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Litigation in Brief
Winter 2008
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DeCaro, Doran, Siciliano,
Gallagher & DeBlasis,
LLP
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Recent Maryland Court of Appeals
Case and Its Impact on UM/UIM
Insurance Carriers
By Erin Hebert
On December 6, 2007, the Maryland
Court of Appeals issued its opinion
in Maurer v. Pennsylvania National
Mutual Casualty Insurance Co,
Opinion No. 131 of the September
Term, 2006. This decision will have
a major impact on the manner in
which an underinsured/uninsured
(hereinafter “UM/UIM”) carrier
should evaluate accepting a
settlement offer from the insurer of
the third party driver. The Court of
Appeals ruled that “an
uninsured/underinsured motorist
carrier, which consents to the
settlement of its insured’s tort
claim against an
uninsured/underinsured tortfeasor,
is bound by the settlement. The
uninsured/underinsured carrier
cannot thereafter contest tort
liability and, under some
circumstances, the amount of
damages.” Id. at pg. 13. This will
significantly affect all UM/UIM
insurers’ ability to defend claims
based on liability, including the
defenses of contributory negligence,
assumption of the risk, unavoidable
accident, and/or lack of negligence
of the allegedly at-fault driver.
Facts
In this case, the plaintiff was a
passenger in a vehicle that was
involved in a single car accident.
Both the plaintiff and the driver of
the vehicle had been drinking prior
to the accident. The driver’s
insurance company offered its policy
limits of $25,000. Maryland Code,
Insurance Article §19-511, requires
an injured person who receives a
written offer to settle a claim of
bodily injury or death for the
applicable limits of liability
insurance policies to submit a copy
of the written offer to his own
UM/UIM carrier. Here, the plaintiff
gave notice to his carrier,
Pennsylvania National Mutual
Casualty (hereinafter “Penn
National”) of the offer pursuant to
§19-511(a). Penn National was then
required to either accept or refuse
to accept this settlement offer,
within 60 days. Md. Code, Insurance,
19-511(b). Penn National consented
to the settlement and executed
releases for the driver and his
insurer.
The plaintiff then filed a lawsuit
against Penn National for coverage
under the UM/UIM motorist provisions
of the policy which provided
$250,000 in UM/UIM coverage. Penn
National’s defense was based on the
plaintiff’s alleged contributory
negligence and/or assumption of the
risk. The jury found that the
plaintiff was contributorily
negligent and returned a verdict for
the carrier. The plaintiff appealed
based on erroneous jury instructions
and the case went directly to
Maryland’s highest court, the Court
of Appeals, on a Writ of Certiorari.
The Decision of the Court of
Appeals
After the Court of Appeals decided
that the jury instructions in the
case were erroneous and prejudicial,
the court went on to discuss an
issue that was neither raised by the
parties nor considered by the lower
court. The court looked to Penn
National’s acceptance of the
settlement offer and held that Penn
National was not allowed to contest
the liability of the driver or the
contributory negligence of the
plaintiff. The court cited three
cases for this proposition.
All three of the cases relied upon
by the Court involved either a
settlement or a judgment issued in
excess of the limits of the third
party’s liability policy. The Court
of Appeals focused on the fact that
each case mentioned the validity of
‘consent to settle’ clauses. Consent
to settle clauses generally state
that settlements, consent judgments,
releases, covenants not to sue, etc.
between insureds and the third party
are not binding upon UM/UIM insurers
unless the insurers have given their
consent. In each of these cases, the
holding was not based on consent to
settle clauses, but the clauses were
discussed as a means for the
insurance company to protect its
rights. Nationwide Mutual Insurance
Company v. Webb, 291 Md. 721 (Md.
1981); Waters v. U.S. Fidelity &
Guarantee, 328 Md. 700 (Md. 1992);
West American Insurance Company v.
Popa, 352 Md. 455 (Md. 1998). The
cases all involved an amount in
excess of a third party’s policy
limits that had previously been
agreed to by the parties or decided
by a court, which was not present in
the Maurer case. The settlement or
judgment had determined the amount
of damages while considering issues
of liability. In the Maurer
decision, instead of having a
settlement setting the amount of
damages, the acceptance of a
settlement of the third party’s
policy limits did not determine the
amount of damages. It merely allowed
the third party and his insurer to
pay limits and owe no further
liability to plaintiff.
