MOYLAN, J.
In this uninsured motorist insurance coverage dispute, we must choose between two diverging roads: one requiring compliance with a statutory scheme, the other excusing compliance in favor of a more equitable (or at least less harsh) result. Unlike Robert Frost,
This case arises out of an April 28, 2007 automobile accident between Jeannine Morse and Paula Smallwood in New Castle, Delaware. The accident itself is not relevant to this appeal, and the parties agree that Smallwood was at fault. Smallwood maintained an automobile insurance policy with Nationwide Insurance Company that provided up to $15,000 in liability coverage. Morse maintained her own uninsured motorist coverage through Erie Insurance Exchange. The uninsured motorist endorsement on Morse's policy contained a consent to settle clause that mirrors the settlement procedures set forth in Md.Code, § 19-511 of the Insurance Article.
In the meantime, on November 3, 2008, without obtaining Erie's consent to the settlement, Morse accepted Nationwide's offer and signed a release of all claims against Smallwood. Morse's attorney stamped the release with a notation: "Nothing contained in this release waives, limits, or extinguishes any future claims for UM/UIM or PIP benefits." Erie learned that Morse had accepted the settlement on February 4, 2009, but did not receive a copy of the executed release agreement until July 8, 2009.
On November 5, 2009, Erie denied Morse's claim for uninsured motorist benefits. Erie gave three reasons: 1) "Ms. Morse signed the Release agreement and negotiated the Nationwide settlement check prior to sending ERIE the notice as required by [Md.Code, § 19-511 of the Insurance Article]"; 2) "the subject release agreement signed by Ms. Morse was a global release and served to preclude any and all claims, including the subject Underinsured Motorists claim";
On June 17, 2011, through her present attorneys, Morse filed suit against Erie in the Circuit Court for Cecil County for breach of the insurance contract. On April 22-23, 2013, the case was tried to a jury on the issues of whether Erie breached the contract by denying Morse's uninsured motorist claim and, if so, the extent of Morse's damages resulting from the automobile accident. Morse moved for judgment on the ground that Erie had failed to show any prejudice resulting from her failure to obtain its consent to settle with Nationwide. The court denied the motion. The court also denied Morse's request for a jury instruction to the effect that her failure to notify Erie of the settlement offer would relieve Erie from its responsibility to provide coverage only if Erie showed actual prejudice.
Our analysis in this case revolves around two sections of the Insurance Article of the Maryland Code. First, § 19-110 prohibits an insurer from disclaiming coverage on a liability insurance policy on the ground that an insured failed to cooperate or to provide "required notice," unless the insurer shows "actual prejudice" resulting therefrom. Section 19-110 provides:
Second, § 19-511 creates a procedure that allows an injured insured to settle her claim against a tortfeasor's liability insurer for full policy limits without prejudice to her claim for uninsured motorist benefits. Upon receiving from its insured a settlement offer from a liability insurer for policy limits, the uninsured motorist insurer is afforded sixty days to choose to consent to the settlement (thereby waiving its subrogation rights against the tortfeasor), or to refuse to consent and instead pay its insured the amount of the offer directly (thereby preserving its subrogation rights). If the injured insured has complied with § 19-511 but the uninsured motorist insurer has not timely responded or paid out, the injured insured still may accept the settlement offer without prejudice to her uninsured motorist claim, just as if the uninsured motorist insurer had consented to the settlement. See Kritsings v. State Farm Mut. Auto. Ins. Co., 189 Md.App. 367, 378, 984 A.2d 395, 401 (2009), cert. denied, 413 Md. 229, 991 A.2d 1274 (2010). See also Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 586-87, 53 A.3d 456, 463 (2012), aff'd, 437 Md. 332, 86 A.3d 665 (2014).
Id. at 131-33, 630 A.2d at 717-18.
Morse contends that the court should have granted her motion for judgment on the breach of contract issue because
Erie takes a very different view of the statutory provisions. Erie contends that § 19-511 created a mandatory procedure that an insured and insurer must follow in order for the insured to accept a settlement offer from a tortfeasor without prejudice to her claim for uninsured motorist benefits. Erie contends that § 19-110 is strictly limited to denials of liability coverage based on an insured's failure to provide notice or to cooperate, and that it cannot be extended to cover a denial of uninsured motorist coverage based on an insured's failure to obtain consent to settle. Erie views a mere failure to provide notice as something altogether different from Morse's denial of its opportunity to review the offer and decide whether to grant or refuse consent to the settlement.
