IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
CITY OF WILMINGTON, )
)
Appellant, )
)
v. ) C.A. No. N15C-11-152 ALR
)
NATIONWIDE INSURANCE )
COMPANY, )
)
Appellee. )
CITY OF WILMINGTON, )
)
Appellant, )
)
v. ) C.A. No. N15C-09-244 EMD
)
VICTORIA INSURANCE )
COMPANY, )
)
Appellee. )
MEMORANDUM OPINION
Date Submitted: April 20, 2016
Date Decided: May 25, 2016
Upon Appellees’ Consolidated Motion to Dismiss – GRANTED
Christofer C. Johnson, Esq., Assistant City Solicitor, City of Wilmington Law
Department, Wilmington, Delaware, Attorney for Appellants City of Wilmington
Kiadii S. Harmon, Esq., Law Office of Cynthia G. Beam, Newark, Delaware,
Attorney for Appellee Nationwide Insurance Company
Carol J. Antoff, Esq., Law Office of Cynthia G. Beam, Newark, Delaware,
Attorney for Appellee Victoria Insurance Company
ROCANELLI, J.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Victoria Action
In February 2012, a City of Wilmington (―Wilmington‖) police officer
struck a parked vehicle with two occupants when the officer attempted to avoid
hitting an animal in the road. One or more of the occupants was insured by
Victoria Insurance Company (―Victoria‖). As a result of the accident, Victoria
paid $30,000.00 in the form of personal injury protection (―PIP‖) benefits.
Subsequently, Victoria filed a petition with the Delaware Insurance Commissioner
(―Commissioner‖) to recover the amounts paid out by Victoria, i.e. seeking
subrogation. An arbitration proceeding between Wilmington and Victoria was
scheduled for August 28, 2015 before the Department of Insurance Arbitration
Award Panel (―Arbitration Panel‖). Wilmington did not attend the arbitration and
the Arbitration Panel found in favor of Victoria, awarding Victoria $30,000.00 in
subrogation.1 On September 28, 2015, Wilmington commenced an action in the
Superior Court against Victoria (―Victoria Action‖) demanding a trial de novo
from the Arbitration Panel award in favor of Victoria.
B. The Nationwide Action
In May 2012, a collision occurred between a Wilmington police officer and
a civilian vehicle with two occupants. One or more of the occupants was insured
1
As noted below, Wilmington’s failure to participate does not change the Court’s analysis.
2
by Nationwide Insurance Company (―Nationwide‖). As a result of the accident,
Nationwide paid $30,000.00 in PIP benefits. Nationwide filed a petition with the
Commissioner to recover the amounts paid out by Nationwide, i.e. seeking
subrogation. On October 19, 2015, Wilmington and Nationwide participated in
arbitration before the Arbitration Panel, which apportioned liability at fifty percent
(50%) to each party and, therefore, awarded Nationwide $15,000.00 in
subrogation. On November 18, 2015, Wilmington commenced an action in the
Superior Court against Nationwide (―Nationwide Action‖) demanding a trial de
novo from the Arbitration Panel award.
C. Consolidation of the Victoria Action and the Nationwide Action
On February 26, 2016, Nationwide filed a motion to dismiss the Nationwide
Action, arguing that the Court lacks subject matter jurisdiction over the
Nationwide Action under Superior Court Civil Rule of Procedure 12(b)(1) and 21
Del. C. § 2118(g)(3). On March 2, 2016, Victoria filed a motion to dismiss the
Victoria Action, presenting a nearly identical argument – that the Superior Court
lacks subject matter jurisdiction to hear the Victoria Action.
On March 30, 2016, Wilmington filed a motion to consolidate the
Nationwide Action and the Victoria Action for the limited purpose of considering
the pending motions to dismiss. Because the motions present common questions
of law, in the interest of judicial economy and to avoid any unnecessary costs or
3
delay in the actions,2 this Court consolidated the Nationwide Action and the
Victoria Action by Order dated April 20, 2016, for the limited purpose of
considering the nearly identical motions to dismiss. The consolidated motion to
dismiss is the matter presently before this Court.
STANDARD OF REVIEW
Pursuant to Superior Court Rule of Procedure 12(b)(1), this Court must
dismiss an action for lack of subject matter jurisdiction if ―it appears from the
record that the Court does not have jurisdiction over the claim.‖ 3 Unlike a motion
to dismiss under Rule 12(b)(6), a motion to dismiss for lack of subject matter
jurisdiction pursuant to Rule 12(b)(1) is more demanding on the non-moving
party.4 Indeed, the burden to establish that the Court has jurisdiction rests with
Wilmington as the appellant.5
2
See Super. Ct. Civ. R. 42(a) (―When actions involving a common question of law or fact are
pending before the court, in the same county or different counties, the court may order a joint
hearing or trial of any or all the matters in issue in the actions; it may order all the actions
consolidated; and it may make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay.‖).
3
Airbase Carpet Mart, Inc. v. AYA Assocs., Inc., 2015 WL 9302894, at *2 (Del. Super. Dec. 15,
2015).