What Does That Mean to Insurers?
The end result is that the decision
in Mauer holds that when an UM/UIM
carrier accepts a settlement offer
for the liability policy limits of
the alleged at-fault driver, the
UM/UIM carrier is admitting
liability of the third party and in
essence, waiving any right to defend
on liability or to raise any
affirmative defenses which might be
applicable to the facts of the
accident. UM/UIM carriers that have
accepted the settlement offer will
not be able to argue contributory
negligence or assumption of the risk
of plaintiff in their defense of
UM/UIM motorist claims. At this time
it appears that the ability to
defend on the basis of the amount of
damages is not changed.
This decision is new law in Maryland
and UM/UIM carriers must now factor
in this issue when deciding whether
they should accept or reject a
settlement offer under these
circumstances. By rejecting the
offer, the insurer will have to pay
the injured party the amount of the
offer. The insurer will then be
allowed to contest liability at
trial and raise issues of
contributory negligence on the part
of the plaintiff. However, even that
comes at a cost.
Earlier this year, the Maryland
Court of Special Appeals decided the
case of Ohio Casualty Insurance Co.
v. Chamberlin, 172 Md. App. 229, 914
A.2d 160 (2007), which will also
play a role in deciding whether to
consent to an offer of settlement of
the alleged at-fault driver. In that
case, the UM/UIM carrier refused to
consent to a $20,000 offer of
settlement by the primary carrier in
order to preserve its subrogation
rights against the tortfeasor. By
statute, the UM/UIM carrier was
required to pay the plaintiff the
$20,000 amount offered by the
liability carrier before defending
on the UIM claim. The jury then
heard the case, but only awarded
$5,445 in damages to the plaintiff.
Ohio Casualty moved to force the
plaintiff to reimburse the excess
$14,555 that it had paid to the
plaintiff pursuant to the procedural
requirement. The Court of Special
Appeals rejected this demand,
holding that the payment of $20,000
was simply to preserve the
subrogation rights if the verdict
exceeded the primary limits and that
the UM/UIM carrier was not entitled
to receive reimbursement from the
plaintiff for the amount paid prior
to the jury decision.
An additional factor to be
considered is the new Maryland “Good
Faith” statute which allows first
party bad faith claims under
Maryland policies. It is not clear
exactly how these claims will fit in
with this current case. Since
accepting the settlement is now
considered an admission of
liability, it will clearly be bad
faith for an insurer who accepted
the settlement offer to refuse to
pay a claim or to litigate a claim
based upon the issue of liability.
What is unclear is how an insured
would have to proceed with a claim
against his UM/UIM carrier in order
to preserve issues of first party
bad faith. The statute only governs
civil actions and only when those
actions involve three issues: 1)
coverage or the extent to which the
insured is entitled to payment, 2)
allegations that the insurer failed
to act in good faith, and 3)
possible recovery of expense,
litigation costs, and interest. For
actions that involve all three
issues, there are specific
procedures required. If the insured
files in the Circuit Court to
resolve coverage and/or extent of
payment issues, then it may be a
waiver of his rights to later file a
bad faith claim. However, the
statute does not directly address
the issue and no cases have been
decided using the statute. As the
case law develops, these issues will
need to be further analyzed.
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Recent Developments - Maryland
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Litigants must be specific
when requesting damages,
pursuant to the recent
decision of the Court of
Special Appeals. The case
involved a failed real
estate deal in which the
buyer, Hewitt Avenue
Associates, sued seller
Hoang for breach of contract
when she failed to appear at
settlement to consummate the
sale of land. After Hoang
failed to answer the
complaint, Hewitt obtained
an order of default. At the
evidentiary hearing for
relief, Hewitt elected to
pursue only monetary
damages, not specific
performance. Although the ad
damnum clause of Hewitt’s
complaint represented that
Hewitt was seeking damages
“in excess of $100,000,”
Hewitt presented evidence of
lost profits from the failed
development, and the Circuit
Court awarded it nearly $1.9
million. Hoang appealed, and
the Court of Special Appeals
provided an historical
overview of how Maryland
common law has regarded ad
damnum clauses, which
limited the amount a
plaintiff could recover to
what had been requested in
the complaint. The Court
applied principles of
statutory construction,
including that words be
given their plain and
ordinary meaning, to find
that the phrase “in excess
of” cannot satisfy the
plain-language requirement
of Rule 2-305, that “a
demand for a money judgment
shall include the amount
sought.” The verdict was
reduced to $100,000.
