IN THE SUPREME COURT OF THE STATE OF DELAWARE
CITY OF WILMINGTON, §
§ No. 318, 2016
Appellant Below, §
Appellant, §
§ Court Below:
v. §
§ Superior Court of the
NATIONWIDE INSURANCE § State of Delaware
COMPANY, §
§ C.A. No. N15C-11-152
Appellee Below, §
Appellee, §
§
________________________________________________________________
CITY OF WILMINGTON, §
§
Appellant Below, §
Appellant, § Court Below:
§
v. § Superior Court of the
§ State of Delaware
VICTORIA INSURANCE COMPANY, §
§ C.A. No. N15C-09-244
Appellee Below, §
Appellee. §
Submitted: December 7, 2016
Decided: January 4, 2017
Before STRINE, Chief Justice; HOLLAND and VALIHURA, Justices.
Upon appeal from the Superior Court. REVERSED.
Christofer C. Johnson, Esquire, City of Wilmington Law Department, Wilmington,
Delaware for Appellant City of Wilmington.
Kiadii S. Harmon, Esquire, Law Office of Cynthia G. Beam, Newark, Delaware, for
Appellee Nationwide Insurance Company.
Carol J. Antoff, Esquire, Law Office of Cynthia G. Beam, Newark, Delaware, for
Appellee Victoria Insurance Company.
Lynn A. Kelly, Esquire, and Roopa Sabesan, Esquire, Department of Justice,
Wilmington, Delaware, for Amicus Curiae State of Delaware Insurance Coverage Office.
Daryl A. Parson, Esquire, and Wilson B. Davis, Esquire, New Castle County Office of
Law, for Amicus Curiae New Castle County.
VALIHURA, Justice:
This appeal presents a question of first impression before this Court—whether,
under Delaware’s motor vehicle insurance statute governing subrogation disputes among
insurers and self-insurers, the losing party may appeal de novo to the Superior Court from
an adverse arbitration award. In considering consolidated motions to dismiss two such
appeals filed by the City of Wilmington (“the City”) against insurers Nationwide
Insurance Company (“Nationwide”) and Victoria Insurance Company (“Victoria”), the
Superior Court determined that 21 Del. C. § 2118(g)(3), which mandates arbitration for
subrogation disputes arising between insurers and self-insurers, did not provide a right to
appeal.1 Because the statute unambiguously provides for appeals from mandatory
arbitration of subrogation disputes between insurers and self-insurers, we REVERSE.
I. BACKGROUND
This dispute concerns subrogation claims Victoria and Nationwide asserted
against the City. Victoria and Nationwide separately sought recovery from the City for
$30,000 in personal injury protection benefits each insurer paid following unrelated 2012
motor vehicle accidents involving City police officers. On August 28, 2015, a
Department of Insurance Arbitration Award Panel awarded Victoria $30,000 in
subrogation. On September 28, 2015, the City filed a de novo appeal in the Superior
Court from the panel’s subrogation award. On October 19, 2015, a second panel awarded
Nationwide $15,000 after finding the two parties involved in the collision equally at fault.
On November 18, 2015, the City filed a de novo appeal in the Superior Court from the
second panel’s subrogation award.
1
City of Wilm. v. Nationwide Ins. Co., 2016 WL 3129421, at *4 (Del. Super. May 25, 2016).
1
Nationwide and Victoria filed motions to dismiss the City’s appeals on February
26, 2016 and March 2, 2016, respectively. They both argued that the Superior Court
lacked subject matter jurisdiction over the City’s appeals. On April 20, 2016, the
Superior Court consolidated the Nationwide and Victoria actions for the purpose of
deciding the motions to dismiss.
On May 25, 2016, the Superior Court granted the motions to dismiss for lack of
subject matter jurisdiction.2 The Superior Court concluded that Delaware’s automobile
insurance statute provided for two arbitration procedures—mandatory and optional.3
Because disputes between insurers and self-insurers fall under the mandatory provision
set forth in subsection 2118(g)(3), the Superior Court concluded that self-insurers are
required to submit to mandatory arbitration. It suggested that the arbitration procedure
set forth in subsection 2118(j)(5) is reserved for “insured persons” only.4 The Superior
Court viewed as dispositive cases in which that court had held that it lacked jurisdiction
over appeals from mandatory arbitration involving two insurers.5 It reasoned that the
City “is treated as an insurer for the purposes of mandatory arbitration under [subsection
2118(g)(3)], and not as an insured person under [subsection 2118(j)(5)].”6 The court also
determined that language in subsection 2118(g)(3) directing that arbitration of disputes
2
Id.
3
Id. at *2 (citing 21 Del. C. § 2118(g)(3); 21 Del. C. § 2118(j)(5)).
