21st Century Assurance Co. v. Liberty Mutual Insurance Co.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
21ST CENTURY ASSURANCE )
CO., )
)
Plaintiff, )
)
v. ) C.A. No.: N13C-06-212 FWW
)
LIBERTY MUTUAL )
INSURANCE CO., )
)
Defendant. )
Submitted: March 6, 2015
Decided: March 23, 2015
Upon Defendant’s Motion for Summary Judgment
GRANTED.
ORDER
Amanda L. H. Brinton, Esquire, The Law Offices of Amanda L. H. Brinton, 521
North West Street, Wilmington, DE 19801, Attorney for Plaintiff 21st Century
Assurance Company.
David L. Baumberger, Esquire, Law Offices of Chrissinger & Baumberger, 3 Mill
Road, Suite 301, Wilmington, DE 19806, Attorney for Defendant Liberty Mutual
Insurance Co.
WHARTON, J.
This 23rd day of March, 2015, upon consideration of Defendant’s Motion
for Summary Judgment, Plaintiff’s Opposition, oral argument, the audio recording
of the Court’s ruling on Defendant’s previous Motion for Summary Judgment 1 and
the parties supplemental submissions, it appears to the Court that:
1. Plaintiff 21st Century Assurance Co. (“21st Century”) initiated this
action on June 20, 2013 by filing a Complaint, seeking, inter alia,
subrogation against Liberty Mutual Insurance Company (“Liberty
Mutual”).2 The claim arises out of a motor vehicle accident in which
a vehicle insured by 21st Century was involved in an accident with a
vehicle insured by Liberty Mutual.3 As a result of the accident
expenses in the form of personal injury protection (“PIP”) benefits
were paid to or on behalf of the occupant of the vehicle insured by 21st
Century. 4 21st Century is seeking judgment against Liberty Mutual
for those PIP benefits as well as future PIP payments. 5
2. On December 20, 2013, Liberty Mutual moved for summary
judgment on the basis that the matter was adjudicated in arbitration,
1
A now retired judge of this Court heard argument and ruled from the bench on Defendant’s
previous Motion for Summary Judgment.
2
Compl., D.I. 1.
3
Id. at ¶ 4.
4
Id. at ¶ 8.
5
Id.
2
barring 21st Century’s claim by operation of law. 6 Liberty Mutual
argued that 21 Del. C. § 2118(g)(3) requires that disputes among
insurers as to liability or payments are required to be arbitrated and
that arbitrators’ decisions are not appealable. 7 In Liberty Mutual’s
view, it was entitled to summary judgment because the arbitrator
determined that 21st Century did not have a right of PIP subrogation
since 21st Century’s insured vehicle was insured and registered in
New Jersey and PIP subrogation is only applicable to vehicles
registered in Delaware and affording Delaware PIP benefits. 8 21st
Century opposed the motion, arguing that the matter was ejected from
arbitration without a determination on the merits and that it was
entitled to appeal the arbitrator’s decision under 21 Del. C. §
2118(j)(5).9
3. On April 29, 2014 the Court held oral argument on Liberty Mutual’s
motion. At the conclusion of argument, the Court denied the motion
for summary judgment, but directed that 21st Century amend its
complaint to reflect the case as an appeal, holding that an appeal from
the arbitrator’s decision was permissible.10 A form of order was
6
Def.’s Mot. Summ. J., D.I. 5, ¶¶ 8-9.
7
Id.
8
Id. at ¶ 3.
9
Pl.’s Resp. in Opp’n to Def.’s Mot. Summ. J., D.I. 7.
10
There was some confusion at oral argument on the present motion as to whether or not the
judge ruled, in fact, that 21st Century could appeal the arbitrator’s decision. The Court has
3
submitted and signed by another judge because the initial judge had
retired in the interim. 11
4. On September 3, 2014, 21st Century filed an amended complaint
captioned “Amended Complaint/Appeal From Arbitration Forums,
Inc. Decision Dated June 3, 2013.”12 With the exception of the
caption, the new filing was identical to the original Complaint.
Liberty Mutual again moved for summary judgment “pursuant to 21
Del. C. § 2118(g)(3) and Rules 12 and 56 for lack of subject matter
jurisdiction.” 13 21st Century opposed the motion for the same reasons
it opposed Liberty Mutual’s first Motion for Summary Judgment as
well as asserting a common law right of subrogation. 14
5. The Court heard argument on Liberty Mutual’s Motion for Summary
Judgment on January 27, 2015. Because the Court subsequently
determined that the previously assigned judge had ruled that 21st
Century was entitled to an appeal, the Court requested the parties to
submit memoranda on the applicability of any exceptions to the law of
listened to the audio recording of the argument and it is clear that the judge ruled that 21st
Century was entitled to an appeal.
