Maryland: Plaintiffs Are Not Necessarily Entitled to Litigate Bad Faith Lawsuit Against Insurance Companies in the Baltimore City Circuit Court

In the case of Thompson v. State Farm Mutual Automobile Insurance Co., filed on December 2, 2010, the Court of Special Appeals of Maryland rejected a Plaintiff’s contention that she was entitled to litigate her bad faith lawsuit against State Farm in the Circuit Court for Baltimore City, Maryland.

In the case of Thompson v. State Farm Mutual Automobile Insurance Co., filed on December 2, 2010, the Court of Special Appeals of Maryland rejected a Plaintiff’s contention that she was entitled to litigate her bad faith lawsuit against State Farm in the Circuit Court for Baltimore City, Maryland.

The case arose from a motor vehicle accident which occurred in Anne Arundel County, Maryland in 2005.  After the tortfeasor’s insurance carrier settled for the policy limits of $20,000, the plaintiff sought underinsured motorist benefits from her insurance carrier, State Farm Mutual Automobile Insurance Co.  Prior to filing her lawsuit, the Plaintiff filed a complaint with the Maryland Insurance Administration (MIA) alleging a violation of Maryland Code Annotated, Insurance §27-1001.  This statute is the “bad faith” statute which allows a plaintiff to complain administratively to the Maryland Insurance Administration that the plaintiff has been victimized by an insurance company’s bad faith handling of a first party insurance claim.  Plaintiff Thompson’s complaint to the MIA resolved in favor of State Farm and Plaintiff Thompson did not thereafter file any sort of administrative appeal or request for review.  Instead, Plaintiff Thompson filed a lawsuit and request for a jury trial in the Circuit Court for Baltimore City, Maryland against State Farm only, alleging that State Farm had acted in bad faith, and seeking underinsured motorist benefits and up to $125,000 penalties.

State Farm filed a motion to dismiss, which the Circuit Court for Baltimore City, Maryland treated as a motion to transfer the case to the Circuit Court for Anne Arundel County, Maryland.  The Court denied the motion to dismiss, but granted the motion to transfer.  The Plaintiff appealed to the Court of Special Appeals of Maryland, which affirmed, holding that the first party bad faith statute guidelines do not apply to lawsuits such as the Plaintiff’s lawsuit, filed as an independent action against an insurance company for alleged bad faith, and seeking a jury trial.  Rather, that statute applies to administrative complaints filed in the MIA, and properly filed requests for review or appeals therefrom.  Thus, the Plaintiff’s case was subject to Maryland’s general rules of civil litigation, including those laws regarding the determination of whether a lawsuit filed in one jurisdiction in Maryland should be transferred to another jurisdiction based on the forum non conveniens. 

The Court found that transfer to the Circuit Court for Anne Arundel County, Maryland was warranted in this particular case since the subject accident occurred in Anne Arundel County, the Plaintiff and driver of the other vehicle lived in Anne Arundel County, the Anne Arundel county police investigated the accident, and the Plaintiff was treated by medical personnel in Anne Arundel County.

For insurance companies, this is a very favorable opinion, because insurance companies are likely to have less success defending a bad faith lawsuit in the Circuit Court for the City of Baltimore rather than in just about any other jurisdiction.