Summary
In Baunchalk, the insurer argued that a party injured in a single-vehicle car accident could not recover both bodily injury benefits and UIM benefits under the same policy.
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C.A. No. N14C-09-102 FWW
10-26-2015
JAMES BAUNCHALK and TONI BAUNCHALK Plaintiffs, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and AMERICAN INDEPENDENT INSURANCE COMPANY, Defendants.
Beverly L. Bove, Esquire and Vincent J. X. Hedrick, II, Esquire (argued), 1020 West 18th St., P.O. Box 1607, Wilmington, Delaware 19899, Attorneys for Plaintiffs. Colin M. Shalk, Esquire, Casarino Christman Shalk Ransom & Doss, P.A., 405 N. King St., Suite 300, Renaissance Center, P.O. Box 1276, Wilmington, Delaware 19899-1276, Attorney for Defendant.
Upon Plaintiffs' Motion for Summary Judgment GRANTED, in part, DENIED, in part.
Upon Defendant State Farm Mutual Automobile Insurance Company's Motion for Summary Judgment GRANTED, in part, DENIED, in part. OPINION AND ORDER Beverly L. Bove, Esquire and Vincent J. X. Hedrick, II, Esquire (argued), 1020 West 18th St., P.O. Box 1607, Wilmington, Delaware 19899, Attorneys for Plaintiffs. Colin M. Shalk, Esquire, Casarino Christman Shalk Ransom & Doss, P.A., 405 N. King St., Suite 300, Renaissance Center, P.O. Box 1276, Wilmington, Delaware 19899-1276, Attorney for Defendant. WHARTON, J.
I. INTRODUCTION
Before the Court are James and Toni Baunchalk's ("Plaintiffs") and State Farm Mutual Automobile Insurance Company's ("Defendant") Cross Motions for Summary Judgment with regard to a dispute that arises out of an automobile insurance policy and motorcycle insurance policy following a single vehicle automobile collision in which the passenger suffered fatal injuries. The parties request that the Court determine an issue of first impression in Delaware: whether a passenger in a single vehicle automobile accident can recover underinsured motorist benefits ("UIM") under the same policy that paid passenger up to the liability limits for bodily injury where the policy contains a non-duplication clause. Additionally, the parties request that the Court determine whether or not a passenger in a single vehicle automobile collision may recover UIM under the driver's other policy that does not cover the automobile involved in the collision.
Applying Super. Ct. Civ. R. 56(c), (h) to the Cross Motions for Summary Judgment, the Court finds that 1) the Non-Duplication Clause is void as a matter of law; and 2) Passenger cannot recover under the Driver's other policy because Passenger is not an Insured. Therefore, Plaintiffs' Motion for Summary Judgment is GRANTED, in part, and DENIED, in part and Defendant's Motion for Summary Judgment is GRANTED, in part, and DENIED, in part.
II. FACTUAL AND PROCEDURAL CONTEXT
On April 27, 2014, Alexis Baunchalk ("Passenger") suffered fatal injuries in a single-vehicle collision in Newark, Delaware. Zachary Burris ("Driver") was the driver of the only vehicle involved in the collision. Driver had a motor vehicle insurance policy with Defendant that provided for $15,000 per person, $30,000 per occurrence policy limits ("Auto Policy"). The Auto Policy also provided UIM in the amount of $15,000 per person, $30,000 per occurrence. Driver also had a motorcycle policy with Defendant that had UIM coverage for $15,000 per person, $30,000 per occurrence ("Motorcycle Policy"). At the time of the collision, Passenger resided with her sister.
Stip. of Facts, D.I. 12, Ex. 1 at ¶¶1-3.
Id. at ¶ 2.
Id. at ¶ 4.
Id. at ¶ 6.
Id. at ¶ 9.
See Compl., D.I. 1, at ¶ 7; Answer, D.I. 6, at ¶ 7.
