Opinion
Civil Action No. 07C-01-095-JOH.
Submitted: March 11, 2008.
Decided: May 7, 2008.
Upon Motion of National Union for Partial Summary Judgment Regarding the Issue of Coverage Being Limited — GRANTED.
Upon Motion of Premcor Refining Group for Partial Summary Judgment Regarding the Issue of Coverage — DENIED.
Upon Motion of National Union for Partial Summary Judgment Regarding the Issue of Punitive Damage Coverage — GRANTED.
Upon Motion of Premcor Refining Group for Partial Summary Judgment Regarding the Issue of Punitive Damage Coverage — DENIED.
William M. Kelleher, Esquire, of Elliott Greenleaf, Wilmington, Delaware, Douglas Christian, Esquire, John B. Kearney, Esquire, Paul F. Jenkins, Esquire, and Joel B. Korin, Esquire, Joshua A. Mooney, Esquire, of Ballard Sparh Andrews Ingersoll, LLP, Voorhees, New Jersey, Attorneys for plaintiffs Premcor Refining Group, Inc., and Valero Energy Corporation.
Thomas H. Kovach, Esquire, of Parkowski Guerke Swayze, Wilmington, Delaware, Jonathan M. Preziosi, Esquire, Jeffrey Carr, Esquire, Stephanie L. Merk, Esquire, of Pepper Hamilton, LLP, Attorneys for defendant/third-party plaintiffs Matrix Industrial Contractors, Inc., and Matrix Service Company.
Timothy J. Houseal, Esquire, of Young Conaway Stargatt Taylor, LLP, Wilmington, Delaware, Charles A. Hafner, Esquire, Richard H. Nicolaides, Jr., Esquire, Robert S. Marshall, Esquire, Mary F. Licari, Esquire, of Bates Carey, Chicago, Illinois, Attorneys for defendants American Home Assurance Company and National Union Fire Insurance Company of Pittsburgh, PA.
Robert M. Greenberg, Esquire, of Tybout Redfearn Pell, Wilmington, Delaware, J. Randolph Evans, Esquire, Tonia L. Ross, Esquire, and Joanne Zimolzak, Esquire, of McKenna Long Aldridge, LLP, Atlanta, Georgia, attorneys for defendants Maryland Casualty Insurance Company.
James S. Yoder, Esquire, of White Williams, Wilmington, Delaware, Attorney for defendant Drass Insurance Agency, Inc.
Brian L. Kasprzak, Esquire, of Marks, O'Neill, O'Brien Courtney, P.C., of Wilmington, Delaware, Attorney for Pro-Tech Engineering, Inc.
Michael L. Sensor, Esquire, of Perry Sensor, Wilmington, Delaware, Gerald J. Dugan, Esquire, Samuel J. Pace, Jr., Esquire, Jacqueline Y. Cassidy, Esquire, of Dugan Brinkmann Maginnis and Pace, Philadelphia, Pennsylvania, Attorneys for third-party defendant.
MEMORANDUM OPINION
This is a coverage case. The issues in it arise from an incident at the Premcor (now Valero) refinery in Delaware City where two men apparently asphyxiated while working inside a tank at the refinery. Two wrongful death actions are pending in the District Court in Philadelphia. The specific issues raised on the current motions before this Court are whether the excess carrier is obligated to provide coverage of nine million dollars or twenty-five million dollars and whether, if awarded, coverage for punitive damages.
Plaintiffs, Premcor Refining Group, Inc., and Valero Energy Corporation (hereafter "Premcor"), have moved for partial summary judgment claiming the maximum coverage, noted above, applies. Defendants, American Home Assurance company ("American Home") and National Union Fire Insurance Company of Pittsburgh ("National Union"), have moved for partial summary judgment contending the coverage obligation is limited to nine million dollars and that there is no coverage for punitives.
The Court holds National Union is obligated to provide compensatory damages coverage up to nine million dollars and is not liable to cover punitive damages.
