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Amer. Insur. Assoc. v. De. Dept. Ins.

Superior Court of Delaware, New Castle County
Nov 29, 2006
Civil Action No. 05C-10-309-JRJ (Del. Super. Ct. Nov. 29, 2006)

Opinion

Civil Action No. 05C-10-309-JRJ.

Submitted: August 17, 2006.

Decided: November 29, 2006.

Upon Defendant's Motion for Discovery on Defendant's Fifth, Sixth, and Seventh Affirmative Defenses — GRANTED in part, DENIED in part .

Before the Court is the motion of Defendant, the Delaware Department of Insurance (the "Department"), for discovery on its fifth, sixth, and seventh affirmative defenses. For the following reasons, the Department's motion is GRANTED in part and DENIED in part.

Michael W. Teichman, Esq. Parkowski Guerke Swayze, P.A. 800 King Street, Suite 203 Wilmington, DE 19801.

Stuart M. Grant, Esq. Grant Eisenhofer, P.A. Chase Manhattan Centre 1201 North Market Street Wilmington, DE 19801


FACTUAL AND PROCEDURAL HISTORY

On October 1, 2005, following a period of public comment, the Department enacted Regulation 703, entitled "Prohibited Practices Related to the Nonrenewal of Residential Homeowners Policies" (the "Regulation"). Prior to enacting the Regulation, the Department received written comments from seven insurers who argued, inter alia, that the Regulation conflicted with existing State law and the Department exceeded its statutory authority in enacting the Regulation. On October 31, 2005, Plaintiffs, the American Insurance Association and the Property and Casualty Insurers Association of America, Inc. (collectively referred to as "Plaintiffs"), filed a complaint for declaratory judgment. Plaintiffs petitioned the Court to strike down the Regulation, arguing that the Department did not have statutory authority to enact it.

Vol. 9 Del. Reg. Regs. p. 593-595 (Oct. 1, 2005).

Id.

"[N]o judicial review of a regulation is available unless a complaint therefore is filed in the Court within 30 days of the day the agency order with respect to the regulation was published in the Register of Regulations." 29 Del. C. § 10141(d).

The Department moved to dismiss Plaintiffs' original complaint, arguing that Plaintiffs lacked standing to bring the action. On February 6, 2006, the Court granted the Department's motion to dismiss and ordered the Plaintiffs to submit an amended complaint. Plaintiffs filed their amended complaint on March 3, 2006. The Court denied the Department's motion to dismiss the amended complaint. The Department again moved to dismiss for lack of standing.

Following an August 7, 2006 status conference, the Court ordered the parties to submit briefing on the issues raised by the fifth, sixth, and seventh affirmative defenses in the Department's answer to the amended complaint. The Court also directed the parties to submit a motion within five days if they required discovery to brief these issues fully.

Answ. Am. Compl., D.I. 24. The Department's fifth, sixth, and seventh affirmative defenses are as follows:

Fifth Affirmative Defense: Plaintiffs' claim is not ripe for adjudication.
Sixth Affirmative Defense: Defendant has acted within the scope of its statutory authority in publishing and promulgating Regulation 703.
Seventh Affirmative Defense: Plaintiffs have failed to identify any grievance they have suffered as a consequence of the promulgation of Regulation 703, and that they are aggrieved within the meaning of 29 Del. C. § 10141(a).

On August 16, 2006, the Department petitioned the Court for discovery on its fifth, sixth, and seventh affirmative defenses, which Plaintiffs opposed. The Department maintains that Plaintiffs do not have standing to bring the action, and without standing, the matter is not ripe for adjudication. Plaintiffs oppose the Department's request for discovery, not only because it was filed after the five-day deadline, but because the discovery sought allegedly exceeds the scope of the Court's order. Plaintiffs argue that the Court did not order briefing on the issue of standing, which is the Department's first affirmative defense. Plaintiffs maintain that the Department has confused the issue of standing with the legal concept of ripeness. Finally, Plaintiffs argue that no amount of discovery will clarify the legal issue presented in the sixth affirmative defense, i.e. the Department's statutory authority to enact the Regulation.

DISCUSSION

A. The Department Is Entitled to Discovery on the Fifth and Seventh Affirmative Defenses.

This Court has jurisdiction to consider the lawfulness of a regulation promulgated by an administrative agency when an aggrieved party brings an action for declaratory relief. The Court has recognized the value of pre-enforcement review of a challenged regulation to all parties. A party that is subjected to regulation benefits by avoiding the Hobson's choice of complying with a potentially invalid regulation or violating the regulation in order to challenge it. The agency also benefits if the regulation is upheld because, "'its enforcement thereafter can be swift, efficient and inexpensive.'" By the same token, an invalid regulation can be revised quickly.

