IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MARIE DESRIV IERES & : EDNER JOSE

PH :

: Plaintiffs, : K15C -07-025 JJC : In and For

Kent Coun

ty v. : : GARNIER RICHARD & : NATIONWIDE INSURANCE : COMPANY : : De fendants. : Submi tted: Nove mber

13, 2015 Decided : January

14, 2016 OPINION AND OR

DER Upon De fendant’ s Motion to Dismiss GRANT ED in part

and DEN

IED in par

t Andres Gutierrez de Cos, Esquire, of Andres de Cos, L LC, W ilming ton, Delaware, Attorney for Plai ntiffs. Sean A. Dolan, Esquir e, of Law Office of Cynthi a G. Beam, N ewark, Delaware , Attorney for Def endant, G arnier R

ichard. Donald M. Ransom, E s quire, of Cas arino Chri stman Shalk Ran som & Doss, P.A., Wilmi ngt on, Dela ware , Att orn ey for Defe nda nt, Nati onw ide Ins ura nce Compa ny.

Clark, J
.2 I. INTRODUCTION Defenda ntNationw ide (“ Nationw ide”) m oves to di smi ss Plaintif

fs Marie Desriv ieres ’s and Edn er J os eph ’s ( “Pla in ti ffs ”) c lai ms against N ationwide pursuant to Superior

Court Civi l Rule 12(b )(6). T he Com plaint inclu des allega

tions of Natio nwide ’s bad faith, breach of the im plied coven ant of fa

ir dealing , and

fraud. For the followingreasons, Nation wide’ s motio n to dism iss Plainti ffs’ C ompla

int is GRANTED in part and

DENIED in par

t. Furth ermo re, Pla

intiffs a re grante d leave to ame nd the Com

plaint wit hin 30 days to alleged th e proper N ationwide party , if necessary. II. FACTUAL BACKGROUND AS ALLEGED IN COMPLAINT As alleged in Plaintiff’s Complaint, Pla intiffs suffere d injurie s in a single car accident on March 3 , 2014 whe n Defend ant Garnier Richard, the driver

of a vehicle they w ere occu

pying, negligently

caused an accident . Acco rding to the Compl aint, Nationw ide was both th e liabil ity car rier for the tortfeasor, and the personal injury protection

(“PIP”) carrie

r for the Plaintif fs. Accordi ngly, Nationw ide’s r elationship to the Plai ntiffs has both a firs t-party and a th ird-party componen t. The Compl aint furth er allege s that Pla intiffs c ontacted N ationwide on March 5, 2014 inquiring about payment of m edical care. On Marc h 6 , a Nationwide adjuster presente d the Plain

tiffs wi th releas es for

their bodil y injury

claim s for $1,0 00 each.1 Spence v. Funk , 396 A.2d 967, 968 (Del. 1978). 3 The Plaintiffs signed the releases and the adjuster gave them

$1,000 “ gift car

ds.” The Nationw ide adjuste

r also pre sented m

edical re cord author

izations toPlaintiffs which they signed. The Compl aint speci fically alleges th at the Na

tionwide on -site adjustor knew that the Plaintiffs did not speak or read English. It also alleg es that the

Nationw ide adjuster did not seek the services of an interpreter an d took no act ion to inform Plaintiffs that they

were r eleasing their bodil y inj ury cl aims for $1,000 . In fac t, the allegatio ns in the Com

plaint alle ge that the

adjuste r affir mativ ely m

isrepres ented “ the nature of and

consequenc es of signin g the [re leases] .” The Complaint further alleges that the adju ster hid the release s under a m

edical au thorizati on. Final ly, t he Compl aint

alleges th at Nat ionwide’ s empl oyee’ s actions w ere take n pursuant toa rewardsystem

set up whic h Nation wide knew would caus e its adj usters to c omm it fraud. It also alleges various unf air busine ss practic es by N ationwide in connection with adjust er practices designed to take adv antage of Pl aintiffs. III. STANDARD

