Justia Delaware Supreme Court Opinion Summaries

After a jury trial, Noranda Aluminum Holding Corporation, an aluminum-products manufacturer, won a judgment against its insurance companies for more than $28 million. The Delaware Supreme Court affirmed, and the Superior Court awarded Noranda post-judgment interest at 6 percent (the same rate as pre-judgment interest) because that was the legal rate in effect when the insurance liability first arose. On appeal, Noranda argued the Superior Court should have used an interest rate of 7.5 percent, which was the legal rate on the date judgment was entered. To this, the Supreme Court agreed, holding that, in 6 Del. C. section 2301(a)'s final sentence, the judgment entered by the Superior Court in Noranda’s favor “shall, from the date of the judgment, bear post-judgment interest of 5% over the Federal Reserve discount rate[.]” Because the Federal Reserve discount rate was 2.5 percent on October 17, 2019, the date the Superior Court entered judgment, the Supreme Court reversed and remanded with instructions to award Noranda post-judgment interest at 7.5 percent. View "Noranda Aluminum Holding Corporation v. XL Insurance America, Inc." on Justia Law

In 2001, Lavastone Capital LLC (Lavastone) entered into an agreement with Coventry First LLC (Coventry) to purchase “life settlements” – life-insurance policies sold on the secondary market. One was that of Beverly Berland. Lincoln Financial (Lincoln) issued the policy to Berland in 2006. But Berland did not act alone in acquiring it. A few months before, she approached a business called “Simba.” As Simba pitched it, the transaction allowed clients to “create dollars today by using a paper asset, (a life insurance policy not yet issued from a major insurance carrier insuring your life)” by selling it on the secondary market. Clients did not need to put up any money upfront. Instead, they got nonrecourse loans to finance the transactions, which allowed them to make all necessary payments without tapping into personal funds. The only collateral for the loan was the life-insurance policy itself. Berland agreed to participate in several transactions with Simba, profiting greatly. Lavastone kept the policy in force, paying all relevant premiums to Lincoln Financial. Upon Berland’s death more than seven years later, Lincoln paid Lavastone $5,041,032.06 in death benefits under the policy. In December 2018, Berland’s estate filed a complaint against Lavastone in the District Court, seeking to recover the death benefits that Lavastone received under 18 Del C. 2704(b). In 2020, the parties filed cross-motions for summary judgment. In 2021, the District Court certified the three questions of law to the Delaware Supreme Court. The Supreme Court responded: (1) a death-benefit payment made on a policy that is void ab initio under 18 Del. C. 2704(a) and PHL Variable Insurance Co. v. Price Dawe 2006 Insurance Trust was made “under [a] contract” within the meaning of 18 Del. C. 2704(b); (2) so long as the use of nonrecourse funding did not allow the insured or his or her trust to obtain the policy “without actually paying the premiums” and the insured or his or her trust procured or effected the policy in good faith, for a lawful insurance purpose, and not as a cover for a wagering contract; and (3) an estate could profit under 18 Del. C. 2704(b) where the policy was procured in part by fraud on the part of the decedent and the decedent profited from the previous sale of the policy, if the recipient of the policy benefits cannot establish that it was a victim of the fraud. View "Lavastone Capital LLC v. Estate of Beverly E. Berland" on Justia Law

In 2011, Appellants Eric Monzo and Dana Spring Monzo purchased a homeowners insurance policy issued by Appellee Nationwide Property & Casualty Co. (“Nationwide”). The policy contained standard exclusions for water damage and earth movement, along with optional water backup coverage. In July 2017, a heavy thunderstorm destroyed a pedestrian bridge and retaining wall located at the Monzos’ residence. A pair of engineering reports prepared after the storm indicated that a combination of water backups from drainage systems, scouring of supporting earth embankments, heavy rain, and tree debris caused the damage. The Monzos filed a claim with Nationwide, seeking coverage under the homeowners insurance policy. Nationwide denied coverage, and the Monzos sued. The court granted summary judgment for Nationwide, holding that the policy’s earth movement and water damage exclusions applied. The Monzos appealed, arguing the Superior Court erred by granting summary judgment too early in the discovery process, misinterpreting the policy, and denying a motion for post-judgment relief. Having reviewed the briefs and record on appeal, the Delaware Supreme Court: (1) affirmed the Superior Court’s holding that Nationwide was entitled to summary judgment regarding the collapsed bridge; (2) reversed the Superior Court’s holding that Nationwide was entitled to summary judgment regarding the retaining wall; and (3) affirmed the Superior Court’s denial of the Monzos’ post-judgment motion. View "Monzo v. Nationwide Property & Casualty Insurance Co." on Justia Law

