      IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

                  IN AND FOR NEW CASTLE COUNTY

LESLIE L. MYERS, NAOMI J.                )
MANALO and OLIVER A.                     )
MANALO, on behalf of themselves          )
and all others similarly situated,       )
                                         )
                  Plaintiffs,            )
                                         )
            v.                           ) C.A. No. N14C-03-091
                                         )
TRAVELERS COMMERCIAL                     )
INSURANCE COMPANY,                       )
                                        )
                  Defendant.            )

                                     OPINION

                       Date Submitted: October 27, 2014
                        Date Decided: January 26, 2015

 Upon Defendant Travelers Commercial Insurance Company’s Motion to Dismiss
   Plaintiffs’ Complaint Pursuant to Super. Ct. Civ. R. 12(b)(1) and 12(b)(6):
                                 GRANTED.


John S. Spadaro, Esquire, John Sheehan Spadaro, LLC, 724 Yorklyn Road, Suite
375. Hockessin, DE 19707, Attorney for Plaintiffs.

Matthew A. Goldberg, Esquire (pro hac vice) (argued), DLA Piper LLP US, One
Liberty Place, 1650 Market Street, Suite 4900, Philadelphia, PA 19103, Nancy
Shane Rappaport, Esquire, Brian A. Biggs, Esquire, DLA Piper US LLP-
Wilmington, 1201 North Market Street, Suite 2100, Wilmington, DE 19801,
Attorney for Defendant Travelers.
                                I. INTRODUCTION

      Leslie L. Myers, Naomi J. Manalo, and Oliver A. Manalo (and others

similarly situated) (“Plaintiffs”) seek a declaration     that Defendant Travelers

Commercial Insurance Company (“Travelers”) has acted improperly and in

violation of Delaware law by adopting a practice under 21 Del. C. § 2118B

whereby it unlawfully delays processing, payment, and denial of claims for

Personal Injury Protection (“PIP”). Plaintiffs also seek a declaration that this

practice constitutes a repudiation of the contractual obligations owed by Travelers

to its Delaware automobile policyholders.


      Travelers has filed a Motion to Dismiss Plaintiffs’ Complaint Pursuant to

Superior Court Civil Rule 12(b)(1) and 12(b)(6) for failure to state a claim upon

which relief can be granted. Travelers argues that Plaintiffs lack standing to bring

the lawsuit because they have failed to plead any injury in fact and, in the absence

of any personalized harm, Plaintiffs’ claim for declaratory relief does not present a

live case or controversy that is ripe for adjudication.

                                II. BACKGROUND

      Travelers is a prolific underwriter of automobile insurance in Delaware,

including first-party medical benefits for persons injured while driving or




                                           2
occupying motor vehicles.1 Plaintiffs are named insureds under automobile

insurance policies issued by Travelers.2

       21 Del. C. § 2118B governs the processing and payment of insurance

benefits for personal injury protection.3 The purpose of § 2118B “is to ensure

reasonably prompt processing and payment of sums owed by insurers to their

policyholders and other persons covered by their policies . . . and to prevent the

financial hardship and damage to personal credit ratings that can result from the

unjustifiable delays of such payments.” 4 § 2118B(c) requires insurers to pay or

deny a claim for first-party benefits “no later than 30 days following the insurer's

receipt of . . . written request for first-party insurance benefits and documentation

that the treatment or expense is compensable . . . .” 5 If an insurer fails to comply

with this requirement, then the amount of unpaid benefits due from the insurer to

the claimant is increased.6

       Plaintiffs allege that Travelers has improperly “adopt[ed] a practice whereby

it fails and refuses to either (a) reach a coverage determination on its insured’s PIP


1
  Compl. ¶ 7 (Trans. ID. 55126055).
2
  Id. ¶¶ 3–5.
3
  See 21 Del .C. § 2118B.
4
  21 Del. C. § 2118B(a).
5
  21 Del. C. § 2118B(c).
6
  Id. (“If an insurer fails to comply with the provisions of this subsection, then the amount of
unpaid benefits due from the insurer to the claimant shall be increased at the monthly rate of: (1)
One and one-half percent from the thirty-first day through the sixtieth day; and (2) Two percent
from the sixty-first day through the one hundred and twentieth day; and (3) Two and one-half
percent after the one hundred and twenty-first day.”).

