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Desantis v. Donegal Mutual Insurance Co.

Superior Court of Delaware, New Castle

July 22, 2015

MARK DESANTIS, Plaintiff,
v.
DONEGAL MUTUAL INSURANCE COMPANY, Defendant.

Submitted: June 15, 2015

Upon Plaintiff's Motion in Limine – GRANTED

Kenneth M. Roseman, Esquire, KENNETH ROSEMAN, P.A., Attorney for Plaintiff.

Colin M. Shalk, Esquire, CASARINO CHRISTMAN SHALK RANSOM & DOSS, P.A., Attorney for Defendant.

MEMORANDUM OPINION

Andrea L. Rocanelli Honorable Andrea L. Rocanelli

This matter is before the Court on Plaintiff's motion in limine to determine the net loss of earnings of a sole proprietor under 21 Del. C. § 2118 ("Section 2118"). Plaintiff, Mark DeSantis, was in a motor vehicle collision on October 17, 2014. At the time of the collision, Plaintiff was insured under an insurance policy issued by Defendant, Donegal Mutual Insurance Company ("Policy") which provided PIP coverage to Plaintiff in compliance with Section 2118. Also at the time of the collision, Plaintiff was self-employed as the sole proprietor of a construction business, Quartz Mill Contracting. Plaintiff was unable to work following his accident and sought to recover his earnings. Plaintiff filed the underlying Complaint on January 21, 2015 alleging that Defendant failed to reimburse Plaintiff for net loss of earnings and that Plaintiff was entitled to these PIP damages pursuant to Section 2118.

In support of his claim for earnings, during discovery, Plaintiff produced nine checks drawn on the account of Quartz Mill Contracting and made out to "cash" for the period from January 8, 2014 to November 13, 2014. Thereafter, the parties stipulated that Defendant would pay Plaintiff $370.72 per week but Plaintiff reserved the right to challenge that $370.72 per week was the correct calculation for Plaintiff's net loss of earnings. Accordingly, Plaintiff filed the pending Motion in Limine requesting a Court ruling on the correct calculation for Plaintiff's net loss of earnings.

Plaintiff contends that his net loss of earnings should be calculated by deducting the business expenses necessary for the production of gross income from the gross income of his sole-proprietorship. Under Plaintiff's method of calculation, Plaintiff is entitled to net weekly earnings of $955.39. In contrast, Defendant maintains that the correct method of calculation for Plaintiff's net loss of earnings is the net amount of the nine draws which represent regular and predictable income. Under Defendant's method of calculation, Plaintiff is entitled to net weekly earnings of $370.72.

DECISION AL AND STATUTORY LAW

Prior to a statutory amendment in 1982, Section 2118 provided that an insured could recover "net amount of lost earnings."[1] Courts interpreting this language denied recovery to self-employed plaintiffs due to the "complex and controversial" problems connected to "proof of damages by a self-employed person." [2] In particular, courts denying or limiting recovery to self-employed plaintiffs expressed concern about confusing business profits with net loss of earnings, considered to be wages or salary.[3] In 1980, the Delaware Supreme Court held in U.S. Fidelity and Guaranty Insurance Co. v. Neighbors that a self-employed plaintiff could recover net loss of earnings only when he or she had made periodic draws sufficient to represent ascertainable and predictable income.[4]Specifically, the Neighbors Court ruled that net loss of earnings based on periodic draws was more similar to salary than to profits and, as such, was recoverable under Section 2118.[5]

The Delaware legislature clearly disagreed with the Court's reading of Section 2118 as to self-employed persons in Neighbors and expressed this disagreement by amending Section 2118 in 1982 to provide: "Lost earnings shall include net lost earnings of a self-employed person."[6]

In the meantime, the Court addressed the issue again in Graham v. Nationwide holding that "in order for a self-employed person to recover [net] lost earnings under § 2118(a)(2)a.2 a basic draw must be ascertainable so as to represent a predictable income."[7] However, acknowledging the statutory change, the Graham Court limited the precedential effect of its decision to the date of the 1982 statutory amendment.[8]

The Superior Court interpreted the 1982 statutory amendment in Jopson v. Commercial Union Ins. Co., holding that "the [statutory] amendment to [Section] 2118 eliminates the requirement that self-employed persons prove an ascertainable basic draw in order to recover lost earnings under the no fault statute." [9]Nevertheless, as the Superior Court noted in another case, "the Court is still 'guided by the principle that the claim for lost net earnings must be supported by evidence of predictable income.'"[10] In yet another case, the Superior Court held that the "phrase 'net amount of lost earnings' in Section 2118 . . . is broader than the term 'wages' and . . . is not synonymous with it."[11] Thus, the decisional law subsequent to the 1982 ...


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