Opinion
N22C-08-165 VLM
10-31-2023
MARK GINSBERG, Individually, and as Executor of the ESTATE OF LISA DAVIS, and RON ZOLADKIEWICZ, as Ad Litem Guardian of BRANDON ZOLADKIEWICZ, a Minor Child, Plaintiffs, v. HARLEYSVILLE WORCESTER INSURANCE COMPANY, n/k/a NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant.
Adam F. Wasserman, Esq., Ciconte Wasserman & Scerba, LLC, Attorney for Plaintiffs. Cynthia Beam, Esq., Reger Rizzo Darnall, LLP, Attorney for Defendant.
Submitted: July 15, 2023
Upon Consideration of Defendant's Motion for Summary Judgment, GRANTED.
Upon Consideration of Plaintiffs' Cross-Motion for Summary Judgment, DENIED.
Adam F. Wasserman, Esq., Ciconte Wasserman & Scerba, LLC, Attorney for Plaintiffs.
Cynthia Beam, Esq., Reger Rizzo Darnall, LLP, Attorney for Defendant.
MEMORANDUM OPINION
Vivian L. Medinilla, Judge
I. INTRODUCTION
Nationwide is on one side. Its insureds on the other. The insureds bring this breach of contract claim in response to the insurance company's denial of uninsured motorist (UM) coverage following an automobile accident that resulted in the death of one of the insureds. Defendant Nationwide sought dismissal under this Court's Superior Court Civil Rule 12(b)(6) for failure to state a claim. On cross-motions for summary judgment, this matter is now reviewed under Superior Court Civil Rule 56. For the reasons below, Defendant's Motion for Summary Judgment is GRANTED, and Plaintiffs' Motion for Summary Judgment is DENIED.
Plaintiffs include Mark Ginsberg, individually, and as executor of the estate of Lisa Davis, and Ron Zoladkiewicz, Guardian ad litem of Ms. Davis's son, Brandon Zoladkiewicz (together, "Plaintiffs").
II. FACTUAL AND PROCEDURAL BACKGROUND
Unless otherwise noted, this Court's recitation is drawn from Plaintiffs' Amended Complaint ("Complaint") and all documents the parties incorporated by reference. Am. Compl. (D.I. 6) ("Am. Compl."); see In re Santa Fe Pac. Corp. S'holder Litig., 669 A.2d 59, 69-70 (Del. 1995).
On September 28, 2020, Lisa Davis and her then minor son, Brandon Zoladkiewicz, were involved in a motor vehicle collision caused by Jordan Griffith in Newark, Delaware. At the time of the accident, Griffith was driving under the influence of alcohol in addition to being uninsured. Ms. Davis did not survive, and Brandon suffered serious injuries.
Am. Compl. ¶¶ 8, 9, 11.
Am. Compl. ¶ 8.
Id. ¶ 10.
When the accident occurred, Ms. Davis was insured by Defendant Harleysville Worcester Insurance Company ("Harleysville"), a Nationwide affiliate, under Policy Number PAAB76109 ("Davis Policy") and was also insured by Harleysville under Policy Number PAAB82705 ("Ginsberg Policy"). Both policies set Uninsured/Underinsured Motorist Bodily Injury ("UM/UIM") limits at $100,000 each person and $300,000 each accident.
Def.'s Mot. to Dismiss Compl. (D.I. 12) Ex. A ("Def.'s Mot. to Dismiss Compl.").
Def.'s Mot. to Dismiss Compl. Ex. B; Pls.' Mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. to Dismiss Compl. at 2 (D.I. 14) ("Pls.' Mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. to Dismiss Compl.").
Def.'s Mot. to Dismiss Compl. Ex. A; Def.'s Mot. to Dismiss Compl. Ex. B.
Under the Davis Policy, Harleysville tendered $100,000 in UIM benefits.Those $100,000 in benefits, in exchange for a release of all claims arising from the death of Ms. Davis, flowed to the husband of Ms. Davis, Mark Ginsberg, receiving $40,000, and the two sons of Ms. Davis, Brandon and Bryce Zoladkiewicz, each receiving $30,000. Brandon was also insured under his father's policy through a separate unaffiliated insurer, Geico. Geico and Defendant entered into a settlement agreement with Brandon that reflected "UIM" benefits were paid out from both insurers.
