Court Opinion

ID: 2681098
Source: CourtListenerOpinion
Date Created: 2014-06-27 21:12:31.568536+00
Date Added: 2024-06-11T12:22:17.088130
License: Public Domain

REPORTED

IN THE COURT OF SPECIAL APPEALS

             OF MARYLAND

                  No. 532

        September Term, 2013

       JESSICA N. WOZNICKI

                    v.

 GEICO GENERAL INSURANCE CO.

   Matricciani,
   Kehoe,
   Berger,

                    JJ.

         Opinion by Kehoe, J.

         Filed: April 29, 2014
       Appellant, Jessica N. Woznicki, concedes that her lawyer failed to comply with a

notice requirement in her automobile liability policy. She asserts, however, that her insurer,

appellee, GEICO General Insurance Company, waived compliance or, alternatively, that the

law does not permit an insurance company to deny coverage in cases like hers unless it can

show prejudice. Reasoning that the record before it did not establish disputes of material fact

as to waiver and that GEICO was otherwise entitled to judgment, the Circuit Court for Cecil

County granted the insurer’s motion for summary judgment. Ms. Woznicki has appealed,

arguing that the circuit court was incorrect on both scores. We think the circuit court was

correct and will affirm its judgment.

                                        Background

       On November 12, 2010, Ms. Woznicki was injured in an automobile accident in Cecil

County, Maryland. The other driver, James B. Houston, was at fault.

       Houston was insured by a liability policy issued by Nationwide Insurance Company,

with policy limits of $20,000. Ms. Woznicki was covered by an insurance policy issued by

GEICO. Section IV of the GEICO policy provided her with uninsured/underinsured motorist

(“UM/UIM”) benefits in the amount of $300,000, subject to certain exclusions.1 In relevant

part, the GEICO policy stated (emphasis in original):

       1
       For a concise review of the statutory evolution of uninsured/underinsured
motorist coverage in Maryland, see the opinion of this Court in Connors v. Government
Employees Insurance Company, ___ Md. App. ___, No. 773, slip op. at 5-7 (filed March
25, 2014).
       Section IV does not apply:

       1.     To bodily injury to an insured if the insured or his legal representative
       has made a settlement of his claim which exhausts the applicable bodily injury
       or death limits of the liability insurance without our prior written consent
       unless:
                     (a)     We are notified in writing by Certified Mail that a
                     tentative agreement to settle for the liability limits of the owner
                     or operator of the other vehicle has been reached;
                     (b)     We did not make a payment equal to the tentative
                     settlement amount to our insured within 30 days of our refusal
                     to consent to the settlement offer; and
                     (c)     We responded to the written notice of settlement within
                     60 days.

(We will refer to this provision as the “Consent to Settle Clause.”) The Consent to Settle

Clause tracks Md. Code Ann. (2011) § 19-511 of the Insurance Article,2 which provides in

pertinent part:

       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 . . . , and the amount of the settlement offer . . . would
       exhaust the bodily injury . . . limits of the applicable liability insurance
       policies . . . , the injured person shall send by certified mail, to any insurer that
       provides uninsured motorist coverage for the bodily injury . . . , a copy of the
       liability insurer’s written settlement offer.

       (b) Response to settlement offer. – Within 60 days after receipt of the notice
       required under subsection (a) of this section, the uninsured motorist insurer
       shall send the injured person:
               (1) written consent to acceptance of the settlement offer and to the
               execution of the releases; or

       2
       Unless otherwise noted, all statutory references in this opinion are to the
Insurance Article.
                                                2
              (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.
                                        ****

       (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 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.3

       Ms. Woznicki notified GEICO that she had been injured in an accident. Her claim

was assigned to Rebecca Davis, a GEICO adjuster. Ms. Woznicki retained a Delaware

attorney, Ben T. Castle, Esquire, to represent her. At some point in March, 2011, Nationwide

offered to settle all of Ms. Woznicki’s claims against Houston for $20,000, that is, its policy

limits, in return for a release for Houston and Nationwide. Castle agreed, at least in

principle. On March 29, 2011, Nationwide sent a letter to Castle enclosing a release that

“confirms our settlement with you/your client[]”and requesting that it be signed by Ms.

