Pajewski v. Perry

• Decision Date: 05 August 1976
• Docket Number: 1975,Nos. 122,1974 and 195,s. 122
• Citation: 363 A.2d 429
• Parties: Adam T. PAJEWSKI, Individually and as next friend of Katherine Pajewski, a minor, Plaintiffs, v. Christopher L. PERRY et al., Defendants. Christopher L. PERRY et al., Defendants, v. Adam T. PAJEWSKI, Individually and as next friend of Katherine Pajewski, a minor, Plaintiffs.
• Court: United States State Supreme Court of Delaware

Page 429

363 A.2d 429

Adam T. PAJEWSKI, Individually and as next friend of

Katherine Pajewski, a minor, Plaintiffs, v. Christopher L. PERRY et al., Defendants.

Christopher L. PERRY et al., Defendants, v. Adam T. PAJEWSKI, Individually and as next friend of

Katherine Pajewski, a minor, Plaintiffs.

Nos. 122, 1974 and 195, 1975.

Supreme Court of Delaware.

Submitted April 20, 1976.

Decided Aug. 5, 1976.

Upon appeal from Superior Court.

Arlen B. Mekler and Jack R. Salley, of Wise & Mekler, Wilmington, for plaintiffs.

Regina M. Small and George E. Gelb, Deputy Attys. Gen., Wilmington, for defendants.

Before HERRMANN, C.J., and DUFFY and McNEILLY, JJ.

DUFFY, Justice:

In these actions for libel and for wrongful invasion of privacy, the Superior Court determined that the State of Delaware, in the person of the Governor and a Cabinet Secretary, was immunized from liability for any claim based on tort but not for one rooted in contract. We consider appeals by both the State and plaintiffs.

I

Plaintiffs, father and his minor child, allege that the Department of Health and Social Services, a State agency created under 29 Del.C. § 7901, received in the regular course of its business confidential information about their family history. They say that such private and personal information, in transparent disguise, was made public by personnel of the Department during a seminar discussion (of child protective services) which it sponsored at the University of Delaware, and by disclosure to a writer for Delaware Today, a monthly magazine which published the data. ¹ A fuller statement of the facts appears in the opinion of the Superior Court determining the tort claim, 320 A.2d 763 (1974), to which reference is made.

II

We begin with a consideration of plaintiffs' contention based on principles of contract law. In brief, they claim to be third-party beneficiaries of a contract between Delaware and the Federal Government under which the latter provides funds to be used by State for aid to families with dependent children. The contract is said to arise from the implementation of two separate statutes enacted by the respective Governments. The first of these is the Federal legislation, 42 U.S.C. § 602(a), which provides that:

'A State plan for aid and services to needy families with children must . . . (9) provide safeguards which restrict the use or disclosure of information concerning applicants and recipients to purposes directly connected with the administration of aid to families with dependent children.'

The Delaware statute, 31 Del.C. § 111, requires the State Treasurer to accept and distribute such Federal funds.

Plaintiffs contend that the actionable effect of the statutes is to create a contract barring disclosure of the specified information to the public and to Delaware Today. And, say plaintiffs, they are beneficiaries of that contract, they have been damaged by its breach (that is, by the disclosure of information about their family history), and they have a right of action thereon.

Relying on our opinion in Blair v. Anderson, Del.Supr., 325 A.2d 94 (1974), the Superior Court accepted this hypothesis and denied the State's motion to dismiss. It concluded that plaintiffs were 'intended beneficiaries' of the mutual undertaking between the Federal and State Governments, under which the requirement of confidentiality arose and, as implemented, the contract is both 'executory and enforceable.'

In Blair we noted that the United States owed a statutory duty of 'safekeeping' and 'protection' to a person whom it had caused to be committed. 18 U.S.C. § 4042. Delaware contracted to perform that duty. Since performance of such duty would satisfy a legal obligation which the United States (the promisee) owed the prisoner (the beneficiary), the latter was, under traditional tests, a creditor beneficiary with standing to sue. Restatement of the Law: Contracts § 133(1)(b). Not so here.

Neither the record nor the briefs show any duty owed by the United States to plaintiffs which the State has undertaken to perform. That is the significant and determinative difference between this case and Blair. We recognize that Delaware may have a contractual duty to the Federal Government to preserve confidentiality of family history of the kind here in issue. Indeed, common decency and the most modest norms of privacy command that the State not permit its files to be used in the manner here alleged. ² But it does not follow that plaintiffs are beneficiaries with standing to sue on the legal hypothesis they propose. Indeed, they do not have such standing under the applicable rule of law which we find to be that stated in Restatement, supra § 145; it provides:

'A promisor bound to the United States or to a State or municipality by contract to do an act or render a service to some or all of the members of the public, is subject to no duty under the contract to such members to give compensation for the injurious consequences of performing or attempting to perform it, or of failing to do so, unless,

(a) an intention is manifested in the contract, as interpreted in the light of the circumstances surrounding its formation, that the promisor shall compensate members of the public for such injurious consequences, . . ..'

