Allstate Ins. Co. v. Spinelli

• Decision Date: 18 December 1981
• Citation: 443 A.2d 1286
• Parties: ALLSTATE INSURANCE COMPANY, a corporation duly existing under the laws of the State of Delaware, Defendant Below, Appellant, v. Clyde SPINELLI, Sr., Plaintiff Below, Appellee.
• Court: Supreme Court of Delaware

Page 1286

443 A.2d 1286

ALLSTATE INSURANCE COMPANY, a corporation duly existing under the laws of the State of Delaware, Defendant Below, Appellant, v. Clyde SPINELLI, Sr., Plaintiff Below, Appellee.

Supreme Court of Delaware.

Submitted Dec. 18, 1981. ^*

Decided March 22, 1982.

Upon appeal from Court of Chancery. Affirmed. ^**

Dennis D. Ferri (argued), of Becker & Ferri, P. A., Wilmington, for appellant.

Stephen B. Potter (argued), and James R. Leonard, of Potter & Carmine, P. A., Wilmington, for appellee.

Before HERRMANN, Chief Justice, DUFFY, McNEILLY, QUILLEN and HORSEY, Justices, constituting the Court en banc.

HORSEY, Justice, for the Court, with DUFFY, Justice, concurring:

This appeal concerns the determination of the applicable statute of limitations over claims for "uninsured vehicle coverage" required We conclude that an action by an insured against his automobile insurance carrier to recover uninsured motorist benefits essentially sounds in contract rather than in tort. Hence, the timeliness of a suit for uninsured motorist benefits is controlled by § 8106, our statute of limitations applicable to actions for breach of contract, rather than 10 Del.C. § 8119, our limitations statute controlling tort claims for personal injury. ³ We also agree with the Chancellor that the instant suit was timely filed. However, we disagree with the Chancellor as to when the three-year limitation of § 8106 begins to run on an uninsured motorist benefit claim. We hold that such a cause of action does not accrue, and hence the limitation of § 8106 does not begin to run, until the insurer denies coverage and notifies its insured of rejection of any claim for such benefits.

                under 18 Del.C. § 3902(a).  1 The Court of Chancery found plaintiff's claim to be contractual in nature.  From this finding, the Court ruled that the applicable statute of limitations was 10 Del.C. § 8106, 2 which prescribes a three-year limitations period.  The Court then ruled that under § 8106 plaintiff's claim for uninsured vehicle coverage benefits would not accrue against plaintiff's automobile's insurance carrier, Allstate Insurance Company, until the "uninsured motorist status of the tortfeasor is ascertained."  Hence, the three-year limitation period of § 8106 did not begin to run until that date.  Applying those rulings to the facts of the case, the Chancellor found the suit to have been timely filed and denied Allstate's motion to dismiss.  We affirm the judgment below
                

I

On August 28, 1976, Clyde Spinelli, Sr. (plaintiff) was injured in an automobile accident when his vehicle operated by his wife was struck in the rear by a vehicle driven by Eugene Gilday (Gilday). The purported insurer of the automobile driven by Gilday was Kemper Insurance Company (Kemper). Spinelli's vehicle was insured by Allstate Insurance Company (Allstate) with Spinelli the named insured. The policy included More than 20 months after date of accident, Spinelli filed a personal injury suit against Gilday in Superior Court. Negotiations ensued between plaintiff and Kemper (Gilday's purported insurer). However, Kemper's attorney deferred entering a court appearance for Gilday until November 30, 1978. But 13 days later, Kemper, on December 13, 1978, disclaimed third-party liability coverage on the automobile that Gilday was operating at the time of the accident.

coverage for damages caused by "uninsured motorists." ⁴

Spinelli continued to pursue his pending suit against Gilday and in March, 1979 obtained a default judgment against Gilday. In September, 1979, following an inquisition as to damages, Spinelli was awarded a judgment of $16,000 against Gilday. In October, 1979, after the judgment proved to be uncollectible, Spinelli, for the first time, informed Allstate of Gilday's uninsured status. Spinelli also sought information as to the uninsured motorist provisions of his Allstate policy, though apparently without making a formal demand upon Allstate for uninsured motorist coverage benefits.

On December 10, 1979 (39 months after date of accident), Spinelli filed suit in Superior Court against Allstate for recovery under his policy of uninsured motorist benefits. The parties then agreed to stay the suit and to arbitrate their dispute under the arbitration provisions of the Allstate policy. ⁵ However, before an arbitration hearing could be held, Allstate withdrew from arbitration, answered Spinelli's complaint, and moved for judgment on the pleadings on its limitation defenses. Allstate relied primarily on the two-year limitation of § 8119 but contended, in the alternative, that if the action were controlled by § 8106, the suit was also time-barred because the cause of action accrued on the date of Spinelli's injury, the date of the accident.

