City of Wilmington v. GEICO Advantage Insurance Company

CourtSuperior Court of Delaware
DecidedNovember 22, 2016
DocketN16C-05-261 PRW
StatusPublished

This text of City of Wilmington v. GEICO Advantage Insurance Company (City of Wilmington v. GEICO Advantage Insurance Company) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Wilmington v. GEICO Advantage Insurance Company, (Del. Ct. App. 2016).

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE CITY OF WILMINGTON,

C.A. NO. N16C-05-261 PRW

Plaintiff, Consolidated

V.

GEICO ADVANTAGE INSURANCE COMPANY, a Foreign Corporation,

Defendant.

CITY OF WILMINGTON,

Appellant/ Defendant Below,

GEICO GOVERNMENT EMPLOYEES INSURANCE COMPANY,

Appellee/ PlaintiffBeloW.

Submitted: September 26, 2016 Decided: November 22, 2016

COMMISSIONER’S REPORT AND RECOMMENDATION THAT DEFENDANT’S MOTION TO DISMISS BE DENIED AND PLAINTIFF’S MOTIONS TO CONVERT TO WRIT OF CERTIORARI BE GRANTED

Sarah A. Fruehauf, I£Squire, and Chrislof`er C. Johnson, blsquire, Assistant C`tty Solicitor, Louis L. Reclding City/County Building, 800 French Street, 9“1 Floor, Wilrnington, Delaware

Amanda T. Dobies, Esquire, The LaW Offlce of Dawn L. Becker, Citizens Bank Center, 919 Market Street, Suite 725, Wilmington, Delaware

Commissioner, Mayer

This 22nd day of November 2016, upon consideration of the issues

presented in these matters,l it appears to the Court that: W

The facts and history of these cases are set forth below and present a troubling set of circumstances It is evident from a review of the record that the lower tribunal lacked subject matter jurisdiction over the parties’ disputes. Despite this, the lower tribunal not only assumed jurisdiction after previously acknowledging it was lacking, but GEICO2 would have this Court deny the City of Wilmington any avenue for review. For the reasons discussed herein, GEICO’s l\/Iotion to Dismiss is denied and the City’s Motions to Convert to a Writ of Certiorari are granted.

FINDINGS OF FACT & PROCEDURAL HISTORY

Civil Action No. N15C-09-218 (“Case l”)

On April 14, 2014, GEICO- Government Employees Insurance Company (“GEICO-Govt”) filed a subrogation lawsuit against the City of Wilmington (the

“City”), in the Court of Common Pleas.3 The City moved to dismiss the lawsuit on

l Civil Action No. Nl 5C-09-218 was consolidated with Civil Action No. Nl 6C-05-26l.

2 Although the GEICO entities involved in these two matters appear to be two separate entities, where appropriate, they are collectively referred to as “GEICO”.

3 The facts for Case l were primarily taken from the City’s Motion to Convert to Writ of Certiorari.

the grounds that the court lacked jurisdiction and argued that pursuant to 21 Del. C. §21 18(g)(3) the proper forum for a dispute between an insurer (GEICO-Govt) and a self-insured entity (the City) is arbitration before the Delaware Insurance Commissioner. The Court of Common Pleas granted the motion and dismissed the matter without prejudice to it being re-filed in the appropriate arbitration venue.

On October 20, 2014, without notice to the City’s counsel, GEICO-Govt re- filed its complaint by commencing a subrogation action against the City before Arbitration Forums, Inc. (“AFI”) ~ not the Insurance Commissioner. Upon learning of the filing, the City again moved to dismiss the matter arguing AFI lacked jurisdiction because the complaint should have been brought before the Insurance Commissioner. On February 9, 2015, AFI dismissed the filing and upheld the City’s affirmative defense of lack of jurisdiction4