The bodily injury policy limits on the Auto Policy were paid to Plaintiffs, as administrators of Passenger's estate, on July 25, 2014. Plaintiffs, as administrators of Passenger's estate, then submitted a demand to Defendant for UIM benefits under both the Auto Policy and Motorcycle Policy. Defendant denied coverage for UIM benefits under both policies. As to the Auto Policy, Defendant claimed the non-duplication of benefits clause excluded payment of UIM benefits when Defendant has already paid the Auto Policy limits for bodily injury. The non-duplication clause in the Auto Policy provides
Stip. of Facts, at ¶¶ 4-5.
Id. at ¶¶ 7, 10.
Id. at ¶¶ 8, 11.
Id. at ¶ 8.
We will not pay Uninsured Motor Vehicle Coverage any damages that have already been paid to or for the Insured: ...As to the Motorcycle Policy, Defendant claimed that Passenger does not meet the definition of an "insured" under the policy. Under the Motorcycle Policy
2. For bodily injury or property damage under Liability Coverage or Non-Vehicular Property Damage Coverage of any policy issued by the State Farm Companies to you or any resident relative;... ("Non-Duplication Clause").
Insured means:
1. you;
2. resident relatives;
3. any other person while occupying :
a. your car ;
b. a newly acquired car ; or
c. a temporary substitute car.
Both the use and actual operation of such vehicle must be within the scope of your consent; and
4. any person entitled to recover compensatory damages as a result of bodily injury to an insured as defined in 1., 2., or 3. above. ("Insured").
Items in Bold Italics appear in that manner in the relevant policy and are defined terms.
Automobile Policy, D.I. 12, Ex. A to Ex. 1, at 14.
Stip. of Facts, at ¶ 11.
Motorcycle Policy, D.I. 12, Ex. B to Ex. 1, at 12.
On September 11, 2014, Plaintiffs filed suit seeking a declaratory judgment against Defendant for payment of UIM benefits from the Auto Policy and Motorcycle Policy. On March 31, 2015, Defendant filed its Motion for Summary Judgment. On April 30, 2015, Plaintiffs filed their response to Defendant's Motion for Summary Judgment as well as its own Motion for Summary Judgment concerning the same issues raised by Defendant in its Motion for Summary Judgment. The parties appeared before the Court for oral argument on the Cross Motions on July 8, 2015.
See Compl., at ¶¶ 11-13; 17-19.
D.I. 12.
D.I. 14.
III. THE PARTIES' CONTENTIONS
The parties submitted stipulated facts to the Court and requested that the Court determine two issues as a matter of law. The first issue is whether the Automobile Policy's Non-Duplication Clause excludes payment of UIM benefits to Plaintiffs. The second issue is whether Passenger is an Insured as defined in the Motorcycle Policy.
A. Non-Duplication Clause in the Auto Policy
Defendant argues that other jurisdictions have upheld non-duplication clauses in automobile collisions involving a single vehicle and have held that "a limiting clause prevents turning first-party UIM coverage into additional third- party liability coverage or a second layer of liability coverage, the result of which was not contemplated by the parties nor calculated in the cost of premiums." Defendant contends that the Court has adopted the reasoning of the Minnesota courts when an "Unknown Phantom Vehicle" is involved in the collision and that, likewise, the Court should adopt the reasoning of the Minnesota courts involving single-vehicle claims which precludes duplication of coverage.
Def.'s Opening Br., D.I. 12, at ¶ 8.
Def.'s Reply Br., D.I. 18, at ¶ 3.
Defendant concedes that the Court has interpreted similar policy exclusionary provisions to be void; however, Defendant asserts that the factual circumstances at bar mandate a different result. Defendant argues that the cases in which the Court held that similar exclusionary provisions are void involved unknown vehicles as tortfeasors and did not contemplate the same result in a single-vehicle collision. Defendant argues that the distinction is important because "the Court recognized '[p]laintiff is able to pursue a claim under the uninsured motorist provision of the policy and have the facts of his claim that an Unknown Phantom Vehicle was also a proximate cause of the accident determined by a jury'" while, in the case at bar, "there is no question for the jury to decide regarding the liability of a second vehicle."