The issue before us is whether an injured insured's failure to obtain her uninsured motorist insurer's consent to settle with a tortfeasor's liability insurer for policy limits, in violation of her insurance policy and § 19-511, triggers either the § 19-110 or common law prejudice rules. We hold that it does not. The § 19-110 prejudice rule is not a safe harbor that would excuse noncompliance with § 19-511. By its terms, § 19-110 is limited to denials of liability coverage based on an insured's failure to cooperate or failure to provide required notice. Obtaining an uninsured motorist insurer's consent to settle with a tortfeasor's liability insurer is not equivalent to providing required notice. Maryland's common law prejudice rule is not noticeably broader than § 19-110.
Section 19-511, by contrast, sets forth a specific procedure an injured insured must follow in order to settle with a tortfeasor's liability insurer without prejudice to her uninsured motorist claim. Extending the prejudice rule to also excuse failure to obtain consent to settle would render § 19-511 a nullity. Reading the statutory provisions in harmony with each other, as we must, we hold that an uninsured motorist insurer may disclaim coverage based on its insured's failure to comply with § 19-511, without having to show actual prejudice.
Since 1964, as a matter of statute, and since 2005, as a matter of common law, Maryland has followed a "prejudice rule," whereby
See Allstate Ins. Co. v. State Farm Mut. Auto. Ins. Co., 363 Md. 106, 122, 767 A.2d 831, 840 (2001). In Maryland, it is the insurer who bears the burden of "establish[ing] by a preponderance of affirmative evidence that the delay in giving notice has resulted in actual prejudice to the insurer." See Sherwood Brands, Inc. v. Hartford Accident & Indem. Co., 347 Md. 32, 42, 698 A.2d 1078, 1083 (1997). The rule avoids
Although the majority of states follow some form of prejudice rule today,
Although Maryland courts have now fully embraced the prejudice rule as articulated in § 19-110, they have uniformly recognized its narrow scope. By its terms, § 19-110 requires an insurer to show actual prejudice only where the insurer disclaims liability coverage as a consequence of its insured's "fail[ure] to cooperate with the insurer" or failure to "giv[e] the insurer required notice."
In Government Employees Ins. Co. v. Harvey, 278 Md. 548, 366 A.2d 13 (1976), the Court of Appeals explained that the General Assembly had already limited the types of failures by an insured that would be protected by the prejudice rule. The version of the statute originally proposed would have required an insurer to show prejudice when it disclaimed liability "for any reason." The version of the statute actually enacted restricted application of the prejudice rule to disclaimers based on failure to cooperate or failure to provide notice.
Id. at 552, 366 A.2d at 16-17 (emphasis supplied).
In Harvey, the injured insured notified her insurer that she had been in an accident
The Court of Appeals reversed, holding that the prejudice statute did not apply to an insured's failure to provide timely proof of loss, which is "separate and distinct from a notice of accident." The Court explained:
Id. at 553, 366 A.2d at 17 (emphasis supplied). Thus, the insurer was entitled to deny the PIP claim solely because the proof of loss was untimely, without having to show prejudice.
In Phillips Way, Inc. v. American Equity Ins. Co., 143 Md.App. 515, 517, 795 A.2d 216, 217 (2002), this Court dealt with a professional liability insurance policy with a no-action clause providing that the insured could not maintain an action to recover under the policy unless and until the amount of loss was fixed by a final judgment rendered after trial or "by agreement between the parties with the written consent of the [insurer]." Instead of trying the case to judgment, however, the insured "settled a claim made against it by a third party but did so without the knowledge or consent of its insurer." Id. The insured sued to collect on the insurance policy. The circuit court granted summary judgment in favor of the insurer, and this Court affirmed.
On appeal, we rejected the insured's argument that § 19-110 applied to its failure to obtain consent to settle. We recalled the legislative history of § 19-110, as explained in Harvey. We noted that the General Assembly had "specifically rejected" an approach that would make § 19-110 "applicable to any defense raised by the insurer." Id. at 521, 795 A.2d at 219. We reiterated the Harvey Court's conclusion "[t]hat an insurer must show prejudice only if it raises a failure to cooperate defense or a defense based on lack of notice." Id. We reasoned that extending the prejudice rule to an insured's breach of a no-action clause would "put the nearly impossible burden on the [insurer] of showing collusion [between the insured and the other party to the settlement] or demonstrating, after the fact, the true worth of the settled claim." Id. at 524, 795 A.2d at 221.
