IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JESSICA M. LEE, )
)
Plaintiff, )
)
v. ) C.A. No. N16C-09-061 ALR
)
GEICO CHOICE INSURANCE )
COMPANY, a foreign corporation, )
)
Defendant. )
Submitted: August 23, 2017
Decided: September 7, 2017
MEMORANDUM OPINION
Upon Defendant’s Motion for Summary Judgment
DENIED
Samuel D. Pratcher, III, Esq., Weik Nitsche & Dougherty, Attorney for Jessica M.
Lee
Michael K. DeSantis Esq., Law Office of Dawn L. Becker, Attorney for GEICO
Choice Insurance Company
ROCANELLI, J.
This is an insurance dispute arising out of a motor vehicle accident that took
place on February 23, 2016. Prior to the accident, Plaintiff Jessica Lee (“Plaintiff”)
had an automobile insurance policy with Defendant GEICO Choice Insurance
Company (“GEICO”) that covered her vehicle (“Plaintiff’s Auto Policy”).
Following the accident, Plaintiff settled with the tortfeasor for his policy limits of
$15,000. Plaintiff also submitted a claim to GEICO under Plaintiff’s Auto Policy,
but GEICO informed Plaintiff that Plaintiff’s Auto Policy had been cancelled prior
to the accident for her failure to make premium payments.
At the time of the accident, Plaintiff resided in the same household as her
sister, Amie Lee (“Plaintiff’s Sister”). Plaintiff’s Sister had a separate insurance
policy with GEICO that provided Underinsured Motorist (“UIM”) coverage for
those qualifying as insureds (“Sister’s Policy”). Plaintiff submitted a claim to
GEICO as an insured under her Sister’s Policy for UIM coverage. GEICO denied
Plaintiff’s claim based on an exclusion in the Sister’s Policy that voided coverage
for bodily injury sustained in an accident with a vehicle that is owned by an insured,
but which is uninsured (“owned-but-uninsured exclusion”). That denial led to the
instant lawsuit, in which Plaintiff seeks UIM coverage under her Sister’s Policy.
Procedural Background
GEICO has moved for summary judgment contending that Plaintiff’s vehicle
was uninsured at the time of the accident and, therefore, that the owned-but-
1
uninsured exclusion acts to bar coverage. Plaintiff opposes GEICO’s motion on two
grounds. First, Plaintiff’s Auto Policy with GEICO had not been effectively
cancelled at the time of the accident. Second, even assuming Plaintiff’s Auto Policy
had been cancelled, GEICO failed to meet its burden to show that the owned-but-
uninsured exclusion applies to bar coverage. This is the Court’s decision on
GEICO’s Motion for Summary Judgment.
Standard of Review
The Court may grant summary judgment only where the moving party can
“show that 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.”1 The moving party bears the initial
burden of proof and, once that is met, the burden shifts to the non-moving party to
show that a material issue of fact exists.2 At the motion for summary judgment
phase, the Court must view the facts “in the light most favorable to the non-moving
party.”3
Discussion
I. Plaintiff is an insured under her Sister’s Policy with GEICO.
It is undisputed that Plaintiff is an insured under her Sister’s Policy, which
defines “insured” to include “[r]elatives of [the named insured] if residents of his
1
Super. Ct. Civ. R. 56.
2
Moore v. Sizemore, 405 A.2d 679, 680–81 (Del. 1979).
3
Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).
2
household.”4 Plaintiff and Plaintiff’s Sister are relatives and were residents of the
same household on the date of the accident.5 Therefore, Plaintiff qualifies as an
insured entitled to UIM coverage under her Sister’s Policy.
II. GEICO cannot meet its burden to establish that the owned-but-uninsured
exclusion applies to bar coverage.
Under Delaware law, the insured bears the burden of establishing that a loss
falls under the coverage provisions of an insurance policy.6 Once the insured does
so, the burden shifts to the insurer to establish that a policy exclusion applies to bar
coverage.7 Plaintiff met her burden in this case by establishing that she is an insured
under her Sister’s Policy and thereby entitled to UIM coverage.