11
D.I. 12.
12
Am. Compl., D.I. 13.
13
Def.’s Mot. Summ. J., D.I. 15.
14
Pl.’s Resp. in Opp’n to Def.’s Mot. Summ. J., D.I. 16.
4
the case doctrine.15 The parties have submitted the requested
memoranda.16
6. Three issues are presented for the Court’s determination: 1) whether
the ruling on Liberty Mutual’s initial motion for summary judgment
was correct; 2) if not, whether an exception to the law of the case
doctrine allows for a different result; and 3) whether a common law
right of subrogation exists so as to allow 21st Century to bring a
complaint for subrogation directly in this Court.
7. Two courts of this state have addressed the issue of whether an insurer
has a right to appeal from an adverse arbitration ruling. In New
Hampshire Ins. Co. v. State Farm Ins. Co.17 New Hampshire
Insurance Company sought to appeal an adverse arbitration ruling to
this Court. 18 The dispute in that case, as in this case, was between
insurance companies, and, hence, subject to the mandatory arbitration
provision of 21 Del. C. § 2118(g)(3). 19 The Court held that the silence
of § 2118 as to the right of an insurer to appeal the decision of an
arbitrator was fatal to the claim that an appeal lies with the Superior
Court.20
15
D.I. 19.
16
D.I. 20-22.
17
643 A.2d 328 (Del. Super. 1993).
18
Id. at 329.
19
Id.20
Id.5
8. In Zurich American Ins. Co. v. St. Paul Surplus Lines, Inc. 21 the Court
of Chancery was called upon to determine whether the court could
review an arbitrator’s dismissal of a PIP insurance case for lack of
jurisdiction based on the internal rules of the arbitration forum and the
governing arbitral agreement.22 The matter was before the Vice-
Chancellor on a petition to correct and confirm the arbitration award,
filed after the arbitrator had dismissed the claim on jurisdictional
grounds despite finding that Zurich’s damages had been proven, and
after Zurich’s subsequent Superior Court action had been dismissed.23
The Court of Chancery reviewed the applicable statutes, including 21
Del. C. § 2118, and determined that the legislature had not provided
for appellate review where the statutorily mandated arbitration was
foreclosed on jurisdictional grounds by the arbitrator’s internal rules.24
9. In State Farm Mut. Auto. Ins. Co. v. United Parcel Service of America,
Inc.25 the Superior Court addressed the issue of whether the Superior
Court had jurisdiction in a PIP insurance subrogation case in light of 21
Del. C. § 2118.26 State Farm had paid PIP benefits to its insureds and
was seeking judgment in Superior Court against United Parcel Service,
21
2009 WL 4895120 (Del. Ch. Dec. 10, 2009).
22
Id. at *1.
23
Id. at *2-3.
24
Id. at *9.
25
2012 WL 1495338 (Del. Super. Jan. 31, 2012).
26
Id. at *1.
6
a self insurer under § 2118, claiming that it was entitled to
subrogation.27 The claim originally was dismissed in arbitration for
lack of jurisdiction.28 State Farm then sued in Superior Court. 29 The
Court recognized that the ability of the arbitrator to decline jurisdiction
seemed at odds with the statute’s mandatory arbitration provision,
nevertheless it held that the Superior Court lacked jurisdiction over the
matter.30
10. The Court must consider two subsections of 21 Del. C. § 2118. Section
2118(g)(3) requires that insurers arbitrate their disputes as to liability
amounts paid. 31 Section 2118(g)(3) does not contain any provision for
appeal. 32 Section 2118(j) requires an insurer to submit to arbitration
upon request of a party 33 claiming to have suffered a loss.34 The right
of the party to request arbitration is optional. 35 Section 2118(j)(5) does
provide for the right of an appeal de novo to the Superior Court. 36 It is
clear to the Court that the mandatory arbitration provision of §
2118(g)(3) required 21st Century and Liberty Mutual to submit this
27
Id.
28
Id.
29
Id.
30
Id. at *3-4.
31
21 Del. C. § 2118(g)(3).
32
Id.
33
In this context, “party” refers to the claimant and not the claimant’s insurer. See, State Farm,
supra, at *2.
34
21 Del. C. § 2118(j).
35
21 Del. C. § 2118(j)(5).
36
Id.