Factual Background
Prior to the incident giving rise to the wrongful death actions and this litigation, Premcor had entered into a National Service Agreement ("Agreement") with Matrix Services Industrial Contractors, Inc. ("Matrix"). Apparently, the contract was for Matrix to perform maintenance or work related to it at several Premcor facilities including the Delaware City refinery.
As part of that Agreement, Matrix was to obtain insurance coverage under these provisions:
11.0 INSURANCE:
11.1 For WORK peformed within the State of Delaware, Texas, Tennessee and Ohio, CONTRACTOR shall maintain, at its sole cost, for itself and any subcontractor it may engage at all times while performing the WORK under this Agreement within the Site, the following insurance coverage's with companies reasonably satisfactory to COMPANY, with full policy limits applying, but not less than as required below (the "Insurance").
For work performed within the states of Delaware, Tennessee and Ohio, CONTRACTOR shall obtain Insurance that provides coverage to the Company for liabilities arising out of or relating to the concurrent, contributory or sole negligence of CONTRACTOR, its Subcontractors, invitees and Suppliers or Third Parties. For work performed within the states of Delaware, Texas, Tennessee and Ohio, CONTRACTOR shall obtain Insurance that provides coverage to the Company for liabilities arising out of or relating to the concurrent or contributory negligence of any Indemnified Party.
11.1.1 Commercial General Liability un-amended or Comprehensive General Liability insurance with Broad Form CGL endorsement with limits of not less than $1,000,000 each occurrence and $2,000,000 general aggregate, and provided that an endorsement is to be provided stating that this CGL insurance is primary to any insurance provided by the Indemnified Party or Parties.
* * * * *
11.6 Excess Liability insurance over coverages afforded by the primary policies described above, with a minimum limit of $9,000,000 if any part of CONTRACTOR'S WORK under this Agreement is to be performed within the battery limits.
* * * * *
11.3 The Insurance and each certificate evidencing the Insurance issued to COMPANY shall name COMPANY and all other Indemnified Parties as additional insureds (except for Worker's Compensation insurance and Longshoremen's and Harborworker's Compensation insurance), without regard to the allocation of liability provisions contained in this Agreement, to the full extent of any claim, loss or liability within the scope of the Insurance. It is the intention of the Parties that the status of COMPANY and all other Indemnified Parties as additional insureds shall not be limited. CONTRACTOR shall provide to COMPANY all certificates evidencing the Insurance Prior to commencement of the WORK and shall provide copies of the policies upon request by COMPANY. COMPANY'S failure to enforce CONTRACTOR'S obligation to provide proof of insurance shall not alter the coverage required herein nor CONTRACTOR'S obliation to maintain the Insurance.
Matrix fulfilled its duty to obtain primary coverage by acquiring a Commercial General Liability policy (CGL) from American Home. It provided for one million dollars per occurrence and two million dollars aggregate coverage. Included in an amendment is this provision:
"Section II — Who is an Insured" which states:
f) Any person or organization to whom you become obligated to include as an additional insured under this policy, as a result of any contract or agreement you enter into which requires you to furnish insurance to that person or organization of the type provided by this policy, but only with respect to liability arising out of your operations or premises owned by or rented to you. However, the insurance provided will not exceed the lessor of:
1. The coverage and/or limits of this policy, or
2. The coverage and/or limits required by said contract or agreement.
Defendant's Motion, Exhibit E @44. (American Home Policy)
Matrix fulfilled the umbrella coverage obligation by obtaining coverage from National Union. The declaration sheet stated that the limit of coverage was twenty-five million for each occurrence.
National Union's policy with Matrix was amended by several different endorsements. One of them, Endorsement 13, deleted a portion of the policy's definition of "Insured Means" to provide instead that:
4. Any person or organization, other than the Named Insured (Matrix), included as an additional insured under the Scheduled Underlying Insurance however:
a. coverage will not be broader than is available to such person or organization under underlying policies, and
b. the coverage granted by this provision 7 does not apply to any liability which results solely from the acts or omissions of such person or organization.
