Henry v. Cincinnati Insurance Company

• Court: Superior Court of Delaware
• Decided: July 31, 2018
• Docket: N18C-03-092 ALR
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

JOHN HENRY and DARLENE ) HENRY ) ) Plaintiffs, ) ) v. ) C.A. No. N18C-03-092 ALR ) THE CINCINNATI INSURANCE ) COMPANY ) ) Defendant. )

Submitted: May 10, 2018 Decided: July 31, 2018

Upon Defendant Cincinnati Insurance Company’s Motion to Dismiss GRANTED

MEMORANDUM OPINION

Jonathan B. O’Neill, Esq., Jennifer D. Donnelly, Esq., Kimmel, Carter, Roman, Peltz & O’Neill, P.A., Attorneys for Plaintiffs

Krista E. Shevlin, Esq., William A. Crawford, Esq., Franklin & Prokopik, Attorneys for Defendant

Rocanelli, J. FACTUAL AND PROCEDURAL BACKGROUND

On September 29, 2015, Plaintiff John Henry (“Employee”) was operating a

motor vehicle in the course of his employment with Horizon Services (“Employer”)

when he was rear-ended by a third-party tortfeasor. Employee sustained injuries to

his neck, back, and right shoulder. The tortfeasor was insured by Liberty Mutual

with a policy limit of $50,000.00 per occurrence. The Employer’s vehicle was

insured under a policy with Cincinnati Insurance Company (“CIC”) that included

underinsured motorist (“UIM”) coverage with limits of $1,000,000.00 per accident.

Following the accident, Employee accepted workers’ compensation for his

injuries. In addition, on or about January 11, 2018, Employee settled his liability

claim with the tortfeasor and received the tortfeasor’s $50,000.00 policy limit.

Employee then made a claim with CIC for UIM coverage under Employer’s policy,

which CIC denied. Accordingly, on March 12, 2018, Employee and his wife,

Darlene Henry, (collectively, “Plaintiffs”) filed this lawsuit seeking underinsured

motorist benefits from CIC. Plaintiff Darlene Henry also raises a loss of consortium

claim.

CIC filed a motion to dismiss in lieu of an answer on April 23, 2018. CIC

argues that the workers’ compensation benefits Employee received under the

Delaware Workers’ Compensation Act (“WCA”)1 constitute Employee’s exclusive

1 19 Del. C. §§ 2301-2397 1 remedy against Employer. Accordingly, CIC argues that Employee is not entitled

to recover UIM benefits under Employer’s insurance policy as a matter of law. In

response, Plaintiffs argue that the WCA was amended to allow an employee to

recover both workers’ compensation benefits and UIM benefits under an employer’s

insurance policy. Plaintiffs argue that Employee’s claim to UIM benefits is subject

to the post-amendment version of the WCA, such that Employee is entitled to UIM

benefits under Employer’s policy with CIC. This is the Court’s decision on CIC’s

motion to dismiss.

STANDARD OF REVIEW

As a preliminary matter, the Court needs to determine whether CIC’s motion

shall be treated as a motion to dismiss under Superior Court Rule of Civil Procedure

16(b)(6), or a motion for summary judgment under Superior Court Rule of Civil

Procedure 56. If a party attaches matters outside of the pleadings to a motion to

dismiss brought under Rule 12(b)(6), the motion “shall be treated as one for

summary judgment and disposed of as provided in Rule 56.”2 To determine whether

the presentation of matters outside of the pleadings will convert a motion to dismiss

into a motion for summary judgment, the Court analyzes “whether the extraneous

matters are integral to and have been incorporated within the complaint and whether

2 Super. Ct. Civ. R. 12(b)(6). 2 they have been offered to the court to establish the truth of their contents.” 3 “If the

extraneous matters have been offered to establish their truth, the court must convert

the motion to dismiss to a motion for summary judgment.”4

Here, CIC attached multiple exhibits to the motion to dismiss, including a

copy of the complaint sent to the Delaware Insurance Commissioner’s office,

Employee’s workers’ compensation records, the Employer’s insurance policy with

CIC, and a copy of the bill amending the WCA.5 However, none of these documents

are offered for their truth, as the parties do not dispute that Plaintiffs filed suit against

CIC, that Employee accepted workers’ compensation, that Employer was insured

with CIC, or that the WCA was amended. Therefore, the documents attached by

CIC meet the “narrow exception to the prohibition against extraneous matter,”6 such

that the CIC’s motion shall still be treated as a motion to dismiss under Rule

12(b)(6).

