Opinion
C.A. No. 05C-09-028-FSS.
Submitted: April 3, 2007.
Decided: July 31, 2007.
Upon Defendant's Motion in Limine — DENIED.
Gary S. Nitsche, Esquire, Weik, Nitsche, Dougherty Componovo, Wilmington, DE.
Kelly A. Costello, Esquire, Law Offices of Cynthia Beam, Newark, DE.
Dear Counsel:
This determines whether Delaware or Maryland law applies in an underinsured motorist case. Plaintiffs, Maryland residents, were hit by another Maryland resident, in Delaware. Delaware law does not reduce the underinsured motorist policy limit by the amount already paid by tortfeasor. Maryland law does. Plaintiffs claim Delaware applies.
I.
The facts are not disputed. On July 9, 2005, Tony Bryant, a Maryland resident, rear-ended Plaintiffs, also Maryland residents, in Delaware. Bryant's automobile insurance paid his policy limit, $50,000, to Plaintiffs. At the time of the accident, Plaintiffs had automobile insurance through Defendant, and the policy included underinsured motorist coverage with a $100,000 policy limit. Plaintiffs purchased the policy in Maryland and registered their vehicles in Maryland.On September 2, 2005, Plaintiffs sued Defendant in Delaware, claiming their underinsured motorist benefits. Then, on May 2, 2006, a Rule 16 arbitration was held, and on May 11, 2006, Plaintiffs were awarded $105,000 in "new" money. Defendant offered to pay $50,000, which was the $100,000 policy limit minus the $50,000 paid by Bryant. Plaintiffs rejected the offer, arguing that under Delaware law, they are entitled to the full $100,000 policy limit. Therefore, on May 20, 2006, Defendant demanded a trial de novo. On March 2, 2007, Defendant filed a motion in limine for a choice of law determination, whether Delaware or Maryland law applies. And, on March 5, 2007, Plaintiffs filed a cross motion.
II.
As mentioned above, under Delaware law, the offset from the tortfeasor is against damages and not against policy limits. Thus, Plaintiffs could recover the $100,000 policy limit. Under Maryland law, however, Plaintiffs must offset the policy limit by what they received from the tortfeasor. That means Plaintiffs receive $50,000, the policy limit minus the amount recovered from Bryant.
Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10, 13 (Del. 1995) (citing 18 Del. C. § 3902(b)).
West American Ins. Co. v. Popa, 670 A.2d 1021, 1027-1028 (Md. Ct. Spec. App. 1996) (citing Md. C. art. 48A, § 541).
Plaintiffs argue that Delaware law applies because "[t]he place of the accident is the most important factor" and one Plaintiff received treatment in Delaware. Also, because Delaware's rules of the road apply, it is reasonable to expect Delaware law to apply with respect to compensation for an automobile accident.
The parties agree, Delaware determines choice of law questions by applying the "most significant relationship" test. Delaware applies the law of the "state which `has the most significant relationship to the occurrence and the parties. . . .'" Defendant argues that Maryland law applies since the relevant contacts are with Maryland, and the only contact with Delaware is the accident's location. Further, Defendant argues that two policy provisions are conclusive: the provision expressly allowing Defendant to offset against the policy limit and the provision stating that the policy was formed under Maryland law.
Travelers Indem. Co. v. Lake, 594 A.2d 38, 47 (Del. 1991) (quoting Restatement (Second) of Torts §§ 145-146 (1971)).
Id.
III.
Here, it is readily apparent that Maryland has the most significant relationship to this claim. The parties are from Maryland; the vehicles are registered in Maryland; the contract was purchased and written in Maryland; the policy's underinsured motoris t cover age pro visio n expre ssly states the policy is covered under Maryland law; and, the benefits will be paid in Maryland. The only contacts with Delaware are the accident occurred here and Plaintiff, Carol Tiller, received some treatment in Delaware. Moreover, there is no compelling Delaware public policy implicated, as Delaware is unconcerned with how Maryland residents are paid by Maryland insurance companies under policies purchased in Maryland.
The reverse situation occurred in Travelers Indemnification Company v. Lake, an uninsured motorist coverage case, which applied Delaware law. The court evaluated the contacts: the insured was a Delaware resident, the uninsured motorist policy provision stated it was controlled by Delaware law, but the accident occurred in Quebec. Travelers reasoned that Delaware law applied because Delaware's law regarding uninsured motorist benefits protects Delaware residents, and all relevant contacts were with Delaware. This case is almost Travelers's opposite, and it leads to the opposite conclusion. Maryland law should apply when all relevant contacts are in Maryland and no Delaware public policy is implicated.
Id.
Further, the court observes that applying Maryland's law is consistent with Plaintiffs' expectations. Plaintiffs' policy expressly calls for the offset against its limit: "[t]he limits of this coverage or damages payable, whichever are less, will be reduced by any amounts paid or payable: a) to the insured by or for any liable parties." And, as already mentioned, the policy states that it "provides Basic Personal Injury Protection in accordance with Section 19.505 of the Insurance Article of the Annotated Code of Maryland."
Finally, in concluding that Maryland's insurance law applies in this instance, the court appreciates Plaintiffs' argument that the policy includes language stating that legal actions for underinsured motorist coverage under the policy "must be filed, within three years, or if greater, the time limit allowed by law. . . of the state in which the accident occurred. . . ." That provision, however, only covers the time for filing claims. It does not provide that the law of the state where the accident occurred controls all legal issues presented, including set-offs. As explained above, the choice of laws question presented here is controlled by the most significant relationship test. And as to that, the most significant contacts in this case clearly are with Maryland.
IV.
For the foregoing reasons, Plaintiffs' Motion for Choice of Law Determination is DENIED . Maryland law applies to Plaintiffs' underinsured motorist benefits.
IT IS SO ORDERED.