An excess insurer under a directors’ and officers’ liability insurance policy sought a declaration from the superior court that coverage under the policy was not available to fund the settlement of two lawsuits: a breach of fiduciary duty action in the Court of Chancery, and a federal securities action in the United States District Court for the District of Delaware. In a series of decisions, the superior court rejected the insurer’s claims and entered judgment in favor of the insureds. Aggrieved, the insurer contended the superior court committed several errors: whether the insurance policy, which insured a Delaware corporation and its directors and officers but which was negotiated and issued in California, should have been interpreted under Delaware law; whether the policy, to the extent that it appeared to cover losses occasioned by one of the insureds’ fraud, was unenforceable as contrary to the public policy of Delaware; whether a policy provision that excluded coverage for fraudulent actions defeats coverage; and whether the superior court properly applied the policy’s allocation provision. Finding no reversible error, the Delaware Supreme Court affirmed the superior court. View "RSUI Indemnity Co. v. Murdock, et al." on Justia Law

Appellants ACW Corporation (a.k.a. Arby’s, (Arby’s)) and Eastern Alliance Ins. Co., as Subrogee of Shanara Devon Waters (“Waters”), appealed the grant of summary judgment in favor of Appellees, Christopher Maxwell (“Maxwell”) and Donegal Mutual Ins. Co. (a.k.a. Donegal Ins. Group). Eastern Alliance was Arby’s’ workers’ compensation carrier. It paid Waters, an Arby’s employee, a $12,500 commuted, lump-sum workers’ compensation benefit to settle her workers’ compensation claims for injuries she received in a work-related motor vehicle accident caused by Maxwell. Arby’s and Eastern Alliance then brought this suit against Maxwell and his auto insurer, Donegal, under 19 Del. C. 2363, claiming that they were entitled to recover the $12,500 lump-sum payment from them. Maxwell and Donegal denied liability, though they acknowledged that under the Workers’ Compensation Act Arby’s and Eastern Alliance could assert a claim against Maxwell for damages that Waters would be entitled to recover against Maxwell in an action in tort. They argued, however, that Maxwell was not liable for the lump-sum payment because it was a settlement of potential or future workers’ compensation claims and did not include any damages that Waters would have been entitled to recover against Maxwell in an action in tort. Arby’s and Eastern Alliance argued that 19 Del. C. 2363(e) allowed them to recover from Maxwell “any amounts paid or payable [to Waters] under the Workers’ Compensation Act” in connection with the Maxwell accident, and that the lump-sum benefit was an amount paid to Waters under the Act. The Superior Court agreed with Maxwell, and after finding that Arby’s and Eastern Alliance failed to offer evidence that any of the $12,500 lump-sum benefit was for damages which Waters would be able to recover in a tort action against Maxwell, granted summary judgment in Maxwell’s and Donegal’s favor. Finding no reversible error in that judgment, the Delaware Supreme Court affirmed. View "ACW Corporation v. Maxwell" on Justia Law