In Perini/Tompkins Joint Venture v. ACE American Ins. Co., 738 F.3d 95 (4th Cir.2013), the United States Court of Appeals for the Fourth Circuit applied Phillips Way to similar facts and reached the same result, concluding that § 19-110 did not apply to an insured's failure to obtain its insurer's consent to settle in violation of a no-action clause.
Sensing the outer limits of § 19-110, Morse has attempted to squeeze her situation into one of the statute's two areas of applicability. She argues only that her failure to obtain Erie's consent to settle was a form of failure to provide required notice, not that it was a failure to cooperate. In our view, providing required notice and obtaining consent to settle are simply not the same thing.
Maryland courts have rejected attempts to equate mere notice violations, which trigger the § 19-110 prejudice rule, with other deficiencies by insureds, which do not trigger the § 19-110 prejudice rule. In Harvey, the Court refused to equate an insured's failure to timely submit a "proof of loss or claim" with an insured's failure to provide a "notice of accident."
278 Md. at 553, 366 A.2d at 17.
In a case that predates § 19-511, Waters v. U.S. F. & G. Co., 328 Md. 700, 616 A.2d 884 (1992), the Court of Appeals noted that a consent to settle clause provides an uninsured motorist insurer with greater protection against undesired settlements than a mere notice clause. The policy in that case contained a notice clause, but not a consent to settle clause. The insured provided notice of a liability insurer's pending settlement offer, but accepted the offer without obtaining its uninsured motorist insurer's consent. The Court held that the insurer still was bound by the settlement, even though it did not consent, because it had notice of the pending settlement offer and was a party to the action between the insured and the tortfeasor.
Id. at 719, 616 A.2d at 893 (emphasis supplied). The Court explained that the insurer could have "protect[ed] itself from an allegedly inappropriate settlement between its insured and the uninsured tortfeasor" by inserting a consent to settle clause into its policy, or by intervening in the action and litigating the liability and damages issues, but it chose not to do so. Id. at 718-19, 616 A.2d at 892-93.
In West American Ins. Co. v. Popa, 352 Md. 455, 723 A.2d 1 (1998), another pre § 19-511 case, the uninsured motorist policy provided that no judgment against a tortfeasor would be binding upon the uninsured motorist insurer unless the insured had provided "reasonable notice of the pendency of the suit" and the insurer had a "reasonable opportunity" to protect its interests. The policy did not contain a consent to settle clause. After trial against the tortfeasor proceeded to judgment, the insured made a claim for uninsured
The insurer also argued that its insured had no right to recover more on a judgment against one of the parties than it already had recovered, because the insured had filed an "order of satisfaction" as to that judgment. The Court reiterated
Id. at 468, 723 A.2d at 7 (emphasis supplied).
In Phillips Way, we rejected an insured's attempt to equate its failure to obtain consent to settle with a failure to provide notice. As we have noted, the insured in that case had violated a no-action clause in a professional liability policy that, under the circumstances, operated as a consent to settle clause. We explained that, even if the insured had notified its insurer of the pending settlement agreement and had cooperated by giving the insurer an opportunity to decide whether to consent, the policy still would have been breached because the insurer had not consented. Thus, the failure to obtain consent was something more than a failure to provide notice or to cooperate and it did not trigger the prejudice rule.
143 Md.App. at 520, 795 A.2d at 218 (emphasis supplied).
An insurer's right to consent to settle takes on even greater importance in the context of uninsured motorist insurance. By contrast to a mere right to notice, which does not necessarily trigger anything in terms of the ongoing litigation, an uninsured motorist insurer's statutory right to consent to certain settlements can effectively put the action on hold for up to sixty days while the insurer makes a decision.
By refusing consent to settle, an insurer takes on the risk that it may later recover less than the non-refundable amount it must advance to its insured, or even that it may later recover nothing at all. In Ohio Cas. Ins. Co. v. Chamberlin, 172 Md.App. 229, 914 A.2d 160 (2007), the uninsured motorist insurer refused to consent to a liability insurer's offer to settle for policy limits of $20,000 and, in accordance with § 19-511(c), advanced the $20,000 to its insured. The action against the tortfeasor proceeded to trial, and a jury returned a verdict in favor of the insured for only $5,445. The uninsured motorist insurer then sought repayment from its insured of the $20,000 it had advanced. The circuit court denied that request, and we affirmed. We held
Id. at 240, 914 A.2d at 167.