Defendant's Motion, Exhibit D @33. (National Union Policy)
The same endorsement also added this language:
Any person, organization, trustee or estate to whom you are obligated by a written Insured Contract to provide insurance such as is afforded by this policy, but only with respect to:
a. liability arising out of operations conducted by your or on your behalf,
b. facilities owned or used by you, or
c. liability arising solely from your acts or ommissions.
However,
1). The coverage granted in this provision does not apply to any liability which arises solely from the acts or omissions of such person, organization, trustee or estate, and
2). The most we will pay for damages under this policy on behalf of any person or organization to whom you are obligated by written Insured Contract to provide Insurance such as is afforded by this endorsement is the lesser of the Limits of Insurance shown in Item 3 of the Declarations or the minimum Limits of Insurance you agreed to procure in such written Insured Contract.
Defendant's Motion, Exhibit D @34.
On November 5, 2005, two Matrix employees John Lattanzi and John Jeney Ferguson, Jr., both boilermakers, were asphyxiated from exposure to nitrogen gas while working inside a reactor at Premcor's refinery. Wrongful death and survivorship actions have been brought in the United State District Court for the Eastern District of Pennsylvania ("Wrongful Death Actions"). In each, claims are made for compensatory and punitive damages against Premcor (and now Valero). Delaware's wrongful death and survivorship statutes have been cited in those actions.
The parties in this action do not disagree that Delaware law applies to this case.
Parties' Contentions
The first of the two areas in dispute is whether Premcor is entitled to coverage for compensatory damages in the amount of nine million dollars or twenty-five million dollars.Premcor, of course, contends it is entitled to twenty-five million dollars in coverage arguing that the "clear and unambiguous" terms of Matrix's policy with National Union establishes that. That policy provides, in the declaration sheet, for twenty-five million dollars in coverage. Premcor points to the "full policy limits" language in its agreement with Matrix. It asserts National Union parses too much the Agreement's provisions about what insurance coverage Matrix is to obtain.
Supra p. 2 (Section 11.1).
Premcor argues that the National Union policy itself permits it to recover the entire policy limit of twenty-five million. To support its contention, it points to the fact that there are two definitions under which it qualifies as an additional insured under the policy. Premcor qualifies first, it contends, under the first definition located in Endorsement 13 to the National Union policy, which replaced the original subsection 7, by virtue of the fact that Premcor is an additional insured under the underlying policy with American Home. That definition does not contain any language which limits an additional insured's available coverage. Premcor says it qualifies for $25 million coverage under the second section defining additional insureds. Therefore, Premcor argues that, because it qualifies as an additional insured under a "separate and independent provision" which contains no coverage limitation it is entitled to the full policy limits.
Supra p. 4.
Supra pp. 4-5.
National Union argues that the language of the policy it issued to Matrix limits Premcor's coverage to $9 million. It points to two provisions of its policy wherein the coverage available to an additional insured is limited to "the lesser of the Limits of Insurance shown in Item 3. of the Declarations or the minimum Limits of Insurance you agreed to procure in such written Insured Contract." This language appears in an amendment to the definition of "Insured" in the policy and in a provision located under the "Limits of Coverage" section. That provision is found in the body of the policy itself which provides:
Section IV. Limits of Insurance, Paragraph E. (National Union Policy).
E. Subject to Paragraphs B and C above, the most we will pay for damages under the policy on behalf of any person or organization to whom you are obligated by written Insured Contract to provide insurance such as is afforded by this policy is the lesser of the Limits of Insurance shown in item 3 of the Declarations or the minimum Limits of insurance you agreed to procure in such written Insured Contract.
Defendant's Motion, Exhibit D, pp. 55. (National Union Policy).
