Justia Maryland Supreme Court Opinion Summaries

In early 2019, G.K. and K.K. purchased a homeowners insurance policy from Travelers Home and Marine Insurance Company for their residence. The policy included an anti-assignment clause prohibiting assignment without the insurer's consent. In May 2020, after the policy expired, the Policyholders reported roof damage from a 2019 storm and hired Featherfall Restoration, LLC to repair it. Travelers denied the claim, citing wear and tear. The Policyholders then assigned their claim to Featherfall, which Travelers refused to recognize due to the anti-assignment clause.Featherfall filed a complaint with the Maryland Insurance Administration (MIA), asserting its right to act in place of the Policyholders. The MIA upheld Travelers' denial, stating the anti-assignment clause invalidated the assignment. Featherfall requested a hearing, arguing the clause should not apply to post-loss assignments. The MIA Commissioner granted summary decision in favor of Travelers, finding the assignment invalid and Featherfall not entitled to a hearing.Featherfall sought judicial review in the Circuit Court for Baltimore City, which affirmed the MIA's decision and denied declaratory relief. The Appellate Court of Maryland also affirmed, holding that anti-assignment clauses apply to post-loss assignments and that Featherfall lacked standing.The Supreme Court of Maryland reviewed the case and held that the anti-assignment clause did not prohibit the assignment of a post-loss claim. The court distinguished between the policy itself and a claim arising under it, noting that a claim is a chose in action and thus assignable. The court reversed the lower courts' decisions and remanded the case to the MIA for further proceedings consistent with this opinion. View "In re Petition of Featherfall Restoration" on Justia Law

Plaintiffs, limited liability companies, filed class action lawsuits in the United States District Court for the District of Maryland seeking relief under the Medicare Secondary Payer (MSP) provisions. These provisions make Medicare a secondary payer when a beneficiary has other insurance coverage. Plaintiffs obtained assignments from Medicare Advantage Organizations and other secondary payers to seek reimbursement from primary payers like the defendants, Government Employees Insurance Company and its affiliates (GEICO). Plaintiffs had no preexisting interest in the claims and were compensated on a contingency basis.The United States District Court for the District of Maryland denied GEICO's motion to dismiss the case, which argued that the assignments were void as against Maryland public policy based on the doctrines of maintenance, champerty, and barratry. The court found no clear statement of Maryland law on this issue and certified questions to the Supreme Court of Maryland.The Supreme Court of Maryland held that Plaintiffs did not violate Maryland’s barratry statute, which prohibits soliciting another person to sue for personal gain without an existing relationship or interest. Plaintiffs did not solicit secondary payers to file lawsuits but obtained the right to sue in their own names through assignments. The court also held that the common law doctrines of maintenance, champerty, and barratry, to the extent they still apply, do not invalidate Plaintiffs’ assignments. The court concluded that the assignments are not void as against public policy and did not address the enforceability of choice-of-law provisions in the agreements. View "GEICO v. MAO-MSO Recovery II" on Justia Law

Two former police officers, Mark Zukowski and Joshua Ruggiero, were injured in the line of duty and subsequently awarded both accidental disability retirement (ADR) benefits and workers' compensation benefits under Maryland's Workers' Compensation Act. The ADR benefits exceeded the workers' compensation benefits, resulting in an offset that left the officers with only a small portion of the workers' compensation benefits. The officers' attorney sought fees based on the total workers' compensation award before the offset was applied.The Maryland Workers' Compensation Commission awarded attorney's fees based on the reduced amount of workers' compensation benefits after applying the statutory offset. The Circuit Court for Anne Arundel County affirmed the Commission's decision, holding that attorney's fees should be calculated after the offset.The Supreme Court of Maryland reviewed the case and affirmed the lower courts' decisions. The Court held that the terms "benefits" and "compensation" are interchangeable in this context, meaning that attorney's fees should be calculated based on the amount of compensation actually payable to the claimant after applying the statutory offset. The Court emphasized that the attorney's fees are a lien on the compensation awarded, which is defined as the money payable to the injured employee. Therefore, the offset must be applied before calculating the attorney's fees. The Court also rejected the argument that this interpretation was unconstitutional, stating that the attorney voluntarily agreed to the fee arrangement and was aware of the statutory provisions governing attorney's fees. View "Zukowski v. Anne Arundel Cnty." on Justia Law

