Court Opinion

ID: 2789348
Source: CourtListenerOpinion
Date Created: 2015-03-26 14:02:17.407664+00
Date Added: 2024-06-11T11:28:50.283031
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
                IN AND FOR NEW CASTLE COUNTY

21ST CENTURY ASSURANCE              )
CO.,                                )
                                    )
            Plaintiff,              )
                                    )
            v.                      )     C.A. No.: N13C-06-212 FWW
                                    )
LIBERTY MUTUAL                      )
INSURANCE CO.,                      )
                                    )
            Defendant.              )

                           Submitted: March 6, 2015
                           Decided: March 23, 2015

                 Upon Defendant’s Motion for Summary Judgment
                                  GRANTED.

                                   ORDER

Amanda L. H. Brinton, Esquire, The Law Offices of Amanda L. H. Brinton, 521
North West Street, Wilmington, DE 19801, Attorney for Plaintiff 21st Century
Assurance Company.

David L. Baumberger, Esquire, Law Offices of Chrissinger & Baumberger, 3 Mill
Road, Suite 301, Wilmington, DE 19806, Attorney for Defendant Liberty Mutual
Insurance Co.

WHARTON, J.
       This 23rd day of March, 2015, upon consideration of Defendant’s Motion

for Summary Judgment, Plaintiff’s Opposition, oral argument, the audio recording

of the Court’s ruling on Defendant’s previous Motion for Summary Judgment 1 and

the parties supplemental submissions, it appears to the Court that:

       1.     Plaintiff 21st Century Assurance Co. (“21st Century”) initiated this

              action on June 20, 2013 by filing a Complaint, seeking, inter alia,

              subrogation against Liberty Mutual Insurance Company (“Liberty

              Mutual”).2 The claim arises out of a motor vehicle accident in which

              a vehicle insured by 21st Century was involved in an accident with a

              vehicle insured by Liberty Mutual.3            As a result of the accident

              expenses in the form of personal injury protection (“PIP”) benefits

              were paid to or on behalf of the occupant of the vehicle insured by 21st

              Century. 4 21st Century is seeking judgment against Liberty Mutual

              for those PIP benefits as well as future PIP payments. 5

       2.     On December 20, 2013, Liberty Mutual moved for summary

              judgment on the basis that the matter was adjudicated in arbitration,

1
  A now retired judge of this Court heard argument and ruled from the bench on Defendant’s
previous Motion for Summary Judgment.
2
  Compl., D.I. 1.
3
  Id. at ¶ 4.
4
  Id. at ¶ 8.
5
  Id.
                                              2
               barring 21st Century’s claim by operation of law. 6 Liberty Mutual

               argued that 21 Del. C. § 2118(g)(3) requires that disputes among

               insurers as to liability or payments are required to be arbitrated and

               that arbitrators’ decisions are not appealable. 7 In Liberty Mutual’s

               view, it was entitled to summary judgment because the arbitrator

               determined that 21st Century did not have a right of PIP subrogation

               since 21st Century’s insured vehicle was insured and registered in

               New Jersey and PIP subrogation is only applicable to vehicles

               registered in Delaware and affording Delaware PIP benefits. 8 21st

               Century opposed the motion, arguing that the matter was ejected from

               arbitration without a determination on the merits and that it was

               entitled to appeal the arbitrator’s decision under 21 Del. C. §

               2118(j)(5).9

       3.      On April 29, 2014 the Court held oral argument on Liberty Mutual’s

               motion. At the conclusion of argument, the Court denied the motion

               for summary judgment, but directed that 21st Century amend its

               complaint to reflect the case as an appeal, holding that an appeal from

               the arbitrator’s decision was permissible.10            A form of order was

6
  Def.’s Mot. Summ. J., D.I. 5, ¶¶ 8-9.
7
  Id.
8
  Id. at ¶ 3.
9
  Pl.’s Resp. in Opp’n to Def.’s Mot. Summ. J., D.I. 7.
10
   There was some confusion at oral argument on the present motion as to whether or not the
judge ruled, in fact, that 21st Century could appeal the arbitrator’s decision. The Court has
                                                3
               submitted and signed by another judge because the initial judge had

               retired in the interim. 11

       4.      On September 3, 2014, 21st Century filed an amended complaint

               captioned “Amended Complaint/Appeal From Arbitration Forums,

               Inc. Decision Dated June 3, 2013.”12                 With the exception of the

               caption, the new filing was identical to the original Complaint.

