Court Opinion

ID: 9647741
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:48:58.285804+00
Date Added: 2024-06-11T18:11:52.753922
License: Public Domain

MOORE, Justice,
dissenting, with whom HARTNETT, Vice Chancellor, joins:
The majority holds that the disputed policy language unambiguously allows Aetna to offset monies received from the tort-feasor against the insurer’s policy limits. I dissent because the wording of the policy is ambiguous. An equally plausible reading would offset amounts received from the tortfeasor against the victim’s total damages. Applying standard rules of construction, the policy must be interpreted against the insurer. Moreover, in contrast to the majority view, the latter interpretation is more consistent with the overriding purpose of 18 Del. C. § 3902 and other liability insurance statutes enacted to protect fully the innocent victims of automobile accidents. Although section 3902 establishes only a floor for coverage, the majority’s interpretation effectively imposes a ceiling on a victim’s recovery.
I.
I first turn to basics. When the language of an insurance contract is clear and unequivocal, the parties are bound by its plain meaning. Hallowell v. State Farm Mut. Auto. Ins. Co., Del.Supr., 443 A.2d 925, 926 (1982); Apotas v. Allstate Ins. Co., Del.Supr., 246 A.2d 923, 925 (1968); Lamberton v. Travelers Indem. Co., Del. Super., 325 A.2d 104, 106 (1974), aff'd, Del.Supr., 346 A.2d 167 (1975). If the language is ambiguous, however, it will be construed strictly against insurer to effectuate the reasonable expectations of the insured. Hallowell, 443 A.2d at 926; Steigler v. Insurance Co. of N. Am., Del. Supr., 384 A.2d 398, 400-01 (1978). An ambiguity exists when two or more reasonable interpretations of a contract are possible. Hallowell, 443 A.2d at 926; Cheseroni v. Nationwide Mut. Ins. Co., Del.Super., 402 A.2d 1215, 1217 (1979), aff'd, 410 A.2d 1015 (1980); Lamberton, 325 A.2d at 106. In determining the meaning of the contract, its language must be read in context and not in isolation. Cheseroni, 402 A.2d at 1217.
The disputed policy contains the following provisions in its “Limits of Liability” section:
B. If a single limit of liability for bodily injury liability is shown in the Declarations for this coverage, this is our maximum limit of liability for all damages for bodily injury resulting from any one auto accident.
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D.
Any amount otherwise payable for damages under this coverage shall be reduced by:
(1) All sums paid because of bodily injury or property damage by or on behalf of persons or organizations who may be legally responsible.
(emphases added). These provisions expressly refer to Aetna’s liability in terms of damages, not policy limits. They must be read together. Subsection B limits Aetna’s liability for all damages. Subsection D similarly refers to any amount otherwise payable for damages under this coverage, and allows a reduction for amounts paid by the tortfeasor. Certainly one reasonable interpretation is that the words “any amount otherwise payable for damages” in subsection D refer back to the general damages provision of subsection B concerning “all damages”. Thus, one construction of the policy’s plain language offsets amounts recovered from tortfeasors against the victim’s total damages.
The majority finds this view unreasonable. It believes the policy requires monies recovered from the tortfeasor to be offset only against the limits of the policy, although that express wording is never used. The majority reaches its conclusion because the phrase “any amounts otherwise payable for damages” is followed by the words “under this coverage”. From this lan*1178guage, it infers that in addition to the $300,000 limit stated in the declarations, the parties meant to limit the insurer’s liability further by requiring any monies recovered from the tortfeasor to be offset against the policy limits rather than against total damages. It is unnecessary for me to consider whether the majority reasonably interprets the policy. I dissent because it is not the only reasonable interpretation, as evidenced by the plain language of the contract, judicial decisions interpreting similar provisions, and public policy considerations.1