Woznicki, witnessed, and returned. The record does not show that Castle discussed a

       3
       Section 19-511 was amended effective October 1, 2012. See 2012 Md. Laws,
Chaps. 268 and 269. The substance of the amendment is not relevant to the matter before
us.
                                               3
possible settlement with GEICO before reaching the agreement with Nationwide.

       On the same day that Nationwide sent Castle the release, he wrote to Davis, the

GEICO adjuster, stating:

       At this time it appears that the driver of the car that caused the accident
       injuring Ms. Woznicki, James Houston, has only limited liability coverage
       through Nationwide Insurance Company. We will provide more information
       as it becomes available.

This letter did not mention a settlement with Nationwide. At this point, the exact sequence

of events becomes unclear.

       On or a few days before July 7, 2011—our only source of information is his

deposition which is a bit vague on the point—Castle contacted GEICO by telephone and

received what Ms. Woznicki asserts was GEICO’s consent to settle her claim against

Houston without prejudice to her right to pursue a UIM claim against GEICO. We will

discuss what we know about this conversation later in the opinion. On July 7, 2011, Ms.

Woznicki signed the release and, on the same day, Castle wrote to Davis stating:

               The tortfeasor’s insurance carrier, Nationwide, has a limited bodily
       injury liability policy of $20,000 and has tendered those limits to the injured
       driver, Jessica Woznicki. We are writing to request GEICO’s consent to
       acceptance of the settlement.

              Enclosed for your file is a copy of the Nationwide Policy insuring
       tortfeasor, James B. Houston, and the Release in exchange for the $20,000.

At some point thereafter—again, the chronology is unclear from the record—Castle sent the

signed release back to Nationwide.

       On August 15, 2011, GEICO wrote Castle, denying UIM coverage to Ms. Woznicki

                                             4
based on what it asserted was her breach of the Consent to Settle Clause and § 19-511

“because you failed to obtain our consent to settle, which is required by both the statute and

the policy contract.”

       On April 3, 2012, Ms. Woznicki, represented by new counsel, filed a complaint for

breach of contract against GEICO seeking reimbursement of her damages in excess of the

$20,000 that she received from Nationwide. GEICO filed its answer and later filed a motion

for summary judgment. GEICO asserted that there were no disputes of material fact and that

summary judgment was appropriate because Ms. Woznicki was precluded from receiving

UIM benefits because she had settled with Nationwide without giving GEICO the

opportunity to either consent to or refuse acceptance of the settlement.

       Ms. Woznicki opposed the motion. She presented essentially the same arguments as

she now presents to this Court, which we will discuss in detail later.

       On April 5, 2013, after a hearing, the court granted summary judgment in favor of

GEICO, stating:

              It’s clear and undisputed that Section 19-511 was not complied with.
       In other words, there is – the plaintiff’s attorney did not comply with that
       section. And that’s also referenced–incorporated into the policy; therefore, the
       terms of the policy were not complied with. That’s undisputed, I believe. But
       the court finds that there could be a question of waiver. And I believe that
       these matters could be waived.

               The question [which] then arises is does the vague reference to a
       telephone conversation constitute–or viewed in a light most favorable to the
       plaintiff, does that constitute sufficient evidence to be material in a decision.

              And quite simply, the court finds that under the facts of this case that

                                              5
       the reference to a telephone call, with nothing more than has been put forth
       today, does not constitute sufficient evidence to be material, to affect the
       decision.

       Ms. Woznicki filed a motion to alter or amend the judgment, which the court denied.

She then filed this appeal.

                                           Analysis

       Ms. Woznicki contends that the circuit court erred in granting summary judgment

because she had established genuine dispute of material fact as to whether GEICO waived

compliance with the Consent to Settle Clause and § 19-511. Ms. Woznicki also argues that

§ 19-110 required GEICO to demonstrate actual prejudice before it could defend its denial

of coverage based on her failure to comply with the Consent to Settle Clause and § 19-511

and that GEICO failed to do so.

       GEICO disputes these assertions and, additionally, contends that § 19-511 is non-

waivable as a matter of law. We will discuss each of these arguments, beginning with

GEICO’s.

