Fiat Motors of North America, Inc. v. Mayor of Wilmington

498 A.2d 1062, 1985 Del. LEXIS 574
CourtSupreme Court of Delaware
DecidedSeptember 9, 1985
StatusPublished
Cited by26 cases

This text of 498 A.2d 1062 (Fiat Motors of North America, Inc. v. Mayor of Wilmington) is published on Counsel Stack Legal Research, covering Supreme Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fiat Motors of North America, Inc. v. Mayor of Wilmington, 498 A.2d 1062, 1985 Del. LEXIS 574 (Del. 1985).

Opinion

CHRISTIE, Justice.

The Federal Court for the District of Delaware has certified three questions for review by this Court. The questions presented call for a determination of the impact which the Municipal Tort Claims Act, 10 Del.C. §§ 4010-4013, (hereinafter the Act) has had upon the law of municipal immunity in Delaware.

I.

Fiat Motors of North America, Inc. (here- ' inafter Fiat) imports and sells automobiles in the United States. In January of 1974, the City of Wilmington agreed to lease approximately 30 acres of property at the Wilmington Marine Terminal to Fiat for the processing, servicing and storage of its imported automobiles prior to their shipment to Fiat dealers in the United States. Pursuant to the lease executed between the parties, Fiat agreed to pay the City of *1063 Wilmington an annual rent of approximately $193,000, plus an annual adjustment to be based upon the wholesale price index.

On October 25, 1980, a severe rain storm caused flooding at the Marine Terminal. As a result of this storm, Fiat suffered a loss of over ten million dollars in damages to the vehicles parked there during the storm. The City had previously obtained one million dollars in insurance coverage for any tort liability on its part, and Fiat had obtained insurance coverage of ten million dollars. Apparently, Fiat’s carrier, through Fiat, seeks to recover from the City’s carrier and from the City the sums it has paid to Fiat as compensation for the loss. Fiat also seeks to recover for any part of its loss not covered by its own insurance.

Fiat and its insurer instituted a suit in Delaware Federal District Court against the City of Wilmington, alleging, inter alia, negligence on the part of the City. The City claimed that, even if it had been negligent, it was immune from liability under the provisions of the Act. The City moved for summary judgment on these grounds. Plaintiffs challenged the City’s claim of immunity on two grounds. They initially contended that because the City acted in its proprietary capacity (as opposed to its governmental capacity) in leasing the parking facilities, any negligent conduct of the City was beyond the protection of municipal immunity. Plaintiffs also claimed that the City’s purchase of liability insurance for activities, which might otherwise be subject to municipal immunity under the statute, constituted an implied waiver of municipal immunity.

The Federal District Court considered the briefs of the parties and heard oral argument on the City’s motion for summary judgment. It was at the oral argument that Judge Wright suggested the certification of the issues of State law to this Court. See Del. Const, art. IV, § 11(9); 1 Supreme Court Rule 41(a). 2 In its unreported memorandum of decision dated February 27, 1985, the District Court, 619 F.Supp. 29, discussed the legal issues before it in detail. The court expressed views on some of the issues, and concluded that, in view of the unsettled state of Delaware decisional law as to municipal immunity and in view of the broad impact which a ruling defining the scope of municipal immunity would have in Delaware, certain questions should be certified to this Court.

The following are the three questions which were certified to this Court, and this Court’s answers thereto:

Question 1: Does the County and Municipal Tort Claims Act, 3 10 Del. C. §§ 4010-4013, render a municipality immune from liability for its negligent acts or omissions when the municipality is acting in a proprietary capacity?
Answer: Yes, except as otherwise provided in § 4012 or “otherwise expressly provided by statute” under § 4011(a). Question 2: Does the County and Municipal Tort Claims Act, 10 Del.C. §§ 4010-4013, prohibit a municipality from waiving its statutory immunity?
Answer: Yes.
*1064 Question 3: Does a municipality’s purchase of insurance that provides the municipality with protection against liability for activities beyond the scope of the exceptions enumerated in 10 Del.C. § 4012 constitute an implied waiver of the municipality’s statutory immunity under 10 Del.C. § 4011 of the County and Municipal Tort Claims Act?
Answer: No.

We shall now briefly discuss these questions and explain our answers.

II.

In Delaware, the general rule has always been that a municipality is immune from suit for its negligent acts or omissions unless such immunity has been modified or waived by statute. Varity Builders, Inc. v. Polikoff, Del.Supr., 305 A.2d 618 (1973); Shellhorn & Hill, Inc. v. State, Del.Supr., 187 A.2d 71 (1962); Flait v. Mayor & Council of Wilmington, Del.Supr., 97 A.2d 545 (1953), overruled in, City of Wilmington v. Spencer, Del.Supr., 391 A.2d 199 (1978). Prior to the passage of the Act, the legislature had never specifically modified this rule or provided for a waiver of municipal immunity. However, there was an exception to the general rule of municipal immunity which had already been engraft-ed as part of our common law when we adopted the rule from England. See Flait, 97 A.2d at 545-6. This exception provided that when a municipality was operating in a proprietary capacity, its activities were not immune from liability because the municipality was functioning outside its traditional role. Only when the municipality was performing a governmental service were its activities immune. Spencer, 391 A.2d 199; Wilmington Housing Authority v. Williamson, Del.Supr., 228 A.2d 782 (1967).

This distinction has been consistently applied in Delaware courts up until the passage of the Act in 1979. The rule, which depends for its proper application upon the distinction between proprietary and governmental acts, is difficult to apply. In fact, the rule has been criticized as “illogical” and “unsatisfactory” by Delaware courts and recognized as “inherently unsound” by the United States Supreme Court. See Williamson, 228 A.2d at 786; Flait, 97 A.2d at 546; Indian Towing Company v. United States, 350 U.S. 61, 65, 76 S.Ct. 122, 124, 100 L.Ed. 48 (1955).

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498 A.2d 1062, 1985 Del. LEXIS 574, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fiat-motors-of-north-america-inc-v-mayor-of-wilmington-del-1985.