OF REVIEW When deciding a

motion to dismis s pursuant t

o Superior

Court Civi l Rule 12(b)(6), all allegations in the complaint must be accepted as true. 1 The test for sufficiency is a broad one: the co mplai nt will sur vive a m otion to dismis s so long as2 Id. (citi ng Klein v. Sunbeam Corp. , 94 A.2d 385 (Del. 1952)).
3 Diamond S

tate Tel. Co . v. Univ . of Del. , 269 A.2d 52, 58 (Del. 1970).
4 Del. Supe r. Ct. Civ
. R. 9.
5 Halpern v. Barran , 313 A.2d 139, 143 (Del. Ch. 1973). 4 “aplaintiff may

recover under any reasonably conceivable setof circu mstances susceptible

of proof un der thecomplaint.” 2 Stated di fferent ly, a compl aint will

not be dism issed unless it clear

ly lac ks factua

l or legal meri t. 3 M oreover, Delaw are Civil Procedur

e Rule 9(b ) require s that aver ments of fraud, negligence or mistake be pl ed with part icularity.” 4 This m eans the " mere

use of the word ‘ fraud’ or its equiv alent is not a suffic iently

particula r statem ent o f the circumstances relied upon". 5 IV. DISCUSSION Plaintiffs have alleged facts that, if true, sat is fy al l el emen ts of a fra ud cla im. However, Plaintiffs have failed to allege facts that generate claims for bad faith or a breach of the im

plied coven ant of good

faith and fair dea ling. The refore, pursuant to Rule 12(b)(6), Plaintif

f’s all egations r

egarding bad faith and breach of the implied covenant of

good faith a

nd fair de aling clai ms ar

e dism issed. A. Plaintif

fs’ Comp laint stat

es a claim

upon whic h relief

may be granted regarding fraud
. Plaintiffs allege N ationwide comm itted fra ud in the induce ment, which voids6 In re Lyle , 2013 WL 4543284, at *8 (Del. 2013).
7 Bernal v. Feliciano , 2013 WL 1871756, at *3 (Del.Super. May 1, 2013).
8 Id.
9 Id.
10 Id. *3-4. 5 the release

of Plainti ffs’ bodily injur y claims. The elements of a fraud claim include: (1) a false r

epresent ation of m

aterial fact; (2) the kn owledge or belief tha

t the represe ntationwas fal se, or ma de with reckless indiffer ence for the truth; (3) the intent to induce anot

her party to act or r

efrain from acting; (4 ) the act

ion or inac tion taken was in j ustifiable

reliance on the repr

esentati on ; and (5) damage to the other party as a resu lt of the r

epresent ation. 6 In the context of an insuran ce claim, fraud by an insurer will invalidate a signed release. 7 In Delaware“‘courts will enf orce a general release that is ‘clear and unambiguou s,’ unless the Plaintiff can show there was “f r aud, d uress, c oercion, or mutual mistake conce rnin g the exis tence of [he r] injur ies.’” 8 A relea se is voidabl e if the Plaintif

f can show

that there

was fra ud. 9 Howeve

r, unless a Plaint

iff was precluded from reading the release, a “release w ill not lightly be setaside whe re the language is clear and unam

biguous” desp ite any

misr epresent ation by anadjuster. 10 Here, Plaintiffs allege that Nationwide: (1) m ade a fa lse repre sentation

of fact by m isrepres enting to non- English spe aking clai mants the purpose of the presented11 Id. at *1. 6

documents; (2) had kno wledge or belief tha t the representation was false; (3)intended to induce Pla

intiffs to abandontheir claims; (4) through its adjuster, told the Plaintiffs that the conside

ration for the rele ases, the

$1,000 gift car

ds, were f or me dical car

e and that they were simply

signing a re ceipt for

the gift c ards; and ( 5) caused damages to Plaintiffs in the amount of their bodily injury claim s which remain u ncompensated. Acco rdi ngl y, Plaintiffs have stated a prima faci e case as to fr aud with su fficient particula rity. Nationw ide argues in i ts Motio n to Dismiss, th at based up on two prior Superior C ourt de cisions , Bernal v. Felicia no and Patrick v . Ellis , an alleged
misrep resentat

