Delaware

Automobile Total Loss Thresholds

Total Loss Formula (See here for definition).

Insurer determines if vehicle is a total loss. It is then transferred as a “salvage vehicle.” 21 Del. C. § 2512.

Deductible Reimbursement

Automobile: No applicable statute, Administrative Code provision or case law exists other than as to PIP subrogation. With regard to PIP subrogation, Del. Code Ann. Tit. 21, § 2118(f) provides: “An insured person may not plead and introduce into evidence in an action for damages against a tortfeasor the amount of the deductible; however, insurers shall recover any deductible for their insureds or their household members pursuant to subsection (g) of this section.”

The carrier’s obligation to pursue under § 2118(g) extends to any deductible, not just exhausted deductibles. The PIP recovery deductible is limited to liability coverage that remains after insured’s bodily injury claim against the tortfeasor. Stratton v. Am. Indep. Ins. Co., 2010 WL 3706617 (Del. 2010).

Property: None.

Diminution of Value

First Party: Delaware Superior Court briefly determined that the majority of jurisdictions requiring the insurer to pay for diminution in value is the better view. However, the Delaware Supreme Court overruled that decision by holding that: “We conclude that the language ‘repair and replace’ is not ambiguous and that this language does not contemplate payment for diminution of value.” Delledonne v. State Farm Mutual Ins. Co., 621 A.2d 350, 352 (Del. Super. Ct. 1992); O’Brien v. Progressive Northern Ins. Co., 785 A.2d 281 (Del. 2001).

Third Party: No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.

First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits

There does not appear to be any Delaware cases directly addressing the duties of a liability carrier faced with multiple claims from multiple plaintiffs. However, Delaware has developed and encourages an interpleader practice which allows the defendant exposed to multiple liability or multiple claims which together exceed the amount of liability insurance the defendant carries. Professional Underwriters Liability Ins. Co. v. Zakrzewski, 2006 WL 3872847 (Del. Supr. Ct., Dec. 8, 2006); 10 Del. C. § 3910. Furthermore, a 3^rd Circuit opinion seems to indicate that the liability insurer has three options:

(1) Notify all potential claimants involved that the value of the claims will likely exceed policy limits and invite them to participate jointly in efforts to reach an agreement with the available funds;

(2) Attempt to settle the claims on a first come, first service basis as the claims are presented; or

(3) Promptly and in good faith commence an interpleader action and pay the policy limits into the court. McNally v. Nationwide Ins. Co., 815 F.2d 254 (3d Cir. 1987) (Delaware law).

The court seemed to lean in favor of option number three, but under the specific facts of that case did not err in finding that the insurer had a duty to interplead the funds.

Funeral Procession Traffic Laws

The law prohibits any vehicle not part of a funeral procession from driving between or interfering with a funeral procession. All vehicles in a funeral procession must be as closely-spaced as safely possible and must have headlights and taillights lit. Vehicles in a funeral procession must exercise due caution and yield the right-of-way to emergency vehicles or when directed by a police officer. Del. Code Ann. tit. 21, §§ 7101-7103.

Imputing Contributory Negligence of Driver to Vehicle Owner

Imputed Contributory Negligence Law:  The contributory negligence of a permissive user is not imputed to the owner in an owner’s action against a third-party tortfeasor for causing damage to the owner’s vehicle in a collision. Westergren v. King, 99 A.2d 356, 358 (Del. Super. 1953).

Negligence of a minor driver is not imputed to owner under § 6104 (making owner vicariously liable for negligence of minor diving with owner’s consent) because the language of the statute does not alter the common law rule preventing same.

Vicarious Liability/Family Purpose Doctrine:  No Vicarious Liability Statute.

No Family Purpose Doctrine. Markland v. B.O.R.R Co., 351 A.2d 89 (Del. Supr. 1976).

Sponsor Liability for Minor’s Driving:  21 Del. C. § 6104: Under Delaware law, a parent or guardian who signs a minor’s application for a driver’s license is liable, along with the minor, for damages caused by the minor’s negligent operation of a vehicle on a highway.

21 Del. C. § 6105: Owner of vehicle liable for damages caused by minor given permission to operate vehicle.

Laws Regarding Using Cell Phones/Headphones/Texting While Driving

Cell Phone/Texting:  Use of a cell phone is prohibited for a driver with a learner’s permit or other restricted licenses.  21 Del. C. § 2710.

No one may operate a motor vehicle while using a cell phone in any manner unless it is hands-free. 21 Del. C. § 4176C(a)

Other Prohibitions:  No Applicable Laws.