By granting consent to settle — under the law as it stood at the time that, had Morse complied with § 19-511, Erie would have had to decide whether to grant or refuse consent — an insurer was precluded from later contesting tort liability. In Maurer v. Pennsylvania Nat. Mut. Cas. Ins. Co., 404 Md. 60, 945 A.2d 629 (2007), the insured followed the procedures set forth in § 19-511 and obtained his uninsured motorist insurer's consent to settle with the tortfeasor's insurer. After that settlement, the insured sued his insurer on the policy. The court granted partial summary judgment in favor of the insured, ruling that the tortfeasor had been negligent as a matter of law. Nevertheless, the court submitted the case to a jury on the issues of whether the insured had been contributorily negligent or had assumed the risk of his injuries. An affirmative finding on either question would preclude recovery. The jury found contributory negligence and the insured appealed.
The Court of Appeals reversed based on erroneous jury instructions, but went on to address the effect of the uninsured motorist insurer's consent to settle with the tortfeasor. By consenting to a settlement, an uninsured motorist insurer became bound by it. Id. at 74, 945 A.2d at 637 (quoting Nationwide Mut. Ins. Co. v. Webb, 291 Md. 721, 739-40, 436 A.2d 465, 476 (1981) (holding that "consent to sue" clauses in uninsured motorist policies are invalid, but noting that "consent to settle" clauses have generally been upheld)). A consenting insurer was thus precluded from "contest[ing] the issues of tort liability" in the insured's action to recover on the policy. Id. at 75, 945 A.2d at 638. The Court concluded that the insurer in Maurer should not have been allowed to raise the
In 2012, the General Assembly tempered the effect of an insurer's written consent to settle with a tortfeasor. By 2012 Md. Laws Chaps. 268, 269, the legislature added subsection (f) to § 19-511, which provides:
The legislation provided "[t]hat this Act shall take effect October 1, 2012." Under current law, an insurer will not be bound by a settlement to which it has given written consent. Notwithstanding its consent, an insurer still may raise in its defense "any issue relating to liability or damages." Consent to settlement "does not constitute an admission ... as to any issue raised in an action against the uninsured motorist insurer."
Although, today, an uninsured motorist insurer may consent to settlement with a tortfeasor without waiving its right to contest tort liability, that was not true at the time Erie would have decided whether to grant consent to Morse's settlement with Nationwide, had Morse given it the opportunity. By its terms, the 2012 legislation did not take effect until October 1, 2012 — well after Morse's 2007 accident, 2008 settlement, and 2011 filing of suit against Erie. If Morse had complied with § 19-511 and given Erie an opportunity to grant or refuse consent to settle, Erie would have had to consider the more weighty, pre- § 19-511(f) consequences of its decision.
The 2012 amendment has no effect on this case. Statutes are presumed to apply only prospectively, absent "clear expressions in the statute to the contrary ... particularly ... where the statute adversely affects substantive rights." See State Farm Mut. Auto. Ins. Co. v. Hearn, 242 Md. 575, 582, 219 A.2d 820, 824 (1966). See also Keeney v. Allstate Ins. Co., 130 Md.App. 396, 402-07, 746 A.2d 947, 951-53 (2000). The addition of subsection (f) clearly affected substantive rights, as it drastically altered the effect of an insurer's granting consent to settle, vis-à-vis both insurer and insured, and did not merely "alter[] procedural machinery." Hearn, 242 Md. at 582, 219 A.2d at 824. There is absolutely no indication that the General Assembly intended for 2012 Md. Laws Chaps. 268, 269, to apply retrospectively. On the contrary, the legislation specifically provided that it would take effect October 1, 2012. The 2012 change in the law is immaterial to our analysis.
In this case, to be sure, Erie never contested Smallwood's negligence or raised Morse's contributory negligence as an affirmative defense to its liability on the
Morse also invokes Prince George's County v. Local Gov't Ins. Trust, 388 Md. 162, 879 A.2d 81 (2005), which, she claims, created a common law prejudice rule that is broader than § 19-110. In that case, Prince George's County was found liable for the actions of three county police officers that deprived a citizen of his state and federal constitutional rights. The County did not inform its excess liability insurer, the Local Government Insurance Trust, of the incident or the lawsuit until ten days after the jury returned its verdict. The Trust denied coverage on the ground that the County had failed to give notice, as required by the policy, and the County filed suit.
