Opinion
C.A. No. 09C-03-010 WLW.
Submitted: March 5, 2010.
Decided: June 24, 2010.
Upon Defendant's Motion for Summary Judgment. Granted.
William D. Fletcher, Esquire of Schmittinger and Rodriguez, P.A., Dover, Delaware; attorneys for Plaintiff.
Christopher T. Logullo, Esquire of Chrissinger Baumberger, Wilmington, Delaware; attorneys for Defendant.
OPINION AND ORDER
Defendant Liberty Mutual Fire Insurance Company ("Liberty Mutual") filed this Motion for Summary Judgment on January 26, 2010. Plaintiff Jennifer Hamilton ("Hamilton") filed a response on March 1, 2010. Based upon the reasons set forth below, Liberty Mutual's motion must be GRANTED.
FACTS
On March 14, 2007, Hamilton was involved in a motor vehicle accident. The driver of the other vehicle, John Nicholson, did not have insurance coverage. On March 11, 2009, Hamilton filed an uninsured motorist ("UM") claim against her insurance carrier, Defendant Liberty Mutual. Hamilton alleges compensatory and "punitive damages arising from the negligence and reckless conduct of John Nicholson, an uninsured motorist." Hamilton's policy with Liberty Mutual, however, provides that, "[w]e do not provide Uninsured Motorist Coverage for punitive or exemplary damages."
Although it initially appeared to Liberty Mutual that Mr. Nicholson had insurance coverage through Allstate Insurance Company ("Allstate"), Allstate denied coverage.
Pl.'s Compl. at 4.
Def.'s Mot. For Summ. J. Ex. B at 29.
Defendant Liberty Mutual's Arguments
Liberty Mutual contends that Hamilton's policy expressly excludes punitive or exemplary damages for UM claims. Liberty Mutual maintains that there is no genuine issue of material fact regarding punitive damages given Hamilton's clear and unambiguous policy. Liberty Mutual asserts that uninsured motorist providers are legally permitted to exclude contractually coverage for awards of punitive damages.Plaintiff Hamilton's Arguments
Hamilton maintains that Liberty Mutual may not exclude contractually punitive or exemplary damages for UM claims. Hamilton concedes, however, that this issue has not been directly addressed by the Delaware Supreme Court. Nevertheless, Hamilton contends that the Delaware Supreme Court has determined that a policy utilizing the generic term "damages" is ambiguous, and may reasonably be construed to encompass both punitive and compensatory damages.
Hamilton asserts that the Delaware uninsured motorist statute uses the generic term "damages." She emphasizes that there is no specific statutory authorization to exclude punitive damages. Consequently, Hamilton maintains that Liberty Mutual's attempt to limit damages to compensatory damages is void and unenforceable. Hamilton further contends that the Price v. Continental Insurance Company case cited by Liberty Mutual is distinguishable and should not be followed.
See 18 Del. C. § 3902.
768 A.2d 975 (Del. Ch. 2000).
Hamilton maintains that her policy permits recovery for punitive damages in other instances. Consequently, she asserts that Liberty Mutual's proposed exclusion fails to provide "mirror coverage."
Standard of Review
Summary judgment should be rendered only if the record shows that there is no genuine issue as to any material fact and, therefore, the moving party is entitled to judgment as a matter of law. The facts must be viewed in the light most favorable to the non-moving party. Summary judgment may not be granted if the record indicates that a material fact is in dispute, or if it seems desirable to inquire more thoroughly into the facts in order to clarify the application of the law to the circumstances. However, when the facts permit a reasonable person to draw but one inference, the question becomes one for decision as a matter of law.
Super. Ct. Civ. R. 56(c).
Guy v. Judicial Nominating Comm'n, 659 A.2d 777, 780 (Del. Super. Ct. 1995).
Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del. 1962).
Wootten v. Kiger, 226 A.2d 238, 239 (Del. 1967).
DISCUSSION
The facts are not in dispute. The question, therefore, before this Court is simply whether the exclusion in question is permitted under Delaware law. Specifically, whether the exclusion in question violates 18 Del. C. § 3902 ("Section 3902"). Section 3902 provides, in pertinent part, that:
[n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered . . . in this State . . . unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages . . . for bodily injury, sickness, disease, including death, or personal property damage. . . .
Hamilton maintains that "damages" in Section 3902 includes punitive damages.