This provision, National Union asserts, is applicable to Premcor regardless of whether it qualifies as additional insured under the replacing or the amending provisions of Endorsement 13. Therefore, Premcor is only entitled to $9 million in coverage. Premcor responds by arguing that Section IV.E. does not apply to it because its terms only apply to those who become additional insureds by virtue of the amending provision of Endorsement 13 which expressly limits coverage to nine million dollars. Since, as it contends, it is an additional insured under the provision of Endorsement 13 without coverage limits, Section IV.E. does not apply to it.
For the first time at oral argument, Premcor additionally argued that Section IV.E. does not apply to it because the Agreement between it and Matrix is not an "Insured Contract" as defined under the policy. That definition is as follows:
N. Insured Contract means that part of any contract or agreement pertaining to your business under which any Insured assumes the tort liability of another party to pay for Bodily Injury or Property Damage to a third person or organization.
Defendant's Motion, Exhibit D., pp. 69. (National Union Policy)
Premcor did not, however, provide the Court any explanation and/or theory to support why the Matrix Agreement does not meet this definition.
Premcor has a fall-back argument on the nine million dollar versus twenty-five million dollar coverage dispute. It took the depositions of several witnesses. Jeff Canfield, a National Union adjuster, was a "30(b)(6)" witness. Premcor argues that his deposition, Karen Burr's deposition and correspondence from her commit National Union to twenty-five million dollar coverage.
A party may in the party's notice name as the deponent a public or private corporation or a partnership or association or governmental agency and describe with reasonable particularity the matters on which examination is requested. The organization so named shall designate one or more officers, directors, or managing agents, or other persons who consent to testify on its behalf, and may set forth, for each person designated, the matters on which the person will testify. The persons so designated shall testify as to matters known or reasonably available to the organization. This subdivision (b)(6) does not preclude taking a deposition by any other procedure authorized in these Rules. Superior Court Rule 30(b)(6).
National Union responds by contending that these depositions and correspondence are irrelevant. They are irrelevant, it asserts, because they represent extrinsic evidence and that kind of evidence can only be considered where there is an ambiguity in the contractual language. As it has claimed there is no ambiguity here, any extrinsic evidence is irrelevant and inadmissable.
Premcor also argues that the Court should consider certain extrinsic evidence, as threshold, to help resolve whether the various contract provisions are or are not ambiguous.
The second area in dispute is whether Premcor is entitled to coverage for punitive damages, if such are awarded.
Premcor argues that the policy language cannot be construed to preclude punitive damages. First, it points out that the policy does not contain an express exclusion of coverage for punitive damages. Second, it argues that National Union's interpretation inserts a "hidden pitfall" into the contract which is not permitted under Delaware law. Third, Premcor argues that National Union's interpretation of the language in the contract creates an absurd result.
National Union responds that Prem cor is not entitled to coverage for punitive damages even if not explicitly excluded in those words. First, it notes the Agreement requires Matrix to obtain insurance for liability arising either on Matrix's concurrent, contributory or sole negligence or the concurrent or contributory negligence of Premcor (or affiliates). Its policy with Matrix "unambiguously provides that additional insured coverage dos not extend to any liability that arises and/or results solely from the acts or omissions of the additional insured entity (emphasis added). It follows with an extensive discussion of the meaning of the word "solely" as "exclusively" or "entirely." National Union asserts that under Delaware law "the factual predicate for punitive damages is the defendant's own conduct-and only the defendant's own conduct." It argues that Delaware law is applicable to the underlying actions, although filed in the District Court of Pennsylvania, because the Wrongful Death Actions seek relief under Delaware law. Therefore, according to National Union, since punitive damages could only arise from "solely" Premcor's conduct, the policy does not cover punitive damages.
See p. 2, supra.
Defendant's Motion pp. 5-6 (emphasis added).
Defendant's Motion pp. 8.
Defendant's Motion pp. 11.
Applicable Standards
Summary judgment may be awarded where there are no genuine issues of materical fact and the moving party is entitled to judgment as a matter of law. If there are genuine issues of material fact, summary judgment will be denied. As a starting point, where there are cross motions for summary judgment, as here, the implication is that there are no genuine issues of material fact. Nevertheless, even when there are cross motions for summary judgment, the Court must determine whether genuine issues of material fact have been presented.
