eNotes: Liability – July 2024 – Maryland

SIGNIFICANT CASE SUMMARIES

Maryland Case Summary

In the Matter of the Petition of Featherfall Restoration LLC
Maryland Appellate Court
No. 1313, Sept. Term, 2022

Decided: March 7, 2024

Appellate Court of Maryland finds anti-assignment clause valid and that Plaintiff lacked standing to request a hearing.

Background

Travelers Home and Marine Insurance Company insured a home in Potomac, Maryland. In May 2020, the homeowners filed a claim with Travelers for roof damage allegedly caused by a storm. While Travelers processed the claim, the homeowners retained Plaintiff Featherfall Restoration LLC to repair the roof. Homeowners signed an “Assignment of Claim” that allegedly gave Plaintiff all rights related to the Travelers’ claim. Travelers inspected the home and determined the roof damage was caused solely by natural wear and tear, ultimately denying the claim. The homeowners were notified that the claim was denied, and Plaintiff then contacted Travelers regarding the “Assignment of Claim.” Travelers refused to recognize the assignment, as Travelers’ policy with the homeowners included an anti-assignment clause. The anti-assignment clause purportedly voided all assignments not made with Travelers’ consent.

After the assignment was denied, Plaintiff filed a Complaint with the Maryland Insurance Administration (“MIA”), alleging that Travelers’ refusal to recognize the assignment was a violation of the Insurance Article of the Maryland Code. The Insurance Commissioner held that the assignment was not valid and that Travelers had not violated the Insurance Article. The Circuit Court for Baltimore County affirmed the Insurance Commissioner’s decision. Plaintiff filed a timely appeal. Plaintiff requested review of the Commissioner’s decision as to the validity of the anti-assignment clause, whether Travelers committed an unfair claims settlement practice by refusing to discuss the assignment with Plaintiff, and whether Plaintiff had standing to file an administrative complaint with the MIA.

Holding

The Appellate Court of Maryland held that Maryland law recognizes the validity of anti-assignment clauses in insurance policies. Additionally, Maryland has not adopted Section 322 of the Restatement (Second) of Contracts, which distinguishes between pre-loss and post-loss assignments. Maryland insurance policies with anti-assignment clauses prohibit assignments, regardless of whether the claim was assigned before or after a loss. As the assignment in question for this matter was void, Plaintiff did not qualify as a “person aggrieved” and lacked standing to request a hearing with the MIA. Additionally, since the anti-assignment clause was valid, Travelers did not engage in unfair settlement practices by refusing further communications from Plaintiff regarding the matter. The Appellate Court of Maryland affirmed the decision of the Circuit Court for Baltimore City.

Questions about this case can be directed to Lucas Duty at (443) 641-0572 or lduty@tthlaw.com.