Case Title: State Farm Mutual Insurance Company v. Daprato

Citation: 

Docket Number: 348, 2003

State: delaware

Court: Delaware Supreme Court

Date: 2003-12-17T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
STATE FARM MUTUAL 
 
) 
AUTOMOBILE INSURANCE  
)  No. 348, 2003 
COMPANY, 
 
 
 
) 
 
 
 
 
 
 
)  Court Below:  Superior Court 
 
 
Defendant Below,  
)  of the State of Delaware 
 
 
Appellant,  
 
)  in and for Kent County 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
)  C.A. No. 02C-06-007 
 
 
 
 
 
 
) 
LOIS DAPRATO,  
 
 
) 
 
 
 
 
 
 
) 
 
 
Plaintiff Below, 
 
) 
 
 
Appellee. 
 
 
) 
 
Submitted:  November 4, 2003 
Decided:  December 17, 2003 
 
Before VEASEY, Chief Justice, HOLLAND, BERGER, STEELE and 
JACOBS, Justices (constituting the Court en banc). 
 
 
Upon appeal from the Superior Court.  REVERSED and REMANDED. 
 
 
Colin M. Shalk (argued) and Thomas P. Leff of Casarino, Christman & 
Shalk, Wilmington, Delaware, for Appellant. 
 
 
Nicholas H. Rodriguez and Noel E. Primos (argued) of Schmittinger and 
Rodriguez, P.A., Dover, Delaware, for Appellee. 
 
 
 
 
 
STEELE, Justice: 
 
2
 
In this case of first impression we are asked to decide whether a “household” 
exclusion found in a personal liability umbrella policy that includes excess 
automobile liability coverage is repugnant to Delaware’s Financial Responsibility 
Laws.  Further, we examine whether the trial judge, by granting the claimant 
summary judgment, misapplied our decision in Nationwide v. Seeman. 1    
 
We hold that the public policy embraced by Delaware’s Financial 
Responsibility Laws does not invalidate the unambiguous household exclusion 
found in this claimant’s State Farm personal liability umbrella policy. 2  We also 
hold that the trial judge interpreted the scope of our decision in Seeman too broadly 
and misapplied it to the facts of this case.  We therefore REVERSE the decision of 
the trial judge and direct the entry of summary judgment in favor of State Farm.  
I 
 
On November 7, 2001, Peter Daprato drove his State Farm insured vehicle 
in an accident in which his wife Lois was injured.  Peter Daprato admitted that he 
caused the accident.  Peter and Lois Daprato were the named insureds on two State 
Farm Mutual Insurance Company policies.  The first provided “motor vehicle 
liability coverage” of $100,000 per person and $300,000 per accident for the 
vehicle involved in the collision.  The second policy, designated as a “personal 
                                                 
1702 A.2d 915 (Del. 1997). 
2DEL. CODE ANN. tit. 21, '' 2118, 2902 (1995); DEL. CODE ANN. tit. 18, ' 3902 (1999). 
 
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liability umbrella policy,@ provided excess liability coverage, up to a limit of 
$1,000,000, for the risks insured by the primary “motor vehicle liability policy” in 
addition to coverage for risks such as false arrest, malicious prosecution, 
defamation, invasion of privacy, assault and battery. 
State Farm paid Lois Daprato $100,000 under the provisions of the primary 
“motor vehicle liability policy.”  She then demanded additional compensation for 
her bodily injuries and medical expenses under the personal liability umbrella 
policy.  State Farm denied the claim on the basis of an exclusion in the personal 
liability umbrella policy coverage Afor personal injury to the named insured, 
spouse, or anyone within the meaning of part a. or b. of the definition of insured, . . 
.@ (“the household exclusion”)3.  
Lois Daprato filed a declaratory judgment action against State Farm in 
Superior Court, arguing that the household exclusion in the personal liability 
umbrella policy as applied to her automobile accident claim, was contrary to the 
broad scope of the public policy embraced by Delaware’s Financial Responsibility 
Laws.  She argued that the trial judge should follow Seeman and that if he did, he 
must invalidate the umbrella policy exclusion “as against public policy.”  The 
parties filed cross-motions for summary judgment.  The trial judge concluded that 
                                                 
3  In pertinent part, the policy defines “Insured” as both: a) the named insured; and b) the 
following members of the named insured’s household: (1) the named insured’s relatives; and …  
State Farm denied the claim because Mrs. Daprato was both a named insured and the spouse of a 
named insured.  The parties refer to the policy language as “the household exclusion.” 
 
