Callaway v. Nationwide Mut. Ins. Co.

• Decision Date: 27 November 1968
• Parties: Robert Alton CALLAWAY, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio Corporation, Defendant.
• Court: Delaware Superior Court

Page 617

248 A.2d 617

Robert Alton CALLAWAY, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio Corporation, Defendant.

Superior Court of Delaware, New Castle County.

Nov. 27, 1968.

Robert H. Richards, III, Wilmington, for plaintiff.

Rodman Ward, Jr., and Robert G. Carey, Wilmington, for defendant.

On cross motions for summary judgment. Judgment for defendant.

OPINION

CHRISTIE, Judge.

This is an action to recover medical expenses under a group insurance policy (hereafter referred to as the 'Delaware policy'), underwritten by defendant and made available to subscribing students of the University of Delaware. Plaintiff, a student at the University, was insured under the Delaware policy when he was injured while he was a passenger in an automobile operated by Samuel B. Kendall. Mr. Kendall was covered by an automobile liability policy (hereafter referred to as the 'Kendall policy'), also written by defendant.

Maximum coverage for medical expenses was $5,000 under the Delaware policy and $2,000 under the Kendall policy. Plaintiff incurred medical expenses slightly in excess of $7,000 as a result of the accident.

The Delaware policy excluded from coverage the following:

'medical expenses incurred to the extent that benefits are payable therefore under Any other insurance policy or prepayment plan.' (Emphasis added).

With regard to payment for medical expenses, the Kendall policy in turn provided:

'* * * no such payment shall be made under the insuring agreements D(1) and D(2) unless the person to or for whom such payment is made shall have executed a written agreement that the amount of such payment shall be applied toward the settlement of any claim, or the satisfaction of any judgment for damages entered in his favor, against any person entitled to protection because of bodily injury arising out of any accident to which the automobile bodily injury liability coverage applies.'

Plaintiff contends that he is entitled to collect the full amount of medical payment coverage under each policy. If he does so, he will not thereby receive compensation greater than his expenses since his medical expenses exceed the combined policy limits Defendant contends that the $2,000 payable under the Kendall policy is to be deducted from payments made under the Delaware policy.

The matter is before the Court on cross motions for summary judgment. There is no factual dispute. The legal meaning and the effect of the quoted provisions of the two insurance policies are the crucial issues.

Plaintiff's argument is two-fold. First, he argues that the Kendall policy is not 'other insurance' within the meaning of the Delaware policy's exclusion clause and, therefore, nothing that might be paid him as medical benefits under the Kendall policy can operate to cut down coverage under the Delaware policy.

Secondly, plaintiff urges that even if the Kendall policy is 'other insurance', no benefits are 'payable' thereunder as required by the exclusion clause since he has not executed an agreement demanded as a condition precedent to payment.

In support of his first argument plaintiff correctly states the rule that exclusionary terms in an insurance policy must be strictly construed against the insurer. 13 Appleman, Insurance Law and Practice § 7405 (1943). However, before a rule of strict construction finds application, there must be ambiguity requiring construction. Apotas v. Allstate Insurance Company, 246 A.2d 923 (Del.Sup.Ct., October 7, 1968). An ambiguity exists where the language has two or more reasonable interpretations. See 3 Words and Phrases, 'Ambiguity', p. 436 (1953).

Here the contract provides that coverage is excluded as to medical expenses payable under 'any other insurance'. (Emphasis added). The words are clear and direct. It is difficult to see how these words could be understood to refer only to insurance held by plaintiff. The language has but one reasonable meaning and that is that coverage is excluded to the extent benefits are payable to plaintiff under any other policies including those held by other persons (such as the Kendall policy) as well as under other policies held by plaintiff himself.

Even though the Kendall policy is deemed to be 'other insurance' within the meaning of the exclusion clause, benefits must be 'payable' thereunder for the exclusion to be operative. The word 'payable...