Smith, III v. CSAA General Insurance Company ( 2022 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
GEORGE SMITH, III, )
)
Plaintiff, )
)
v. )
) C.A. No. N22C-05-089 CLS
CSAA GENERAL INSURANCE )
COMPANY. )
)
Defendants. )
)
)
Date Submitted: July 29, 2022
Date Decided: October 6, 2022
Upon Defendant’s Motion to Dismiss Plaintiff’s Complaint. GRANTED.
ORDER
Vincent J.X. Hedrick, II, Esquire, Bove & Hedrick, Attorneys at Law, Wilmington,
Delaware, 19899, Attorney for Plaintiff, George Smith, III.
Katherine J. Sullivan, Esquire, WILKS LAW, LLC, Wilmington, Delaware,
19805, Attorney for Defendant, CSAA General Insurance Company.
SCOTT, J.
INTRODUCTION
Before the Court is Defendant CSAA General Insurance Company’s
(“CSAA”) Motion to Dismiss (“Motion”) Plaintiff George Smith, III’s (“Mr.
Smith”) Complaint. The Court has reviewed the Motion and Mr. Smith’s opposition.
For the reasons below, Defendants’ Motion to Dismiss is GRANTED.
ALLEGED FACTS
The cause of action arises out of a dog bite at the home of Joseph Dimino
(“Mr. Dimino”). On October 1, 2021, Mr. Smith filed a complaint naming Mr.
Dimino. In this complaint, Mr. Smith alleged he was an invitee of Mr. Dimino when
Mr. Dimino’s Pit Bull viciously attacked him, requiring Mr. Smith to seek medical
attention the day after the bite. Mr. Smith alleged the Pit Bull had previously
attacked and/or bitten other individuals and Mr. Dimino was aware his Pit Bull’s
propensity.
On May 12, 2022, Mr. Smith filed this cause of action as a Complaint for
Declaratory Judgment against CSAA as the insurer of Mr. Dimino. Mr. Smith
claims CSAA has failed to honor its obligations under Mr. Dimino’s policy and thus,
he asked the Court to enter an Order to declare CSAA is responsible for damages
caused by the dog bite.
On June 27, 2022, CSAA filed this Motion, which argues Mr. Smith cannot
maintain a direct action against CSAA because he is not insured by CSAA. CSAA
subsequently argued even if Mr. Smith could maintain an action against CSAA,
CSAA does not have an obligation to defend or indemnify Mr. Dimino and Brandy
Edgington based on the policy’s “Dog with Prior Bite History” exclusion.
On July 29, 2022, Mr. Smith responded in opposition to the Motion. He
argued CSAA’s Motion should be denied because the Complaint for Declaratory
Judgment sets forth Mr. Smith was an invitee of the insured and that the insured dog
bit Mr. Smith on insureds’ property. Therefore, Mr. Smith argues he stated a
judiciable claim under the policy. Additionally, Mr. Smith contends the language
contained in the complaint against Mr. Dimino cannot be used as allegations in this
Complaint for Declaratory Judgment, i.g. even though Mr. Smith stated Mr.
Dimino’s Pit Bull had prior biting incidents and Mr. Dimino knew about them,
because those statements were contained in a different, but related complaint, they
cannot be used as evidence toward the Pit Bull’s prior bite history.
STANDARD OF REVIEW
The test for sufficiency of a complaint challenged by a Rule 12(b)(6) motion
to dismiss is whether a plaintiff may recover under any reasonably conceivable set
of circumstances susceptible of proof under the complaint.1 In making its
1
Spence v. Funk, 396 A.2d 967, 968 (1978); see Cambium Ltd. v. Trilantic Capital
Partners III L.P., 2012 WL 172844, at *1 (Del. Jan. 20, 2012)(citing Cent. Mortg.
Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 537 (Del. 2011)).
determination, the Court must accept all well-pleaded allegations in the complaint
as true and draw all reasonable factual inferences in favor of the non-moving party.2
The complaint must be without merit as a matter of fact or law to be dismissed.3
Therefore, if the plaintiff can recover under any conceivable set of circumstances
susceptible of proof under the complaint, the motion to dismiss will not be granted.4
In most cases, when the Superior Court considers a 12(b)(6) motion, it limits
analysis to the “universe of facts” within the complaint and any attached documents.5
This rule protects parties from the harm that may be caused by a lack of notice.6 The
court, however, may consider documents outside the pleadings when “the document
2
Ramunno v. Cawley, 705 A.2d 1029, 1034-36 (Del. 1998); Nix v. Sawyer, 466 A.2d
407, 410 (Del. Super. Ct.1983).