4
Id. (citing 21 Del. C. § 2118(j)(5)).
5
Id. at *3 (citing 21st Century Assurance Co. v. Liberty Mut. Ins. Co., 2015 WL 1405925 (Del.
Super. Mar. 23, 2015); New Hampshire Ins. Co. v. State Farm Ins. Co. (New Hampshire I), 643
A.2d 328 (Del. Super. 1993)).
6
Id.
2
between insurers and self-insurers proceed “in the same manner” as arbitration under
subsection 2118(j) relates “to the manner in which the arbitration proceeding itself must
be conducted, but does not extend the right of appeal explicitly provided in [subsection
2118(j)(5)].”7 Accordingly, the Superior Court dismissed both appeals.
On appeal, the City argues that subsection 2118(g)(3) unambiguously provides
that disputes between insurers and self-insurers, though mandatory, proceed pursuant to
subsection 2118(j), which provides the right of appeal de novo to the Superior Court in
subsection 2118(j)(5). The City contends that legislative history and long-standing
administrative and judicial recognition of the right to appeal support this conclusion.8
Victoria agrees that section 2118 is unambiguous, but argues that the City has no
right to appeal because, in its view, section 2118 is silent as to whether an insurer or self-
insurer may appeal.9 According to Victoria, subsection 2118(j)(5) only confers a right to
appeal on individuals who assert claims against insurers or self-insurers pursuant to
subsection (j). Victoria contends that subsection 2118(g)(3)’s provision that arbitration
between insurers and self-insurers proceeds “in the same manner as the arbitration of
claims provided for in subsection (j)” operates only with respect to subsections (j)(1)-(4),
to the exclusion of subsections (j)(5)-(9). Finally, Victoria asserts that permitting self-
7
Id. at *4.
8
The City relies upon State Insurance Coverage Office v. Christenson, 2014 WL 3045215, at *1
(Del. Super. June 11, 2014); New Hampshire I, 643 A.2d at 329; and New Hampshire Insurance
Co. v. State Farm Insurance Co. (New Hampshire II), 1994 WL 125038, at *4 (Del. Ch. Mar. 31,
1994)). The State of Delaware Insurance Coverage Office and New Castle County filed a joint
brief as amici curiae in support of the City’s position.
9
Nationwide joined with and adopted Victoria’s Answering Brief to this Court.
3
insurers to appeal would increase litigation costs for insurers and result in disparate
treatment of insurers and self-insurers under the statute.
II. ANALYSIS
As to the question of whether the Superior Court has jurisdiction over appeals
arising from the arbitration of disputes between insurers and self-insurers, “[t]he Superior
Court’s authority to entertain appeals from administrative agencies must be statutorily
conferred.”10 Thus, the language of section 2118 controls whether the Superior Court
may exercise jurisdiction over the City’s appeals from arbitration proceedings brought
under that section.
“This Court reviews a trial court’s grant of a motion to dismiss de novo.”11
Questions of law, including the interpretation of statutes, are also reviewed de novo.12
Subsection 2118(g) sets forth procedures for resolving motor vehicle insurance
subrogation disputes among insurers and self-insurers:
(g) Insurers providing benefits described in paragraphs (a)(1)--(4) of this
section shall be subrogated to the rights, including claims under any
workers’ compensation law, of the person for whom benefits are provided,
to the extent of the benefits so provided.
[. . .]
(3) Disputes among insurers as to liability or amounts paid pursuant
to paragraphs (a)(1)--(4) of this section shall be arbitrated by the
10
State Dep’t. of Corr. v. Worsham, 638 A.2d 1104, 1108 (Del. 1994) (citing Sinha v. Bd. of Trs.
of Del. Technical & Cmty. Coll., 585 A.2d 1310, 1313 (Del. Super. 1990)).
11
RBC Capital Mkts., LLC v. Educ. Loan Trust IV, 87 A.3d 632, 639 (Del. 2014) (citing Cent.
Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings LLC, 27 A.3d 531, 535 (Del. 2011)).
12
Ovens v. Danberg, 2016 WL 6092473, at *2 (Del. Oct. 19, 2016) (citing Rapposelli v. State
Farm Mut. Auto. Ins. Co., 988 A.2d 425, 427 (Del. 2010)).
4
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 which
shall be conducted by the Commissioner in the same manner as the
arbitration of claims provided for in subsection (j) of this section.
[. . .]
