ACE American Insurance Co v. Guaranteed Rate, Inc.

• Court: Supreme Court of Delaware
• Decided: November 19, 2021
• Docket: 357, 2021
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

ACE AMERICAN INSURANCE § COMPANY, § § No. 357, 2021 Defendant Below, § Appellant, § Court Below—Superior Court § of the State of Delaware v. § § C.A. No. N20C-04-268 GUARANTEED RATE, INC., § § Plaintiff Below, § Appellee. §

Submitted: November 17, 2021 Decided: November 19, 2021

Before SEITZ, Chief Justice; VALIHURA and MONTGOMERY-REEVES, Justices.

ORDER

Upon consideration of the notice of interlocutory appeal, the supplemental

notice of interlocutory appeal, and the exhibits attached thereto, it appears to the

Court that:

(1) This interlocutory appeal arises from an insurance coverage dispute.

Plaintiff below-appellee Guaranteed Rate, Inc. (“GRI”), an underwriter and issuer

of federally-insured mortgage loans, had a Private Company Management Liability

Policy with defendant-below appellant ACE American Insurance Company (“ACE”).1 After receiving a Civil Investigative Demand (“CID”) on June 27, 2019,

GRI gave notice of the CID to ACE on July 8, 2019. 2 ACE denied that the CID

constituted a claim under the policy and declined to advance defense costs.3 On

April 30, 2020, GRI filed a breach of contract and bad faith action against ACE and

other insurers in the Superior Court.

(2) GRI filed a motion for partial judgment on the pleadings regarding three

issues: (i) whether the CID was a claim first made during the policy period; (ii)

whether policy exclusions, including the Professional Services Exclusion, negated

ACE’s obligation to advance GRI’s defense costs; and (iii) whether ACE breached

the policy by refusing to treat the CID as a claim and refusing to advance GRI’s

defense costs.4 ACE filed a cross-motion for judgment on the pleadings, arguing

that: (i) the Professional Services Exclusion barred coverage under the D&O part of

the policy; (ii) GRI had not pleaded a claim for loss under the Employment Practices

Liability Coverage part (“EPL”) of the policy; and (iii) the bad faith claim should

be dismissed.5

1 Guaranteed Rate, Inc. v. ACE Am. Ins. Co., 2021 WL 3662269, at *1 (Del. Super. Ct. Aug. 18, 2021). 2 Id. 3 Id. 4 Id. 5 Id. 2 (3) In a decision dated August 18, 2021, the Superior Court granted GRI’s

motion and denied ACE’s motion.6 The Superior Court held that the CID fell within

the definition of a claim under the policy, the claim was first made during the policy

period, and the July 8, 2019 notice triggered ACE’s obligation to advance defense

costs under the D&O part of the policy.7 The court also concluded that the

Professional Services Exclusion did not preclude coverage under the policy and that

GRI stated a claim for coverage under the EPL.8 Finally, the Superior Court found

there were questions of fact that made it premature to decide the bad faith claim.9

ACE filed a motion for reargument, which the Superior Court denied.

(4) On October 21, 2021, ACE filed an application for certification of an

interlocutory appeal. ACE sought interlocutory review of two of the Superior

Court’s rulings: (i) that the July 28, 2019 notice triggered ACE’s obligation to

advance defense costs; and (ii) that the Professional Services Exclusion did not apply

to prevent coverage. GRI opposed the application for certification.

(5) On November 16, 2021, the Superior Court denied the application for

certification. The court found that the interlocutory decision determined a

substantial issue of material importance. Considering the Rule 42(b)(iii) criteria

6 Id. at *5. 7 Id. at *2-3. 8 Id. at *3-4. 9 Id. at *4-5. 3 identified by ACE, the Superior Court concluded that the interlocutory decision did

not decide a question of law resolved for the first time in Delaware (Rule

42(b)(iii)(A) that was sufficient to warrant interlocutory review and that

interlocutory review would not terminate the litigation (Rule 42 (b)(iii)(G) because

the EPL and bad faith claims would remain. Finally, the Superior Court found that

the likely benefits of interlocutory review would not outweigh the inefficiency,

disruption, and probable costs.

(6) We agree with the Superior Court that interlocutory review is not

warranted in this case. Applications for interlocutory review are addressed to the

sound discretion of the Court.10 In the exercise of its discretion and giving due

weight to the Superior Court’s analysis, this Court has concluded that the application

for interlocutory review does not meet the strict standards for certification under

Supreme Court Rule 42(b). Exceptional circumstances that would merit

interlocutory review of the Superior Court’s interlocutory opinion do not exist in this

case,11 and the potential benefits of interlocutory review do not outweigh the

inefficiency, disruption, and probable costs caused by an interlocutory appeal.12

10 Supr. Ct. R. 42(d)(v). 11 Supr. Ct. R. 42(b)(ii). 12 Supr. Ct. R. 42(b)(iii). 4 NOW, THEREFORE, IT IS ORDERED that the interlocutory appeal is

REFUSED.

BY THE COURT:

/s/ Collins J. Seitz, Jr. Chief Justice