Spinelli then filed this action in the Court of Chancery seeking an order compelling arbitration and staying the Superior Court proceedings, including determination of Allstate's pending motion for judgment on the pleadings. Allstate countered by moving to dismiss the Chancery suit as barred by either §§ 8119 or 8106.

As stated, the Chancellor denied the motion and ruled: first, that the claim was based on a contract right rather than a tortious injury; and therefore the three-year contract limitation of § 8106 controlled; and second, that liability accrued and hence the statute began to run not on the occurrence of the accident but upon "the ascertainment of the uninsured status of the tortfeasor." Allstate then appealed. The only issue before us is the timeliness of Spinelli's suit.

II

Allstate claims the Court of Chancery committed legal error as to both issues: (1) the applicable statute of limitations controlling Spinelli's claim for uninsured motorist benefits; and (2) the date when Spinelli's cause of action accrued and the statute of limitations began to run on his claim. As to As to the second issue, when Spinelli's cause of action accrued and the statute began to run on his claim, Allstate contends that under § 8119 the claim is clearly time-barred because it was not brought within two years of the date of the accident and Spinelli's alleged injuries. In the alternative, Allstate argues that even if § 8106 were found to be the governing statute of limitations, Spinelli's suit is still time-barred because the three-year limitation of § 8106 should also run from the date of accident-injury.

                the applicable statute, Allstate contends, as stated, that Spinelli's claim is based upon personal injury.  Hence, Allstate argues that the applicable statute of limitations is 10 Del.C. § 8119 because it controls all actions for damages based on claims for personal injury.  6 Allstate argues that this Court's 1978 decision in Nationwide Insurance Company v. Rothermel, Del.Supr., 385 A.2d 691 (1978), calls for, if not requires, this result.  In Rothermel, this Court ruled that suits based on claims for personal injury protection (PIP benefits) are controlled by the time limitation of 10 Del.C. § 8119 and not that of § 8106.  Allstate argues that this Court's ratio decidendi in Rothermel applies with equal force to accidents for uninsured motorist benefits.  Hence, it contends, Spinelli's claim for uninsured benefits based on personal injury should also be controlled by the time limitations of § 8119
                

On the first issue, Spinelli understandably responds that the Court of Chancery correctly determined § 8106 to be the appropriate statute of limitations controlling his claim for uninsured motorist benefits. Spinelli reasons, as did the Court below, that an uninsured motorist claim is founded in contract, not tort; that is, the claim exists only by reason of the provisions of his insurance policy with Allstate. Hence, Spinelli argues, since the action is based on a bargained-for promise, the timeliness of the action should be governed by the contract language of 10 Del.C. § 8106.

On both issues, Spinelli responds that Rothermel's reasoning as applied to PIP benefits is not pertinent to a claim for uninsured motorist benefits. Rothermel reasoned that since an insurer's subrogation rights against a tortfeasor are subject to the two-year limitation period of § 8119, an insured's suit for PIP benefits should also be subject to the same limitation period. Spinelli argues that Rothermel either should be overruled or is distinguishable. We agree that Rothermel is distinguishable and should not control the limitation questions here presented relating to uninsured motorist coverage benefits. ⁷ However, we cannot agree that our decision in Rothermel should be overruled.

III

A.

We conclude that a suit for recovery of uninsured motorist benefits is more nearly Chancellor Marvel explained the majority view as follows:

akin to a contract claim than a tort action and, hence, should be controlled by our contract rather than our tort statute of limitations. Thus, we hold that the three-year limitation period of § 8106 determines the timeliness of this suit for recovery of uninsured motorist benefits. We hereby adopt the view held by the majority of jurisdictions-that actions based on uninsured motorist coverage claims are actions ex contractu and as such are controlled by the applicable contract statute of limitations. See, 7 Appleman, Insurance Law and Practice, § 4331 (2d Ed. 1962); see also, Annot., 28 A.L.R.3d 580 (1969). ⁸

"The view accepted generally is that despite the requirement that the insured must establish that a tort was committed by an uninsured motorist and that injury ensued, the action is nevertheless one based upon an insurance contract, on the basis of which the liability, if any, of the insurer is found, such contract limitation accordingly controls. See, e.g., Sykes v. Fireman's Fund Ins. Co., D.C.Fla., 269 F.Supp. 299 (229) (1967); Lemrick v. Grinnell Mut. Reinsurance Co., Iowa, 263 N.W.2d 714 (1978); Van Hoozer v. Farmers Ins. Exchange, Kan. (219 Kan. 595), 549 P.2d 1354 (1976); Booth v. Fireman's Fund Ins....