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Green v. GEICO General Insurance Co.

Court of Chancery of Delaware

February 1, 2017

GEICO General Insurance Company

          Submitted: January 20, 2017

          Richard H. Cross, Jr., Esquire Cross & Simon, LLC

          Paul A. Bradley, Esquire Maron Marvel Bradley & Anderson LLC

         Dear Counsel:

         After carefully reviewing this matter, including the parties' recent submissions on the jurisdictional issue, I have determined that I must dismiss the Amended Verified Class Action Complaint ("the Complaint") for lack of subject matter jurisdiction.[1] This is a court of limited subject matter jurisdiction. By statute, the Court is conferred with subject matter jurisdiction to hear and adjudicate all matters and causes in equity; it may not, however, exercise its subject matter jurisdiction where an adequate remedy of law is available.[2] In determining whether there is an adequate remedy at law, the "issue for the Equity court is not whether another remedy would be preferable to the plaintiffs, but whether the available remedy at law will provide a full, adequate and complete remedy to the plaintiffs."[3]As then-Chancellor Allen succinctly observed:

Chancery jurisdiction is not conferred by the incantation of magic words. Neither the artful use nor the wholesale invocation of familiar Chancery terms in a complaint will excuse the court . . . from a realistic assessment of the nature of the wrong alleged and the remedy available in order to determine the whether a legal remedy is available and fully adequate. If a realistic evaluation leads to the conclusion that an adequate remedy [at law] is available, this court, in conformity with the command of Section 342 of Title 10, will not accept jurisdiction over the matter.[4]

         After taking a "practical view"[5] of the Complaint, it appears to me that the Plaintiffs have adequate remedies at law.

         Plaintiffs seek an injunction that would "prohibit GEICO from employing the Geographic Reduction Rule and Passive Modality Rule" when adjusting claims for benefits presented under Delaware's personal injury protection ("PIP") statute, 21 Del. C. § 2118, and a mandatory injunction that would "require GEICO to recalculate all previously paid claims [for PIP benefits] from the period March 10, 2011 to the date an injunction is issued . . . without using the Geographic Reduction Rule or Passive Modality Rule."[6] Presumably these prayers are the "hooks" for equitable jurisdiction. The requests for injunctive relief, in turn, are predicated upon the Court having determined that GEICO has either breached its contracts of insurance with its insureds or violated the applicable provisions of Delaware's PIP statute. Yet the Complaint offers no well-pled facts that would support the notion that a declaration of rights under the applicable contracts of insurance and/or Delaware's PIP statute, coupled with an award of damages and statutory penalties, if appropriate, would not provide an adequate remedy to the putative class of plaintiffs.[7]

         A declaration that either the insurance policies at issue or the applicable statute(s) do not permit GEICO to employ the Geographic Reduction Rule or Passive Modality Rule in its claims processing would not require an accompanying injunction. There is no indication that GEICO would refuse to abide by a final declaratory judgment to this effect.[8] Plaintiffs' identification of instances where GEICO allegedly ignored orders issued in connection with Insurance Commissioner arbitration proceedings does not persuade me that GEICO would ignore a final declaratory judgment of the Superior Court of Delaware. Moreover, Plaintiffs would have remedies available in the Superior Court to compel compliance, including a contempt citation, in the unlikely event that GEICO demonstrated any reluctance to comply fully with the Superior Court's order(s).

         Plaintiffs maintain that their request for a mandatory injunction that would compel GEICO to reexamine all bills submitted to it "without using the Geographic Reduction Rule or Passive Modality Rule" is the only adequate remedy because GEICO has resisted providing discovery in the past that would allow for a calculation of damages.[9] Even assuming this is accurate, I am satisfied that Plaintiffs can resort to the Superior Court's Civil Rules, particularly Rule 37, to compel GEICO to produce damages evidence in the event the Superior Court determines that GEICO either breached its insurance contracts or violated the PIP statute by applying the Geographic Reduction Rule or Passive Modality Rule when adjusting claims.[10] In this regard, I note that the mere fact a plaintiff may have to go to some lengths to prove damages does not mean that damages are not an adequate remedy.[11]

         Having reviewed the Complaint, and Plaintiffs' requested remedies, I am satisfied that this Court lacks subject matter jurisdiction since "[t]he true nature of this action is contractual; [and] complete relief is available at law."[12] I appreciate that neither Plaintiffs nor the Defendant raised the jurisdictional issue, a circumstance that suggested initially that all parties were content to litigate their claims and defenses here. I raised the jurisdictional issue sua sponte because I am obliged to do so.[13] GEICO has since advised the Court that it agrees the Court lacks subject matter jurisdiction.[14] In any event, this court's jurisdiction cannot be conferred by consent.[15] Having now afforded the parties an opportunity to be heard on the issue, I conclude that dismissal with prejudice is appropriate subject to Plaintiffs' election to have the case transferred to the Superior Court of Delaware pursuant to 10 Del. C. § 1902.

         IT IS SO ORDERED.

         Very truly yours,

          Joseph R. Slights ...

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