                    I. Does § 19-511 Preclude Waiver by an Insurer?

       GEICO contends that § 19-511 is non-waivable. In so arguing, it relies upon the

legislature’s use of the word “shall” in the statute itself as well as a statement of this Court

in our opinion in Buckley v. Brethren Mut. Ins. Co., 207 Md. App. 574, 600 (2012)

(“Buckley I”), aff’d __ Md. __, 2014 WL 838860 (filed March 4, 2014) (“Buckley II”),

wherein we stated (emphasis added):

                                               6
              To be clear, in order to comply with § 19-511, after a UM carrier
       receives notice of a settlement offer from an injured insured, the UM carrier
       must do one of two things: it must either (1) consent to the settlement offer
       (and, as a result, waive its right to contest tort liability) or (2) refuse to consent
       and pay the injured insured the amount of the settlement offer within 30 days
       of issuing its refusal to consent. . . . .

       Buckley I was concerned with an insurer’s obligations when its insured sends it a

notice of settlement that complied with § 19-511's requirements. Whether an insurer can

waive strict compliance with the statute is a distinct question that neither Buckley I nor

Buckley II addresses.

       Moving beyond Buckley, we find GEICO’s reliance on the language of § 19-511 to

be unwarranted. To be sure, “shall,” as a general rule, suggests a mandatory duty. See Perez

v. State, 420 Md. 57, 63 (2011) (“‘When the Legislature commands that something be done,

using words such as “shall” or “must” rather than “may” or “should,” the obligation to

comply with the statute or rule is mandatory.’”) (quoting State v. Green, 367 Md. 61, 82

(2001)). That performance of a duty is mandatory is one thing; that a private entity to whom

the duty is owed cannot waive strict performance is quite another.4

       We are also aware that, when the General Assembly wants to make it clear that a

statutory provision is non-waivable, it generally says so explicitly. See, e.g., Insurance

       4
        The rule is sometimes different with regard to public bodies. See, e.g., Bright v.
Unsatisfied Claim & Judgment Fund Bd., 275 Md. 165, 170 (1975) (stating that absent a
specific statutory provision, an administrative agency may not waive or extend a
mandatory filing deadline.).

                                                 7
Article § 18-119(b)(2) (“The right of surrender may not be waived.”); Md. Code Ann. (2006,

2013 Supp.) § 5-1105 of the Courts & Judicial Proceedings Article (providing that “[t]he

provisions of this subtitle may not be waived”); Md. Code Ann. (1974, 2010 Repl. 2013

Supp.) § 11B-108(d) of the Real Property Article (“RP”) (providing that “[t]he rights of a

purchaser under this section may not be waived in the contract and any attempted waiver is

void . . . .”); RP § 11B-103 (“Except as expressly provided in this title, the provisions of this

title may not be varied by agreement, and rights conferred by this title may not be waived.”);

Md. Code Ann. (1975, Repl. 2013) § 14-2402(c) of the Commercial Law Article (providing

that “[t]he right of cancellation [of vacation club membership] may not be waived or

otherwise surrendered.”).

       This sort of language is absent from § 19-511. Moreover, Maryland’s case law

interpreting § 19-511, as well as the statute’s legislative history, make it clear that the statute

is intended to benefit an insured by facilitating settlements of claims against a tortfeasor

when a UIM claim has been or may be asserted. See Buckley II, 2014 WL 838860 at *7-8;

Keeney v. Allstate Ins. Co., 130 Md. App. 396, 401 (2000).5 We are not persuaded that § 19-

       5
           In Keeney, this court explained:

       [T]he legislative goal of [the statutory predecessor to § 19-511] was to
       resolve a common problem that beset litigants attempting to settle tort
       claims. The liability carrier for the allegedly negligent party typically was
       not willing to pay its policy limits unless it received a release from the
       injured party. The liability carrier’s reluctance . . . was based on a well-
       founded fear that, if it paid its limits without a release, it would subject its
       insured to a subrogation claim by the injured party’s UM carrier; and if, as
                                                                                 (continued...)
                                                8
511’s remedial purposes would be served by holding that an insurer cannot, as a matter of

law, waive strict compliance in an appropriate situation. Even if we were so inclined, we

“may neither add nor delete language so as to reflect an intent not evidenced in the plain and

unambiguous language of the statute, nor . . . construe the statue with forced or subtle

interpretations that limit or extend its application.” City of Baltimore Dev. Corp. v. Carmel

Realty Assocs., 395 Md. 299, 318 (2006) (internal quotation marks and citation omitted).

