Opinion
C.A. No. 02C-06-007 JTV
Submitted: March 21, 2003
Decided: June 18, 2003
Upon Consideration of Cross-Motions for Summary Judgment. Plaintiff's Motion GRANTED.
Nicholas H. Rodriguez, Esq., Schmittinger Rodriguez, Dover, Delaware. Attorney for Plaintiff.
Colin M. Shalk, Esq., and Thomas P. Leff, Esq., Casarino, Christman Shalk, Wilmington, Delaware. Attorneys for Defendant.
OPINION
This is a declaratory judgment action brought by the plaintiff, Lois Daprato, against State Farm Mutual Automobile Insurance Co. The parties have filed cross-motions for summary judgment. The question presented is whether a household exclusion in a personal liability umbrella policy is valid and enforceable against a claim for personal injuries sustained in an automobile accident.
FACTS
The parties have stipulated to the following facts. On November 7, 2001, Peter Daprato was driving southbound on Route 13 in the City of Dover. His wife, Lois Daprato, was a passenger in the right front seat. Mr. Daprato negligently caused an automobile accident in which Mrs. Daprato was seriously injured. At the time, the Daprato's held four insurance polices issued by the defendant: an automobile liability policy covering their vehicle, a homeowner's policy, a personal articles policy, and a personal liability umbrella policy. The first three provided primary coverage for the risks which each insured. A condition for issuance of the personal liability umbrella policy was that the underlying primary polices carry specific coverage limits. For the automobile policy, the limits were $100,000 per person and $300,000 per occurrence. The umbrella policy provides excess liability coverage for the risks insured by the primary policies. Its limit is $1,000,000. The policy also covers other risks, such as false arrest, malicious prosecution, defamation, invasion of privacy, assault and battery. State Farm paid Mrs. Daprato the $100,000 limit under the automobile policy, but denied her additional claim against the umbrella policy because she falls within a household exclusion, which reads as follows:
The plaintiff claims that she has incurred medical expenses in the amount of $233,875.35.
We will not provide insurance: . . .
(10) for bodily injury or personal injury to the named insured, spouse, or anyone within the meaning of part (a) or (b) of the definition of insured.
The plaintiff is a named insured. According to the affidavit of Jeffrey Tidwell, a claim representative for the defendant, the household exclusion is a customary provision used in the insurance industry to limit the liability of carriers for intra-familial claims.
STANDARD OF REVIEW
Summary judgment should be rendered if the record shows that there is no genuine issue as to any material fact and 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.
Superior Court Civil Rule 56(c).
Guy v. Judicial Nominating Comm'n, 659 A.2d 777, 780 (Del.Super. 1995); Figgs v. Bellevue Holding Co., 652 A.2d 1084, 1087 (Del.Super. 1994).
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962).
Wooten v. Kiger, 226 A.2d 238 (Del. 1967).
CONTENTIONS
In Nationwide General Insurance Company v. Seeman, the Delaware Supreme Court held that any household exclusion in a Delaware automobile insurance policy violates public policy and is void and unenforceable based on the established precedents of that court. The plaintiff contends that this holding applies to her umbrella policy for claims arising out of automobile accidents.The defendant contends, however, that the rationale underlying the result in Seeman does not support extending the rule of that case to umbrella policies. It marshals several arguments in support of its position. The insurance policy involved in Seeman was an automobile policy required by Delaware's Financial Responsibility Laws. Under those laws a vehicle must be insured for liability and personal injury protection in certain minimum amounts, currently $15,000 per person and $30,000 per occurrence. An umbrella policy, however, is not required by the Financial Responsibility Laws and there are no statutes governing or regulating such policies. Because the umbrella policy is not issued pursuant to the requirements of Delaware's Financial Responsibility Laws, the defendant contends, it is not subject to the public policies relating to those laws and should be enforced as a common law contractual term. State Farm cites several cases interpreting Delaware law which it argues support this position. It also argues that there are sound business reasons for the household exclusion in an umbrella policy. Umbrella policies are intended to cover a broad range of potentially catastrophic liability claims by third parties, and an insurer may not wish to insure its insureds' intra-familial relationships in such a policy. Finally, it contends, the overwhelming weight of authority in other jurisdictions, including our neighboring states of Pennsylvania and New Jersey, has upheld household exclusions in umbrella policies.