3
Diamond State Tel. Co. v. University of Delaware, 269 A.2d 52 (Del. 1970).
4
Ramunno, 705 A.2d at 1034; see Cambium, 2012 WL 172844, at *1 (citing Cent.
Mortg., 27 A.3d at 537)).
5
In re General Motors (Hughes) S'holder Litig., 897 A.2d 162, 168 (Del. 2006)
(citing Malpiede v. Townson, 780 A.2d 1075, 1082 (Del. 2001), In re Santa Fe
Pac. Corp. S'holder Litig., 669 A.2d 59, 69 (Del. 1995),
6
In re Gardner Denver, Inc., 2014 WL 715705, at *2 (Del. Ch. Feb. 21, 2014)
(citing In re Morton's Rest. Grp., Inc. S'holders Litig., 74 A.3d 656, 658 n.3 (Del.
Ch. 2013) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.
2002)), and State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 523 (Del. Ch.
2005)); 5C Fed. Prac. & Proc. Civ. § 1366 (3d ed.) (In the federal context:
“Generally, the harm to the plaintiff when a court considers material extraneous to
a complaint on a Rule 12(b)(6) motion is the lack of notice that the material may
be considered. Accordingly, when the plaintiff has actual notice of all the
information in the movant's papers and has relied upon these documents in framing
the complaint, the necessity of converting a Rule 12(b)(6) motion into one under
Rule 56 is largely dissipated.”).
is integral to a plaintiff's claim and incorporated into the complaint,” or “when the
document is not being relied upon to prove the truth of its contents.” 7 Additionally,
“[t]he trial court may also take judicial notice of matters that are not subject to
reasonable dispute.”8
DISCUSSION
In support of CSAA’s argument that Delaware does not permit direct actions
against insurers in situations such as this, CSAA offers the case of Kaufmann v.
McKeown.9 While Kaufmann dealt primarily with the application of the Dead Man's
Act, the Court addressed whether an injured party could maintain a direct action
against an insurer for the negligent acts of its insured. The Court stated: “A liability
insurer may well be the real party in interest, but this is not a State where a direct
action is permitted against it. Plaintiff is obliged to bring his suit against the
tortfeasor or in the event of her demise, her estate.”10
7
Vanderbilt Income & Growth Assoc., L.L.C. v. Arvida/JMB Managers, Inc., 691
A.2d 609, 613 (Del. 1996) (citing In re Santa Fe, 669 A.2d at 69–70).
8
In re General Motors, 897 A.2d at 169 (citing D.R.E. 201(b)); see In re Gardner
Denver, Inc., 2014 WL 715705, at *2 (Noting that this Court has recognized three
occasions where a court may consider documents extraneous to a complaint: “(i)
when the document is integral to a plaintiff's claim and incorporated into the
complaint; (ii) when the document is not being relied upon to prove the truth of its
contents; and (iii) when the document, or a portion thereof, is an adjudicative fact
subject to judicial notice.”
9
Del.Supr., 193 A.2d 81 (1963).
10
Id. at 83.
In Delmar News, Inc. v. Jacobs Oil Co.,11 the Court followed the authority of
Kaufmann to conclude that an injured party may not bring a direct action against an
insurer based upon the negligence of the insured.12 The Delmar Court subsequently
recognized an exception to the general rule which restricted injured parties from
bringing direct actions against an insurer. That exception is: a third-party may
recover on a contract made for his benefit.13 Therefore, if a party is not a named
insured, he may still recover under the policy as a third-party beneficiary.14
Additionally, if the injured party is neither a named insured nor a third-party
beneficiary, the injured party may still recover if there has been an assignment or
there has been a judgment against the insured, such that the party has become a
judgment creditor.15
Under general contract principles, for Mr. Smith to be a third-party
beneficiary, the parties to the contract, Mr. Dimino and CSAA, must have intended
to confer a benefit.16 “[W]here it is the intention of the promisee to secure
performance of the promised act for the benefit of another, either as a gift or in
11
584 A.2d 531, 533-34 (Del.Super.Ct.1990).
12
Id.13
Delmar News, Inc., 584 A.2d at 534. See also Eric Mills Holmes, 22 Holmes'
Appleman on Insurance 2d § 142.1 (2003).