            II. Was there a genuine dispute of material fact as to waiver?

       “Whether summary judgment was granted properly is a question of law” and our

review is de novo. Livesay v. Baltimore County, 384 Md. 1, 9 (2004). We conduct an

independent review of the record considered in the light most favorable to the non-moving

party to decide whether there are issues of material fact. Wells Fargo Home Mortgage, Inc.

v. Neal, 398 Md. 705, 714 (2007). In determining whether there are disputes as to material

facts, we construe reasonable inferences in favor of the non-moving party. Educ. Testing

Serv. v. Hildebrant, 399 Md. 128, 140 (2007). To avoid summary judgment, the non-moving

       5
        (...continued)
       a defendant in a subrogation suit, the insured had to pay money out of
       his/her pocket, it might well subject the insurer to liability in a bad-faith
       action filed against it by its own insured . . . . On the other hand, prior to
       the enactment [of § 19-511’s statutory predecessor], the UM carrier
       typically would not consent to a release being signed because that would
       destroy any possibility of obtaining in a subrogation suit any of its money
       back from the alleged negligent party. In sum, the main purpose and effect
       of the statute was to resolve a recurrent problem that arose when parties
       attempted to settle tort cases.
130 Md. App. at 403 (2000).
                                              9
party must establish the existence of a genuine dispute of material fact. Beatty v. Trailmaster

Products, Inc., 330 Md. 726, 737 (1993). To be “genuine” in this context, the dispute must

be more than hypothetical or conjectural: “the mere existence of a scintilla of evidence in

support of the [non-moving party’s] claim is insufficient to preclude the grant of summary

judgment; there must be evidence upon which the jury could reasonably find for the

plaintiff.” Id. at 738. Put another way, “when a movant has carried its burden, the party

opposing summary judgment ‘must do more than simply show there is some metaphysical

doubt as to the material facts.’” Id. (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986)).

       “Waiver is the intentional relinquishment of a known right, or such conduct as

warrants an inference of the relinquishment of such right, and may result from an express

agreement or be inferred from circumstances.” Hovnanian Land Inv. Group, LLC v.

Annapolis Town Centre at Parole, LLC, 421 Md. 94, 122 (2011) (internal quotation marks

and citation omitted). To demonstrate the existence of an implied waiver, there must be

evidence that the actions of the purportedly waiving party were “inconsistent with an

intention to insist upon enforcing” the provisions of a contract. Id. (internal quotation marks

and citations omitted). Generally, the question of waiver requires “resolution of many factual

disputes and drawing of factual inferences.” Hovnanian, 421 Md. at 122.

       Ms. Woznicki contends that the court erred by granting GEICO’s motion for

summary judgment because she established the existence of a genuine dispute of material

                                              10
fact as to whether GEICO waived its rights under the Consent to Settle Clause and § 19-511.

She asserts that this waiver occurred during the course of Castle’s telephone conversation

with the unidentified GEICO employee in July, 2011. The only source of information about

that conversation in the record is Castle’s deposition.

       Castle testified that, prior to the July telephone conversation with the GEICO

employee, he had not read Ms. Woznicki’s GEICO policy, but “probably” had reviewed the

declaration page. Thus, he was unaware of the Consent to Settle Clause. He also testified

that he was unaware of § 19-511. With that background, we set out the relevant portions of

his testimony (emphasis added):

[Counsel for GEICO]:        Did, in fact, GEICO ever give you consent to settle [Ms.]
                            Woznicki’s claim against [] Houston, who was insured by
                            Nationwide?

[Castle]:                   It was my understanding that they had, and it was done by
                            telephone. And it was not Davis. It was somebody taking her
                            place when she was unavailable.

[Counsel for GEICO]:        Tell me those details.

[Castle]:                   My recollection is a telephone call to GEICO asking forDavis
                            with whom I’d been dealing with all along.

