Justia Delaware Supreme Court Opinion Summaries

Christina Connelly appealed the dismissal of her claim against State Farm Mutual Automobile Insurance Company. She contended that a claim accrued only when the insured suffers a judgment in excess of policy limits, and that judgment becomes final and non-appealable. Connelly's appeal raised this question as it pertained to the applicable statute of limitations on Connelly's insurance claim. State Farm contended that the claim accrued when the insurer allegedly acts in bad faith and breaches its duty to the insured. Although the Delaware Supreme Court had never addressed that precise issue, courts in other states that have considered it, and the weight of expert authority on insurance law, were in accord that a bad-faith failure-to-settle claim accrued when an excess judgment became final and non-appealable. "That approach conserves litigant and judicial resources. It also properly aligns the incentives of the insurer and its insured by allowing them to join efforts in defending the underlying third-party insurance claim without a stayed breach-of-contract claim causing a conflict of interest between them. Further, to state a claim that the insurer breached its implied duty to act in good faith, the insured must plead damages, which she cannot do before there is a final excess judgment against her." In view of these considerations, the Delaware Court found that a claim against an insurer for acting in bad faith by failing to settle a third-party insurance claim accrued when an excess judgment against an insured becomes final and non-appealable. Accordingly, it reversed the Superior Court's decision. View "Connelly v. State Farm Mutual Automobile Insurance Co." on Justia Law

The plaintiffs both have policies with State Farm Mutual Automobile Insurance Company and both submitted claims that State Farm failed to pay within the statutory thirty-day period. The plaintiffs earlier alleged that State Farm had failed to make the required statutory interest payments to them and other claimants whose PIP claims had not been processed within thirty days. When that theory did not pan out and they faced summary judgment, the plaintiffs reformulated their pursuit of class-wide relief by proposing to file an amended complaint seeking a declaratory judgment from the Superior Court that State Farm must process all PIP claims within thirty days. The Superior Court denied the motion for leave to amend, reasoning that amending the complaint would be futile because no case or controversy existed because the plaintiffs had been paid the required statutory interest. The court then granted summary judgment to State Farm. In this appeal, the plaintiffs alleged that the Superior Court was wrong to dismiss their claim, arguing that they have a ripe disagreement with State Farm over its failure to comply invariably with the thirty-day deadline set forth in 21 Del. C. 2118B(c). After review, the Supreme Court affirmed the Superior Court, but on a somewhat different ground. The plaintiffs were correct that absent declaratory (or injunctive) relief, it may be that they and other class members will have a claim in the future processed by State Farm in more than thirty days. But, the Court agreed with the Superior Court that the amended complaint is futile because as plainly written, section 2118B(c) did not impose an invariable standard that every PIP claim must be processed within thirty days and, in fact, contemplated that will not be the case by establishing a statutory consequence for the failure to do so. View "Clark v. State Farm Mutual Automobile Insurance Co." on Justia Law

David Stoms was killed in an automobile accident by an uninsured driver. David was driving a car belonging to his employer, Diamond Motor Sports, Inc., which had purchased uninsured motorists coverage on its insurance policy only for a limited class of drivers. Under Diamond Motor's insurance policy, only directors, officers, partners, and owners of the corporation had uninsured motorists coverage. David Stoms was a finance manager at Price Toyota, one of Diamond Motor's dealerships. The insurance policy gave all drivers, including David, personal injury protection coverage up to $30,000 per accident. David had purchased no supplemental coverage of his own. Although Federated Insurance paid the entire $30,000 in personal injury protection on David's behalf, it denied Mrs. Stoms benefits for uninsured motorists coverage resulting from David's death. Mrs. Stoms sued Federated Insurance, demanding those benefits. The parties filed cross-motions for summary judgment and the Superior Court granted Federated Insurance's motion. Mrs. Stoms argued that the Superior Court erred in granting Federated Service Insurance Company's motion for summary judgment after concluding that the insurance policy it issued to Diamond Motor was neither contrary to public policy nor ambiguous. Finding no reversible error, the Supreme Court affirmed. View "Stoms v. Federated Service Insurance Company" on Justia Law

