State Farm Mutual Automobile Insurance v. Patterson

7 A.3d 454, 2010 Del. LEXIS 569, 2010 WL 4403109

• Court: Supreme Court of Delaware
• Decided: November 8, 2010
• Docket: 32, 2010
• Status: Published

Opinions

RIDGELY, Justice,

for the Majority:

This action involves a dispute over Delaware uninsured motorist (“UM”) benefits. Aneita Patterson is a Delaware resident who was injured while driving her automobile in New Jersey. A New Jersey resident, Jean Armstrong, was at fault for the collision. Patterson filed a claim against Armstrong’s insurance carrier, Allstate. Allstate denied the claim. Patterson then brought this action for uninsured motorist benefits against her Delaware insurance carrier, State Farm. State Farm moved for summary judgment on the ground that Patterson was not “legally entitled to recover” from Armstrong under the New Jersey law, and therefore, was not eligible to receive UM benefits under the State Farm policy. The Superior Court determined that Delaware law applied, denied State Farm’s motion for summary judgment and awarded compensatory damages to Patterson. On appeal, State Farm argues that the Superior Court erred as a matter of law in concluding that Patterson was “legally entitled to recover” against the tortfeasor under title 18, section 3902(a) of the Delaware Code. We find no merit to State Farm’s position and affirm.

Facts and Procedural History

Jean Armstrong rear ended Aneita Patterson on a New Jersey highway on February 1, 2007. Patterson is a Delaware resident and her vehicle is registered in Delaware. Her Delaware carrier, State Farm Mutual Automobile Insurance Company, insured her under a policy issued in Delaware. Allstate Insurance Company insured Armstrong.

After the accident, Patterson filed a third party bodily injury claim for soft tissue injuries with Allstate. Allstate denied Patterson’s claim because Allstate did not believe that Patterson had pierced the “verbal threshold” under the New Jersey Verbal Tort Threshold Statute, which limits tort based recovery in New Jersey.¹

On April 16, 2008, Patterson sued State Farm in the Delaware Superior Court to recover UM benefits under her own Delaware insurance policy. Patterson’s insurance policy provided for UM benefits up to $100,000 per person and $300,000 per accident. Although the parties agree that Armstrong is uninsured and at fault for the collision, State Farm denied coverage and moved for summary judgment on the ground that Patterson was not “legally entitled to recover” from Armstrong under the New Jersey Verbal Tort Threshold Statute. The Superior Court disagreed and denied State Farm’s summary judgment motion, concluding that Delaware law applies and Patterson could recover UM benefits to the extent she could prove fault and damages.

Patterson and State Farm then stipulated that they would submit the issue of damages to an inquisition before a Superi- or Court Commissioner. The Commissioner determined the fair compensation for Patterson’s injuries to be $20,000. The Superior Court entered a final judgment in that amount in favor of Patterson and this appeal followed.

Standard of Review

“This Court reviews de novo the Superior Court’s grant or denial of summary judgment ‘to determine whether, viewing the facts in the light most favorable to the nonmoving party, the moving party has demonstrated that there are no material issues of fact in dispute and that the moving party is entitled to judgment as a matter of law.’ ”² We review de novo questions of statutory interpretation'.³

Title 18, Section 3902 of the Delaware Code

Section 3902 requires all Delaware insurance policies to provide UM benefits to protect insured drivers from owners or operators of uninsured or hit-and-run vehicles. Section 3902(a) relevantly provides:

No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered or issued for delivery in this State with respect to any such vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or hit- and-run vehicles for bodily injury, sickness, disease, including death, or personal property damage resulting from the ownership, maintenance or use of such uninsured or hit-and-run motor vehicle.

Consistent with section 3902(a), the policy issued by State Farm to Patterson provides UM benefits “for bodily injury and property damage an insured is legally entitled to recover from the owner or driver of an uninsured vehicle.” There is no dispute that if Delaware law applies, Patterson is entitled to recover the damages which the New Jersey statute disallows. Delaware courts have consistently interpreted section 3902 to protect Delaware motorists from an irresponsible driver causing injury or death.⁴ The statute permits a Delaware motorist to “mirror his own liability coverage and take to the roads knowing that a ‘certain amount of protection will always be available.’ ”⁵

Although a claim for insurance policy benefits arises out of contract, we have held that tort law governs the assessment of the underlying damages.⁶ To determine whether Patterson is “legally entitled to recover” the underlying damages in this case, we must determine by a choice of law analysis whether Delaware law or New Jersey law applies.