The trial court granted summary judgment in favor of the Trust. This Court affirmed, as did the Court of Appeals. The Court of Appeals held that the County had indeed violated the notice requirements of the policy, but that § 19-110 did not apply because the Trust did not fit the statutory definition of an "insurer."
In holding that the Trust was required to show prejudice under the common law, the Court overruled its earlier rejection of a prejudice rule in Watson v. U.S. F. & G. Co., 231 Md. 266, 189 A.2d 625 (1963). The Court took note of the fact that, although no-prejudice was the majority rule at the time Watson was decided, the majority of states now support a prejudice rule. 388 Md. at 182-83, 879 A.2d at 93. Furthermore, the General Assembly's swift rejection of Watson, by enacting the forerunner of § 19-110, "announced the public policy of this state that an insurer must show prejudice before disclaiming coverage based on the insured's breach of a notice provision." Id. at 187, 879 A.2d at 96. Thus, the Court held:
Id., 388 Md. at 187, 879 A.2d at 96-97 (emphasis supplied).
To the extent that a common law prejudice rule even exists, it does not extend to an insured's failure to obtain consent to settle. By its facts, the Prince George's decision extended the § 19-110 prejudice rule to cover entities that do not meet the strict definition of "insurer" contained in Ins. § 1-101, and made clear that the prejudice rule applies to both primary and excess liability insurers. This may support Morse's argument that the prejudice
In fact, in a subsequent case, the Court has taken an even more limited view of its Prince George's holding. In Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md. 300, 322 n. 18, 13 A.3d 1268, 1282 n. 18 (2011), the Court explained:
(Emphasis supplied). Whatever common law prejudice rule Maryland may have, it is not noticeably broader than § 19-110.
Our conclusion that Erie's denial of coverage did not trigger the § 19-110 or common law prejudice rules is strengthened by the fact that the procedure for settling with an uninsured tortfeasor is itself a creature of statute. We cannot apply one statute to excuse Morse's noncompliance with another statute, especially where the two statutes do not overlap or conflict. As we have explained, § 19-110 requires an insurer to show actual prejudice only where it disclaims liability coverage based on an insured's failure to cooperate or provide required notice. It does not apply where a disclaimer of coverage is based on an insured's failure to comply with the § 19-511 settlement procedure.
In Harvey, the Court held that the § 19-110 prejudice rule did not apply to an insurer's denial of PIP coverage. Like uninsured motorist insurance, PIP coverage is mandatory in Maryland, unless affirmatively waived, and is governed by its own statutory provisions. See Ins. §§ 19-505 et seq. Consistent with the PIP coverage statute, the insurer had written into its policy a six-month time limit for submitting proof of claim. The Court held that the insurer was entitled to deny PIP coverage based on its insured's failure to timely submit proof of claim, without having to show prejudice.
278 Md. at 554, 366 A.2d at 17 (emphasis supplied). Similarly, an uninsured motorist insurer may deny coverage based on an insured's failure to comply with a statutory settlement procedure, § 19-511, irrespective of prejudice and notwithstanding the fact that uninsured motorist coverage is compulsory.
We do not suggest that § 19-511 removes all uninsured motorist coverage disputes from the ambit of § 19-110. On the contrary, if an uninsured motorist insurer denies coverage based on an insured's failure to provide notice or to cooperate, it will have to show actual prejudice. In General Accident Ins. Co. v. Scott, 107 Md.App. 603, 669 A.2d 773, cert. denied, 342 Md. 115, 673 A.2d 707 (1996), this Court affirmed a circuit court's grant of summary judgment in favor of an injured insured whose uninsured motorist insurer denied coverage based on the insured's twenty-nine-month delay in providing notice of the accident. Without deciding whether the forerunner of § 19-110 actually applied to uninsured motorist coverage, we concluded that "an insurer cannot avoid coverage under an uninsured motorist policy on the grounds of an unreasonably late notice, unless the insurer proves that it suffered `actual prejudice.'" Id. at 615, 669 A.2d at 779.
