A Full and Final Release of (Almost) All Claims

According to the Maryland Court of Special Appeals, an injured party’s execution of a Release of all claims may not bar a subsequent claim for underinsured motorist benefits against her own insurance company.

Under Maryland law, an injured party who receives an offer of liability limits from a negligent party’s insurance company must provide notice of the offer to her own insurance company [underinsured motorist (“UIM”) carrier].  The UIM carrier then has sixty days to either 1) consent to the offer, which waives the UIM carrier’s subrogation claim against the at-fault party, or 2) refuse to consent, which preserves the UIM carrier’s subrogation claim against the at-fault party, but requires the UIM carrier to pay its insured (the injured party) the amount of the liability limits that were offered.  When the UIM carrier consents, the injured party may then accept the offer and release the negligent party.

In Buckley v. Brethren Mutual Insurance Co., a recent Court of Special Appeals opinion, Buckley was involved in an accident with a vehicle insured by Geico.  Geico offered its $100,000 liability limits to Buckley.  After Buckley forwarded the offer to Brethren Mutual, her own insurance company, Brethren Mutual consented to Buckley’s acceptance of the offer.

In connection with her acceptance of Geico’s $100,000, Buckley, represented by counsel, executed a “full and final Release of any and all claims and liens.”  After executing the Release, Buckley made a demand for UIM benefits to Brethren Mutual.  Denying her claim, Brethren Mutual argued that she released her claim against Brethren Mutual when she executed the “full and final Release of any and all claims and liens.”

After the trial court entered summary judgment in favor of Brethren Mutual, Buckley appealed.  The Court of Special Appeals reversed, primarily basing its decision on the purpose of the UIM statutes, namely “to assure that victims of automobile accidents have a guaranteed avenue of financial redress,” as well as the “strong public policy favoring compensation of those injured by [underinsured] motorists.”  Rejecting Brethren’s arguments that the broad language of the Release barred Buckley’s UIM claim, the Court wrote that “to interpret the Release as absolving Brethren from liability on its contractual obligations to Buckley would be giving Brethren a gratuitous windfall not remotely contemplated by the parties to the Release.”    

In dissent, Judge Deborah S. Eyler described the Release signed by Buckley as “clear on its face,” and opined that it “encompasses every sort of claim that might exist resulting from the accident.” 

While it would lead to an incredibly harsh result, I am inclined to agree with Judge Eyler.  The Release unambiguously covered “any and all claims.”  Buckley’s counsel could have fashioned a release that was limited to the claims against Geico and its insured, and that explicitly preserved Buckley’s UIM claim.  The majority opinion subordinates the language of a legal document to the intent of the parties.  It should be the other way around.