Galarza v. Olmstead

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
NEYDA GARCIA GALARZA, )
Individually and as Guardian Ad Litem for )
KARLA GALARZA and MARIA B. )
CEBRERO-GARCIA, )
)
Plaintiffs, )
v. ) C.A. No. N18C-04-091 CEB
)
LEE DAVID OLMSTEAD, )
MOISES GARCIA-CASTELLANOS and )
NATIONWIDE PROPERTY & )
CASUALTY INSURANCE COMPANY, )
)
Defendants. )
Submitted: January 13, 2020
Decided: April 19, 2020
MEMORANDUM OPINION
Defendant Nationwide Property & Casualty Insurance Company’s
Motion for Summary Judgment.
GRANTED.
Jonathan B. O’Neill, Esquire, KIMMEL, CARTER, ROMAN, PELTZ & O’NEILL,
P.A., Christiana, Delaware. Attorney for Plaintiffs.
Amy M. Taylor, Esquire, HECKLER & FRABIZZIO, Wilmington, Delaware.
Attorney for Defendant Lee David Olmstead.
Moises Garcia-Castellanos, Wyoming, Delaware. Pro Se Defendant.
Donald M. Ransom, Esquire, CASARINO CHRISTMAN SHALK RANSOM &
DOSS, P.A, Wilmington, Delaware. Attorneys for Defendant Nationwide Property
and Casualty Insurance Company.
BUTLER, R.J.
FACTS AND PROCEDURAL HISTORY
This dispute is really about insurance coverage, so let us begin there.
Moises Garcia-Castellanos (“Husband”) and Neyda Garcia Galarzo (“Wife”)
are married with one Child. Husband and Wife had an auto insurance policy with
Nationwide Insurance. Nationwide and Husband came to a parting of the ways,
causing Nationwide, Husband and Wife to write a “named driver exclusion” into the
insurance policy whereby Husband was excluded from coverage under the policy,
thus making wife the only insured driver.1 The policy’s “Authorization to Exclude
a Driver” stated: “the company has agreed to issue or continue coverage . . . provided
that coverage is excluded while: Moises Garcia is operating any of the vehicles to
which the policy applies.”2
Notwithstanding his absence on the auto insurance policy, Husband was
driving the family vehicle with the insured Wife and Child in the car when
Husband’s negligent driving caused an accident in which Wife and the Child were
injured.
1
While no mention of why this exclusion was applied to Husband is made in these
pleadings, such exclusions typically follow a bad driving record of a particular
driver in the household.
2
Compl., Ex. E, D.I. 65853541.
2
The second car was driven by Lee David Olmstead, but save for his
participation in the accident, he is not relevant to this motion. It is conceded for our
purposes that Husband’s negligence was the sole cause of the collision.
Wife and Child have sued Husband, the uninsured driver, for uninsured
motorist coverage under Wife’s policy for the injuries suffered by Wife and Child.
ISSUE PRESENTED
Defendant Nationwide moves for summary judgment, arguing that
Nationwide is not required to provide uninsured motorist benefits for the conduct of
the excluded driver. In response, Wife and Child argue summary judgment is
inappropriate because Nationwide is relying on an exclusion from coverage that is
unenforceable as a matter of Delaware law.
STANDARD OF REVIEW
This Court will grant summary judgment where “there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter
of law.”3 The moving party bears the initial burden of showing that the undisputed
facts make judgment appropriate.4 If the burden is satisfied, the burden shifts to the
non-moving party to demonstrate that there are material issues of fact that must
proceed to trial.5
3
Super. Ct. Civ. R. 56(c).
4
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).
5
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
3
ANALYSIS
In order to get to the heart of the matter, we will assume that the reader is
familiar with the basics of Delaware’s “no fault” auto insurance law, by which all
motorists on Delaware roads are required to carry insurance against liability in the
event they are responsible for injuries to others.6 It is called “no fault” because the
insurance mandated by the statute also covers injuries to the policy holder in the
event the driver himself is negligent.7
This dispute is a layer beyond the ordinary: what happens when a policy
holder is injured by a hit and run driver? Or a driver who is himself uninsured? To
protect policy holders from such a risk, 18 Del. C. § 3902 requires the insurance
company to offer uninsured motorist coverage; that is, the policy purchased by the
insured must offer the option for the policy holder to cover the risk of being injured
by a driver who is not insured. That coverage, however, is not mandatory and the
policy holder may opt out of uninsured motorist coverage, so long as doing so is
clearly indicated in the policy documents.8 On the other hand, when the policy
holder elects uninsured motorist coverage, it is presumed that the purpose of the
coverage is to protect the innocent policy holder from damages caused by unknown
6
21 Del. C. § 2118(a)(1).
7
21 Del. C. § 2118(a)(2).
8
18 Del. C. § 3902.
4
or impecunious negligent tort-feasors and limitations on such protection are
narrowly construed.9
The permissibility and scope of exclusions from coverage under an uninsured
motorist provision have been disputed from time to time. For example, in Frank v.
