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Selective Insurance Co. v. Philadelphia Indemnity Insurance Co.

Superior Court of Delaware

May 15, 2018

SELECTIVE INSURANCE COMPANY, In its own right and alternatively as a subrogee of RITA GEKHT, Plaintiff,
v.
PHILADELPHIA INDEMNITY INSURANCE COMPANY d/b/a DELAWARE AUTOMOBILE INSURANCE PLAN, Defendants.

          Submitted: February 21, 2018

          Sarah B. Cole, Esquire

          William D. Rimmer, Esquire

          ORDER

          Abigail M. LeGraw, Judge

         Defendant Philadelphia Indemnity Insurance Company's Motion to Dismiss: Granted

         1. This case arose after Plaintiff paid Rita Gekht workers' compensation benefits following a work-related automobile accident in Delaware. Defendant insures the employer of Valerie McKeever, the other driver in the accident. In a personal injury action arising from the accident, Gekht settled her claim against McKeever for $75, 000. The settlement agreement provided $30, 000 to Plaintiff in full satisfaction of its workers' compensation lien, but expressly reserved Plaintiffs right to pursue PIP subrogation or workers' compensation subrogation for PIP-eligible benefits.

         2. Plaintiff now brings a workers' compensation subrogation claim against Defendant under 19 Del. C. § 2363 for PIP-eligible benefits. Plaintiffs insurance policy with Gekht's employer is governed by Pennsylvania's Workers' Compensation Act and Gekht's workers' compensation benefits were paid under the Pennsylvania Act. Defendant moved to dismiss Plaintiffs claim, arguing Pennsylvania law applies and governs Plaintiffs subrogation rights. The issue raised by Defendant's motion is whether Pennsylvania law, where the workers' compensation claim arose, or Delaware law, where the motor vehicle accident occurred, governs the parties' subrogation dispute. I find, based on the facts presently alleged in the complaint, that conflict of law principles dictate Pennsylvania law applies to Plaintiffs subrogation claim. My reasoning follows, BACKGROUND

         3. The following facts, and all permissible inferences, are drawn from the complaint and are assumed true for purposes of this motion. On August 28, 2015, Rita Gekht was operating a vehicle within the scope of her employment with Max & Me Inc. While driving southbound on Route 896 in Delaware, Gekht's vehicle was struck by Valerie McKeever's vehicle, causing Gekht personal injury.

          4. At the time of the accident, McKeever was working within the scope of her employment with Advoserve Group Homes ("Advoserve"). At all relevant times, Plaintiff Selective Insurance ("Selective") insured Max & Me Inc., while Defendant Philadelphia Indemnity Insurance Company ("Philadelphia") insured Advoserve. As a result of the accident in August, Selective paid Gekht workers' compensation benefits totaling $43, 642.12.[1]

         5. Gekht filed a separate action in Delaware against McKeever for negligently causing the accident. On May 22, 2017, Gekht settled her action against McKeever for $75, 000. According to the terms of the settlement agreement, Selective agreed to accept $30, 000 in full satisfaction of its workers' compensation lien. The settlement did not, however, limit any workers' compensation subrogation claim for PIP-eligible benefits. The settlement agreement provides, in relevant part: "[t]his settlement does not limit or prohibit any PIP subrogation or workers['] comp subrogation claim for any PIP[-]eligible benefits."[2]

         6. On August 28, 2017, Selective brought this action under 19 Del. C. § 2363, seeking reimbursement for all PIP-eligible benefits from Philadelphia as the third-party liability insurer. On November 13, 2017, Philadelphia filed this motion to dismiss.

          7. Philadelphia argues Selective has no claim under 19 Del. C. § 2363 because choice of law principles dictate Pennsylvania's Workers' Compensation Act applies. Selective argues the motion is premature because Selective has pleaded factual allegations sufficient to put Philadelphia on notice of S elective's claim. In the alternative, Selective argues promissory estoppel should apply to keep Philadelphia from denying its subrogation rights provided under the settlement agreement.

         ANALYSIS

         8. On a motion to dismiss, the Court must determine whether the "plaintiff may recover under any reasonably conceivable set of circumstances susceptible of proof."[3] "If [the plaintiff] may recover, the motion must be denied."[4] A court may grant the motion if "it appears to a reasonable certainty that under no state of facts which could be proved to support the claim asserted would plaintiff be entitled to relief."[5] When applying this standard, the Court will accept as true all non-conclusory, well-pleaded allegations.[6] In addition, "a trial court must draw all reasonable factual inferences in favor of the party opposing the motion."[7]

         A. Based on the facts alleged in the complaint, choice of law principles dictate Pennsylvania law applies to this case.

         9. The single count alleged in Selective's complaint is one for subrogation for PIP-eligible benefits under Section 2363. Philadelphia argues Pennsylvania law governs Selective's subrogation rights, and therefore Selective has no cognizable claim under the Delaware statute. Philadelphia contends that Pennsylvania law has the most significant contacts with the dispute because Selective's workers' compensation policy with Max & Me Inc. is governed by Pennsylvania's Workers' Compensation Act.

         10. Delaware's choice of law analysis follows the "most significant relationship" test from the Restatement (Second) of Conflict of Laws Section 6.[8]Under this test, the governing law is that of the state with the most significant relationship to the parties and the occurrence based on the principles listed in Section 6.[9] Section 6 provides the following seven factors that the Court must consider in conducting a choice of law inquiry:

a. The needs of the interstate and international systems;
b. The relevant policies of the forum;
c. The relevant policies of other interested states and the relative interests of those states in the determination of a particular issue;
d. The protection of justified expectations;
e. The basic policies underlying the particular ...

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