[Counsel for GEICO]:        And when did that happen?

[Castle]:                   Well, it would have been probably within a week, ten days of
                            July 7th prior to. I can’t tell you exactly. And [Davis] was
                            unavailable. And I spoke to someone who asked for the file
                            number and policy number and so forth and told – it was a
                            female. I know that. And told her that– what the situation
                            was and asked her what she wanted from me to confirm
                            this. And I was told that she wanted a copy of the Release and

                                             11
                          a copy of the Declaration Page from the Nationwide Policy.
                          And that would be the extent of it.

                                         ****

[Counsel for GEICO]:      Do you have any documentation of that phone call?

[Castle]:                 Not that I’m aware of.

[Counsel for GEICO]:      Not knowing [about §] 19-511, why would you have called
                          GEICO even to get their permission then?

[Castle]:                 Because that’s our practice in Delaware, and that has always
                          been my customary practice when I’m dealing with an
                          underinsurance claim, to be very careful to advise the
                          underinsurance carrier as soon as I have a sense that there’s
                          going to be an underinsured claim, which I think I did with
                          GEICO, and also to find out whether there are any special
                          circumstances or evidence that they want. And I also am very
                          careful to make it clear in the Release that I’m not releasing the
                          underinsurance claim.

                                         ****

[Counsel for GEICO]:      When you spoke with them, had you already settled with
                          Nationwide?

[Counsel for Woznicki]:   You mean settled, you mean like accepted the tender?

[Counsel for GEICO]:      Accepted the tender from Nationwide.

[Counsel for Woznicki]:   Or gotten a check or – I don’t know what you mean.

[Counsel for GEICO]:      Reached an agreement with Nationwide that the claim of
                          [Ms.]Woznicki against [] Houston was settled.

[Castle]:                 As a practical matter, I certainly would have told them that we
                          have settled or [are] going to settle or [are] willing to settle, that
                          we’re going to take it. I certainly would have communicated
                          that that phase of the case is or has been or will be settled,

                                            12
                         and we’re going to be asserting a claim against GEICO for
                         the underinsured coverage. What exact words I used, I can’t
                         tell you.

[Counsel for GEICO]:     Okay. So you have given–you had advised Nationwide that
                         for all practical purposes [Ms.] Woznicki’s claim against
                         Mr. Houston was settled, but you wanted to pursue a UIM
                         claim against GEICO?

[Castle]:                That’s true.

                                        ****

[Counsel for GEICO]:     As I understand the conversation that you . . . claim to have had
                         with GEICO about settlement with Nationwide, you’re not able
                         to tell precisely whether you said it was your intention to settle
                         or whether the claim had been settled? You just know you
                         spoke with GEICO about settling the claim?

[Castle]:                I know I spoke with GEICO, and I know I would have told
                         them what the realities were and that the case was in the
                         process of being settled. Whether I said has been settled or
                         will be settled or we need your permission to settle – I don’t
                         think I said that, but I told them what the facts were.

                                        ****

[Counsel for GEICO]:     Did GEICO ever tell you that it did not require written
                         notification?

[Castle]:                Only the conversation I referred to in which I asked them what
                         they needed, and I was told the Release and the Declaration
                         Page.

[Counsel for GEICO]:     But you would agree you were never told that you do not
                         need to get written consent from GEICO?

[Castle]:                I don’t recall ever being told that in so many words, no.

       To survive summary judgment, Ms. Woznicki, as the non-moving party, had the

                                          13
burden to demonstrate that there was a dispute of material fact as to whether GEICO waived

its rights under the Consent to Settle Clause. Because of the absence of other evidence in the

record, the answer to this question hinges on whether a fact finder could reasonably

conclude from Castle’s deposition testimony that the GEICO employee did so. Beatty v.

Trailmaster Products, Inc., 330 Md. at 738-39. Ms. Woznicki’s contentions that she met this

standard are not persuasive.

       Although it is clear from the Castle’s deposition that he told Nationwide that he

intended to assert a UIM claim against GEICO on Ms. Woznicki’s behalf, it is not clear that

Castle ever explicitly informed GEICO that he intended to assert a UIM against it. For the

purposes of analysis, however, we will read Castle’s testimony as supporting such an

inference.