29 Del. C. § 10141(a). Pre-enforcement review of a regulation is available when "a complaint therefor is filed in the Court within 30 days of the day the agency order with respect to the regulation was published in the Register of Regulations." § 10141(d).

American Auto. Mfrs. Ass'n v. Public Service Com'n, 1997 WL 718656, at *1 (Del.Super.) ( quoting Kenneth Culp Davis et al., Administrative Law Treatise § 15.14 (3d ed. 1994)) ("'Uncertainty often imposes large costs on many individuals and institutions, including the agency itself.'").

Id. ("When the validity of a regulation is in issue, those subject to it must choose between making changes to comply with the regulation they believe to be invalid or take the risk that sanctions will be imposed.").

Id.

Id.

Although the Court can undertake a pre-enforcement review of a challenged regulation, Delaware law is clear that the Court will not issue advisory opinions. Even in the context of a declaratory judgment action, the issue must be justiciable. "While the Declaratory Judgment statute, 10 Del. C., ch. 65, may be employed as a procedural device to 'advance the stage at which a matter is traditionally justiciable,' the statute 'is not to be used as a means of eliciting advisory opinions from the courts.'" A matter must satisfy the following four prerequisites to be considered "justiciable" or an "actual controversy:"

Stroud v. Milliken Enterprises, Inc., 552 A.2d 476, 479 (Del. 1989); Anonymous v. State, 2000 WL 739252, at *4 (Del.Ch.) ( quoting Heathergreen Commons Condominium Ass'n v. Paul, 503 A.2d 636, 639 (Del. Ch. 1985)) ("[C]ontroversies that are 'hypothetical . . . would result in only an advisory opinion' and therefore are 'not justiciable.'").

Id.

Id. ( quoting Rollins International, Inc. v. International Hydronics Corp., 303 A.2d 660, 662 (Del. 1973); Ackerman v. Stemerman, 201 A.2d 173, 175 (Del. 1964)).

(1) It must be a controversy involving the rights or other legal relations of the party seeking declaratory relief; (2) it must be a controversy in which the claim of right or other legal interest is asserted against one who has an interest in contesting the claim; (3) the controversy must be between parties whose interests are real and adverse; (4) the issue involved in the controversy must be ripe for judicial determination.

Id. ( quoting Rollins, 303 A.2d at 662-63).

Ripeness of the issue is essential for the matter to be justiciable. "Unless a controversy is 'ripe for judicial determination,' a court may simply be asked to render an advisory opinion."

Id. at 480; Anonymous v. State, 2000 WL 739252, at *4 (Del.Ch.) ( quoting Heathergreen Commons Condominium Ass'n v. Paul, 503 A.2d 636, 639 (Del.Ch. 1985)) ("As Vice Chancellor Jacobs has explained the concept generally, "'[r]ipeness or 'justiciability' . . . speaks to whether a given dispute lends itself to adjudication by any court[,]" with "'ripeness" referring to the concept 'that a controversy will not be adjudicated unless it involves truly adverse interests and actual rights.").

Stroud, 552 A.2d at 480.

There is no bright-line test for justiciability. Instead, the issue must be evaluated by assessing whether "given the facts at hand, a sufficient threat of enforcement exists such that judicial review is warranted." The ripeness of the matter is determined by using practical judgment in balancing whether "'postponing review until the question arises in some more concrete and final form, [is] outweighed by the interests of those who seek relief from the challenged action's immediate and practical impact upon them.'"

Anonymous, 2000 WL 739252, at *6 (Del.Ch.).

Id.

Stroud, 552 A.2d at 480 ( quoting Continental Air Lines, Inc. v. C.A.B., 522 F.2d 107, 124-125 (D.C. Cir. 1975)).

In this matter, the Department is seeking discovery on the issue of ripeness and, more specifically, the identification of a grievance Plaintiffs have allegedly suffered as a result of the Regulation. As the case law indicates, judiciability, of which ripeness is an essential component, is necessarily fact-driven. For that reason, the parties should engage in discovery before briefing the issue of ripeness. Accordingly, the Department's motion for discovery on the fifth and seventh affirmative defenses is GRANTED.