Loss Of Use

Loss of Use: Yes. Based on 21 Del. C. § 2118(a)(4), which includes “loss of use of the motor vehicle” as compensation for damages to the motor vehicle. However, no published case law authority exists for this contention, and courts often look to the liability policy for any language regarding loss of use. Loss of use is currently recoverable when damages are proved by the depreciated market value of the vehicle; therefore, rental value of a substitute vehicle is not currently applicable in Delaware. Teitsworth v. Kempski, 127 A.2d 237, 238 (Del. 1956). However, unpublished case law exists in Delaware holding that failure to actually procure a replacement vehicle does not preclude recovery for loss of use. The case law cites to several other jurisdictions for this support, so a strong argument may be made in Delaware, in the absence of published authority, that rental value may be used as a measure of damages without the vehicle actually being rented. There is no caselaw expressly disallowing recovery for loss of use on a total loss claim. Accordingly, there is a strong argument that such a claim can be sustained, especially with favorable policy language.

Lost Profits: No applicable authority exists for recovery of lost revenue/profits as a measure of loss of use.

Med Pay/PIP Subrogation

Med Pay: Coverage not applicable.

PIP: Statutory right of subrogation (arbitration) for reimbursement under 21 Del. C. § 2118(g) exists only against third-party’s liability carrier – not tortfeasor individually. Subrogation rights only against third-party policy limits remaining after insured settles with third-party. Carrier can’t join insured’s third-party lawsuit. Third-party carrier can settle with PIP carrier before the insured but must reimburse insured if third-party claim and subrogation recovery exceed third-party policy limits. Harper v. State Farm Mut. Auto. Ins. Co., 703 A.2d 136 (Del. Super. 1997). Subrogation may proceed directly against a self-insured or uninsured tortfeasor. Waters v. United States, 787 A.2d 71, 72 (Del. 2001). State Farm v. Dann, 794 A.2d 42 (Super. Del. 2002). While subrogation against an uninsured person may proceed in court, subrogation against a self-insured entity is subject to mandatory arbitration. Compare Gov’t Emps. Ins. Co. @ 1156317 v. Creamer, 2013 WL 7861541 (Del. Com. Pl. 2013) (uninsured) with City of Wilmington v. Nationwide Ins. Co., 154 A.3d 1124, 1125 (Del. 2017) (self-insured).

• “Add-On” PIP State. No significant limitation on third-party lawsuits, but insured can’t recover no-fault benefits from tortfeasor. Uninsured driver without no-fault insurance can sue tortfeasor in tort. Redding v. Ortega, 840 A.2d 1224 (Del. 2003).

Made Whole: No case law. See PIP Statute above.

Statute of Limitations: A three (3) year contract statute of limitations applied to subrogation. 10 Del. C. § 8106. Statute of limitations begins to run on date(s) of final PIP payments (not first PIP payment) made to or for its insured. Nationwide Gen. Ins. Co. v. Hertz Corp., 2006 WL 2673057 (Del. Super. 2006).

Owner Liability For Stolen Vehicle

Key In The Ignition Statutes: 21 Del. C. § 4182.

Common Law Rule: Whether liability can be imputed to a vehicle owner for injuries caused by a thief is based on questions of foreseeability. The court considers several factors that may lead a fact finder to impose a legal duty, including whether the vehicle is one that may attract those who lacked the skill and knowledge to operate it safely, whether the vehicle is one that would inflict more injury and damage than an ordinary vehicle, and whether prior occurrences should have indicated that additional security measures were required to prevent theft. Vadala v. Henkels & McCoy, Inc., 397 A.2d 1381 (Del. Super. Ct. 1979); Jewell v. Absher, 2002 WL 970464, at *3 (Del. Super. Ct. 2002).

Payment of Sales Tax After Vehicle Total Loss

First-Party Claims:  No state sales tax in Delaware. No applicable statute, case law, or regulation governing recovery of sales tax. 21 Del. C. § 2118 (A)(4) describes only the following benefits: “Compensation for damage to the insured motor vehicle, including loss of use of the motor vehicle, not to exceed the actual cash value of the vehicle at the time of the loss and $10 per day, with the maximum payment of $300, for loss of use of such vehicle.” 21 Del. C. § 2118 (A) (4). Look at policy language.

Third-Party Claims:  No applicable statute, case law, or regulation governing recovery of sales tax.

Pedestrian and Crosswalk Laws

Statute:

21 Del. C. § 4142: Vehicles must yield to pedestrians in crosswalk when pedestrians are on vehicle’s half of road. Pedestrians must not leave curb when vehicles are close.

21 Del. C. § 4143: Pedestrians must yield to cars when outside of crosswalks. No crossing diagonally. At intersections with traffic signals, pedestrians must use crosswalk to cross.

Summary: A motorist who struck a pedestrian at an intersection had a duty to drive in a careful and prudent manner with due regard for the circumstances, and his duty required him to observe a stop sign at the intersection and subsequently yield to a pedestrian. Floyd v. Lipka, 1 Storey 487, 51 Del. 487, 148 A.2d 541 (1959). Crossing outside a crosswalk without looking makes a pedestrian guilty of contributory negligence. Stenta v. Leblang, 5 Storey 181, 55 Del. 181, 185 A.2d 759 (1962).

Rental Car Company Physical Damage and Loss of Use Claims

Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers not regulated.

