Galarza v. Olmstead

• Court: Superior Court of Delaware
• Decided: April 19, 2021
• Docket: N18C-04-091 CEB
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

NEYDA GARCIA GALARZA, ) Individually and as Guardian Ad Litem for ) KARLA GALARZA and MARIA B. ) CEBRERO-GARCIA, ) ) Plaintiffs, ) v. ) C.A. No. N18C-04-091 CEB ) LEE DAVID OLMSTEAD, ) MOISES GARCIA-CASTELLANOS and ) NATIONWIDE PROPERTY & ) CASUALTY INSURANCE COMPANY, ) ) Defendants. )

Submitted: January 13, 2020 Decided: April 19, 2020

MEMORANDUM OPINION

Defendant Nationwide Property & Casualty Insurance Company’s Motion for Summary Judgment. GRANTED.

Jonathan B. O’Neill, Esquire, KIMMEL, CARTER, ROMAN, PELTZ & O’NEILL, P.A., Christiana, Delaware. Attorney for Plaintiffs.

Amy M. Taylor, Esquire, HECKLER & FRABIZZIO, Wilmington, Delaware. Attorney for Defendant Lee David Olmstead.

Moises Garcia-Castellanos, Wyoming, Delaware. Pro Se Defendant.

Donald M. Ransom, Esquire, CASARINO CHRISTMAN SHALK RANSOM & DOSS, P.A, Wilmington, Delaware. Attorneys for Defendant Nationwide Property and Casualty Insurance Company.

BUTLER, R.J. FACTS AND PROCEDURAL HISTORY

This dispute is really about insurance coverage, so let us begin there.

Moises Garcia-Castellanos (“Husband”) and Neyda Garcia Galarzo (“Wife”)

are married with one Child. Husband and Wife had an auto insurance policy with

Nationwide Insurance. Nationwide and Husband came to a parting of the ways,

causing Nationwide, Husband and Wife to write a “named driver exclusion” into the

insurance policy whereby Husband was excluded from coverage under the policy,

thus making wife the only insured driver.1 The policy’s “Authorization to Exclude

a Driver” stated: “the company has agreed to issue or continue coverage . . . provided

that coverage is excluded while: Moises Garcia is operating any of the vehicles to

which the policy applies.”2

Notwithstanding his absence on the auto insurance policy, Husband was

driving the family vehicle with the insured Wife and Child in the car when

Husband’s negligent driving caused an accident in which Wife and the Child were

injured.

1 While no mention of why this exclusion was applied to Husband is made in these pleadings, such exclusions typically follow a bad driving record of a particular driver in the household. 2 Compl., Ex. E, D.I. 65853541.

2 The second car was driven by Lee David Olmstead, but save for his

participation in the accident, he is not relevant to this motion. It is conceded for our

purposes that Husband’s negligence was the sole cause of the collision.

Wife and Child have sued Husband, the uninsured driver, for uninsured

motorist coverage under Wife’s policy for the injuries suffered by Wife and Child.

ISSUE PRESENTED

Defendant Nationwide moves for summary judgment, arguing that

Nationwide is not required to provide uninsured motorist benefits for the conduct of

the excluded driver. In response, Wife and Child argue summary judgment is

inappropriate because Nationwide is relying on an exclusion from coverage that is

unenforceable as a matter of Delaware law.

STANDARD OF REVIEW

This Court will grant summary judgment where “there is no genuine issue as

to any material fact and that the moving party is entitled to a judgment as a matter

of law.”3 The moving party bears the initial burden of showing that the undisputed

facts make judgment appropriate.4 If the burden is satisfied, the burden shifts to the

non-moving party to demonstrate that there are material issues of fact that must

proceed to trial.5

3 Super. Ct. Civ. R. 56(c). 4 Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979). 5 Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995).

3 ANALYSIS

In order to get to the heart of the matter, we will assume that the reader is

familiar with the basics of Delaware’s “no fault” auto insurance law, by which all

motorists on Delaware roads are required to carry insurance against liability in the

event they are responsible for injuries to others.6 It is called “no fault” because the

insurance mandated by the statute also covers injuries to the policy holder in the

event the driver himself is negligent.7

This dispute is a layer beyond the ordinary: what happens when a policy

holder is injured by a hit and run driver? Or a driver who is himself uninsured? To

protect policy holders from such a risk, 18 Del. C. § 3902 requires the insurance

company to offer uninsured motorist coverage; that is, the policy purchased by the

insured must offer the option for the policy holder to cover the risk of being injured

by a driver who is not insured. That coverage, however, is not mandatory and the

policy holder may opt out of uninsured motorist coverage, so long as doing so is

clearly indicated in the policy documents.8 On the other hand, when the policy

holder elects uninsured motorist coverage, it is presumed that the purpose of the

coverage is to protect the innocent policy holder from damages caused by unknown

6 21 Del. C. § 2118(a)(1). 7 21 Del. C. § 2118(a)(2). 8 18 Del. C. § 3902.

4 or impecunious negligent tort-feasors and limitations on such protection are

narrowly construed.9

The permissibility and scope of exclusions from coverage under an uninsured

motorist provision have been disputed from time to time. For example, in Frank v.