A commercial tenant and landlord entered into a contract for the construction and lease of a warehouse, with the landlord also acting as the general contractor. The contract included a waiver of subrogation, where both parties waived subrogation against each other for certain losses, including those caused by their subcontractors. After the warehouse sustained weather damage, the tenant’s insurer sought to recoup insurance payments by suing the subcontractors.The Circuit Court for Baltimore City granted summary judgment in favor of the subcontractors, concluding that they were intended beneficiaries of the waiver of subrogation in the contract between the tenant and landlord. The court did not consider any extrinsic evidence regarding the parties' intent. The Appellate Court of Maryland reversed this decision, finding that the waiver of subrogation in the contract did not unambiguously benefit the subcontractors and that the subcontractors were not intended third-party beneficiaries.The Supreme Court of Maryland reviewed the case and held that the waiver of subrogation in the contract between the tenant and landlord did not extend to the subcontractors. The court found that the language of the waiver was unambiguous and did not show an intent to benefit the subcontractors. However, the court found that the waiver of subrogation included in the subcontracts was ambiguous regarding whether it applied to the tenant’s insurer’s claims against the subcontractors. Therefore, the court held that extrinsic evidence was needed to determine the parties' intent regarding the scope of the subrogation waiver in the subcontracts.The Supreme Court of Maryland affirmed the Appellate Court's decision, reversing the Circuit Court's summary judgment in favor of the subcontractors, and remanded the case for further proceedings to consider extrinsic evidence. View "Lithko Contracting v. XL Insurance America, Inc." on Justia Law

In this insurance dispute brought by Insured seeking declarations that the policies issued by Insurer covered the losses it had suffered from repairing and remediating its physical space to accommodate the health necessities brought about by the COVID-19 pandemic, holding that the allegations did not trigger the primary coverage provided by the relevant policies.Insured asserted that it suffered hundreds of millions of dollars for health and safety protocols and modifications to its stores due to the presence of COVID-19. After Insurer denied coverage Insured brought this lawsuit. Insurer moved to dismiss the complaint, after which Insured filed a motion to certify a question of law to the Court of Appeals. The Court of Appeals answered that when a first-party, all-risk property insurance policy covers "all risks of physical loss or damage" to insured property from any cause unless excluded, coverage is not triggered when a toxic, noxious, or hazardous substance such as COVID-19 is physical present in the indoor air of that property, is also present on and can later be dislodged from physical items on the property, and causes a loss of the functional use of the property. View "Tapestry, Inc. v. Factory Mutual Insurance" on Justia Law

The Court of Appeals held that an injured tort claimant's rights under a general liability insurance policy do not vest until the claimant has obtained a judgment against, or entered into a qualifying settlement with, an insured.CX Reinsurance Company issued commercial general liability policies to several Baltimore residential Landlords that included coverage for bodily injuries resulting from lead paint exposure at the Landlords' rental properties. CX field contract rescission actions against the Landlords, which the parties settled. Under the terms of the rescission settlements, the coverage for lead paint-related losses was substantially reduced. Claimants alleged they suffered bodily injuries from lead paint exposure while residing in the Landlords' rental properties, but the majority of claimants had not obtained final judgments against, or entered into settlements with, the Landlords before CX and the Landlords settled. The lower courts ruled that the Claimants were intended beneficiaries of the polices. The Court of Appeals reversed in part, holding (1) the Claimants who did not hold final judgments against or enter into approved settlement agreements with the Landlords were not the intended beneficiaries under the policies; and (2) the Claimants who obtained final judgments against their Landlords prior to the settlements of the applicable rescission cases may enforce the pre-settlement terms of the policies. View "CX Reinsurance Co. v. Johnson" on Justia Law

