Brethren Mutual Insurance v. Buckley , 437 Md. 332 ( 2014 )

The Brethren Mutual Insurance Company v. Ember Louise Buckley, Case No. 10, September
Term, 2013, Opinion by Adkins, J.
INSURANCE LAW - SCOPE OF RELEASE - GENERAL RELEASE - MARYLAND
CODE (1997, 2011 REPLACEMENT VOLUME), § 19-511(e) OF THE INSURANCE
ARTICLE - NO PREJUDICE TO UNINSURED MOTORIST CLAIM: The Court of
Special Appeals correctly held that, under § 19-511(e) of the Insurance Article, a tort victim
may execute a boilerplate, general release with a tortfeasor’s liability insurer without
prejudicing the tort victim’s claim under her uninsured motorist policy.
Circuit Court for Baltimore County
Case No. 03-C-08-008799
Argued: November 5, 2013
IN THE COURT OF APPEALS
OF MARYLAND
No. 10
September Term, 2013
THE BRETHREN MUTUAL INSURANCE
COMPANY
v.
EMBER LOUISE BUCKLEY
Barbera, C.J.
Harrell
Greene
Adkins
Eldridge, John C., (Retired,
Specially Assigned)
Cathell, Dale R., (Retired,
Specially Assigned)
McAuliffe, John (Retired,
Specially Assigned),
JJ.
Opinion by Adkins, J.
Filed: March 4, 2014
In this case we examine the scope of a general release executed pursuant to Md. Code
(1997, 2011 Repl. Vol.), § 19-511 of the Insurance Article (“§ 19-511”). Petitioner, The
Brethren Mutual Insurance Company (“Brethren”), appeals the decision of the Court of
Special Appeals that a general release executed by its policy holder, Ember L. Buckley
(“Buckley”), in favor of a tortfeasor’s liability insurer did not likewise waive Buckley’s claim
under her uninsured motorist policy with Brethren.
FACTS AND LEGAL PROCEEDINGS
Respondent, Buckley, was involved in a single-vehicle accident on March 18, 2007.
Buckley was the front-seat passenger in a motor vehicle driven by her boyfriend, Harvey
Betts (“Betts”). Betts was covered by a liability insurance policy issued by GEICO, with
policy limits of $100,000. GEICO offered to settle Respondent’s claim against Betts for the
full policy limits. Notwithstanding this settlement, Buckley had medical bills related to this
accident in excess of $200,000. Because the settlement with Betts did not cover the full
extent of her injuries, Buckley sought coverage under her uninsured/underinsured motorist
(“UM”) policy with Petitioner, Brethren.
In order to comply with Maryland’s UM scheme,1 Respondent sent notice of the
settlement offer from GEICO to Brethren via certified mail on August 29, 2007.2 In
1
Discussed infra.
2
This letter stated:
We represent [Buckley] who was injured in an automobile
collision. Our office currently has an open file with Brethren
(continued...)
response, Brethren’s claims adjuster stated in a letter dated October 30, 2007 that Brethren
would waive any subrogation action against Betts. Having received this message, Buckley
signed a full release of all claims against Harvey Betts and a hold harmless agreement in
favor of Betts and GEICO on December 6, 2007 (“the Release”). The Release stated that:
I/we, Ember Buckley . . . for and in consideration of a draft for
the sum of one hundred thousand dollars . . . do . . . hereby
remise, release, and forever discharge Harvey Betts.
Releasee(s), successors and assigns, and/or his, her or their
associates, heirs, executors and administrators, and all other
persons, firms or corporations of and from any and every claim,
demand, right or cause of action, of whatever kind of nature, on
account of or in any way growing out of any and all personal
injuries and consequences thereof . . . resulting or to result from
an accident that occurred on or about the eighteenth day of
March, 2007, at or near Saw Mill Court Baldwin, MD . . . .
(Emphasis in original). After executing the Release with GEICO, Buckley attempted to
recover for the remainder of her outstanding medical bills from Brethren under her UM
policy. Brethren denied coverage and refused to pay.
2
(...continued)
Mutual for P.I.P. benefits (Claim # 343628).