Horizon Assur. Co. the Delaware Supreme Court held that Horizon could not
exclude the policy holder from relief under her uninsured motorist policy with
Horizon just because she had a similar policy on a different vehicle with a different
insurance company which was in an accident with an uninsured driver. 10 In State
Farm Mut. Auto Ins. Co. v. Abramowicz, the plaintiff sought uninsured motorist
coverage for injuries she sustained when she veered to avoid a driver that fled the
scene. The insurance company attempted to limit uninsured motorist coverage by
pointing to a policy provision that limited uninsured motorist coverage to drivers
that actually struck the insured vehicle. The Supreme Court voided the contractual
provision of the policy, saying it unlawfully limited the scope of the uninsured
motorist coverage required by the statute.11
9
See, e.g., Lomax v. Nationwide Mut. Ins. Co., 964 F.2d 1343, 1346 (3d Cir. 1994);
Miller v. State Farm Auto Ins. Co., 993 A.2d 1049, 1053-54 (Del. 2010); Bryant v.
Progressive Northern Ins. Co., 2008 WL 4140686, at *3 (Del. Super. Jul. 28, 2008),
rearg., denied, 2008 WL 4899419, at *1 (Del. Super. Sept. 16, 2008).
10
553 A.2d 1199, 1200 (Del. 1989).
11
386 A.2d 670, 674 (Del. 1978).
5
18 Del. C. § 3909 authorizes named driver exclusions, which ensure continued
coverage of an automobile where the driving record of a household member warrants
non-issuance or cancellation of a policy.12 Delaware’s driver exclusion statute
allows an insurance carrier to withhold coverage from individuals who pose an
unreasonably high risk of liability to the carrier.13
But even named driver exclusions are read narrowly, as we see in the case of
State Farm Mut. Ins. Co. v. Washington.14 In Washington, the son of Mr.
Washington was excluded by name from his father’s insurance policy. The son was
injured while driving his aunt’s car and the injury was caused by the negligence of
the other driver. He sought coverage as a member of his father’s household. The
Supreme Court repudiated State Farm’s argument that the son could not recover
because he was a named driver excluded from coverage under the policy.
Washington thus had some of the elements before us, but not all of them. Wife
and Child, like Washington, were innocent victims. But unlike Washington, the
named excluded driver was the tort-feasor. Indeed, Husband makes no claim of a
right to insurance coverage in this case.
Adding to the mix, 18 Del. C. § 3909(c) provides that:
12
18 Del. C. § 3909; State Farm Mut. Ins. Co. v. Washington, 641 A.2d 449, 451-
52 (Del. 1994).
13
State Farm Mut. Ins. Co. v. Washington, 1993 WL 1626510, at *6 (Jun. 29, 1993).
14
641 A.2d at 451.
6
With respect to any person excluded from coverage under this section, the
policy may provide that the insurer shall not be liable for damages, losses or
claims arising out of this operation or use of the insured motor vehicle,
whether or not such operation or use was with the express or implied
permission of a person insured under the policy.15
Husband was a “person excluded from coverage under this section.” The
statute permits the insurer to provide that it shall not be liable for “damages, losses
or claims” arising from Husband’s operation of the vehicle.
In the face of this clear language, Wife has argued to the Court that the
provision that the insurer “shall not be liable” refers to Nationwide’s liability policy,
not the uninsured motorist provision. But the statute under consideration is the
uninsured motorist of Title 18, not the liability provisions of Title 21. And the
legislature clearly intended to permit the insurer to exclude all “damages, losses or
claims,” whether they are liability claims or uninsured motorist claims.
Kivlin v. Nationwide Ins. Co. involved a claim against the insurer of a motorist
who was a named excluded driver.16 Kivlin was injured in an accident caused by a
teenage son (and excluded driver) of insured parents. Kivlin named the son’s parents
as defendants by virtue of 21 Del. C. §§ 6105 and 6106, which together impute the
youthful driver’s negligence on the parents. Kivlin also sued Nationwide, arguing
that Nationwide had a duty to insure the parents should they be found liable to
15
18 Del. C. § 3909(c).
16
765 A.2d 536, 538 (Del. 2000).
7
Kivlin. Nationwide resisted, pointing to section 3909(c) and the
“Voiding Endorsement” in its policy that specifically excluded coverage for the
teenage son.
The Supreme Court dispatched Kivlin’s arguments, holding that the plain
meaning of section 3909(c) is that when the named excluded driver is operating the
vehicle, there is, in effect, no coverage.
While public policy is unnecessary to support the plain, clear meaning of the
statute, Kivlin brings the public policy home. In Kivlin, the defendant family’s
personal fortunes were put directly at risk by the son’s negligent driving of the
vehicle as they could not look to their auto insurer to cover the damages from his
negligence. On the other hand, the family was in the best position to keep him from
behind the wheel of the family vehicle and the family was well aware of his
exclusion as a driver. So while the named driver exclusion does limit the availability
of insurance, and limitations are to be narrowly construed, Kivlin and this case
demonstrate that when the exclusion compels the insured to control who is driving
the insured car without a remedy in insurance, we might conclude that the statute
and the policy are in harmony – or at least not so out of harmony as to hurt one’s
ears.
In sum, Wife and Child have not convinced the Court that they are entitled to
uninsured motorist coverage for claims arising out of Husband’s operation of the
8
insured vehicle. As such, defendant Nationwide is entitled to judgment as a matter
of law.
CONCLUSION
The motion of Nationwide Property and Casualty Insurance Company for
summary judgment is GRANTED.
IT IS SO ORDERED.
Charles E. Butler, Resident Judge
9