Grusso v. First USA Bank, 713 A.2d 304, 307 (Del.Super. 1998).
United Vanguard Fund v. Takecare, Inc., 693 A.2d 1076, 1079 (Del. 1997).
Browning-Ferris v. Rockford Enterprises, 642 A.2d 820, 823 (Del. 1993).
State ex rel Mitchell v. Wolcott, 83 A.2d 759 (Del. 1951).
As a starter, each party contends there are no genuine issues of material fact. They each say the applicable documents are unambiguous and support their respective decisions. In this circumstance, therefore, and based on the Court's review of the record before it, there are no genuine issues of material fact. It is only when the Court determines, if it should, that applicable contractual provisions are ambiguous does the specter arise of potential material factual issues. The Court's analysis, however, stops at the applicable documents.
Discussion
Under Delaware Law, where, as here, the issue is contract interpretation, summary judgment is only appropriate where the contract is deemed unambiguous. The Court must examine the plain language to determine "not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant." The "clear meaning rule" requires a court to assess what the parties reasonably understood to be their agreement from the "words of the contract standing alone the language being so unequivocal that no reasonable person could have expectations inconsistent with such language."
United Rentals, Inc. v. Ram Holdings, Inc., 937 A.2d 810, 830 (Del.Ch. 2007).
Lorillard Tobacco Company v. American Legacy Foundation, 903 A.2d 728, 740 (Del. 2006).
U S West, Inc. v. Time Warner Inc., 1996 WL 307445 (Del.Ch.) at *9.
A contract is considered ambiguous only where the provisions in dispute "are reasonably or fairly susceptible of different interpretations or may have two or more different meanings." Contract language is not ambiguous simply because the parties disagree on its meaning. Extrinsic evidence will not be considered "to manufacture an ambiguity" where a contract has only one reasonable meaning. Where a provision is deemed to be ambiguous, the Court will consider "proffered admissible evidence bearing upon the objective circumstances relating to the background of the contract."
Christina Medical Group, P.A. v. Ford, M.D., 2008 WL 162829 (Del.Super.).
E. I. duPont de Nemours Co. V. Allstate Insurance Co. 693 A.2d 1059, 1061 (Del. 1997).
United Rentals, 937 A.2d at 830.
U S West, Inc., 1996 WL 307445 at *10.
A
Premcor offers extrinsic evidence for several purposes: (1) to bind National Union to twenty-five million dollars in coverage, or (2) to show that the various contractual provisions are ambiguous, or (3) to assist the Court in making a preliminary finding of whether the contractual provisions are or are not ambiguous. The Court must address that three-prong offer. As just noted, where contractual provisions are not ambiguous, extrinsic evidence will not be considered.When considered as a whole, the contractual provisions relating to the issues in these partial summary judgment motions are not ambiguous. Curiously, Prem cor, despite the offer outlined above, essentially argues that the applicable contracts are not ambiguous and entitle it to twenty-five million dollar coverage.
Premcor initially relies upon the language in Endorsement 13 to the Matrix National Union Policy that as an additional insured, "coverage will not be broader than is available to such person or organization under underlying policies. . . ." Premcor is an additional insured under the CGL policy with American Home. From that premise, Premcor argues that the unambiguous policy language in the National Union policy means that there is not a nine million dollar cap on coverage. National Union has waffled on whether Premcor is an additional insured in the National Union policy, but has now agreed, or arguably conceded, that Premcor is such.
Section VII, DEFINITIONS, Paragraph M, Subparagraph 7, p. 4, infra.
Id.
The Court's analysis, however, accepts the parties' agreement that Premcor is an additional insured in the National Union policy. But this status does not translate into a finding that Premcor has twenty-five million dollar coverage for compensatory damages. There are two policy provisions which demonstrate why. The first is additional amendatory language in Endorsement 13:
2.) The most we will pay for damages under this policy on behalf of any person or organization to whom you are obligated by written Insured Contract to provide insurance such as is afforded by this endorsement is the lesser of the Limits of Insurance shown in item 3. of the Declarations or the minimum Limits of Insurance you agreed to procure in such written Insured Contract.