ion by an i nsurance a

djuster cannot over

come clearly worded, unambi guous language i n a writt en relea se. Nam

ely, Nationw ide argue s that beca use the language of the releases clearly apprise Plaintiffs of the extent of the rele ases, an d they should have r

ead them before si gning them, allegatio ns of m isrepres entation

by the adj us ter can no t s up po rt a fra ud cla im. Both Be rnal and Patrick

are disting uishabl e at this st age of the p roceeding s, however. In Bernal , Plainti f

f was fl uent in Spanish but did not read, write or speak English. 11 The Plaintiff had not been compensated for her lost wage s resultingfrom12 Id. at *2.
13 Id. at *1-2.
14 Id. at *2.
15 Bernal , 2013 WL 1871756 at, *4.
16 Id.
17 Id. at *2.
18 Id. 7 an accident
. 12 Plaintif

f’s dau ghter, Y asmin

Martinez (“M artinez” ) was fluent in both Spanish and Englis h and the Pl aintiff i n th at cas e chose to r ely upo n her for translati on between the adjuster and the Plaintiff. 13 Martinez only spoke t o the adjuster on behalf o f her m

other re garding com

pensation f

or Plainti ff’s l ost wages . 14 Neverth eless, the adju ster sent a general r elease toMartinez’s place of em ploym ent citing considera

tion of $410. Martinez

mista kenly b eli eved it was sole ly for lost wages. 15 Rely ing on Marti nez’s u nderstandi ng of the docu ment, the Plaintiff signed the general release form a nd returned it to the adjuster. 16 The Plaintif

f in Bernal

thereafter

brought a pe

rsonal inj ury ac tion against the Defenda ntand the De fendant m

oved to dismis s based on the general release. 17 The Court c onverted th e moti on to one for summ ary j udgmen

t because it relied o n mate rials outsi de of the

pleadings. 18 The Court then granted summ ary judgm ent. It based its decision on the fact that nothing precluded Plaintiff (through Martinez) from19 Patrick v. Ellis , 2013 WL 5800908, at *1 (Del. Super. Oct. 18, 2013). 8 reading the release an d that relea se was clear and unambiguou s. T he fact t hat the Plaintiff could not spe ak, wri te or rea d English w as not addr

essed in t he decis ion’s reasonin g, perhaps because of t he English -literate i ntermediary. Bernal v. Fel iciano is distinguish able from the caseat hand on m ultiple grounds. First, t

he Court in Bernal

ruled on a m

otion for su mmary j udgmen t and not
amotion to dism iss. Her e, Plai ntiffs ade quately

allege f raudwit h sufficient p articu larity

to survive a Rule 12(b)(6) motion. Discovery will ultimately reveal whether sufficie nt evidence

exists to gener ate a tri able issue of fact. Second, the allegatio ns in this case do not involve an English literate interpreter such as Martinez in the Bernal

case. T he facts applicable

to this m otion are as alleged and Plaintiffs allege the y h ad no abilit

y to re ad or under stand the r eleases a t issue. F

inally , the
cases cited by

the Court i n Bernal

involve various cl aims where the various Plaintiffs chose not to r ead the rele ase s, d esp ite ade qua te o ppo rtu nit y. H ere, a s alleged, the nature of t he documents wer e hidden fr om the non-Eng lish-lit erate Plaint iffs. Likewise, Patrick v. Ellis is distinguish able. In Patrick , Plaintiff was in an accident involving a du mp tr

uck, anoth er vehicl e and

Plaintiff’s vehicle. 19 Fiv e da ys after the acci dent, an a

djuster for

one of seve

ral alle ged tortfe asors m

et with Plaintiff20 Id.
21 Id.
22 Id. at *2.
23 Id.
24 Id.
25 Id.
26 Id. 9 atPlaintiff’s home. 20 The meeting lasted over a n hour, in which Plain

tiff signe d a general release , relea sing all cla ims against all p arties, in exchange for a check w orth $750. 21 The Plaintiff later filed a personal injury action and the alleged tortfeasors relied on t

he affir mativ e defense s of accor

d andsatisfac tion and

release. 22 Plaintiff
was deposed and testified that he w as taking approximately eleven m edications when he signed the r

