Walker v. Ctr. Ins. Co.

JAMES T. WALKER v. CENTRE INSURANCE COMPANY

No. 187-2021

Court of Special Appeals of Maryland

February 23, 2022

Circuit Court for Prince George's County Case No CAL-17-38334

Zic Ripken, Wright, Alexander, Jr. (Senior Judge, Specially Assigned), JJ.

OPINION ^[*]

WRIGHT, J.

This appeal arises from a complaint filed with the Maryland Insurance Administration (the "MIA") in 2002 by James Walker, appellant, against Centre Insurance Company ("Centre") regarding nonpayment of funds pursuant to a homeowner's insurance policy (the "Policy") on a home owned by Mr. Walker and his wife (the "Property") that had been destroyed by a tornado.^[1] In 2003, the parties entered into a settlement agreement (the "Settlement Agreement") in which Centre agreed to pay funds into an escrow account for the Walkers' benefit. In 2013, Centre withdrew the funds from the escrow account.

In 2017, Mr. Walker filed the instant complaint with the MIA, arguing that Centre had breached the Policy and the Settlement Agreement by withdrawing the funds from the escrow account. The MIA ultimately found in favor of Centre, and Mr. Walker filed an appeal in the Office of Administrative Hearings (the "OAH"). Following a hearing, the OAH dismissed Mr. Walker's complaint for lack of subject matter jurisdiction. Mr. Walker then appealed to the circuit court, which dismissed the appeal without a hearing. Mr. Walker noted an appeal to this Court, and, in an unreported opinion, we held that the circuit court erred in dismissing the action. Walker v. Centre Insurance Company, 2019 WL 6040496, No. 1036, September Term, 2018 (filed November 14, 2019). We vacated the court's judgment and remanded the case for appropriate judicial review of the OAH's decision to dismiss Mr. Walker's appeal.

On remand, the circuit court affirmed the OAH's decision. Mr. Walker thereafter noted this appeal, in which he raises a single question, which we have rephrased for clarity:

Did the OAH err in dismissing Mr. Walker's complaint for lack of subject matter jurisdiction?

For reasons to follow, we hold that the OAH did not err. We therefore affirm the judgment of the circuit court.

BACKGROUND^[2]

In 2001, the Walkers owned the Property, a home in La Plata, Maryland. The Property was covered by the Policy, which had been issued by Centre. The Policy had a general coverage limit of $290, 000.00, but the Walkers had purchased a "Platinum Endorsement," under which Centre agreed to pay an additional $145, 000.00 if the Walkers met certain conditions.

In 2002, the Property and all of its contents were destroyed by a tornado. The Walkers subsequently filed a loss claim with Centre for $435, 000.00. Centre paid the general coverage limit of $290.000.00, but it refused to pay the remaining $145, 000.00 under the Platinum Endorsement.

Mr. Walker thereafter filed a complaint with the MIA. In 2003, the parties entered into the Settlement Agreement. The pertinent provisions of the agreement were as follows:

[Centre] will pay to "Chase" Manhattan Mortgage Corporation, as escrow agent for the [Walkers] pursuant to the [Walkers'] mortgage, the remaining sum of $145, 000.00 for coverage of the [Property] ($290, 000.00 having previously been paid).

These payments are intended to resolve all claims as to [the Property], leaving only for further litigation, if necessary, in The District Courts of Maryland or Circuit Courts of Maryland, the issue of whether [and] to what extent the [Walkers] may recover under the Policy. . . . The [Walkers] waive and release [Centre] and all agents and assigns from all but the specifically excluded sums referred to on page 4 of the [Agreement] and withdraw their appeal in the [OAH].

In July 2003, Centre sent a check for $145, 000.00 to Chase Manhattan Mortgage Corporation ("Chase") per the terms of the Settlement Agreement. The check, according to Centre, was to be held until such time that the Walkers incurred certain costs in constructing a new residence. The funds remained in escrow for the next nine years.

In January 2013, Centre sent a letter to Chase requesting that the $145, 000.00 be returned. In that letter, Centre alleged that the Walkers never constructed a new residence and that, as a result, Centre was entitled to recoup the $145, 000.00. In March 2013, Chase returned the funds to Centre.

In 2017, Mr. Walker filed the instant complaint with the MIA pursuant to § 27-1001 of the Insurance Article and § 3-1701 of the Courts and Judicial Proceedings Article of the Maryland Code. Under those statutes, an individual may recover damages if an insurer does not act in good faith in settling a claim under a property insurance policy. Md. Code, Ins. § 27-1001; Md. Code, Cts. & Jud. Proc. § 3-1701. Mr. Walker alleged that Centre, by withdrawing the funds from the escrow account, had breached the terms of the Policy and the Settlement Agreement, had acted in bad faith, and had engaged in unfair claim settlement practices.