       That notwithstanding, there is nothing in the deposition testimony that supports a

reasonable inference that Castle asked GEICO to waive the procedural requirements set out

in the Consent to Settle Clause and § 19-511. Castle did not testify that he actually asked for

such a waiver—not surprising because he was unaware of both the contract provision and

the statute at the time he had the conversation. Similarly, there is nothing in the testimony

that supports a reasonable inference that the unidentified GEICO employee gave Castle

permission to settle without prejudice to Ms. Woznicki’s UIM claim. What is conspicuously

missing from Castle’s testimony is any description of what the GEICO employee actually

said to him other than that she asked him to provide a copy of the declaration page and the

                                              14
release. Such a request, standing alone, is not remotely equivalent to a consent to settle when

considered in the context of the specific requirements of the Consent to Settle Clause and

§ 19-511.

       Castle’s subjective understanding that GEICO had waived compliance is without

probative value because he did not provide any indication of what was said to him to justify

the conclusion. To the extent that there was miscommunication, moreover, GEICO cannot

be faulted because Castle had not read the policy and Castle is chargeable with knowledge

of Maryland law, specifically § 19-511. See, e,g,, State v. Chaney, 375 Md. 16, 181 (2003).

       Ms. Woznicki also contends that, because Castle told the unnamed GEICO employee

the claim and policy numbers, the unnamed GEICO employee would have known from the

file (which presumably included a communication log) that Ms. Woznicki intended to assert

a UIM claim because Castle had updated GEICO regarding Ms. Woznicki’s medical

progress. We think this is a reasonable inference. But, as we have explained, Ms. Woznicki

must do more than demonstrate that the unidentified GEICO employee was aware that a

UIM claim might be asserted. She must also demonstrate facts that give rise to a reasonable

inference that the employee waived compliance with the contractual and statutory

requirements.

       Finally, Ms. Woznicki presented no evidence to support a reasonable inference that

Castle’s interlocutor had either express or apparent authority to waive compliance with

either the Consent to Settle Clause or § 19-511. Castle’s testimony lacks any specific

                                              15
information that would permit a fact-finder to assess the reasonableness of his belief that the

GEICO employee was so authorized. Ms. Woznicki asserts that she was entitled to an

inference that the unnamed GEICO employee had the authority to waive GEICO’s statutory

and contractual rights because the unnamed GEICO employee requested the claim and

policy numbers from Castle during the telephone call. Absent specific facts as to what the

GEICO employee actually said, such a conclusion would be wholly speculative.

           III. Insurance Article § 19-110 and the Requirement of Prejudice

       Section 19-110 provides:

       An insurer may disclaim coverage on a liability insurance policy on the
       ground that the insured or a person claiming the benefits of the policy through
       the insured has breached the policy by failing to cooperate with the insurer or
       by not giving the insurer required notice only if the insurer establishes by a
       preponderance of the evidence that the lack of cooperation or notice has
       resulted in actual prejudice to the insurer.6

       Ms. Woznicki contends that § 19-110 applies to GEICO’s denial of UIM coverage

because the Consent to Settle Clause was essentially a notice provision. She suggests that,

because the record indicates that Houston was elderly and had only the statutory minimum

in coverage, there was a dispute of fact as to whether GEICO was actually prejudiced by her

failure to comply with the Consent to Settle Clause.

       GEICO’s position is that § 19-110 does not apply because the Consent to Settle

Clause is not a notice provision. Instead, GEICO posits that the Consent to Settle Clause is

       6
       For a detailed analysis of § 19-110's legislative history and the cases interpreting
and applying the statute, see Sherwood Brands, Inc. v. Great Am. Ins. Co., 418 Md. 300,
311–24 (2011).
                                              16
a condition precedent to coverage and is thus outside § 19-110's ambit. GEICO also argues

that requiring an insurer to show actual prejudice when denying coverage based on a breach

of the Consent to Settle Clause and § 19-110 “would improperly shift the burden to the

insurer to retrospectively determine that its subrogation rights were viable. There would be

no incentive for an insured to ever comply with the policy terms or the statutory provisions,

as the insured could always simply claim no prejudice.”

