Opinion
C.A. No. 01C-07-118 RRC
Submitted: June 20, 2002
Decided: July 24, 2002
On Defendant's Motion for Summary Judgment.
GRANTED.
On Plaintiff's Cross-Motion for Summary Judgment.
DENIED.
Glenn C. Ward, Esquire, Ramunno Ramunno, P.A., 903 N. French Street, Wilmington, Delaware 19801, Attorney for Plaintiff.
Carol J. Antoff, Esquire, Reger Rizzo, LLP, 1225 King Street, Suite 900, Wilmington, Delaware 19801, Attorney for Defendant.
Dear Counsel:
Before the Court are a motion for summary judgment filed by One Beacon Insurance Company ("Defendant") and a cross-motion for summary judgment filed by Michael Garnett ("Plaintiff"). The issue the Court must determine is whether Plaintiff has standing to assert that an insurance policy issued by Defendant to Louise Clark ("the Insured") should have contained uninsured motorist coverage ("UM coverage") when the Insured purportedly rejected UM coverage in several signed writings to Defendant. Plaintiff was not named as an additional insured under the policy Defendant had issued to the Insured; Plaintiff claims in this lawsuit to have been involved in an accident with an unknown vehicle while in the Insured's automobile, and both parties agree that that accident caused physical injuries to Plaintiff and to the Insured. For the reasons below, however, the Court finds that Plaintiff lacks standing to assert that Defendant should have provided UM coverage to the Insured (which would potentially provide Plaintiff with UM coverage as well) because: 1) Plaintiff was not an additional insured under the Insured's policy with Defendant, 2) Defendant has not agreed Plaintiff was so qualified at the time of the accident, and 3) Plaintiff's alleged third-party beneficiary status does not otherwise entitle him to the relief he now seeks. Because the Court finds the issue of Plaintiff's standing dispositive, it does not reach the merits of Plaintiff's argument that Defendant never made a "meaningful offer" of UM coverage to the Insured. Accordingly, Defendant's motion for summary judgment is granted and Plaintiff's cross-motion for summary judgment is denied.
FACTS AND PROCEDURAL HISTORY
The Insured in this case originally obtained coverage through Defendant by filing an application on December 22, 1995 to participate in Delaware's "assigned risk plan" as established by title 18, section 2527 of the Delaware Code. On her application, the Insured specifically rejected UM coverage by checking the box next to the word "Reject"; parallel to that box, the application stated in a handwritten entry apparently made by someone in the Insurance Commissioner's office that "No [UM] Coverage" was therefore available to Insured.
That section provides that the Insurance Commissioner of Delaware "shall promulgate the necessary regulations to effect (1) an equitable apportionment among all the insurers writing automobile insurance in . . . [Delaware] of insurance which shall be afforded applicants who are in good faith entitled to but who are unable to procure such insurance through ordinary methods, (2) reasonable rates for such insurance, and (3) such other rules as are necessary to effect and maintain an assigned risk plan." DEL. CODE ANN. tit. 18 Del. C. § 2527 (1999).
See Dec. 22, 1995 Application of Louise M. Clark (Ex. "A" to Def.'s Mot.).
Subsequently, the Insured was "assigned" to Defendant through the assigned risk plan established by the Insurance Commissioner. Sometime before January 10, 1997, the Insured became a "regular" insured paying Defendant's normally charged rates; a January 10, 1997 renewal form drafted by Defendant's predecessor indicates as such. Significantly, that renewal form, as well as other similar forms dated January 10, 1998 and January 10, 1999 all contain the word "Rejected" underneath the UM designation. There are no other interlineations concerning UM coverage (other than "Rejected") on the faces of any of those documents.
See Jan. 10, 1997, Jan. 10, 1998, and Jan. 10, 1999 Renewals of Louise M. Clark (Ex. "C" to Def.'s Mot.).
Additionally, the Insured changed the vehicle covered under her policy at least four times before she and Plaintiff were injured. None of the change of vehicle replacement forms reflects UM coverage having been in effect (nor do they contain any explicit detail of what UM coverage would have potentially been available to the Insured). See Mar. 19, 1997, Aug. 6, 1997, July 10, 1998, and Dec. 21, 1998 Policy Change Requests of Louise M. Clark (Ex. "D" to Def.'s Mot.).
Here, Plaintiff was a passenger in the Insured's motor vehicle and alleged that in April 1999, "he sustained serious injuries, including a herniated disc, as a result of a hit and run motor vehicle collision while he was driving a vehicle owned by . . . [the Insured] and insured with . . . [Defendant]." Plaintiff represents that he had filed a claim for UM benefits with Defendant that "was denied on the sole basis that . . . [the Insured had] rejected . . . [Defendant's] offers of UM benefits." Additionally, Plaintiff has averred that Defendant "has agreed that should this Court find th[at] UM coverage exists . . . [Defendant] will tender the . . . policy limits." Defendant has not taken issue with this representation.
