A Preliminary Decision from the Maryland Insurance Administration Does Not Constitute A “Final Decision” For the Purposes of Collateral Estoppel

 David Boyd, et ux. v. The Goodman-Gable-Gould Company, No. 2139, September Term 2019. Opinion by Eyler, James R., J.

    After a fire destroyed the home of David Boyd and Penny Coco-Boyd (collectively “the Boyds”) in 2016, they gave notice of their loss to their homeowners’ insurer, State Farm Fire and Casualty Company (“State Farm”). The Boyds subsequently engaged the services of Goodman-Gable-Gould Co. (“GGG”), a public adjuster, to adjust their claim with State Farm. A public adjuster is an independent insurance professional that a policyholder may hire to help settle an insurance claim in exchange for a percentage of any proceeds collected on the policyholder’s behalf.

    The Boyds eventually became dissatisfied with GGG’s services and filed a complaint against GGG with the Maryland Insurance Administration (“MIA”), alleging that GGG engaged in fraudulent and dishonest practices, displayed incompetence, and wrongfully withheld monies. The MIA ultimately issued a preliminary decision in favor of GGG. Although the Boyds were entitled to challenge the Commissioner’s preliminary decision under Maryland Code Ann., Insurance § 2-210, the Boyds elected not to request an administrative hearing to contest that determination.

    While the MIA complaint was pending, the Boyds initiated a declaratory judgment action in the Circuit Court for Montgomery County, seeking a declaration that they had a right to terminate their contract. In response, GGG moved for summary judgment on the basis that, since the Boyds did not file an administrative appeal within thirty (30) days, the preliminary decision issued by the MIA became a “final decision.” According to GGG, the Boyds were collaterally estopped from pursuing their claims in the circuit court since they pursued claims premised on the same core facts before the MIA. The court agreed with GGG and held that, since the Boyds chose not to contest the MIA’s preliminary decision in favor of GGG, the Boyds had been afforded “every opportunity to pursue their claims” administratively and were estopped from doing so in the circuit court.

    In reviewing the circuit court’s ruling on appeal, the Court of Special Appeals cited to Baston v. Shiflett, 325 Md. 684, 705 (1992), which held that “the decision of an administrative agency may have preclusive effect if the agency decision was the product of a quasi-judicial proceeding.” In making that determination, the Court employed a three-part test for deciding the preclusive effect of agency decisions. An agency decision can have preclusive effect if: (1) the agency acted in a judicial capacity; (2) the issue presented to the fact finder in the second proceeding was fully litigated before the agency; and (3) resolution of the issue was necessary for the agency’s decision. Exxon Corp. v. Fischer, 807 F.2d 842, 845-46 (9th Cir. 1987) (citing Batson, 325 Md. at 701).

    The Court next looked to Md. Code Ann., Ins. § 2-214(a), which provides that the MIA Commissioner acts in a quasi-judicial manner when holding a hearing on a challenge to its preliminary decision. In this case, since the Boyds never requested a hearing pursuant to Md. Code Ann., Ins. § 2-210, the Boyds action before the MIA never amounted to a quasi-judicial proceeding.

    Since the MIA Commissioner’s preliminary determination in favor of GGG was not deemed to be a “judicial proceeding,” the three-part Baston test was not satisfied, and the Court held that the Boyds were not collaterally estopped from pursuing concurrent relief in the circuit court.

-John Thompson, Associate Attorney

Congratulations to John Thompson on his Recent Trial Win!

 

    John's client was falsely accused of running a red light, thereby causing a three-car collision. One of the drivers involved in the collision, Plaintiff, alleged injuries due to the accident. 

    Plaintiff's mother testified at trial that she arrived at the scene following the collision and heard John's client say that he was "trying to beat the light." 

    John's client and the third driver involved in the accident testified that John's client had a green light when he entered the intersection. 

    Plaintiff testified that she had not yet entered the intersection when John's client ran the red light and struck her vehicle, Plaintiff provided photographs of her vehicle, which she indicated were taken at the location of the impact. Those photographs were contradictory to Plaintiff's testimony, as her vehicle was positioned in the middle of the intersection. 

    Based on this inconsistency, the Court found John's client's version of the accident to be more credible than Plaintiff's, and therefore the Court entered judgment in favor of him. 

Promising New Changes for Civil Litigation in Maryland

           The Maryland General Assembly has recently certified multiple proposed constitutional amendments for the November 8, 2022 ballot. These proposed amendments, if successful, will cause some major changes to civil litigation in the State of Maryland.

The Maryland General Assembly recently passed Senate Bill 670 (SB670). SB670, if successful on the ballot, will change the maximum amount in controversy in which a party can bring a civil suit without a jury trial from $15,000 to $25,000.

The bill was first read during Senate Judicial Proceedings on February 3, 2021 and in its initial reading it stated the amount in controversy as being raised to $30,000.  It was then amended in the House on April 9, 2021, and the amount in controversy was changed to $25,000. The bill then went back to the Senate and was passed on April 12, 2021 with the House Amendment. The bill was then enacted under Article II, Section 17(c) of the Maryland Constitution – Chapter 598 on May 30, 2021. It is now certified to appear on the Maryland Ballot on November 8, 2022 as a constitutional amendment.

This proposed amendment will have a large impact on civil litigation in Maryland if it succeeds. By raising the amount in controversy in which parties may sue without a jury trial, there may be a reduction in the number of civil jury trials, and an increased amount of bench trials. This would alleviate some of the burden on both the Maryland Courts and the parties to civil litigation as jury trials are often more time consuming and costly as compared to bench trials. The change will mean that only parties to litigation with an amount in controversy over $25,000 may demand a jury trial.

In addition to SB670, the upcoming November 8, 2022 ballot will contain a vote regarding name changes to both of Maryland’s Superior Courts. Currently Maryland’s initial appeals court is named the Maryland Court of Special Appeals and Maryland’s Superior Court is named the Maryland Court of Appeals. The proposed changes would change the Maryland Court of Special Appeals’ name to the Appellate Court of Maryland and change the Maryland Court of Appeals’ name to the Supreme Court of Maryland. Chief Judge of the Maryland Court of Appeals Mary Ellen Barbera stated that the current Court names have caused “confusion from beyond the borders of our state as lawyers, law students and litigants research, contact and even file papers with the wrong court. That same confusion persists among Marylanders.”[i] The proposed name change will ideally alleviate the confusion that Chief Judge Barbera addresses.  

As we approach the November 8, 2022 ballot, it will be important to watch for these proposed changes and how they affect the future of civil litigation in Maryland.

-Kari Martiniano, Law Clerk

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[i] Danielle E. Gaines, General Assembly Passes Bill to Rename Maryland’s Top Court, Maryland Matters (April 6, 2021), https://www.marylandmatters.org/blog/general-assembly-passes-bill-to-rename-marylands-top-court/.