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Spivey v. USAA Casualty Insurance Co.

Superior Court of Delaware

August 15, 2017

USAA Casualty Insurance Co.

          Vivian L. Medinilla, Judge.

         Dear Counsel:

         The insureds in this case seek to reform the insurance policy to increase the limits of their Uninsured/Underinsured Motorist ("UM/UIM") coverage liability limits to the equivalent limits of their bodily injury liability coverage. This is the Court's ruling on the parties' cross-motions for summary judgment, filed on June 1, 2017. For the reasons stated below, Plaintiffs Richard Spivey and Jerry Brooks-Spivey's Motion for Summary Judgment is DENIED; Defendant USAA Casualty Insurance Co. ("USAA")'s Motion for Summary Judgment is GRANTED.

         Factual Background

         The facts underlying this insurance contract dispute are largely undisputed. Plaintiffs, Mr. and Mrs. Spivey, were involved in a January 20, 2013 automobile accident when another driver struck their 2006 Lincoln Town Car. The other driver was charged with DUI, driving across a median, and driving on the wrong side of the roadway. His insurance carrier tendered the statutory minimum liability insurance limits to Plaintiffs and provided an affidavit stating that there was no other insurance available to them under his policy.

         Plaintiffs' vehicle was insured with USAA. From 1993 until 2013, Plaintiffs had insured a total of 28 vehicles with USAA.[1]

         Several years before the accident, on June 12, 2009, USAA sent Plaintiffs a semi-annual renewal packet for their automobile insurance policy. This packet included a Declaration Page with a list of coverage limits and associated premium costs, and USAA's Form 999DE(18).[2]

         Form 999DE(18) is essentially a menu of various insurance coverage options with associated costs. The form is conspicuously titled, "DELAWARE OFFER OF INSURANCE COVERAGE."[3] It is eight pages in length and appears immediately after an enclosed Cover Page and Declaration Page.[4] Form 999DE(18) represents the eighteenth version of USAA's offer of additional coverage.[5]

         On July 25, 2009, Mr. Spivey signed and returned his Form 999DE(18).[6] In so doing, he first selected the minimum Delaware Personal Injury Protection ("PIP") limits with a $250 deductible.[7] On the next page, he checked a box to add additional PIP coverage by $35, 000/$70, 000.[8] This selection meant that Plaintiffs' premium would increase by the amount listed immediately next to Mr. Spivey's selection-a semi-annual increase of $7.89.

         Immediately below the additional PIP coverage selection, on the fourth page of the Form 999DE(18), there is a section entitled, "UM COVERAGE SELECTION OPTIONS."[9] This is where the dispute in the motions lies. The salient portion of this section is reproduced below in approximate scale:


         We initially issue UM coverage with limits equal to your Bodily Injury liability limits. If you want to change your UM coverage limits, you must check the appropriate box below, "UM Coverage Selection Option, " and sign and date the "Acknowledgement of Coverage Selections" at the end of this form.

         Semi-annual premium per policy

         We offer the following limits for UM. I want the UM limits checked below:

Limits Limits
Per person/per accident Per person/per accident
□$15,000/$30,000 $51.82 □ $100,000/$300,000 $119.88
□ $20,000/$40,000 $60.32 □ $300,000/$500,000 $183.31
□ $25,000/$50,000 $65.75 □ $500,000/$500,000 $236.68
□ $50,000/$ 100,000 $83.54 [omitted]
□ $100,000/$200,000 $116.03 [omitted]


• The UM limits you select must not exceed your policy's Bodily Injury liability limits.
• To reject UM Coverage, you must check the box below, "UM Coverage Rejection Option, " and sign and date the "Acknowledgement of Coverage Selections" at the end of this form.[10]

         Mr. Spivey checked the second box, selecting $20, 000/$40, 000 in UM/UIM coverage at an associated cost of $60.32.[11] Prior to 2009, Mr. and Mrs. Spivey's UM/UIM coverage limits were consistent with their bodily injury coverage limits at $100, 000/$300, 000.[12]

         He completed the rest of Form 999DE(18) and signed the final page, "ACKNOWLEDGMENT OF COVERAGE SELECTIONS."[13] Immediately above his signature, the following relevant language reads:

Uninsured Motorists (UM Coverage)
I further understand and agree that my selection of either the UM Coverage Selection Option or the UM Coverage Rejection Option shall be applicable to all vehicles on my policy, all future renewals of the policy, and all future policies issued to me because of a change of vehicle or coverage or because of an interruption of coverage, unless I subsequently request a change in coverage in writing. If I change my liability limits to an amount less than my elected UM limits, I understand that my UM limits will automatically be lowered to the same amounts.[14]

         Mr. Spivey returned the packet to USAA.[15] The changes became effective on August 2, 2009.[16] The policy continued to reflect the lowered UM/UIM limits from that date until the date of the accident.[17] Between the effective date of the change and the accident date, Plaintiffs received 17 similar packets from USAA.[18]

