Moyer v. Am. Zurich Ins. Co.
| Decision Date | 28 April 2021 |
| Docket Number | K19C-09-026 JJC |
| Parties | MICHAEL MOYER, Plaintiff, v. AMERICAN ZURICH INSURANCE COMPANY, Defendant. |
| Court | Delaware Superior Court |
Defendant's Motion for Partial Summary Judgment - DENIED
Phillip T. Edwards, Esquire, Murphy & Landon, Wilmington, Delaware, Attorney for the Plaintiff.
Bruce W. McCullough, Esquire, Bodell Bove, LLC, Wilmington, Delaware, Attorney for the Defendant.
Clark, J. Plaintiff Michael Moyer ("Mr. Moyer") sues Defendant American Zurich Insurance Company ("AZIC") for alleged bad faith adjustment of his workers' compensation claim. For purposes of summary judgment, AZIC concedes that genuine issues of material fact exist regarding whether it delayed investigating and paying Mr. Moyer's claim in bad faith. That is, there will be a factual issue at trial regarding whether it delayed its investigation and payment without reasonable justification. AZIC contests, however, whether a factual issue exists regarding the potential for punitive damages.1
Here, the summary judgment record read in the light most favorable to Mr. Moyer will permit a reasonable jury to infer that AZIC recklessly disregarded Mr. Moyer's rights as an insured. As a result, AZIC's motion for partial summary judgment regarding the issue of punitive damages must be DENIED.
The facts referenced herein are those of record viewed in the light most favorable to Mr. Moyer, as the non-movant. The claim results from a work injury he suffered on March 5, 2019. While troubleshooting a heat pump on a ladder, he received an electrical shock. As a result, he suffered a fractured scapula and other shoulder injuries. His employer, CBRE, submitted a claim to AZIC, its workers' compensation insurer, on the same day.2 AZIC then sent a letter to Mr. Moyer the next day. It acknowledged Mr. Moyer's claim and assigned Monique Redman as his claims adjuster.3
There were discrepancies in how Mr. Moyer described the events surrounding his injury. The initial claim stated that he had been electrocuted.4 Subsequent reports indicated he may have suffered his injury from a fall caused by the electrocution.5 Regardless, he sustained work injuries while in the course of his employment.6
On March 8, 2019, within three days of Mr. Moyer's accident, an AZIC employee acknowledged in writing that two women witnessed the incident.7 Furthermore, on March 11, 2019, Ms. Redman created a file titled "Compensability" where she recorded the location and cause of Mr. Moyer's injury.8 The file also noted a "Y" in the field that answered the question regarding whether the injury was compensable.9 At a Rule 30(b)(6) deposition, AZIC's designee would not acknowledge that "Y" meant yes in this case.10 The designee nevertheless acknowledged that "Y" typically stands for "yes."11 Despite that entry, on March 27, 2019, Ms. Redman sent an email to CBRE's risk manager that recommended denying Mr. Moyer's claim.12 The reasons she provided in the email were as follows: (1) Mr. Moyer described the mechanism of injury inconsistently; (2) Mr. Moyer retained a lawyer; and (3) Mr. Moyer was a a bodybuilder.13
At some point late in March, Mr. Moyer became inpatient regarding the lack of action taken on his claim. He left an unanswered message with Ms. Redman. When he did reach her, at the end of March, she told Mr. Moyer "I don't work onyour schedule" and "I don't check my voicemail."14 Separately, she also allegedly engaged in a "screaming match" at one point with Mr. Moyer's doctor's office.15 Following those exchanges, at CBRE's request, AZIC replaced Ms. Redman with Melissa Robles. Ms. Robles later served as the insurer's Rule 30(b)(6) designee in this litigation.16
On April 2, 2019, Mr. Moyer underwent surgery on his left shoulder to address a dislocated shoulder and fractured shoulder blade.17 On the same day as the surgery, AZIC belatedly sent a statutorily required 19 Del. C. §2362(a) ("Section 2362(a)") letter to Mr. Moyer informing him that it could neither accept nor deny the claim for two reasons.18 These new reasons differed from the three reasons Ms. Redman cited in her email to CBRE. Namely, AZIC informed Mr. Moyer that it could not accept the claim because it lacked medical documentation and because it needed to investigate the claim further.19 Furthermore, AZIC sent the letter outside the statutorily required 15-day time frame for doing so, and also failed to provide an estimate of how long it would take to provide a final decision.20 As to the later statutory deficiency, it merely informed Mr. Moyer that its "investigation [would be] completed as soon as possible."21
On April 3, 2019, Mr. Moyer's attorney filed an IAB petition.22 Although AZIC had notice of at least two witnesses to the accident from the outset, Mr. Moyer's attorney followed-up by identifying three witnesses. Despite that, AZIC still did not contact any witnesses to the accident until the middle of May. At that point, AZIC acknowledged the claim to be compensable.23 That acknowledgment included AZIC's acceptance of Mr. Moyer's total disability from April 2, 2019 until he returned to work June 10, 2019.24 AZIC then issued two payments to Mr. Moyer, one for $7,136.50 on June 18, 2019 for total disability,25 and one for $22,684.06 on July 14, 2020 for permanent partial disability.26
AZIC argues that Mr. Moyer made inconsistent statements about the mechanism of his injury. According to AZIC, those statements prompted it to investigate the claim further, which in turn contributed to its delay in paying his claim. Furthermore, AZIC emphasizes that the claim was accepted as compensable approximately three months after the injury, which itself was not an unreasonable delay. While AZIC acknowledges there will be a factual issue regarding whether the delay constituted bad faith, it contends that the evidence is insufficient to submit the issue of punitive damages to the jury.
