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When a General Release Isn’t General

August 5, 2020

The Court of Appeals of Maryland recently held in Brethren Mutual Ins. Co. v. Buckley that pursuant to Section 19-511(e) of the Insurance Article, a tort victim may execute a boilerplate, general release with the tortfeasor’s liability insurer without prejudicing the tort victim’s claim under her uninsured motorist policy.  In the underlying action, Plaintiff Buckley was involved in a single vehicle accident as the front seat passenger in a vehicle driven by her boyfriend, Harvey Betts.  Betts was covered by a liability insurance policy issued by GEICO with limits of $100,000.  GEICO offered to settle Plaintiff’s claim against Betts for the full policy limits.  The Plaintiff’s medical bills, related to the accident, were in excess of $200,000.  As the settlement with GEICO did not cover the full extent of her injuries, the Plaintiff also sought coverage under her uninsured/underinsured motorist (“UM”) policy with Brethren. 

In exchange for the policy of $100,000 from GEICO, the Plaintiff executed a full and final release of any and all claims and liens.  The Plaintiff then sent correspondence to Brethren in order to obtain its consent to accept GEICO’s settlement offer.  Brethren’s adjuster sent the Plaintiff a letter confirming that Brethren would waive any prospective subrogation actions against the Defendant tortfeasor.  Upon receiving Brethren’s letter, Plaintiff accepted GEICO’s settlement offer and signed a broad release form provided by GEICO, which stated: “I/we, Amber Buckley . . . hereby release (as 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 [of the March 18, 2007 accident].

Once the Plaintiff executed the Release with GEICO, she requested that Brethren cover the medical expenses that were beyond the amount covered by the GEICO settlement.  Brethren declined to pay the remaining expenses and Plaintiff filed a breach of contract claim that the policy limits be paid.  Brethren alleged that Plaintiff’s claim was barred by the language of the GEICO release.  Both parties moved for summary judgment.  The Circuit Court entered judgment in favor of Brethren based upon the language of the release that Plaintiff had signed with GEICO. 

The Court of Special Appeals reversed the Circuit Court’s entry of summary judgment and held that the general release between the Plaintiff and GEICO did not relieve Brethren of its contractual and statutory duty to issue a UM payment under the terms of Plaintiff’s policy and pursuant to Section 9-511.  The Court found that the purpose of the statute in ensuring that auto accident victims are assured financial redress, and a strong public policy in favor of compensating those injured by uninsured and underinsured motorists, worked in favor of not barring the Plaintiff’s claim. 

A Petition for Certiari was filed by Brethren with the Court of Appeals as to whether the Court of Special Appeals erred in ruling that the general release that Plaintiff executed did not prejudice her breach of contract claim against Brethren for benefits under her UM policy.

The Court of Appeals held that Section 19-511(e) states that an injured person “May . . . 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 carrier.”  Brethren did not dispute that under this language that Plaintiff could have executed a release of GEICO and the tortfeasor while preserving its claim against Brethren.  Instead, Brethren argued that the language of Section 19-511(e) required an injured person to execute a narrow release, solely in favor of the liability insurer. 

The Court has previously stated that “The purpose of the uninsured motorist statute is to provide minimum protection for individuals injured by uninsured motorists and should be liberally construed to insure that innocent victims of motor vehicle collisions are compensated for their injuries.”  Based on the legislative intent of Section 19-511, the Court cannot interpret the release as releasing Brethren from responsibility under Plaintiff’s UM policy.  Section 19-511(e) set forth a settlement procedure to be followed by the Plaintiff.  That procedure allowed the Plaintiff to circumvent the dilemma outlined above and execute a settlement with the tortfeasor’s insurance company without prejudicing the injured person’s claim against her own UM policy. 

The Court noted that to hold that Buckley intended to waive her claim against Brethren would defy common sense.  The Court further commented that it would be economically illogical for Buckley to settle with GEICO for an amount less than her medical expenses and release Brethren from the coverage to which  she was entitled.  The Court of Appeals, therefore, affirmed the decision of the lower court and held that the release did not waive Buckley’s uninsured motorist claim against Brethren.