National Union Motion, Exhibit D, p. D034.
The policy has identical language in it too, specifically Section IV, Limits of Insurance, Subparagraph E:
E. Subject to Paragraphs B and C above, the most we will pay for damages under this policy on behalf of any person or organization to whom you are obligated by written Insured Contract to provide insurance such as is afforded by this policy is the lesser of the Limits of Insurance shown in Item 3 of the Declarations or the minimum Limits of Insurance you agreed to procure in such written Insured Contract.
National Union Motion, Exhibit D, p. D055.
These provisions read together, and aside from the position of Premcor being an additional insured or not, mean that coverage for compensatory damages is limited to nine million dollars. Matrix obtained coverage for itself from National Union for twenty-five million dollars. But these two policy provisions do not refer to Matrix but, in this instance, to Premcor.
Premcor seeks to escape from this result by belatedly (oral argument) contending its Agreement with Matrix is not an "Insured Contract" under the National Union Policy. It did not explain why. Further, that agreement squarely meets the definition of an "Insured Contract" found in the National Union policy:
Insured Contract means that part of any contract or agreement pertaining to your business under which any Insured assumes the tort liability of another party to pay for Bodily Injury or Property Damage to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
National Union Motion, Exhibit D, p. D069.
The Premcor/Matrix Agreement stated:
11.0 INSURANCE
11.1 For WORK performed within the State of Delaware, Texas, Tennessee and Ohio, CONTRACTOR shall maintain, at is sole cost, for itself and any subcontractor it may engage at all times while performing the WORK under this Agreement within the Site, the following insurance coverage's with companies reasonably satisfactory to COMPANY, with full policy limits applying, but not less than as required below (the "Insurance").
For work performed within the states of Delaware, Texas, and Ohio, CONTRACTOR shall obtain Insurance that provides coverage to the Company for liabilities arising out of or relating to the concurrent, contributory or sole negligence of CONTRACTOR, its Subonctractors, Invitees and Suppliers or Third Parties. For work performed within the State of Delaware, Texas, Tennessee and Ohio, CONTRACTOR shall obtain Insurance that provides coverage to the Company for liabilities arising out of or relating to the concurrent or contributory negligence of any Indemnified Party.
* * * * *
11.1.6 Excess liability insurance over coverages afforded by the primary policies described above, with a minimum limit of $9,000,000, if any part of CONTRACTOR'S WORK under this Agreement is to be performed within the battery limits.
It is not clear to the Court how Premcor can argue its Agreement with Matrix is not an Insured Contract. If Matrix had breached the insurance obligations imposed in the Agreement, Premcor would have relied on them in any litigation for such a breach.
The Court's holding that the contractual provisions at issue here are unambiguous means that it is unnecessary, if not prohibited, to consider the extrinsic evidence which Premcor offers. And that would be for any of the reasons it sought to do so, including using any "30(b)(6)" depositions to resolve an issue of law, namely contract interpretation. Also, National Union stated at oral argument it would need to undertake discovery should the Court determine the contractual provisions were ambiguous. That reservation of right is obviated, too, by this opinion.
Bryant v. Bayhealth Medical Center, Inc., 937 A.2d 118, 126 (Del. 2007).
One factor in coverage cases which supports this Court's holding is that of expectations. Insurance policies — in this instance really the Agreement — should be read so as to satisfy the reasonable expectations of the insured. The agreement explicitly required Matrix to have no less than nine million dollars excess coverage for Premcor. That requirement, as written in the Agreement, cannot be reasonably stretched to say whatever Matrix obtains for itself Prem cor is entitled to it.
Steigler v. Insurance Co. of North America, 384 A.2d 398, 400 (Del. 1978).