O'Hanlon v. Hartford Accident and Indemnity Company, 639 F.2d 1019 (3rd Cir. 1981) (umbrella policies not required to provide uninsured motorist coverage); Wilson v. Jones, 1995 Del. Super LEXIS 218 (Del.Super. 1995), aff'd sub nom. Wilson v. Underwriters Ins. Co., 676 A.2d 909 (Del. 1995) (umbrella policies not required to provide uninsured motorist coverage); Engerbretsen v. Engerbretsen, 675 A.2d 13 (Del.Super. 1995), aff'd, 626 A.2d 902 (Del. 1996) (household exclusion in homeowner's policy held valid).
See, e.g., Electric Insurance Company v. Rubin, 32 F.3d 814 (3d Cir. 1994); Trinity Universal Ins. Co. v. Metzger, 360 So.2d 960 (Ala. 1978); Mass. v. U.S. Fidelity Guaranty Co., 610 A.2d 1185 (Conn. 1992); Hartbarger v. County Mut. Ins. Co., 437 N.E.2d 691 (Ill.App. 1982); Bogas v. Allstate Ins. Co., 576 N.W.2d 236 (Mich.App. 1997); United Serv. Auto Assoc. v. Wilkinson, 569 A.2d 49 (N.H. 1989); Weitz v. Allstate Insurance Company, 642 A.2d 1040 (N.J.Super. App. 1994); Matarasso v. Continental Cas. Co., 440 N.Y.S.2d 40 (N.Y. 1981), aff'd 436 N.E.2d 1305 (N.Y. 1982); Moser v. Liberty Mut. Ins. Co., 731 P.2d 406 (Okla. 1986); Sidelnik v. American States Ins. Co., 914 S.W.2d 689 (Tex.App. 1996); Thompson v. Grange Ins. Co., 660 P.2d 307 (Wash.App. 1983).
DISCUSSION
The Delaware Supreme Court first considered a household exclusion in an automobile policy in State Farm Mutual Insurance Company v. Wagamon. In that case it held that a household exclusion which completely excluded household members from any coverage violated the public policy of this State and was void.The automobile policy in the more recent Seeman case had a limit of $100,000, but contained a household exclusion which limited coverage for household members to a maximum of $15,000, the minimum coverage required under Delaware's Financial Responsibility Laws. In its decision invalidating the exclusion, the court made it clear that the public policy of Delaware's Financial Responsibility Laws favors full compensation to all victims of automobile accidents, and that this policy is much more expansive than the statutory requirements of the Financial Responsibility Laws. This is evident not only from the court's act of invalidating an exclusion which did, in fact, provide to household members that amount of coverage which the Financial Responsibility Laws minimally require, but from the language of the opinion as well. It is now clear that the "public policy of this State is to allow the children and spouses of negligent drivers to recover at least to the full extent of the tortfeasor's liability insurance," and that "[t]he law admits of no exclusion intended to deny compensation to a portion of the class of victims which the [Financial Responsibility Laws] were designed to protect."
702 A.2d at 920.
Id. (quoting Wagamon).
As the defendant correctly states, in Seeman the policy involved was an automobile insurance policy. The holding in Seeman limits itself to automobile insurance policies. In my opinion, however, a result which would limit Ms. Daprato to $100,000 of coverage for her claim but allow other persons injured by her husband's negligent driving to recover to the extent of $1,000,000 cannot be squared with the public policy considerations set forth in Seeman. Under that case, I see no material distinction between an automobile policy and an umbrella policy to the extent that they insure against the same risk of damage claims from automobile accidents.
The cases construing aspects of Delaware law cited by the defendant were all decided before Seeman. Similarly, while the defendant may be correct that the overwhelming weight of authority in other jurisdictions is that household exclusions for automobile injuries are valid in umbrella policies, such authorities must give way to the authority of the court of last resort in this State. Courts of appeals in two jurisdictions have held household exclusions in umbrella policies void to the extent they apply to automobile accident claims on reasoning similar to that found in Seeman.
Marley v. State Farm Mutual Automobile Insurance Company, 2002 Ky. App. LEXIS 1923 (Ky.App. 2002); Safeco Insurance Company of Illinois v. Automobile Club Insurance Company, 31 P.3d 52 (Wash.App. 2001).
I conclude that the household exclusion set forth in the State Farm umbrella policy is void and unenforceable as applied to the plaintiff's claim for damages from the automobile accident. This decision is limited to automobile accident claims only. Summary judgment for the plaintiff is granted.