The Choice of Law Analysis

When conducting a choice of law analysis, Delaware Courts follow the “most significant relationship” test in the Restatement (Second) of Conflict of Laws.⁷ Section 145(1) of the Restatement provides that the law of the state with the most significant relationship to the occurrence and the parties under the principles stated in § 6 is the governing law.⁸ Section 6(2) provides that the following seven factors are relevant in conducting a choice of law inquiry:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

(d) the protection of justified expectations,

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and

(g) ease in the determination and application of the law to be applied.

Section 145(2) also instructs that when applying the section 6 factors, courts should take into account the following four contacts:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury occurred,

(c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and

(d) the place where the relationship, if any, between the parties is centered.

Finally, section 146 provides that the law of the state where the injury occurred should apply “unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in [section] 6 to the occurrence and the parties.”

Delaware Law Applies

We find that Delaware has a more significant relationship to the occurrence and the parties under the section 6 factors and section 145(2) contacts. Patterson is a Delaware resident suffering in Delaware from the consequences of her injuries,⁹ State Farm, a Delaware carrier, insured Patterson for bodily injury under a policy issued in Delaware,¹⁰ and the parties’ relationship and dispute are centered in Delaware.¹¹ Most importantly, Delaware has a strong policy in favor of Delaware motorists taking to the roads knowing that a certain amount of protection will always be available.¹² Even though the collision occurred in New Jersey due to the fault of a New Jersey resident, there is no compelling issue of New Jersey public policy here.

This Court’s decision in Travelers Indem. Co. v. Lake¹³ is directly on point. At issue in Lake was a choice between Delaware law and Quebec law on the amount of damages a Delaware resident could recover from a Delaware insurance carrier. Quebec law set a limit of $29,400 on any damages recovery. Under Delaware law, the plaintiff in Lake could recover the full amount of monetary damages up to the policy limit of $300,000. In Lake, we adopted the “most significant relationship” test and concluded that Delaware law applied on the legal issue of the amount of damages the plaintiff could recover. We explained:

There is no compelling issue of Quebec public policy here. The parties are not residents of Quebec. The truck Lake was driving when the accident occurred was not registered in Quebec. The only connection with Quebec is that the accident occurred there.

In comparison, Delaware clearly has the “most significant relationship” to the issues presented. Lake is a resident of Delaware. Travelers obviously conducts substantial business here. The uninsured motorist coverage provision of Lake’s policy arose out of Delaware law and involves issues of vital impoHance to all Delaware citizens.14

While the tortfeasor in Lake was not a resident of Quebec, we find that distinction to be of no moment. The rationale of Kent v. Nationwide Prop. & Cas. Ins. Co.,15 which we find persuasive, explains why. In Kent, the Supei’ior Court considered facts nearly identical to this case. There, in concluding that New Jersey had no interest in the dispute, the Superior Court said:

While the accident occurred in New Jersey, involving a New Jersey resident, and New Jersey law gives the tortfeasor immunity from suit for noneconomic loss in furtherance of New Jersey’s overall effort to contain the cost of automobile insurance in that jurisdiction, such New Jersey public policies are not impacted by the resolution of this case. The New Jersey tortfeasor will not be impacted, and that is the party protected by the New Jersey statute.¹⁶

The Superior Court concluded that Delaware law applied because Delaware had the most significant relationship to the issue:

[T]he relationship between the parties arises from a contract between a Delaware citizen and an insurance company registered to do business in Delaware. The contract was entered into and the premiums were paid in Delaware. The policy relates to a vehicle registered in Delaware and the scope of the coverage provided in the policy is governed by Delaware statutes. The public policy of Delaware, expressed in its uninsured motorist statute, is to permit a Delaware motorist to take to the roads knowing that a certain amount of protection will always be available.¹⁷

We agree with this rationale, which applies with equal force here.

