Title: City of Wilmington v. Nationwide Insurance Co.

State: delaware

Issuer: Delaware Supreme Court

Document:

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: 
 
 
 
1 
 
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). 
 
2 
 
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. 
 
3 
 
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.   
 
4 
 
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)). 
 
5 
 
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). 
 
6 
 
 
(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. 
 
 
7 
 
(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). 
 
8 
 
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). 
 
9 
 
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”). 
 
10 
 
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.