Enclosed please find a copy of correspondence dated August 8,
2007 which I have received from Geico [sic] Insurance
Company, the liability carrier for the tortfeasor, Mr. Harvey
Betts. They have offered their policy limits of $100,000.00 in
settlement of this claim and are willing to settle the case
accordingly if the tortfeasor, Mr. Harvey Betts, is released from
liability and [subrogation]. This letter is a request that you
permit this to occur pursuant to Insurance Article, §19-511.
(Italics in original).
2
Buckley filed suit against Brethren in the Circuit Court for Baltimore County, alleging
breach of contract and seeking the policy limit of $300,000 in compensatory damages,
attorney’s fees and interest. Brethren answered the complaint, asserting a general denial of
liability, and raising the defenses of failure to state a claim, contributory negligence and
assumption of the risk. Brethren did not raise the Release as an affirmative defense until its
Amended Answer, filed two months after its initial Answer, and nearly three months after
Buckley filed her complaint.
Both parties filed motions for summary judgment. Brethren argued that the Release,
as written, was a general release, and thus released all persons, firms, and corporations from
future claims, regardless of whether they were parties to the Release. Brethren further argued
that Buckley’s subjective intent in executing the Release was irrelevant—the words on the
page should be interpreted exactly as written. Responding, Buckley contended that the
Release only applied to Betts and his insurer, and that her execution of it was clearly in
accordance with § 19-511. That statute reads, in pertinent part:
§ 19-511. Uninsured motorist coverage — Settlement
procedures.
(a) Notice of settlement offer required. — If an
injured person receives a written offer from a
motor vehicle insurance liability insurer . . . to
settle a claim for bodily injury or death, and the
amount of the settlement offer . . . would exhaust
the bodily injury or death limits of the applicable
liability insurance policies . . . the injured person
shall send by certified mail, to any insurer that
provides uninsured motorist coverage . . . a copy
of the liability insurer’s written settlement offer.
3
(b) Response to settlement offer. — Within 60
days after receipt of the notice . . . the uninsured
motorist insurer shall send to the injured person:
(1) written consent to acceptance
of the settlement offer and to the
execution of releases; or
(2) written refusal to consent to
acceptance of the settlement offer.
(c) Payment of settlement offer. — Within 30
days after a refusal to consent to acceptance of a
settlement offer . . . the uninsured motorist insurer
shall pay to the injured person the amount of the
settlement offer.
(d) Subrogation rights of uninsured motorist
insurer. —
(1) Payment as described in
subsection (c) of this section shall
preserve the uninsured motorist
insurer’s subrogation rights against
the liability insurer and its insured.
(2) Receipt by the insured person of
th e p a ym e n t d e s c r i b e d i n
subsection (c) of this section shall
constitute the assignment, up to the
amount of the payment, of any
recovery on behalf of the injured
person that is subsequently paid
from the applicable liability
insurance polic[y] . . . .
(e) Acceptance of settlement offer. — The injured
person may accept the liability insurer’s
settlement offer and execute releases in favor of
the liability insurer and its insured without
prejudice to any claim the injured person may
have against the uninsured motorist insurer:
(1) on receipt of written consent to
4
acceptance of the settlement offer
and to the execution of releases; or
(2) if the uninsured motorist insurer
has not met the requirements of
subsection (b) or subsection (c) of
this section.
§ 19-511 of the Insurance Article. The Circuit Court agreed with Brethren and entered
summary judgment in its favor, dismissing Buckley’s breach of contract claims.3
Buckley appealed the Circuit Court’s grant of summary judgment to Brethren. The
Court of Special Appeals, applying the facts of this case to § 19-511, held that “in the context
of § 19-511(e), executing a boilerplate, general release in favor of the liability insurer does
not relieve the UM carrier from its contractual duty to issue a UM payment to its insured.”
Buckley v. Brethren Mut. Ins. Co., 207 Md. App. 574, 587, 53 A.3d 456, 463 (2012). The
court based its decision on three considerations, “(1) the text of the statute; (2) the purpose
of the statute; and (3) matters of public policy.” Buckley, 207 Md. App. at 587, 53 A.3d at
463–64.