Def.'s Opening Br., at n. 1.
Id. at ¶ 8.
Def.'s Reply Br., at ¶ 2 quoting Pankowski v. State Farm Mut. Auto. Ins. Co., 2013 WL 5800858, at *4 (Del. Super. Oct. 10, 2013).
Plaintiffs assert that the Non-Duplication Clause is void as a matter of law. Plaintiffs contend that the Court has rendered void similar non-duplication clauses when there are multiple vehicles involved in a collision and argues that there is no basis to distinguish between multiple-vehicle accidents and single-vehicle accidents. Plaintiffs assert that Defendant's argument to adopt the reasoning of the Minnesota courts is unpersuasive because "Minnesota's underinsured motorist statute is not the same as Delaware's, and whether Defendant's policy exclusion is void, is controlled by th[e] statute...There is also a conflict in Minnesota law whether an insurer may disclaim underinsured motorist coverage to a passenger in the tortfeasor's vehicle."
Pl.'s Answering Br. and Mot., D.I. 14, at ¶ 4.
Id. at ¶ 6.
Pl.'s Reply Br., D.I. 22, at ¶ 6.
Plaintiffs contend that its position that the Non-Duplication clause is void "is supported by public policy underlying the underinsured motorist statute." Plaintiffs argue that the UIM statute requires that every policy contain underinsured motorist coverage and that the courts have voided provisions that reduce or eliminate underinsured motorist coverage to less than what the statute requires. Additionally, Plaintiffs argue that Delaware courts have held that insurance policies may not exclude a particular class of persons because of their relationship with the insured. Plaintiffs assert that Delaware public policy favors full compensation to all victims of automobile collisions because "whether a driver is underinsured is determined by the extent of the victim's damages, not the victim's relationship to the tortfeasor."
Pl.'s Answering Br. and Mot., at ¶ 7.
Id.
Id. at ¶¶ 8-9.
Id. at ¶¶ 9, 11.
B. Definition of "Insured" in the Motorcycle Policy
As to the Motorcycle Policy, Defendant argues that coverage is personal to the Insured as defined in the Motorcycle Policy and that Passenger did not meet that definition. Defendant argues that recovery for "[Passenger] is limited to the vehicle in which she was a passenger and any insurance that is personal to her." Defendant asserts that Passenger was not a passenger on the motorcycle at the time of the collision nor did she meet any of the requirements to be an Insured under the Motorcycle Policy. Defendant asserts that denial of the UIM claim under the Motorcycle Policy was appropriate.
Def.'s Opening Br., at ¶ 10.
Id.
Id.
Id.
Plaintiffs assert that Defendant had no basis upon which to deny UIM benefits under the Motorcycle Policy. Plaintiffs' only argument in support of its assertion is that "the limitation of defining an insured under the motorcycle policy to exclude Plaintiff fails, as uninsured motorist coverage is designed to protect innocent victims like Plaintiff here, especially where Defendant's insured is responsible."
Pl.'s Answering Br. and Mot., at ¶ 12.
Id.
IV. STANDARD OF REVIEW
Super. Ct. Civ. R. 56(c) provides that summary judgment is appropriate where there is "no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." When considering a motion for summary judgment, the Court's function is to examine the record to determine whether genuine issues of material fact exist "but not to decide such issues." Additionally, Super. Ct. Civ. R. 56(h) provides
Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99-100 (Del. 1992).
Where the parties have filed cross motions for summary judgment and have not presented argument to the Court that there is an issue of fact material to the disposition of either motion, the Court shall deem the motions to be the equivalent of a stipulation for decision on the merits based on the record submitted with the motions.If the Court finds that there are no genuine issues of material fact, summary judgment will be granted in favor of one party.
See Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742, 744-45 (Del. 1997).