GEICO denied UIM coverage for Plaintiff because of the owned-but-
uninsured exclusion in the Sister’s Policy which provides: “Bodily injury sustained
by an injured while occupying, or through being struck by an uninsured motor
vehicle owned by a insured or a relative is not covered.”8 GEICO cannot meet its
burden with respect to this exclusion for two reasons. First, under Delaware law,
UIM coverage is personal to the insured rather than vehicle-related.9 Therefore,
Plaintiff’s UIM coverage does not depend on the coverage status of her vehicle.
4
Defendant’s Mot. Summ. J., Ex. E, 39.
5
Defendant’s Mot. Sum. J., ¶ 5; Plaintiff’s Opp. Br., ¶ 17.
6
Deakyne v. Selective Ins. Co. of America, 728 A.2d 569, 571 (Del. Super. 1997).
7
Id.
8
Defendant’s Mot. Summ. J., Ex. E, 40.
9
See Frank v. Horizon Assur. Co., 553 A.2d 1199, 1203 (Del. 1989).
3
Second, any restrictions on UIM coverage are narrowly construed,10 such that a
policy exclusion affecting UIM coverage must be specifically authorized by statute
and not against public policy.11 GEICO cannot establish that the owned-but-
uninsured exclusion meets this test.
A. UIM coverage is personal to the insured.
The owned-but uninsured exclusion cannot bar UIM coverage for Plaintiff
because UIM coverage is personal to the insured under Delaware law.12 In Frank,
the plaintiff was injured in an accident while driving a vehicle insured with Hartford
Insurance Company, which paid the policy limit to the plaintiff.13 Then the plaintiff
sought to recover UIM coverage under a separate policy with a different insurer that
covered two vehicles she jointly-owned with her husband (“Defendant Insurer”).14
Although the plaintiff qualified as an insured under that policy, the Defendant
Insurer denied coverage based on an exclusion (“other-motor-vehicle exclusion”)
that denied coverage “for a claim arising out of an accident involving a vehicle
owned by the insured, but not listed as a covered vehicle under the policy.”15
10
See id. at 1204; State Farm Mut. Auto Ins. Co. v. Abramowicz, 386 A.2d 670, 673
(Del. 1978).
11
Frank, 553 A.2d at 1204-05.
12
Id. at 1203.
13
Id. at 1200.
14
Id. at 1201.
15
Id.
4
In Frank, the Delaware Supreme Court first considered whether UIM
coverage is personal to the insured or vehicle-related as an issue of first impression.
The Court noted that an “apparent majority” of jurisdictions that had considered the
question determined that UIM coverage is personal to the insured.16 Of these, the
Court cited favorably to Fernandez v. Selected Risks Ins. Co.,17 a New Jersey
Supreme Court case that invalidated an owned-but-uninsured exclusion.18 There,
the New Jersey court held that the insurer could not rely on the exclusion when its
own policy terms provided coverage to all those qualifying as insureds, and that the
attempt to do so went against the public policy of protecting innocent victims
underlying UIM coverage.19 The Court in Frank agreed with the reasoning in
Fernandez and similar cases and concluded that UIM coverage is “personal to the
insured and not vehicle specific.”20
In this case, it is undisputed that Plaintiff qualifies as an insured under her
Sister’s Policy. Therefore, because UIM coverage is personal to the insured and not
related to the coverage status of the vehicle,21 Plaintiff is entitled to UIM coverage
regardless of whether her personal vehicle was insured at the time of the accident.
16
Id. at 1202.
17
412 A.2d 755 (N.J. 1980).
18
Frank, 553 A.2d at 1202.
19
Id. (citing Fernandez, 412 A.2d at 757).
20
Id. at 1203.
21
Id.
5
As a result, GEICO cannot rely on the owned-but-uninsured exclusion in the Sister’s
Policy to restrict Plaintiff’s UIM coverage.
B. Exclusions on UIM coverage must be authorized by statute and not
against public policy.
Exclusions on UIM coverage must be specifically authorized by statute and
not against public policy.22 In Frank, the Court analyzed the other-motor-vehicle
exclusion at issue in light of the statutory framework underlying UIM coverage.23
Section 3902 of the Delaware Insurance Code (“Section 3902”) requires that insurers
provide UIM coverage in all automobile policies unless the insured expressly rejects
that coverage in writing.24 The Court in Frank noted that Section 3902 is silent on
the right of insurers to include exclusions and restrictions on UIM coverage through
policy language, apart from subsection (c), which addresses coverage limitations for
multi-vehicle policies.25 In addition, the Court noted that the legislature did not
include language in the statute authorizing the use of exclusions “customary to the
field” as it did in the no-fault insurance law of the Delaware Motor Vehicle Code.26
As a result, the Court concluded that Section 3902 “bespeaks of legislative policy
22
Id. at 1204-05.