Horizon Assur. Co. the Delaware Supreme Court held that Horizon could not

exclude the policy holder from relief under her uninsured motorist policy with

Horizon just because she had a similar policy on a different vehicle with a different

insurance company which was in an accident with an uninsured driver. 10 In State

Farm Mut. Auto Ins. Co. v. Abramowicz, the plaintiff sought uninsured motorist

coverage for injuries she sustained when she veered to avoid a driver that fled the

scene. The insurance company attempted to limit uninsured motorist coverage by

pointing to a policy provision that limited uninsured motorist coverage to drivers

that actually struck the insured vehicle. The Supreme Court voided the contractual

provision of the policy, saying it unlawfully limited the scope of the uninsured

motorist coverage required by the statute.11

9 See, e.g., Lomax v. Nationwide Mut. Ins. Co., 964 F.2d 1343, 1346 (3d Cir. 1994); Miller v. State Farm Auto Ins. Co., 993 A.2d 1049, 1053-54 (Del. 2010); Bryant v. Progressive Northern Ins. Co., 2008 WL 4140686, at *3 (Del. Super. Jul. 28, 2008), rearg., denied, 2008 WL 4899419, at *1 (Del. Super. Sept. 16, 2008). 10 553 A.2d 1199, 1200 (Del. 1989). 11 386 A.2d 670, 674 (Del. 1978).

5 18 Del. C. § 3909 authorizes named driver exclusions, which ensure continued

coverage of an automobile where the driving record of a household member warrants

non-issuance or cancellation of a policy.12 Delaware’s driver exclusion statute

allows an insurance carrier to withhold coverage from individuals who pose an

unreasonably high risk of liability to the carrier.13

But even named driver exclusions are read narrowly, as we see in the case of

State Farm Mut. Ins. Co. v. Washington.14 In Washington, the son of Mr.

Washington was excluded by name from his father’s insurance policy. The son was

injured while driving his aunt’s car and the injury was caused by the negligence of

the other driver. He sought coverage as a member of his father’s household. The

Supreme Court repudiated State Farm’s argument that the son could not recover

because he was a named driver excluded from coverage under the policy.

Washington thus had some of the elements before us, but not all of them. Wife

and Child, like Washington, were innocent victims. But unlike Washington, the

named excluded driver was the tort-feasor. Indeed, Husband makes no claim of a

right to insurance coverage in this case.

Adding to the mix, 18 Del. C. § 3909(c) provides that:

12 18 Del. C. § 3909; State Farm Mut. Ins. Co. v. Washington, 641 A.2d 449, 451- 52 (Del. 1994). 13 State Farm Mut. Ins. Co. v. Washington, 1993 WL 1626510, at *6 (Jun. 29, 1993). 14 641 A.2d at 451.

6 With respect to any person excluded from coverage under this section, the policy may provide that the insurer shall not be liable for damages, losses or claims arising out of this operation or use of the insured motor vehicle, whether or not such operation or use was with the express or implied permission of a person insured under the policy.15

Husband was a “person excluded from coverage under this section.” The

statute permits the insurer to provide that it shall not be liable for “damages, losses

or claims” arising from Husband’s operation of the vehicle.

In the face of this clear language, Wife has argued to the Court that the

provision that the insurer “shall not be liable” refers to Nationwide’s liability policy,

not the uninsured motorist provision. But the statute under consideration is the

uninsured motorist of Title 18, not the liability provisions of Title 21. And the

legislature clearly intended to permit the insurer to exclude all “damages, losses or

claims,” whether they are liability claims or uninsured motorist claims.

Kivlin v. Nationwide Ins. Co. involved a claim against the insurer of a motorist

who was a named excluded driver.16 Kivlin was injured in an accident caused by a

teenage son (and excluded driver) of insured parents. Kivlin named the son’s parents

as defendants by virtue of 21 Del. C. §§ 6105 and 6106, which together impute the

youthful driver’s negligence on the parents. Kivlin also sued Nationwide, arguing

that Nationwide had a duty to insure the parents should they be found liable to

15 18 Del. C. § 3909(c). 16 765 A.2d 536, 538 (Del. 2000).

7 Kivlin. Nationwide resisted, pointing to section 3909(c) and the

“Voiding Endorsement” in its policy that specifically excluded coverage for the

teenage son.

The Supreme Court dispatched Kivlin’s arguments, holding that the plain

meaning of section 3909(c) is that when the named excluded driver is operating the

vehicle, there is, in effect, no coverage.

While public policy is unnecessary to support the plain, clear meaning of the

statute, Kivlin brings the public policy home. In Kivlin, the defendant family’s

personal fortunes were put directly at risk by the son’s negligent driving of the

vehicle as they could not look to their auto insurer to cover the damages from his

negligence. On the other hand, the family was in the best position to keep him from

behind the wheel of the family vehicle and the family was well aware of his

exclusion as a driver. So while the named driver exclusion does limit the availability

of insurance, and limitations are to be narrowly construed, Kivlin and this case

demonstrate that when the exclusion compels the insured to control who is driving

the insured car without a remedy in insurance, we might conclude that the statute

and the policy are in harmony – or at least not so out of harmony as to hurt one’s

ears.

In sum, Wife and Child have not convinced the Court that they are entitled to

uninsured motorist coverage for claims arising out of Husband’s operation of the

8 insured vehicle. As such, defendant Nationwide is entitled to judgment as a matter

of law.

CONCLUSION

The motion of Nationwide Property and Casualty Insurance Company for

summary judgment is GRANTED.

IT IS SO ORDERED.

Charles E. Butler, Resident Judge