(6) Unless specifically excepted by this subsection, this subsection
shall also apply to self-insurers.13
Subsection 2118(g)(3) establishes two procedures for insurance subrogation
disputes. First, “disputes among insurers” are subject to mandatory arbitration
proceedings before Arbitration Forums Inc. (the “Insurers Clause”).14 Second, disputes
arising between an insurer and a self-insurer are also subject to mandatory arbitration, but
such proceedings must “be conducted by the Commissioner in the same manner as the
arbitration of claims provided for in subsection (j) of [section 2118]” (the “Self-Insurers
Clause”).15
The Self-Insurers Clause refers to subsection 2118(j), which provides:
(j) Every insurance policy issued under this section shall require the insurer
to submit to arbitration, in the manner set forth hereinafter, any claims for
losses or damages within the coverages required under paragraph (a)(2) of
this section and for damages to a motor vehicle, including the insured
motor vehicle, including loss of use of such vehicle, upon request of the
party claiming to have suffered a loss or damages within the above-
described coverages of paragraph (a)(2) of this section or to such a motor
vehicle. Such request shall be in writing and mailed to the Insurance
Commissioner.
13
21 Del. C. § 2118(g) (emphasis added).
14
Id. § 2118(g)(3); see State Farm Mut. Auto. Ins. Co. v. UPS, 2012 WL 1495338, at *2 (Del.
Super. Apr. 30, 2012) (explaining that Arbitration Forums Inc. “is the successor to Wilmington
Auto Accident Reparation Arbitration Committee”).
15
21 Del. C. § 2118(g)(3) (emphasis added).
5
(1) All arbitration shall be administered by the Insurance
Commissioner or the Insurance Commissioner’s nominee.
(2) The Insurance Commissioner or the Insurance Commissioner’s
nominee shall establish a panel of arbitrators consisting of attorneys
authorized to practice law in the State and insurance adjusters
licensed to act as such in the State.
(3) The Insurance Commissioner, or the Insurance Commissioner’s
nominee, shall select 3 individuals from the panel of arbitrators, at
least 1 of whom shall be an attorney authorized to practice law in the
State, to hear each request for arbitration.
(4) The Insurance Commissioner, or the Insurance Commissioner’s
nominee, shall promulgate all rules and regulations necessary to
implement this arbitration program.
(5) The right to require such arbitration shall be purely optional and
neither party shall be held to have waived any of its rights by any act
relating to arbitration and the losing party shall have a right to
appeal de novo to the Superior Court if notice of such appeal is filed
with that Court in the manner set forth by its rules within 30 days of
the date of the decision being rendered.
(6) The Insurance Commissioner shall establish a schedule of costs
of arbitration; provided, however, the arbitrator’s fee shall not
exceed $25 per arbitrator for any 1 arbitration.
(7) The cost of arbitration shall be payable to the State Department
of Insurance, and shall be maintained in a special fund identified as
the “Arbitration Fund” which shall be administered by the Insurance
Commissioner. These funds under no circumstances shall revert to
the General Fund. All costs of arbitration including administrative
expenses of the Insurance Department and the arbitrator’s fee shall
be payable from this Fund.
(8) The applicant may be reimbursed the cost of filing arbitration as
a part of the award rendered by the arbitration panel. If an insurer
should pay an applicant damages in advance of a hearing, they shall
include with those damages the cost to the applicant of filing the
arbitration.
6
(9) This subsection shall also apply to self-insurers.16
“When construing a statute, Delaware courts must first determine whether the
statute is ambiguous.”17 “A statute is ambiguous if it is susceptible of two or more
reasonable interpretations, or if a literal reading of the statutory language ‘would lead to
an unreasonable or absurd result not contemplated by the legislature.’”18 “There is
judicial discretion to construe a statute when its language is obscure and ambiguous, but
when no ambiguity exists, and the intent is clear from the language of the statute, there is
no room for statutory interpretation or construction.”19
Here, the statute is unambiguous and leaves no room for statutory interpretation.
The City is a self-insurer, and Nationwide and Victoria are insurers. The disputes at issue
therefore are subject to mandatory arbitration under the Self-Insurers Clause of
subsection 2118(g)(3). Under the plain language of the Self-Insurers Clause, such
disputes must be arbitrated “in the same manner” as arbitration set forth in subsection
2118(j),20 which in turn refers to arbitration “in the manner set forth hereinafter[.]”21
The most reasonable reading of the “in the same manner” language of subsections
2118(g)(3) and (j) is that it encompasses all subparts of subsection 2118(j), including the
right to appeal set forth in (j)(5). The statute provides no basis for denying a losing party
16
Id. § 2118(j) (emphasis added).
17
Lawson v. State, 91 A.3d 544, 549 (Del. 2014) (citing Sussex Cnty. Dep’t of Elections v.
Sussex Cnty. Republican Comm., 58 A.3d 418, 422 (Del. 2013)).
18
Id. (quoting CML V, LLC v. Bax, 28 A.3d 1037, 1041 (Del. 2011)).