We find nothing in the alleged contract nor in the surrounding circumstances which manifests an intention to give plaintiffs a right to sue the State on the grounds here alleged. Restatement, supra § 145; Commonwealth of Pa. v. National Ass'n on Flood Insurers, M.D., Pa., 378 F.Supp. 1339 (1974); Martinez v. Socoma Companies, Inc., 11 Cal.3d 394, 113 Cal.Rptr. 585, 521 P.2d 841 (1974); City & County of San Francisco v. Western Air Lines, Inc., 204 Cal.App.2d 105, 22 Cal.Rptr. 216 (1962); Davis v. Nelson-Deppe, Inc., 91 Idaho 463, 424 P.2d 733 (1967); Eastern Air Lines, Inc. v. Town of Islip, Sup., 229 N.Y.S.2d 117 (1962); Townsend v. City of Pittsburgh, 383 Pa. 453, 119 A.2d 227 (1956); Oman Construction Co. v. Tenn. Central Ry. Co., 212 Tenn. 556, 370 S.W.2d 563 (1963).

In sum, it appears to us that, at most, plaintiffs are incidental beneficiaries of the Federal-State agreement and no right of action is vested in them under principles of contract law. It follows that, to this extent, the judgment of the Superior Court must be reversed.

III

As we have noted, plaintiffs also found their claim on traditional tort law and, as against the State, the Superior Court applied the Constitutional provision, Art. I § 9, and the decisions thereunder in determining that the action is barred by the doctrine of sovereign immunity. 320 A.2d at 765. With the significant exception discussed below in Part IV hereof, we agree with the Trial Court's conclusion for the reasons stated in its opinion. Compare Donovan v. Delaware Water & Air Resources Comm'n, Del.Supr., 358 A.2d 717 (1976).

IV

Finally, we turn to plaintiffs' argument based upon the provisions of 18 Del.C. ch. 65, an Act which is captioned 'Insurance for the Protection of the State.' Plaintiffs say that statute is a waiver of immunity to the claim asserted here, while the State argues to the contrary.

(A)

The legal significance of the State Insurance Program provided for in 18 Del.C. § 6501, etc., has been considered in several Superior Court cases beginning with Raughley v. Department of Health & Social Serv., Del.Super., 274 A.2d 702 (1971), and continuing through Pipkin v. Department of Highways & Transportation, Del.Super., 316 A.2d 236 (1974) and Holden v. Bundek, Del.Super., 317 A.2d 29 (1972). But this is the first case in which this Court has been asked to consider the Act and the Program.

The key provision on which the waiver of immunity argument is based is § 6511; it reads as follows:

'The defense of sovereignty is waived and cannot and will not be asserted as to any risk or loss covered by the state insurance coverage program, whether same be covered by commercially procured insurance or by self-insurance, and every commercially procured insurance contract shall contain a provision to this effect, where appropriate.'

The Superior Court has, of course, considered § 6511 but has rejected the arguments made by plaintiffs in this case. Thus, in Raughley, the Court determined that the Act 'is merely enabling legislation notwithstanding its mandatory direction.' The Court found that a

'. . . fully developed and integrated program (of insurance) protecting both the State and the public was contemplated.'

Since such a program was not in being, the Court concluded that the waiver in § 6511 was not effective and, applying the immunity doctrine, dismissed tort claims against the State. Pipkin adopted the same rationale but on a somewhat more restrictive basis, concluding that without insurance coverage there was no waiver, and so a negligence action against the State was dismissed.

'To decide otherwise (said the Court at 316 A.2d 239) would be to expose the State to claims against which it has no protection and as to which it has enacted no effective waiver of sovereign immunity.'

Between Raughley and Pipkin the Superior Court decided Holden, a case with a claim for permanent injuries sustained as a result of alleged negligence by the State Highway Department. In Holden the Court made clear its impatient concern with the failure of the State to implement the Insurance Act, thereby doing injustice to persons injured by fault of the State. Then, noting that it is 'difficult to understand why so little progress has been made in this area since the original 1968 Act,' the Court refused to accept as determinative an affidavit of 'no-coverage' and denied the State's motion for summary judgment on sovereign immunity grounds; the Court permitted a 'thorough inquiry' into why there was not protection for plaintiffs in a 'simple slip and fall tort case.'

In this case the Trial Judge followed the prior Superior Court cases and concluded that there is 'no waiver until there is a...