The conclusion is that National Union is obligated to provide coverage for the lesser of the coverage in the limits of insurance (twenty-five million dollars) or that which Matrix agreed with Premcor to obtain (nine million dollars). Nine million dollars is National Union's potential coverage liability to Premcor.
B
Premcor argues it is entitled to coverage from National Union for any punitive damages which may be awarded in the Wrongful Death Actions. National Union contends the policy language does not entitle it that coverage. The essence of this disagreement arises from the lack of express language in the insurance policy disclaiming coverage for punitive damages.
This Court must note that once again the courts are called upon to resolve insurance coverage language that would have been better, and more cheaply, addressed with a proper focus at the beginning. Regrettably, this kind of litigation unavoidably adds to the cost of doing business.
As stated earlier, Delaware law recognizes that if contract language is unambiguous, the plain meaning of the language will dictate the outcome. "However, if the words of the agreement `can only be known through an appreciation of the context and circumstances in which they were used a court is not free to disregard extrinsic evidence of what the parties intended.'"
Gildor v. Optical Solutions, Inc., 2006 WL 1596678 (Del.Ch.) at *5.
City Investing Co. Liquidating Trust v. Continental Cas. Co., 624 A.2d 1191, 1198 (Del. 1993).
National Union urges the Court to determine that the provision in Endorsement 13 denying coverage "to any liability which arisessolely from the acts or omissions of such . . . organization (emphasis supplied)" means that punitive damage coverage is not available to Premcor. Under the clear meaning test, this language would indicate that an additional insured is not covered for punitive damages where the liability arises from omissions which are its alone. Here, the underlying Wrongful Death Actions were filed naming only Premcor (Valero) as defendant and it is from Premcor alone that punitive damages are sought. Matrix is not a co-defendant to that case. However, Prem cor has, in addition to its claims against National Union, madenegligence claims against Matrix in this lawsuit. At oral argument, Premcor argued that even though they have not made any third-party claims against Matrix in the Wrongful Death Actions, Matrix could still be determined to have been solely and/or partially negligent by this Court. Therefore, the accident would not be for the "sole" act(s) of Prem cor.
Nor could it be a defendant because the deceased were Matrix employees. Their exclusive remedy against Matrix is through worker's compensation. 19 Del. C. § 2304.
Premcor's arguments have two fatal flaws, however, which compel the Court to rule that it is not entitled to punitive damages. That flaw comes to light in an examination of how punitive damages are treated under Delaware law. The Delaware Supreme Court has held that punitive damages are appropriate where a party's conduct is "`outrageous' based on an `evil motive' or `reckless indifference to the rights of others.'" Delaware courts have further established that the factual predicate for punitive damages "must be attributable to the conduct of the charged party, not to a joint tortfeasor." Based on this, Premcor cannot impute liability for punitive damages upon Matrix as a joint tortfeasor. This is so regardless of whether or not Matrix's negligence is found to be a contributing factor in the underlying action. And mere negligence itself is not a basis for awarding punitive damages. Therefore, any assessment of punitive damages against Premcor could only be attributable to "liability which arises solely from the acts or omissions . . ." of Premcor. Clearly, coverage for those damages are not provided for under the policy.
Jardel Co., Inc. v, Hughes, 523 A.2d 518, 529 (Del. 1987).
Empire Financial Services, Inc. v. The Bank of New York, 2007 WL 1991179 (Del.Super.) at *6.
Rhinehardt v. Bright, 2006 WL 2220972 (Del.Super.) at *5.
Conclusion
For the reasons stated herein, Defendant National Union's Motion for Partial Summary Judgment on the issue of Premcor's coverage being limited to nine million dollars under the policy language is GRANTED. Plaintiff Premcor's motion for Partial Summary Judgment that it is entitled to twenty-five million dollars coverage is DENIED. Defendant National Union's Motion for Partial Summary Judgment on the issue of no coverage for punitive damages is GRANTED. Plaintiff Premcor's Motion for Partial Summary Judgment on the issues of punitive damage coverage is DENIED.