Insurance providers asked the Delaware Supreme Court whether certain costs incurred in connection with an appraisal action under 8 Del. C. 262 were precluded from coverage under the primary and excess directors’ and officers’ insurance policies (the “D&O Policies”) issued to Solera Holdings, Inc. (“Solera”). An affiliate of Vista Equity acquired Solera in 2016. That transaction gave rise to litigation, including an appraisal action. Solera requested coverage under the D&O Policies for the Appraisal Action. The insurers denied the request. Solera then filed suit against the insurers for breach of contract and declaratory judgment, seeking coverage for pre-judgment interest and defense expenses incurred in connection with the Appraisal Action. However, Solera did not seek coverage for the underlying fair value amount paid to the dissenting stockholders, upon which the pre-judgment interest was based. The issuer of the primary policy settled, and the excess policy insurers moved for summary judgment. The superior court denied the motion, interpreting the policy to hold that: (1) a “Securities Claim” under the policy was not limited to a claim alleging wrongdoing, and the Appraisal Action was for a “violation” under the Securities Claim definition; (2) because the “Loss” definition was not limited by any other language, the policy covered pre-judgment interest on a non-covered loss; and (3) as to defense expenses, Delaware law implied a prejudice requirement in insurance contract consent clauses, and Solera’s breach of the consent clause did not bar coverage for defense expenses absent a showing of prejudice. The Insurers appealed, contending that the superior court erred in holding that the Appraisal Action could be covered under the D&O Policies for a violation of a “Securities Claim.” The Supreme Court disagreed with the superior court's determination the Appraisal Action was for a “violation,” concluding the Appraisal Action did not fall within the definition of a “Securities Claim.” Because the Appraisal Action was not a Securities Claim, the remaining issues were moot. View "In Re Solera Insurance Coverage Appeals" on Justia Law

Following two operation-disabling accidents, Noranda Aluminum Holding Corporation, an insured aluminum-products manufacturer, whose “all-risks” property-insurance policy included business- interruption coverage, did not rebuild its damaged facility and consequently did not resume operations. Noranda and its insurers agreed that the failure to rebuild and resume operations did not negate the business-interruption coverage. But when Noranda submitted its business-interruption claim, the parties could not agree on how to calculate the Noranda's gross-earnings loss, which was the measure of the insurers’ liability under the relevant policy. After a seven-day trial, a jury found in favor of Noranda, and the insurers appealed. At trial, Noranda's damages expert employed a model that measured the insured’s gross-earnings loss by comparing the value of the insured’s production had the accident not occurred with the value of its production after the accidents had it repaired and resumed operations with due diligence. Although the parties disputed whether the insurers took issue with this methodology at trial in this appeal, the insurers contended that the model was inconsistent with the policy’s formula for calculating gross-earnings loss and that it grossly exaggerated the amount of the Noranda's claim. The insurers also challenged Noranda's expert’s factual assumptions and claimed he improperly included amounts that the insured had waived in an earlier property-damage settlement. The Delaware Supreme Court concluded Noranda's expert's damages model was consistent with the relevant policy provisions, and that the trial court's determination that the factual assumptions made by the expert were sufficiently reliable for the jury to consider was not an abuse of discretion. Likewise, the Court held the insurers' claim that the earlier property-damage settlement precluded a portion of Noranda's recovery was without merit. Therefore, the Supreme Court affirmed. View "XL Insurance America, Inc., et al. v. Noranda Aluminum Holding Corporation" on Justia Law

A superior court determined State Farm Mutual Auto Insurance Company and State Farm Fire and Casualty Company’s (collectively, “State Farm”) payment practices with Spine Care Delaware, LLC (“SCD”) for medical fees incurred by its Personal Injury Protection (“PIP”) insureds in connection with covered multi-injection spine procedures contravened 21 Del. C. 2118(a)(2). When State Farm received SCD’s charges for a multi-injection procedure performed on one of its PIP insureds, it unilaterally applied a Multiple Payment Reduction (“MPR”) to the charges for injections after the first injection in a manner consistent with Medicare guidelines, paying SCD less than what it charged. SCD sought a declaration that State Farm's application of its MPRs was inconsistent with section 2118(a)(2)’s requirement of reasonable compensation for covered medical expenses, and sought a declaration that State Farm had to pay SCD any reasonable amount charged for PIP-related medical expenses, without applying MPRs. Both parties then moved for summary judgment. The superior court held that State Farm failed to show that the MPR reductions correlated to reasonable charges for the multiple-injection treatments, and thus contravened section 2118(a)(2). On appeal, State Farm contended the superior court incorrectly placed the burden of proof on State Farm to demonstrate that its application of MPRs was reasonable, and that SCD failed to meet its burden of demonstrating that State Farm’s application of MPRs was a failure to pay reasonable and necessary expenses under the statute. Alternatively, State Farm argued that even if it had the burden of proof, it satisfied that burden. The Delaware Supreme Court agreed with State Farm's first premise, that the superior court erred in assigning State Farm the burden of proof. Judgment was reversed and the matter remanded for further proceedings. View "State Farm v. Spine Care Delaware" on Justia Law