I have already noted above that two reasonable interpretations of the policy language are possible. Courts interpreting nearly identical policy provisions under similar circumstances have also been unable to reach a consensus as to their meaning. Some, like the majority, have found such wording to require a reduction from policy limits. Corso v. State Farm Mut. Auto. Ins. Co., 668 F.Supp. 364 (D.Del.1987) (policy language “any amount payable under this coverage” unambiguously required reduction from policy limits), aff'd mem., 838 F.2d 1205 (3d Cir.1988); Giardino v. American Family Ins., 164 Ill.App.3d 389, 115 Ill.Dec. 501, 517 N.E.2d 1187 (1987) (policy language “any amounts payable” clearly required reduction from policy limits), appeal denied, 119 Ill.2d 556, 119 Ill.Dec. 384, 522 N.E.2d 1243 (1988); State Farm Mut. Auto. Ins. Co. v. Kuehling, Miss.Supr., 475 So.2d 1159 (1985) (policy language “any amount payable under this section” required offset against policy limits). Others have interpreted similar wording to require an offset from total damages. O’Hanlon v. Hartford Ace. & Indem. Co., C.A. No. 76-59, slip op. at 4-5, Stapleton, J. (D.Del. Feb. 15, 1979) (policy language “any amount payable under the terms of this insurance” required reduction against total damages and not policy limits); Gomolka v. State Auto. Mut. Ins. Co., 15 Ohio St.3d 27, 472 N.E.2d 700 (1984) (policy language “any amount payable under the Uninsured Motorists Coverage” required offset against total damages); McCoy v. Aetna Cas. & Sur. Co., 281 Md. 26, 374 A.2d 1170 (1977) (policy language “any amount payable to an insured under the terms of this insurance” required setoff against total damages). Yet another court, interpreting language identical to that found in Aetna’s policy, has found it ambiguous, and construed it against the insurer. Mulliss v. American Protection Ins. Co., 653 F.Supp. 685 (D.Vt.1987) (policy language “any amounts otherwise payable for damages under this coverage” was ambiguous so reduction against total damages was required). The sheer number and diversity of these decisions strongly suggests that the disputed policy language is capable of more than one reasonable interpretation, particularly since one of the cases involved wording identical to that found here. The majority cited none of these decisions in its analysis of the policy language, relying only on its own conception of reasonableness.
Two additional considerations lead me to conclude that requiring a reduction from total damages is a reasonable interpretation of the policy. In Gomolka v. State Automobile Mutual Insurance Company, the Supreme Court of Ohio emphasized the notion of bargained-for protection underlying contracts of insurance. It stated:
The [insurerj’s interpretation ... equates “amount payable” to “damages compen-sable” by looking to the plain meaning of the policy’s terms and by focusing on the nature and purpose of uninsured/under-insured motorist coverage. When purchasing this coverage, an insured expects to be protected against a loss caused by another that is not covered by that other person’s insurer. Thus, an “amount payable” under uninsured/underinsured motorist coverage is an amount of damages suffered by the insured, which amount is greater than the insurance coverage held by the party causing the damages.
*1179Gomolka, 472 N.E.2d at 703 (emphasis added). See also Mulliss, 653 F.Supp. at 690 (quoting same text); Whaley v. Allstate Ins. Co., C.A. No. 83-846, Latchum, J. (D.Del. July 11, 1985). The majority rejects this notion of bargained-for protection on statutory grounds because it creates “an illogical distinction between underin-sured motorists and uninsured or fully insured motorists.” Ante, at 1176. I fail to see how the distinction is illogical since, as noted below, the statute creates only a floor of available coverage. It is not illogical that plaintiffs are able to recover the full measure of their damages from tort-feasors with sufficient resources; it is an unavoidable aspect of our tort law that some parties have insufficient resources. Section 3902 did not and could not eradicate those economic distinctions.
Moreover, if the reduction clause were meant to apply to policy limits rather than total damages, it would have explicitly referred to them. Id. at 703-03; Gomolka, 472 N.E.2d at 702-03. Cf. James v. Michigan Mut. Ins. Co., 18 Ohio St.3d 386, 481 N.E.2d 272, 275 (1985) (comparing policy referring to damages with another stating “the limit of liability shall be reduced by”). Other Delaware insurers have incorporated language expressly referring to policy limits in their reduction clauses. See Kulas v. Nationwide Gen. Ins. Co., Del.Super., C.A. No. 87C-OC-87, slip op. at 6, Babiarz, J., 1989 WL 64086 (May 30, 1989) (“Uninsured Motorist limits will be reduced by all sums paid by or for any liable parties....”); Dilenno v. Nationwide Ins. Co., 632 F.Supp. 1253 (D.Del.1986) (“The limits of this coverage and/or any amounts payable under this coverage will be reduced by ... [a]ny amounts paid by or for any liable parties.”). In the absence of such limiting language, Aetna’s policy does not unambiguously require monies received from a tortfeasor to be offset against policy limits rather than against total damages. Being susceptible of two reasonable interpretations, the policy is ambiguous, and should be interpreted against Aetna.
II.
Having found the policy language ambiguous, I must consider whether its interpretation offends the public policy underlying our insurance statutes. Section 3902 provides in part:
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 of bodily injury liability set forth in the basic policy. Such additional insurance shall include underinsured bodily injury liability coverage.
