Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Melick v. Stanley

April 24, 1980

FRANK H. MELICK, PLAINTIFF,
v.
JAMES L. STANLEY, AND JAMES L. STANLEY, JR., DEFENDANTS



Miller, J.s.c.

Miller

This is a subrogation action filed in the name of Frank H. Melick by his insurance carrier Nationwide Mutual Insurance Company (Nationwide). At issue is whether Nationwide may recover PIP benefits from defendants in the amount of $10,739.75 representing medical expenses and related benefits paid to plaintiff under a policy of "no-fault" insurance issued in the State of Delaware. The pertinent facts are as follows:

On September 15, 1977 plaintiff sustained serious injuries as a result of a collision between the van he was driving and a septic tank truck owned by defendant James L. Stanley and operated by defendant James L. Stanley, Jr. The accident occurred in New Jersey. At the time plaintiff was a resident of Delaware and both defendants were residents of New Jersey.

Following the accident plaintiff instituted suit against defendants in the United States District Court for the District of New Jersey pursuant to 28 U.S.C.A. § 1332 seeking damages in the amount of $15,000 against each defendant for personal injuries, pain and suffering and medical expenses incurred as a result of the collision.

On or about November 14, 1978 the parties entered into a settlement agreement wherein plaintiff, in consideration of the sum of $18,500, executed a release of all claims against defendants. The federal action was dismissed several days later.

Plaintiff's insurer, Nationwide, was not a signatory to this release which provided in pertinent part that plaintiff released defendants:

In the belief that the instant suit sought recovery of the same damages which were the subject of the prior federal suit, defendants moved for summary judgment dismissing the complaint on the ground that the prior settlement and release barred any further action by plaintiff.

In opposition plaintiff acknowledged the prior release but pointed out that the instant suit was actually a subrogation action by Nationwide to recover medical expenses and related PIP benefits paid to plaintiff before the release was executed. Unlike New Jersey, Delaware law mandates subrogation rights for insurers which have paid PIP benefits to persons covered by insurance policies issued in accordance with Delaware's no-fault statute. Compare N.J.S.A. 39:6A-9 with 21 Del.C. § 2118(f). Nationwide's position as the real party in interest is that the prior release was for pain and suffering in plaintiff's personal action against defendants and that it could not affect Nationwide's subrogation rights against defendants for the medical expense and related PIP benefits paid to its insured. Nationwide further contends that defendants, through their insurance carrier, State Farm Mutual Insurance Company (State Farm) and the carrier's attorney, were aware of its subrogated interest in these PIP benefits prior to August 21, 1978. In addition, Nationwide cites its insured's answers to interrogatories propounded by defendants in the federal suit which indicated that plaintiff's medical and hospital expenses were being paid by Nationwide.

In response, defendants submitted the affidavit of a State Farm field claim specialist who was instrumental in the settlement of the federal suit. In his affidavit the claim specialist states that neither plaintiff's personal attorney nor Nationwide ever notified him of the existence of Nationwide's subrogation interest in the PIP benefits sought here. According to the claim specialist, the only subrogated interests discussed concerned a

claim for property damage to plaintiff's van in the amount of $1,679 which was paid by State Farm on February 5, 1979.

At the outset two issues are raised by the facts: (1) what are Nationwide's subrogation rights in New Jersey with respect to PIP benefits paid to its Delaware insured under a policy of no-fault insurance issued in Delaware, and (2) what effect does the release executed by plaintiff in the prior federal suit have on Nationwide's subrogation interests?

This is a suit filed in the name of a Delaware insured based upon subrogation rights arising from a policy of insurance issued in Delaware in accordance with that state's no-fault statute. In such a case our law provides that the rights and liabilities of the insurer under the policy and the statutory impact thereon must be determined by the law of the state where the contract of insurance was made, in this case Delaware. State Farm Mut. Auto. Ins. v. Simmons Estate , 169 N.J. Super. 133 (App.Div.1979). This is in accord with the settled principles of conflicts discussed in Buzzone v. Hartford Acc. and Indem. Co. , 23 N.J. 447, 457 (1957). Delaware's no-fault statute mandates insurance coverage for lost earnings and all reasonable and necessary medical and hospital expenses incurred by a covered party who has been struck by a motor vehicle. 21 Del.C. § 2118(a)(2). This includes coverage for expenses incurred as a result of accidents involving non-Delaware insureds in any state of the United States. 21 Del.C. § 2118(a)(2)d. By statute, insurers providing these benefits are subrogated to the rights and claims of the person to whom benefits are provided to the extent of the benefits paid. 21 Del.C. § 2118(f). Such subrogated rights are limited to the maximum amounts of the tortfeasor's liability insurance coverage available for the injured party, after the injured party's claim has been settled or otherwise resolved. 21 Del.C. § 2118(f)(1).

In addition, the statute precludes any person eligible for no-fault benefits, other than an insurer in a subrogation action, from pleading or introducing into evidence in an action for damages against a tortfeasor, those damages for which compensation

is available from the covered party's insurer. 21 Del.C. § 2118(g). Furthermore, effective June 2, 1977, the Delaware statute was amended to prohibit an insurer from joining in an action by an injured party against a tortfeasor for recovery of any benefits paid by the insurer. 21 Del.C. § 2118(f)(4); amended by 61 Del.Laws C. 66. The practical effect of these provisions is to prohibit injured plaintiffs from attempting to recover compensation for medical expenses from alleged tortfeasors in automobile negligence actions. Garr v. Clayville , 71 F.R.D. 553, 555 (D.Del.1976). Instead the statute mandates that the proper plaintiffs for such damages are insurers who are subrogated to the rights of the person for whom benefits are provided under 21 Del.C. § 2118(f). Id. at 555.

Accordingly, applying New Jersey conflicts of law principles, the Delaware subrogation statute must be given effect in the instant suit. It should be noted, however, that even if the conflict of law principles provided otherwise so that New Jersey law controlled ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.