V. DISCUSSION
Because the facts are stipulated, the Court must determine whether the undisputed facts entitle one party to judgment as a matter of law. The parties do not dispute that the plain language of the Non-Duplication Clause unambiguously excludes payment of additional benefits after the Automobile Policy's bodily injury limits have been exhausted. However, the Court must determine whether the Non-Duplication Clause is valid where it purports to prohibit a passenger involved in a single-vehicle collision from recovering UIM benefits under the driver's insurance policy. Additionally, the Court must determine whether a passenger may recover UIM benefits under the driver's other insurance policy for a different vehicle than that which was involved in the collision.
A. The Non-Duplication Clause Contained in the Automobile Policy is Void as a Matter of Law.
The Delaware Supreme Court recently set forth guidelines for examining limitations or exclusions contained in automobile insurance policies. The Delaware Supreme Court advised that
[its] precedent thus does not support a bright-line rule that any limitations or exclusions based on the relationship between the insured and the victim are invalid. Rather, the appropriate analysis to determine if coverage limitations or exclusions are valid is to start with the language of the statute, and only if it is ambiguous, to consider relevant public policy. Even then, any judicial ruling impinging on contractual freedom should be carefully justified by reference to the public policy as reflected in the overall statutory regime, as that is the legitimate source of public policy in this heavily regulated field.
State Farm Mut. Auto. Ins. Co. v. Kelty, 2015 WL 6155890, at *6 (Del. Oct. 20, 2015).
i. 18 Del. C. § 3902(b).
The rules of statutory construction are well settled. First, the Court must determine whether the statute is ambiguous. The statute is ambiguous if it is "susceptible of two reasonable interpretations." If it is unambiguous, then the words in the statute are ascribed their plain meaning. However, if it is ambiguous, then the Court "consider[s] the statute as a whole, rather than in parts, and [the Court] read[s] each section in light of all others to produce a harmonious whole."
Dewey Beach Enters., Inc. v. Bd. of Adjustment, 1 A.3d 305, 307 (Del.2010).
Id.
Taylor v. Diamond State Port Corp., 14 A.3d 536, 538 (Del. 2011).
Dewey Beach Enters., 1 A.3d 305, 307 (Del.2010).
Taylor, 14 A.3d at 538.
The UIM statute, 18 Del. C. § 3902(b), provides, in part, that
Every insurer shall offer to the insured the option to purchase additional coverage for personal injury or death up to a limit of $100,000 per person and $300,000 per accident or $300,000 single limit, but not to exceed the limits for bodily injury liability set forth in the basic policy. Such additional insurance shall include underinsured bodily injury liability coverage...
(2) An underinsured motor vehicle is one for which there may be bodily injury liability coverage in effect, but the limits of bodily injury liability coverage under all bonds and insurance policies applicable at the time of the accident are less than the damages sustained by the insured. These limits shall be stated in the declaration sheet of the policy.
The Court finds that the provision in the statute that defines an underinsured motorist is unambiguous. Based upon the plain meaning of the language, the definition of an underinsured motor vehicle does not depend upon the number of vehicles involved in a collision; instead, the statute defines an underinsured motor vehicle relative to the victim's injuries. Absent ambiguity, the Court cannot arbitrarily insert an exclusion for single-vehicle collisions where there is no indication that was the intent of the General Assembly. Given this interpretation of the statute, the Non-Duplication Clause conflicts with the statute because the Non-Duplication Clause functions to limit Plaintiffs' recovery based upon the number of vehicles involved in the collision rather than based upon the extent of Passenger's injuries.
See Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10, 14 (Del. 1995); Frank v. Horizon Assur. Co., 553 A.2d 1199, 1203 (Del. 1989).
ii. Public Policy Regarding Automobile Insurance
Even if the Court found that the statute is ambiguous, the overall public policy as reflected in the statutory scheme requires rendering void the Non-Duplication Clause. "[T]his Court held that the public policy underlying the statute ' favors full compensation to all victims of automobile accidents' and encourages 'the Delaware driving public to purchase more than the statutory minimum amount [of coverage].'" Additionally, "the 'letter and spirit of Section 3209 require UIM coverage to be personal to the insured. Once coverage is purchased, the insurance consumer is entitled to the full extent of those benefits.'" To insert an exclusion for single-vehicle accidents into the statute would undermine the strong public policy to fully compensate victims of automobile accidents.