18 Del. C. § 3902(b). The section “permit[s] an insured to protect himself from an irresponsible driver causing injury or death.” Frank v. Horizon Assur. Co., Del.Supr., 553 A.2d 1199, 1205 (1989). It establishes a floor of uninsured/underinsured motorist coverage that insurers are required to offer, see State Farm Mut. Auto. Ins. Co. v. Abramowicz, Del.Supr., 386 A.2d 670, 672 (1978); Corso, 668 F.Supp. at 370; O’Hanlon, 439 F.Supp. at 383, but it does not prohibit insurers from contracting to provide coverage in excess of the statutory floor. Goodman v. Continental Cas. Co., Del.Super., 347 A.2d 662, 666 (1975). Cf. Mulliss, 653 F.Supp. at 691; LaFrange v. United States Auto. Ass’n, Ky.Supr., 700 S.W.2d 411 (1985).
On its face, section 3902 does not address the question on appeal: whether monies recovered from a tortfeasor must be offset against the insured’s total damages or the insurer’s policy limits.2 Based on language *1180in Frank v. Horizon Assurance Company describing how section 3902 is applied, 553 A.2d at 1205, the majority contends that its interpretation is the only one consistent with the concept of “mirrored coverage” underlying section 3902. According to the majority, the alternative construction noted above violates the mirror concept because it favors the victims of underinsured tort-feasors over the victims of either uninsured or fully insured tortfeasors. The majority’s emphasis on the mirror metaphor ignores the overriding public policy rationale for the statute recognized by Frank and numerous other cases.
In Frank the insured’s daughter was injured by an uninsured motorist while she was driving a vehicle owned by the insured but not listed in the contract of insurance. The insurer denied coverage based on a policy exclusion for “other motor vehicles” (“OMV”) which it argued was permitted under the statute. We struck down the OMV exclusion as inconsistent with the public policy underlying section 3902 and mandatory liability insurance statutes, noting:
Once uninsured motorist coverage is purchased, the insurance consumer is entitled to the full extent of the benefit which the law requires to be offered. Attempts by insurers to reduce this benefit by hypertechnical language or exclusion clauses are equally repugnant to the public policy articulated in Waga-mon — the protection of persons injured in automobile accidents.
Id. The majority now does exactly what it prohibited in Frank by adopting a hyper-technical interpretation of the statute and imposing a ceiling on victims’ recovery. Its interpretation may or may not be faithful to the mirror metaphor used in Frank, but its approach is clearly inconsistent with the overriding purpose of our insurance laws, acknowledged by Frank, and recognized in other cases, to compensate fully those persons injured in automobile accidents. Arms, 477 A.2d at 1064. See also Hudson v. State Farm Mut. Ins. Co., Del.Supr., 569 A.2d 1168, 1171 (1990); State Farm Mut. Auto Ins. Co. v. Wagamon, Del.Supr., 541 A.2d 557, 560 (1988). Cf. Frank, 553 A.2d at 1204-05; Abramowicz, 386 A.2 at 672; Home Ins. Co. v. Maldonado, Del.Supr., 515 A.2d 690, 693 (1986). Absent express limitation in the contract, this Court should favor the interpretation supporting full recovery for the insured.
The Delaware Insurance Code establishes a floor for certain types of liability coverage. It does not require equal compensation to be paid to those injured by uninsured and underinsured motorists if terms of the contract suggest otherwise. The overriding purpose of section 3902 and other statutes requiring insurers to offer or provide liability insurance is to protect the innocent victims of automobile accidents. While the majority’s approach is somewhat consistent with that purpose, it effectively imposes a ceiling on recovery. The alternative construction is more consistent because it provides greater protection to innocent victims.
In summary, I find the disputed policy ambiguous and would construe it in favor of the insured. Since this interpretation does not violate the underlying policy of section 3902, and indeed supports it more than other interpretations, the decision of the Superior Court should be AFFIRMED.

. If our laws were different, and courts were required to determine which interpretation was more reasonable, one might criticize the majority’s inordinate focus on the words "under this coverage" to achieve its interpretation of the policy.

. Aetna argued on appeal that our decision in State Farm Mut. Auto. Ins. Co. v. Arms, Del.Supr., 477 A.2d 1060 (1984), required those injured by an underinsured motorist to receive no more compensation than those injured by an uninsured motorist. In a footnote we stated: "[Wjhen a policyholder is injured by a driver whose coverage is less than the policyholder’s underinsured coverage, the injured policyholder may recover the difference from his own insurer.” Arms, 477 A.2d at 1063 n. 3 (emphasis added). The footnote suggested how section 3902 could work under a properly drafted contract, but it did not address the situation here involving ambiguous wording. Certainly section 3902 allows insurers to offset against policy *1180limits, see e.g., Kulas, slip op. at 6, but it does not require that approach.