O'HANLON v. Hartford Acc. & Indem. Co.

• Decision Date: 01 August 1977
• Docket Number: Civ. A. No. 76-59.
• Citation: 439 F. Supp. 377
• Parties: Patrick J. O'HANLON, Individually and as Administrator of the Estate of Brian O'Hanlon, Plaintiff, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Connecticut Corporation, Insurance Company of North America, a Pennsylvania Corporation, and Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants.
• Court: U.S. District Court — District of Delaware

439 F. Supp. 377

Patrick J. O'HANLON, Individually and as Administrator of the Estate of Brian O'Hanlon, Plaintiff, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, a Connecticut Corporation, Insurance Company of North America, a Pennsylvania Corporation, and Nationwide Mutual Insurance Company, an Ohio Corporation, Defendants.

Civ. A. No. 76-59.

United States District Court, D. Delaware.

August 1, 1977.

COPYRIGHT MATERIAL OMITTED

David Roeberg, of Roeberg & Agostini, Wilmington, Del., for plaintiff.

Alfred M. Isaacs, of Flanzer & Isaacs, Wilmington, Del., for defendant Hartford Acc. & Indem. Co.

Wayne N. Elliott, of Prickett, Ward, Burt & Sanders, Wilmington, Del., for defendant Insurance Co. of North America.

F. Alton Tybout, of Tybout & Redfearn, Wilmington, Del., for defendant Nationwide Mut. Ins. Co.

OPINION

STAPLETON, District Judge:

This is a tort action arising out of an automobile accident. Several questions involving the interpretation of three insurance contracts and of certain provisions of Delaware insurance law are presented on what is styled plaintiff's motion for partial summary judgment.¹

The facts necessary for an understanding of the questions before the Court can be summarized briefly. In 1974, Brian O'Hanlon, a minor, was a passenger in a car owned and operated by Michael Ryan. The Ryan car and an unidentified vehicle engaged in a drag race. Ryan's car was forced off the road and it collided with stationary objects at the side of the road. Brian O'Hanlon was severely injured and remained hospitalized for much of the next two years. He died in 1976, apparently from the injuries sustained in the accident. This action is brought by his father, Patrick O'Hanlon, individually and as administrator of Brian's estate, against Hartford Accident and Indemnity Company and the Insurance Company of North America, companies with which the O'Hanlon family and certain O'Hanlon business interests were insured, and against Nationwide Mutual Insurance Company, whose uninsured motorist coverage on the Ryan car extends to injuries Brian received while a passenger in that car.

JURISDICTION

Jurisdiction of this Court is based on diversity of citizenship. Defendants contend that, by virtue of the language of 28 U.S.C. § 1332(c), the requisite diversity does not exist. That section provides in pertinent part:

In any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business.

This provision, added to Section 1332 in 1964 was designed to stem the flow of tort suits to the federal courts in Louisiana and Wisconsin, the two states which permitted an injured party to bypass suit against the tortfeasor in favor of a "direct action" against the insurer. S.Rep.No.1308, 1964 U.S.Code Cong. & Admin.News 2778, 2779. It was not designed to eliminate diversity jurisdiction in all actions against insurance companies. By its own terms, it does not include the present suit within its purview.

This is not an action against "the insurer of a policy or contract of liability insurance". When a hit-and-run driver causes injury, by definition, there is no "liability insurance" from which to seek a recovery because the person "liable" has fled. Rather, this is an action based on uninsured motorist insurance, coverage a policyholder provides for himself and, generally, those in his family and those who are passengers in his car to afford protection when the liable party cannot be reached.²

On the other side of the same coin, this is not a "direct action". In Lank v. Federal Insurance Company, 309 F.Supp. 349, 351 (D.Del.1970), this Court ruled:

Unless the suit against the insurance company is of such a nature that liability sought to be imposed could be imposed against the insured, this action is not a "direct action" in the sense used in the proviso of § 1332(c).

Here, as in Lank, this suit is not one in which the liability could have been imposed on the insured. The "insured" under uninsured motorist coverage is the person injured as a result of the actions of the missing or judgment-proof tortfeasor. In other words, under both Ryan's Nationwide policy and O'Hanlon's Hartford and INA policies, Brian O'Hanlon is the insured. O'Hanlon could not have sued himself in a "direct action". Thus, I conclude diversity jurisdiction is proper.

