Murrey v. Nationwide Ins. Co.
| Decision Date | 23 November 1987 |
| Docket Number | Civ. A. No. 86-281 MMS. |
| Citation | 674 F. Supp. 154 |
| Parties | Kenneth E. MURREY, Plaintiff, v. NATIONWIDE INSURANCE CO., Defendant. |
| Court | U.S. District Court — District of Delaware |
Eliot Alazraki, of Eliot Alazraki, P.A., Wilmington, Del., for plaintiff.
Wayne N. Elliott, and W. Wade W. Scott, of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., for defendant.
Plaintiff, Kenneth Murrey, has filed suit to retroactively reform his Delaware automobile insurance policy with defendant, Nationwide Insurance Company, to provide for increased uninsured motorist coverage. Plaintiff contends that defendant's failure to comply with section 3902 of the Delaware Insurance Code, Del.Code Ann. tit. 18, § 3902 (1974 & Cum.Supp.1986), allows him to obtain reformation. Cross-motions for summary judgment are now before the Court.
Plaintiff Murrey purchased a Delaware automobile insurance policy from Nationwide while a resident of Delaware. The policy provided $100,000 per person/$300,000 per accident bodily injury liability coverage and $10,000 per person/$20,000 per accident uninsured motorist ("UM") coverage.
On November 27, 1980, while driving Mr. Murrey's car with permission, Walter Lomax was killed in an accident in Pennsylvania, allegedly involving an uninsured automobile. Mr. Murrey was not in the car at the time of the accident. Although Mr. Murrey's contract with Nationwide was in effect on the date of the accident, he subsequently cancelled the policy.
The administrator of Lomax's estate filed suit against Nationwide in Pennsylvania state court on September 15, 1982. Nationwide removed the case to the Eastern District of Pennsylvania, which dismissed the suit and denied Mr. Murrey's motion to intervene. Lomax v. Nationwide Insurance Co., No. 83-1621 (E.D.Pa. Jan. 30, 1985) (). The United States Court of Appeals for the Third Circuit affirmed. Lomax v. Nationwide Insurance Co., 779 F.2d 43 (3d Cir. 1985) (mem.). On June 23, 1986, Mr. Murrey filed suit in this Court seeking to reform his contract to provide increased uninsured motorist coverage.
Section 3902 of the Delaware Insurance Code requires insurers to provide uninsured motorist coverage to Delaware residents and to offer policy holders certain minimum coverage.1 Mr. Murrey maintains Nationwide violated the statute by failing to offer him increased uninsured motorist benefits, and he, therefore, may reform his policy retroactively to provide for increased UM coverage.
Plaintiff and defendant have both filed motions for summary judgment. Plaintiff Murrey maintains that the statute of limitations does not bar his claim, contrary to Nationwide's affirmative defense assertion. Plaintiff also moves for summary judgment on Nationwide's failure to comply with the offer of increased UM coverage required by section 3902. Defendant Nationwide requests summary judgment that if the policy is reformed, the policy coverage limits are $100,000/$300,000 and not $300,000/$300,000 as claimed by plaintiff. Nationwide also asserts plaintiff lacks the necessary standing to bring this suit and that collateral estoppel bars the plaintiff's claims.
Plaintiff seeks summary judgment that his claim is not barred by the statute of limitations as asserted by Nationwide as an affirmative defense. The following dates are relevant to the determination of the statute of limitations issue:
July 21, 1980 — Nationwide alleges that it sent a mailer to Murrey informing him of the availability of increased UM benefits.
November 17, 1980 — Walter Lomax, Jr., had a fatal accident while driving plaintiff's car.
September 15, 1982 — Walter Lomax's estate filed suit in Pennsylvania.
February 22, 1984 — Nationwide denied in writing plaintiff's request for retroactively increased UM benefits.
June 23, 1986 — Plaintiff filed suit in Delaware.
Both plaintiff and defendant agree that the three-year limit in Del.Code Ann., tit. 10, § 8106 (1974) applies, although they disagree about date of accrual. Plaintiff also contends section eight of the insurance contract requires the Court to use the statute of limitations of the state in which the accident occurred, and the six-year limit in 42 Pa.Cons.Stat.Ann. § 5527(2) applies. Nationwide argues that section eight of the insurance contract does not apply because it governs only legal actions, not an action in equity for reformation. In addition, Nationwide maintains that Delaware law requires the use of the Delaware limitation period in section 8106 and not the Pennsylvania limitation period. Because the Court finds that plaintiff's action is timely under either statute of limitations, it declines to reach the issue of which statute of limitations applies.