Def.'s Mot. to Dismiss Compl. ¶ 3; Pls.' Mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. to Dismiss Compl. at 11. Harleysville acknowledged that the funds had not yet been distributed at the time the Motion to Dismiss was filed as Brandon's minor status had delayed the disbursement of funds. Plaintiffs reiterated that, as of February 04, 2023, the funds had not yet been disbursed.
Def.'s Letter to the Ct. with the Req. Additional Doc. (D.I. 20) Ex. Releases for all Parties ("Def.'s Letter to the Ct. with the Req. Additional Doc."). On December 1, 2021, Plaintiff Ron Zoladkiewicz, Brandon's Guardian ad litem, signed Brandon's release of claims on his behalf. As a passenger in vehicle at the time of the accident, Brandon also received $100,000 for his own injuries under the UM $100,000 per person limit from the Davis Policy. His individual claims are not at issue here.
Def.'s Mot. to Dismiss Compl. ¶ 3; Def.'s Letter to the Ct. with the Req. Additional Doc. Ex. Releases for all Parties.
Def.'s Letter to the Ct. with the Req. Additional Doc. Ex. Releases for all Parties.
Id. Defendant maintains the designation of underinsured (UIM) versus uninsured (UM) was in error.
As to the Davis Policy, on November 1, 2021, Plaintiff Ginsberg, signed in his individual capacity, a release of claims in exchange for $40,000. The release, titled Uninsured/Underinsured Motorist Release and Trust Agreement Claim #S1 396913-005 states, in pertinent part:
Def.'s Mot. to Dismiss Ex. C.
Def.'s Mot. to Dismiss Ex. C; Def.'s Letter in Resp. to Ct.'s Questions (D.I. 22) at 5 ("Def.'s Letter in Resp. to Ct.'s Questions"). On July 14, 2023, Defendants stated in their letter that, "[t]he Davis Policy is the only Policy which applies, as it was paid pursuant to uninsured (UM) coverage. Additionally, the Davis Policy is the only policy due to a General Release of any and all claims related to the subject accident as to Defendant."
[f]or the sole consideration of Forty Thousand Dollars ($40,000)_to me in hand paid by Harleysville Preferred Insurance Company/Nationwide Insurance Company, under Policy No. S1 396913-005, the receipt of which is hereby acknowledged....
forever discharge[s] Harleysville. . ./Nationwide. . . for all Uninsured/Underinsured Motorist Benefits and medical claims, demands, damages, actions, claims . . . causes of actions. . . as a result of, resulting from, or related to an automobile accident. . . in which Lisa Davis was killed....
The parties further understand that this Release is made as a compromise to avoid expense and to terminate the controversy as set forth in the...claim referred to above .
Def.'s Mot. to Dismiss Ex. C. at 1-2.
On October 10, 2022, Plaintiffs filed the Amended Complaint, alleging that Nationwide's failure to pay Plaintiffs UM benefits under the Ginsberg Policy constituted a breach of contract. Thereafter, Defendant filed the Motion to Dismiss under Superior Court Civil Rule 12(b)(6). Plaintiffs then filed a Cross-Motion for Summary Judgment and response opposing the Motion to Dismiss. After full briefing and supplemental clarifications on factual and legal issues, this matter is ripe for decision under Superior Court Civil Rule 56.
Am. Compl. ¶ 17.
Def.'s Mot. to Dismiss.
Pls.' Mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. to Dismiss Compl; Judicial Action Form dated Thursday, March 16, 2023. During the March 16, 2023, hearing, the parties agreed that Defendant's Motion to Dismiss converted to a Motion for Summary Judgment.
Pls.' Suppl. Submission on Summ. J. (D.I. 19) ("Pls.' Suppl. Submission on Summ. J."); Def.'s Letter to the Ct. with the Req. Additional Doc.; Ct.'s Letter to Counsel (D.I. 21) ("Ct.'s Letter to Counsel"); Def.'s Letter in Resp. to Ct.'s Questions; Pls.' Letter in Resp. to Ct's Questions (D.I. 23) ("Pls.' Letter in Resp. to Ct.'s Questions").
The Court need not address the issues regarding the validity of the release.
Defendant first argues dismissal is required as a matter of law pursuant to 18 Del. C. § 3902(c), permitting the use of anti-stacking provisions, because Defendant has already tendered the $100,00 limit per person under the Davis Policy and because the Ginsberg Policy prohibits stacking of UM benefits by the same insurer.Alternatively, Defendant argues that Plaintiff Ginsberg's signed release precludes recovery in this action and also that "[a]ll claims, including the derivative wrongful death claims, were included in the settlement and exhausted UM policy limits."