Recovery From Third-Party: Nothing specifically with regard to car rental companies, but loss of use and loss of profits recoverable. Recovery of loss of use of vehicle used in plaintiff’s employment. Loss of use equal to the rental value for the period of time the vehicle was being repaired was allowed. Loss of profits is also recoverable. Parker v. Stauffer, 1991 WL 14130 (Del. Super. 1991). Loss of use damages for vehicle sitting on dealer’s lot is allowed. Ganc v. Corrosion Control Corp., 1992 WL 1182140 (Del. Ct. Comm. Pleas 1992).

Rental Car Company’s Liability Insurance Primary or Excess

Summary: Car rental companies are required to carry the minimum limits of liability insurance. If the owner fails to do so, it is jointly and severally liable with the renter for any damages caused by the renter’s negligence. A judge will allow a hearing and if the car rental company has these minimum limits, it will be dismissed from the suit. Del. Stat. § 6101(a)(d). When a car rental company maintains the required minimum liability coverage, primary liability will be shifted to the renter’s personal auto policy. Del. Stat. § 6102; Stewart v. Selner and Agency Rent-A-Car, 1989 WL 5186 (Del. Super. 1989). This is true even when the car rental company is self-insured. United Service Auto. Ass’n v. Avis Rent-A-Car, Inc., 2005 WL 3416299 (Del. Super. 2005).

Slower Traffic Keep Right

Statute: 21 Del. C. § 4114(a) and (b) and 21 Del. C. § 4116

Summary: Delaware requires motorists to drive in the right lane, except when overtaking and passing another vehicle, when there is an obstruction on the roadway, when a roadway is divided into three marked lanes for traffic, or upon a roadway designated for one-way traffic. Slower traffic must keep right. Vehicles proceeding at less than the normal speed of traffic shall be driven in the right lane. Except when overtaking and passing on the right is permitted, the driver of an overtaken vehicle or operator of an overtaken bicycle shall give way to the right in favor of the overtaking vehicle on audible signal.

Sudden Medical Emergencies While Driving

Sudden Emergency Doctrine. Where a driver of a vehicle suddenly becomes physically or mentally incapacitated without warning, he is not liable for injury resulting from the operation of a motor vehicle while so incapacitated. Lutzkovitz v. Murray, 339 A.2d 64 (Del. 1975).

Where a prima facie case of negligence has been established by the plaintiff, the burden of proof is on the defendant to show sudden illness or attack and that such illness or attack was not anticipatable and unforeseen. Lutzkovitz v. Murray, 339 A.2d 64 (Del. 1975).

Suspension of Drivers’ Licenses

Administrative Suspension: Delaware suspends an uninsured driver’s license for six (6) months and fines the uninsured driver $1,500 if pulled over by a police officer or is involved in an accident and is unable to provide proof of motor vehicle insurance. Delaware DMV can assess a $100 fine, with a $5 per day increase, while mandatory insurance is not carried on vehicle. 21 Del. C. § 2118(n)(4). Each insurer must report to the DMV, within thirty (30) days after an accident, the name of any persons involved in the accident without insurance. 21 Del. C. § 2118(n)(3).

Judgment: Whenever any person fails to satisfy any judgment within sixty (60) days of its issuance, the judgment debtor can request the court forward a certified copy of such judgment to the Secretary of Transportation. 21 Del. C. §2941. If a person has had his license suspended for nonpayment of judgment, the Department after the lapse of ten (10) years from the entry of the judgment may issue a new license. 21 Del. C. § 2945.

Contact Information: State of Delaware, Division of Motor Vehicles, Uninsured Department, P.O. Box 698, Dover, DE 19903, (302) 744-2503 x2323,  https://www.dmv.de.gov/

Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles

Authority: 6 Del. C. § 4905A

Summary: The invoice must state if non-OEM parts were used in the repair.

Municipal/County/Local Government Immunity and Tort Liability

Legal Authority: 

Delaware county and municipal tort Claims Act:  10 Del. Code § 4013.

Notice Deadlines: Any municipality may enact a notice requirement by ordinance provided it is no longer than one (1) year. 10 Del. Code § 4013.  Must give notice of actions against City of Wilmington within one (1) year of date cause of action accrued. 10 Del. Code § 8124.

Claims/Actions Allowed:  Counties, municipalities, and political subdivisions retain their governmental immunity with three statutory exceptions.  Depends on whether acts are discretionary or ministerial. Discretionary acts are subject to immunity; ministerial acts can be subject to liability under one of the three exceptions. The distinction is always one of degree.  Sussex County v. Morris, 610 A.2d 1354 (Del. 1992).

Comments/Exceptions: No immunity when performing governmental function:

(1) Ownership, maintenance, or use of motor vehicle;

(2) Liability for the construction, operation, or maintenance of any public building; and

(3) Liability for a discharge of toxic substances.

10 Del. Code § 4012.

Damage Caps: $300,000 per occurrence.  If municipality purchases liability insurance in excess of $300,000, then that is the limit.  10 Del. Code § 4013

State Sovereign Immunity And Tort Liability

Tort Claims Act: Delaware Tort Claims Act.

