Opinion
C.A. No. 06C-01-099 JRS
Date Submitted: July 26, 2007.
Date Decided: September 21, 2007.
Kenneth M. Roseman, Esquire Cicconte, Roseman Wasserman, DE.
Stephen P. Casarino, Esquire Casarino, Christman Shalk, DE.
Upon Consideration of Defendant USAA General Indemnity Company's Motion for Summary Judgment. DENIED.
Dear Counsel:
As you know, this case involves a claim for uninsured motorist benefits. Defendant, USAA General Indemnity Company ("USAA"), has moved for summary judgment on the ground that Plaintiff, Jack Whitaker ("Plaintiff"), cannot seek uninsured motorist coverage from USAA for injuries sustained in a motor vehicle accident on August 3, 2004, because the alleged tortfeasor, Jigish Thakore ("Thakore"), was insured at the time of the accident. Specifically, USAA alleges that Plaintiff's only impediment to obtaining Thakore's coverage is New Jersey's statutory "verbal threshold" which limits tort recoveries against New Jersey-insured drivers under certain circumstances. USAA contends that Thakore cannot be considered an uninsured motorist as a matter of law under 18 Del. C. § 3902(a)(3)(b) ("Section 3902(a)(3)(b)") because he maintained a valid policy of liability insurance at the time of the accident. After careful consideration of the record, oral arguments, and the applicable law, the Court concludes that it must stay these proceedings pending resolution of related, ongoing litigation in New Jersey between plaintiff and Thakore where the issue of plaintiff's entitlement to damages under Thakore's insurance policy will be resolved.
See N.J. STAT. ANN. § 39:6A-8(a). Under this statute, drivers are required to choose between two categories of coverage for personal injuries related to auto accidents. The category relevant to this case is the "verbal threshold" option which limits recovery for non-economic losses. Id. Specifically, under the "verbal threshold," a plaintiff may recover only for: (1) death; (2) dismemberment; (3) significant disfigurement or scarring; (4) displaced fracture; (5) loss of fetus; and (6) "a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement." Id. "[A]n injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment." Id. See also N.J. STAT. ANN. § 17:28-1-4 (stating that non-resident drivers who are insured by insurance companies licensed to operate in New Jersey are subject to the verbal threshold); Whitaker v. DeVilla, 147 N.J. 341, 355 (N.J. 1997) (holding that all out of state drivers in New Jersey are subject to the verbal threshold regardless of whether they elected a policy that is more comparable to the "no threshold" coverage option).
See 18 Del. C. § 3902(a)(3)(b) (defining an uninsured motorist as "one for which the insuring company denies coverage or becomes insolvent[.]").
On August 3, 2004, Plaintiff was involved in a motor vehicle accident with Thakore in East Windsor, New Jersey. At the time of the accident, Thakore was insured by Liberty Mutual Insurance Company ("Liberty Mutual") and Plaintiff was insured by USAA. Plaintiff's insurance policy included uninsured motorist coverage. Liberty Mutual initially accepted liability for the accident on behalf of Thakore and paid for the damages to Plaintiff's vehicle. On December 6, 2005, Liberty Mutual denied Plaintiff's claim for bodily injuries because Plaintiff did not satisfy New Jersey's "verbal threshold."
See Docket Item ("D.I.") 13, Def. Mot. ¶ 1.
Id. ¶ 2-3.
Id. ¶ 2.