The Court will first consider the Delaware statute of limitations. The Supreme Court of Delaware has held that a suit for recovery of UM benefits, such as this one, is an action in contract and governed by the three-year limitation period in Del.Code Ann., tit. 10, § 8106. Allstate Insurance Co. v. Spinelli, 443 A.2d 1286, 1289-90 (Del.1982). Following contract law principles, the court in Spinelli held that because a cause of action accrues when the contract is breached, an action for UM benefits arises when the insurer denies the claim for UM benefits and so informs the insured. Id. at 1292.
Although Spinelli concerned the total denial of UM benefits, rather than the denial of increased benefits sought by Murrey, the principle remains the same. In both, the insured seeks to obtain UM benefits under the contract, and the parties dispute the entitlement to benefits.
Plaintiff maintains that accrual occurred on February 22, 1984, the date that Nationwide denied in writing Murrey's request of February 17, 1984 for retroactively increased UM benefits. Nationwide responds by arguing that accrual might have occurred on any of three dates — July 21, 1980 when Nationwide sent the mailer, which if statutorily insufficient, breached the contract; September 15, 1982 when Lomax's estate filed suit in Pennsylvania; or as plaintiff contends, on February 22, 1984 when Nationwide denied Murrey's request for increased benefits.
Under the summary judgment standard established by the Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986), the movant is entitled to summary judgment if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Nationwide has urged the statute of limitations as an affirmative defense, see Defendant's Second Amended Answer at ¶ 16, and, therefore, bears the burden of proof on this issue.
The date of accrual of the statute of limitations is an essential element of the statute of limitations defense. Speculation as to the date of accrual of the statute of limitations is insufficient. Under the Celotex standard and the law established in Spinelli, Nationwide has not provided evidence of a denial of benefits or communication of this denial on any date other than February 22, 1984. Nationwide has failed to establish that Murrey's cause of action accrued more than three years prior to the filing of the claim. If Delaware law applies, Murrey is entitled to summary judgment.
The Court will now consider the timeliness of plaintiff's action if Pennsylvania law applies, as urged by plaintiff. Section eight of the contract between plaintiff and defendant provides that any legal action concerning UM coverage against Nationwide must "begin within the time limit allowed for bodily injury or death actions in the state where the accident occurred." Plaintiff's Appendix at A-15. The Superior Court of Pennsylvania has held that an action by the insured to recover UM benefits from the insurer is essentially an action in contract, and that the six-year statute of limitations in 42 Pa.Cons.Stat.Ann. § 5527(2) applies. Boyle v. State Farm Mutual Automobile Insurance Co., 310 Pa.Super. 10, 456 A.2d 156, 157 (1983); 42 Pa.Cons.Stat.Ann. § 5527(2) (1981) (amended 1982). The court in Boyle also held that under Pennsylvania law a cause of action for UM benefits accrues when "(1) the insured was in a motor vehicle accident, and (2) the insured sustained bodily injury as a result of that accident, and (3) the insured knows of the uninsured status of the other owner or operator." Id. 456 A.2d at 162.2
Even if Murrey's cause of action accrued on November 17, 1980, the date of the accident, this was less than six years before Murrey filed suit on June 23, 1986. If section 5527 applies, this suit is not barred.
Plaintiff's action is timely under either the Pennsylvania or Delaware statute of limitations. Summary judgment on this issue, therefore, will be granted to the plaintiff. The statute of limitations does not bar his claim.
Murrey also moves for summary judgment on the issue that Nationwide failed to adequately inform him of the availability of increased UM coverage as mandated by Del.Code Ann., tit. 18, § 3902.
Section 3902, as in effect at the critical time, required that insurance companies offer each insured the option of purchasing additional UM coverage.3 Nationwide maintains that on July 21, 1980 it sent a mailer to Murrey informing him of the availability of additional UM coverage. Defendant's Appendix at A-6. Plaintiff alleges that he never received the mailer, although his deposition suggests that he may have forgotten receiving it or that his wife may have received it. Defendant's Appendix at A-39-46.
Plaintiff asks the Court to declare that Nationwide's notification by mailer is legally insufficient. The Court is unable to do so for two reasons. First, the dispute concerning Murrey's receipt of the mailer raises a question of...
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Lomax v. Nationwide Mut. Ins. Co.
...held that, either under Delaware or Pennsylvania statutes of limitation, the reformation action was timely. Murrey v. Nationwide Ins. Co., 674 F.Supp. 154, 156-58 (D.Del.1987). The Court also found that Murrey had standing to reform his policy and was not collaterally estopped from assertin......
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...District Court for the District of Delaware on June 23, 1986, seeking reformation of the UM portion of the policy. Murrey v. Nationwide Ins. Co., 674 F.Supp. 154 (D.Del.1987). Subsequently, Nationwide made an offer of judgment to permit Murrey to retroactively increase the limits of his UM ......
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