No claim shall arise against the State, public officer/ employee if the act/ omission:

(1) arose out of an official duty requiring discretion;

(2) was done in good faith and for the best interest of the State; and

(3) was done without gross or wanton negligence.

Del. Code tit. 10, § 4001-4005 (1978).

Notice Deadlines:  None.

Claims/Actions Allowed:  Bringing a tort claim against the State requires a party to prove that the action is not precluded by the State Tort Claims Act or the doctrine of sovereign immunity. Marvel v. Prison Indus., 884 A.2d 1065 (Del. Super. 2005).

Comments/Exceptions:  Sovereign Immunity is waived where insurance coverage exists by statute.

Del. Code tit. 18, § 6511. Where a State officer/employee is negligent in performing routine functions, they may be held personally liable. This includes motor vehicle accidents. Simon v. Heald, 359 A.2d 666 (Del. Super. 1976).

Damage Caps:  None.

Anti-Indemnity Statutes

Prohibits Intermediate Indemnity.  Applies to Construction Contracts or Agreements.  Del. Code, Title 6 § 2704.

Does not apply to any insurance policy issued by a “duly authorized” insurer “insuring against losses or damages from any causes whatsoever”.

Contribution Actions

Pure Joint and Several Liability. Plaintiff can recover entire amount of damages from any particular defendant. 10 Del. C. § 6301; Blackshear v. Clark, 391 A.2d 747 (Del. 1978).

A settling contribution plaintiff is not entitled to contribution from a tortfeasor whose liability was not extinguished by the settlement. No contribution in a separate action if it can be enforced by cross-claim in the original action. 10 Del. C. § 6302; Am. Ins. Co. v. Material Transit, Inc., 446 A.2d 1101, 1104 (Del. Super. 1982).

Separate contribution actions are rarely allowed. Usually, they must be filed in the underlying third-party action.

Contributory Negligence/Comparative Fault

Modified Comparative Fault. 51% Bar. Damaged party cannot recover if it is 51% or more at fault. If 50% or less at fault, it can recover, although its recovery is reduced by its degree of fault. If defendant’s conduct was plain negligence, and plaintiff is more than 50% at fault, plaintiff cannot recover. 1 Del. C. § 8132; Brittingham v. Layfield, 962 A.2d 916 (Del. 2008).

Dog Bite Laws

Dog owner is liable for damages in all types of injuries caused to person or property by their dog. Del. Code Ann. § 1711.

Economic Loss Doctrine

Majority Rule (exception for residential construction). The ELD prevents recovery in tort where only the product itself has been damaged. Danforth v. Acorn Structures, Inc., 608 A.2d 1194 (Del. Super. 1999). In 1996, the Delaware General Assembly passed the Home Owner’s Protection Act, 6 Del. C. §§ 3651-52. This Act expressly does away with the ELD in certain residential construction cases. Otherwise, where solely economic losses were sought and no damage to persons or other property had occurred, the plaintiff is limited to remedies under the U.C.C. and may not proceed in tort. When two separate parts are integrated into one functioning whole, damage to either integrated piece by the other component does not constitute damage to “other property” for which tort recovery is allowed. Delmarva Power & Light v. Meter-Treater, Inc., 218 F.Supp.2d 564 (D. Del. 2002). An exception to the ELD exists where there is negligent misrepresentation. Guardian Constr. Co. v. Tetra Tech. Richardson, Inc., 583 A.2d 1378 (Del Super. 1990).

Parental Responsibility

Minor’s Driving. Parents, guardians or employer who signed license application liable for damages caused by minor driver. 21 Del. C. § 6104.  Owner of vehicle liable for damages caused by minor given permission to operate vehicle. 21 Del. C. § 6105.

There are no limits to the liability involving a minor’s driving.

Vandalism. Parents liable for intentional or reckless damage to real or personal property. 10 Del. C. § 3922.

The limits of liability are $5,000.

Child must be under 18-years-old.

Spoliation

Tort of Spoliation: Delaware declines to recognize a separate cause of action for negligent or intentional spoliation. Lucas v. Christiana Skating Center, Ltd., 722 A.2d 1247, 1250 (Del. 1998).

Sanctions: Criminal Penalty: 11 Del. C. § 1269(2), Tampering with physical evidence, states that “a person is guilty of tampering with physical evidence when … believing that certain physical evidence is about to be produced or used in an official proceeding or a prospective official proceeding, and intending to prevent its production or use the person suppresses it by any act of concealment, alteration or destruction, or by employing force, intimidation or deception against any person.”

Adverse Inference: Where a litigant intentionally suppresses or destroys pertinent evidence, an inference arises that evidence would be unfavorable to his case. Lucas v. Christiana Skating Center, Ltd., 722 A.2d 1247, 1250 (Del. 1998).