The Court of Appeals affirmed the judgment of the circuit court ruling that a household exclusion in umbrella policy issued by The Travelers Indemnity Company (TIC) was valid and enforceable, holding that the circuit court properly granted summary judgment to Travelers on Count VIII of Plaintiffs' complaint.Michael Buarque de Macedo and his wife and child died in a two-vehicle collision in Montgomery County and a remaining child suffered permanent injuries. Michael and his wife were the named insureds of a primary automobile liability insurance policy issued by TIC. The policy contained a household exclusion purporting to preclude coverage for bodily injury or personal injury suffered by Michael or related individuals who resided in Michael's household. Plaintiffs (collectively, the Macedos) brought this action asserting several claims against Michael's estate and the State. Count VIII of the complaint sought a declaratory judgment that the household exclusion was void as against public policy and contrary to statute. The circuit court declared the household exclusion valid and enforceable. The court of special appeals affirmed. The Court of Appeals affirmed, holding that the circuit court correctly ruled that the household exclusion in TIC's umbrella policy was valid and enforceable. View "Macedo v. Automobile Insurance Co." on Justia Law

The Court of Appeals held that only the amount that a workers' compensation insurer actually pays for medical expenses is part of the statutory offset against underinsured motorist benefits.Michael Gilliam was injured in an automobile accident during the course of his employment and received payments from his employer's workers' compensation insurer and the other driver's liability insurer. Gilliam later sought to recover the amounts by which the other driver was underinsured from an insurance policy covering the vehicle he was driving. As required by Maryland law, the healthcare providers who treated Gilliam had generated bills in amounts greater than the amounts set by the Workers' Compensation Commission but accepted payments at those lower amounts in full satisfaction for their services. At issue was whether the difference between the bills' amounts and the workers' compensation insurer's payments constituted a "benefit" that Gilliam had "recovered" under the Workers' Compensation Act that was to be offset against any recovery Gilliam would obtain from the underinsured motorist coverage of the auto policy. The Supreme Court held that a difference between a higher face amount billed by a healthcare provider and the amount actually paid by the workers' compensation insurer was not part of that offset. View "Westfield Insurance Co. v. Gilliam" on Justia Law

The Court of Appeals affirmed the judgment of the court of special appeals concluding that prejudgment interest on defense costs where a party breaches its duty to defend does not fall within the exception to the "modified discretionary approach" and is within the discretion of the fact-finder.The modified discretionary approach used by Maryland courts in awarding prejudgment interest generally places the award of prejudgment interest within the discretion of the trier of fact but also recognizes exceptions where a plaintiff is entitled to prejudgment interest as a matter of right. At issue was whether prejudgment interest should be awarded as a matter of right. The Court of Appeals held (1) prejudgment interest on defense costs is left to the discretion of the fact-finder; and (2) where the jury in this case was not presented with a claim of prejudgment interest, was not instructed on the issue, and did not separately state an award of prejudgment interest in the verdict, the circuit court was not authorized to award prejudgment interest. View "Nationwide Property & Casualty Insurance Co. v. Selective Way Insurance Co." on Justia Law

The Court of Appeals held that a change in life insurance beneficiary constitutes a conveyance under the Maryland Uniform Fraudulent Conveyance Act (MUFCA), Md. Code Comm. Law 15-201(c), and that a guardian of property is not granted the authority to change a life insurance beneficiary on a policy of the ward under section 15-102(t) of the Estates and Trusts Article (ET).In a case arising from a decade-long dispute between the adult children of the Buckingham family and United Bank, the United States District Court for the District of Maryland certified two questions of law to the Court of Appeals regarding whether the children intentionally defrauded the Bank when they successfully diverted significant amounts of life insurance proceeds away from the declining family business and to their personal use. The Court of Appeals answered the questions as follows: (1) a change of the beneficiary designation of a life insurance policy constitutes a conveyance under MUFCA; and (2) the guardian of property does not have the authority to change the beneficiary on a life insurance policy of a ward under ET 15-102(t). View "United Bank v. Buckingham" on Justia Law