E-Alert Case Updates

Failure to Comply with Notice Provisions Renders Wrongful Death Settlement Invalid

ACE American Insurance Company, et al. v. Williams, et al.
No. 75 (Md. 2011)
by Lydia S. Hu, Associate
Semmes, Bowen & Semmes (www.semmes.com)

The Court of Appeals held that failure to appropriately notify use-plaintiffs pursuant to MD. RULE 15-1001, MD. CTS. & JUD. PROC., § 3-904, and Walker v. Essex, 318 Md. 516 (1990), will effectively void a settlement agreement reached by the parties. This case has a long and convoluted history stemming from a tragic 2002 car accident taking the life of Michael Williams.

On May 14, 2003, the Decedent’s widow, Lori Williams, filed a wrongful death action as a surviving spouse and on behalf of their minor children, Jeremy and Shane Williams against Defendant ACE American Insurance Company. Mrs. Williams and ACE reached a settlement agreement that would resolve the claims of Mrs. Williams and her two children.

The settlement agreement did not contemplate potential claims brought by Decedent’s children from a prior marriage, Michael Williams and Steven Williams. MD. RULE 15-1001 requires that all persons who are or may be entitled to damages for a wrongful death claim shall be named as plaintiffs whether or not they join in the action. Any person named but not joining shall be indicated as such with the words “to the use of.” Furthermore, pursuant to that Rule, a party bringing the action will mail a copy of the Complaint by certified mail to the Use-Plaintiff. Proof of the mailing is required to be filed with the Clerk of the Circuit Court.

In recognition of these requirements, Plaintiffs filed a Second Amended Complaint and Demand for a Jury Trial that named Michael Williams and Steven Williams as “use plaintiffs.” The Second Amended Complaint acknowledged that these were children of a prior marriage but did not seek compensation for those children.

The Use-Plaintiffs were served with a copy of the Second Amended Complaint by private process. Affidavits of private process service were filed with the Clerk’s office. However, an original of the Second Amended Complaint was never filed with the Circuit Court. When more than thirty (30) days had elapsed from the service of the Second Amended Complaint to the Use-Plaintiffs, the parties filed a Joint Motion for Approval of the Settlement and Entry of Judgment. However, since the Second Amended Complaint was never filed with the Court, the Use-Plaintiffs were never notified of the Motion.

On May 17, 2005, the Circuit Court for Baltimore County granted the Joint Motion to Approve Settlement and Entry of Judgment. The Order stated that:

[U]pon payment of open costs by the defendant, ACE American Insurance Company, that any and all claims and potential claims stemming from the death of Michael Williams, as a result of a motor tort occurring on September 12, 2002, shall be and hereby will be deemed SATISFIED IN FULL.

This Order effectively foreclosed any claims by the Use-Plaintiffs. In June 2005, plaintiffs’ counsel filed a Line of Satisfaction of Judgment.

In an unusual twist of events, counsel formerly representing Mrs. Williams and her children, opened a new case with the Circuit Court of Baltimore County, now representing Michael Williams and Steven Williams, the Use-Plaintiffs in the previous action. The Use-Plaintiffs, through Plaintiffs’ counsel, filed a Motion to Reopen and Consolidate both of the Williams’ actions. Defendant Ace opposed the motion.

The Court of Appeals explained that the Joint Motion for Approval of Settlement and Entry of Judgment that was presented on May 17, 2005 should not have been accepted because the Use-Plaintiffs were never served with copies of the motion. Moreover, the Second Amended Complaint that identified the Use-Plaintiffs was not effective as it was never filed with the Clerk’s Office. Accordingly, the proceedings on the Joint Motion for Approval of Settlement were ex parte which violated MD. RULE 1-351. Since the Second Amended Complaint was not filed with the Court, the Use-Plaintiffs were not identified in the record as Plaintiffs or parties of any kind, service of the Order that foreclosed their claim was not sent to them by the Clerk’s office. They were effectively deprived of their opportunity to file a Motion to Vacate the Judgment under RULE 2-535(a).

The Court of Appeals held that the parties must show a good faith effort to gain fully informed and knowing consent to the Settlement Agreement. The case was remanded to the Circuit Court to vacate the settlement approved in the first action and grant the Motion to Consolidate the Actions. This will give the opportunity for all the statutory beneficiaries to be named as Plaintiffs or Use-Plaintiffs.