               Liberty Mutual again moved for summary judgment “pursuant to 21

               Del. C. § 2118(g)(3) and Rules 12 and 56 for lack of subject matter

               jurisdiction.” 13 21st Century opposed the motion for the same reasons

               it opposed Liberty Mutual’s first Motion for Summary Judgment as

               well as asserting a common law right of subrogation. 14

       5.      The Court heard argument on Liberty Mutual’s Motion for Summary

               Judgment on January 27, 2015.                Because the Court subsequently

               determined that the previously assigned judge had ruled that 21st

               Century was entitled to an appeal, the Court requested the parties to

               submit memoranda on the applicability of any exceptions to the law of

listened to the audio recording of the argument and it is clear that the judge ruled that 21st
Century was entitled to an appeal.
11
   D.I. 12.
12
   Am. Compl., D.I. 13.
13
   Def.’s Mot. Summ. J., D.I. 15.
14
   Pl.’s Resp. in Opp’n to Def.’s Mot. Summ. J., D.I. 16.
                                                  4
              the case doctrine.15     The parties have submitted the requested

              memoranda.16

       6.     Three issues are presented for the Court’s determination: 1) whether

              the ruling on Liberty Mutual’s initial motion for summary judgment

              was correct; 2) if not, whether an exception to the law of the case

              doctrine allows for a different result; and 3) whether a common law

              right of subrogation exists so as to allow 21st Century to bring a

              complaint for subrogation directly in this Court.

       7.     Two courts of this state have addressed the issue of whether an insurer

              has a right to appeal from an adverse arbitration ruling. In New

              Hampshire Ins. Co. v. State Farm Ins. Co.17 New Hampshire

              Insurance Company sought to appeal an adverse arbitration ruling to

              this Court. 18 The dispute in that case, as in this case, was between

              insurance companies, and, hence, subject to the mandatory arbitration

              provision of 21 Del. C. § 2118(g)(3). 19 The Court held that the silence

              of § 2118 as to the right of an insurer to appeal the decision of an

              arbitrator was fatal to the claim that an appeal lies with the Superior

              Court.20

15
   D.I. 19.
16
   D.I. 20-22.
17
   643 A.2d 328 (Del. Super. 1993).
18
   Id. at 329.
19
   Id.
20
   Id.
                                          5
       8.     In Zurich American Ins. Co. v. St. Paul Surplus Lines, Inc. 21 the Court

              of Chancery was called upon to determine whether the court could

              review an arbitrator’s dismissal of a PIP insurance case for lack of

              jurisdiction based on the internal rules of the arbitration forum and the

              governing arbitral agreement.22     The matter was before the Vice-

              Chancellor on a petition to correct and confirm the arbitration award,

              filed after the arbitrator had dismissed the claim on jurisdictional

              grounds despite finding that Zurich’s damages had been proven, and

              after Zurich’s subsequent Superior Court action had been dismissed.23

              The Court of Chancery reviewed the applicable statutes, including 21

              Del. C. § 2118, and determined that the legislature had not provided

              for appellate review where the statutorily mandated arbitration was

              foreclosed on jurisdictional grounds by the arbitrator’s internal rules.24

       9.     In State Farm Mut. Auto. Ins. Co. v. United Parcel Service of America,

              Inc.25 the Superior Court addressed the issue of whether the Superior

              Court had jurisdiction in a PIP insurance subrogation case in light of 21

              Del. C. § 2118.26 State Farm had paid PIP benefits to its insureds and

              was seeking judgment in Superior Court against United Parcel Service,

21
   2009 WL 4895120 (Del. Ch. Dec. 10, 2009).
22
   Id. at *1.
23
   Id. at *2-3.
24
   Id. at *9.
25
   2012 WL 1495338 (Del. Super. Jan. 31, 2012).
26
   Id. at *1.
                                              6
               a self insurer under § 2118, claiming that it was entitled to

               subrogation.27 The claim originally was dismissed in arbitration for

               lack of jurisdiction.28 State Farm then sued in Superior Court. 29 The

               Court recognized that the ability of the arbitrator to decline jurisdiction

               seemed at odds with the statute’s mandatory arbitration provision,

               nevertheless it held that the Superior Court lacked jurisdiction over the

               matter.30

       10.     The Court must consider two subsections of 21 Del. C. § 2118. Section

               2118(g)(3) requires that insurers arbitrate their disputes as to liability

               amounts paid. 31 Section 2118(g)(3) does not contain any provision for

               appeal. 32 Section 2118(j) requires an insurer to submit to arbitration

               upon request of a party 33 claiming to have suffered a loss.34 The right

               of the party to request arbitration is optional. 35 Section 2118(j)(5) does

               provide for the right of an appeal de novo to the Superior Court. 36 It is

               clear to the Court that the mandatory arbitration provision of §

               2118(g)(3) required 21st Century and Liberty Mutual to submit this

27
   Id.
28
   Id.
29
   Id.
30
   Id. at *3-4.
31
   21 Del. C. § 2118(g)(3).
32
   Id.
33
   In this context, “party” refers to the claimant and not the claimant’s insurer. See, State Farm,
supra, at *2.
34
   21 Del. C. § 2118(j).
35
   21 Del. C. § 2118(j)(5).
36
   Id.
                                                  7
                 matter to arbitration.      The parties apparently believed they were

                 required to submit the matter to arbitration as well, because that is

                 exactly what they did.           After being ejected from arbitration, 21st

                 Century seeks to appeal to this Court, but, “Without specific statutory

                 authority to do so, the Superior Court has no jurisdiction to hear an

                 appeal. (citations omitted.)         Thus, § 2118(g)(3) does not grant the

                 Superior Court jurisdiction to hear an appeal from mandatory

                 arbitration between insurers.”37 21st Century cannot avail itself of the

                 appeal provisions of § 2118(j)(5) because the matter was not eligible to

                 be arbitrated under that section. Whether the matter was arbitrated on

                 the merits or not (as 21st Century claims) is of no significance. The

                 matter was required to go before an arbitration forum from which there

                 is no appeal. Accordingly, the Court finds that it has no jurisdiction to

                 entertain this case as an appeal.