3
Along with this case, Buckley also pursued a complaint against Brethren with the
Maryland Insurance Administration (“MIA”) pursuant to Md. Code (2007, 2011 Repl. Vol.)
§ 27-1001 of the Insurance Article. The issue in the MIA proceeding was whether Brethren
had acted with an absence of good faith in refusing to pay Buckley’s UM claim. Finding that
Brethren’s argument that the Release must be read to release them from their obligation to
pay Buckley was inconsistent with the plain language of § 19-511(e), the MIA found that
Brethren had acted in the absence of good faith. Thus, the MIA ordered Petitioner to pay
$246,250.00 to Buckley for its violations of § 27-1001. Brethren filed an appeal for judicial
review of this MIA decision in the Circuit Court for Baltimore County. That appeal was
stayed pending the result of the Court of Special Appeals case. Buckley v. Brethren Mut. Ins.
Co., 207 Md. App. 574, 583, n.5, 53 A.3d 456, 461, n.5 (2012).
5
Thus, the Court of Special Appeals held that the general release executed between
Buckley and GEICO did not prejudice Buckley’s claim against Brethren. Consequently,
Brethren could not use the Release to relieve itself of its duty to pay under the UM policy
owned by Buckley. Buckley, 207 Md. App. at 598, 53 A.3d at 470.
On Brethren’s petition, we granted certiorari to consider the following question:
Did the Court of Special Appeals err in ruling that the general
release that Buckley executed did not prejudice her breach of
contract claim against Brethren for benefits under her UM
policy? 4
Because we answer this question in the negative, we affirm the decision of the Court
of Special Appeals.
DISCUSSION
4
We rephrased Petitioner’s question presented, which appeared in its brief as follows:
Did the Court of Special Appeals err in ruling that Buckley’s
breach of contract claim against Brethren for UIM benefits was
preserved, despite the fact that the parties and the Court of
Special Appeals agreed that Buckley executed a release that,
under its plain language, released all claims arising out of her
automobile accident against “all persons, firms or corporations,”
where the unambiguous provisions of Md. Code Ann. Ins. §19-
511(e), and the settlement procedures established thereunder,
did not legislatively overrule controlling case law of this Court
on the effect of such a global release?
Additionally, we highlight that this Court granted certiorari on the narrow question of the
correctness of the interpretation of the Release by the Court of Special Appeals. The issue
of Brethren’s consent to Buckley’s settlement with GEICO, although briefed by Respondent,
is not presented for our review.
6
Under Maryland Rule 2-501(f), a trial court may grant summary judgment if “there
is no dispute as to material fact and the moving party is entitled to judgment as a matter of
law.” Mathews v. Cassidy Turley Maryland, Inc., 435 Md. 584, 598, 80 A.3d 269, 276
(2013). The court views the record in the light most favorable to the non-moving party,
including any reasonable inferences that can be drawn against the moving party. Mathews,
435 Md. at 598, 80 A.3d at 276. Because no material facts are in dispute, we review the
order granting summary judgment for legal correctness without “according any special
deference to the circuit court’s conclusions.” Mathews, 435 Md. at 598, 80 A.3d at 277
(citation omitted).
Buckley argues that the Court of Special Appeals correctly held that § 19-511(e) and
the public policy of the State of Maryland preclude Brethren from asserting the Release as
a defense to her UM claim. Buckley points to the plain language of § 19-511(e), the purpose
of §19-511 as evidenced by its legislative history, and the Maryland Insurance
Administration’s interpretation of § 19-511 to support her position that a release signed in
accordance with § 19-511 cannot be read to release her UM insurer.
Brethren counters that Buckley signed a general release that, under its plain language,
released all known claims against all persons or entities, even if those persons or entities
were not aware of the Release and paid nothing for it. Brethren argues that the plain
language of the Release should rule the day, the statutory protections and legislative purposes
of § 19-511 notwithstanding. Additionally, Brethren alleges that Buckley cannot claim the
7
protection of § 19-511(e) because the Release went far beyond that permitted under § 19-
511(e).
We are called upon to construe both the Release and the statute, and how they interact.