Delaware is a notice pleading jurisdiction.7 Therefore, to survive a motion to

dismiss, a complaint only needs to give general notice of the claim asserted. 8 In

deciding a motion to dismiss under Rule 12(b)(6), the Court shall accept all well-

3 Mell v. New Castle County, 835 A.2d 141, 144 (Del. Super. 2003). 4 Id. 5 Mot to Dismiss, Ex. 1-4 (Apr. 23, 2018). 6 Great American Assur. Co. v. Fisher Controls Intern., Inc., 2003 WL 21901094, at *3 (Del. Super. Aug. 4, 2003). 7 Doe v. Cahill, 884 A.2d 451, 458 (Del. 2005). 8 Id. 3 pleaded allegations as true and make all reasonable inferences in favor of the non-

moving party.9 Factual allegations, even if vague, are well-pleaded if they provide

notice of the claim to the other party.10 The Court should deny the motion if the

claimant “may recover under any reasonably conceivable set of circumstances

susceptible of proof.”11

DISCUSSION

The central question in this litigation is whether Employee’s claim for UIM

benefits is subject to the pre-amendment or post-amendment version of the WCA.

CIC argues that the pre-amendment version of the WCA applies, such that Employee

cannot receive UIM benefits because his workers’ compensation benefits constitute

his exclusive remedy. By contrast, Plaintiffs argue that the post-amendment version

of the WCA applies because Employee’s claim for UIM did not arise until Employee

settled with the tortfeasor for the full policy limits, which was after the amendment

went into effect. Accordingly, Plaintiffs argue that Employee can recover UIM

benefits in addition to workers’ compensation benefits.

9 Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998); Spence v. Funk, 396 A.2d 967, 968 (Del. 1978). 10 Spence, 396 A.2d at 968. 11 Id. 4 I. The Evolution of the WCA

In Simpson v. State, this Court considered, as an issue of first impression,

whether an employee who accepts workers’ compensation may also accept UIM

benefits under the employer’s insurance policy.12 The case arose after the plaintiff

sustained injuries in a car accident that occurred in the course and scope of her

employment.13 The plaintiff accepted workers’ compensation for her injuries, and

also received the policy limits of the tortfeasor’s insurance policy. 14 The plaintiff

then sought UIM benefits under her employer’s insurance policy, but was denied.15

As a result, the plaintiff brought suit to recover the UIM benefits. The plaintiff’s

self-insured employer moved for summary judgment, arguing that the workers’

compensation benefits that the plaintiff received constituted her exclusive remedy

under the WCA.16

The question before the Court in Simpson was “whether [the plaintiff] may

pursue a UIM claim against her [employer] … for essentially the same injuries [for

which] she received workers’ compensation in light of the WCA’s exclusivity

clause.”17 At the time, the exclusivity clause of the WCA provided:

12 2016 WL 425010 (Del. Super. Jan. 28, 2016). 13 Id. at *1. 14 Id. 15 Id. 16 Id. at *2. 17 Id. 5 Every employer and employee, adult and minor, except as expressly excluded in this chapter, shall be bound by this chapter respectively to pay and to accept compensation for personal injury or death by accident arising out of and in the course of employment, regardless of the question of negligence and to the exclusion of all other rights and remedies.18

The Court held that the purpose of UIM coverage is to “insure that individuals

have the ability to be compensated for their injuries beyond what may be available

from a negligent tortfeasor’s policy.”19 However, the Court reasoned that this

underlying purpose of UIM benefits is fulfilled when an individual receives workers’

compensation benefits.20 In other words, the Court held that permitting an injured

employee to recover UIM benefits in addition to workers’ compensation benefits

would allow “the injured party [to] be compensated twice for the same injury.” 21

Therefore, the Court held that the WCA’s exclusivity clause, as it was written at the

time, precluded an injured employee who accepts workers’ compensation benefits

from also receiving UIM benefits.