D.I. 13, Def. Mot. Ex. A. Liberty Mutual's letter to plaintiff's counsel reads, in pertinent part, as follows:
Dear Mr. Roseman:
This is to confirm our conversation of 12/6/2005 at which time I advised you that per the Deemer statute your client will be bound by the verbal threshold and that he will be unable to press a bodily injury claim against our insured. The nature and extent of [sic] do not fall under the specifically outlined injuries . . . [under] New Jersey state law. Looking at all the information gathered and the definitions of the verbal threshold, we are not allowed by state law to satisfy your client's claim. We are closing our file at this time. [ ]
Sin cerely,
ELIZABETH BASKIND Claims Department
On January 11, 2006, Plaintiff filed his initial Complaint against USAA in Delaware seeking coverage for his personal injuries. Plaintiff alleged that Thakore is an uninsured motorist as defined by Section 3902(a)(3)(b), and that USA A's refusal to pay damages for Plaintiff's injuries constituted a breach of the policy. The matter was placed in the court's mandatory arbitration track. On July 20, 2006, while the arbitrator's decision was pending in Delaware, Plaintiff filed a complaint in the Superior Court of New Jersey against Thakore and others seeking recovery for his personal injuries. The New Jersey case is still pending. On August 28, 2006, the arbitrator in Delaware filed an order in favor of USAA upon concluding that Plaintiff did not provide sufficient proof as to damages or the breach of the uninsured motorist policy. Plaintiff timely filed a Demand for Trial De Novo on August 31, 2006. USAA filed the motion sub judice on May 22, 2007, and this Court took the decision under advisement after oral arguments on July 20, 2007.
D.I. 1, Init. Arb. Compl.
D.I. 6, Arbitrator's Order.
D.I. 7.
USAA has moved for summary judgment pursuant to Superior Court Civil Rule 56 claiming that Thakore cannot be considered an uninsured motorist because coverage would be available but for the fact that Plaintiff allegedly satisfies the New Jersey "verbal threshold" standard due to the nature of his alleged injuries. Plaintiff responded that USAA would only be entitled to summary judgment if Plaintiff obtains a recovery in the New Jersey lawsuit against the tortfeasor. If Plaintiff does not prevail in the New Jersey lawsuit, he argues that summary judgment should be denied because Thakore would then be deemed an uninsured motorist pursuant to Section 3902(a)(3)(b).
D.I.13, Def. Mot. ¶ 12.
D.I. 14, Pl. Resp. Mot.
Id.
At oral argument, USAA proffered an additional argument in support of its motion for summary judgment. According to USAA, Liberty Mutual's letter to Plaintiff informing him that it would not cover his noneconomic damages is not, as a matter of law, a denial of coverage within the meaning of Section 3902(a)(3)(b). The letter did not explicitly state that Liberty Mutual was "denying coverage," and Liberty Mutual did not point to any provision in Thakore's policy as the basis for its decision. In response, Plaintiff argued that Liberty Mutual's letter does constitute a denial of coverage because the effect of the letter was to deny Plaintiff's claim for coverage. In the end, Plaintiff contends that he currently is left without compensation for his personal injuries from Thakore's insurance company and is, therefore, entitled immediately to seek compensation under the uninsured motorist provisions of his own policy with USAA without regard to the outcome of the pending New Jersey litigation. In supplemental briefing to the Court, USAA also maintains that Liberty Mutual has not denied coverage because it subsequently reopened its file by retaining a law firm to defend Thakore in the New Jersey case. Thus, the question presented to the Court is whether, as a matter of law, Liberty Mutual has denied coverage for plaintiff's injuries as contemplated by Section 3902(a)(3)(b) so as to trigger the uninsured motorist coverage under USAA's policy.
Def. Ltr. July 23, 2007.
The Court's principal function when considering a motion for summary judgment is to examine the record to determine whether genuine issues of material fact exist. Summary judgment will be granted only if, after viewing the record in a light most favorable to a non-moving party, no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. If, however, the record reveals that material facts are in dispute, or if the factual record has not been developed thoroughly enough to allow the Court to apply the law to the factual record sub judice, then summary judgment will not be granted.
Oliver B. Cannon Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322, 325 (Del.Super.Ct. 1973). See also SUPER. CT . CIV. R. 56.
Id.
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962). See also Cook v. City of Harrington, 1990 WL 35244, at *3 (citing Ebersole, 180 A.2d at 467) ("Summary judgment will not be granted under any circumstances when the record indicates. . .that it is desirable to inquire more thoroughly into the facts in order to clarify the application of law to the circumstances.").