          11.    Next, the Court turns to the fact that a judge previously assigned to this

                 case permitted an appeal under 21 Del. C. § 2118(j)(5) that this Court

                 has determined to be impermissible.           Normally, matters previously

                 litigated are not subject to re-litigation. However, where the previous

                 ruling was clearly in error, it makes no sense to defer correction of the

37
     New Hampshire Ins. Co., supra, at 329-330.
                                                  8
                 error until appeal. 38 If error can be corrected now, before the case

                 reaches appeal, it manifestly should be.            The Court finds that the

                 previous ruling permitting an appeal under § 2118(j)(5) was clearly in

                 error and will not be protected by the law of the case doctrine.

          12.    Finally, 21st Century argues that it can maintain this claim under a

                 common law right of subrogation. However, to the extent that common

                 law subrogation exists, it does not exist with respect to disputes

                 between insurers. A common law right of subrogation, operating in

                 parallel with 21 Del. C. § 2118(g)(3), would effectively vitiate the

                 mandatory arbitration provision of that statute.             Further, a system

                 countenancing both mandatory arbitration and independent common

                 law subrogation claims is a system ripe for confusion in the event of

                 differing or inconsistent awards.

          13.    The authorities cited by 21st Century do not warrant a different result,

                 inasmuch as none of those cases addressed the issue present here -

                 whether an insurer has a common law right to bring a subrogation

                 claim in Superior Court against another insurer. In fact, in Waters v.

                 United States 39 the Delaware Supreme Court specifically declined to

                 address that issue, holding that the question of whether Waters could

                 assert a common law right of subrogation against the United States,

38
     Hamilton v. State, 831 A.2d 881 (Del. 2003); Weedon v. State, 750 A.2d 521 (Del. 2000).
39
     787 A.2d 71 (Del. 2001).
                                                 9
              which was treated as a self insurer for purposes of 21 Del. C. § 2118

              analysis, was not before it. 40 In Nationwide Mut. Ins. Co. v. Wooters41

              the Court held that an insurer could sue an individual tortfeasor directly

              where the tortfeasor’s insurer was not subject to Delaware’s no-fault

              law because it was not licensed to do business in Delaware and not

              statutorily required to submit to arbitration.42                  In International

              Underwriters, Inc. v. Blue Cross and Blue Shield of Del., Inc. 43 the

              issue was whether § 2118 may reasonably be construed as barring a

              subrogation claim by a health care carrier against a no-fault carrier for

              reimbursement of covered medical expenses of both carriers’ insured

              resulting from a motor vehicle accident.44 In construing a different

              statute applicable to that case – 21 Del. C. § 2118(f) - the Court held

              that Blue Cross was not a no-fault carrier and its subrogation rights

              were not governed by § 2118. 45 Similarly, Givens v. Street, 46 the

              holding of which was cited with approval and adopted in International

              Underwriters,47 held that “The no-fault statute cannot properly be

              construed as governing subrogation rights arising under insurance

40
   Id. at 73-74.
41
   1996 WL 280778 (Del. Super. Jan. 31, 1996), aff’d 682 A.2d 71 (Del. 2001).
42
   Id. at *1.
43
   449 A.2d 197 (Del. 1982).
44
   Id. at 197.
45
   Id. at 199.
46
   405 A.2d 704 (Del. Super. Jun. 27, 1979).
47
   International Underwriters, supra, at 199.
                                              10
                  contracts not governed by the no-fault statute…”48 Here there is no

                  dispute that both parties are subject to the no-fault statute. Since all of

                  the foregoing cases deal with issues different than the one presented

                  here, none of them controls the outcome in this case.

          14.     Summary judgment is appropriate where there are no issues of material

                  fact and the moving party is entitled to judgment as a matter of law. 49

                  The Court finds that there are no issues of material fact relating to the

                  question of the Court’s subject matter jurisdiction. The Court further

                  finds that Liberty Mutual is entitled to judgment as a matter of law.

                  Specifically, the Court finds that 21st Century has no right of appeal

                  under 21 Del. C. §2118(j)(5); that the Court’s previous ruling to the

                  contrary was clearly in error; and that, under these facts, 21st Century

                  has no right to bring a common law subrogation claim.

          Therefore, because this Court lacks subject matter jurisdiction, Defendant’s

Motion for Summary Judgment is hereby GRANTED.

IT IS SO ORDERED.

                                                              ______________________
                                                               /s/ Ferris W. Wharton, J.

48
     Givens, supra, at 706.
49
     Super. Ct. Civ. R. 56(c).
                                               11