Sherman v. State of Delaware & , 133 A.3d 971 ( 2016 )

IN THE SUPREME COURT OF THE STATE OF DELAWARE
Defendants-Below,
Appe11ees.
JAMES SHERMAN, §
as Administrator of the § No. 190, 2015
Estate of JANE D.W. DOE, §
§
Plaintiff-Below, § Court Be1oW - Superior Court
Appellant, § of the State of De1aWare
§
V. § C.A. No. N10C-08-178
§
STATE OF DELAWARE, §
and the Estate of §
JOSHUA GIDDINGS, §
§
§
§
Submitted: January 13, 2016
Decided: February 16, 2016
Before STRINE, Chief Justice; HOLLAND, VAL]]IURA, VAUGHN, and
SEITZ, Justices, constituting the Court en Banc.
Upon aippeal from the Superior Conrt. AFFIRMED in part, REVERSED in pa`rt
and REMANDED.
Edmund Daniel Lyons, Esquire (arguea'), The Lyons LaW Firm, Wihnington,
De1aware, Attorney for Plaintiff-Below, Appe11ant.
Michael F. McTaggart, Esquire (arguea'), Departrnent of Justice, Wilmington,
Delaware, Attorney for Defenda.nt-BeloW, Appe11ee, State of Delaware.
Ronald D. Smith, Esquire (argued), Hudson, Jones, Jaywork & Fisher, LLC, Dover,
Delaware, Attorney for Defendant-Below, Appe11ee, The Estate of Joshua Giddings.
HOLLAN]), Justice:
This appeal arises from an alleged sexual assault in 2009 by Delaware State
Police Officer, Joshua Giddings. The complaint alleges that after Giddings arrested
the plaintiff-below, appellant, Jane D.W. Doe for shoplifting, Giddings threatened
Doe with incarceration unless she would have sex with him. After she capitulated
to his demand, he took her home. Doe filed this suit against both Giddings and the
State of Delaware.
In this appeal, Doe alleges that the Superior Court erred inc first, granting the
State’s motion for summary judgment on sovereign immunity grounds; second,
denying Doe’s motion for partial summary judgment on respondeat superior
grounds; and third, granting a motion to dismiss by Giddings’s estate ("Giddings’s
Estate"). We have determined that the State waived sovereign immunity and,
therefore, the Superior Court erred in granting the State’s motion for summary
judgment. We have also concluded, however, that Doe’s other two arguments are
without merit. Therefore, the judgment of the Superior Court is affirmed, in part,
and reversed, in part.
Factsl
Doe was arrested on March l9, 2009 for shoplifting at the Christiana Mall.
Giddings took Doe into custody and placed her in the back seat of his police car.
1 Unless otherwise noted, all facts are taken from this Court’s decision Doe v. State, 76 A.3d 774(Del. 2013), and the two Superior Court decisions being appealed, Doe v. Gz'ddz'ngs, 2014 WL
2b. Personally participate in;
c. Personally acquiesce to; or
d. Remain passive after having knowledge of;
any such "act, error or omission."”
Particularly instructive for our purposes is the explanation provided with that typical
commercial insurance policy for the interplay between that exclusion for intentional
conduct and its "however" exception.
l. Intentional Acts[:] This exclusion applies if any
insured (including an employee) commits a criminal,
fraudulent, malicious, dishonest or intentional act that
causes a claim, but the exception preserves coverage for
"innocent" insureds (including the named insured).z°
This explanation is consistent with our interpretation of what is accomplished in the
State’s self-insurance Policy by Exclusion B and its exception. First, the term "this
exclusion" reflects that multiple acts of intentional conduct are considered as a single
exclusion. Second, the explanation distinguished denying coverage for the
intentional actor and maintaining coverage for the non-actor.
lt is not reasonable to conclude that the exception in Exclusion B applied only
to one type of intentional conduct. It is reasonable, however, that the purpose of
Exclusion B was to exclude coverage for intentional conduct by an Insured who was
the actor and to retain coverage for the named Insured and its political subdivision
which were not actors.
19 Id. (emphasis added).
20
This interpretation denies coverage to an lnsured who is the intentional
wrongdoer but continues to provide coverage to the non-actor named lnsured who
is responsible for that intentional conduct under another theory of liability, for
example respondeat superz'or, as alleged in this case. Accordingly, the exception to
Exclusion B in the Policy serves several salutary purposes. First, the exception
denies coverage to an intentional wrongdoer. Second, it provides coverage for the
non-actor named lnsured. Third, it provides a source of monetary relief for a person
who was injured, when the non-actor named lnsured is legally responsible for the
actor’s intentional conduct.