Plaintiff's counsel represented at oral argument on these competing summary judgment motions that Plaintiff was a passenger in the Insured's vehicle (Defendant's counsel agreed); it is not clear from the record whether Plaintiff was a driver or passenger of Insured's vehicle at the time of the accident. That issue however is not material to the disposition of the motions.
Pl.'s Cross-Mot. for Summ. J. ¶ 1.
Id.
Id.
The Court held oral argument on the parties' motions and deferred ruling pending supplemental letter memoranda. The Court ordered the parties to brief the issue of Plaintiff's standing to seek (what some cases have termed) "reformation" of the policy issued by Defendant to the Insured in order to provide Plaintiff UM benefits; that issue had not been raised until Defendant responded to Plaintiff's cross-motion for summary judgment.
See Def.'s "Opposition to Plaintiff's Cross-Motion for Summary Judgment and Reply to Plaintiff's Response" ¶¶ 5-6.
THE PARTIES' CONTENTIONS
Defendant's original ground for seeking summary judgment against Plaintiff was that the Insured had rejected UM coverage for the automobile Plaintiff was riding in when injured, and that Plaintiff could therefore not recover UM benefits from Defendant. Plaintiff responded that under Mason v. United Servs. Auto. Ass'n and State Farm Mut. Auto. Ins. Co. v. Arms, Defendant had never made a "meaningful offer" of UM coverage to the Insured (i.e., Defendant had failed to adequately explain the nature and availability of UM coverage to the Insured) so that UM coverage continued to be available through the time of the accident. Plaintiff argued that because an offer of UM coverage should therefore be deemed "continuous," he is able in the present litigation to claim UM benefits under the Insured's policy through the Defendant.Defendant subsequently argued that Plaintiff lacks standing to assert a claim based on the merits of whether or not UM coverage should be available to the Insured and thus to Plaintiff. Defendant argues that "Plaintiff is a third-party beneficiary to . . . [the Insured's] contract of insurance" and therefore lacks standing. Defendant largely relies on Menefee v. State Farm Mut. Auto. Ins. Co. to support its arguments. That case held that a permissive user of an automobile did not have standing to seek a declaratory judgment that UM coverage was equal to the liability coverage contained in the insured's insurance policy.
Def.'s Letter Mem. in Resp. to Pl.'s Letter Mem. at 3.
1986 WL 6590 (Del.Super.)
Id., at *2.
In response to Defendant's standing argument, Plaintiff contends that he was an "intended" third-party beneficiary of statutorily required insurance coverage and therefore has standing. Plaintiff cites title 18, section 3902(a) of the Delaware Code, which generally provides that no insurance policy can be issued within Delaware unless that policy provides for uninsured motor vehicle coverage except where "such coverage . . . [is] rejected in writing." In support of his argument that he has standing to claim UM benefits under the Insured's contract with Defendant, Plaintiff cites Amalfitano v. Salemi for the "longstanding" proposition that the "public policy of . . . [Delaware] [is] to protect its citizens against financially irresponsible motorists and to adequately compensate them for their injuries." Lastly, Plaintiff asserts that Defendant's argument regarding standing "should be rejected because it was never raised as an affirmative defense."
Pl.'s Letter Mem. at 2.
See DEL. CODE ANN. tit. 18 Del. C. § 3902(a) (1999).
1986 WL 6593 (Del.Super.) (holding that an insurer was not negligent for failing to making a statutorily prescribed offer of additional uninsured motorist coverage because the Delaware Insurance Commissioner had communicated to the insurer that it need not make the additional coverage offer to the drivers of the State of Delaware fleet vehicles insured under the policy therein).
Amalfitano, 1986 WL 6593, at *1.
Pl.'s Reply to Def.'s Opp'n to Pl.'s Mot. for Summ. J. ¶ 4.
STANDARD OF REVIEW
Summary judgment is granted only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The Court must view the facts in a light most favorable to the non-moving party. Where there are cross-motions for summary judgment, as here, "the parties implicitly concede the absence of material factual disputes and acknowledge the sufficiency of the record to support their respective motions."DISCUSSION
The issue before the Court is whether Plaintiff has standing to assert that an insurance policy Defendant issued to the Insured should have contained UM coverage when Plaintiff was not named as an additional insured under that policy and Defendant has not agreed that Plaintiff was so qualified at the time of the accident. Two leading commentators suggest that reformation of an insurance policy (e.g., to claim additional or omitted UM coverage) "should only be permitted where sought by parties to the policy," and that parties "who ha[ve] no present interest in . . . [a] policy cannot obtain its reformation." Additionally, Delaware courts have held that third-party beneficiary status, even if found to exist, does not permit a party to reform the insurance policy of another.The Amalfitano case Plaintiff primarily relies on to support his assertion of standing is distinguishable. That case involved a Delaware State employee injured by an uninsured motorist while the employee was driving a state-owned vehicle. At the time of the accident, the State carried $25,000 in UM coverage. The question before that court was whether the insurer made or needed to have made an offer of additional UM coverage as required by statute, and whether the State had rejected such an offer, if one in fact had ever been made. While that court did indicate that the injured State employee would likely have standing to seek reformation because "the State employees who drive State-owned vehicles are the ones for whom the uninsured motorist coverage was legislated," the court nonetheless reasoned that the plaintiff was an "insured" under the relevant policy because the insurer had so agreed: "[Insurer] agrees that . . . [plaintiff], as the driver of the covered vehicle, is clearly covered up to $25,000 in uninsured motorist coverage because she was an `insured' under the terms of the policy."