We start our analysis by examining the nature of releases. Releases are contracts that should
be interpreted according to the intent of the parties. See Owens-Illinois, Inc. v. Cook, 386
Md. 468, 495–96, 872 A.2d 969, 985 (2005) (“[I]t is well settled that ‘[a] release is to be
construed according to the intent of the parties and the object and purpose of the instrument,
and that intent will control and limit its operation.’” (quoting Shriver v. Carlin & Fulton Co.,
155 Md. 51, 64, 141 A. 434, 440 (1928))). Under the objective law of contract interpretation,
courts are to interpret contracts based on “what a reasonable person in the position of the
parties would have meant at the time it was effectuated.” General Motors Acceptance Corp.
v. Daniels, 303 Md. 254, 261, 492 A.2d 1306, 1310 (1995).
If the language of a contract is plain and unambiguous, we presume that the parties
meant what they expressed. See Bd. of Trustees v. Sherman, 280 Md. 373, 380, 373 A.2d
626, 629 (1977). Previously, we have held that general releases, similar in language to that
signed by Buckley, must be read to release even claims against parties who gave no
consideration for, had no knowledge of, and were not parties to the contract. See Pemrock,
Inc. v. Essco Co., 252 Md. 374, 249 A.2d 711 (1969). We recognize the appeal of—and
Brethren’s zealous advocacy for—interpreting the Release according to these tenets of our
“freedom of contract” jurisprudence. Indeed, these tenets have persuaded us in similar,
8
though not identical, factual settings. Brethren has argued that those cases should control our
decision here. We now examine three of the leading decisions in this line of cases.
In the first case, Bernstein v. Kapneck, the parents of an infant injured in a car
accident settled with an at-fault driver and her insurer by executing a general release with
language similar to the one here.5 290 Md. 452, 454, 430 A.2d 602, 603–04 (1981). After
signing the release, the injured child began suffering medical symptoms that had not been
diagnosed or foreseen at the time that the release was executed. Bernstein, 290 Md. at 455,
430 A.2d at 604. This Court refused to set aside the release on the grounds of mutual
mistake of fact. Bernstein, 290 Md. at 464, 430 A.2d at 609. We observed:
[T]he release could not be more clear, more specific, more
complete, more all-inclusive or more all-embracing. It would
require turning the English language on its head to conclude
that, from these words used, the releasors did not by this
document exhibit a clear desire to extinguish the claim for the
damages they now seek.
Id. (footnote omitted).
In the second case, Pemrock, Inc. hired Essco Co., Inc. to build poultry houses that
were manufactured by Anderson Box Company, Inc. and later insured by New Castle Mutual
Insurance. Pemrock, 252 Md. at 375–76, 249 A.2d at 712. The poultry houses later
collapsed in a windstorm. Id. Pemrock sued New Castle, which then impleaded Essco and
5
The relevant language stated: “and all other persons, firms or corporations liable for
or who might claim to be liable, . . . from any and all claims, demands, damages, actions,
causes of action, or suits of whatsoever kind or nature . . . .” Bernstein v. Kapneck, 290 Md.
452, 454–55, 430 A.2d 602, 604 (1981).
9
Anderson. Pemrock, 252 Md. at 376, 249 A.2d at 712. Pemrock then settled with New
Castle, signing a general release similar to the one signed by Buckley.6 Pemrock, 252 Md.
at 376–77, 249 A.2d at 712. Essco and Anderson later moved for summary judgment based
on the release, which the trial court granted and we affirmed. Pemrock, 252 Md. at 379–80,
249 A.2d at 714. We held that the release “in literal, plain, unambiguous words acquitted
and discharged forever not only New Castle but all other persons. . . .” Pemrock, 252 Md.
at 380, 249 A.2d at 714.
