Opinion
Consolidated Cases C.A. No. 95C-04-167 CLS. C.A. No. 01C-04-036 CLS.
Submitted: January 27, 2004.
Decided: February 24, 2004.
On DaimlerChrysler's Motion for Summary Judgment. DENIED.
On Penn National's Cross-Motion for Summary Judgment. DENIED.
Daniel F. Wolcott, Jr., Esquire, and David E. Moore, Esquire, Potter Anderson Corroon LLP, Wilmington, Delaware, Attorneys for Plaintiff DaimlerChrysler.
Michael K. Tighe, Esquire, Tighe Cottrell Logan, Wilmington, Delaware, and Kenneth M. Portner, Esquire, Weber Gallagher Simpson Stapleton Fires Newby LLP, Philadelphia, Pennsylvania, Attorneys for Defendant Pennsylvania National Mutual Casualty Insurance Company. John D. Balaguer, Esquire, White Williams, Wilmington, Delaware, Attorney for Defendant The Martin Co. Insurance Agency.
Daniel P. Bennett, Esquire, Heckler Frabizzio, Wilmington, Delaware, Attorney for Defendant Merrell Garaguso.
MEMORANDUM ORDER
I. INTRODUCTION
Plaintiff DaimlerChrysler Corporation ("Chrysler") has filed a Motion for Summary Judgment against Defendant Pennsylvania National Mutual Casualty Insurance Company ("Penn National"). In its Response to Chrysler's Motion, Penn National included a Cross-Motion for Summary Judgment against Chrysler. Upon a review of the motions, responses, oral arguments, and the record, this court concludes both motions should be DENIED.
II. BACKGROUND
This case is a consolidation of two cases arising from an incident at Chrysler's Assembly Plant in Newark, Delaware. Brian Keech ("Keech"), an employee of Defendant Merrell Garaguso ("MG"), was injured at the plant while working under a contract between MG and Chrysler. Keech alleged his injuries were caused by Chrysler's negligence. Chrysler then brought a third party action against MG, alleging MG was required to defend and indemnify Chrysler for its own negligence and obtain insurance naming Chrysler as an additional insured under MG's liability policy with Penn National. Chrysler subsequently settled with Keech for $100,000. Chrysler now seeks reimbursement of the settlement amount plus related expenses, costs, and fees from Penn National. Penn National has cross-moved for summary judgment against Chrysler. Oral argument on the Motions was heard January 27, 2004.
III. STANDARD OF REVIEW
The court will grant summary judgment only if there are no genuine issues of material fact "and the moving party must show he is entitled to judgment as a matter of law." In determining whether there is a genuine issue of material fact, the evidence must be viewed in the light most favorable to the non-moving party. Summary judgment, therefore, is appropriate only if, after viewing the evidence in the light most favorable to the non-moving party, the court finds no genuine issue of material fact.
Deakyne v. Selective Insurance Co., 728 A.2d 569, 570 (Del.Super. 1997) (internal citation omitted).
Moore v. Sizemore, 405 A.2d 679 (Del. 1979.
Guy v. Judicial Nominating Com'n., 659 A.2d 777, 780 (Del.Super. 1995); Figgs v. Bellevue Holding Co., 652 A.2d 1084, 1087 (Del.Super. 1994).
IV. DISCUSSION
The narrow issue that is before the court is whether, if the contract between Chrysler and MG is an "insured contract," Penn National is liable for reimbursement to Chrysler for the amount of the settlement and associated expenses.
Chrysler argues the contract between it and MG is an "insured contract" and thus Penn National is required to reimburse Chrysler's expenses of settlement. Chrysler argues undisputed facts establish that: (1) MG made a contract to provide indemnification to Chrysler, (2) an insurance policy was issued which included contractual liability coverage, and (3) the contract to provide indemnification was a covered contract under the policy. Chrysler argues the ruling in Chrysler Corp. v. Merrell Garaguso allows it to proceed with its claim against Penn National. The Chrysler case stated that even though 6 Del. C. § 2704(a) ("§ 2704(a)") precludes indemnification of a contractor by a subcontractor as against public policy, the "savings clause" of 6 Del. C. § 2704(b) ("§ 2704(b)") makes insurance, once purchased for the purpose of such indemnification, enforceable against the insurer.
796 A.2d 648 (Del. 2002).
Id. at 653 ("The savings provision has meaning only if it cannot be used as a shield by insurers to decline coverage for insurance once purchased . . .").
Penn National counters § 2704(b) only allows insurance coverage for indemnification if the party seeking indemnification (here, Chrysler) is a named insured. Penn National argues that because MG is not directly liable to indemnify Chrysler under § 2704(a), there can be no "covered claim" even if the contract between Chrysler and MG is an "insured contract."
The court is not asked to decide whether Chrysler is an additional insured on MG's policy from Penn National. Whether Chrysler is an additional insured under the Penn National policy is the subject of a factual dispute remaining to be resolved at trial. The court here, instead, is asked to decide whether Chrysler has a ground for obtaining reimbursement from Penn National by virtue of the provision in MG's policy with Penn National providing coverage for liability arising under an "insured contract."
For the purposes of argument, the contract between Chrysler and MG is deemed an "insured contract."
The court finds Penn National is basing its position on the lack of direct liability of MG to indemnify Chrysler. Section 2704(a), as a matter of public policy, precludes such direct liability. The court finds this cannot be the sole basis for analysis, however. If the only way an insurer assumes liability for indemnification is if the insured is liable, then even if there were insurance providing for payment for indemnification, it would never be applicable and the insurer would never be required to pay. The Court in Chrysler concluded, however, that if there were an insurance policy that provides coverage for indemnification, the insurer must pay. The court finds that whether Penn National's liability arises from having Chrysler as a named insured on MG's policy, or whether liability comes from an "insured contract" between MG and Chrysler that is covered by MG's policy, is a distinction without a difference. The Chrysler decision makes it clear that if there is insurance, Penn National must pay, even if MG cannot be directly liable. As the Court held in Chrysler, the point of § 2704(b) is that the insurer cannot hide behind § 2704(a) and refuse to pay coverage "to any insured, however identified or designated."
Chrysler, 796 A.2d at 653.
Id. (emphasis supplied).
The court does find, however, that the analysis does not end there. The decision in Chrysler has an implicit requirement that the insurer have notice of its potential liability. The Court in Chrysler assumed the insurer had issued an endorsement and received a premium for the indemnification coverage. This court thus concludes that notice to the insurer is an essential element of whether there is coverage. The court finds this notice could be given to Penn National by Chrysler's being named as an additional insured on MG's policy or notice to Penn National of the existence of an "insured contract" between Chrysler and MG that would be covered under MG's policy. Based on testimony at oral argument and the record provided, the court finds there is a factual issue of whether Penn National had notice of its potential liability in this case. Because there is a genuine issue of material fact, summary judgment is inappropriate.
Id.
V. CONCLUSION
For the above reasons, Chrysler's Motion for Summary Judgment against Penn National is DENIED. Penn National's Cross-Motion for Summary Judgment against Chrysler is DENIED.