19
Giuricich v. Emtrol Corp., 449 A.2d 232, 238 (Del. 1982) (citation omitted).
20
21 Del. C. § 2118(g)(3).
21
Id. § 2118(j).
7
the right to appeal solely based on one party’s status as a self-insurer. To the contrary,
subsection (j)(9) expressly provides that subsection (j) “shall also apply to self-
insurers.”22
We reject Victoria’s argument that only (j)(1)-(4) are intended to apply to
arbitration required by (g)(3), and that (j)(5)-(9) should be disregarded. First, that result
is not what the General Assembly provided in the text of the statute. Subsection (g)(3)
directs self-insurers and insurers to arbitrate their disputes in the manner provided in
subsection (j)—not, for example, only as provided in (j)(1)-(4). Second, (j)(5) is
embedded in the midst of process-oriented provisions concerning the makeup, function,
and funding of the arbitration panel. This structure suggests that, along with the subparts
before and after it, (j)(5) is included in the “manner” of arbitrations proceeding under
subsection (j). Finally, (j)(6)-(8) concern the mechanics of setting and allocating the
costs of arbitration.23 These provisions are natural corollaries to those in (j)(1)-(4), which
describe the Commissioner’s role, outline the composition of and qualifications for
arbitration panels, and require the Commissioner to promulgate rules implementing the
arbitration program.24 The cost provisions in (j)(6)-(8) are at least as important as the
other provisions in (j) to effectuating the arbitration scheme. Disregarding these
provisions theoretically would leave the Commissioner without compensation for
arbitrating disputes between insurers and self-insurers. The statute provides no basis for
22
Id. § 2118(j)(9).
23
See id. § 2118(j)(5)-(8).
24
See id. § 2118(j)(1)-(4).
8
omitting certain subsections of (j) when determining the manner of arbitration required
by (g)(3).
That the “purely optional” language presented in the first portion of subsection
2118(j)(5) cannot apply to self-insurer/insurer disputes does not indicate that the
legislature intended that the rest of (j)(5) not apply. Subsection 2118(j)(5) has three
provisions: (1) that “[t]he right to require such arbitration shall be purely optional[;]” (2)
that “neither party shall be held to have waived any of its rights by any act relating to
arbitration[;]” and (3) that “the losing party shall have a right to appeal de novo to the
Superior Court[.]”25 Because the statute cannot reasonably be read to provide for
arbitration that is both mandatory under subsection 2118(g)(3) and optional under
subsection 2118(j)(5), the “purely optional” language in the latter provision must refer
solely to an individual’s “right to require such arbitration” pursuant to subsection 2118(j),
and not to arbitration brought under the Self-Insurers Clause of subsection 2118(g)(3).26
Although the provisions in subsection 2118(j)(5) are connected by the word “and,” each
part has its own subject and predicate such that the second and third parts do not require
the “right to require such arbitration” language to make sense. As such, the second and
third parts do not rely on the right set forth at the beginning of (j)(5) and can apply to
self-insurers even if the first provision of (j)(5) does not.
The procedures and case law governing insurer-insurer disputes are not applicable
25
Id. § 2118(j)(5) (italics added).
26
See UPS, 2012 WL 1495338, at *2 (stating that Delaware courts have generally determined
that the “optional right” to demand arbitration in subsection 2118(j)(5) “belong[s] to the
claimant”).
9
here. The Superior Court concluded that the City “is treated as an insurer for the
purposes of mandatory arbitration” and that, “by agreeing to provide insurance in the
State of Delaware, self-insured entities are subject to the same regulatory scheme as
insurers.”27 These conclusions are inconsistent with the structure of the statute.
Subsection 2118(g)(3) contains two sentences—the Insurers Clause and the Self-Insurers
Clause—which require arbitration of subrogation disputes via separate procedures
depending on the identity of the parties. That subsection 2118(g)(3) is organized by party
rather than by a common procedure emphasizes the distinct treatment of insurers and
self-insurers under that provision. Accordingly, although Delaware courts have
recognized that there is no right to appeal from arbitration of disputes between insurers,28
importing this limitation to disputes governed by the Self-Insurers Clause is not
supported by the text of the statute.
For the reasons set forth above, we conclude that the plain language of section
2118 permits a losing party to appeal following mandatory arbitration between insurers
and self-insurers pursuant to subsections 2118(g)(3) and (j)(5). Accordingly, we
REVERSE the Superior Court’s dismissal of the City’s appeals.
27
Nationwide, 2016 WL 3129421, at *3, *4.
28
See, e.g., 21st Century, 2015 WL 1405925, at *2; New Hampshire I, 643 A.2d at 329-30.
10