Def.'s Mot. to Dismiss ¶¶ 11-12.
Def.'s Mot. to Dismiss ¶¶ 15-18.
Def.'s Letter in Resp. to Ct.'s Questions at 7.
Plaintiffs' cross motion for summary judgment contends, that under principles of contract interpretation either: (1) stacking of UM benefits is expressly permitted under the terms of the Ginsberg Policy, or (2) the ambiguity of the contract provisions in the Ginsberg Policy permits the stacking of UM benefits. Plaintiffs contend that Endorsement A2677 of the Ginsberg Policy, which applies to UM and UIM benefits, expressly permits stacking of UM benefits in the Other Insurance provision, which distinguishes between primary and excess coverage. Plaintiffs contend that the Davis Policy constitutes the primary coverage, and the Ginsberg Policy constitutes the secondary or excess coverage. Finally, Plaintiffs contend that Plaintiff Ginsberg's release does not preclude recovery.
Pls.' Mot. for Summ. J. and Resp. in Opp'n to Def.'s Mot. to Dismiss Compl. at 4-5.
Id. at 5-6.
Id. at 6.
Id. at 10-12.
In supplemental briefing, Defendant contends that the Davis Policy is "the only Policy which applies, as it was paid pursuant to uninsured (UM) coverage."And Defendant further contends that there is no excess coverage available under the Ginsberg policy.
Def.'s Letter in Resp. to Ct.'s Questions at 5.
Id. at 6.
IV. STANDARD OF REVIEW
Under Delaware Superior Court Civil Rule 56, dismissal is appropriate if "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." "When the moving party sustains the initial burden of showing the nonexistence of any material issues of fact, the burden shifts to the non-moving party to substantiate its adverse claim by showing that there are material issues of fact in dispute." The opposing party must do more than merely "assert the existence of such a disputed issue of fact."
Super. Ct. Civ. R. 56(c).
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995) (citing Moore v. Sizemore, 405 A.2d 679, 681 (Del. 1979) (citations omitted)).
Brzoska v. Olson, 668 A.2d 1355 at 1364.
[t]he existence of cross motions for summary judgment does not act per se as a concession that there is an absence of factual issues. Rather, a party moving for summary judgment concedes the absence of a factual issue and the truth of the nonmoving party's allegations only for purposes of its own motion, and does not waive its right to assert that there are disputed facts that preclude summary judgment in favor of the other party. Thus, the mere filing of a cross motion for summary judgment does not serve as a waiver of the movant's right to assert the existence of a factual dispute as to the other party's motion.
United Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997) (citations omitted).
V. DISCUSSION
Uninsured/underinsured (UM/UIM) insurance protects innocent victims when the tortfeasor does not carry any or enough liability insurance. This protection is codified in 18 Del. C. § 3902. "The purpose of §3902 is to permit a risk adverse person to establish a fund to protect against losses caused by uninsured/underinsured motorists by contracting for supplemental coverage."
Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10, 14 (Del. 1995) (emphasis added) (citations omitted).
Thereafter, to the extent that the innocently injured claimant has not been fully compensated for all the bodily injury damages that could legally be recovered from the uninsured/underinsured driver, the claimant is entitled to be paid for the uncompensated bodily injuries, up to the full policy limits of the uninsured coverage. . . .
This construction of Section 3902 is consistent with the prior decisions of this Court recognizing that the "legislative intent to compensate . fully innocent drivers has been and continues to be evident on the face of our uninsured motorist laws."
Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10, at 13-14 (emphasis added) (citations omitted).
Stacking is when courts must decide "whether, or under what circumstances, the uninsured or underinsured motorist coverages provided in separate policies issued by the same insurer to the same insured may be combined or 'stacked' to satisfy the actual damages suffered by the claimant or claimants."
25 A.L.R.4th 6 (Originally published in 1983).
A. UIM COVERAGE IS A FORM OF UM COVERAGE
When purchasing insurance, the carrier (insurer) and the purchaser (insured) take on certain responsibilities with respect to the waiver, rejection, or addition of this supplemental UM/UIM coverage. These responsibilities are found in various subsections of § 3902. For example, an insured is permitted to waive the coverage altogether under § 3902(a) with a written rejection acknowledging an intent to forego the coverage. Likewise, an insurer must make a "meaningful offer" for additional UM/UIM coverage under (b) and provide the insured with the option of accepting greater limits of this supplemental coverage.