4
Id. (citing Appriva S’holder Litig. Co., LLC v. EV3, Inc., 937 A.2d 1275, 1284 n.14 (Del.
2007)).
5
See Appriva S’holder Litig. Co., 937 A.2d at 1284 n.14 (internal citations omitted) (―Unlike the
standards employed in Rule 12(b)(6) analysis, the guidelines for the Court’s review of [a] Rule
12(b)(1) motion are far more demanding of the non-movant. The burden is on the [p]laintiffs to
prove jurisdiction exists. Further, the Court need not accept [the p]laintiffs factual allegations as
true and is free to consider facts not alleged in the complaint.‖); see also Pitts v. City of
Wilmington, 2009 WL 1204492, at *5 (Del. Ch. Apr. 27, 2009) (noting that a plaintiff has the
burden to establish subject matter jurisdiction); Ruggiero v. FuturaGene, plc., 948 A.2d 1124,
1131 (Del. Ch. 2008) (same).
4
DISCUSSION
A. The Regulatory Scheme
Automobile insurance coverage is highly regulated by statute. Resolution of
insurance disputes is also addressed by statute, which makes a limited distinction
between insurers, such as Victoria and Nationwide, and entities that are self-
insured, such as Wilmington. Subrogation is addressed in 21 Del. C. § 2118(g)(3)
(―Subrogation Statute‖), which provides two procedural routes for arbitration
depending on whether a dispute is between insurers or between an insurer and a
self-insured entity.6 When the dispute is between insurers, the dispute is arbitrated
by the Wilmington Auto Accident Reparation Arbitration Committee or its
successors.7 When a self-insured entity is involved, the dispute is resolved in the
manner set forth for disputes involving insured persons – arbitration before the
Commissioner.8 Regardless of the procedural route for arbitration, this is a
mandatory arbitration scheme.
On the other hand, whereas arbitration is mandatory for subrogation disputes
between insurers and disputes between an insurer and a self-insured entity,9
arbitration is merely optional for insured persons pursuant to 21 Del. C. §
6
See 21 Del. C. § 2118(g)(3).
7
Id.
8
Id.; see also 21 Del. C. § 2118(j).
9
21 Del. C. § 2118(g)(3)(emphasis added) (―Disputes among insurers as to liability or amounts
paid . . . shall be arbitrated by the Wilmington Auto Accident Reparation Arbitration Committee
or its successors. Any disputes arising between an insurer or insurers and a self-insurer or self-
insurers shall be submitted to arbitration . . . .‖).
5
2118(j)(5) (―Optional Arbitration Statute‖).10 Further, while the Subrogation
Statute does not provide appellate rights from mandatory arbitration proceedings,
the Optional Arbitration Statute explicitly provides insured persons with a right to
appeal de novo to the Superior Court after participating in an optional arbitration
proceeding.11 Accordingly, the Optional Arbitration Statute does not divest
insured persons the opportunity for dispute resolution with a court of law.
B. The Decisional Law
This Court finds that the Superior Court’s rulings in 21st Century Assurance
Co. v. Liberty Mutual Insurance Co.12 and New Hampshire Insurance Co. v. State
Farm Insurance Co.13 are dispositive. Wilmington is treated as an insurer and not
as an insured person under the regulatory scheme. Accordingly, these cases are
dispositive despite the distinction between an insurer and a self-insured entity.
In 21st Century Assurance Co., Liberty Mutual Insurance Co. (―Liberty
Mutual‖) filed a motion for summary judgment in a subrogation action commenced
by 21st Century Assurance Co. (―21st Century‖).14 Liberty Mutual argued that the
matter was previously adjudicated in arbitration pursuant to the Subrogation
Statute, that 21st Century had no right to appeal the arbitrator’s decision and,
10
21 Del. C. § 2118(j)(5) (―The right to require such arbitration shall be purely optional . . . .‖).
11
Id. (― . . . and the losing party shall have a right to appeal de novo to the Superior Court . . . .‖).
12
2015 WL 1405925 (Del. Super. Mar. 23, 2015).
13
643 A.2d 328, 329 (Del. Super. 1993).
14
21st Century Assurance Co., 2015 WL 1405925, at *1.
6
therefore, the Superior Court lacked subject matter jurisdiction over 21st Century’s
appeal.15
The Court granted Liberty Mutual’s motion for summary judgment, finding
that it lacked subject matter jurisdiction over the appeal.16 The Court noted that,
because the dispute arose between two insurers, the dispute was subject to the
mandatory arbitration provision of the Subrogation Statute.17 The Court reasoned
that it did not have jurisdiction over 21st Century’s appeal because the Court was
not given any statutory authority to hear the appeal.18 Further, the Court
determined that 21st Century could not avail itself of the appeal provision of the
Optional Arbitration Statute because the dispute between 21st Century and Liberty
Mutual was not eligible to be arbitrated under the Optional Arbitration Statute.19
Similarly, in New Hampshire Insurance Co. v. State Farm Insurance Co.,
the Superior Court determined that the insurers were subject to the mandatory
arbitration provision of the Subrogation Statute.20 The Court noted that the
Subrogation Statute is silent as to the right of appeal and, therefore, ―this silence is
fatal to any claim that an appeal lies with the Superior Court.‖ 21 Accordingly, the
Court held that it lacked subject matter jurisdiction to hear an appeal from
15
Id.
