Summary of Nationwide Mutual Insurance Co. v. Webb

Nationwide Mutual Insurance Co. v. Webb, 291 Md. 721, 736 (1981) addresses the enforceability of a consent to sue clause in an uninsured motorist endorsement.  This case consolidated this case and MAIF v. Franz.  Both cases concerned this issue of the enforceability of consent to sue clauses in uninsured motorist endorsements.  Basically, what was going on was that insurance companies were writing clauses into their car insurance contracts that compelled arbitration in uninsured motorist cases.

In Franz, MAIF’s attorney asked the Maryland Court of Appeals of overturn summary judgment granted in favor of Anthony Franz because the Maryland Court of Special Appeals found that the arbitration clause in Franz’s insurance policy with MAIF (now called Maryland Auto Insurance) contained an unenforceable mandatory arbitration clause.

Similarly, in Webb, Nationwide Insurance asked the Maryland Court of Appeals to affirm a lower court finding that it was not bound by a dispute involving the injured insured because he had not abided by the consent to sue clause.

The court found in favor of the personal injury victim in both cases, affirming the judgment in Franz and vacated and remanded Webb, finding that consent to sue clauses were unenforceable because they limited uninsured motorist coverage. The court noted that Marylnad has a keen interest in protecting insured drivers, that there was an interest in avoiding repetitive litigation, and that insurers’ rights were protected because they had the option of intervening in disputes between insured and uninsured motorists.

Mandatory Arbitration in MarylandWebb is an exception to Maryland law that allows for the enforcement of mandatory arbitration agreements. The Maryland Arbitration Act embodies a legislative policy in favor of the enforcement of agreements to arbitrate. Arbitration is encouraged by Maryland law because it “originates from an agreement between the parties as to how and in what forum the parties will settle their disputes.” Birkey Design v. Eagle Nursing Home, 113 Md. App. 261, 265, 687 A.2d 256 (1997).

Typically, the only question the court will as is whether an enforceable agreement exists to arbitrate the underlying dispute. When the language of an arbitration clause is plain and the issue in dispute falls within its scope, the Court typically compel arbitration. Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 104 (1983). In fact, Maryland law resolves ambiguities in favor of arbitration. Roarke v. Amchem Products, Inc., 384 Md. 329, 356, (2004).

In our opinion, this is absolute garbage in most cases and particularly in nursing home cases.  Our law firm has fought back against arbitration agreements, most notably making new law in nursing home cases.

There are certainly cases where Maryland appellate court may be tempted to toss out an arbitration clause because it is unconscionable.  But Maryland appellate courts have yet to invalidate a mandatory arbitration clause for unconscionability or because the agreement was an adhesion contract (often written in extremely tiny fonts).

Still, this could change in the future.  The Maryland courts do know there is a cause for concern with these mandatory arbitration provisions. In MCR of America, Inc. v. Greene, 811 A.2d 331 (2002) the Maryland Court of Appeals opined:

We are not unmindful of the growing concern over the use of arbitration contracts to compel consumers and prospective employees to waive, in effect, important constitutional and statutory rights or be denied, in the case of consumers, needed goods and services, and, in the case of prospective employees, desirable employment. [Citations ommitted.] This concern is not unfounded. The use of arbitration to resolve employment disputes and consumer complaints is growing at a startling pace. What was once considered just a voluntary alternative means of resolving disputes quickly and inexpensively, has the potential, as one commentator has observed, to become “a tool for the powerful to exert authority over the less powerful.”

So there is hope for the future. Thankfully, this is not a problem facing victims bringing uninsured motorist claims in Maryland.

  • Maryland arbitrators and mediators: get a list of active mediators and arbitrators in Maryland
  • Maryland Law Update
  • Sample Interrogatories Filed by Nationwide: examples of interrogatories from this insurance company in a car accident case
  • Settling Claims with Nationwide (details on dealing with Nationwide Insurance for settlement)
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