In the third case, Peters v. Butler, a woman drove a car into a brick wall of an
apartment complex, near where her mother was standing. 253 Md. 7, 8, 251 A.2d 600, 601
(1969). The brick wall subsequently collapsed, injuring the mother’s leg. Id. The mother
settled with the automobile insurer, Nationwide Mutual Insurance Company, and the driver’s
insurer, American Mutual Insurance Company of Boston, executing a release of not only the
driver, but “‘all other persons, firms or corporations liable or who might be claimed to be
liable . . . on account of all injuries, known and unknown[.]’” Peters, 253 Md. at 9, 251 A.2d
at 601. The mother later attempted to sue the apartment complex, but the defendant pleaded
the release and moved for summary judgment. Id. When the mother moved to reform the
release, the circuit court denied relief. Peters, 253 Md. at 8–9, 251 A.2d at 601. On appeal,
this Court rejected the mother’s contention that because the apartment complex paid nothing
6
The relevant language stated: “and all other persons, firms, corporations, associations
or partnerships of and from any and all claims, actions, causes of action, demands, rights,
damages . . . .” Pemrock, Inc. v. Essco Co., 252 Md. 374, 376–77, 249 A.2d 711, 712 (1969).
10
for the release, and was not expressly named, it was not released from the mother’s claim.
Peters, 253 Md. at 9–10, 251 A.2d at 602.
Brethren, relying on this line of cases, urges us to hold that general releases must
invariably be read to release all claims against all parties, regardless of whether the released
parties were contemplated, parties to, or paid consideration for the release. To be sure,
applying this principle to the Release would render this a straightforward case. But other
strands of our jurisprudence, glossed over by Brethren, preclude such tidy dispatch of this
dispute.
The most significant hurdle is posed by Bernstein itself. In that case, we did not
announce a blanket rule that general releases would always be given the full effect that the
language would allow. Bernstein, 290 Md. at 459, 430 A.2d at 606. Instead, we stated that
“in the absence of constitutional, statutory or clear important policy barriers, parties
are privileged to make their own agreement and thus designate the extent of the peace being
purchased[.]” Id. (Emphasis added). In this case, such statutory and public policy barriers
exist.
First, we will address why § 19-511 acts as an applicable statutory barrier. We have
long held that “parties to a contract are presumed to contract mindful of the existing law and
that all applicable or relevant laws must be read into the agreement of the parties just as if
expressly provided by them, except where a contrary intention is evident.” Wright v.
Commercial and Sav. Bank, 297 Md. 148, 153, 464 A.2d 1080, 1083 (1983) (citations
11
omitted).
The world of insurance is not immune from this doctrine. In Federal Insurance
Company v. Allstate Insurance Company, Max Schwartz contracted with Direct Way, a
carrier authorized by the Interstate Commerce Commission (“ICC”), to transport his vehicle
from Brooklyn, New York to Florida. 275 Md. 460, 462–63, 341 A.2d 399, 402 (1975). The
transaction was memorialized by a bill of lading, through which Schwartz consented to have
“‘the driver . . . transport persons authorized by the carrier, but not for hire.’” Fed. Ins. Co.,
275 Md. at 463, 341 A.2d at 402. Outside of this phrase, the bill of lading made no reference
to vehicle occupants besides the driver. Id. Direct Way’s driver then picked up two
passengers on his way to Florida, one of which took the wheel before engaging in a four-car
collision that generated “a bevy of personal injury claims.” Fed. Ins. Co., 275 Md. at
464–65, 341 A.2d at 403. Federal Insurance Company (“Federal”), Schwartz’s automobile
insurer, moved for declaratory judgment as to its liability to the vehicle passengers. Fed. Ins.
Co., 275 Md. at 468, 341 A.2d at 404. In response, one of the injured claimants filed a
motion for summary judgment, and the trial court ruled that Federal must extend the claimant
coverage. Id.
On appeal, this Court observed that the Federal policy only provided coverage to
persons using the vehicle “‘with the permission of the named insured.’” Fed. Ins. Co., 275
Md. at 473, 341 A.2d at 407. To interpret the scope of the permission granted by Schwartz,
we read ICC regulations into the bill of lading, which narrowed the authorization that
12
Schwartz provided solely to the driver authorized by Direct Way. Fed. Ins. Co., 275 Md. at
475, 341 A.2d at 408 (“[W]hile it is true that Schwartz granted Direct Way . . . authority to
subdelegate the driving to an authorized driver, the scope of this authority must be considered
in light of the I.C.C. regulations cited above.”). Consequently, coverage under the Federal
policy applied only to Schwartz, the named insured. Fed. Ins. Co., 275 Md. at 476, 341 A.2d
at 409.