However, the Court also acknowledged that the issue “requires clarification

from the legislature” to determine which injuries are covered by the WCA and which

are covered under personal injury policies.22 The Court suggested that “recovery

18 19 Del. C. § 2304 (2016) [pre-amendment version]. 19 Id. at *4. 20 Id. 21 Id. 22 Id. 6 under both is not fully aligned, meaning the exclusivity provision could operate to

unfairly deprive an employee of much-needed benefits.”23 Therefore, the Court

suggested that there be a “clear legislative mandate” to explain any inconsistencies

in coverage.24

In response to Simpson, the legislature amended the exclusivity clause of the

WCA. The post-amendment version of the WCA’s exclusivity clause states:

Except as expressly included in this chapter and except as to uninsured motorist benefits, underinsured motorist benefits, and personal injury protection benefits, every employer and employee, adult and minor, shall be bound by this chapter respectively to pay and to accept compensation for personal injury or death by accident arising out of and in the course of employment, regardless of the question of negligence and to the exclusion of all other rights and remedies.25

In other words, the post-amendment version of the WCA excepts UIM benefits from

the exclusivity clause, such that an injured employee can recover both workers’

compensation benefits and UIM benefits for the same injuries. The post-amendment

version of the WCA went into effect on September 6, 2016.

Following the amendment to the exclusivity clause of the WCA, the Superior

Court in Robinson v. State was tasked with determining whether the post-amendment

version would apply retroactively.26 This required the Court to analyze whether the

23 Id. 24 Id. 25 19 Del. C. § 2304 (effective Sept. 6, 2016) (emphasis added). 26 2017 WL 1363894 (Del. Super. Apr. 11, 2017), aff’d, 176 A.3d 1274 (Del. 2017). 7 amendment was a clarification or a substantive change, as only clarifications can

apply retroactively.27 The Court concluded that the amendment to the WCA’s

exclusivity clause was a substantive change because the legislature did not declare

that the amendment was clarifying, because there was no conflict or ambiguity prior

to the amendment, and because the post-amendment version is not consistent with a

reasonable interpretation of the pre-amendment version.28 Therefore, the Court

concluded that the post-amendment version of the WCA does not apply

retroactively.29

II. Employee’s Claim for UIM Benefits is Subject to the Pre- Amendment Version of the WCA.

Both the pre-amendment and post-amendment versions of the WCA’s

exclusivity clause provide that an employee is “bound” to accept workers’

compensation for “personal injury or death by accident arising out of and in the

course of employment.”30 In other words, once an employee is involved in an

employment-related accident, he or she is thereby bound to accept workers’

compensation for any injuries sustained therein. In this sense, the WCA is triggered

27 Id. at *1. 28 Id.at *2 (applying the standard set forth in Trusz v. UBS Realty, 2016 WL 1559563, at *5 (D. Conn. Apr. 18, 2016)). 29 Id. 30 19 Del. C. § 2304 (2016) [pre-amendment version]; 19 Del. C. § 2304 (effective Sept. 6, 2016). 8 at the moment an employment-related accident occurs.31 Accordingly, the

applicable version of the WCA is the one in effect at the time of a particular

employment-related accident.

Here, Employee was involved in an accident arising out of and in the course

of his employment on September 29, 2015, approximately one year prior to the

effective date of the amendment to the WCA. Therefore, the pre-amendment version

of the WCA applies to Employee’s receipt of workers’ compensation benefits, and

subsequent claim to UIM benefits. Under the exclusivity clause of the pre-

amendment version of the WCA, Employee is prohibited from receiving both

workers’ compensation benefits and UIM benefits under Employer’s insurance

policy.32 Therefore, Plaintiff is not entitled to receive UIM benefits under

Employer’s policy with CIC.

