Opinion ID: 2803697
Heading Depth: 2
Heading Rank: 2

Heading: Jeannine Morse

Text: Petitioner, Jeannine Morse (“Morse”), was injured in a motor vehicle collision on April 28, 2007 in New Castle, Delaware, when her vehicle was struck by a vehicle driven by Paula Smallwood (“Smallwood”). As a result of her injuries, Morse incurred medical expenses in excess of $22,500. At the time of the collision, Smallwood, the at-fault driver, carried automobile liability insurance with Nationwide Insurance Company (“Nationwide”). Smallwood’s policy with Nationwide included a single incident liability limit of $15,000. Also at the time of the collision, Morse maintained UM/UIM coverage through her motor vehicle insurance policy with Respondent, Erie Insurance Exchange (“Erie”), with bodily injury limits of $250,000. Morse’s “Uninsured/Underinsured Motorists Coverage Endorsement” in her policy with Erie contained a condition that required Morse to notify Erie 5 of any settlement offer which would exhaust the tortfeasor’s liability insurance policy limits and to obtain Erie’s consent to settle prior to accepting any such settlement with the tortfeasor. For a discussion of the policy language see infra. After the accident, Morse retained a Delaware attorney, Beverly A. Bove, Esq. (“Bove”), to represent her. Upon demand from Bove, on October 13, 2008, Nationwide offered Morse its entire $15,000 policy limit in settlement of Morse’s claims against Smallwood. Nationwide also sent Bove a notarized letter confirming that Smallwood had no other insurance polices applicable to Morse’s claims. On October 14 or 15, 2008, Bove contacted by telephone a claims adjuster at Erie to report Morse’s UM claim and the settlement offer from Nationwide. In a letter dated October 27, 2008, Bove sent Erie a copy of the Nationwide settlement offer letter. The letter to Erie was not sent by certified mail and was addressed to an incorrect P.O. box. Erie contends that it did not receive the letter until December 5 or 6, 2008. Meanwhile, Morse accepted Nationwide’s settlement offer and signed a Release of All Claims on November 3, 2008. Accordingly, at the time of Morse’s acceptance of Nationwide’s settlement offer, Erie had not given its consent. Morse’s attorney wrote on the release: “[N]othing contained in this release waives, limits, or extinguishes any future claims for UM/UIM or PIP benefits.” On February 4, 2009, after accepting Nationwide’s settlement offer, Bove first informed Erie by telephone that she had accepted Nationwide’s settlement offer and signed 6 a release.4 Following the February 4th telephone conversation, Erie requested by phone and by mail a copy of the release on March 19 and 27, 2009, respectively. Erie did not receive a copy of the signed release until July 8, 2009, over seven months after it was executed, and nearly four months after Erie requested a copy of the release by letter. On November 5, 2009, Rucker wrote Bove to advise her that Erie had denied Morse’s UM claim, because she failed to send written notice of the Nationwide offer and accepted the offer without Erie’s written consent. On June 17, 2011, Morse sued Erie in the Circuit Court for Cecil County for breach of contract. A jury trial was held on April 22-23, 2013, following which the jury returned a verdict in favor of Erie, finding that Erie did not breach its contract with Morse. Morse appealed. 4 The parties appear to contest what was said during this conversation, or rather who said what. On the one hand, Morse, in her brief, asserts that “Mr. Rucker told [Bove] . . . that Ms. Morse did not need Erie’s consent to settle with Nationwide. Mr. Rucker memorialized that telephone conversation by letter, which he wrote to ‘confirm our telephone conversation several weeks ago regarding your acceptance of Nationwide’s offer of its limit of liability and the fact that you did not need our consent to accept that offer of its limit of coverage.’” On the other hand, Erie asserts that it was Bove who advised Rucker that she did not need to obtain Erie’s consent or send Erie a copy of the settlement and release because Delaware law applied. Erie asserts that the letter “restated what attorney Bove had stated to [Rucker.]” Bove’s testimony, upon which Morse relies, is not particularly helpful. Although Bove noted that during the conversation the two discussed “not needing consent” she did not expressly state that she was advised by the claims adjuster that no consent was needed. Rucker, however, testified that “[Bove] said that . . . Delaware law applied . . . and, therefore, she did not have to basically provide us with any information[.]” Rucker further stated that “[Bove] said that she did not need Erie’s consent to settle the claim[.]” In any event, whatever was said during this conversation, it was said nearly two months after Morse had already accepted the settlement offer. There is no suggestion that Erie had waived its rights under the policy or any applicable Maryland law at the time of acceptance. 7 In a reported opinion, a majority of the Court of Special Appeals affirmed, concluding that the failure to comply with the consent to settle procedure contained in the insurance policy and § 19-511 does not trigger Maryland’s prejudice rules, and that, for the purposes of § 19-110, obtaining consent to settle is not the equivalent of providing notice. Morse v. Erie Ins. Exch., 217 Md. App. 1, 12, 90 A.3d 512, 518 (2014). The author of the dissenting opinion would have reversed, because, in that judge’s view, construing the statute within the context and purpose of the statutory scheme, which is to maintain “balance between the insured’s right to speedy recovery and the protection of the UM carrier’s subrogation rights[,]” leads to the conclusion that the insurer must show prejudice before disclaiming liability. 217 Md. App. at 37, 90 A.3d at 533.