Section 19-511 exists primarily for the benefit of an injured insured. It was first enacted in 1995 as Article 48A, § 542(b). See 1995 Md. Laws Chap. 516. It was conceived, in part, as a short cut allowing an injured insured to obtain at least some compensation for her injury without having to wait for a global settlement involving both the tortfeasor's liability insurer and her own uninsured motorist insurer. See Kritsings v. State Farm Mut. Auto. Ins. Co., 189 Md.App. 367, 378-79, 984 A.2d 395, 401-02 (2009), cert. denied, 413 Md. 229, 991 A.2d 1274 (2010). It is a carefully brokered legislative solution that "sets forth a settlement procedure to be followed by claimants." See Brethren Mut. Ins. Co. v. Buckley, 437 Md. 332, 86 A.3d 665, 674 (2014).
In Keeney v. Allstate Ins. Co., 130 Md.App. 396, 403-04, 746 A.2d 947, 951 (2000), we explained the situation before § 19-511, when liability insurers' unwillingness to settle without a release was pitted against uninsured motorist insurers' unwillingness to grant a release and waive subrogation.
The summary of the bill provided in the Senate floor report was terse, viz:
Id. at 401-02, 746 A.2d at 950.
In exchange for allowing injured insureds to obtain some compensation earlier on in the process, without prejudice to their remaining claims for uninsured motorist benefits, § 19-511(b) grants an uninsured motorist carrier the right to consent to settlement and a sixty-day period to make that decision. This is true even if the policy does not contain a consent to settle clause. Section 19-511 effectively writes into all uninsured motorist policies a consent to settle clause that applies where the settlement offer would exhaust liability policy limits. See Maurer, 404 Md. at 73 n. 4, 945 A.2d at 637 n. 4 ("Under some circumstances, where the amount of the settlement or settlements, arising out of the same occurrence, would exhaust liability policy limits, the uninsured/underinsured carrier is by statute given the option to consent or not to consent to the settlement. Under such circumstances, there exists a `consent to settle' clause by statute.").
If an injured insured follows the settlement procedures of § 19-511, she cannot lose. If the uninsured motorist insurer grants consent to the settlement, she will obtain prompt compensation from the tortfeasor's liability insurer. If the uninsured motorist insurer refuses consent to the settlement, it must promptly remit to her the same compensation, as an advance against any future recovery. If the uninsured motorist insurer does not respond within the statutorily established time limit, she may accept the liability insurer's offer as if her insurer had consented. Upon settling with a liability insurer, pursuant to § 19-511(e), or accepting equivalent payment from her uninsured motorist insurer, pursuant to § 19-511(c), the injured insured no longer bears any risk that her claim will later be found to be worth less than the limit of the tortfeasor's liability policy. Once she
In this case, Morse made no attempt to comply with § 19-511. Section 19-511 was triggered when Nationwide extended an offer to settle for the full limit of the only liability policy Smallwood had. Instead of sending Erie a copy of Nationwide's offer by certified mail, as required by § 19-511(a), Morse's previous attorney first notified Erie by telephone and later by non-certified mail. Instead of giving Erie sixty days to decide whether to grant or refuse consent to the settlement, as required by § 19-511(b), Morse accepted Nationwide's offer and signed a release, twenty-one days after the offer was extended, nineteen or twenty days after her attorney notified Erie by telephone, seven days after her attorney sent notice by non-certified mail, and thirty-two or thirty-three days before Erie actually received the written offer.
We are mindful that "the purpose of uninsured motorist statutes is `that each insured under such coverage have available the full statutory minimum to exactly the same extent as would have been available had the tortfeasor complied with the minimum requirements of the financial responsibility law,'" see, e.g., Nationwide Mut. Ins. Co. v. Webb, 291 Md. 721, 737, 436 A.2d 465, 474 (1981), as well as "the remedial nature of the statutory plan, which dictates a liberal construction in order to effectuate its purpose of assuring recovery for innocent victims of motor vehicle accidents," see, e.g., State Farm Mut. Auto. Ins. Co. v. Maryland Auto. Ins. Fund, 277 Md. 602, 605, 356 A.2d 560, 562 (1976). Nevertheless, even a liberal construction of a remedial statute cannot excuse total noncompliance.
