Case Title: Sammarco v. USAA Casualty Insurance Co.

Citation: 

Docket Number: 489, 2004

State: delaware

Court: Delaware Supreme Court

Date: 2005-06-30T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
ALAN SAMMARCO, 
 
 
§  
 
 
 
 
 
 
§   No. 489, 2004 
 
Plaintiff Below, 
 
 
§  
 
Appellant,  
 
 
§   Court Below – Superior Court 
 
 
 
 
 
 
§   of the State of Delaware, 
 
v. 
 
 
 
 
§   in and for New Castle County 
 
 
 
 
 
 
§   C.A. No. 04C-07-112 
USAA CASUALTY INSURANCE 
§  
COMPANY, 
 
 
 
§  
 
 
 
 
 
 
§  
 
Defendant Below,  
 
§  
 
Appellee. 
 
 
 
§  
 
 
 
 
 
    Submitted:  April 27, 2005 
 
 
 
 
       Decided:  June 30, 2005 
 
Before STEELE, Chief Justice, HOLLAND, BERGER, JACOBS and 
RIDGELY, Justices, constituting the Court en Banc. 
 
 
Upon appeal from the Superior Court.  REVERSED and 
REMANDED. 
 
 
Bernard A. Van Ogtrop, Esquire (argued) and Robert K. Hill, Esquire, 
Seitz, Van Ogtrop & Green, Wilmington, Delaware, for appellant. 
 
Stephen P. Casarino, Esquire (argued), Casarino, Christman & Shalk, 
Wilmington, Delaware for appellee.   
 
 
 
 
HOLLAND, Justice: 
 
 
2
 
This is an appeal from a final judgment entered by the Superior Court.  
The plaintiff-appellant, Alan Sammarco, brought a declaratory judgment 
action against the defendant-appellee, USAA Casualty Insurance Company 
(“USAA”).  Sammarco sought to reform an automobile insurance contract to 
provide uninsured and underinsured motorist coverage (“UM/UIM”) from 
$15,000/$30,000 to $300,000/$500,000.  The Superior Court denied 
Sammarco’s request and granted USAA’s motion for judgment on the 
pleadings.   
Sammarco contends that USAA violated Del. Code Ann. tit. 18, § 
3902(b) by failing to inform him, in a meaningful way, that he had the 
option to purchase additional UM/UIM coverage up to his bodily injury 
liability policy limits.  Del. Code Ann. tit. 18, § 3902(b) reads as follows: 
Every insurer shall offer to the insured the option to purchase 
additional coverage for personal injury or death up to a limit of 
$100,000 per person and $300,000 per accident or $300,000 
single limit, but not to exceed the limits for bodily injury 
liability set forth in the basic policy.1   
 
Based upon this Court’s holding against it in Mason v. USAA2 on the 
same issue of notice, USAA admits that it did not properly inform 
Sammarco of his statutory right to purchase additional UM/UIM coverage, 
and that reformation of the insurance contract between the parties is 
                                          
 
1 Del. Code Ann. tit. 18, § 3902(b). 
2 Mason v. USAA, 697 A.2d 388 (Del. 1997). 
 
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warranted.  In fact, after Sammarco filed this lawsuit, USAA agreed to 
reform his policy to provide UM/UIM benefits of $100,000/$300,000.  
However, USAA refused Sammarco’s request to reform the policy to 
provide UM/UIM benefits to the extent of Sammarco’s bodily injury 
liability policy limits of $300,000/$500,000. 
Issue on Appeal 
The only question presented on appeal is the amount of additional 
coverage Sammarco is entitled to receive by reformation of his UM/UIM 
policy with USAA.  Sammarco contends that he should receive UM/UIM 
coverage equal to his bodily injury liability policy limits of $300,000 per 
person and $500,000 per incident because those limits were being offered by 
USAA when his UM/UIM Policy was issued.  USAA argues that section 
3902(b) limits mandatory UM/UIM insurance, including that required by 
contract reformations like this one, at $100,000 per person and $300,000 per 
incident.  We have concluded that Sammarco is entitled to have his 
UM/UIM policy reformed to the same $300,000/$500,000 limits that are in 
his bodily injury liability policy with USAA. 
Facts 
 