In complete disregard for AFI’s ruling, and again without notice to the City’s counsel, GEICO-Govt re-filed its previously dismissed complaint with AFI, The City claims it did not receive notice of this new complaint nor afforded an opportunity to respond. On July 2, 2015, an adverse judgment was entered by default against the City in the amount of $25,000.00. When the City learned of the decision, it filed a request for reconsideration with AFI and moved to vacate the

decision on the basis that, consistent with AFI’s previous decision, it lacked

4 Case 1, Docket No. 6, Exhibit F.

jurisdiction. Curiously, although AFI had previously recognized that it lacked subject matter jurisdiction over the dispute, AFI declined to reconsider its judgment against the City and stated “AF is authorized to correct only those decisions where a clerical or jurisdictional error was made by AF or the arbitrator. Unfortunately, the issue you raised does not constitute a clerical or jurisdictional error.”5

On September 23, 2015, the City filed an appeal with this Court from AFI’s decision.6 On August 29, 2016, the City filed a Motion to Convert to Writ of Certiorari.7 On that same date, the City moved to consolidate this matter with Case 2 (summarized below).8 On September 26, 2016, the Court granted the request to consolidate9 To date, GEICO-Govt has not appeared in this matter nor filed a response Civil Action No. N16C-05-261 (“Case 2”)

On December 14, 2015, GEICO Advantage Insurance Company (“GEICO- AIC”) filed another subrogation lawsuit in the Court of Common Pleas against the

City that was subsequently voluntarily dismissed after the City again argued that

5 case 1, Docket No. 1, Exhibits. 6 Case l, Docket No. 1. 7 Case l, Docket No. 6. 8 Case 1, Docket No. 7.

9 Case 1, Docket No. 10; Case 2, Docket No. 17.

the appropriate forum to litigate the dispute was arbitration before the Delaware Insurance Commissioner. Thereafter, and up through February 10, 2016, the parties’ counsel engaged in back and forth communications including discussions addressing whether the applicable statute, 21 Del. C. §2118(g)(3), directs subrogation claims, such as the one brought by GEICO-AIC, to be arbitrated before the Insurance Commissioner. During this time, unbeknownst to the City, GEICO-AIC filed a claim with AFI on December 26, 2016 and obtained a decision in its favor, by default, on February 17, 2016. Upon learning of the decision, the City appealed to AFI and argued both a clerical error with respect to improper service, as well as lack of jurisdiction. AFI denied the appeal on the basis that the City should have raised the issue in response to the complaint.

This matter was then brought before this Court by way of a Notice of Appeal filed by the City on l\/Iay 26, 2016.10 Similar to Case 1, the City argues AFI lacked jurisdiction over the City as a self-insured entity, and lacked jurisdiction over the subject matter of the litigation, under the subrogation statute. On June 16, 2016, GEICO-AIC filed a Motion to Dismiss the appeal in Case 2.ll The City filed an

Opposition to the Motion to Dismiss and simultaneously filed a Motion to Convert

10 Case 2, Docket No. 1.

ll Case 2, Docket No. 2.

to a Writ of Certiorari.12 GEICO-AIC opposed the Motion to Convert13 and oral argument was held on August 9, 2016. At the conclusion of the hearing, the parties were directed to submit supplemental briefing that is now complete.14 CONCLUSIONS OF LAW At the outset, it is important to note that jurisdiction to hear and determine

disputes between an insurer and self-insured has been specifically carved out by statute and the correct forum for litigation of such disputes is mandatory arbitration before the Delaware Insurance Commissioner, not AFI. The second clause of 21 Del. C. §21 18(g)(3) provides that:

Disputes among insurers as to liability or amounts paid

pursuant to paragraphs (1) through (4) of subsection (a)

of this section shall be arbitrated by the 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 t0 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.

(emphasis added).15 See also State Farm Mut. Auto. Ins. CO. v. UPS, 2012 WL

1495338, at *1 (Del. Super., Apr. 30, 2012) (citing the definition of self-insured in

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City of Wilmington v. GEICO Advantage Insurance Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-wilmington-v-geico-advantage-insurance-company-delsuperct-2016.