                                                3
claims, or (b) communicate such a determination to its insured, within the

statutorily-required 30-day period under 21 Del. C. § 2118B.”7

       Plaintiffs seek a declaration that Travelers improperly exempts itself from

the statutory 30-day period by routinely withholding coverage determinations

pending results of independent medical examinations conducted only after the 30-

day deadline has passed. 8

                            III. PARTIES’ CONTENTIONS

       Travelers argues that Plaintiffs’ Complaint must be dismissed: (1) Plaintiffs

allege no injury in fact because they have not demonstrated that Travelers engaged

in this allegedly unlawful practice with regard to them; 9 and (2) absent an alleged

injury, Plaintiffs’ claims are not ripe for adjudication.10

       In opposition, Plaintiffs assert that “a litigant seeking declaratory relief need

not have suffered actual harm . . . [r]ather it is enough that one party allege an

invasion, erosion or deprivation of legal rights, while the other party disputes the

allegation . . . .”11 According to Plaintiffs, they have suffered an injury “by paying



7
  Id. ¶ 1.
8
  Id. ¶ 17.
9
   Defendant Travelers Commercial Insurance Company’s Motion to Dismiss Plaintiffs’
Complaint at 3–5 (“Mot. Dismiss”) (Trans. ID. 55425393) (“Plaintiffs never allege that they
sustained injuries covered by [their] polices, that they made a claim for those injuries under their
polices, or that Traveler’s failed to approve or deny those claims in accordance with § 2118B.”).
10
   Id. at 6–7.
11
   Plaintiffs’ Answering Brief in Opposition to Travelers’ Motion to Dismiss at 6 (Trans. ID.
55568142) (“Pl.’s Ans. Br.”) (internal quotations omitted).

                                                 4
substantial premiums for valuable contractual rights that Travelers is actively

diluting and defeating . . . .” 12

        Plaintiffs also argue that their claims are ripe for adjudication because: (1)

Plaintiffs paid premiums for the benefit of their bargain and they have a legitimate

interest in a prompt resolution of the dispute; (2) if the dispute remains unresolved,

Plaintiffs will face continued uncertainty regarding the nature and extent of the

insurance protection they purchased; (3) absent judicial intervention, future

developments will do nothing to resolve or better define the dispute; (4) the

adjudication of the class action lawsuit will conserve judicial resources; and (5)

Delaware’s public policy for speed, particularly, its PIP statutes favor a finding for

ripeness. 13

        Additionally, Plaintiffs maintain that “Travelers’ practice of failing and

refusing to comply with section 2118B’s 30-day requirement constitutes a

repudiation of the contractual obligations owed by Travelers’ to its Delaware auto

policyholders.”14 Plaintiffs assert that because anticipatory breach is a question of

fact for the jury, it cannot properly be decided on a motion to dismiss. 15




12
   Id. at 6.
13
   Id. at 12.
14
   Compl. ¶ 33.
15
   Pl.’s Ans. Br. at 13.

                                           5
                            IV. STANDARD OF REVIEW

       The Court assumes that all well-pled facts in a complaint are true when

considering a Motion to Dismiss under Superior Court Rule 12(b)(6). 16 Allegations

are well-pled if they place the defendant on notice of the claim. 17 Although the

pleading threshold in Delaware is low, “[a]llegations that are merely conclusory

and lacking factual basis, however, will not survive a motion to dismiss.” 18

                                     V. DISCUSSION

       Jurisdiction to award declaratory relief exists only if an “actual controversy”

exists between the parties.19 Lack of an actual controversy will act as a bar to a

party proceeding with a case requesting only declaratory relief. For an “actual

controversy” to exist, four prerequisites must be satisfied:

       (1) It must be a controversy involving the rights or other legal
       relations of the party seeking declaratory relief; (2) it must be a
       controversy in which the claim of right or other legal interest is
       asserted against one who has an interest in contesting the claim; (3)
       the controversy must be between parties whose interests are real and
       adverse; (4) the issue involved in the controversy must be ripe for
       judicial determination. 20




16
    Brevet Capital Special Opportunities Fund, LP v. Fourth Third, LLC, 2011 WL 3452821, *6
(Del. Super. Aug. 5, 2011).
17
   Precision Air, Inc. v. Standard Chlorine of Del., Inc., 654 A.2d 403, 406 (Del. 1995).
18
   Brevet Capital, 2011 WL 3452821, at *6.
19
   XI Specialty Ins. Co. v. WMI Liquidating Trust, 93 A.3d 1208, 1217 (Del. 2014).
20
   XI Specialty, 93 A.3d at 1217 (citing Stroud v. Milliken Enterprises, Inc., 552 A.2d 476, 479–
80 (Del. 1989)).