       The parties present us with an issue that has not yet been decided in Maryland,

namely whether an insurer must demonstrate prejudice in order to deny UIM coverage based

on its insured’s breach of § 19-511 or a corresponding policy provision.7 We conclude that

§ 19-110 should not apply in situations such as the one before us.

       Section 19-110 requires an insurer to prove that it was actually prejudiced if it

disclaims coverage and raises “a failure to cooperate defense or a defense based on lack of

notice.” Phillips Way, Inc. v. Am. Equity Ins. Co., 143 Md. App. 515, 521 (2002). Generally,

an insured’s duty to cooperate “include[s] the obligation to make a fair, frank and truthful

disclosure to the insurer for the purpose of enabling it to determine whether or not there is

a defense, and the obligation, in good faith, both to aid in making every legitimate defense

to the claimed liability and to render assistance at trial.” Travelers Ins. Co. v. Godsey, 260
Md. 669, 673 (1971). An insured’s duty to provide required notice is generally an obligation

       7
        We also address the prejudice issue in a companion case, Jeannine Morse v. Erie
Insurance Exchange, ___ Md. App. ___, No. 0511, September Term 2013. We refer the
reader to Morse for a more comprehensive analysis of the relationship between §§ 19-
110 and 19-511.
                                             17
to give the insurer notice of a claim or occurrence in order to ensure that the insurer has the

“opportunity to acquire full information about the circumstances of the case, assess its rights

and liabilities, and take early control of the proceedings.” Prince George’s County v. Local

Gov’t Ins. Trust, 388 Md. 162, 184 (2005).

       When an insurer denies coverage on the basis of something other than a failure of

notice or a failure of cooperation, § 19-110 does not apply. The Court of Appeals and this

Court emphasized the narrow scope of what is now § 19-110 in two cases: GEICO v.

Harvey, 278 Md. 548 (1976) and Phillips Way, Inc. v. Am. Equity Ins. Co., 143 Md. App.
515 (2002).

       In Harvey, an insured provided timely notice of an automobile accident to her insurer,

but failed to comply with a policy provision that required her to provide written proof of loss

“including full particulars of the nature and extent of the injuries and treatment received and

contemplated” within six months of the date of the accident as a condition precedent to the

insured paying personal injury protection (“PIP”) benefits. Harvey, 278 Md. at 550-51.

Applying § 19-110’s substantially similar statutory predecessor, § 482 of Article 48A,8 the

       8
           Section 482 of Article 48A provided:

       Where any insurer seeks to disclaim coverage on any policy of liability
       insurance issued by it, on the ground that the insured or anyone claiming
       the benefits of the policy through the insured has breached the policy by
       failing to cooperate with the insurer or by not giving requisite notice to the
       insurer, such disclaimer shall be effective only if the insurer establishes, by
       a preponderance of affirmative evidence that such lack of cooperation or
       notice has resulted in actual prejudice to the insurer.
                                                                                (continued...)
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Court of Appeals concluded that, when defending its denial of coverage based on breach of

the proof of loss provision, the insurer did not have to demonstrate prejudice because: (i) the

policy clearly included a required notice of an accident provision separate and apart from

the proof of loss provision; and (ii) proof of loss, as opposed to notice provisions:

       enables the insurer to ascertain the nature, extent and character of the loss and
       to set reserves accordingly. The chief purpose of a proof of loss is to acquaint
       the insurance company with certain facts and circumstances relative to the
       loss, forming a basis for further steps to be taken by the company, ranging
       from full settlement to absolute repudiation of liability.”

Harvey, 278 Md. at 553.

       In Phillips Way, Inc. v. Am. Equity Ins. Co., 143 Md. App. 515 (2002), this Court

considered whether § 19-110 applied where an insurer denied coverage based on its

insured’s failure to comply with a so-called “no-action clause.”9 We concluded that the

       8
           (...continued)

Harvey, 278 Md. at 551-52.
       9
           The no-action clause at issue in Phillips Way stated:

       No action shall be maintained against the Company by the Insured to
       recover for any loss under this Insurance Policy unless, as a condition
       precedent thereto, the Insured shall have fully complied with all the terms
       and conditions of this Insurance Policy, nor until the amount of such loss
       has been fixed or rendered certain by either final judgment against the
       Insured after trial of the issues and the time to appeal therefrom has expired
       without an appeal having been taken, or, if an appeal has been taken, then
       after the appeal has been determined or by agreement between the parties
       with the written consent of the Company.