Statute of Limitations

Personal Property2 Years10 Del. C. § 8107*

Personal Injury/Death2 Years10 Del. C. § 8119

Breach of Contract/Written3 Years10 Del. C. § 8106

Breach of Contract/Oral3 Years10 Del. C. § 8106

Breach of Contract/U.C.C./Goods4 Years6 Del. C. § 2-725

Breach of Contract/Wages/Work1 Year10 Del. C. § 8111

Statute of Repose/ProductsNone

Statute of Repose/Real Property6 Years10 Del. C. § 8127**

Breach of Warranty/U.C.C.4 Years6 Del. C. § 2-725

Breach of Implied Warranty4 Years6 Del. C. § 2-725

Workers’ Comp Third Party Case2 Years19 Del. C. § 2363

Strict Product Liability2 Years10 Del. C. § 8119 § 8107***

Statute of Limitations Exceptions

*3 Years if not discoverable in 2 Years. 10 Del. C. § 8107.

**6 Years from substantial completion of improvement to real property. 10 Del. C. § 8127.

***4 Years from delivery for breach of implied warranty of merchant-ability and fitness for a particular purpose. Addison v. Emerson Elec. Co., 1997 WL 129327 (D. Del. 1997).

Health and Disability Insurance

Statute of Limitations: 2 Years (3 years if not discoverable in 2 years). 10 Del. C. § 8119.

Subrogation of Medical and Disability Benefits are allowed. Givens v. St., 405 A.2d 704 (Del. Super. Ct. 1979). Made Whole Doctrine does not apply. Common Fund Doctrine applies. Americas Mining Corp. v. Theriault, 51 A.3d 1213, 1253 (Del. 2012).

Admissibility of Expert Testimony

Admissibility Standards: Daubert

Case/Statutory Law:  D.R.E. 702

Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims

Duty To Disclose: No.

Failure To Disclose A Basis For Bad Faith: Delaware recognizes a cause of action for bad faith against a first-party insurer. See Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254, 264 (Del. 1995). An insured must show two things to establish a bad faith claim: (1) the insurer denied insurance benefits to the insured; and (2) the denial of insurance benefits was clearly without any reasonable justification. Id. at 264. In Delaware, bad faith claims can be based on failure to objectively investigate a claim, process, or pay an insurance claim. Id. at 264 and 266. An insurer is entitled to consequential damages. Id. at 265.

Recording Conversations

All-Party Consent: State privacy laws state that all parties must consent to the recording of oral or electronic conversations. U.S. v. Vespe holds that even under the privacy laws an individual has the right to record their own conversations. Section 1335 says it is a class G felony to intercept without the consent of all parties thereto a message by telephone or other means of communication, except as authorized by law. Section 2402 provides that it is “authorized by law” for a person communication where the person is a party to the communication or where one of the parties to the communication has given prior consent, unless the communication is intercepted for the purpose of a criminal act. Del. Code Ann. tit. 11, § 2402(c)(4); Del. Code Ann. tit. 11, § 1335(a)(4); U.S. v. Vespe, 389 F. Supp. 1359 (1975).

Product Liability Law

Statute of Limitations/Repose: 2 Years for personal injury and wrongful death. 10 Del. C. § 8119. Statute of Repose is 6 years. 10 Del. C. § 8127.

Liability Standards: Negligence, Warranty.

Fault Allocations: Modified Comparative. 10 Del. C. § 8132.

Non-Economic Caps/Limits On Actual Damages: No.

Punitive Y/N and Limits: Yes.

Heeding Presumption?: No. Never adopted strict liability or Restatement (Second) of Torts § 402A (1965).

Innocent Seller Statute: Yes. 18 Del. C. § 7001.

Joint and Several Liability: Yes. 10 Del. C. § 6301, et seq.

Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; Presumption; Sophisticated User.

Restatement 2^nd or 3^rd?: Neither.

“Matching Regulations” And Laws Affecting Homeowners Property Claims

Statute/Regulation: None.

Caselaw: None.

Condominium/Co-Op Waiver of Subrogation Laws

Associations must maintain property insurance, liability insurance, and fidelity insurance, but the insurer must waive its right to subrogation against a unit owner and any member of his/her household.

Del. Uniform Common Interest Ownership Act, 25 Del. C. § 81-313(d)(2).

Courts, however, have said that anti-subrogation agreements do not bar third parties from suing negligent condo owners as joint tortfeasors. See Fireman’s Ins. Co. of Washington, D.C. v. Fire-Free Chimney Sweeps, Inc., No. 2010 WL 1268158 (Del. Super. 2010).

Damage to Property Without Market Value

Service Value:  No Case Law

Intrinsic Value:  “Where no market value is available, the value to the owner will be given.” Woodland Manor v. Anderson, 1997 WL 33471238 (Del. C.P. 1997).

Sentimental Value:  A property’s sentimental value is unique to the owner. Carello v. State of Delaware, 2004 WL 2520905 (Del. Super. Ct., 2004).