Following a contested hearing, the MIA found in favor of Centre. Mr. Walker thereafter filed an appeal with the OAH.

Before holding a hearing, the OAH issued a written decision dismissing the appeal. The OAH found that the MIA, and by extension the OAH, lacked subject matter jurisdiction over the complaint:

Although [Mr. Walker] asserts [Centre's] withdrawal of the $145, 000.00 from the [Chase] escrow account violated the Policy and constituted bad faith, the issues of whether [Centre] acted in bad faith or improperly refused to pay [Mr. Walker] the $145, 000.00 as provided in the Platinum Endorsement, has been soundly resolved, as is clear by the express language of the June 25, 2003 settlement agreement.

** *

The Settlement Agreement further provides that the agreement was intended to resolve all past claims between [Mr. Walker] and [Centre]. Although [Mr. Walker] asserts [Centre's] withdrawal of the $145, 000.00 constitutes a new claim, I disagree. The issues enunciated in section 27-1001 are fully addressed in the June 2003 Settlement Agreement. [Mr. Walker's] argument in the instant matter is that [Centre's] interpretation of the Settlement Agreement is incorrect, and [Centre] breached the terms of the Settlement Agreement when it withdrew the $145, 000.00 from the escrow account.

** *

The interpretation and enforcement of a settlement agreement involves principles of contract law and is outside the scope of my authority. [Mr. Walker's] allegation that [Centre] breached the Settlement Agreement must be pursued in a court of competent jurisdiction.

(Footnote and emphasis omitted.)

Following the OAH's decision, Mr. Walker appealed to the circuit court. Centre filed a motion to dismiss, which was granted by the court without a hearing. The court did not provide an explanation for its decision. After Mr. Walker appealed to this Court, we vacated the court's judgment and remanded the case for appropriate judicial review of the OAH's decision. Walker, supra, 2019 WL 6040496, *9.

On remand, the circuit court held a hearing and ultimately affirmed the OAH's decision. This timely appeal followed.

DISCUSSION

Parties' Contentions

Mr Walker contends that the circuit court erred in affirming the OAH's decision to dismiss his complaint for want of subject matter jurisdiction. He asserts that § 27-1001 of the Insurance Article (hereinafter "§ 27-1001") and § 3-1701 of the Courts and Judicial Proceedings Article (hereinafter "§ 3-1701") gave the MIA and the OAH the authority to determine whether Centre failed to act in good faith under the Policy and the Settlement Agreement. He maintains that the MIA and the OAH also had the authority to interpret the Settlement Agreement to determine if Centre violated those statutes. Mr. Walker asserts further that, because he received an adverse decision from the MIA, which decided the complaint on the merits, and because he subsequently requested a hearing on the merits in the OAH pursuant to the MIA's express directive, the OAH was granted the authority to adjudicate the claims. Finally, Mr. Walker claims that the OAH's decision to dismiss the complaint for lack of subject matter jurisdiction was "legally inconsistent and erroneous" because the OAH "exercised jurisdiction over the matters that were discussed or raised in the complaint as grounds for its dismissal."^[3] Centre counters that § 27-1001 and § 3-1701 are not applicable here because there was no insurance policy, and hence no subject matter, over which the MIA and the OAH could exercise jurisdiction. Centre asserts that the insurance policy was no longer extant when Mr. Walker filed the instant claim because it had been replaced by the 2003 Settlement Agreement. Centre maintains that any claims Mr. Walker made in the instant case should therefore be evaluated based on the terms of the Settlement Agreement. Centre asserts that because settlement agreements are akin to contracts, any interpretation of the Settlement Agreement in the instant case should fall within the purview of the courts of general jurisdiction, not the MIA or the OAH.^[4]

Standard of Review

"The overarching goal of judicial review of agency decisions is to determine whether the agency's decision was made in accordance with the law or whether it is arbitrary, illegal and capricious." Sugarloaf Citizens Ass'n v Frederick Cnty. Bd. of Appeals, 227 Md.App. 536, 546 (2016) (citation and quotations omitted). During that review, "we [assume] the same posture as the circuit court . . . and limit our review to the agency's decision." Anderson v. Gen. Cas. Ins. Co., 402 Md. 236, 244 (2007) (citation omitted). Moreover, our review of the agency's decision "is 'limited to determining if there is substantial evidence in the record as a whole to support the agency's findings and...