Opinion
C.A. No. 03C-05-160 SCD.
Submitted: July 20, 2007.
Decided: July 23, 2007.
ORDER
This 23rd day of July, 2007, upon consideration of plaintiff Liberty Mutual's motion for summary judgment seeking a declaration that Progressive has a duty to provide primary insurance coverage under the circumstances of this claim, and defendant Progressive's cross motion for summery judgment, and the argument of counsel, it appears that:
1. Defendant Jennifer Smith was born May 25, 1985 to defendants Linda Doto (Mother) and Edward Smith (Father).
2. In June of 2000, Mother and Father divorced. They agreed to joint custody of Jennifer and her siblings such that the children would live at both residences, alternating every Friday.
3. At the time of the divorce, Mother and Father owned a Dodge Intrepid and a Ford Aerostar (Ford). Mother kept the Dodge Intrepid; Father retained the Ford.
4. In June of 2000, Father purchased an individual auto insurance policy from Progressive to cover the Ford. At that time, he requested and executed a named driver exclusion with Progressive for his daughter Jennifer Smith who was then 15 years old and unlicensed. The exclusion provided that there would be no liability or personal automobile insurance coverage for Jennifer.
5. In the Spring of 2001, when Jennifer turned 16, Mother consulted with her insurance provider, Liberty Mutual, about providing insurance coverage for her daughter. She has testified that she was told by a Liberty representative that Jennifer need only be insured under one parent's auto insurance policy.
6. Jennfer was added as an insured to Mother's policy with Liberty Mutual. Father agreed to pay half of the insurance premium for Jennifer.
7. In the Spring of 2001, Jennifer began driver's education classes at Glasgow High School in preparation for her application for a driver's permit and license. Jennifer and her parents decided that she would use Father's Ford.
8. After Jennifer was fully licensed, on October 1, 2002, Jennifer was responsible for a rear end motor vehicle accident while driving Father's Ford van insured by Progressive. The parties claiming injury from the accident are Hai Tran and Min Tran (the Trans).
9. The Trans have made property damage and personal injury claims against Jennifer.
10. Progressive denies coverage for the Ford under two theories. First, Jennifer was excluded pursuant to an agreement signed by her father before she was a licensed driver. Second, that Liberty Mutual is estopped to deny primary coverage.
11. Automobile insurance exclusions are controlled by 18 Del. C. § 3909.
18 Del. C. § 3909. Automobile insurance; exclusion, cancellation or nonrenewal
(a) The insurer shall have the right to exclude, cancel or refuse to renew coverage under an automobile insurance policy as to designated individuals. Any such cancellation or refusal to renew shall be subject to the applicable provisions of § 3903 through and including § 3907 of this title, and the notice provisions of those said sections shall apply equally to the exclusion, cancellation or refusal to renew coverage as to a designated individual or individuals.
(b) In any case where an insurer is authorized under this chapter to cancel or nonrenew any automobile policy under which more than 1 person is insured because of the record of 1 or more, but less than all of the persons insured under the policy, the insurer shall, in lieu of cancellation or nonrenewal, offer to continue or renew the insurance, but to exclude from coverage, by name, the person or persons whose record would have justified the cancellation or nonrenewal. The premiums charged on any such policy excluding a named driver or drivers shall not reflect the claims, experience or driving record of the excluded named driver or drivers.
(c) With respect to any person excluded from coverage under this section, the policy may provide that the insurer shall not be liable for damages, losses or claims arising out of this operation or use of the insured motor vehicle, whether or not such operation or use was with the express or implied permission of a person insured under the policy.
(d) Every insurer shall be required to offer to the driver or drivers excluded under this section coverage of the same type or types and in an amount or amounts at least as great as the types and amount of coverage carried on the vehicle or vehicles that the designated person is being excluded from, which coverage shall be offered at rates commensurate with the driving record of such excluded driver or drivers; provided, however, that such excluded driver or drivers shall not be required to carry coverage in any amount or amounts greater than those amounts required by the financial responsibility law of the State.
(e) The excluded driver or drivers shall be required to accept this offer of coverage, to furnish proof that such coverage is carried with another company, or surrender his/her motor vehicle operator's license to the Division of Motor Vehicles within 30 days after the offering of such coverage. Refusal to accept such coverage, the furnishing of adequate proof, or the failure to surrender his/her operator's license within the 30 day period will cause the cancellation of the policy or policies that they were excluded from. This provision shall apply as long as the designated individual could be considered a member of the household or possible occasional driver of the vehicle or vehicles he or she is being excluded from.
12. Progressive's exclusion argument, which was abandoned at oral argument, fails because Progressive did not comply with the requirements of 18 Del. C. § 3909 which incorporates by reference the notice provisions of §§ 3903-3907. No notice was provided to Jennifer that she was being excluded. Additionally, she was not offered comparable insurance commensurate with her driving record, because she was unlicensed and had no driving record at the time. Jennifer was not insurable at the time the exclusion was executed.
13. Progressive lacks standing to assert an estoppel defense. "The doctrine of equitable estoppel is invoked `when a party by his conduct intentionally or unintentionally leads another, in reliance upon that conduct, to change position to his detriment.' The party claiming estoppel must demonstrate that: (i) they lacked knowledge or the means of obtaining knowledge of the truth of the facts in question; (ii) they reasonably relied on the conduct of the party against whom estoppel is claimed; and (iii) they suffered a prejudicial change of position as a result of their reliance." (citations omitted) There were never any communications between Liberty and Progressive on the issue of insurance coverage. Progressive did not rely on the conduct of Liberty. Liberty Mutual is not denying coverage, it is merely claiming that its coverage is secondary. For all these reasons, Progressive does not have standing to assert an estoppel defense.
Nevins v. Bryan, 885 A.2d 233, 249 (Del.Ch. 2005).
14. Delaware law provides that motor vehicle liability policies are required to designate all motor vehicles which are covered by the policy, and to insure the person to whom the policy was issued, and any other person using any such vehicle with the express or implied permission of the named insured.
21 Del. C. § 2902 (b)(2), Brown v. AIG National Insurance Co., 2005 WL 1654365 (Del.Super.).
15. Father's Ford van was covered by his policy with Progressive. It is undisputed that Jennifer was operating the van with the express permission of Father, the named insured on the policy.
16. Mother's policy with Liberty Mutual includes a clause which takes effect when there is other available insurance. It states:
If there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectable insurance.
17. Jennifer was a permissive user of a vehicle insured by Progressive. The named driver exclusion executed by Father was not valid. Given the language in Liberty's policy, Progressive's coverage is primary to that of Liberty.
WHEREFORE, plaintiff's motion for summary judgment is GRANTED, and defendant Progressive's cross motion for summary judgment is DENIED.
IT IS SO ORDERED.