                                               6
       Travelers contends that the ripeness requirement is not met. 21 “Delaware

courts decline to exercise jurisdiction over a case unless the underlying controversy

is ripe. . . .”22 Unless a controversy is ripe, the action for declaratory relief

constitutes a request for an advisory or hypothetical opinion and Delaware Courts

do not issue advisory or hypothetical opinions. “The underlying purpose of [this]

principle is to conserve judicial resources and to avoid rendering a legally binding

decision that could result in premature and possibly unsound lawmaking” 23

       In determining whether a case is ripe for judicial review, the Court must

undertake “a common sense assessment of whether the interests of the party

seeking immediate relief outweigh the concerns of the court in postponing review

until the question arises in some more concrete and final form” 24 The Delaware

Supreme Court has explained that:


21
   Mot. Dismiss at 6–7.
22
   XI Specialty, 93 A.3d at 1217 (citing Stroud, 552 A.2d at 480)).
23
   Id. See also KLM Royal Dutch Airlines v. Checchi, 698 A.2d 380, 382 (Del. Ch. 1997)
(“Advisory opinions ill-serve the judicial branch and the public by expending resources to decide
issues that may never come to pass. More importantly, the judiciary’s role in the lawmaking
process is an interstitial one, carried out by the application of legislative enactments and common
law principles to concrete factual circumstances that have created real and present controversies.
An action seeking declaratory relief is not exempt from these requirements and must present the
court with an actual controversy that is ripe for judicial decision.”).
24
   XI Specialty, 93 A.3d at 1217–18. In Schick Inc. v. Amalgamated Clothing & Textile Workers
Union, the Delaware Court of Chancery identified five factors to help guide the Court in
determining whether an issue is ripe for adjudication: (1) a practical evaluation of the legitimate
interests of the plaintiff in a prompt resolution of the question presented; (2) the hardship that
further delay may threaten; (3) the prospect of future factual development that might affect the
determination made; (4) the need to conserve scarce resources; and (5) a due respect for
identifiable policies of law touching upon the subject matter in dispute. 533 A.2d 1239, 1239
(Del. Ch. 1987).

                                                7
       Generally, a dispute will be deemed ripe if litigation sooner or later
       appears to be unavoidable and where the material facts are static.
       Conversely, a dispute will be deemed not ripe where the claim is
       based on uncertain and contingent events that may not occur, or where
       future events may obviate the need for judicial intervention. 25

       Although Plaintiffs need not have suffered actual harm, “an actual

controversy must exist so that judicial resources are not wasted on hypothetical

disputes or on situations in which a judicial declaration will not end the dispute

between the parties.” 26 Plaintiffs assert that the issue is not whether Travelers may

properly conduct independent medical examinations, but rather, “whether

Travelers may unilaterally exempt itself from section 2118B’s 30-day deadline,

particularly by withholding a coverage determination from its insured pending the

results of [the independent medical examination].” 27

       In reality, Plaintiffs seek nothing more than a declaration reprimanding

Travelers for allegedly adopting this practice. This controversy, so framed,

amounts to request for an advisory opinion that is not ripe for adjudication.

       Moreover, “[u]nder Delaware law, repudiation is an outright refusal by a

party to perform a contract or its conditions entitling the other contracting party to

treat the contract as rescinded.” 28 Plaintiffs have failed to allege sufficient facts


25
   XI Specialty, 93 A.3d at 1217 (internal quotations omitted).
26
   Hoechst Celanese Corp. v. Nat’l Union Fire Ins. Co. of Pittsburg, Pa., 623 A.2d 1133, 1137
(Del. Super. 1992).
27
   Ans. Br. at 5.
28
   CitiSteel USA, Inc. v. Connell Ltd. P'ship, 758 A.2d 928, 931 (Del. 2000) (internal quotations
omitted).

                                               8
from which it can be reasonably inferred that Travelers’ alleged practice

constitutes a repudiation of the contractual obligations owed by Travelers to its

Delaware automobile policyholders.

                              VI. CONCLUSION

      For the foregoing reasons, Defendant Travelers Commercial Insurance

Company’s Motion to Dismiss Plaintiffs’ Complaint is GRANTED. Plaintiffs’

Complaint is DISMISSED.

      IT IS SO ORDERED.



                                            _____________________________

                                            Jan R. Jurden, President Judge




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