"No such coverage shall be required in or supplemental to a policy when rejected in writing, on a form furnished by the insurer or group of affiliated insurers describing the coverage being rejected, by an insured named therein. . . ."
See 18 Del. C. §3902(b):
"Every insurer shall offer to the insured the option to purchase additional coverage for personal injury or death up to a limit of $100,000 per person and $300,000 per accident or $300,000 single limit. . . ."
Regardless of the responsibilities associated with the waiver, rejection, offer, or acceptance of this coverage, UM/UIM coverage is not severable. One cannot choose to purchase uninsured (UM) coverage and decline the offer to purchase underinsured (UIM) coverage, or vice versa. If not rejected, the supplemental coverage of UM/UIM is a packaged deal. The coverage is reflected on one line of a declaration sheet. This Court succinctly encapsulated the previous historical interpretations of 18 Del. C. §3902 in Homa v. Chalme noting that, "underinsured coverage simply is a form of uninsured coverage." Previously, in Home Ins. Co. v. Maldonado, our Supreme Court addressed the legislative intent behind 18 Del. C. §3902.
Homa v. Chalme, 2018 WL 638191, at *3 (Del. Super. Ct. Jan. 30, 2018) (citing Home Ins. Co. v. Maldonado, 515 A.2d 690 (Del. 1986)).
Home Ins. Co. v. Maldonado, 515 A.2d 690 at 696. ("[T]he General Assembly intended to equate the statutory provisions controlling uninsured motorist coverage. . .with the statutory provisions governing underinsured motorist coverage. When the Legislature rewrote Section 3902 in 1982, it clearly intended to broaden its protective benefits to treat an underinsured tortfeasor's vehicle as an uninsured vehicle. It did so by including underinsured motorist coverage within the definition of uninsured motorist coverage....").
B. APPLICABILITY OF UM OR UIM
Whether UM or UIM applies is solely contingent on whether the tortfeasor has insurance. If there is no liability coverage from the tortfeasor, then UM coverage applies. If the tortfeasor instead is insured, and liability coverage exists, then UIM coverage applies if the injured party's damages exceed the liability coverage limits.
1. Insured Damages Determines UIM Coverage
In 2013, an important amendment occurred for the injured person who found himself underinsured. Under 18 Del. C. § 3902(b)(2), the law now reads:
An underinsured motor vehicle is one for which there may be bodily injury liability coverage in effect, but the limits of bodily injury liability coverage under all bonds and insurance policies applicable at the time of the accident are less than the damages sustained by the insured. . .
18 Del. C. § 3902(b)(2) (emphasis added).
Before the amendment, if the tortfeasor carried insurance that mirrored the UIM coverage, there could be no additional UIM coverage because it could not be said that the insured was "under" insured. But today, we no longer apply threshold amounts to determine the applicability of UIM. Instead, the determination of UIM looks to all policies in the aggregate as they relate to the insured's damages. This Court has previously explained regarding the historical interpretations of the statute that, "Section 3902(b) expressly defines an underinsured motor vehicle as one for which bodily injury coverage is in effect, but the limits of that coverage are less than the damages the insured sustained." And further clarified, "[i]n other words, the statute defines an underinsured motor vehicle by reference to the injured party's damages and the scope of the available bodily injury coverage. . . ."
Prior to the amendment, 18 Del. C. § 3902(b)(2) read: "An underinsured motor vehicle is one for which there may be bodily injury liability coverage in effect, but the limits of bodily injury liability coverage under all bonds and insurance policies applicable at the time of the accident total less than the limits provided by the uninsured motorist coverage."
Brown v. Everett, 2019 WL 2361539, at *3 (Del. Super. Ct. June 4, 2019), affdsub nom. USAA Gen. Indem. Co. v. Brown, 238 A.3d 191 (Del. 2020).
Id.
Under UIM law, had Plaintiffs' tortfeasor here carried $100,000/person in liability insurance, Plaintiffs would have recovered both $100,000/person in liability from that tortfeasor, and $ 100,000/person under UIM. Before 2013, Plaintiffs would have been limited to the sole $100,000/person from the tortfeasor, and no access to the supplemental UIM would have been available. The amendments to § 3902(b) now align with the purpose of UIM insurance to protect innocent victims when the tortfeasor does not have enough liability insurance.
2. Named Insurer Determines UM Coverage
But since Ms. Davis was killed by an uninsured driver, the analysis changes. Since the tortfeasor was uninsured, the injured person's sole protection is derived from the efforts that the insured took to manage the risk. This protection is therefore wholly reliant on the insured's contract for UM. Since there is no liability coverage from the tortfeasor, if the insured purchased supplemental UM/UIM insurance, she is afforded the UM protection.