On May 2, 2004, Sammarco’s minor son was seriously injured in an 
accident when an automobile being operated by Sammarco was hit head-on 
 
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by an underinsured, drunk driver.  At the time of the accident, Sammarco 
carried liability insurance with limits of $300,000 per person and $500,000 
per accident through a contract with USAA.  At the same time, Sammarco 
had UM/UIM motorist coverage with USAA at the statutory minimum of 
$15,000/$30,000.   
 
USAA attached a declaration of coverages and corresponding costs 
for the various coverages that USAA offered, as Exhibit B to its Motion for 
Judgment on the Pleadings, as follows: 
UM/UIM limits 
 
 
1st Car 
Add’l Car 
 
$15,000/$30,000  
 
$14.00 
$12.00 
$20,000/$40,000  
 
$17.00 
$14.00 
$25,000/$50,000  
 
$18.00 
$15.00 
$50,000/$100,000  
 
$23.00 
$19.00 
$100,000/$200,000 
 
$32.00 
$27.00 
$100,000/$300,000 
 
$33.00 
$27.50 
$300,000/$500,000 
 
$51.00 
$43.00 
$500,000/$500,000 
 
$64.00 
$55.00 
$500,000/$1,000,000 
 
$69.00 
$59.00 
$1,000,000/$1,000,000  
$85.00 
$72.00 
 
The foregoing schedule reflects that Sammarco could have obtained 
UM/UIM coverage from USAA at the same level of his liability policy 
limits of $300,000/$500,000, for $51.00 a year.   
The USAA declaration of coverages and offering materials also included the 
following statements: 
 
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● UM Coverage limits are initially issued at $15,000/$30,000 
unless the coverage is rejected or a higher limit is selected.  
Future renewals will remain the same. 
 
● We offer higher limits of UM, which you may select, but the 
UM limits selected must not exceed your policy’s BI limit.  To 
select a higher limit of UM coverage, you must check the 
appropriate box above, “UM Coverage Selection Option,” and 
sign and date the “Acknowledgement of Coverage Selections” 
at the end of this form. 
 
The record includes an affidavit of Alan Sammarco which asserts that he 
would have purchased UM/UIM coverage equal to his liability coverage of 
$300,000/$500,000, if he had been properly advised of his option to 
purchase the higher additional coverage.   
Prior Precedents Distinguished 
 
Once again, we are required to resolve a dispute over the reformation 
terms of a UM/UIM automobile insurance policy.3  Section 3902(a) requires 
insurers to offer a minimum amount of uninsured motorist coverage.4  
Section 3902(b) requires insurers to offer the insured the option to purchase 
additional uninsured and underinsured coverage “for personal injury or death 
up to a limit of $100,000 per person and $300,000 per accident or $300,000 
                                          
 
3 State Farm Mut. Auto Assoc. Co. v. Arms, 477 A.2d 1060 (Del. 1984). 
4 Id. 
 
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single limit, but not to exceed the limits for bodily injury liability set forth in 
the basic policy.”5 
 
In Arms, the issue presented to this Court was an insured’s complete 
failure to make the offer of additional coverage as required by section 
3902(b).  In Arms, we held that when an insured breaches its section 3902(b) 
statutory duty to offer increased UM/UIM coverage, it results in an implied 
extension of a continuing offer of additional UM/UIM motorist coverage.6  
In Arms, the insured had limits of $100,000/$300,000 in a bodily injury 
liability policy and the UM/UIM coverage was reformed to equal those 
amounts.   
 
