Delaware Supreme Court Refuses to Rule Without a Justiciable Controversy

Parties Cannot Stipulate to Obtain an Advisory Opinion

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Courts are designed to solve problems. They are not designed to give advice about how a party can avoid a problem or litigation or how to get an insurance company to provide benefits already settled by the parties.

When parties settle claims against each other there is no need, or ability, to litigate further to determine what insurer is obligated to pay the amount of the settlement. In George & Lynch, Inc. v. E.J. Breneman, L.P., No. 286, 2019, Supreme Court of the State of Delaware (December 18, 2019) the parties agreed to present an issue to the Supreme Court to resolve a dispute after all issues between the parties had been resolved by settlement.

FACTS

George & Lynch, Inc. (“George & Lynch”) and E.J. Breneman, L.P. (“Breneman”) were codefendants in a personal-injury and wrongful-death action that arose out of a single-vehicle accident. In that action, which was filed in the Superior Court, the plaintiffs alleged that the accident was caused by unsafe road conditions that were the byproduct of a road-resurfacing project, of which George & Lynch was the general contractor.

George & Lynch cross-claimed for contribution and contractual indemnity against Breneman, which was one of George & Lynch’s subcontractors.

After discovery was completed and expert reports were exchanged, Breneman settled with the plaintiffs and moved for summary judgment on George & Lynch’s contractual-indemnity claim. The expert reports included an opinion from the plaintiffs’ expert that, among other things, Breneman breached its duty of care in various ways. But when Breneman settled with the plaintiffs, the plaintiffs’ expert changed his opinion, submitting a supplemental report that concluded that Breneman was without fault.

Meanwhile, George & Lynch moved for summary judgment against the plaintiff. When the Superior Court granted George & Lynch’s motion, Breneman’s summary-judgment motion on George & Lynch’s cross-claim for indemnity was rendered moot. The plaintiffs, however, appealed the judgment in George & Lynch’s favor, and the Supreme Court reversed.

On remand, the Superior Court granted Breneman’s motion for summary judgment on George & Lynch’s contractual-indemnity cross-claim. The court ruled that George & Lynch could not rely on the plaintiffs’ expert’s earlier opinion that Breneman was at fault and, since it did not have its own expert to prove its claim of fault on Breneman’s part, Breneman prevailed.

After that decision, George & Lynch also settled with the plaintiffs, leaving George & Lynch’s cross-claims against Breneman as the only remaining claims in the case.

According to the Superior Court docket, nothing else happened in the case until early June 2019, when the Superior Court approved a stipulation of dismissal.

THE ISSUE

Although the separate settlements eliminated any direct claim that EJ Breneman and George & Lynch could assert against each other, the issue of EJ Breneman’s involvement in the accident remains relevant for the collateral issue of George & Lynch’s rights as an additional insured on EJ Breneman’s insurance policy.

ANALYSIS

By virtue of the settlements the parties no longer stoond in an adversarial relationship to each other, the absence of which the Supreme Court recognized as a “primary basis for not accepting review” of an otherwise moot matter.

George & Lynch was asking for an advisory opinion. In particular, George & Lynch suggested that one alternative resolution of the appeal would be for “this Court…[to] determine that the [summary judgment] order is not appealable and therefore cannot have preclusive effect in subsequent litigation [against Breneman’s insurance carrier].”

Despite George & Lynch’s acknowledgement that the settlements had “eliminate[d] any direct claim that EJ Breneman and George & Lynch could assert against each other in this action,” Breneman counters — by all appearances against its own interests — that “[t]he issue before the Court is not moot, because it involves a cross-claim for contractual indemnity,” a claim that was not dismissed with prejudice in the Stipulation of Dismissal.

The Supreme Court refused to render an advisory opinion simply because both parties might want it to do so.

Delaware law requires, like every other jurisdiction, that a justiciable controversy exist before a court can adjudicate properly a dispute brought before it. Where the settlement process has eliminated the adversity of the parties such that a justiciable controversy no longer exists, an adjudication after settlement would result in an impermissible advisory opinion on a purely academic question.

ZALMA OPINION

Usually, when parties reach a settlement and insurance is involved the insurer pays. In this case there was an indemnity agreement that may or may not have been involved in resolving the dispute raised by the auto accident. Rather than dealing with the issue the parties settled without resolving the insurance and indemnity disputes and asked the Supreme Court to fix their error by providing an advisory opinion. The court, finding no justiciable controversy refused, since it had no option, to give an advisory opinion.

? 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at https://www.zalma.com and [email protected].

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.