One rule for measure of damages to clothing and household articles is replacement value adjusted to reflect actual value based on actual condition, considering articles in use for same length of time and in same condition, but court in its discretion may permit parties to resort to other known methods of ascertaining actual value. Phillips v. Delaware Power & Light Co., 201 A.2d 160 (Del. Super. 1964).

General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims

Payment And Depreciation Of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.

Landlord/Tenant Subrogation

A fire insurer is not entitled, as subrogee, to bring a subrogation action against a tenant to recover amounts paid to the landlord for fire damage to rental premises caused by the tenant’s negligence in absence of an express agreement between the landlord and tenant to contrary. The landlord and tenant are co-insureds under the fire policy. Lexington Ins. Co. v. Raboin, 712 A.2d 1011, 1016 (Del. Super. Ct. 1998). In Lexington, the tenants caused a fire by installing a ceiling fan in violation of the landlord’s rules and regulations. The Lexington court surveyed the law of multiple jurisdictions in holding that the “trend of modern jurisprudence holds that fire insurance secured by the landlord has been obtained for the mutual benefit of landlord and lessee.” In Deloach v. Houser, 2018 WL 5899080 (Del. Super. 2018), the insurer for an apartment complex joined a suit filed by two tenants against a third tenant who caused a fire. The court affirmed that the Sutton Rule is the rule followed in Delaware.

In Donegal Mut. Ins. Co. v. Thangavel, 301 A.3d 1186 (Del. 2023), the Supreme Court of Delaware ruled in a case where the apartment owner’s property carrier sued tenants for the $77,704.06 to repair the water damage caused by the tenants when they accidentally hit a sprinkler head while flying a drone inside the apartment. The Superior Court ruled in the tenants’ favor at summary judgment, holding that the Sutton Rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord’s damages. The lease provided:

12. NO LIABILITY FOR LOSS OR DAMAGE TO TENANTS’ PERSONS OR PROPERTY; INDEMNITY TO LANDLORD.

(a) Tenants agree to be solely responsible for all loss or damages to Tenants or their property or to any other person which may be situated in the Rental Unit and storage area; gross negligence of Landlord, its servant, agents or employees excepted[.] In addition, Tenants agree to indemnify and save Landlord harmless from any and all loss occasioned by the tenant’s breach of any of the covenants, terms and conditions of the Agreement, or caused by the tenant(s) family, guests, visitors, agents or employees ….²

(b) Tenant agrees to procure and maintain adequate content and liability insurance in an amount not less than $300,000.00 to afford protection against the risks herein assumed ….

29. TENANT RESPONSIBLE FOR DAMAGES.

Tenant by accepting this agreement covenants and agrees that tenant will be responsible for all damages accidentally, maliciously, intentionally, or negligently caused by the tenant, tenant’s family, guests or invitees to any of the property of the landlord.

On appeal, the Delaware Supreme Court affirmed. The Supreme Court held that fire insurance secured by the landlord is obtained for the mutual benefit of landlord and lessee. Therefore, in the absence of an express agreement or provision in the lease that would place liability on the tenant for the tenant’s negligence in causing the fire, the landlord’s carrier cannot obtain subrogation against the tenant. The court pointed out that, practically speaking, tenants contribute to the cost of the landlord’s fire insurance premiums through their rental payments. It said that the landlords could have held out for an agreement that the tenant would furnish fire insurance on the premises, but they did not. They elected to purchase the coverage. To suggest the fire insurance does not extend to the insurable interest of an occupying tenant is to ignore the realities of urban apartment renting. Prospective tenants ordinarily rely upon the owner of the dwelling to provide fire protection for the realty (as distinguished from personal property) absent an express agreement otherwise. Certainly, it would not likely occur to a reasonably prudent tenant that the premises were without fire insurance protection or if there were such protection it did not inure to his benefit and that he would need to take out another fire policy to protect himself. The court also noted that for purposes of preventing subrogation, residential tenants are “co-insureds”, absent some clearly expressed intent in the lease to the contrary. The court said this conformed to the usual expectations of the parties with regard to the assignment of risk of loss for fire, the practical effect of which is that rental payments contribute to the cost of the landlord’s fire insurance premiums, the mutual benefits derived by the parties from dividing respective liabilities, and the efficiency of not carrying duplicative insurance coverage on the same property.

In a 2013 federal court decision, a residential lease where the landlord could have but did not allocate the burden of a loss due to fire on her property to the tenant, and the landlord did not impose liability on the tenant for negligence in causing a fire or impose an obligation to purchase insurance. State Farm Fire and Casualty Company v. Lauzon, 2023 WL 1991827 (D. Del. 2023). The court dismissed the subrogation action against the tenant because the landlord did not impose liability on the tenant for negligence in causing a fire nor impose an obligation to purchase insurance. The insurer, instead, agreed to insure for fire loss, and argued the court should construe missing language in the lease to infer the tenant should be obligated to pay the insurer in subrogation when the landlord and tenant never agreed to the tenant being obligated to pay the landlord for negligence causing a fire in the leased property. The federal court followed Delaware law in holding that a tenant is assumed to be a co-insured under the landlord’s home insurance policy absent contrary language in the lease with the tenant.