In 2013, the Delaware Supreme Court determined that Matthew Kelty was eligible for personal injury protection (PIP) benefits under an insurance policy between State Farm Mutual Automobile Insurance Company and John and Shirley Lovegrove after Kelty was injured in an accident involving the Lovegroves' vehicle. As a result, the Supreme Court reversed the Superior Court's earlier grant of summary judgment to State Farm and remanded the case for further proceedings. On remand, the parties argued about whether Kelty was entitled to receive only the statutory minimum of $15,000, or $100,000, including excess coverage the Lovegroves opted to pay for but which was expressly limited in the policy to the insureds and their relatives who lived with them. The Superior Court held that Kelty was entitled to receive the full $100,000 because the policy's limitation on who could benefit from the excess coverage was "void as against public policy." The Supreme Court reversed finding that the plain language of the statute, 21 Del. C. 2118, required PIP policies to provide only $15,000 of coverage. Imposing a higher minimum here simply because the Lovegroves chose to pay for additional coverage for themselves and their relatives "thwart[ed] Delaware's public policy to encourage drivers to purchase more than the statutorily-mandated minimum by increasing the cost of excess coverage.[. . .] It is not the role of the judiciary to alter that amount and thus disrupt the incentives that the General Assembly has itself set up for insurers and consumers. Accordingly, we reverse the judgment of the Superior Court." View "State Farm Mutual Automobile Insurance Co. v. Kelty" on Justia Law

The Delaware Supreme Court certified two questions of New York law to the New York Court of Appeals. This case was a consolidated appeal in an insurance-coverage dispute from separate trial court judgments by the Delaware Court of Chancery and the Delaware Superior Court. Viking Pump, Inc. and Warren Pumps, LLC sought to recover under policies issued to Houdaille Industries, Inc. Viking claimed it was the successor to insurance policies that Liberty Mutual Insurance Company issued to Houdaille, or in the alternative, sought partition of the Liberty policy limits. Liberty, Viking and Warrant settled their dispute, but Viking and Warren then filed new complaints in the Court of Chancery against more than twenty other insurers that had issued excess policies to Houdaille. The Court of Chancery held that Houdaille's policies unambiguously provided for an all sums allocation. The case was then transferred to the Superior Court to determine several other issues. That court held that as a matter of New York law, Viking and Warren were obligated to horizontally exhaust all triggered "primary and umbrella insurance layers before tapping" any of Houdaille's excess coverage. The legal insurers in this appeal were controlled by New York law. As such, the Delaware Supreme Court certified two questions of New York law to the New York Court of Appeals, centering on the proper method of allocation and interpretation of the policies at issue here. View "In Re Viking Pump, Inc." on Justia Law

Defendant-Appellant First Health Settlement Class appealed a superior court order that granted partial summary judgment in favor of plaintiff-appellee Chartis Specialty Insurance Company. This was one of a number of class action cases filed against First Health and others in the State of Louisiana. In those actions, medical service providers alleged that First Health violated notice provisions contained in a Louisiana statute known as the Preferred Provider Organizations Act. First Health ultimately entered into a settlement in which it resolved all of the Louisiana litigation. Chartis was First Health's errors and omissions insurance insurer. The policy had a number of exclusions, one of which was an exclusion for "penalties." The issue this case presented for the Delaware Supreme Court's review was whether the amount that First Health paid to settle the Louisiana litigation was a "penalty," and, therefore, not a covered loss under the insurance policy. The superior court concluded that the amount paid was a "penalty." The Delaware court disagreed, concluding that it was not a "penalty," and that the policy's exclusion for "penalties" did not apply. View "The First Health Settlement Class v. Chartis Speciality Insurance Co." on Justia Law

Defendant-Appellant CorVel Corporation appealed a superior court order that granted partial summary judgment in favor of plaintiff-appellee Homeland Insurance Company of New York. This was one of a number of class action cases filed against CorVel and others in the State of Louisiana. In those actions, medical service providers alleged that CorVel violated notice provisions contained in a Louisiana statute known as the Preferred Provider Organizations Act. CorVel ultimately entered into a settlement in which it resolved all of the Louisiana litigation. Homeland was CorVel's errors and omissions insurance insurer. The policy had a number of exclusions, one of which was an exclusion for "penalties." The issue this case presented for the Delaware Supreme Court's review was whether the amount that CorVel paid to settle the Louisiana litigation was a "penalty," and, therefore, not a covered loss under the insurance policy. The superior court concluded that the amount paid was a "penalty." The Delaware court disagreed, concluding that it was not a "penalty," and that the policy's exclusion for "penalties" did not apply. View "Corvel Corporation v. Homeland Insurance Company of New York" on Justia Law

