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Old Guard Insurance Co. v. Jimmy's Grille9/21/2004
Submitted: July 21, 2004
ORDER
This 21st day of September, 2004, upon consideration of the briefs of the parties and their presentations at oral argument, it appears to the Court that:
1. Old Guard appeals from an adverse Superior Court judgment based upon an unfavorable jury verdict. At issue are three pretrial rulings. To understand how those issues arose in this procedurally convoluted insurance coverage matter, some background is required.
The Underlying Personal Injury Lawsuit
2. In July 1997, Evelyn Cummings sustained injuries from a fall while she was a customer at Jimmy's Grille, a restaurant in Bridgeville, Delaware. In July 1999, Mr. and Mrs. Cummings filed a personal injury action in the Superior Court against Jimmy's Grille and its alleged owner, Jimmy Tenefoss. Tenefoss claimed that after receiving the summons and complaint, he forwarded them to Calloway, which was the agent for the restaurant's liability insurance carrier, First Delaware Insurance (the predecessor in interest of Old Guard). It appears that Calloway, the agent, did not forward the Cummings' suit papers to the insurer. As a consequence, a default judgment was entered against Jimmy's Grille and Tenefoss in November 1999.
3. The landlord of Jimmy's Grille, who was a co-defendant, did enter an appearance. Thereafter, the matter was referred to arbitration. After the arbitration hearing, $100,000 in damages was awarded against Jimmy's Grille and Tenefoss but the landlord was found to be not liable.
4. The Cummings next filed a proceeding in the Superior Court to convert the arbitrator's award into a judgment. At that point, Old Guard, which had received notice of the judgment previously entered against its insureds, appeared and moved to vacate the default judgment against Jimmy's Grille and Tenefoss. The Superior Court denied Old Guard's motion on July 7, 2000. The Superior Court also informed the parties that to fix the amount of the damages award against Jimmy's Grill and Tenefoss an inquisition hearing was required. An inquisition hearing took place on December 4, 2000, at which neither Jimmy's Grille nor Tenefoss appeared. A damages award was ultimately entered, but the amount of that judgment does not appear of record.
The Instant Declaratory Judgment Action
5. Old Guard then commenced, in the Superior Court, an action for a declaratory judgment against Jimmy's Grille, Tenefoss, and the Cummings. Old Guard sought a determination that it (Old Guard) was not liable under its liability policy either to indemnify any of its insureds against, or to pay to the Cummings, the amount of the judgment(s) in the underlying action. The basis for Old Guard's no-coverage claim was that Jimmy's Grille and Tenefoss had failed to provide timely notice to the carrier (Old Guard) as the insurance contract required.
6. The Cummings opposed Old Guard's claim for declaratory relief, and counterclaimed for a declaration that the Old Guard insurance policy covered the underlying judgment(s) and claims at issue. Jimmy's Grille and Tenefoss did not respond to the Old Guard complaint, and default judgment(s) were (again) entered against them in Old Guard's declaratory action on September 27, 2001.
7. On June 26, 2002, Old Guard moved for summary judgment on its "no- coverage" declaratory claim. At the hearing on that motion, the Cummings' attorney attempted to advance, on behalf of Jimmy's Grille and Tenefoss, the same position as he was asserting on behalf of the Cummings. The Superior Court precluded Cummings from asserting that position, because the Cummings had not received an assignment of rights from Jimmy
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