HIT-AND-RUN INSURANCE

The contract interpretation question before the Court is whether the "hit-and-run" clause of each of the relevant insurance policies covers an accident in which there was no physical contact between the unidentified vehicle that caused the accident and the vehicle in which the injured plaintiff was riding. If physical contact is a prerequisite to recovery under the "hit-and-run" clause as written, then it is necessary to decide whether the clause violates 18 Del.C. § 3902 which requires all automobile liability insurance policies to include coverage for accidents involving "hit-and-run" vehicles.

The hit-and-run clauses of the three insurance policies are identical:

A "hit-and-run vehicle" means a highway vehicle which causes an accident resulting in injury to an insured or property damage arising out of physical contact of such vehicle with the person or property of the insured or with a vehicle which the insured is occupying at the time of the accident.

I think the language quite clearly limits coverage to accidents involving physical contact. Although the construction plaintiff argues for, that physical contact is required only in suits arising out of property damage, is a possible one, I think it highly improbable that such a construction was intended. Even under the widely accepted rule of construction that ambiguities in an insurance contract will be construed against the drafter, a court need not accept a highly improbable construction when a much more reasonable interpretation readily commends itself. Accordingly, I conclude that the insurance contracts intended to impose a physical contact requirement. I turn now to the question whether such a limitation on hit-and-run coverage can be squared with the policy of the statute. I do not believe that it can.

Many courts have considered this same question in light of statutes similar to the Delaware law for uninsured motorist coverage.³ No clear majority rule has emerged. Compare Prosk v. Allstate Insurance Co., 82 Ill.App.2d 457, 226 N.E.2d 498 (1967) (physical contact requirement permissible under the statute), with Progressive Mutual Insurance Co. v. Brown, 249 So.2d 429 (Fla. 1971) (physical contact requirement violates the policy of the statute). Courts which uphold the physical contact requirement say that this is a legitimate means for insurance companies to protect themselves from fraudulent claims of insureds who may be involved in a one car accident of their own making and seek to pin the fault on a fictional hit-and-run vehicle. Courts which invalidate the clause say that it contravenes the design of uninsured motorist statutes to assure some recovery to those who are injured by persons who flee the scene of an accident and, thus, who cannot look to the tortfeasor for recovery. They note that, as in all cases, the claimant must satisfy his or her burden of proof with respect to all elements of the claim, including proof of the existence of a hit-and-run vehicle.

The Delaware Supreme Court, whose law controls in this diversity case, has not passed on the physical contact question. Recently, however, Judge Stiftel of the Superior Court considered the matter and held that a physical contact clause in an insurance policy was inconsistent with the purpose of 18 Del.C. § 3902. Abramowicz v. State Farm Mutual Automobile Insurance Co., 369 A.2d 691 (Del.Super.1977). Judge Stiftel reviewed the conflicting decisions and found the reasoning in Hartford Accident and Indemnity Co. v. Novak, 83 Wash.2d 576, 520 P.2d 1368 (1974), and Soule v. Stuyvesant Insurance Co., 364 A.2d 883 (N.H.1976), the most persuasive. I agree.

In Soule, the court pointed out that the phrase "hit-and-run" has a commonly accepted meaning which is drawn from criminal statutes enacted in a majority of jurisdictions. Hit-and-run statutes impose a duty on motorists to stop at the scene of any accident in which they are involved "in any manner" and give certain information and render aid to the injured. 364 A.2d at 885. No one would construe these criminal statutes to include only accidents involving physical contact and the court found no rationale for so limiting the insurance statutes. I am in complete agreement.

The sole concern reflected in the insurance statute is that of providing a source of recovery for those injured in auto accidents by persons who cannot be held financially responsible. The need to which it is addressed exists regardless of whether or not the accident entailed physical contact. Any fraudulent claims made under the statute can be rooted out by the same means available in all litigation.

The one argument made by defendants here which it appears Judge Stiftel and the cases he relied on did not consider is that the clause in question has been approved by the State Insurance Commissioner as consistent with State insurance law. In Nationwide Mutual Insurance Co. v. Krongold, 318 A.2d 606, 609 (Del.1974), the Delaware Supreme Court noted that, while not conclusive, interpretations of the Insurance Commissioner are entitled to some weight. In Krongold, the Commissioner had taken an active part in obtaining the passage of the challenged legislation and, thereafter, had formally adopted regulations interpreting it. Here, in contrast, while the insurance contracts were submitted to the...