Hoang v. Hewitt Ave.
Associates
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Assumption of Risk
Plaintiff, an
experienced
competitive
powerlifter, was
seriously injured
while attempting to
bench-press 530
pounds at a meet
held at Patuxent
High School and
sanctioned by the
American
Powerlifting
Association (APA).
He sued the APA, the
Board of Education
of Calvert County,
and William Duncan,
an organizer of the
meet, asserting
various claims of
negligence,
including that the
spotters (members of
Patuxent High
School’s
weightlifting club)
were improperly
instructed on how
and when to assist a
lifter. The Circuit
Court granted
defendants’ motion
for summary judgment
based on assumption
of risk; that is,
the dangers inherent
in attempting to
lift 530 pounds
above one’s head
should be so evident
that assuming the
risk of injury
thereby goes without
saying. Plaintiff
appealed, and the
Court of Special
Appeals reversed in
part, holding that
because Plaintiff
did not know the
spotters at the meet
were improperly
trained, and because
their improper
training represented
a heightened risk
not normally
incident to the
sport, Plaintiff
could not have
assumed the risk.
There was
conflicting evidence
in the trial court
on whether or not
the spotters were,
in fact, improperly
trained, but the
Court of Special
Appeals resolved the
inference that they
were in Plaintiff’s
favor. The Court of
Appeals reversed,
finding that this
was a case where
Plaintiff, a
competitive
powerlifter for at
least ten years,
knew and appreciated
the risk of danger,
and voluntarily
confronted it, when
he chose to
participate in the
meet. American
Powerlifting
Association v.
Cotillo
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Recent Developments - Virginia |
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Medical Malpractice - Continuous Treatment
Exception - Statute of Limitations
The fact that an employee works in
an environment prone to lightning
strikes will not make an injury
suffered when struck by lightning
compensable under Virginia’s
worker’s compensation scheme. The
Claimant was an employee at a water
treatment facility. The Court of
Appeals found that while the
Claimant was subject to an increased
risk of being struck by lightning by
virtue of the amount of water and
metal pipes on site, such increased
risk was due to the physical
characteristics of the plant itself,
and not the Claimant’s job, so her
injuries were non-compensable.
Rivanna Water & Sewer Authority v.
LaFleur
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Medical Malpractice
- Causation
The Court held that an
Emergency Room physician
is not qualified to
render an opinion as to
a multifactorial cause
of death. The
Plaintiff’s decedent, an
insulin-dependent
diabetic, was
unconscious and was
taken to an emergency
room. A blood alcohol
test confirmed that the
decedent had ingested
large quantities of
alcohol. The decedent
was treated and
discharged. Decedent
subsequently died of a
stroke. The estate
brought suit against the
defendant doctor
alleging discharge was
not appropriate as the
decedent could suffer a
diabetic seizure.
Defendant doctor
asserted that decedent’s
death was due to alcohol
withdrawal syndrome.
Defendant’s sole expert
witness was offered to
testify as to standard
of care and causation.
The Court found that
while the expert witness
could testify as to the
standard of care, he was
not qualified to give
testimony concerning the
manner of the
Plaintiff’s decedent’s
death as the death was
multifactorial and was
outside his specialty.
Dagner v. Anderson
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Medical
Malpractice - Prisoner
Rights
TThe Court found that a
prisoner’s allegation of a
doctor’s use of local
anesthesia in performing
examination of a wound was a
medical judgment and not
subject to review for
constitutional claims. The
prisoner’s disagreement with
the doctor’s judgment was
based on his own opinion and
was not a cognizable 8th
amendment claim or a 42
U.S.C. § 1983 civil rights
action. At most, the
prisoner could file a state
law claim for medical
malpractice. McCauley v.