elease ( although only

one me dicine wa s n ew). 2 3 He further testified that during the day of the meeting with the adj uster, he felt out of sorts and thought that the new st

eroid pre scrip tion he w as given af ter the a ccident “might” have affectedhis cl arityof tho ught, yet he was unsure. 24 He state d that he onl y had a seventh-grade education, and though he couldread, he chose to not read the general release before si gning it. 25 He testi fied that h e was not f eeling we ll and jus twanted the adjuster to leave. 26 Notwiths tanding the signed bodily injury relea se, the Plaintiff in Patrick

sued27 Id.
28 Id. at 3, 9.
29 Patrick, 2013 WL 5800908, at *5.
30 Id. at *7.
31 Id.
32 Id.
33 Id. at *1. 10 for bodily injuryas a resu lt of the collision. 27 After d

iscovery , the De fendant moved for summ ary j udgmen

t andthe Court g ranted D efendant’ s motio n. 28 As in Bernal , the Courtin Patrick

ruled that a release is not invalidated because “an individual chose not to read it b efore sign ing.” 29 Further more , in Patri ck , discov ery revealed that Plaintiff was given

ample time to read the document, ask any questions, and if he had read the docum

ent, he w ould have be en a w are that the gener al relea se was f or all cla ims agains t all part

ie s. 30 The Cour

t in Patrick held that i t was t he Pla inti ff’s obligation

to read and

understand

the rele ase prior

to signing. 31 The Pla

intiff cho se to not read it, so the Plaintiff

could not cl aim t

hat he signe d under dure ss, coer cion, or undue influence. 32 Patrick v. Ellis was also a summ ary j udgmen

t de cisi on, not a de cision regardin g a mot

ion to dism

iss. 33 There w as depositio n testimony ava ilable to shed light on the factual aspects of the frau d claim . Here , the par ties have c onducted no34 Tackett v. State Farm Fire &Cas. Ins. Co., 653 A.2d 254, 264 (Del. 1995).
35 Shipley v. Shaw , 2007 WL 521813, at *2 (D. Del. Feb. 16, 2007).
36 Id.
37 Swain v. State Farm Mut. Auto. Ins. Co. , 2003 WL 22853415, at *1 (Del. Super. May 29, 2003). 11 written discovery or depositions. Furthermore, as alleged, the Plainti ffs speak no English, the adju ster knew that, and

allegedly

hid a rele ase un der a me dical authoriza tion form . Unlike

a situation

involving a li terate

individual’s choice to not read a release, the facts al leged her e state a potential f

raud clai m. F or these r

easons, Plaintiffs ’ Complaint state s a claim upon wh ich relief may be grant ed. B. Plaintiffs’ Complaint f ails to state a bad faith claim against Nationwide. Delawarerecogniz es claim s for bad fa ith against an insurer when an insured
can show that a

n insurer’ s denial of

benefits w as “c learly

without any reaso nable justificat ion.” 34 However, an injured third-party may not direct

ly bri ng an actio n of bad faith against a tortfeasor’s insurer. “Under Delaware law, a

n injured party may not bring a d

irect ac tion against

a liability insurer based upon the negligence of the insured.” 35 In this re gard, an injur ed third-p arty may

not bring a d

irect ac tion against
aliability insurer of

an insured

before a determ ination of t

he insured' s l iabili ty. 36 Furthermore, an insure r does not o we any duty to a third-party to negotiate a settlem ent in good fait

h. 37 This duty

of good fai th runs only

to the insure d and not to38 Hullinger v. Thompson , 1992 WL 9307, at *1 (Del.Super. Jan. 9, 1992).
39 Tackett, 653 A.2d at 262.
40 Id. at 263 (Quot ing H olmgren v . State Farm Mut. Auto. Ins. Co. , 976 F.2d 573, 577 (1992)). 12 an i njur ed t hir d-p arty. 38 A first-pa rtyinsured m

