McDonald v. GEICO ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
KEVIN MCDONALD and :
HILLARY MCDONALD, his wife : CIVIL ACTION
:
:
Plaintiffs, :
: C.A. No.: N22C-02-204 FJJ
v. :
:
GOVERNMENT EMPLOYEES :
INSURANCE COMPANY (GEICO) :
:
:
Defendant. :
Submitted: October 27, 2023
Decided: November 3, 2023
OPINION AND ORDER
On the Parties’ Cross Motions for Summary Judgment
Plaintiffs’ Motion GRANTED; Defendants’ Motion DENIED
Bernard A. Van Ogtrop, Esquire, and Jared Green, Esquire, Wilmington,
Delaware, Attorneys for Plaintiffs
Robert J. Cahall, Esquire, Newark, Delaware, Attorney for Defendant
Jones, J.
This case involves a claim for Uninsured/Underinsured Motorist benefits
(“UM/UIM”) under a policy issued to the Plaintiffs, Kevin and Hillary McDonald
(“Plaintiffs”), by Government Employees Insurance Company (“GEICO”).
The present issue before the Court is the parties’ Cross Motions for Summary
Judgment on whether the Plaintiffs may reform the policy to increase the UM/UIM
coverage to match the liability coverage. The question is whether GEICO
communicated to Plaintiffs a meaningful offer of UM/UIM coverage up to the limits
of their liability policy.
For the reasons stated below, this Court finds that GEICO did not make a
meaningful offer of UM/UIM coverage to the Plaintiffs and that the Plaintiffs are
entitled to have the policy reformed. GEICO’s Motion for Summary Judgment is
DENIED. Plaintiffs’ Cross Motion for Summary Judgment is GRANTED as to the
reformation issue.
STANDARD OF REVIEW
Summary judgment is appropriate when the record “shows there is no genuine
issue as to any material fact and the moving party is entitled to judgment as a matter
of law.”1 The moving party bears the burden of establishing the nonexistence of
material issues of fact.2 The burden then shifts to the nonmoving party to establish
1
Del. Super. Ct. Civ. R. 56(c).
2
See Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).
1
the existence of material issues of fact.3 In considering the motion, the Court must
view the evidence in a light most favorable to the nonmoving party and accept the
nonmovant’s version of any disputed facts.4
These well-established standards and rules for summary judgment apply in
full when the parties have filed cross-motions for summary judgment.5 Cross-
motions for summary judgement “are not per se” concessions that no material factual
disputes exists.6 But where cross-motions for summary judgment are filed, and
neither party argues the existence of a genuine issue of material fact, “the Court shall
deem the motions to be the equivalent of a stipulation for decision on the merits
based on the record submitted with them.”7 So, the questions before this Court are
questions of law not fact, and the parties, by filing cross motions for summary
judgment, have in effect stipulated that the issues raised by the motions are ripe for
a decision on the merits.8
FACTS
The parties have filed a stipulated set of facts which reveal the following:
3
See Id. at 681.
4
See Merrill v. Crothall-American, Inc., 606 A.2d 96, 99-100 (Del. 1992) (internal citations omitted).
5
Spivey v. USAA Casualty Ins. Co., 2017 WL 3500402, at *4 (Del. Super. Aug 15, 2017).
6
Unites Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997).
7
Del. Super. Ct. Civ. R. 56(h).
8
Id.2
Plaintiffs have been insured by GEICO since November 22, 2013. In
November 2013, Plaintiffs elected liability coverage in the amount of
$100,000/$300,000 and UM/UIM coverage in the amount of $25,000/$50,000.
After the initial sign up with GEICO, all of Plaintiffs’ interactions with
GEICO, with respect to any material changes in the policy, were conducted online.
On December 31, 2020, a 2021 Mazda CX-5 was added to the policy. This
addition of the Mazda constituted the last material change to the policy prior to the
motor vehicle accident of November 30, 2021 that is at issue in this case.
On or about January 1, 2021, Kevin McDonald received email notification
that his updated auto paperwork was being made available to him through his online
GEICO account, containing a link which, when selected, would allow the
policyholder to review the corresponding insurance policy documents at the online
GEICO account. Once this link was utilized, Mr. McDonald was able to access and
review a document9 that was 25 pages in length. The first 6 pages of the document
contained a letter and the relevant insurance cards. Pages 7 through 9 contained the
Declaration sheet. Page 12 and 13 contained the following document10:
9
See Kevin McDonald, et. al. v. GEICO, Exhibit H (Jan. 1, 2021).
10
See Kevin McDonald, et. al. v. GEICO, Exhibit H, at 12-13 (Jan. 1, 2021).
3
4
Page 16 contained the following document11:
11
See Kevin McDonald, et. al. v. GEICO, Exhibit H, at 16 (Jan 1, 2021).
6
The remaining pages contained additional material that is not relevant to the
instant motion.
18 Del. C. §3902(b) and the “Meaningful Offer” Standard
18 Del.C. §3902(b) provides in part:
Every insurer shall offer to the insured the option
to purchase additional coverage for personal
injury or death up to a limit of $100,000 per
person and $300,000 per accident or $300,000
single limit, but not to exceed the limits for
bodily injury liability set forth in the basic policy.
