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Millersville woman can’t file bad-faith claim in Baltimore

Though her car crash occurred in Millersville, Christina Thompson of Anne Arundel County tried to sue her auto insurer in Baltimore City Circuit Court, saying a state law expressly permits lawsuits to be filed in the city whenever the allegation is that an insurance company rejected a claim in bad faith.

But a Maryland appeals court has rejected Thompson’s bid to litigate her case against State Farm Mutual Automobile Insurance Co. in Baltimore.

The Court of Special Appeals said the law, found in Section 2-215 of the state’s Insurance Article, permits the Baltimore circuit court to review any and all administrative decisions rejecting a bad-faith claim. The General Assembly put the venue provision in the law presumably to make it convenient for the state’s main administrative agency, the Baltimore-based Maryland Insurance Administration, to defend its decisions, the court said.

But the statute does not apply to lawsuits — such as Thompson’s — filed against insurance companies for alleged bad faith, the court said. Thompson’s case, therefore, must comply with the general rules of civil litigation, including those governing the appropriate court to hear a lawsuit, the appellate court stated in its 3-0 decision.

The court then upheld Baltimore City Circuit Judge Sylvester B. Cox’s decision to transfer Thompson’s lawsuit to Anne Arundel County Circuit Court.

The appellate court, echoing Cox, said all relevant factors related to the litigation are in Anne Arundel, not Baltimore.

For example, the accident occurred in Anne Arundel, both Thompson and the driver of the other car live in the county, Anne Arundel police investigated the crash and Thompson was treated by medical staff in the county, the court said.

“There is no local interest in burdening a Baltimore City jury with deciding this case,” Judge Robert A. Zarnoch wrote for the appellate court. “[A] jury will … have to decide the issue of damages, and the testimony of investigating officers and treating physicians could likely bear on that question. Moreover, any testimony on the key issue in this case — whether State Farm acted in good faith in denying appellant’s claim — will very likely come from witnesses located outside Baltimore City.”

Robert J. Zarbin, an attorney for Thompson, said he continues to believe the Insurance Article permits lawsuits alleging bad faith to be brought in Baltimore City Circuit Court.

He said the desire to have Thompson’s claim of bad faith heard quickly was a major factor in her lawyers’ decision to file in Baltimore City.

“I will get in quicker and faster than I will in Anne Arundel County,” said Zarbin, of The Jaklitsch Law Group in Upper Marlboro and president of the Maryland Association for Justice. “[But] we’re prepared to litigate anywhere.”

Zarbin said he and his co-counsel are weighing whether to ask the Court of Appeals — the state’s highest court — to review the appellate court’s decision.

State Farm’s attorney, Laura B. Jacobs, declined to comment on the decision. Jacobs is with Budow and Noble PC in Bethesda.

Following the Oct. 6, 2005, car crash, Thompson settled with the other driver’s insurance company for its policy limit of $20,000. But State Farm, Thompson’s own insurance company, rejected her request for $80,000 in underinsured motorist coverage.

Thompson filed a complaint with the Maryland Insurance Administration, alleging State Farm violated the Insurance Article’s requirement that insurers review claims in “good faith.” After reviewing the records, MIA concluded on Dec. 3, 2008, that State Farm acted in good faith and was not obligated to pay her claim.

Thompson could have sought judicial review of MIA’s decision in Baltimore City Circuit Court under the Insurance Article, but opted instead to file a lawsuit, with a request for jury trial, on Dec. 30, 2008, the appellate court said.

In that lawsuit, Thompson alleged State Farm breached the insurance contract by not making good on her claim and by failing to act in good faith. She sought $100,000 in damages for breach of contract and $225,000 for bad faith, plus attorney’s fees and costs.

State Farm successfully requested that the litigation be moved from Baltimore City to Anne Arundel County as the appropriate forum. Thompson then sought review by the Court of Special Appeals.

Zarnoch was joined in his opinion by Judges Alexander Wright Jr. and Irma S. Raker, a retired jurist who was sitting by special assignment.

WHAT THE COURT HELD

Case:

Thompson v. State Farm Mutual Automobile Insurance Co., CSA No. 977, Sept. Term 2009. Reported. Opinion by Zarnoch, J. Filed Dec. 2, 2010.

Issue:

Did a Baltimore City Circuit Court judge err in transferring to another county a lawsuit alleging bad faith by an insurance company?

Holding:

No; state law permitting Baltimore court’s jurisdiction for insurance cases alleging bad faith applies to judicial review of administrative decisions, not lawsuits.

Counsel:

James K. MacAlister for appellant; Laura B. Jacobs for appellee.