143 Md App. at 517 (emphasis omitted).
                                               19
insurer was not required to show specific prejudice when it denied coverage because the

insured breached the no-action clause: “the requirements for notice of claim[] and the

separate requirement for cooperation with the insurer,[] are contained in separate paragraphs

from the ‘no-action’ clause,” id. at 522-23 (footnotes omitted); and (ii) “one of the main

purposes of the non-action clause is to protect it from collusive or overly generous or

unnecessary settlements by the insured at the expense of the insurer.” Id. at 524 (internal

quotation marks and citation omitted). We continued: “[t]hat last-mentioned purpose would

be difficult to accomplish if an insured could disregard the no-action clause, sue its insurer,

and put the nearly impossible burden on the latter of showing collusion or demonstrating,

after the fact, the true worth of the settled claim.” Id. at 524.

       Returning to the present appeal, and guided by the reasoning of Harvey and Phillips

Way, we conclude that the Consent to Settle Clause in the GEICO policy is conceptually

similar to the “no action” provision at issue in Phillips Way. Like a “no action” provision,

the Consent to Settle Clause protects an insurer against the possibility of collusive and

unreasonable settlements. The Consent to Settle Clause must be read in conjunction with §

19-511. We recognize that the Consent to Settle Clause and § 19-511 have a notice

component, namely that the insured notify the UIM insurer of a potential settlement with the

tortfeasor’s insurer. However, both the policy provision and the statute go beyond mere

notice. For example, the insured must wait 60 days to permit the insurer to investigate the

feasibility of a subrogation action against the tortfeasor’s carrier and, based upon the results

                                               20
of that effort, either to consent to the settlement offer (in which case the insured may move

forward with the settlement), to reject the settlement offer (in which case the insurer has 30

days to pay the liability insurer’s coverage limits to the insured), or to fail to respond (in

which case the insurer may move forward with the settlement).

       Prejudice to an insurer can occur when “the insured has presented the insurer with

a fait accompli by delaying notice until after the judgment. The delay vitiates the purpose

of the contractual notice requirement, as the insurer cannot exercise any of its rights to

investigate, defend, control, or settle the suit.” Prince George’s County v. Local Gov’t Ins.

Trust, 388 Md. at 190. Ms. Woznicki effectively presented GEICO with a similar fait

accompli by releasing the tortfeasor before GEICO had an opportunity to assess whether to

assert a subrogation claim. Section 19-511 is clear that the decision whether to waive the

right of subrogation is for the insurer, not the insured, to make.

       Section 19-511, like its contractual counterpart, was designed to resolve some of the

barriers to prompt recovery which can arise when a person injured by a UIM motorist

attempts to settle with the tortfeasor’s liability insurer (which, in turn, requires a release of

all claims) and the injured person’s UIM carrier does not permit the injured person to sign

the release for fear of losing its right of subrogation. See Buckley II, 2014 WL 838860 at *7-

8; Keeney, 130 Md. App. at 403. The statute represents the General Assembly’s attempt to

balance the legitimate expectations of an injured insured with the right of an insurer to

investigate before consenting to a release of its subrogation rights. Id.; see also Keeney, 130
21
Md. at 401-03. We agree with GEICO that this balance would be threatened if an insured

could disregard the Consent to Settle Clause and § 19-511, settle the claim for policy limits

with the liability insurer (thus extinguishing the UIM insurer’s subrogation rights), and then

place the burden on the UIM insurer to prove, after the fact, that there was actually a viable

subrogation claim. In our view, the analyses of Prince George’s County, Harvey, and

Phillips Way point clearly to this conclusion.

       On the record before us, Ms. Woznicki presents a sympathetic figure. But this is not

a basis for us to provide her the remedy she seeks in light of the facts of this case and the law

as we understand it.

                       THE JUDGMENT OF THE CIRCUIT COURT FOR CECIL
                       COUNTY IS AFFIRMED. APPELLANT TO PAY COSTS.

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