Such additional insurance shall include
underinsured bodily injury liability coverage.12
Where the insured has liability limits above the minimum required under
Delaware law, an insurer has an affirmative duty to offer UM/UIM coverage in the
same amount as the liability coverage.13 When an insured makes a material change
to the policy, §3902(b) requires the insurer to make another offer of additional
coverage beyond what the insured had already purchased.14 Changing or adding
vehicles to a policy is considered a material change.15
If the offer language is challenged, the insurer bears the burden of
demonstrating compliance with §3902(b).16 To carry this burden, the insurer must
demonstrate that the offer included: (1) the cost of the additional coverage; (2) a
12
18 Del. C. §3902(b).
13
Shukitt v. USAA, 2003 WL 22048222 (Del. Super. 2003).
14
State Farm Mut. Auto. Ins. Co. v. Arms, 477 A.2d 1060, 1065 (Del. 1984); Mason v. USAA, 697 A.2d 388, 394
(Del. 1997); Vera v. Progressive Northern Insurance Company, 286 A.3d 967, 986-987 (Del. Super. 2022).
15
Shukitt, 2003 WL 22048222; Patilla v. Aetna Life & Casualty Co., 1993 WL 189473 (Del. Super. 1993).
16
Shukitt, 2003 WL 22048222, at *3.
7
communication to the insured which clearly offers UM/UIM coverage; and (3) an
offer for UM/UIM is made in the same manner and with the same emphasis as the
insurer’s other coverage.17 If the insurer cannot meet this burden, then Delaware
courts treat the offer as a continuing offer for additional coverage, which the insured
may accept, even after the insured’s accident.18 It is presumed that the policyholder
would accept the coverage.19 Thus, if no meaningful offer has been made, the Court
must reform the policy to increase the policyholder’s UM/UIM coverage to match
the liability coverage limits.20
Several cases have addressed what constitutes a meaningful offer. The
leading case is Mason v. USAA.21 In Mason, the Supreme Court held that USAA
failed to satisfy its burden of proving that it made a meaningful offer for additional
UM/UIM coverage.22 USAA sent a 50-page insurance renewal packet to the insured
every six months.23 The Supreme Court found that USAA’s offers were ambiguous
because of the location of the offers in the packet, as well as, the offer’s lack of
emphasis.24 Of relevance to the instant case, the Supreme Court in Mason wrote:
“The relevant language was not in a separate section nor
highlighted in any manner, but loosely spread throughout
eight pages of text. Most importantly, the text (did) not
17
Shukitt, 2003 WL 22048222; Hudson v. Colonial Penn Ins. Co., 1993 WL 331168, at *7
18
Id.19
Id.20
Id.21
Mason v. United Service Auto. Ass’n., 697 A.2d 388 (Del. 1997).
22
Id. at 394.
23
Id. at 390.
24
Id. at 394.
8
clearly state that an offer of additional insurance (was)
being made. Rather the materials merely obliquely
indicated that additional coverage was available.”25
Knapp v. USAA26 and Shukitt v. USAA27 followed Mason. Both Knapp and
Shukitt turned on the lack of a clear offer. In Shukitt, Judge Slights recognized that,
while the language was not buried in the paperwork as it was in Mason, the language
failed to contain a clear offer of additional coverage.28 Judge Slights wrote:
“…[m]ost importantly, the text [did] not clearly state that
an offer of additional insurance [was] being made.” The
court considered these deficiencies in the context of the
doctrine of contra proferendum: “[if] an insurance
contract is ambiguous (as here) it must be construed
against the insurance carrier that drafted it.”29
In contrast to the trio of the USAA cases cited above are the decisions in
Brintzenhoff v. Hartford Underwrites Ins. Co.30 and Spivey v USAA31. In
Brintzenhoff, the Court found that the carrier had met its burden because the
language sent to the policyholder stated in bold print that Hartford recommended
that its policyholder include UM/UIM coverage in his policy at limits equal to his
liability limits.32 Similarly, in Spivey, the Court found that the carrier had met its
25
Id.26
Knapp v. United Service Auto. Ass’n., 1997 WL 719340 (Del. Super. 1997).
27
Shukitt, 2003 WL 22048222.
28
Id. at *4.
29
Id.
30
2004 WL 2191184 (Del. Super. 2004).
31
2017 WL 3500402 (Del. Super. 2017).
32
Brintzenhoff, 2004 WL 2191184, at *3.
9
burden because in the “UM coverage selection options section” it said “we offer the
following limits for UM.”33
Having the benefit of this guidance, I now turn to the materials involved in
the instant case.
There is no question that GEICO advised the Plaintiffs of the cost of the
additional UM/UIM coverage. The question is whether the materials in the
December 31, 2021 email made it clear that an offer was being made. There is
simply no language in the GEICO documents, as in Brintzenhoff or Spivey, that says
an offer was being made. There is no “recommendation,” nor is there language that
it is an “offer.” The language used by GEICO is more akin to the language in Mason,
Knapp, and Shukitt. GEICO’s language is merely a succinct recitation of the
requirements of §3902(b), with no clear recitation that an offer of additional
coverage was being made. In short, a clear offer is lacking.
Given the lack of a clear offer being made, this Court must conclude that
GEICO did not comply with the requirements of §3902(b). As such, Plaintiffs are
entitled to reform their UM/UIM coverage to $100,000/$300,000, which would be
applicable to the accident in question.
33
Spivey, 2017 WL 3500402, at *7.
10
IT IS SO ORDERED.
/s/ Francis J. Jones, Jr.
Francis J. Jones, Jr., Judge
cc: Counsel via File & ServeXpress
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