In addition, the Court notes that Plaintiff Darlene Henry’s loss of consortium

claim is derivative. In Farrall v. Armstrong Cork Co., this Court held that the

“derivative nature of [a spouse’s] cause of action has resulted in the barring of a

claim for loss of consortium where the spouse’s exclusive remedy against the

31 See e.g., 19 Del. C. § 2303(b) (connecting the calculation of workers’ compensation wages to the date of the injury); Johnson v. Chrysler Corp., 213 A.2d 64, 66 (Del. 1965) (stating that workers’ compensation cannot be awarded unless and until “the claimant establishes by probative evidence that he suffered an injury and that such injury was the result of an accident taking place in the course of his employment”). 32 Simpson, 2017 WL 425010, at *4. 9 employer is workmen’s compensation.”33 Here, the Court has concluded that

workers’ compensation is Employee’s exclusive remedy against Employer.

Therefore, Plaintiff Darlene Henry’s claim for loss of consortium must also fail.

Plaintiffs cannot establish under any reasonably conceivable set of

circumstances that Employee is entitled to UIM benefits or that Plaintiff Darlene

Henry is entitled to damages for loss of consortium. Therefore, CIC’s motion to

dismiss must be granted.

III. The Date that Plaintiffs Settled with the Tortfeasor Does Not Control.

Plaintiffs argue that Employee’s claim for UIM benefits is subject to the post-

amendment version of the WCA because Employee did not settle with the tortfeasor,

and become entitled to UIM benefits, until after the amendment went into effect.

Plaintiffs rely on the language of Delaware’s UIM statute, which provides in relevant

part that the “insurer shall not be obligated” to make UIM payments “until after the

limits of liability under all bodily injury bonds and insurance policies available to

the insured at the time of the accident have been exhausted by payment of settlement

or judgments.”34 Plaintiffs claim that Employee only became entitled to UIM

benefits after settling with the tortfeasor on January 11, 2018, which is after the

amendment to the WCA went into effect. Therefore, Plaintiffs argue that

33 457 A.2d 763, 770 (Del. Super. 1983). 34 18 Del. C. § 3902(b)(3). 10 Employee’s claim for UIM benefits should be subject to the post-amendment version

of the WCA, such that Employee should be able to recover UIM benefits in addition

to workers’ compensation.

Plaintiffs’ argument is without merit. It is true that in the ordinary course a

person does not become entitled to UIM benefits until after he or she has exhausted

the liability coverage under the tortfeasor’s insurance policy.35 However, Employee

never became entitled to UIM benefits in this case, regardless of his settlement with

the tortfeasor, because he accepted workers’ compensation under a version of the

WCA that prohibited him from also receiving UIM benefits.36 The date of the

accident giving rise to workers’ compensation, and not the date that Employee

settled with the tortfeasor, controls which version of the WCA applies to Employee’s

claim. Therefore, because the accident occurred prior to the amendment to the

WCA, Employee’s claim for UIM benefits is subject to, and prohibited by, the pre-

amendment version of the WCA’s exclusivity clause.

CONCLUSION

The pre-amendment version of the WCA’s exclusivity clause applies to

Employee’s claim for UIM benefits. As a result, Employee’s workers’

compensation benefits constitute Employee’s exclusive remedy against Employer,

35 18 Del. C. § 3902(b)(3). 36 Simpson, 2017 WL 425010, at *4. 11 such that he is prohibited from receiving UIM benefits under Employer’s policy with

CIC. In addition, the loss of consortium claim is derivative, and is barred where

Employee’s exclusive remedy against Employer is workers’ compensation.

Accordingly, this lawsuit must be dismissed, as there is no basis for relief.

NOW, THEREFORE, this 31st day of July, 2018, Defendant Cincinnati

Insurance Company’s Motion to Dismiss is hereby GRANTED and the

complaint is hereby DISMISSED.

IT IS SO ORDERED.

Andrea L. Rocanelli ____________________________ The Honorable Andrea L. Rocanelli