WILLIAM DONALD SCHAEFER, Governor

In accordance with Article II, Section 17 of the Maryland
Constitution, I have today vetoed House Bill 514.

This bill provides that service of civil process in certain
insurance cases may be made on a defendant's insurance company if
the defendant's whereabouts are unknown and there have been three
unsuccessful attempts at service. Any judgments would be limited
to the limits of the applicable insurance.

House Bill 514 also provides that all policy defenses under the
terms of the insurance policy, including noncooperation, are
available to the insurer. The Attorney General advises me,
however, that the bill is not clear as to what effect a
disclaimer of coverage would have upon the sufficiency of service
of process or the permissible entry of a judgment against the
defendant. If there were a judgment against a defendant who has
no actual knowledge of the lawsuit, and whose insurance has been
disclaimed because of noncooperation or other policy defense, a
violation of the Due Process Clause might exist.

In addition to the concerns raised by the Attorney General, I
note that placing an insured in the position of being an agent
for service while limiting the liability of the defendant to the
limits of any applicable insurance could place an insurer in a
conflict of interest. The liability of the insured may only
become unlimited if the insurer makes the insured part of the
case. Revealing the whereabouts of the insured could subject an
insurance company to claims of bad faith by the insured. If the
insurance company does not bring the policyholder into the
litigation, then the insurance company's ability to defend the
case is hampered. A more appropriate solution to the possible
problem of insurance companies refusing to divulge the
whereabouts of their policyholders due to restrictions of agency
law might be legislation which would permit plaintiffs limited
access to insurance company files. I suggest that the General
Assembly study the possibility of legislation which would allow
limited discovery as to the whereabouts of policyholders.
However, for reasons outlined above, I have decided that it is
necessary to veto House Bill 514.

Sincerely,

William Donald Schaefer

Governor

House Bill No. 514

AN ACT concerning

Civil Actions - Substituted Service of Process —

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