Here, Plaintiffs did just that. Ms. Davis paid premiums for UM coverage of $100,000/per person and $300,000/accident. In Delaware, a risk-adverse insured who wishes to contract for additional UM insurance enjoys the freedom to do so. Here, Plaintiffs also did just that. Mr. Ginsberg paid separate premiums for his policy to include UM coverage of $100,000/$300,000. But access to this additional UM coverage is triggered by different considerations than UIM.
Unlike § 3902(b) where an assessment of the personal injury damages matter, Ms. Davis's damages are no longer relevant. The combination of all policies is not considered. Nor does it matter that Ms. Davis and Mr. Ginsberg purchased separate policies (and were separately insured) to protect themselves from the very act that resulted in her death. Instead, although they contracted separately for UM/UIM, the only question of whether this supplemental insurance is available is to ask whether the contracts were purchased from the same carrier. If the answer is yes, they are limited to the coverage as if they had only purchased one policy.
3. One Plaintiff Received Benefit of UM/UIM Stacking
As discussed, the applicability of UIM is triggered by an assessment of damages to the insured. So, any UIM insurance is in addition to the tortfeasor's insurance. Defendant maintains § 3902(b) does not apply here although, perhaps in error, the record reflects that Plaintiff Brandon Zoladkiewicz received underinsured (UIM) benefits.
Defendant entered into an agreement with Plaintiff Brandon Zoladkiewicz, who was also an insured under his father's policy under Geico. In addition to the payment under the Davis Policy from Defendant, Geico paid Brandon additional "UIM" benefits. Defendant's counsel argues that she was not the attorney of record for that settlement agreement and the designation of UIM was in error. The designation prompted this Court for clarification. If Lisa Davis's uninsured (UM) coverage is insufficient to compensate all Plaintiffs for their individual or derivative claims for Mrs. Davis's wrongful death, could Mr. Ginsberg's separate and distinct policy trigger access to the underinsured (UIM) benefits? In other words, if the Davis Policy stood "in the shoes of the tortfeasor" as the uninsured, and Defendant's UM limits were insufficient to cover damages, then just as Geico paid out under UIM, could Lisa Davis's estate, her husband and son now be considered separately as "underinsured" under the Ginsberg Policy? Given the lack of authority in Delaware on this issue and the confusion of the settlement documents submitted, the Court accepts that we review this matter for stacking only. The Court does not explore the responses prompted by this Court since the underinsured issue was not initially raised by the parties nor did Plaintiffs allege entitlement to UIM benefits.
Regardless of the designation, Lisa Davis's son was not precluded from stacking both UM policies. This follows Delaware law that allows stacking of UM/UIM, except for policies written by the same affiliated insurers, covering vehicles registered to persons living in the same household. UM/UIM benefits were afforded to Lisa Davis's son but not available to her husband or her Estate.
The question is whether the Ginsberg Policy precludes the stacking of UM/UIM, and if so, whether the terms of that policy are consistent with the UM/UIM laws, generally.
C. NO STACKING OF UM/UIM
Under 18 Del C. § 3902(c), anti-stacking provisions are permitted. The statute reads:
The affording of insurance under this section to more than 1 person or to more than 1 vehicle shall not operate to increase the limits of the insurer's liability. When 2 or more vehicles owned or leased by persons residing in the same household are insured by the same insurer or affiliated insurers, the limits of liability shall apply separately to each vehicle as stated in the declaration sheet but shall not exceed the highest limit of liability applicable to any 1 vehicle.
18 Del C. § 3902(c) (emphasis added).
Worth noting is that the General Assembly's construction of § 3902 underwent material changes in language in response to both public policy considerations and subsequent decisions interpreting the statute. Almost twenty years ago, in Johnson v. Colonial Ins. Co. of California, this Court noted the amendments.
The former statute, in pertinent part, read:
When 2 or more vehicles are insured under 1 policy, the limits of liability shall apply separately to each vehicle as stated in the declaration sheet, but shall not exceed the highest limit of liability applicable to any 1 vehicle.
The [] statute [now] reads:
When 2 or more vehicles owned or leased by persons residing in the same household are insured by the same insurer or affiliated insurers, the limits of liability shall apply separately to each vehicle as stated in the declaration sheet, but shall not exceed the highest limit of liability applicable to any 1 vehicle.