In Mason v. USAA,7 the issue was this same insurer’s alleged failure 
to make the offer of UM/UIM additional insurance that is required by 
section 3902(b) in a meaningful way – rather than making no offer at all, as 
was the situation in Arms.  In Mason, we held that USAA’s frequent 
mailings to that plaintiff did not constitute proper statutory offers of 
additional UM/UIM coverage within the meaning of section 3902.  In 
Mason, the plaintiff sued to reform the terms of the UM/UIM insurance 
                                          
 
5 Id. 
6 State Farm Mut. Auto Assoc. Co. v. Arms, 477 A.2d 1060 (Del. 1984). 
7 Mason v. USAA, 697 A.2d 388 (Del. 1997). 
 
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contract to the statutory amounts of $100,000/$300,000.  Therefore, 
reformation beyond those statutory amounts was not an issue.   
 
In USAA v. Knapp,8 a case involving similar facts and – once again – 
this same insurance company, we held that, “[t]he statute, in plain language, 
requires insurers to offer UM/UIM coverage ‘up to a limit of’ 
$100,000/$300,000 or $300,000 for single limit coverage (or such lesser 
amount as are contained in the basic policy).”9  In USAA v. Knapp, the 
Superior Court ordered reformation of the UM/UIM policy to equal the 
$300,000/$500,000 limits of the insured’s bodily injury liability policy, even 
though those limits were in excess of the statutory amounts of 
$100,000/$300,000 for UM/UIM coverage that must be offered.  In Knapp, 
however, there was no record evidence that USAA was offering UM/UIM 
coverage in excess of the statutorily mandated amounts.  Therefore, in USAA 
v. Knapp, we held that there was no basis to order reformation of the 
UM/UIM contract beyond the statutorily mandated amounts, in the absence 
of record evidence that such higher coverage had been offered but not in a 
meaningful way. 
                                          
 
8 USAA v. Knapp, 708 A.2d 631 (Del. 1998). 
9 Id. 
 
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Statute Preserves Contract Rights 
 
In Humm v. Aetna Casualty, we held that the focus of section 3902(b) 
is to make additional UM/UIM coverage available above the basic minimum 
uninsured coverage and “then allow the insurer and the insured to engage in 
traditional means of contracting; that is by an offer and an acceptance.”10  In 
this case, USAA voluntarily offered to contract with Sammarco for 
UM/UIM coverage in excess of the statutory limits.  Thus, unlike Knapp, the 
record reflects that USAA offered Sammarco the option of purchasing 
additional 
UM/UIM 
coverage 
equal 
to 
his 
liability 
limits 
of 
$300,000/$500,000 for a cost of $51.  USAA admits, however, that offer 
was not made to Sammarco by USAA in a meaningful way.11   
In accordance with our decision fifteen years ago in Nationwide Mut. 
Ins. Co. v. Starr, Sammarco’s right to reform his UM/UIM policy with 
USAA is based upon the public policy identified by this Court in Arms and 
derived from the legislative intent of section 3902.12  Since USAA’s offer of 
additional coverage did not comply with the notice required by section 3902, 
USAA’s offer to contract at those higher limits was continuing and could be 
                                          
 
10 Humm v. Aetna Cas. & Sur. Co., 656 A.2d 712, 716 (Del. 1995). 
11 Mason v. USAA, 697 A.2d 388 (Del. 1997). 
12 Nationwide Mut. Ins. Co. v. Starr, 575 A.2d 1083 (Del. 1990). 
 
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accepted by Sammarco, at any time – even as in Arms, after an accident.13  
Therefore, Sammarco is entitled to reformation of his UM/UIM policy in an 
amount equal to the limits of his bodily injury liability coverage.14  
Consequently, we hold that Sammarco’s UM/UIM policy must be reformed 
to provide coverage limits of $300,000 per person and $500,000 per 
accident. 
Conclusion 
 
The judgment of the Superior Court is reversed.  This matter is 
remanded for further proceedings in accordance with this opinion. 
 
                                          
 
13 State Farm Mut. Auto Assoc. Co. v. Arms, 477 A.2d 1060 (Del. 1984).   
14 Humm v. Aetna Cas. & Sur. Co., 656 A.2d 716 (Del. 1995); State Farm Mut. Auto 
Assoc. Co. v. Arms, 477 A.2d 1060 (Del. 1984).