23
Id. at 1203-04.
24
18 Del. C. § 3902(a).
25
Frank, 553 A.2d at 1203.
26
Id. at 1204 (citing 21 Del. C. 2118(e) (providing that insurance coverage falling
under that section “may be subject to conditions and exclusions customary to the
field of liability, casualty and property insurance…”)).
6
that [UIM] coverage shall not be undercut by restrictive policy provisions, unless
such restrictions are specifically authorized by statute.”27 Therefore, because
Section 3902 does not authorize other-motor-vehicle exclusions, the Court held that
such an exclusion could not be used to restrict UIM coverage.28
In the instant case, the exclusion at issue is an owned-but-uninsured exclusion
rather than an other-motor-vehicle exclusion as in Frank. However, that does not
change the outcome. Section 3902 does not specifically authorize an owned-but-
uninsured exclusion just as it does not authorize an other-motor-vehicle exclusion.
Therefore, the owned-but-uninsured exclusion cannot act as a bar to Plaintiff’s UIM
coverage.
In addition, the owned-but-uninsured exclusion is against public policy. After
its discussion of Section 3902, the Court in Frank stated that its primary reason for
invalidating the other-motor-vehicle exclusion was that the exclusion violated public
policy.29 The public policy behind Section 3902’s mandate of UIM coverage is “the
protection of innocent persons from the negligence of unknown or impecunious
tortfeasors.”30 The Court held that once a consumer purchases UIM coverage, an
insurer’s attempt to use “hypertechnical language or an exclusion clause” to restrict
27
Id.
28
Id.
29
Id.
30
Id. at 1201 (citing Abramowicz, 386 A.2d at 673).
7
that coverage is repugnant to the public policy of protecting the class of persons at
issue, innocent victims of negligent motorists.31 As a result, the Court determined
that the other-motor-vehicle exclusion was against the public policy of Section 3902.
GEICO’s attempt to rely on the owned-but-uninsured exclusion in this case
invokes the same public policy concerns at issue in Frank.32 Plaintiff’s Sister
purchased an insurance policy from GEICO that included UIM coverage for those
qualifying as insureds, including Plaintiff. Plaintiff suffered damages in an accident
with an underinsured tortfeasor, and therefore falls squarely into the class of persons
that Section 3902 is meant to protect. As a result, GEICO’s attempt to use the
owned-but-uninsured exclusion to restrict Plaintiff’s UIM coverage goes against the
public policy underlying Section 3902. Therefore, the owned-but-uninsured
exclusion cannot operate as a bar to coverage for Plaintiff.
III. The coverage status of Plaintiff’s vehicle need not be addressed.
The parties dispute whether Plaintiff’s Auto Policy had been effectively
cancelled prior to the date of the accident. Because the Court finds that the owned-
but-uninsured exclusion is not enforceable, the Court need not yet determine whether
31
Id. at 1204-05.
32
The Court reiterates that the Delaware Supreme Court in Frank favorably
discussed Fernandez, in which the New Jersey Supreme Court invalidated an
owned-but-uninsured exclusion after finding that it went against a similar public
policy in favor of protecting against irresponsible motorists.
8
Plaintiff’s Auto Policy with GEICO had been cancelled prior to the date of the
accident.
Conclusion
For the reasons stated, the Court hereby finds that the Plaintiff is an insured
under the Policy and that GEICO cannot meet its burden in relying on the owned-
but-uninsured exclusion because it is inconsistent with the statute requiring UIM
coverage and is against the public policy in favor of protecting innocent victims.
Accordingly, GEICO’s Motion for Summary Judgment is denied.
NOW, THEREFORE, on this 7th day of September 2017, Defendant
GEICO Choice Insurance Company’s Motion for Summary Judgment is
hereby DENIED.
IT IS SO ORDERED.
Andrea L. Rocanelli
____________________________________
The Honorable Andrea L. Rocanelli
9