16
Id. at *3.
17
Id. at *2.
18
Id.
19
Id.
20
643 A.2d at 329.
21
Id.
7
mandatory arbitration between insurers where there was no specific statutory
authority granting the Superior Court such jurisdiction.22
C. The Parties’ Contentions
Wilmington argues that this Court has jurisdiction over its appeal from the
Arbitration Panel, pursuant to the explicit right of appeal in the Optional
Arbitration Statute. In contrast, Nationwide and Victoria argue that Wilmington’s
reliance on the Optional Arbitration Statute is misplaced. Nationwide and Victoria
contend that Wilmington cannot rely on the benefit of the appeal provision in the
Optional Arbitration Statute when each of their respective arbitration proceedings
was mandatory pursuant to the Subrogation Statute, which does not provide for a
right of appeal.
Further, Wilmington argues that this Court should distinguish the rulings in
21st Century Assurance Co. and New Hampshire Insurance Co. because those
lawsuits involved disputes between insurers and the pending matter before the
Court involves disputes between an insurer and a self-insured entity. Wilmington
is incorrect because it is treated as an insurer for the purposes of mandatory
arbitration under the Subrogation Statute, and not as an insured person under the
Optional Arbitration Statute.
22
Id.
8
D. The Superior Court does not have subject matter jurisdiction over the
Nationwide Action or the Victoria Action.____________________________
All parties concede that Wilmington is a self-insured entity and that
Nationwide and Victoria are insurers. Accordingly, because this dispute is
between Wilmington—a self-insured entity—and Nationwide and Victoria—
insurers—arbitration was mandated for any subrogation dispute under the
Subrogation Statute.23 The Subrogation Statutes provides that any dispute between
an insurer and a self-insured entity ―shall be submitted to arbitration.‖24 Although
the Subrogation Statute notes that this mandatory arbitration must be ―conducted
by the Commissioner in the same manner as the arbitration of claims provided for
in [the Optional Arbitration Statute,]‖25 the Court finds that this relates to the
manner in which the arbitration proceeding itself must be conducted, but does not
extend the right of appeal explicitly provided in the Optional Arbitration Statute.
Therefore, the Subrogation Statute provides that a dispute between an insurer and a
self-insured entity shall proceed in accordance with the Optional Arbitration
Statute with respect to the requirement that the arbitration be administered by the
Commissioner.
23
See 21 Del. C. § 2118(g)(3) (emphasis added) (―Any disputes arising between an insurer or
insurers and a self-insurer or self-insurers shall be submitted to arbitration which shall be
conducted by the Commissioner in the same manner as the arbitration of claims provided for in
subsection (j) of this section.‖).
24
Id. (emphasis added).
25
Id.
9
Unlike the Subrogation Statute, which provides that arbitration is mandatory
for disputes between a self-insured entity and an insurer,26 the Optional Arbitration
Statute provides parties with an optional right to request arbitration.27 However,
for a self-insured entity such as Wilmington, the Optional Arbitration Provision
does not serve as a procedural alternative to the mandatory arbitration process
required in the Subrogation Statute. Moreover, there is no right of appeal in the
Subrogation Statute for mandatory arbitration regardless of before whom the
mandatory arbitration takes place.
Regardless of whether the dispute is between insurers or between an insurer
and a self-insured entity, the Subrogation Statute does not provide for the right of
appeal to the Superior Court from the mandatory subrogation arbitration
proceeding regardless of whether the dispute is between insurers or between an
insurer and an entity that is self-insured. Accordingly, while the arbitration
proceeding for subrogation is procedurally different depending on whether the
dispute is between insurers or between an insurer and a self-insured entity, self-
insured entities are not provided any additional rights as compared to insurers.
Rather, by agreeing to provide insurance in the State of Delaware, self-insured
entities are subject to the same regulatory scheme as insurers.
26
21 Del. C. § 2118(g)(3).
27
21 Del. C. § 2118(j)(5).
10
Accordingly, this Court lacks subject matter jurisdiction over Wilmington’s
appeals in both the Nationwide Action and the Victoria Action.28
CONCLUSION
This Court does not have jurisdiction over appeals between parties that were
required to participate in mandatory arbitration under the Subrogation Statute.
Accordingly, the Nationwide Action and the Victoria Action must be dismissed.
NOW, THEREFORE, this 25th day of May, 2016, the motions to
dismiss filed by Appellees Nationwide Insurance Company and Victoria
Insurance Company are hereby GRANTED. These cases are hereby
DISMISSED, each party to bear its own costs.
IT IS SO ORDERED.
Andrea L. Rocanelli
____________________________________
The Honorable Andrea L. Rocanelli
28
This Court finds that it is insignificant that City did not appear for arbitration with Victoria.
See 21st Century Assurance Co., 2015 WL 1405925, at *2 (―Whether the matter was arbitrated
on the merits or not . . . is of no significance. The matter was required to go before an arbitration
forum from which there is no appeal.‖).
11