Anti-Subrogation Rule

An insurer has no right of subrogation against an insured, co-insured, or a wrongdoer who is an insured under the same policy. Lexington Ins. Co. v. Raboin, 712 A.2d 1011 (Del. 1998). If a joint tortfeasor is protected from subrogation because of the ASR, and other joint tortfeasors who are not protected by the ASR are sued by the insurer, the unprotected joint tortfeasors can sue the protected joint tortfeasor for contribution. Great American Assur. Co. v. Fisher Controls Intern., Inc., 2003 WL 21901094 (2003) (unpublished); Firemen’s Ins. Co. of Washington, D.C. v. Fire-Free Chimney Sweeps, Inc., 2010 WL 1268158 (2010) (unpublished). In Fisher Controls Intern., Inc., Great American Assurance Company (“Great American”) paid damages for a fire that broke out at a refinery during a renovation project. Great American sued several subcontractors alleging that they negligently started the fire. They drop the suit against one of the subcontractors, Conectiv, after determining that Conectiv was an insured under the Great American policy and, therefore, protected by the ASR. Several of the other subcontractors then sue Conectiv for indemnification or contribution. The court rules that although the ASR protects Conectiv from a direct action by Great American, precedent indicates that Conectiv can still be sued for contribution or indemnification by its joint tortfeasors.

Criminal Restitution

If a criminal defendant is convicted of “stealing, taking, receiving, converting, defacing, or destroying property” a court can order that they pay restitution to the victim of any such offense. Although the statute does not expressly label an insurer as a “victim,” it does state that the disbursement of restitution funds will go first to the individual victims before an insurer will receive any amount. Del. Code Ann. Tit. 11 § 4106(d)(2).

Delaware case law further states that prior Delaware court decisions “have construed the term ‘victim’ as used in § 4106(a) as ‘one who suffers injury, loss, or death as a result of the voluntary act or undertaking of another,’ and have included insurers who pay compensation to policy-holding victims in that definition as well.” Nathan v. State, 962 A.2d 256 (Del. 2008).

Made Whole Doctrine

The 3^rd Circuit, in which Delaware sits, has been reluctant to apply the Made Whole Doctrine, especially where the Plan language specifically and unambiguously disclaims it. Bill Gray Enter., Inc. Emp. Health & Welfare Plan v. Gourley, 248 F.3d 206 (3^rd Cir. 2001). As for state law, however, Delaware contains no cases applying, extending, or explaining the application of the Made Whole Doctrine within Delaware state courts.

Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule

Collateral Source Rule: Delaware follows the common law CSR. It Is a cardinal principle of Delaware tort law. The collateral source must be unrelated to the tortfeasor, and the tortfeasor is entitled to present evidence of a collateral source to which it contributed. The plaintiff must have paid consideration for the source, although “even the slightest amount of consideration will suffice”. Yarrington v. Thornburg, 205 A.2d 1 (Del. 1964). Delaware has not enacted a direct statutory modification of the CSR. However, the no-fault statute, 21 Del. C. § 2118(g), limits the CSR by precluding an insured from suing a tortfeasor for damages for which compensation is available under the statute.

Recovery Of medical Expenses Rule:

Private Insurance: Gratuitous services and private health insurance payments subject to common law CSR. CSR applies to gratuitous write-offs by physicians and to payments by private health insurers. In those situations, plaintiff allowed to present to the jury the amount billed instead of the amount actually paid to the provider. Evidence of write-downs and write-offs is inadmissible. Mitchell v. Haldar, 883 A.2d 32 (Del. 2005). Discount from treating physician for cash payment by plaintiff was a collateral source, so plaintiff could recover the full price of medical services, excluding the discount, from the tortfeasor. Kerr v. Onusko, 2004 WL 2735456 (Del. Super. 2004), aff’d, 880 A.2d 1022 (Del. 2005) (approving Restatement (Second) of Torts § 920A(2) in this context). The requirement of consideration may be weakening. Recent case cited Minnesota law for the principle that under CSR, a plaintiff can recover the reasonable value of medical services provided even if those services were provided gratuitously. Mitchell v. Haldar, 883 A.2d 32 (Del. 2005), citing Hueper v. Goodrich, 314 N.W.2d 828 (Minn. 1982), superseded by statute as recognized in Imlay v. Lake Crystal, 453 N.W.2d 326 (Minn. 1990).

Related Law/Comments:

Medicare: As a matter of first impression, Supreme Court refused to extend the CSR to Medicare payments. The CSR could not be used to increase an injured party’s recovery of past medical expenses beyond those actually paid by Medicare. To determine the reasonable value of medical services where there are Medicare write-offs, the amount paid by Medicare is dispositive of the reasonable value of healthcare provider services. Stayton v. Delaware Health Corp., 117 A.3d 521 (Del. 2015).