B. The Issue Raised by the Department's Sixth Affirmative Defense Does Not Require Discovery.

In its sixth affirmative defense, the Department argues that it "acted within the scope of its statutory authority in publishing and promulgating Regulation 703." When enacting a regulation, an administrative agency's actions must be consistent with the provisions of the enabling statute and in harmony with the Act that created it. In order to determine whether an agency exceeded its statutory authority, the Court must review the agency's enabling legislation to determine the extent of its power.

Answ. Am. Compl., D.I. 24.

In re Dept. Of Natural Resources and Environmental Control, 401 A.2d 93, 96 ( citing Wilmington Country Club v. Delaware Liquor Com'n, 91 A.2d 250 (Del.Super. 1952); Mayor, Etc., of Baltimore v. William E. Koons, Inc., 310 A.2d 813 (Md. 1973)).

State v. Raley, 1991 WL 18114, at *1 (Del.Super.)( citing Lynch v. Tunnell, 236 A.2d 369, 373 (Del. 1967); Mitchell v. Delaware Alcoholic Beverage Con. Com'n, 193 A.2d 294, 310 (Del.Super. 1963), rev'd, on other grounds, 196 A.2d 410 (Del. 1963)).

The rules of statutory construction are well-settled. The goal in construing a statute is to ascertain and give effect to the true intent of the legislature from the language employed. The Court will not engage in statutory construction when the language and intent of the statute are clear. When the statute is unambiguous, the plain language of the statute controls. "However, if the statute is ambiguous, then it is the role of the judiciary to construe it in a manner that is consistent with the legislative intent."In contrast to the issues raised in the Department's fifth and seventh affirmative defenses, the issue raised in the sixth affirmative defense is a legal one. Discovery is not necessary to aid the Court in deciding whether the Department exceeded its statutory authority in enacting the Regulation. Therefore, the Department's motion for discovery on the sixth affirmative defense is DENIED.

Rubick v. Security Instrument Corp., 766 A.2d 15, 18 (Del. 2000).

Id. ( citing Ingram v. Thorpe, 747 A.2d 545, 547 (Del. 2000)); Washington v. Christiana Service Co., 1990 WL 177645, at *3 (Del.Super.).

Newtowne Village Serv. Corp. v. Newtowne Road Dev. Co., 772 A.2d 172, 175-176 (Del. 2001) (citing General Motors Corp. v. Burgess, 545 A.2d 1186, 1191 (Del. 1988); Distefano v. Watson, 566 A.2d 1, 4 (Del. 1989)).

Rubick, 766 A.2d at 18 ( citing Ingram, 747 A.2d at 547). See also Newtowne Village, 772 A.2d at 175-176; Eliason v. Englehart, 733 A.2d 944, 946 (Del. 1999); Giuricich v. Emtrol Corp., 449 A.2d 232, 238 (Del. 1982); Daniels v. State, 538 A.2d 1104, 1109 (Del. 1988); Coastal Barge Corp. v. Coastal Zone Indus. Control Bd., 492 A.2d 1242, 1246 (Del. 1985).

Ruderman ex rel. Ruderman v. State Farm Fire and Cas. Co., 2001 WL 755935, *1 (Del.Super.) (citing State v. Cooper, 575 A.2d 1074, 1075 (Del. 1990)).

CONCLUSION

For the aforementioned reasons, the motion of Defendant, the Delaware Department of Insurance, for discovery on the fifth, sixth, and seventh affirmative defenses is GRANTED in part and DENIED in part. The parties are ordered to submit a stipulated discovery and briefing schedule with respect to the Department's fifth and seventh affirmative defenses. Because Plaintiffs previously filed their opening brief addressing the Department's fifth, sixth, and seventh affirmative defenses, the Department's brief in response, limited to the sixth affirmative defense, is due within thirty days of the date of this order.

IT IS SO ORDERED.


Summaries of

Amer. Insur. Assoc. v. De. Dept. Ins.

Superior Court of Delaware, New Castle County
Nov 29, 2006
Civil Action No. 05C-10-309-JRJ (Del. Super. Ct. Nov. 29, 2006)
Case details for

Amer. Insur. Assoc. v. De. Dept. Ins.

Case Details

Full title:American Insurance Association, et al. v. Delaware Department of Insurance

Court:Superior Court of Delaware, New Castle County

Date published: Nov 29, 2006

Citations

Civil Action No. 05C-10-309-JRJ (Del. Super. Ct. Nov. 29, 2006)

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