In Jones v. State Farm Mutual Automobile Insurance Company, the Delaware Supreme Court reviewed a State Farm uninsured/underinsured ("UM/UIM") motorist provision. The State Farm policy provided, in pertinent part, that "[w]e will pay damages for bodily injury and property damage an insured is legally entitled to recover from the owner or driver of an uninsured motor vehicle. The Jones Court held that this provision was ambiguous.
610 A.2d 1352 (Del. 1992).
Id. at 1353 (emphasis in original).
Id.
The Jones Court noted that the generic term "damages," when read in conjunction with another provision permitting coverage for "all damages," could "reasonably be construed to encompass punitive, as well as compensatory, damages." The Jones Court further held that the, "public policy [underlying UM/UIM insurance] is achieved by making available coverage that mirrors [an insured's] liability insurance. . . ."
This provision provided, in pertinent part, that "[t]he amount of coverage . . . shown on the declarations page . . . is the amount of [UM/UIM] coverage for all damages due to bodily injury. . . ." Jones, 610 A.2d at 1353 (emphasis added).
Jones, 610 A.2d at 1353.
Id. at 1354 (citing Frank v. Horizon Assurance Co., 553 A.2d 1199, 1205 (Del. 1989)).
Hamilton maintains that Jones precludes parties from excluding punitive and exemplary damages from UM/UIM coverage. She asserts that Section 3902, similar to Jones, uses the generic term "damages." Hamilton, therefore, contends that Section 3902 must be read to include punitive and exemplary damages. Hamilton cites to Valley Forge Insurance Company v. Jefferson for further support.
628 F. Supp. 502 (D. Del. 1986).
In Jefferson, the United States District Court for the District of Delaware read an insurance policy covering "damages for bodily injury or property damage" as including punitive damages under Delaware law. As a result, Hamilton contends that Section 3902, which requires "damages . . . for bodily injury, sickness, disease, including death, or personal property damage," should be subject to the same conclusion.
Id. at 505-06.
The problem with Hamilton's argument, however, is that Jones and Jefferson both involved interpretations of insurance policies, not statutes. In both Jones and Jefferson, the courts first deemed the respective insurance policy provisions ambiguous. Consequently, the Jones and Jefferson courts each applied principles of contract interpretation, and concluded that the respective policy provisions could be read to include punitive damages. Neither the Jones court nor the Jefferson court held that Section 3902 prohibits a policy from expressly excluding punitive and exemplary damages.
Jones, 610 A.2d at 1353; Jefferson, 628 F. Supp. at 505.
Jones, 610 A.2d at 1354; Jefferson, 628 F. Supp. at 506.
In Price v. Continental Insurance Company, however, the Court of Chancery held that "[Delaware's] laws do not require that insurers provide coverage for punitive damage awards." The Price court noted that, "[t]he legislative purpose underlying Delaware's UM/UIM statute . . . is to protect `innocent persons from negligence of unknown or impecunious tortfeasors.'"
768 A.2d at 976 (emphasis in original)).
Id. (citing Frank, 553 A.2d at 1201).
The Price court held that while this legislative purpose entitles the insurance consumer to the full benefits required under the law, "[no] authority holds, or even suggests, that the provisions of the UM/UIM sections of the Delaware insurance code require coverage for punitive damages." Consequently, the Price court concluded that, "UM/UIM providers and purchasers can contractually exclude coverage for punitive damage awards."
Id. at 977.
Id. at 979.
Similar to the situation in Price, there is no dispute that Hamilton's policy clearly and unambiguously excludes coverage for punitive or exemplary damages. The Court, therefore, agrees with the Price court, and concludes that UM/UIM providers and purchasers can contractually exclude coverage for punitive damage awards.
Unlike Jones, this Court is not being asked to interpret Hamilton's policy. Therefore, while public policy may be achieved by reading mirror coverage into an ambiguous policy, Section 3902 does not require that punitive or exemplary damages be made available in every UM/UIM policy. In fact, "neither the punitive nor the deterrent effect of awards of exemplary damages is furthered by requiring UM/UIM providers to pay [punitive] damages to their own insured."
Id. (citing Grissom v. Nationwide Mut. Ins. Co., 599 A.2d 1086, 1089-90 (Del. Ch. 1991)).
CONCLUSION
For the foregoing reasons, Defendant Liberty Mutual's Motion for Summary Judgment is GRANTED. IT IS SO ORDERED.