Wrongful death settlement procedures reviewed in Maryland
In ACE American Insurance Company v. Williams, et al., 418 Md. 400, 15 A.3d 761 (2010), the Maryland Court of Appeals held that a court cannot approve a settlement of a wrongful death action unless the settlement complies with the requirements of Maryland Rule 15-1001, Courts and Judicial Proceedings Article sec. 3-904, and Walker v. Essex, 318 Md. 516 (1990). The failure of a court to comply with those requirements renders invalid any judgment purporting to settle “any and all potential claims stemming from the death of the decedent,” when that judgment is challenged by children of the decedent who had never been properly made “use” plaintiffs, and who had not been notified of a proposed settlement that—if approved—would purportedly extinguish their rights.
In 2003, Lori Williams, as the widow and personal representative of the decedent filed a lawsuit and identified two children as “use” plaintiffs that were beneficiaries of the decedent’s estate, Jeremy and Shane Williams. In 2005, Mrs. Williams reached a settlement with the Defendant’s insurance provider, ACE, for $750,000, but her attorney refused to sign a release in which Mrs. Williams would have held harmless and indemnified ACE for any further claims. In the interim, it was revealed that decedent had two other children, Steven and Michael Williams, from a previous relationship. Since ACE intended to settle and resolve “all” claims, it objected to settling the case without the two additional children being added to the suit as “use” plaintiffs as required under Maryland law. As a result, Plaintiffs amended the complaint to include and reference Michael and Steven and mailed them a copy of the amended complaint. Once Michael and Steven were added to the suit, ACE and Mrs. Williams filed a Joint Motion for the Court to approve the settlement and the Court granted the motion even though Michael and Steven were not represented by counsel, did not respond to the Complaint, and were not allocated any of the settlement funds.
Later in 2005, Michael and Steven Williams, through the same attorney who represented Mrs. Williams, filed an Amended Complaint and a Motion to Reopen and Consolidate the two wrongful death cases. The crux of the motion to reopen was that the claims of Michael and Steven were not addressed in the 2003 suit or 2005 settlement. In response, ACE filed a third party complaint against Mrs. Williams for indemnification and moved for summary judgment against Michael and Steven asserting that the case had been resolved to finality and a valid settlement agreement was in place. The trial court granted summary judgment in ACE’s favor.
On appeal, the Court of Appeals held that Michael and Steven were never officially added as “use” plaintiffs to the lawsuit due to several procedural technicalities and therefore, their interests were not represented or considered regardless of whether they had notice of the suit. Rule 15-1001 and Courts & Judicial Proceedings Article sec. 3-904 require that all beneficiaries be included in “one action” for wrongful death and the failure to include all beneficiaries is a defect that cannot be waived. The Court reiterated their holding in Walker v. Essex that “the purpose of the one action rule is to protect a defendant from being vexed by several suits instituted by or on behalf of different equitable plaintiffs for the same injury, when all the parties could be joined in one proceeding.”
Consequently, the Court of Appeals found that the trial court erred in approving the settlement since Michael and Steven were not properly added as parties, nor were their interests considered in settlement. As a result, the trial court also erred in granting summary judgment in the second action brought by Michael and Steven. Consequently, the settlement agreement and judgment based on the settlement agreement was vacated and the Court remanded the matter.