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Litigation: Maryland court rules that jury must know identity of insurance carrier

Public interest in identifying parties to litigation outweighs the potential risk of defendants receiving a higher damages award

Maryland’s intermediate appellate court, the Court of Special Appeals, has ruled that that an insurance company’s identity must be disclosed to a jury in a breach of contract case arising out of the uninsured motorist provisions of an insurance policy. Davis et vir. v. Martinez, et al., examines the potential prejudice that defendants face when a jury knows that a claim may be covered by insurance, as well as the distinction between evidentiary matters and basic trial procedure.

On Jan. 27, 2008, Tania Nicole Little Martinez’s car collided with one being operated by Dionne and Darryl Davis. The Davises sued Martinez, alleging personal injuries and loss of consortium, among other things.

Martinez had an automobile insurance policy with United Services Automobile Association (USAA) with limits of $20,000, which were the minimum required limits at the time. The Davises had $50,000 in uninsured motorist (UM) coverage through State Farm.

USAA tendered its $20,000 policy limits to the Davises. The Davises sent notice of the tender to State Farm, requesting that it accept or reject the settlement offer. State Farm rejected the offer, opting instead to tender $20,000 to retain its subrogation rights against Martinez. State Farm also told the Davises it needed additional time before it would agree to tender the difference between the $50,000 uninsured motorist limits and Martinez’s $20,000 limits.

The Davises then amended their complaint to add a breach of contract count under the UM policy against State Farm. State Farm answered and filed a cross-claim against Martinez.

Martinez moved the court to preclude any mention of State Farm’s presence at trial. Martinez argued that the jury might infer that she did not comply with state law on required insurance, and that it might be swayed in awarding damages by the knowledge that the claim was covered by insurance.

Despite the Davis’ opposition, the court granted the motion. The jury was not made aware of State Farm’s presence as a party, and its lawyer was introduced as “another lawyer in this case.” In voir dire, the court told the jury the case was a motor vehicle negligence case against Martinez alone. The jury returned a defense verdict on the issue of Martinez’s liability. The court denied the Davis’ motion for a new trial, and the Davises appealed.

On appeal, the Davises argued that Maryland’s long-held, overwhelming public policy interest in openly identifying parties to litigation outweighs any risk that defendants will suffer a higher damages award. State Farm countered that:

  1. Maryland law has long recognized the impropriety of disclosing to juries that a claim may be covered by insurance
  2. That an insurance company’s identity is irrelevant to the issue of a tortfeasor’s negligence

The Court of Special Appeals rejected State Farm’s arguments. The appellate court reaffirmed that a party’s potential adverse economic consequences are insufficient to justify hiding a party’s identity at trial. Second, the appellate court found that a party’s tort liability does not determine whether an underinsured motorist (UIM) carrier’s presence should be disclosed to a jury.

Rather, the appellate court agreed with the Davises that, “the trial court’s ruling was not evidentiary but one of basic trial procedure.” The appellate court looked favorably on opinions from other states in which courts ruled that juries must know that a UM/UIM carrier is a party to the action. Cloaking State Farm in anonymity made a “charade” of the trial that risked the jury system’s integrity. Hence, the appellate court reversed the judgment, finding the trial court’s decision was an abuse of discretion concerning basic trial procedure.

Contributing Author

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Jim Steele

Jim Steele is a member at Carr Maloney. He counsels insurers on complex coverage matters and litigates insurance coverage disputes. He also defends clients in...

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