Jose Campos was injured while working for Daisy Construction Company. While Campos was receiving total disability payments from Daisy, Daisy performed an investigation of his social security number at the request of its workers' compensation insurance carrier and discovered that Campos was an undocumented worker. When Campos could not provide a valid number, Daisy terminated his employment. Around the same time, Daisy hired a doctor to re-evaluate Campos' medical condition. The doctor concluded that although Campos remained partially disabled, he could perform "light duty" work with restrictions. Daisy then filed a petition with the Industrial Accident Board to terminate Campos' total disability benefit payments. The Board granted Daisy's petition because Campos was physically capable of working and therefore was not totally disabled. The Board also found that Campos was not eligible for partial disability benefits, reasoning that Daisy had met its burden of showing that Campos had no decrease in earning capacity by testifying that Campos would be eligible for light duty jobs at Daisy at his pre-injury wage rate if he could provide a valid social security number. The Superior Court affirmed the Board's decision. After its review, the Delaware Supreme Court concluded the Board erred when it found that Campos was not eligible for partial disability benefits: "If we were to hold that Daisy's testimony constituted sufficient proof of job availability, an employer could always hire an undocumented worker, have him suffer a workplace injury, and then avoid partial disability benefit payments by 'discovering' his immigration status, offering to re-employ him if he could fix it, and claiming that a job is available to him at no loss in wages. This outcome would be contrary to the Workers' Compensation Act and our case law interpreting it, [...] which prevents employers from depriving undocumented workers of employment benefits. [...]Accordingly, Daisy must continue to pay partial disability payments until it can demonstrate that Campos has no decrease in earning power from his workplace injury, or until the statutory period for partial disability benefit eligibility expires. Federal restrictions that prevent employers from hiring undocumented workers may make it more difficult for Daisy to prove job availability, but any difficulty is appropriately borne by it as the employer, who must take the employee, Campos, as it hired him." View "Campos v. Daisy Construction Co." on Justia Law

Appellant North River Insurance Company challenged the Court of Chancery’s denial of its request for permanent injunctive relief. This multi-forum litigation concerns policies issued by North River to a safety products company, Mine Safety Appliances Company (MSA). North River issued thirteen policies to MSA covering periods from 1972 through 1986. MSA defended against thousands of personal injury claims allegedly caused by defects in its mine safety equipment. MSA seeks coverage under North River’s policies as well as from several other insurers. The issue this case presented for the Supreme Court's review was whether North River’s coverage under these policies was "triggered" (as a matter of Pennsylvania law), and was being litigated, along with its claims against other insurers in federal and state courts in Pennsylvania, the Delaware Superior Court and in certain later-filed cases in West Virginia. North River requested that the Court of Chancery permanently enjoin MSA from prosecuting the later-filed claims in West Virginia and from assigning to any tort claimants the right to recover under any insurance policy issued by North River to MSA. During the course of this appeal, North River narrowed its focus to the assignment issue. Finding no reversible error to the Court of Chancery's decision, the Delaware Supreme Court affirmed. View "The North River Insurance Co. v. Mine Safety Appliances Co." on Justia Law

Appellant North River Insurance Company appealed the Court of Chancery’s denial of its request for permanent injunctive relief. This multi-forum litigation concerned policies issued by North River to a safety products company, Mine Safety Appliances Company (“MSA”). North River issued thirteen policies to MSA covering periods from August 28, 1972 through April 1, 1986. MSA was defending against thousands of personal injury claims allegedly caused by defects in its mine safety equipment. MSA sought coverage under North River’s policies as well as from several other insurers. The issue this case presented for review was whether North River’s coverage under these policies was “triggered” (a matter of Pennsylvania law) was being litigated, along with its claims against other insurers, in federal and state courts in Pennsylvania, the Delaware Superior Court and in certain later-filed cases in West Virginia. North River requested that the Delaware Court of Chancery permanently enjoin MSA from prosecuting the later-filed claims in West Virginia and from assigning to any tort claimants the right to recover under any insurance policy issued by North River to MSA. During the course of this appeal, North River narrowed its focus to the assignment issue. Finding no reversible error in the Court of Chancery's denial, the Delaware Supreme Court affirmed that decision. View "The North River Insurance Co. v. Mine Safety Appliances Co." on Justia Law