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Hilaire v. Lankford

Superior Court of Delaware, Kent

February 6, 2018

MARIE SAINT HILAIRE, Individually and as Wife and Administratrix of the Estate of Therisson Augustin, and MARCEA AUGUSTIN, and EDNEST AUGUSTIN, Plaintiffs,
v.
MARTHA IRENE GONZALEZ LANKFORD, and UNITED FARM FAMILY INSURANCE COMPANY, Defendants.

          Submitted: December 15, 2017

         Upon the Parties' Claims for Declaratory Relief

          Keith E. Donovan, Esquire & Reneta L. Green-Streett, Esquire, Morris James, LLP, Dover, Delaware, Attorneys for the Plaintiff.

          David C. Malatesta, Jr., Esquire, Kent & McBride, P.C., Wilmington, Delaware, & Margaret Fonshell Ward, Esquire, Ward & Herzog, LLC, Baltimore, MD, Attorneys for the Defendants.

          MEMORANDUM OPINION AND ORDER

          CLARK, J.

         This matter involves a declaratory judgment action regarding parties' rights under an umbrella policy. The insured, an alleged tortfeasor in an automobile accident, did not obtain underlying primary automobile bodily injury coverage at the level required by the umbrella policy. As a result, the umbrella insurer argues that it has no coverage obligations. The injured parties (based on an assignment of rights by the insureds) counter that the policy's language provides for this contingency and that umbrella coverage is nevertheless triggered.

         For the reasons discussed below, under Maryland law and based on uncontroverted stipulated facts, the policy directly addresses the issue. Namely, it provides that the injured parties, now by assignment, have up to one million dollars of umbrella coverage available. The insurer's obligation to indemnify its insured and thus compensate the injured parties, however, is not triggered unless and until the value of the injured parties' claims are fixed by verdict or settlement to exceed $250, 000. In the event damages exceed that amount, the injured parties must absorb the gap in coverage and are due no compensation from Farm Family for any final damages fixed at less than $250, 000.

         I. Background

         A. Stipulated Facts

         The parties stipulated to the following facts in support of their joint request that the Court decide this matter on the briefing. The parties also agree that Maryland law applies. On December 30, 2014, Defendant Martha Irene Gonzalez Lankford (hereinafter "Mrs. Lankford") left a stop sign and entered a roadway in Sussex County. She pulled into the path of Plaintiff Therisson Augustin's (hereinafter "Mr. Augustin's") vehicle and the two vehicles collided. Mr. Augustin suffered injuries and later died as a result of the collision. Presently, the parties include his estate and those allegedly injured as a result of his death (hereinafter "the injured parties") and Defendant United Farm Family Insurance Company (hereinafter "Farm Family").

         At the time of the collision, Farm Family provided Mrs. Lankford's vehicle with $100, 000 per person bodily injury coverage. Also at the time of the collision, Mrs. Lankford lived with her husband's father, Robert Lankford (hereinafter "Mr. Lankford"), in Delmar, Maryland. At that time, Farm Family separately insured Mr. Lankford under a policy that provided one million dollars in umbrella coverage. The parties stipulate that Mrs. Lankford qualified as an insured under her father-in-law's Farm Family umbrella policy.

         In 2015, the injured parties partially settled their claims against Mrs. Lankford. Pursuant to the settlement, the injured parties accepted the $100, 000 in underlying policy limits.[1] In exchange, they (1) released Mrs. Lankford from all further personal liability, and (2) Mr. and Mrs. Lankford assigned all of their rights in the Farm Family umbrella policy to the injured parties.[2]

         Farm Family denied coverage under its umbrella policy because Mrs. Lankford secured only $100, 000 per person bodily injury coverage rather than the $250, 000 per person coverage required by the umbrella policy. In response, the injured parties (pursuant to the assignment of rights), claim that although Mrs. Lankford did not secure and exhaust the limits identified in the umbrella policy's declaration page, the policy provides for this contingency and coverage is triggered nevertheless. In the alternative, the injured parties argue that the policy is ambiguous and, under Maryland law, it should be interpreted against its drafter.

         B. The Terms and Conditions of the Umbrella Policy

         The parties included a complete copy of the umbrella policy with the stipulation of facts. The declaration page, in the only portion in all capitals, bolded and italicized, provides:

TO AVOID GAPS IN COVERAGE, YOU MUST MAINTAIN THE MINIMUM LIMTS OF LIABILITY STATED BELOW ON ALL PRIMARY INSURANCE POLICIES WHICH APPLY TO YOU (emphasis omitted).

         The declaration page then lists bodily injury limits of $250, 000 per person as "primary insurance requirements."

Part II of the umbrella policy, discussing coverage, provides that:
We will pay on an INSURED'S behalf DAMAGES for which an INSURED becomes legally responsible due to PERSONAL INJURY or PROPERTY DAMAGE caused by an OCCURANCE. This coverage applies only to DAMAGES in excess of the PRIMARY INSURANCE or the RETAINED LIMIT[3], whichever applies.

         The policy defines primary insurance as "any insurance collectible by the INSURED which covers the INSURED'S liability for PERSONAL INJURY or PROPERTY DAMAGE." The definition of primary insurance does not reference the amount of coverage necessary other than to refer to that which is "collectible." Germanely, this definition of primary insurance, which is used throughout the policy, does not reference a minimum amount of underlying coverage. In addition, Part VII. 5. provides that "[t]his insurance [the umbrella coverage] is excess over other collectible insurance."

         Next, Part IV of the policy, discussing limits of liability, provides that:

Regardless of the number of INSUREDS, claims or injured persons, the maximum we pay as DAMAGES resulting from one OCCURENCE shall not exceed the amount stated in the declarations page, subject to the following:
1. This policy only pays after the limits of the PRIMARY INSURANCE and excess insurance, and any other PRIMARY INSURANCE and excess insurance covering the claim, have been paid by you or on your behalf.
2. If the PRIMARY INSURANCE terminates or if the limits are less than the limits show in the declarations page, we pay DAMAGES we would have paid as if the PRIMARY INSURANCE had not been terminated or if its limits had not been less than the limits shown in the declaration page (emphasis added).

         Finally, Part V of the policy, discussing primary insurance requirements, provides that:

This policy requires that all INSUREDS have and maintain the PRIMARY INSURANCE coverage at or above the limits of liability shown on the declarations page. ... If the PRIMARY INSURANCE does not provide at least the limits indicated, you will be responsible for the loss up to the required limits. We only pay for the amount of loss which is:1. above the required PRIMARY INSURANCE limits, and

2. above any other insurance collectible for an occurrence, (emphasis added)

         As stated previously, the definition of "primary insurance", which is used in the provisions discussed above, does not include a defined amount of underlying coverage. The definition refers only to "any insurance collectible by the insured." Separate from that definition inserted throughout the policy, Part V of the policy places an independent obligation upon the insured to ...


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