7
matter to arbitration. The parties apparently believed they were
required to submit the matter to arbitration as well, because that is
exactly what they did. After being ejected from arbitration, 21st
Century seeks to appeal to this Court, but, “Without specific statutory
authority to do so, the Superior Court has no jurisdiction to hear an
appeal. (citations omitted.) Thus, § 2118(g)(3) does not grant the
Superior Court jurisdiction to hear an appeal from mandatory
arbitration between insurers.”37 21st Century cannot avail itself of the
appeal provisions of § 2118(j)(5) because the matter was not eligible to
be arbitrated under that section. Whether the matter was arbitrated on
the merits or not (as 21st Century claims) is of no significance. The
matter was required to go before an arbitration forum from which there
is no appeal. Accordingly, the Court finds that it has no jurisdiction to
entertain this case as an appeal.
11. Next, the Court turns to the fact that a judge previously assigned to this
case permitted an appeal under 21 Del. C. § 2118(j)(5) that this Court
has determined to be impermissible. Normally, matters previously
litigated are not subject to re-litigation. However, where the previous
ruling was clearly in error, it makes no sense to defer correction of the
37
New Hampshire Ins. Co., supra, at 329-330.
8
error until appeal. 38 If error can be corrected now, before the case
reaches appeal, it manifestly should be. The Court finds that the
previous ruling permitting an appeal under § 2118(j)(5) was clearly in
error and will not be protected by the law of the case doctrine.
12. Finally, 21st Century argues that it can maintain this claim under a
common law right of subrogation. However, to the extent that common
law subrogation exists, it does not exist with respect to disputes
between insurers. A common law right of subrogation, operating in
parallel with 21 Del. C. § 2118(g)(3), would effectively vitiate the
mandatory arbitration provision of that statute. Further, a system
countenancing both mandatory arbitration and independent common
law subrogation claims is a system ripe for confusion in the event of
differing or inconsistent awards.
13. The authorities cited by 21st Century do not warrant a different result,
inasmuch as none of those cases addressed the issue present here -
whether an insurer has a common law right to bring a subrogation
claim in Superior Court against another insurer. In fact, in Waters v.
United States 39 the Delaware Supreme Court specifically declined to
address that issue, holding that the question of whether Waters could
assert a common law right of subrogation against the United States,
38
Hamilton v. State, 831 A.2d 881 (Del. 2003); Weedon v. State, 750 A.2d 521 (Del. 2000).
39
787 A.2d 71 (Del. 2001).
9
which was treated as a self insurer for purposes of 21 Del. C. § 2118
analysis, was not before it. 40 In Nationwide Mut. Ins. Co. v. Wooters41
the Court held that an insurer could sue an individual tortfeasor directly
where the tortfeasor’s insurer was not subject to Delaware’s no-fault
law because it was not licensed to do business in Delaware and not
statutorily required to submit to arbitration.42 In International
Underwriters, Inc. v. Blue Cross and Blue Shield of Del., Inc. 43 the
issue was whether § 2118 may reasonably be construed as barring a
subrogation claim by a health care carrier against a no-fault carrier for
reimbursement of covered medical expenses of both carriers’ insured
resulting from a motor vehicle accident.44 In construing a different
statute applicable to that case – 21 Del. C. § 2118(f) - the Court held
that Blue Cross was not a no-fault carrier and its subrogation rights
were not governed by § 2118. 45 Similarly, Givens v. Street, 46 the
holding of which was cited with approval and adopted in International
Underwriters,47 held that “The no-fault statute cannot properly be
construed as governing subrogation rights arising under insurance
40
Id. at 73-74.
41
1996 WL 280778 (Del. Super. Jan. 31, 1996), aff’d 682 A.2d 71 (Del. 2001).
42
Id. at *1.
43
449 A.2d 197 (Del. 1982).
44
Id. at 197.
45
Id. at 199.
46
405 A.2d 704 (Del. Super. Jun. 27, 1979).
47
International Underwriters, supra, at 199.
10
contracts not governed by the no-fault statute…”48 Here there is no
dispute that both parties are subject to the no-fault statute. Since all of
the foregoing cases deal with issues different than the one presented
here, none of them controls the outcome in this case.
14. Summary judgment is appropriate where there are no issues of material
fact and the moving party is entitled to judgment as a matter of law. 49
The Court finds that there are no issues of material fact relating to the
question of the Court’s subject matter jurisdiction. The Court further
finds that Liberty Mutual is entitled to judgment as a matter of law.
Specifically, the Court finds that 21st Century has no right of appeal
under 21 Del. C. §2118(j)(5); that the Court’s previous ruling to the
contrary was clearly in error; and that, under these facts, 21st Century
has no right to bring a common law subrogation claim.
Therefore, because this Court lacks subject matter jurisdiction, Defendant’s
Motion for Summary Judgment is hereby GRANTED.
IT IS SO ORDERED.
______________________
/s/ Ferris W. Wharton, J.
48
Givens, supra, at 706.
49
Super. Ct. Civ. R. 56(c).
11