Dewey Beach Enterprises, Inc. v. Drass Insurance Agency, Inc. ( 2021 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
DEWEY BEACH ENTERPRISES,INC. and )
RUDDERTOWNE HOTEL, LLC, )
)
Plaintiffs, )
)
v. ) C.A. No. N20C-08-018 CEB
)
DRASS INSURANCE AGENCY, INC.; )
MARKEL AMERICAN INSURANCE CO.: )
WILMINGTON INSURANCE CO.; )
CATALYTIC MANAGERS AND INSURANCE )
AGENCY, LLC; UNDERWRITERS AT )
LLOYD’S, LONDON; SAFETYSPECIALTY )
INSURANCE CO.; and GUIDEONE NATIONAL )
INSURANCE CO., )
)
Defendants. )
Submitted: February 5, 2021
Decided: May 13, 2021
On Defendants’ Motion to Dismiss, or in the Alternative,
Motion to Stay Litigation.
DENIED.
MEMORANDUM OPINION
Neil R. Lapinski, Esquire, Phillip A. Giordano, Esquire, GORDON, FOURNARIS
& MAMMARELLA, P.A., Wilmington, Delaware. Attorneys for Plaintiffs Dewey
Beach Enterprises, Inc. and Ruddertowne Hotel, LLC.
Susan List Hauske, Esquire, TYBOUT, REDFEARN & PELL, Wilmington,
Delaware; Kimberly M. Jones, Esquire, Christian M. Gunneson, Esquire, WOOD,
SMITH HENNING & BERMAN, LLP, Tampa, Florida. Attorneys for Defendants
Catalytic Risk Managers and Insurance Agency, LLC, Underwriters at Lloyd’s
London, Safety Specialty Insurance Company and Guideone National Insurance
Company.
BUTLER, R.J.
FACTS AND PROCEDURAL HISTORY
In 2012, Plaintiffs began construction and renovation on a mixed-use property
containing the Ruddertowne Hotel, the adjacent lighthouse, condominiums, and
commercial event space (collectively, the “Project”). Plaintiffs retained Defendants
to provide insurance coverage for the Project.1 The coverage was current through
April 2020. On April 23, 2020, a fire — deemed arson by the Fire Marshall —
consumed the lighthouse, the restaurant and damaged the adjacent decking, railings,
piers, condominiums and commercial space. Plaintiffs have brought this action
against the insurers claiming breach of contract, negligence and requesting
declaratory judgment. Three of the Defendants have moved to dismiss the
Complaint because, they say, they are still “adjusting” the claim. In the alternative,
they seek a stay of the litigation pending the completion of their own investigation.
STANDARD OF REVIEW
On a motion to dismiss pursuant to Superior Court Civil Rule 12(b)(6), the
Court accepts all factual allegations as true in a light most favorable to the plaintiff.2
1
The instant motion is brought by Defendants Underwriters at Lloyd’s, London,
Safety Specialty Insurance Company, and Guideone National Insurance Company.
It appears these defendants were underwriters of policies obtained by Defendant
Drass Insurance Agency.
2
Williams v. Newark Country Club, 2016 WL 6781221, at *1 (Del. Super. Nov. 2,
2016); see Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Hldgs., LLC, 27 A.3d
531, 535 (Del. 2011).
1
If it is possible for the plaintiff to recover under any reasonable set of circumstances
presented from the complaint, the motion must be denied.3
ANALYSIS
Defendants argue that because the Plaintiffs’ insurance claims are still being
adjusted, any litigation is premature and is not ripe for adjudication.
A ripeness determination requires an assessment of whether the interests of
the party seeking immediate relief – in this case the Plaintiffs – outweigh the
concerns of a party “in postponing review until the question arises in some more
concrete and final form.”4 The balancing test to determine ripeness for adjudication
includes:
(1) a practical evaluation of the plaintiff’s legitimate interest in prompt
resolution of the question presented, (2) the hardship that further delay
may threaten, (3) the possibility of future factual development that
might affect the determination made, (4) the need to conserve scarce
judicial resources, and (5) a due respect for identifiable policies of the
law touching upon the subject matter dispute.5
Here, these so-called Schick factors weigh in favor of denying the motion to
dismiss. First, Plaintiffs have a legitimate interest in prompt resolution, as they are
paying the repair and rebuilding costs themselves, defeating the very reasons they
3
Spence v. Funk, 396 A.2d 967, 968 (Del. 1978).
4
Stroud v. Milliken Enter., Inc., 552 A.2d 476, 480 (Del. 1989) (quoting Cont'l Air
Lines, Inc. v. C.A.B., 522 F.2d 107, 124–25 (D.C. Cir. 1974)).
5
Schick v. Amalgamated Clothing & Textiles Workers Union, 533 A.2d 1235, 1239
(Del. Ch. 1987).
2
purchased insurance. Plaintiffs have suffered hardships including loss of income
and lengthened construction schedules that further delay will exacerbate.
When considering the possibility of future factual development that might
affect the determination and a due respect for identifiable policies of the law
touching on the dispute, Defendants rely upon XL Specialty v. WMI Liquidating
Trust.6 In XL Specialty, an excess insurance policy was only triggered when the
plaintiff incurred liability reaching the excess carrier’s attachment level. The Court
dismissed the action because without a determination regarding liability, there was
no reasonable likelihood that the policy would be triggered and a judicial
determination would necessarily be based on speculation and hypothetical facts.
That is not this case. While there may be multiple insurance policies involved,
the Defendants have not identified themselves as excess carriers. Absent such a
claim, XL Specialty is inapposite. There is no risk that the Court will render an
advisory opinion, as the condition for coverage has been triggered and litigation is
unavoidable.7 Since litigation is unavoidable, there is no judicial economy served
by piecemeal litigation.8
6
XL Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208 (Del. 2014).
7
See id. at 1217 (“Generally, a dispute will be deemed ripe if ‘litigation sooner or
later appears to be unavoidable and where the material facts are static.’” (quoting
Julian v. Julian, 2009 WL 2937121, at *3 (Del. Ch. Sept. 9, 2009))).
8
See generally Energy Transfer Equity, L.P. v. Twin City Fire Insur. Co., 2020 WL
5758027, at *7 (Del. Super. Sept. 28, 2020) (finding judicial economy is not
3
The Court cannot sanction further delay when the precipitating factor appears
to be that Defendant insurers are still investigating the claim. Such logic would give
Defendant insurers carte blanche to take forever resolving their own coverage
obligations while the Plaintiff loses the benefits of his bargained-for insurance
coverage.
The Court is currently issuing trial availability dates in 2022 at the earliest.
There is no illusion that these Defendants, or any other party, is being rushed into
the Courthouse. Should Defendants require a protective order from onerous
discovery they are not yet prepared to answer, they may apply to the Court for relief.
A blanket Order that dismisses the litigation or stays it indefinitely while the insurers
investigate their options is not appropriate.
CONCLUSION
Accordingly, Defendant’s motion to dismiss, or in the alternative, to stay
litigation is DENIED.
IT IS SO ORDERED.
Charles E. Butler, Resident Judge
preserved when dismissing an action without prejudice would result in a new
complaint renaming moving insurers).
4