Here, § 19-511 constitutes existing law that must be read into the Release. See Prince
George’s Country Club, Inc. v. Edward R. Carr, Inc., 235 Md. 591, 607, 202 A.2d 354, 362
(1964) (“‘[S]ubsisting laws enter into and form part of a contract as if expressly referred to
or incorporated in its terms, and [this] rule embraces alike those provisions which affect its
validity, construction, discharge, and enforcement.’” (quoting Holmes v. Sharretts, 228 Md.
358, 367, 180 A.2d 302, 306 (1962))); cf. 3 Arthur L. Corbin, Corbin on Contracts § 551
(1960) (“[W]ords and other symbols must be interpreted in the light of the surrounding
circumstances; and the existing statutes and rules of law are among those circumstances.”)
(footnote omitted). Section 19-511, like the ICC regulations in Fed. Ins. Co., existed at the
time that Buckley signed the Release. Section 19-511 applies to Brethren as an insurer, just
as the ICC regulations applied to Direct Way as a carrier. See Md. Code (1997, 2011 Repl.
Vol.), § 19-503(b) of the Insurance Article (“The Commissioner may review any motor
vehicle liability insurance policy issued, sold, or delivered in the State to determine whether
it complies with this subtitle and regulations adopted under this subtitle.”).
13
We do not consider reading § 19-511 into the Release to be unfair to Brethren,
especially because § 19-511 was specifically referenced in the letter seeking Brethren’s
consent to the Release. In Prince George’s Country Club, Inc., we charged a realtor having
26 years of experience with knowledge of the statutory requirements required for a proper
sale. 235 Md. at 607–08, 202 A.2d at 362–63. Brethren, as an insurance company, is
undoubtedly aware of § 19-511, and the release procedures set forth by § 19-511(e). Thus,
Brethren is chargeable with knowledge of the statute, and that the Release was executed
pursuant to that statute.
We must now determine how § 19-511 should be read into the Release—i.e., its effect
on the Release. When interpreting a statute, we strive to “ascertain and effectuate the intent
of the Legislature.” Mayor and Town Council of Oakland v. Mayor and Town Council of
Mountain Lake Park, 392 Md. 301, 316, 896 A.2d 1036, 1045 (2006). We ascertain
legislative intent according to the following procedure:
[I]n attempting to divine legislative intent, we look first to the
words of the statute, “but if the true legislative intent cannot
readily be determined from the statutory language alone, we
look to other indicia of that intent, including the title of the bill,
the structure of the statute, the inter-relationship of its various
provisions, its legislative history, its general purpose, and the
relative rationality and legal effect of various competing
constructions.”
State v. Sharafeldin, 382 Md. 129, 138, 854 A.2d 1208, 1212–13 (2004) (quoting Baltimore
Cnty. v. RTKL Associates, 380 Md. 670, 678, 846 A.2d 433, 437–38 (2004)).
Section 19-511(e) states that an injured person “may . . . execute releases in favor of
14
the liability insurer and its insured without prejudice to any claim the injured person may
have against the uninsured motorist insurer[.]” (Emphasis added.) Brethren does not
dispute that under this language, Buckley could have executed a release of GEICO and Betts
while preserving its claim against Brethren. Instead, Brethren argues that the language of §
19-511(e) requires an injured person to execute a narrow release, solely in favor of the
liability insurer.
On its face, the statute’s language does not explicitly address the scope of the release
that may be executed by the insured. Nor does the statutory language suggest that, in saying
the injured party may execute a release in favor of the liability insurer and its insured, any
limitation on the word “release” is intended. We are hard-pressed to find in the language of
the statute any intent to require that, in order to fall within the ambit of § 19-511(e), the
release executed must be something other than a broad, general release.
