provide","paragraph_id":"para_955"},{"text":"minimum protection for individuals injured by uninsured","paragraph_id":"para_956"},{"text":"motorists and should be liberally construed to ensure that","paragraph_id":"para_957"},{"text":"innocent victims of motor vehicle collisions are compensated for","paragraph_id":"para_958"},{"text":"their injuries. Consistent with the public policy of affording minimal","paragraph_id":"para_959"},{"text":"protection for innocent victims, an insured can purchase a higher","paragraph_id":"para_960"},{"text":"amount of uninsured motorist insurance which will become available","paragraph_id":"para_961"},{"text":"when the insured’s uninsured motorist coverage, as well as his","paragraph_id":"para_962"},{"text":"damages, exceed the liability coverage of the tortfeasor. The effect","paragraph_id":"para_963"},{"text":"[i]s to provide an injured insured with compensation equal to that","paragraph_id":"para_964"},{"text":"which would have been available had the tortfeasor carried liability","paragraph_id":"para_965"},{"text":"insurance in an amount equal to the amount of the injured insured’s","paragraph_id":"para_966"},{"text":"UM coverage.","paragraph_id":"para_967"},{"text":"207 Md. App. at 589 (alteration in original) (emphasis added) (citations and internal","paragraph_id":"para_968"},{"text":"quotation marks omitted). Similarly, Maryland has a “strong public policy favoring","paragraph_id":"para_969"},{"text":"compensation of those injured by UM drivers.” Id. at 591.","paragraph_id":"para_970"},{"text":"The primary reason for enacting § 19-511 was to eliminate the potential lengthy delay","paragraph_id":"para_971"},{"text":"caused by “‘a situation where the liability carrier w[ould] not give [the injured persons] the","paragraph_id":"para_972"},{"text":"limits of the at-fault party’s policy without a release and the [UM] carrier w[ould] not allow","paragraph_id":"para_973"},{"text":"them to give a release to the liability carrier.’” Id. at 590 (first and fourth alterations in","paragraph_id":"para_974"},{"text":"original) (quoting Keeney v. Allstate Ins. Co., 130 Md. App. 396, 401 (2000)). Moreover,","paragraph_id":"para_975"},{"text":"§ 19-511 sought to strike a balance between the right of the insured to a speedy recovery of","paragraph_id":"para_976"},{"text":"the liability policy limits and the protection of the UM carrier’s subrogation rights.","paragraph_id":"para_977"},{"text":"- 4 -","paragraph_id":"para_978"},{"text":"When the constructions of § 19-511 advanced by the majority and Morse are","paragraph_id":"para_979"},{"text":"considered in the context of the purpose and policy of Maryland’s uninsured motorist statute","paragraph_id":"para_980"},{"text":"and the reasons underlying § 19-511, the result clearly favors Morse’s construction. Morse’s","paragraph_id":"para_981"},{"text":"construction would further the public policy of affording protection for innocent victims by","paragraph_id":"para_982"},{"text":"allowing recovery of uninsured motorist compensation unless the UM carrier can show actual","paragraph_id":"para_983"},{"text":"prejudice occasioned by the insured’s failure to comply with the procedural requirements of","paragraph_id":"para_984"},{"text":"§ 19-511. Where there is no actual prejudice, an insured who paid for uninsured motorist","paragraph_id":"para_985"},{"text":"coverage equal to his or her liability coverage would receive what the statute intended:","paragraph_id":"para_986"},{"text":"“‘[C]ompensation equal to that which would have been available had the tortfeasor carried","paragraph_id":"para_987"},{"text":"liability insurance in an amount equal to the amount of the injured insured’s UM coverage.’”","paragraph_id":"para_988"},{"text":"Id. at 589 (quoting Kritsings v. State Farm Mut. Auto. Ins. Co., 189 Md. App. 367, 375","paragraph_id":"para_989"},{"text":"(2009)). In addition, the balance between the insured’s right to speedy recovery and the","paragraph_id":"para_990"},{"text":"protection of the UM carrier’s subrogation rights would be maintained by Morse’s","paragraph_id":"para_991"},{"text":"construction, because the UM carrier would still be able to deny coverage where its","paragraph_id":"para_992"},{"text":"subrogation rights were actually prejudiced.","paragraph_id":"para_993"},{"text":"A comparison of the results of the different constructions of § 19-511 also support","paragraph_id":"para_994"},{"text":"Morse’s construction. Adoption of the majority’s view results, in effect, in a windfall to the","paragraph_id":"para_995"},{"text":"UM carrier—the UM carrier is allowed to keep the premiums paid for uninsured motorist","paragraph_id":"para_996"},{"text":"coverage while avoiding its obligation to pay an otherwise valid claim, where the actions of","paragraph_id":"para_997"},{"text":"the insured did not increase the risk inherent with such coverage or prejudice any subrogation","paragraph_id":"para_998"},{"text":"- 5 -","paragraph_id":"para_999"},{"text":"rights