Johnson v. Colonial Ins. Co. of California, 1997 WL 126994, at *2 (Del. Super. Ct. Jan. 2, 1997).
Unlike the changes to UIM, today, the anti-stacking law remains unchanged and retains the precise language from 1997. Thus, Defendant maintains that the law is clear, stacking is not permitted as a matter of law, and Plaintiffs cannot stack their respective policies. Defendant is correct as to the current law.
Fourteen years ago, the Supreme Court addressed a similar request to consider the applicability of § 3902(c)'s anti-stacking provision of underinsured (UIM) benefits. In Bromstad-Deturk, the plaintiff and her husband had three separate insurance policies from the same insurer; each policy with underinsured motorist (UIM) coverage limits of $100,000. The defendant tendered $100,000 from one of the three policies and the parties entered a settlement acknowledging that the payment satisfied all claims arising under that policy.
Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 974 A.2d 857, 2009 WL 1525948, at *2 (Del. 2009) (ORDER) ("We will not encroach upon the General Assembly's apparent intent to allow those with multiple policies from different, unaffiliated insurers to stack their uninsured motorist coverage, while allowing anti-stacking provisions that preclude stacking multiple policies issued by the same insurer.") (emphasis added).
Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 974 A.2d 857 at *1.
Id. *1. Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 974 A.2d 857, 2009 WL 1525948, at *1 (Table) (Del. 2009).
Plaintiff sought to recover the UIM benefits by stacking the other two separate policies. The trial court determined that the policies could not be stacked and dismissed the matter. The Supreme Court affirmed. It held that § 3902(c) "clearly and unambiguously allows the type of anti-stacking provision found in Bromstad-Deturk's policies."
Id.
Id. at *2.
Id. at * 1.
The law has not changed and remains clear. "If [a] statute as a whole is unambiguous and there is no reasonable doubt as to the meaning of the words used, the Court's role is limited to an application of the literal meaning of those words."The Supreme Court's interpretation in Bromstad-Deturk makes clear that the law was intended to prevent stacking of all policies issued by the same carrier, provided that the anti-stacking provision is in the contract.
Leatherbury v. Greenspun, 939 A.2d 1284, 1288 (Del. 2007) (quoting In re Adoption of Swanson, 623 A.2d 1095, 1096-97 (Del. 1993)) (citations omitted).
D. AMBIGUITY IN THE NATIONWIDE POLICIES
Delaware courts have recognized the development of construction rules pertaining specifically to insurance contracts, as they are generally contracts of adhesion. Our Supreme Court has made clear that "when the language of an insurance contract is clear and unequivocal, a party will be bound by its plain meaning because creating an ambiguity where none exists could, in effect, create a new contract with rights, liabilities and duties to which the parties had not assented."
Johnson v. Colonial Ins. Co. of California, 1997 WL 126994, at *2 (Del. Super. Ct. Jan. 2, 1997) (citations omitted).
Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925, 926 (Del. 1982) (citation omitted).
Further, "where ambiguous, the language of an insurance contract is always construed most strongly against the insurance company which has drafted it."Moreover, a "contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings." Yet, a "contract is not rendered ambiguous simply because the parties do not agree upon its proper construction." Importantly, Delaware courts, when considering whether an interpretation is reasonable or not, consider whether the "interpretation produces an absurd result or one that no reasonable person would have accepted when entering the contract."
Steigler v. Ins. Co. of N. Am., 384 A.2d 398, 400 (Del. 1978) (citations omitted).
Rhone-Poulenc Basic Chemicals Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992) (citations omitted).
Rhone-Poulenc Basic Chemicals Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 at 1196.
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1160 (Del. 2010) (citations omitted).
Under a plain language review, this Court agrees with Plaintiffs that there is some ambiguity in the provision of additional coverage found in the "Other Insurance" and "Two or More Auto Policies" provisions, located on the same page as the UM/UIM section of the policies. The first provision reads:
Other Insurance
If there is other applicable insurance available under one or more policies or provisions of coverage that is similar to the insurance provided under this Part of the Policy:
1. Any insurance we provide with respect to a vehicle:
a. You do not own, including any vehicle while used as temporary substitute for 'your covered auto'; or
b. Owned by you or any "family member", which is not insured for this coverage under this Policy; shall be excess over any collectible insurance providing such coverage on a primary basis.