We have previously stated that “[t]he purpose of the uninsured motorist statute is to
provide minimum protection for individuals injured by uninsured motorists and should be
liberally construed to ensure that innocent victims of motor vehicle collisions are
compensated for their injuries.” Erie Ins. Exch. v. Heffernan, 399 Md. 598, 612, 925 A.2d
636, 644 (2007); see also Arrow Cab v. Himelstein, 348 Md. 558, 565, 705 A.2d 294, 297
(1998) (“[T]he legislative ‘purpose behind adopting motor vehicle regulations that require
insurance on vehicles is to promote the established legislative policy in Maryland that seeks
to assure that victims of automobile accidents have a guaranteed avenue of financial
15
redress.’” (quoting Rentals Unlimited, Inc. v. Aetna Cas. & Sur. Ins. Co., 101 Md. App. 652,
660, 647 A.2d 1278, 1282 (1994))). In particular, § 19-511 was passed “to provide ‘a
remedy [for] a problem that [had] existed in Maryland’s tort system for some time.’” See
Keeney v. Allstate Ins. Co., 130 Md. App. 396, 401, 746 A.2d 947, 950 (2000) (quoting the
Senate Floor Report for Senate Bill 253 of the 1995 Legislative Session). In short:
[A]n injured person who [made] a claim against a liability
carrier for limits available under the liability policy [wa]s
frequently not allowed by their uninsured/underinsured motorist
carrier to give the liability carrier a full release of their claim.
Therefore, if the injured person wishe[d] to make an additional
claim for their injuries against their underinsured motorist
coverage, they g[o]t caught in a situation where the liability
carrier w[ould] not give them the limits of the at-fault party’s
policy without a release and the uninsured/underinsured motorist
carrier w[ould] not allow them to give a release to the liability
carrier. As a result, they [we]re unable to recover funds from
either carrier. This dilemma c[ould] cause a lengthy delay in
settlement.
Id. The purpose, evident in the Senate Floor Report, is confirmed by the Summary of Senate
Bill 253 of the 1995 Legislative Session, which states that the bill “establishes a settlement
procedure to be followed when a claimant is injured by a party whose liability insurance
limit is less than the claimant’s uninsured motorist limits.” (Emphasis added.)
We cannot, consistent with the legislative intent of § 19-511, interpret the Release as
releasing Brethren from responsibility under Buckley’s UM policy. Section 19-511(e) sets
forth a settlement procedure to be followed by claimants. That procedure allows claimants
to circumvent the dilemma described above, and execute a settlement with the tortfeasor’s
16
insurance company without prejudicing the injured person’s claim against her own UM
policy. This procedure was enacted in the context of a broader statutory goal to enable
recovery for injured victims. These legislative purposes would be turned on their head if we
interpreted the Release as terminating her right to claim under her policy with Brethren.
Our interpretation of the Release is also supported by the maxim that we always strive
to interpret contracts in accordance with common sense. See Fister ex rel. Estate of Fister
v. Allstate Life Ins. Co., 366 Md. 201, 219, 783 A.2d 194, 205 (2001). To hold that Buckley
intended to waive her claim against Brethren would defy common sense. Section 19-511(e)
sets forth a procedure to speed up the settlement process, and enables Buckley to collect from
both the liability insurer and the UM insurer. For Buckley to settle with GEICO for an
amount less than her medical expenses, and release Brethren from the coverage she was
entitled to would be economically illogical.
Our interpretation is also aligned with the one used by the MIA in related proceedings.
The MIA, when considering Brethren’s denial of the claim, held that when a release is
executed within the statutory framework of § 19-511, the statute should define the
permissible scope of the release as to the UM insurer. “Although never binding upon the
courts, the contemporaneous interpretation of a statute by the agency charged with its
administration is entitled to great deference, especially when the interpretation has been
applied consistently and for a long period of time.” Baltimore Gas and Elec. Co. v. Public
Service Comm’n of Maryland, 305 Md. 145, 161, 501 A.2d 1307, 1315 (1986) (citations
17
omitted).
In conclusion, the Court of Special Appeals correctly held that the Release did not
waive Buckley’s uninsured motorist claim against Brethren. The broad, all-inclusive
language of the Release must be read with an eye towards the parties’ overall intent, which
encompasses the legislative purposes embodied in § 19-511. That reading persuades us to
cabin the scope of the Release to include GEICO and Betts, not Brethren. As explained
above, the issue of Brethren’s consent to Buckley’s settlement with GEICO is not properly
before this Court, and we decline to address it.
JUDGMENT AFFIRMED; COSTS TO BE
PAID BY PETITIONER.
18