         At their depositions, Mr. and Mrs. Spivey attested to their naivete regarding this change. Mr. Spivey stated that he generally did not review the insurance policy.[19] Instead, he believed his wife would review the policy information.[20] Mrs. Spivey testified that, "most of the time" she was the one making changes to the policy, not Mr. Spivey.[21] She infrequently communicated those changes to Mr. Spivey.[22] Nevertheless, she did not regularly review the information sent to her from USAA because she "really didn't understand it" and she typically made changes to the policy over the phone.[23]

         Procedural Background

         The parties filed cross-motions for summary judgment on June 1, 2017. USAA filed its response to Plaintiffs' motion on July 5, 2017. Plaintiffs failed to timely file their response brief, and the parties agreed to augment the briefing schedule. Plaintiffs filed their response on July 17, 2017. USAA filed its reply brief on August 1, 2017.[24] A hearing on the motions occurred on August 10, 2017.

         Contentions of the Parties

         The sole material issue in this Motion is whether USAA made a meaningful offer in accordance with 18 Del. C. § 3902(b) and Delaware case law interpreting this provision.

         Plaintiffs' principal contention is that Form 999DE(18) is unclear as to its offer of additional UM/UIM coverage up to Plaintiffs' bodily injury coverage limits. First, they claim that this Court has previously ruled that USAA's Form 999DE has failed to meet the "meaningful offer" standard, citing the decades-old cases of Mason v. United Services Automobile Association[25] Knapp v. United Services Automobile Association[26] and Shukitt v. United Services Automobile Association[27]Plaintiffs argue that the subject version of Form 999DE in this case is "substantially similar" to the versions held insufficient in the aforementioned cases.[28] Second, Plaintiffs argue that, other than the Declaration Page, Plaintiffs' coverage for bodily injury is not listed; thus, Plaintiffs were not reasonably informed about their available coverage when changing the limits of their UM/UIM coverage. Finally, Plaintiffs contend that they were unaware of the changes to the UM/UIM coverage limits and at no time knew that their limits were augmented downward in 2009.[29]

         USAA counters Plaintiffs' contention that the subject version of Form 999DE(18) is "substantially similar" to the forms held insufficient in earlier cases. USAA contends that the present form was changed because of those earlier cases and now complies with § 3902(b).[30] USAA cites Brintzenhoff v. Hartford Underwriters Insurance Co.[31] as a more apt analogy to the present case. Second, USAA argues that Plaintiffs' inability to comprehend or understand the effect of their selections on their UM/UIM limits is immaterial because they have a duty to read the policy.[32] What is more, USAA argues that the time between the change and the accident, as well as the number of times they added or removed cars while insured by USAA, cuts against their claims of ignorance of the insurance policy provisions.[33]

         Standard of Review

         On cross-motions for summary judgment under Delaware Superior Court Civil Rule 56, the court must determine whether any genuine issues of material fact exist.[34] Summary judgment will not be granted if there is a material fact in dispute or if "it seems desirable to inquire thoroughly into [the facts] in order to clarify the application of the law to the circumstances."[35] "All facts and reasonable inferences must be considered in a light most favorable to the non-moving party."[36]

         Thus, the standard of review on cross-motions for summary judgment is equivalent to the situation where one party moves for summary judgment.[37]Moreover, cross-motions for summary judgment "are not per se" concessions that no material factual disputes exist.[38] "Rather, a party [cross-]moving for summary judgment concedes the absence of a factual issue and the truth of the nonmoving party's allegations only for the purposes of its motion, and does not waive its right to assert that there are disputed facts that preclude summary judgment in favor of the other party."[39]


         I. 18 Del. C. § 3902(b) and the "Meaningful Offer" Standard

         Section 3902(b) states in part:

Every insurer shall offer to the insured the option to purchase additional coverage for personal injury or death up to a limit of $100, 000 per person and $300, 000 per accident or $300, 000 single limit, but not to exceed the limits for bodily injury liability set forth in the basic policy. Such additional insurance shall include underinsured bodily injury liability coverage.[40]

         The insurance carrier has an "affirmative duty to offer the insured additional coverage, above the $15, 000 minimum amounts, 'so that the insured can make an informed decision' regarding the limits of coverage."[41] "An informed decision can be made only if all of the facts reasonably necessary for a person to be adequately informed to make a rational, knowledgeable and meaningful determination have been supplied."[42] "The burden of proof in establishing compliance with the statutory mandate is on the insurer."[43] "Delaware courts have strictly enforced Section 3902(b)'s requirement that insurance carriers clearly communicate offers of additional UM/UIM coverage to their policyholders."[44]

         A meaningful offer requires the insurer to demonstrate: "(1) the cost of the additional coverage; (2) a communication to the insured which clearly offers [UM/UIM] coverage; and (3) an offer for uninsured motorist coverage made in the same manner and with the same emphasis as the insurer's other coverage."[45] If the insurer fails to meet this burden, then the offer is treated as "a continuing offer ...

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