Mr. Moyer counters by identifying facts he alleges are sufficient to support a reasonable jury's finding that AZIC acted with reckless indifference to Mr. Moyer's rights as an insured. He alleges those facts support a finding that AZIC acted withsuch disregard when it both investigated and delinquently paid his claim. Specifically, he cites evidence that AZIC withheld the true reason for its initial denial, including the three reasons provided by Ms. Redman in her email. Those reasons, he contends, included impermissible theories for denying the claim such as penalizing Mr. Moyer for hiring an attorney. Furthermore, he argues that despite AZIC's quick, written admission that the claim was compensable, it nevertheless withheld benefits, and then failed to comply with statutory notice requirements. Finally, he contends that the evidence supports that AZIC understood by March 2019 that it was harming Mr. Moyer, but, nevertheless, refused to accept his claim for two additional months.
Summary judgment is appropriate only if there is no genuine issue of material fact and if the movant is entitled to judgment as a matter of law.27 This motion is one for partial summary judgment which is also available pursuant to Superior Court Civil Rule 56; that mechanism may address individual claims.28 When considering a partial summary judgment motion, the Court must consider the evidence of record in the light most favorable to the non-moving party.29 Furthermore, the moving party bears the initial burden of proof.30 However, if the movant meets its initial burden regarding an issue, the burden then shifts to the non-moving party to demonstrate the existence of a material issue of fact regarding that issue.31 At that point, the non-movant must demonstrate material facts in dispute that are sufficient to withstand amotion for a judgment as a matter of law and support the verdict of a reasonable jury.32
The Court's analysis turns on the reasonable inferences that will be available regarding AZIC's state of mind. To explain its decision, the Court first summarizes Delaware law regarding bad faith insurance litigation. It then evaluates the evidence of record in light of that law. Here, the facts and circumstances of this case, considered in the light most favorable to Mr. Moyer, permit an inference that AZIC recklessly disregarded the rights of its insured.
An insurance policy is a contract between an insurer and insured; as a result, it includes an implied covenant of good faith and fair dealing.33 This duty of good faith extends to third-party beneficiaries of the insurance contract. In the workers' compensation context, those beneficiaries include the policy holder's employees.34 When an insurer unjustifiably delays investigating, processing, or paying a claim, it breaches its implied contractual obligations.35 Nevertheless, a mere delay when investigating a claim or paying benefits does not alone amount to insurer bad faith so long as the insurer had a reasonable justification for the failure.36 On the other hand, an insured need not produce "smoking gun" evidence to survive summaryjudgment.37 Rather, "[i]n an appropriate case, inferences from facts can lead to a triable bad faith claim."38
Generally, in claims for breaches of good faith and fair dealing, compensatory damages are limited to those that are direct or consequential because such claims are contract actions.39 In addition, because of the special nature of insurance relationships, punitive damages may at times be available if a plaintiff can demonstrate that the insurer breached its obligations with malice or reckless indifference to the plight of its insured.40
In Tackett v. State Farm, the Delaware Supreme Court described the state of mind necessary to support a punitive damages claim against an insurer. There, the Supreme Court observed...
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