Is Maryland’s New Bad Faith Law Retroactive?

One question that has remained unanswered is whether Maryland’s new bad faith law is retroactive. On Dec. 17, 2007, U.S. District Court Judge J. Frederick Motz ruled that the Maryland legislature intended Maryland’s new first-party bad faith law to be retroactive. In Schwaber v. Hartford, a case involving insurance coverage for a roof leak, Judge Motz had initially dismissed Plaintiff’s bad faith action prior to the effective date of the first-party bad faith bill (2007 Md. Laws 150). Plaintiff sought to re-file the claim after the bill passed.

Interestingly, Hartford agreed that the Maryland legislature had intended the new bad faith statute to be retroactive, and instead objected on state and federal constitutional grounds. Judge Motz deferred ruling on these objections or certifying the state constitutional questions to the Maryland Court of Appeals, unless or until resolution of these constitutional issues is necessary to the outcome of the litigation. So while it is not a slam dunk that this recent law will pass constitutional muster, the court’s finding that the General Assembly intended the bad faith law to be retroactive is a significant step in the right direction.

I wrote this post in 2008.  In 2019, we now fully realize that our bad faith law in Maryland is useless.  We have never had a client meaningfully enjoy Maryland’s law in the last 12 years.


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