See DEL. CODE ANN. tit. 18 Del. C. § 3902(b) (1999) (stating that every insurer writing policies in Delaware "shall offer to the insured the option to purchase additional coverage for personal injury or death," and that such additional coverage "shall include underinsured [and uninsured] bodily injury liability coverage").
Amalfitano, 1986 WL 6593, at *1.
Id.
Id.
In contrast, there are no facts in the record of this case that Plaintiff was named as an additional insured under the policy issued by Defendant to the Insured, and Defendant does not agree that Plaintiff was so qualified at the time of the accident. Additionally, Malone and other Delaware cases indicate that even if Plaintiff were a third-party beneficiary of the Insured's policy, he still would not have standing to claim any UM benefits thereunder. Courts in other jurisdictions have also made similar rulings.
Malone, 1987 WL 18107, at *2; Menefee, 1986 WL 6590, at *2; Sczubelek v. Maahs, 1986 WL 15440, at *2 (Del.Super.); Metropolitan Property and Liab. Ins. Co. v. Nationwide Gen. Ins. Co., 1987 WL 14868, at *2 (Del.Super.).
See, e.g., Del Prado v. Liberty Mut. Ins. Co., 400 So.2d 115 (Fla.Dist.Ct.App. 1981) (holding that a permissive user of an insured vehicle did not have standing to complain of technical deficiencies regarding the securing or retention of a written memorandum demonstrating that the named insured therein had rejected an offer of UM coverage).
The facts of this case are similar to those in Menefee relied upon by Defendant. The plaintiff in that case was a permissive user of a vehicle who had not been named as an insured under the policy covering the vehicle and who was injured while driving that vehicle. The plaintiff sought a declaratory judgment that the UM coverage of the vehicle was equal to the liability coverage rather than the UM coverage the policy provided because the insurer had "fail[ed] to offer the additional uninsured motorist coverage[ ] as required by . . . [title 18, section 3902(b) of the Delaware Code]." In determining that the plaintiff lacked standing as a person not named in the policy, the court refuted that the plaintiff could succeed on a third-party beneficiary theory:
Menafee, 1986 WL 6590, at *1.
Plaintiff argues that a third-party beneficiary of a contract may sue. In such as case, the third-party beneficiary is suing to protect his rights under an existing contract. In the present situation, there is no contract but only a right to create a contract. That right belongs to the person who contracted for the insurance in the first place, not to someone who would be covered under the policy if the contracting party exercises that right. Since no right of [p]laintiff was violated by [d]efendant's failure to comply with . . . [title 18, section 3902(b) of the Delaware Code], it follows that . . . [p]laintiff does not have standing to sue.
Id., at *2 (citation omitted).
The court then dismissed the plaintiff's motion for a declaratory judgment, subject to the "proper plaintiff" being added as a party.
Id.
Here, Plaintiff was a passenger in the Insured's vehicle when the accident occurred and was not an additional insured under the policy issued by Defendant to the Insured. As Menefee explicitly states, a third-party beneficiary status such as that claimed by Plaintiff will not permit an action to recover UM benefits under these circumstances. Also, Plaintiff's claim that Defendant's standing argument has been waived is unpersuasive. The rule listing those affirmative defenses that normally must be included in the pleadings does not include "standing." This issue comes relatively early in the progress of this case; the Court therefore in its discretion deems Defendant's standing argument as timely raised.
See Super.Ct.Civ.R. 8(c).
Cf. National Union Fire Ins. Co. of Pittsburgh, Pa. v. Stauffer Chem. Co., 1991 WL 138431, at *8 (Del.Super.) (holding that the plaintiffs timely asserted and did not waive an objection that the defendant was not the "real party in interest" and stating that "the issue of whether a party has waived its right to raise the objection [of "real party in interest"] turns on whether the objection is raised in a timely or seasonable fashion in the trial court proceedings.").
Accordingly, Defendant is entitled to judgment as a matter of law that Plaintiff does not have standing to seek UM coverage from Defendant. As stated in Menefee, "there is no contract but only a right to create a contract," and that right "belongs to the person who contracted for the insurance in the first place, not to someone who would be covered under the policy if the contracting party . . . [had exercised] that right." Whether there has been a "meaningful offer" of UM coverage availability to the Insured is an issue not reached by the Court in its decision, as Plaintiff has no standing to assert it.
Menafee, 1986 WL 6590, at *2.
It may well be that the Insured can be added as a "proper plaintiff," see Menafee at *2, but the Court does not reach that issue.
CONCLUSION
For the above reasons, Defendant's motion for summary judgment is GRANTED and Plaintiff's cross-motion for summary judgment is DENIED.IT IS SO ORDERED.