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the household exclusion set forth in the State Farm personal liability umbrella 
policy was void and unenforceable as applied to Lois Daprato’s claim for damages 
from the automobile accident.  He entered an Order granting Lois Daprato 
summary judgment.  State Farm appealed. 
II 
We review questions of law and construction of contracts decided by the 
Superior Court de novo.4 
III 
Delaware’s Financial Responsibility Laws 
Delaware’s Financial Responsibility Laws are designed to protect citizens by 
requiring each driver to carry minimum insurance coverage through a duly 
certified Amotor vehicle liability policy@ issued by an authorized insurance carrier 
as proof of the financial responsibility of the named insured. 5  The clear purpose of 
the Financial Responsibility Laws is to provide primary insurance coverage for all 
personal injury claims arising out of an automobile accident, regardless of the 
injured person’s relationship to the insured.6  In Seeman, this Court explained that 
                                                 
4Grand Ventures, Inc. v. Whaley, 632 A.2d 63, 66 (Del. 1993); Oberly v. Kirby, 592 A.2d 
445,457 (Del. 1991); Judge v. Rago, 570 A.2d 253, 255 (Del. 1990). 
5DEL. CODE ANN. tit. 21, '' 2118, 2902; DEL. CODE ANN. tit. 18, ' 3902. 
6State Farm Mut. Auto. Ins. Co. v. Wagamon, 541 A.2d 557, 558 (Del. 1988).  In Wagamon, this 
Court invalidated a household exclusion contained in a basic automobile insurance policy, 
 
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"the law admits of no exclusion intended to deny compensation to a portion of the 
class of victims which the [Financial Responsibility Laws] were designed to 
protect."7  
But, the Financial Responsibility Laws simply do not apply to the umbrella 
policy at issue here.  The Dapratos maintained a separate “motor vehicle liability 
policy” that satisfied the statutory coverage for the class of victims the Financial 
Responsibility Laws were designed to protect.  In fact, the umbrella policy 
required the Dapratos to maintain that separate, primary policy.  The personal 
liability umbrella coverage purchased by the Dapratos did indeed contain excess 
automobile liability coverage, but that coverage was a discretionary, contractual 
matter between them and State Farm.  The scope of that coverage was subject 
neither to the limitations nor to the requirements of the Financial Responsibility 
Laws.8  The public policy underlying the Financial Responsibility Laws does not 
extend to coverage purchased by contract in excess of the full amount of coverage 
contracted for and purchased in a primary “motor vehicle liability policy.”  State 
Farm made the Dapratos’ “motor vehicle liability policy” coverage available to 
Lois Daprato, who was within the class of injured persons the General Assembly 
                                                                                                                                                             
holding that the exclusion violated the public policy underlying the Financial Responsibility 
Laws.  Id. at 560-61. 
7 702 A.2d at 919 (quoting Wagamon). 
8 There is no indication that the umbrella policy was certified or issued in satisfaction of DEL. 
CODE ANN. tit. 21, ' 2902. 
 
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and the Seeman holding intended to benefit.  These public policy concerns 
associated with the Dapratos’ primary “motor vehicle liability policy” do not 
control the permissible coverages and exclusions separately contracted for in the 
Dapratos’ personal liability umbrella policy.   
The Seeman Decision 
In Seeman, we concluded that “any household exclusion in a Delaware 
automobile insurance policy is void and unenforceable based on the established 
precedents of this Court…”
9   Seeman is distinguishable from the matter sub judice 
because a material distinction exists between a primary “motor vehicle liability 
policy” and a personal liability umbrella policy that provides excess coverage for 
automobile accidents as well as a multitude of other risks.  Both policies provided 
coverage by contract, but only the former comes within the ambit of the Financial 
Responsibility Law.  The trial judge no doubt recognized that distinction but 
confronted with compelling arguments by both parties and the fact that Seeman 
referred to “automobile insurance policy” and not “motor vehicle liability policy,” 
a statutory term of art, simply overbroadly interpreted Seeman’s application to the 
facts of this case.  While we understand why the trial judge expanded Seeman’s 
scope, we believe it to be improvident for this Court to invade the province of the 
General Assembly and expand the ambit of the Financial Responsibility Laws on a 
                                                 
9 702 A.2d at 921 (emphasis added). 
 
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record that does not address the myriad of societal issues that must be considered 
before altering private contracts post hoc on public policy grounds.  A legislative 
body is far better suited to gather and weigh the legislative facts10  and hear the 
arguments of those interested parties over the costs and benefits of extending the 
policy underlying the Delaware Financial Responsibility Law to excess automobile 
accident coverage in personal liability umbrella policies.11  As we see it, in the 
absence of a clear legislative pronouncement, this dispute should be resolved as a 
simple matter of private contract. 
IV 
Neither public policy nor Delaware law renders unenforceable or invalid the 
household exclusion as applied to Lois Daprato, because the Daprato’s umbrella 
policy falls wholly outside the ambit of the Financial Responsibility Laws.  Once 
an insured contracts for specific coverage in a personal liability excess policy 
above the coverages purchased in a primary “motor vehicle liability policy,” the 
costs and benefits associated with that contract are matters solely within the 
discretion of the contracting parties. 
                                                 
10 “When an agency [or court] wrestles with a question of law or policy, it is acting legislatively, 
[a]nd the facts which inform its legislative judgment may conveniently be denominated 
legislative facts.”  Kenneth Culp Davis, An Approach to Problems of Evidence in the 
Administrative Process, 55 Harv. Law Rev. 364, 402 (1942). 
 
11 What, for example, would be the effect on underwriting, the availability of coverage, the costs 
of that coverage, and the carriers’ desire to offer a policy without the “household exclusion?”  
Our record offers nothing from which one can make a reasoned judgment on any of these issues 
of consequence. 
 
8
Accordingly, we REVERSE and REMAND the trial judge’s decision 
granting summary judgment in favor of Lois Daprato and direct that summary 
judgment be entered on REMAND in favor of State Farm.   
 
9