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General release does not bar recovery against Insurer in § 19-511 settlement.

The Brethren Mutual Insurance Company v. Ember Louise Buckley
--- A.3d--- (March 4, 2014) (not yet published)

by Gregory Emrick, Associate
Semmes, Bowen & Semmes (

Plaintiff Buckley was involved in a single vehicle accident in which her boyfriend, Mr. Betts, was operating the vehicle. Betts was covered by a liability insurance policy issued by GEICO with limits of $100,000. At the time, Buckley also had uninsured/under-insured motorist coverage through an insurance policy issued by Brethren Mutual Insurance Company (“Brethren”). Buckley was injured significantly in the accident, and GEICO offered to settle her claim for policy limits, with a release of all claims against Betts. In accordance with MD. CODE ANN., Ins. § 19-511, Buckley sent notice to Brethren of GEICO’s offer to settle, requesting that Brethren consent to the settlement and waive its right to subrogate against Betts. In response, Brethren acknowledged it would waive the subrogation rights against Betts, but specifically address the request for consent to the settlement. Thereafter, Buckley executed a general release of all claims, which stated in relevant part:

I/we, Ember Buckley ... for and in consideration of a draft for the sum of one hundred thousand dollars ... do ... hereby remise, release, and forever discharge Harvey Betts. Releasee(s), 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 thereof ... resulting or to result from an accident that occurred on or about the eighteenth day of March, 2007, at or near Saw Mill Court Baldwin, MD....

Buckley then attempted to recover the available under-insured motorist coverage from Brethren. Brethren denied the claim. Buckley filed suit for breach of contract.

In the trial court, both parties filed cross motions for summary judgment. Brethren successfully argued that Buckley executed a general release that discharged “all other persons, firms or corporations … from any claim” growing out of the accident, which necessarily included her claims for underinsured motorist coverage. The trial court agreed with Brethren and granted its motion for summary judgment. Buckley appealed the dismissal of her case to the Court of Special Appeals.

The Court of Special Appeals reviewed the facts of the case presented in the trial court and applied them to § 19-511, and held that “in the context of § 19-511(e), executing a boilerplate, general release in favor of the liability insurer does not relieve the UM carrier from its contractual duty to issue a UM payment to its insured.” Buckley v. Brethren Mut. Ins. Co., 207 Md. App. 574 (2012). The Court of Special Appeals overturned the trial court’s holding and remanded the matter back to the trial court. Brethren filed a writ of certiorari to the Court of Appeals, which was granted.

The Court of Appeals granted certiorari for the purpose of determining whether the Court of Special Appeals had properly held that the general release that Buckley executed did not prejudice her breach of contract claim against Brethren for benefits under her under-insured motorist policy. The Court first explored the general contract law surrounding releases, noting that on prior occasions the Court had held that “general releases, similar in language to that signed by Buckley, must be read to release even claims against parties who gave no consideration for, had no knowledge of, and were not parties to the contract.” Citing Pemrock, Inc. v. Essco Co., 252 Md. 374 (1969). The Court conceded that applying that law would effectively end the analysis in Brethren’s favor, but the Court also noted that that law only applied “in the absence of constitutional, statutory or clear important policy barriers.” The Court then held that “§ 19-511 constitutes existing law that must be read into the Release” when the procedures of § 19-511 implicated. As such, § 19-511 established a settlement procedure that did not specifically preclude the injured party from executing a general release, and reading this limitation into the statute would be contrary to the purpose indicated in the legislative history of § 19-511. The Court held that “when a release is executed within the statutory framework of § 19-511, the statute should define the permissible scope of the release as to the UM insurer.” The Court refused to address the question of whether Brethren had consented to the settlement, as required by § 19-511. The Court affirmed the holding of the Court of Special Appeals overruling the trial court’s dismissal.