ay est ablish a cl aim of

bad faith i n a first- party

insuredinsurercontractual relationship if they “show that the insurer lac ked reas onab le justific ation in delaying or refusing p ayment of a claim.” 39 In this context, the mental impre ssions, strategy , and “ opinions of [the insurer’ s] agents concer

ning the handling of the claim are di rectly at issue .” 40 In the case at hand, Plaintiffs’ suit seeks third-party benef its. As pas s engers in the sam

e vehicle , howeve

r, Plai n tiffs ar e also first-party claimants for personal injury protectio n benefits. This first-party elem ent to the case, would under certain circum stances, permit Plaintiffs to bring a direct action against Nationwide fo r bad faith. However, Plaintiffs’ Complaint does not alleg e Natio nwide’ s bad faith regardin g Plaint iffs’ PIP c lai ms . Nam ely, Plaintif

fs have not

alleged a

bad faith denial or delay in paym

ent of PIP benefits. P

laintiffs Compl aint focus es only on the alleg ed bad faith activitie s of the adj uster in he r role as a repre sentative of the tortfeasor. Ac cordingly , Plainti ffs’ c laim of bad fai th must be dism issed with out41 Id. at 264.
42 Id.
43 Id.
44 Dunlap v. State Farm Fire & Cas. Co. , 878 A.2d 434, 442 (Del. 2005) 13 prejudic e for fa

ilure to sta

te a clai m upon which relie f ma y be granted. C. Plaintif

fs’ Com plaint als o fails to state a claim regarding the bre ach of the implied covenant of good faith and fair d ealing
. In the contex t of insura

nce contr acts, a breach of the impli ed covenan

tof good faith and fair dealing occurs “[w] here an insurer f ails to inve stigate or

process a claim
or delay s paym

ent in bad fait

h .” 41 The rel ationship between an insured an d the insurerarises from a m

utual exchange o f consider ation, suc h as pay ing prem iums f or insurance in exchange for coverage, and is controlled by the term s and standards set in the agreement. 42 A claim that is in breach of the term s of that agreem

ent should be treated like a bre ach of contract because t h ere is no sound theoretical difference between a first- party

insurance

contract versus othe

r contrac ts. 43 “The imp l ied covenant requires a party in a contractual relationship to refrain from ar bitr ary or
unreasona

ble condu ct which h a s the eff ect of pr eventing the

other par

ty to the contractfrom

receivin g the fruit s of

the bargain.” 44 Parties are liab le for br eaching the impliedcove nant when their condu ct frustrates the ov erarchi ng purpose of the45 Id.
46 Wilgus v. Salt Pond Inv. Co. , 498 A.2d 151, 159 (Del. Ch. 1985). 14 contract . 45 Here, Plaintiffs have not alleged the elements of a breach of the im plied covenant of good fai th and fair deal ing to no tice plead ing stan dards. As Nati onwide argued and Plaintiffs correctly em phasize in their r

esponse, a

claim for a bre ach of the impli ed covenan

t of goo d faith and f

air deali ng ensures t

hat the inj ured part

y receives “the

fruits of the contract.” 46 Plaintif fs havenot allege d what ter ms of the PI P contract were violated or breached. The Com plaint has also not alleg ed tha t Nationw ide has delay ed a pay ment o r failed to pr ocess a PIP claim, or that Nationw ide denied Pla

intiffs any benefi ts through N ationwide ’s role as the Pla intiffs’ PIP insurer. Because cognizable damages re sulting from this cl aim h ave not been alleged in the Complaint, it must also be dism issed without prejudice. V. CONCLUS ION WHEREFORE , for th e reaso ns ci ted, Na tion wide’s M otion to Dis miss i s granted in part and

de nied in par

t. Spec ifically , Nation wide’ s Motion to D ismiss Plainti ffs’ f

raud clai m is D ENIED. Pla intiff’ s Motion to D ismiss the bad fa ith and unfair dealing claims against Nationwide is GRAN TED, without prejudice. Plaintiffs
are further

granted le ave to amend the Com plaint to allege, if necessary, the corr ect15

Nationwide entity provided they do so within thirty day s of the date of this Order.

IT IS SO ORDERED.

/s/Jeffr ey J C lark Judge