In Buckley v. Brethren Mut. Ins. Co., 207 Md.App. 574, 53 A.3d 456 (2012), this Court held that an insured's general release, given in exchange for settlement with a tortfeasor's liability insurer, that released the tortfeasor "and all other persons, firms or corporations," did not also release the insured's uninsured motorist carrier from providing benefits. We explained that to hold otherwise would be contrary to the text, spirit, and purpose of § 19-511. Nevertheless, we remanded for further factfinding with regard to whether the insurer had consented to the settlement with the tortfeasor. The answer to that question would determine whether the insurer could contest tort liability at trial or be limited to a trial on damages only. The Court of Appeals affirmed our decision in all respects, though it did not reach the question whether the insurer had actually consented to the settlement. Brethren Mut. Ins. Co. v. Buckley, 437 Md. 332, 86 A.3d 665 (2014). Nothing in either opinion casts any doubt on an insured's obligation to comply with § 19-511.
We are not moved by Morse's assertion that Erie could not have been prejudiced by her settlement with Nationwide because the settlement was for the full limits of the only liability insurance policy Smallwood had. As we have explained, no prejudice rule was triggered in this case and Erie's lack of prejudice is irrelevant. We note, however, that, if we were to apply a prejudice rule as Morse suggests, such a lack of prejudice would almost always excuse
Morse presents us with decisions of twenty-eight states which, she claims, apply a prejudice rule to a denial of uninsured motorist coverage based on violation of a consent to settle clause.
In Sherwood Brands, Inc. v. Great American Ins. Co., 418 Md. 300, 327-28, 13 A.3d 1268, 1285 (2011), the Court of Appeals cautioned against "squeez[ing] a square peg — that is, Maryland's notice-prejudice statute, as embodied in § 19-110, and our jurisprudence — into a round hole — that is, the notice-prejudice jurisprudence of other states and jurisdictions." The Court noted that, "[o]f the more than three-dozen states adopting a notice-prejudice rule, it appears that only two did so legislatively, as Maryland has." Id. That assessment applies equally to the cases Morse has cited here. We may not read a prejudice rule into § 19-511 on the authority that other state legislatures have included
Morse argues that our result would be inequitable. Erie, to be sure, made no showing at all that it was prejudiced by Morse's failure to obtain its consent to settle with Nationwide. The result Morse feels is harsh could have been easily avoided by complying with the straightforward settlement procedure the General Assembly provided in § 19-511. We will not nullify a finely tuned and completely valid statutory procedure simply to excuse Morse's noncompliance in this particular case. As Morse's noncompliance did not trigger a prejudice rule, Erie was entitled to disclaim liability on the basis of that noncompliance, with or without prejudice.
Dissenting Opinion by WOODWARD, J.
WOODWARD, J., dissenting.
I respectfully dissent.
At the outset, it is important to note that under the facts of this case, Erie does not claim, nor is there anything in the record to support a claim, that Erie was actually prejudiced by Morse's failure to obtain Erie's written consent prior to settling her claim against the tortfeasor for the limits of the tortfeasor's liability policy. Thus, if the consent to settle requirement of § 19-511 is enforced in the absence of actual prejudice, as Erie urges and the majority holds, "the insurer [Erie] suffers no harm and the insured [Morse] forfeits the premiums and loses coverage." Prince George's Cnty. v. Local Gov't Ins. Trust, 388 Md. 162, 187, 879 A.2d 81 (2005). Notwithstanding the majority's assertion that Erie's lack of actual prejudice is "irrelevant," I believe that such lack of actual prejudice is very relevant to a proper construction of § 19-511.
In Town of Oxford v. Koste, 204 Md.App. 578, 42 A.3d 637 (2012), aff'd, 431 Md. 14, 63 A.3d 582 (2013), this Court set forth the principles that guide the construction of a statute:
Id. at 585-86, 42 A.3d 637 (emphasis added) (citations omitted). When the text is ambiguous, we must look beyond the statute's plain language to determine legislative intent:
Consol. Constr. Servs., Inc. v. Simpson, 372 Md. 434, 457, 813 A.2d 260 (2002) (emphasis added) (quoting Tracey v. Tracey, 328 Md. 380, 387, 614 A.2d 590 (1992)). The Court of Appeals has emphasized the importance of legislative purpose, stating that "[t]he cardinal rule [of statutory interpretation] is to ascertain and effectuate legislative intent." Id. at 456, 813 A.2d 260 (alterations in original) (internal quotation marks omitted).