14
O/E Systems, Inc. v. InaCom Corp., 179 F.Supp.2d 363, 367 (D.Del.2002).
15
Id.16
Delmar News, Inc., 584 A.2d at 534.
satisfaction of an obligation to that person, and the promisee makes a valid contract
to do so, then such third person has an enforceable right under that contract....” 17
The issue of whether an injured party is a third-party beneficiary to a liability
insurance policy is essentially a question of interpretation. The court must look to
the language of the policy to determine the parties' intent. “A third-party beneficiary
cannot sue, unless the contracting parties confer upon him the right to sue.” 18 This
is not to say that the third-party beneficiary has to be specified in the contract. “It is
not essential to the creation of a right in an intended beneficiary that he be identified
when a contract containing the promise is made.”19 This is just one factor that may
have a bearing on whether the parties intended to confer a right on the injured party.20
In this regard, if a liability insurance policy explicitly states that injured parties
could bring direct suit against the insurer before judgment had been obtained against
the tortfeasor, such an action would be permitted. To the contrary, if a policy
prohibits direct action to be brought against the insurer by injured parties, the intent
17
Guardian Constr. Co. v. Tetra Tech Richardson, Inc., 583 A.2d 1378, 1387
(Del.Super.Ct.1990).
18
Wilmington Housing Authority v. Fidelity & Deposit Co. of Maryland, 47 A.2d
524, 528 (Del.1946). See Crow v. Erectors, Inc., 1988 WL 7617, at *2
(Del.Super.Ct.) (concluding that the intent to benefit a third-party is dependent
upon the language of the contract).
19
Restatement (Second) of Contracts § 308 (1981).
20
See id.
would be clear on the face of the policy. In that case a direct action would not be
allowed.21
Page 75 of CSAA's insurance policy with Mr. Dimino states:
E. Suit Against Us
1. No Action can be brought against us unless there has been full compliance
with all of the terms under this Section II.
2. No one will have the right to join us as a party to any action against an
“insured”.
3. Also, no action with respect to Coverage E can be brought against us until
the obligation of such “insured” has been determined by final judgment or
agreement signed by us.
Coverage E contains a specific provision pertaining to dog bites.22 The
language of the policy prohibits a direct action to be brought against CSAA by
injured parties. With this language present in the policy, injured parties are merely
incidental beneficiaries and have no right under the policy to sue the CSAA until a
21
See, e.g., O/E Systems, Inc., 179 F.Supp.2d at 367 (finding Plaintiff could not
make a direct claim against the insurer because the policy prohibited any third-
party benefit).
22
11. “Vicious Dogs” and “Dogs with Prior Bite History”
“Bodily injury” or “property damage” caused by a “vicious dog” or “dog with prior
bite history”. This exclusion applies regardless of the cause of the loss, whether
other causes of the loss acted concurrently or in any sequence with the excluded
event to produce the loss, and regardless whether the claim against any “insured”
arises out of;
a. The ownership, custody or care of the dog by any “insured”, or by any
other person.
b. Negligent supervision by any “insured” of any person or animal;
c. Premises liability for allowing a dog on any premises; or
d. Any liability statutorily imposed on any “insured”.
judgment has been obtained against the insured or an agreement has been made as
to settle the claims. Subsequently, there are no facts alleged that indicate if there has
been an assignment or there has been a judgment against the insured, such that Mr.
Smith has become a judgment creditor. Therefore, Mr. Smith does not fall into either
exception to the general rule that an as an injured party, he does not have a direct
action against CSAA.
Based on the alleged facts of the Complaint for Declaratory Judgment, and
the language of the insurance policy23, Mr. Smith cannot recover under any
conceivable set of circumstances susceptible of proof under the Complaint, as he
does not have a direct action against CSAA.
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is GRANTED.
/s/ Calvin L. Scott
Judge Calvin L. Scott, Jr.
23
which this Court may look at without the Motion being converted into a Motion
for Summary Judgment.