2. If the coverage under this Policy is provided:
a. On a primary basis, we will pay only our share of the loss that must be paid under insurance providing coverage on a primary basis Our share is the proportion that our limit of liability bears to the total of all applicable limits of liability for coverage provided on a primary basis.
b. On an excess basis, we will pay only our share of the loss that must be paid under insurance providing coverage on an excess basis. Our share is the proportion that our limit of liability bears
to the total of all applicable limits of liability for coverage provided on an excess basis.
Def.'s Mot. to Dismiss Compl. Ex. A. (emphasis added).
The second provision, the anti-stacking provision, reads:
Two Or More Auto Policies
If this Policy and any other auto insurance policy issued to you or any resident of your household, by us or any company affiliated with us, apply to the same accident, the maximum limit of liability under all the policies shall not exceed the highest applicable limit of liability under any one policy.
Defendant steers clear of the "1 vehicle" language in the law, and substitutes the language that the anti-stacking provision applies to all policies.
Def.'s Mot. to Dismiss Compl. Ex. A. (emphasis added).
Defendant does not address the provisions found under the Uninsured Motorist Coverage in the "Other Insurance" provision. Instead, Defendant only highlights this anti-stacking provision to support their argument for dismissal.
Defendant correctly posits that this Court's interpretation of the Davis/Ginsberg policies "must rely on a reading of all of the pertinent provisions of the policy as a whole, and not on any single passage in isolation."
Def.'s Reply Br. in Opp'n to Pls.' Mot. for Summ. J. at 1 (D.I. 16) ("Def.'s Reply Br. in Opp'n to Pls.' Mot. for Summ. J.").
Because the contract provided two potentially conflicting provisions on the same page, a consumer could have reasonably interpreted the language to mean that there was a right to excess coverage without any carveouts or exceptions. The contract appears to take away that right on the same page with its anti-stacking provision. The contract further has no express prohibition regarding that the two policies cannot be from the same company. Under both the general endorsements, and the same Part C that speaks to the "Uninsured Motorists Coverage," the policies contain identical conflicting provisions.
Def.'s Mot. to Dismiss Ex. A, Ex. B.
At first blush, it appears that the rights to primary/excess coverage that Defendant gives to both Ginsberg and Davis, respectively, are taken away through the anti-stacking provision. The Ginsberg Policy could have been read as secondary coverage under these policies, susceptible to different interpretations. Plaintiffs' sole argument for stacking is based upon the ambiguity that exists as to this primary/secondary or "excess" coverage. Defendant argues there is no primary or secondary coverage because the legal prohibition against stacking vitiates any distinction of whether coverage is primary or secondary. Defendant is correct.
Def.'s Letter in Resp. to Ct.'s Questions at 5.
The insured is prohibited from stacking policies. Therefore, this Court does not address the question of which policy is primary or secondary. Moreover, when construing the provisions together, any ambiguity cannot provide the relief sought by Plaintiffs as a matter of law. There is no outright contradiction that would render the anti-stacking provision inoperative.
Jones v. Horace Mann Ins. Co., 723 A.2d 390, 393 (Del. Super. Ct.), affd, 720 A.2d 559 (Del. 1998) n.16 ("In this instance, the insured is prohibited from "stacking" policies, therefore, the question of which policy is "primary" or "secondary" is not before the Court.").
It is true that "[i]nsurance policy provisions designed to reduce or limit the coverage to less than that prescribed by the Delaware statute, 18 Del. C. § 3902, are void." But here, Defendant limited its coverage as prescribed by statute. Thus, any ambiguity in these provisions cannot lead the Court to conclude that the Defendant impermissibly reduced or limited its coverage to less than what the law allows. The law permits it, and the anti-stacking provision was properly reflected in the policies. It would constitute an absurd result to find that the ambiguity in the policies equates to permissible stacking. To do so would go against the interpretation by the Supreme Court, which has determined that anti-stacking provisions are permissible. As such, summary judgment in favor of Plaintiffs is improper. For the reasons stated, Defendant is entitled to summary judgment as a matter of law.
Frank v. Horizon Assurance Co., 553 A.2d 1199, 1201-02 (Del. 1989) (citations omitted).
E. PUBLIC POLICY
In 2009, the Bromstad-Deturk Court took the opportunity to comment as to the impact of the law as written, namely that it treats persons in the same household with the same insurance carrier differently from persons who carry policies from different carriers:
We suggest, however, that because consumers like [the plaintiff] may not fully comprehend the significance of an anti-stacking provision, the General Assembly might consider amending § 3902 to require insurers
to notify consumers that they would be able to stack multiple policies from different, unaffiliated insurers. Adding a notice requirement to § 3902, would serve to encourage consumers to evaluate the pros and cons of choosing to ensure multiple vehicles through one insurer."
Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 974 A.2d 857 at *2.
Nothing has changed. No such notice provision exists.
Issues related to disclosures and communications are tantamount in this area of law. Delaware courts have strictly enforced § 3902(b)'s requirement that insurance carriers clearly communicate offers of additional UM/UIM coverage to their policyholders. More recently, in Banaszak v. Progressive Direct Ins. Co., our Supreme Court, ruling favorably for the insured, observed that,
Shukitt v. UnitedServs. Auto. Assn., 2003 WL 22048222, at *3 (Del. Super. Ct. Aug. 13, 2003).
[t]o honor the legislative intent and to fulfill the obligations of § 3902 by providing a disclosure mechanism for informed insurance decisions, the insured must know '[a]ll of the facts reasonably necessary for a person to be adequately informed to make a rational, knowledgeable and meaningful determination.' Without understanding what [both] uninsured or underinsured motorist coverage entails, [the insured] did not have all of the pertinent facts and could not make an informed decision on automobile insurance coverage.
Banaszak v. Progressive Direct Ins. Co., 3 A.3d 1089, 1095 (Del. 2010), as corrected (Sept. 3, 2010) (citations omitted).
This Court takes this opportunity to echo the Bromstad-Deturk Court's suggestion that the legislature may consider adding a notice requirement to § 3902. Insureds should be informed about the option to purchase additional UIM coverage, and that additional UM insurance may be available if purchased from a different carrier. And conversely, that if insureds decide to insulate themselves with multiple policies from the same carrier, they will never be able to avail themselves to the true maximum coverage permissible via stacking. Without notice, the insured remains in the dark about the law's impact of purchasing insurance from the same carrier.
Equally as important is to highlight what the insurer does know. Defendant acknowledges that the law gives greater coverage to insureds with different unaffiliated insurers. It concedes that had Plaintiffs purchased policies from two different, unaffiliated insurers, Plaintiffs would have been able to stack their UM policies. The argument that it owes no obligation to tender both UM limits because the law does not allow it is troubling.
Defendant does not dispute it received premiums to provide the maximum limits of UM/UIM coverage for two separate policies for Ms. Davis and Mr. Ginsberg, as separate insureds on their respective policies. The policies were sold from the same local insurance agent in Delaware, and the same household address was reflected on both policies. Therefore, Defendant knew or should have known that these policies insured the vehicles and persons in that same household.
At best, if Defendant was within its rights to include the anti-stacking provisions in the contracts knowing that coverage for one could never serve as "excess" for the other, then the ambiguous "excess language" in both contract serves to confuse the insured.
At worst, under prevailing law, Defendant sold separate UM/UIM policies to the same household knowing that any "excess coverage" in the UM/UIM section of the policies could not be honored as a matter of law. And where the law mandates the coverage is available only as to "1 vehicle," this makes the coverage in the other [policy] non-existent.
Hardy v. Progressive Specialty Ins. Co., 67 P.3d 892 (Mont. 2003) (The Montana Supreme Court held that the anti-stacking statute violated substantive due process to the extent it allowed automobile insurer to charge premiums for non-existent underinsured motorist (UIM) coverage.).
The stacking issues raised in this case are equally as important as issues related to waiver and rejection under § 3902(a) and meaningful offers and acceptance of additional protection under § 3902(b). That the law allows the insurer to limit its liability under §3902(c) should not rest on loyalty or whether the family purchased their insurance from the same company to their detriment.
Insurance contracts are difficult enough for even the most seasoned practitioner. Perhaps with a notice requirement, insures will clarify in their policies the distinctions between UM/UIM and what "excess" coverage really means in each context. Until then, insurance policies will continue to be sold with anti-stacking provisions that absolves insurers from any obligation to pay additional coverage, so long as the insured continues to do business with them. Caveat emptor. Any public policy concern is "best left to the legislature."
Caveat Emptor, Black's Law Dictionary (2nd ed. 1910).
Sternberg v. Nanticoke Mem'l Hosp., Inc., 62 A.3d 1212, 1217 (Del. 2013) (citations omitted).
VI. CONCLUSION
Under Superior Court Civil Rule 56, Defendant's Motion for Summary Judgment is GRANTED; Plaintiffs' Motion for Summary Judgment is DENIED.
IT IS SO ORDERED.