"Although there is little authority as to what evidence triggers an explicit denial-of-coverage provision, the uninsured motorist carrier will have difficulty rejecting a claim when there has been a written disclaimer by the liability carrier of either a precondition for liability or coverage itself." To the extent the Court determines that Liberty Mutual denied coverage, this determination would implicate the statutory definition of "uninsured vehicle" as it relates to Mr. Thakore. When considering the specific provisions of Delaware's uninsured motorists statute, including the definition of an "uninsured vehicle," the Court must be mindful that "[t]he purpose of [Section 3902] is to protect innocent persons injured by the negligence of tortfeasors who . . . have no means for recompensing the injured parties. Insurance policy provisions designed to reduce or limit the coverage to less than that prescribed by statute are void." "Delaware courts have consistently interpreted Section 3902 as a form of supplemental coverage designed to protect Delaware motorists from an irresponsible driver causing injury or death." Under these standards, at first glance, Liberty Mutual's letter, in which it "disclaime[d] a precondition for liability," would appear to constitute a denial of coverage that would trigger statutorily-required uninsured coverage in Delaware. The involvement of New Jersey's "verbal threshold" standard, however, complicates the analysis.
24 APPLEMAN ON INSURANCE § 147.4(D) (2d ed.1996).
See 18 Del. C. § 3902(a)(3)(b) (defining an uninsured motorist as "one for which the insuring company denies coverage or becomes insolvent[.]").
State Farm Mut. Auto. Ins. Co. v. Abramowicz, 386 A.2d 670, 671-72 (Del. 1978). See also Frank v. Horizon Assurance Co., 553 A.2d 1199, 1201 (Del. 1989) ("The legislative purpose embodied in the requirement that uninsured motorist coverage be available to all members of the public is clear: the protection of innocent persons from the negligence of unknown or impecunious tortfeasors."); Kent v. Nationwide Prop. Cas. Ins. Co., 844 A.2d 1092, 1096 (Del.Super.Ct. 2004) ("The legislative purpose of [18 Del. C. § 3902 is] protecting people injured by tortfeasors carrying little or no insurance.") (citations omitted).
Travelers Indem. Co. v. Lake, 594 A.2d 38, 42 (Del. 1991) (citations omitted).
24 APPLEMAN ON INSURANCE § 147.4(D) (2d ed.1996).
In her letter, Liberty Mutual's adjuster took the position that Plaintiff could not satisfy the statutory "verbal threshold" standards and could not, therefore, recover from Thakore under Liberty Mutual's policy. Yet New Jersey law is clear that neither an insurance company nor its claims adjusters are empowered to determine whether a plaintiff satisfies the "verbal threshold." In Dicks v. New Jersey Auto. Full Underwriting Ass'n, the New Jersey Superior Court held that only an arbitrator or other authorized adjudicator could make the determination of whether an insured satisfies New Jersey's statutory "verbal threshold" standard. Thus, the legal question of whether Plaintiff satisfies the "verbal threshold" can only be answered by a neutral decision maker, not by Liberty Mutual. Accordingly, Liberty Mutual's letter purporting to inform Plaintiff that he could not recover for his personal injuries under Thakore's insurance policy is not dispositive of the question of whether Liberty Mutual has denied coverage.
604 A.2d 239 (N.J.Super.Ct. Law Div. 1992) (citations omitted) (considering whether a trial judge or an arbitrator should make the determination of whether an insured has satisfied the "verbal threshold").
See Dicks, 604 A.2d at 242 ("[T]his court concludes that whether the verbal threshold is met is a question to be decided by the arbitrator and not by a judge.").
Liberty Mutual has taken a position and Plaintiff has taken appropriate steps to challenge that position. If the New Jersey litigation yields a result that allows the Plaintiff to recover from Thakore's policy, Plaintiff's claim for uninsured coverage in Delaware is no longer viable. If, however, the Plaintiff does not prevail in New Jersey, he may then seek to recover uninsured motorist coverage here in Delaware subject to all applicable defenses, including the defenses USAA has raised in the motion sub judice. The outcome of the New Jersey litigation will inform the analysis of those defenses.
If his policy allows it, Plaintiff may be able to pursue an underinsured motorist claim even if he recovers in New Jersey.
Based on the foregoing, Defendant's motion for summary judgment is DENIED without prejudice, and this litigation is STAYED pending resolution of the case presently before the Superior Court of New Jersey.