Medicaid: For same reasons expressed in Stayton, when Medicaid has paid medical expenses, the CSR cannot be used to increase an injured party’s recovery beyond those paid by Medicaid. The amount paid by Medicaid is conclusively reasonable. Future medical expenses not subject to Medicaid reimbursement limitations. Unlike Medicare, Medicaid coverage is income dependent, and might not be available if a plaintiff improves her financial position to a living wage and secures other insurance. Because of the uncertainty of future coverage, Medicaid benefits cannot be used to limit a plaintiff’s future medical expenses. Smith v. Mahoney, 150 A.3d 1200 (Del. 2016).

Medical Malpractice: Plaintiff can’t get a double recovery from a public source, such as Social Security or Medicare. 18 Del. C. § 6862.

Employee Leasing Laws

While there are no statutes or cases which directly determine the respective subrogation rights against an employee leasing company or its client, most likely, both are going to be afforded protection under the Exclusive Remedy Rule. Porter v. Pathfinder Services, Inc., 683 A.2d 40 (Del. 1996).

Hospital Lien Laws

Statute: Delaware Code Title 25 §§ 4301 – 4306. Hospital Liens.

Perfecting Lien: A charitable organization shall file:

(1) Notice shall be in writing, containing name and address of injured party, date of the accident, name and location of hospital, and if known, name of alleged responsible party. § 4302.

(2) Copies must be sent by registered mail to the injured party and to all parties at interest. § 4302.

(3) After notice is served, an affidavit by a competent person acting on behalf of the institution, setting forth such service, and all attempts to serve shall be filed in the office of the Prothonotary. § 4302.

Comments: Hospital liens only apply to charitable hospitals. § 4301. The lien will attach to any verdict, report, decision, decree, award, judgment, or final order made or rendered in any action in any court of record in Delaware. § 4303. Notice must be sent prior to the payment of any money from the responsible party to the injured party. § 4302.

OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases

OCIP Law: No statute or case law specifically dealing with effect of OCIP/CCIP.

Statutory Employer Law: In construction settings, if an owner or contractor contracts to perform work, an employee’s right to recover workers’ compensation subrogation is against his immediate employer only. 19 Del. C. § 2311. Therefore, only the direct employer of an injured worker can claim the Exclusive Remedy Rule as a defense to a third-party action, and no other employer on a job site. Dickinson v. Eastern R.R. Builders, Inc., 403 A.2d 717 (Del. 1979). There is no immunity for upstream contractors.

Comments: Because 19 Del. C. §§ 2304, 2311 provides that subcontractor on construction site is alone responsible for compensation of its employees working on or under subcontract, it alone is immune from third-party suits. Suit by injured employee can be maintained against contractor on construction site. Dickinson v. Eastern R. R. Builders, Inc., 403 A.2d 717 (Del. 1979).

Recovery Of Increased Workers’ Compensation Premiums By Employer

Recovery For Increased Premiums? Undecided.

Statute/Case Law: None.

Rule Summary: There is no authority or precedent allowing or prohibiting the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.

Which Workers’ Compensation “Benefits” Can Be Subrogated?

No statute, regulation, or case decision on point. Section 2363 somewhat broadly describes the nature of the payments for which the workers’ compensation carrier is entitled to reimbursement: “…any amounts paid or payable under the Workers’ Compensation Act.” 19 Del. C. § 2363.

Workers’ Compensation Subrogation Waiver Endorsements

Subrogation Statute: 19 Del. C. § 2363

Waiver Allowed? Nothing in the Delaware Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.

Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.

Other Applicable Law: None.

Workers’ Compensation

Statute of Limitations:  2 Years. 19 Del. C. § 2363.

Can Carrier Sue Third Party Directly:  Yes, if the plaintiff has not filed suit by 260 days. Must give 30 days notice by all.

Right to Intervene:  Yes.

Recovery from UM/UIM Benefits: Yes.

Subrogation Against Medical Malpractice:  Yes.

Subrogation Against Legal Malpractice:  No.

Recovery Allocation/Equitable Limitations:  (1) Fees, Expenses; (2) Carrier Reimbursed, Less Pro-Rata Fees; and (3) Balance to Plaintiff.

Employer Contribution/Negligence:  No.

Attorney’s Fees/Costs:  Pro-Rata.

Future Credit:  Yes.

Auto No-Fault:  No.

Workers’ Compensation Claims by Undocumented Employees

Y/N/U:  U*

Statute: The term “employee” includes every person in service under any contract of hire or other employment avenue. It is silent on “aliens” as employees. 19 Del. Code § 2301(10). 19 Del. Code § 2333(a) says non-resident alien dependents are entitled to ½ the compensation for residents.

Case Law:  Campos v. Daisy Constr. Co., 107 A.3d 570 (Del. 2014).

Comments/Explanation/Other: *Under 19 Del. Code § 2325, illegal aliens are allowed to collect partial disability or diminished earning capacity. Campos held this application ensures fairness to undocumented workers under the law.