Hawks
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Recent Developments -
District of Columbia
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Wrongful Death - Intervention
Martha Schoenborn was struck and
killed by a bus while crossing the
street. Her husband and personal
representative of her estate,
Gregory Schoenborn, filed a wrongful
death and survival action against
the driver and his employer. Mrs.
Schoenborn's daughter, Kimberly
Pifer filed a Motion to Intervene.
The Court did not permit Ms. Pifer
to intervene in the survival action
because she did not have an interest
in the property. The court did allow
Ms. Pifer to intervene in the
wrongful death action. The Court
looked to whether Ms. Pifer's
interests would be impaired and
whether her interest was adequately
represented. Although both Mr.
Schoenborn and Ms. Pifer want to
maximize the amount of damages,
there may be a dispute as to the
distribution of the award.
Therefore, Ms. Pifer would need
adequate representation.
Schoenborn v. Washington
Metropolitan Area Transit Authority
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Medical Malpractice – Expert Witness
Plaintiff was injured in a
motorcycle accident and had an
internal fixation procedure to
repair his leg. As a result of this
surgery, Plaintiff developed an
infection of the bone and had to
have that portion of the bone
removed. Plaintiff filed suit
against his physicians for medical
malpractice. Defendants made a
Motion for Judgment, at the
conclusion of Plaintiff’s case and
the trial court granted the motion.
Plaintiff appealed and Court of
Appeals affirmed - based on failure
of Plaintiff’s expert to establish a
proper foundation for his opinion.
In this case, Plaintiff’s expert
testified only as to his own
personal opinions and practices. He
did not provide a basis for his
knowledge of the standard of care or
a basis for his opinion that
defendants breached that standard of
care. Hill v. Medlantic
Healthcare Group
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17251 Melford Boulevard
Suite 200
Bowie, Maryland 20715
(301) 352-4950
Fax - (301) 352-8691
3930 Walnut Street
Suite 250
Fairfax, Virginia 22030
(703) 255-6667
Fax - (703) 299-8548
740 Stagwell Road
Mail: P.O. Box 338
Queenstown, Maryland 21658
(410) 827-5013
Fax - (410) 827-4323
www.decarodoran.com
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2008 Defense Litigation
Seminar
April 3, 2008
Martin's Crosswinds
Greenbelt, Maryland
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About The Firm
DeCaro, Doran is very pleased to
announce that Erin M. Hebert and
Jennifer A. Birckhead have become
associate attorneys at the firm.
Erin Hebert received a Bachelor of
Science degree in Marketing Research
from Louisiana State University in
2002. She received her law degree
from Louisiana State University Law
Center in 2005. Erin was ranked near
the top of her class at LSU as both
an undergraduate and law student. As
a student, Erin worked as a
franchise researcher for LSU as well
as a research assistant with the Law
Center.
Upon completion of her legal
studies, Erin served as a judicial
clerk for the Honorable Anthony D.
Ragusa, Jr. in the Louisiana 25th
Judicial District Court, during
which time she successfully
completed the bar examination and
became a member of the Louisiana
State Bar.
Erin relocated to Maryland in 2007
and, while preparing for the
Maryland Bar examination, served as
a law clerk with
the firm. She now joins the firm as
an associate attorney and will focus
her practice on premises liability,
general liability insurance defense,
workers’ compensation, and
commercial litigation.
Jennifer A. Birckhead has actually
worked at DeCaro, Doran since 2002.
While earning her undergraduate
degree at the University of
Maryland, College Park, Jennifer
worked as a legal assistant,
primarily in the area of workers’
compensation, with Sam DeBlasis.
Thereafter, from 2004 until 2007,
during her time at the University of
Baltimore School of Law, Jennifer
worked as a law clerk with Sam
DeBlasis and Jeff DeCaro in general
liability insurance defense
litigation, workers’ compensation,
and commercial litigation.
Having successfully completed the
Maryland Bar examination, Jennifer
joins DeCaro, Doran as an associate
attorney. She will continue to work
in the areas of general liability
defense litigation and commercial
litigation, but is expected to also
provide her expertise in the field
of business law and wills, estates
and trusts.
We are very pleased to have Erin
Hebert and Jennifer Birckhead join
the firm as associate attorneys and
look forward to their work and the
representation of our clients
throughout their career.
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