USAA Casualty Insurance Company (“USAA”) sought a declaratory judgment that it was not obligated to defend, indemnify, or provide insurance coverage for claims made in two lawsuits against Trinity Carr, the daughter of a USAA homeowner’s-insurance policyholder. The plaintiffs in the underlying lawsuits sought money damages from Carr and others for personal injuries and wrongful death suffered by Amy Joyner-Francis in a physical altercation - described in both complaints as a “brutal, senseless, forseeable [sic] and preventable attack” - between Joyner-Francis and Carr and her friends. USAA argued at trial, as it did before the Delaware Supreme Court, that the incident - whether it be labeled an altercation, an attack, or otherwise - was not an “accident” and therefore not a covered occurrence under the policy and that, even if it were, the purported liability was excluded from coverage. The Superior Court disagreed and entered summary judgment in favor of Carr. The Delaware Supreme Court agreed with USAA’s interpretation of the relevant policy provisions and therefore reversed the Superior Court’s judgment. "To label an intentional assault, as the parties agree occurred here, an accident is to disregard the ordinary, everyday meaning of 'accident.' We thus hold that whether an assault is an 'accident' is determined by the intent of the insured, and not by the viewpoint of the victim. ... even though Carr may not have intended to cause [the victim's] death, she certainly intended to cause injury to her." View "USAA Casualty Ins. Co. v. Carr" on Justia Law

In 2006, Verizon divested its print and electronic directories business to its stockholders in a tax-free “spin-off” transaction. As part of the transaction, Verizon created Idearc, Inc. and appointed John Diercksen, a Verizon executive, to serve as Idearc’s sole director. Verizon then distributed Idearc common stock to Verizon shareholders. Idearc launched as a separate business with $9.1 billion in debt. In connection with the Idearc spinoff, Verizon and Idearc purchased primary and excess Executive and Organizational Liability Policies (“Idearc Runoff Policies"). The Idearc Runoff Policies covered certain claims made against defined insureds during the six-year policy period that exceeded a $7.5 million retention. Relevant here, Endorsement No. 7 to the policies stated that “[i]n connection with any Securities Claim,” and “for any Loss . . . incurred while a Securities Claim is jointly made and maintained against both the Organization and one or more Insured Person(s), this policy shall pay 100% of such Loss up to the Limit of Liability of the policy.” “Securities Claim” was defined in pertinent part as a “Claim” against an “Insured Person” “[a]lleging a violation of any federal, state, local or foreign regulation, rule or statute regulating securities (including, but not limited to, the purchase or sale or offer or solicitation of an offer to purchase or sell securities).” Under the policy, Verizon could recover its “Defense Costs” when a Securities Claim was brought against it and covered directors and officers, and Verizon indemnified those directors and officers. Idearc operated as an independent, publicly traded company until it filed for bankruptcy in 2009; a litigation trust was set up to pursue claims against Verizon on behalf of creditors. Primary amongst the allegations was Dickersen and Verizon saddled Idearc with excessive debt at the time of the spin-off. This appeal turned on the definition of a "Securities Claim;" the Superior Court found the definition ambiguous. Using extrinsic evidence, the court held that fiduciary duty, unlawful dividend, and fraudulent transfer claims brought by a bankruptcy trustee against Verizon Communications Inc. and others were Securities Claims covered under the policy. The Delaware Supreme Court disagreed, finding that, applying the plain meaning of the Securities Claim definition in the policy, the litigation trustee’s complaint did not allege any violations of regulations, rules, or statutes regulating securities. Thus, the Superior Court’s grant of summary judgment to Verizon was reversed and that court directed to enter summary judgment in favor of the Insurers. View "In Re Verizon Insurance Coverage Appeals" on Justia Law