Progressive Northern Ins. Co. v. Mohr, 47 A.3d 492, 500 (Del. 2012)( quoting Nationwide Gen. Ins. Co. v. Seeman, 702 A.2d 915, 918 (Del. 1997))(emphasis in original).
Jones v. Horace Mann Ins. Co., 723 A.2d 390, 393 (Del. Super. 1998)(quoting Frank, 553 A.2d at 1205).
The Court is mindful that invalidating the Non-Duplication Clause may impinge upon the parties' right to contract because it results in a second layer of liability coverage that was not necessarily contemplated by the parties. Additionally, the Court considers the Delaware Supreme Court's view that "[i]f insurance companies are forced to provide benefits beyond what policyholders contracted for ..., they will undoubtedly raise the cost of such coverage, and thereby reduce the number of Delaware drivers who opt to pay for anything more than the statutory minimum." However, the Court finds that the strong public policy favoring full compensation for automobile collision victims outweighs the contractual concerns particularly when there is no evidence before the Court to indicate that Defendant did not contemplate paying UIM benefits from the Automobile Policy for a single-vehicle collision. Therefore, based upon the plain meaning of 18 Del. C. § 3902(b) with support by public policy considerations, the Court finds that the Non-Duplication Clause is void as a matter of law. Summary judgment is GRANTED for Plaintiffs and DENIED for Defendant.
Kelty, 2015 WL 6155890, at *5.
B. Passenger is Not an "Insured" Under the Motorcycle Policy.
Although Delaware public policy, as stated in Part V.A. supra, is to compensate automobile accident victims in full, the Court has recognized that "there are still limitations on the scope of coverage." Specifically, coverage under an insurance policy "only extends to those individuals who [the policyholder] could reasonably expect to be insured ..." In Ruggiero v. Montgomery Mut. Ins. Co., 2004 WL 1543234, the Court determined that it was unreasonable for a plaintiff to expect to recover benefits under an automobile insurance policy when plaintiff did not meet the definition of an "insured" under that policy. Similarly, Passenger does not meet any definition of an Insured under the Motorcycle Policy.
Ruggiero v. Montgomery Mut. Ins. Co., 2004 WL 1543234, at *3 (Del. Super. June 28, 2004) citing Fisher v. Nat'l Union Fire Ins. Co. of Pittsburgh, 1997 WL 817893, at *4 (Del. Super. Dec. 11, 1997).
Id. (emphasis in original).
Id.
The Motorcycle Policy specifies that
Insured means:
1. you;
2. resident relatives;
3. any other person while occupying :
a. your car ;
b. a newly acquired car ; or
c. a temporary substitute car.
Both the use and actual operation of such vehicle must be within the scope of your consent; and
It is undisputed that Passenger was neither the policyholder nor a resident relative of the policyholder. It is also undisputed that Passenger was not an occupant of the motorcycle at the time of the collision. Therefore, it would be unreasonable to conclude that Passenger is an "Insured" who can recover benefits under the Motorcycle Policy. Therefore, summary judgment in favor of Defendant is GRANTED and summary judgment is DENIED as to Plaintiffs.4. any person entitled to recover compensatory damages as a result of bodily injury to an insured as defined in 1., 2., or 3. above.
Motorcycle Policy, at 12.
See Stip. of Facts, at ¶ 4; Compl., at ¶ 7; Answer, at ¶ 7.
See Stip. of Facts, at ¶¶1-3. --------
VI. CONCLUSION
The Court finds that the Non-Duplication clause contained in the Automobile Policy is void as a matter of law. Additionally, the Court finds that the undisputed facts establish that Passenger was not an "Insured" under the Motorcycle Policy. Therefore, Plaintiffs' Motion for Summary Judgment is GRANTED, in part, and DENIED, in part and Defendant's Motion for Summary Judgment is GRANTED, in part, and DENIED, in part.
IT IS SO ORDERED.
/s/_________
Ferris W. Wharton, Judge