of the UM carrier. Morse’s construction would protect a UM carrier from any real","paragraph_id":"para_1000"},{"text":"adverse impact on its subrogation rights while allowing the recovery of compensation under","paragraph_id":"para_1001"},{"text":"uninsured motorist coverage that was bought and paid for by the insured.","paragraph_id":"para_1002"},{"text":"Finally, the views expressed in this dissent are consistent with those of Andrew","paragraph_id":"para_1003"},{"text":"Janquitto, who wrote in his treatise, Maryland Motor Vehicle Insurance:","paragraph_id":"para_1004"},{"text":"The issue of whether an unauthorized settlement by a","paragraph_id":"para_1005"},{"text":"claimant can relieve the claimant’s insurer of its obligation to pay","paragraph_id":"para_1006"},{"text":"UM benefits is a difficult one . . . . A short answer is that the 1995","paragraph_id":"para_1007"},{"text":"amendment that created what is now Section 19-511 provides a","paragraph_id":"para_1008"},{"text":"mandatory procedure that must be followed and, if it is not followed,","paragraph_id":"para_1009"},{"text":"the UM insurer is relieved of its obligation to pay UM benefits. This","paragraph_id":"para_1010"},{"text":"short answer may not be correct. Of note, Section 19-511 does not","paragraph_id":"para_1011"},{"text":"indicate that the failure to abide by its provisions relieves the UM","paragraph_id":"para_1012"},{"text":"insurer of its contractual obligation to pay. Hence, if the UM insurer","paragraph_id":"para_1013"},{"text":"can escape its obligation, it must do so by relying on a contractual","paragraph_id":"para_1014"},{"text":"consent-to-settle clause. But using a breach of a consent-to-settle[2]","paragraph_id":"para_1015"},{"text":"clause to avoid the obligation to pay UM benefits is also problematic.","paragraph_id":"para_1016"},{"text":"Not only is there no provision in the UM Statute that creates an","paragraph_id":"para_1017"},{"text":"insurer’s subrogation right, there is no provision that states that a","paragraph_id":"para_1018"},{"text":"claimant’s unauthorized release of a tortfeasor is grounds for the","paragraph_id":"para_1019"},{"text":"insurer to escape paying UM benefits. Even assuming an insurer","paragraph_id":"para_1020"},{"text":"could escape its contractual and statutory obligations by","paragraph_id":"para_1021"},{"text":"enforcing a consent-to-settle provision, it should be able to do so","paragraph_id":"para_1022"},{"text":"only if that is an equitable result. Subrogation, even when it [ ]","paragraph_id":"para_1023"},{"text":"arises out of a contract or a statute, is equitable in nature. . . . [A]","paragraph_id":"para_1024"},{"text":"court must seek to strike a balance between the claimant’s right","paragraph_id":"para_1025"},{"text":"to compensation and the insurer’s right to subrogation. Certainly,","paragraph_id":"para_1026"},{"text":"a mere loss of a theoretical right of subrogation rights should not","paragraph_id":"para_1027"},{"text":"cause the loss of an injured claimant’s right of recovery, for such a","paragraph_id":"para_1028"},{"text":"holding would not be an equitable one. An insurer, simply put, must","paragraph_id":"para_1029"},{"text":"show that there was a realistic likelihood that it would have recovered","paragraph_id":"para_1030"},{"text":"In the instant case, Erie relied upon its contractual consent-to-settle clause to deny2","paragraph_id":"para_1031"},{"text":"Morse her UM claim.","paragraph_id":"para_1032"},{"text":"- 6 -","paragraph_id":"para_1033"},{"text":"had it exercised the subrogation rights. In other words, an insurer","paragraph_id":"para_1034"},{"text":"must show that it has been actually or materially prejudiced by","paragraph_id":"para_1035"},{"text":"the release of the tortfeasor.","paragraph_id":"para_1036"},{"text":"Andrew Janquitto, Maryland Motor Vehicle Insurance § 8.12(B), at 471 (3d ed. 2011)","paragraph_id":"para_1037"},{"text":"(footnote omitted).","paragraph_id":"para_1038"},{"text":"For the foregoing reasons, I would reverse the judgment of the circuit court.","paragraph_id":"para_1039"},{"text":"- 7 -","paragraph_id":"para_1040"}],"word_count":12174,"cites":["738 F.3d 95"],"cited_by":[],"sha256":"5cf72405065b6e53e7a80b6ca2a4d2fd5e76722b9ea9b7293b3e30bc3945efb8","source_url":"http://www.mdcourts.gov/opinions/cosa/2014/0511s13.pdf","fetched_at":"2026-10-23T09:21:56.478+00:00","canonical":"https://legal.exploreworldai.com/ai/judgments/us/mdctspecapp-0511-13-2014-04-29","risk_graph":"https://legal.exploreworldai.com/api/public/v1/risk?id=us:mdctspecapp-0511-13-2014-04-29","relations_graph":"https://legal.exploreworldai.com/api/public/v1/relations?id=us:mdctspecapp-0511-13-2014-04-29","changes":"https://legal.exploreworldai.com/api/public/v1/us-praxis/changes","agent":"https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:mdctspecapp-0511-13-2014-04-29","neighbors":[{"id":"us:calctapp-e055062n-2020-01-15","name":"People v. 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