A Delaware resident who is driving out of state does not have to travel far to encounter limitations imposed by (non-Delaware) local law on actual damages caused by a tortfeasor outside of Delaware. But what is critical is that the consequences of that tortfeasor’s conduct are suffered in Delaware which imposes no thresholds or caps on actual damages. Those consequences are not suffered in the state where the accident occurred. Delaware has the most significant interest in applying its law where what is at stake is the right of the injured Delaware citizen to recover the full amount of his or her actual damages.¹⁸ We recognize that New-Jersey has an interest in reducing premiums for its citizens by abrogating certain damages claims. But that interest is minimal when compared to the interest of Delaware, which is the most significant interest in the circumstances presented here. For that reason, a proper application of our choice of law rule compels the conclusion that Delaware law applies and that the Superior Court did not err in applying Delaware law in this case.¹⁹

No Statute of Limitations Bar

Finally, State Farm argues that Patterson is barred from recovery because the applicable statute of limitations has run. In Allstate Ins. Co. v. Spinelli,20 this Court held that the applicable statute of limitations on an UM benefits cause of action is controlled by contract law and is, therefore, three years.²¹ Because Patterson brought this action within three years, State Farm’s argument is without merit.

Conclusion

The judgment of the Superior Court is AFFIRMED.

1 .According to New Jersey’s "verbal threshold” statute, noneconomic damages for personal injury are only available in cases of "death; dismemberment; significant disfigurement or significant scarring; displaced fractures; loss of a fetus; or a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement.” N.J. Stat. Ann. § 39:6A-8. In this case, the parties dispute whether Patterson's injury is sufficiently permanent, within the meaning of the final category, to defeat this limitation on recovery.

2 . Brown v. United Water Delaware, Inc., 3 A.3d 272, 275 (Del.2010) (quoting Estate of Rae v. Murphy, 956 A.2d 1266, 1269-70 (Del.2008)).

3 . Freeman v. X-Ray Assocs., P.A., 3 A.3d 224, 227 (Del.2010) (citing Dambro v. Meyer, 974 A.2d 121, 129 (Del.2009)).

4 . See Deptula v. Horace Mann Ins. Co., 842 A.2d 1235, 1237 (Del.2004).

5 . Travelers Indem. Co. v. Lake, 594 A.2d 38, 42 (Del.1991) (quoting Adams v. Delmarva Power & Light Co., 575 A.2d 1103, 1107 (Del.1990)).

6 . See id. at 41, 43.

7 . See id. at 46-47 (replacing lex loci delicti with the Restatement's “most significant relationship” test).

8 . Restatement (Second) of Conflict of Laws § 145(1) (1971).

9 . See Restatement § 145(2)(c).

10 . See id.

11 . See Restatement § 145(2)(d).

12 . See Lake, 594 A.2d at 42; Restatement §§ 6(2)(b), (d), (e) and (£).

13 . 594 A.2d 38 (Del.1991).

14 . See Lake, 594 A.2d at 48 (emphasis added).

15 . 844 A.2d 1092 (Del.Super.2004).

16 . Id. at 1095 (citation omitted).

17 . Id. at 1095-96 (citation and quotations omitted).

18 . Cf. Kent County v. Shepherd, 713 A.2d 290, 301 (Del.1998) ("[Pjublic policy ... favors permitting [plaintiffs] to recover the full amount of monetary damages....”)

19 . Although the choice of law analysis employed by other states has varied, many states have also concluded that an insured may recover UM benefits in circumstances similar to this case. See, e.g., Huber Engineered Woods, LLC v. Canal Ins. Co., 690 S.E.2d 739, 743 (N.C.App.2010); Ohayon v. Safeco Ins. Co. of Illinois, 91 Ohio St.3d 474, 483, 747 N.E.2d 206 (Ohio 2001); Holcomb v. Universal Ins. Co., 640 So.2d 718 (La.Ct.App.1994); Matter of Allstate Ins. Co. (Stolarz), 81 N.Y.2d 219, 597 N.Y.S.2d 904, 613 N.E.2d 936 (N.Y.1993); Hartzler v. Am. Fam. Mut. Ins. Co., 881 S.W.2d 653, 657 (Mo.App. W.D.1994); Continental Ins. Co. v. Howe, 488 So.2d 917 (Fla.Dist.Ct.App.1986); Hague v. Allstate Ins. Co., 289 N.W.2d 43 (Minn.1978); Lewis v. American Family Ins. Group, 555 S.W.2d 579 (Ky.1977); Travelers Indem. Co. v. Stearns, 116 N.H. 285, 358 A.2d 402 (1976).

20 . 443 A.2d 1286 (1982).

21 . See id. at 1289-90.