Regarding the text of § 19-511, in Buckley v. Brethren Mutual Insurance Co., 207 Md.App. 574, 53 A.3d 456 (2012), aff'd, 437 Md. 332, 86 A.3d 665 (2014), we summarized the procedure to be followed by the insured and the uninsured motorist carrier ("UM carrier") when the liability insurer of the alleged tortfeasor offers the policy limits to the injured person. We stated:
Id. at 586-87, 53 A.3d 456 (footnote omitted).
There is no language in § 19-511 that sets forth the consequences of an insured's failure to follow the statute's procedure prior to accepting the tortfeasor's liability policy limits. According to the majority, the consequence of such failure is that the UM carrier may deny coverage regardless of whether it suffered actual prejudice. Morse, on the other hand, construes § 19-511 to require actual prejudice to the UM carrier before it can deny coverage. Given the absence of statutory language, § 19-511 is ambiguous, and the question thus presented is which construction is consistent with the purpose and policy of § 19-511, and how do the results of each construction compare with each other.
In Buckley, this Court articulated the purpose and policy of the uninsured motorist statute, as well as the underlying reasons for enacting § 19-511. We said:
207 Md.App. at 589, 53 A.3d 456 (alteration in original) (emphasis added) (citations and internal quotation marks omitted). Similarly, Maryland has a "strong public policy favoring compensation of those injured by UM drivers." Id. at 591, 53 A.3d 456.
The primary reason for enacting § 19-511 was to eliminate the potential lengthy delay caused by "`a situation where the liability carrier w[ould] not give [the injured persons] the limits of the at-fault party's policy without a release and the [UM] carrier w[ould] not allow them to give a release to the liability carrier.'" Id. at 590, 53 A.3d 456 (first and fourth alterations in original) (quoting Keeney v. Allstate Ins. Co., 130 Md.App. 396, 401, 746 A.2d 947 (2000)). Moreover, § 19-511 sought to strike a balance between the right of the insured to a speedy recovery of the liability policy limits and the protection of the UM carrier's subrogation rights.
When the constructions of § 19-511 advanced by the majority and Morse are considered in the context of the purpose and policy of Maryland's uninsured motorist statute and the reasons underlying § 19-511, the result clearly favors Morse's construction. Morse's construction would further the public policy of affording protection for innocent victims by allowing recovery of uninsured motorist compensation unless the UM carrier can show actual prejudice occasioned by the insured's failure to comply with the procedural requirements of § 19-511. Where there is no actual prejudice, an insured who paid for uninsured motorist coverage equal to his or her liability coverage would receive what the statute intended: "`[C]ompensation equal to that which would have been available had the tortfeasor carried liability insurance in an amount equal to the amount of the injured insured's UM coverage.'" Id. at 589, 53 A.3d 456 (quoting Kritsings v. State Farm Mut. Auto. Ins. Co., 189 Md.App. 367, 375, 984 A.2d 395 (2009)). In addition, the balance between the insured's right to speedy recovery and the protection of the UM carrier's subrogation rights would be maintained by Morse's construction, because the UM carrier would still be able to deny coverage where its subrogation rights were actually prejudiced.
A comparison of the results of the different constructions of § 19-511 also support Morse's construction. Adoption of the majority's view results, in effect, in a windfall to the UM carrier — the UM carrier is allowed to keep the premiums paid for uninsured motorist coverage while avoiding its obligation to pay an otherwise valid claim, where the actions of the insured did not increase the risk inherent with such coverage or prejudice any subrogation rights of the UM carrier. Morse's construction would protect a UM carrier from any real adverse impact on its subrogation rights while allowing the recovery of compensation under uninsured motorist coverage
Finally, the views expressed in this dissent are consistent with those of Andrew Janquitto, who wrote in his treatise, Maryland Motor Vehicle Insurance:
Andrew Janquitto, Maryland Motor Vehicle Insurance § 8.12(B), at 471 (3d ed. 2011) (footnote omitted).
For the foregoing reasons, I would reverse the judgment of the circuit court.
(Emphasis supplied).
(Pattern instruction modified as indicated). The court was correct in not giving this instruction because, as we shall explain, it is not a correct statement of the law as it applies to this case.
Neb.Rev.Stat. § 44-6413(1)(a) (emphasis supplied).
N.D. Cent.Code § 26.1-40-15.6(7) (emphasis supplied).