We hold that Exclusion B excludes coverage for an otherwise lnsured
employee, like Giddings, for his willful violation of a penal code, but with the
exception, does not exclude coverage for the "named lnsured or the political
subdivision in which the named lnsured is located" for such acts. Therefore, the
penal code exclusion does not apply to the State and the Policy insures the State
against acts like the alleged willful violation of the penal code by its employee,
Giddings, that is at issue in this proceeding. Because the Policy insures the State for
the alleged conduct by Giddings, the State has waived sovereign immunity under
Section 6511.2‘
21 The State has also argued that the "Department of Public Safety, Division of State Police" is the
"Named Insured" under the Policy, and not the State. Because Doe named the State as a defendant
instead of the Named Insured, the argument goes, the case should have been dismissed by the
12
Respondeat Superior Is A jury Questi0n
Doe argues that the Superior Court erred in denying her motion for partial
summary judgment on the issue of the State’s liability under her theory of
respondeat superz'or. This Court reviews the Superior Court’s denial of Doe’s
motion for partial summary judgment de novo.zz
ln its 2013 opinion, this Court recognized that there is a four-factor test for
determining whether an employee acted within the scope of his or her employment:
Under the Restatement of Agency (2¢0 § 228, conduct is
within the scope of employment if, "(l) it is of the kind he
is employed to perform; (2) it occurs within the authorized
time and space limits; (3) it is activated, in part at least, by
a purpose to serve the master; and (4) if force is used, the
use of force is not unexpectable."‘°'3
This four-factor test, also called the Section 228 test, is used to determine "whether
the employee was acting in the ordinary course of business during the time frame
within which the tort was committed."z"' ln other words, the relevant inquiry is not
whether the conduct itself was within the scope of employment. This Court further
Superior Court. This argument ignores the express recognition in the State’s minutes adopting the
imperial Policy that it "sha1l continue in force . . . as a self-insured program of the State." A0034
(emphasis added). And, as the State’s attomey admitted at oral argument, because the State
advanced this argument late in the case, Doe would need to be given the opportunity to amend and
to add the Department of Public Safety, Division of State Police as a defendant, curing any defect.
ln its Answering Brief the State acknowledged that "the Delaware State Police is a recognized
state agency under ll Del. C. ch. 83.”
22 ConAgra Foods, Inc., 21 A.3d at 68.
23 Doe, 76 A.3d at 776 (quoting Draper v. Olivere Pavz'ng & Conslr. C0., 181 A.Zd 565, 570 (Del.
1962)).
24 Id. at 777.
13
explained, in its 2013 opinion, that the first two factors of the Section 228 test are
satisfied because "Giddings was in uniforrn, on-duty, carrying out a police duty by
transporting Doe to court" and because "[t]he sexual assault took place in the police
car, during the time that Giddings was supposed to be carrying out police duties."25
-:D_f;;oe now asserts that, after additional limited discovery on remand, no jury
question exists on the issue of liability because all four Section 228 factors are
satisfied She argues that "the facts are truly uncontested." Doe points to a
deposition where a former Delaware State Police Superintendent testified that there
is a general risk that some police officers will engage in sexual assault. Doe observes
that this Court previously explained that "[s]everal other jurisdictions have noted
that sexual assaults by police officers and others in positions of authority are
foreseeable risl878 A.2d 434, 438 (Del. 2005).
29 12 Dez. C. § 2102(3).
3° See Dellaversano v. Estate of DiSabatz'no, 1998 WL 960702, at *2 n.1 (Del. Super. Dec. 23,
1998) ("The Court’s use of the word ‘limitations’ does not suggest that we are dealing with the
typical statute of limitations. The statute here is a nonclaim statute which bars the claim forever
15
acknowledged that Section 2102’s language "if not barred earlier by other statute of
limitations" suggests that Section 2102 is itself a statute of lirnitations.“ But the
court explained "[s]imply because the phrase ‘statute of lirnitations’ was used does
not necessarily mean that the statute is a statute of limitations."32
The Superior Court adopted the Court of Chancery’s reasoning in Cummz'ngs
v. Estate of Lewz`s33 and held that Section 2102 is a "non-claim statute," the
protections of which cannot be waived. ln Cummings, the Court of Chancery
concluded that Section 2102 is a "‘non-claim’ statute," and not a statute of
limitations, because it "‘terminates an estate’s capacity to be sued eight months after
the death of a decedent."’34 Similarly, the court explained that "if a claim that arose
before the decedent’s death is not presented to the Estate within eight months after
the death, that claim is forever barred against the Estate."35 The Court of Chancery’ s
decision in Estate of H0lt0n36 is consistent with Cummz'ngs. In Holton, the court
explained that Section 2102 "makes no exception to the type or source of the claim,
but rather it bars all claims against the estate of a decedent."37
if not filed in a timely manner. lt is thus akin to a statute of repose which need not be pleaded as
an affirmative defense . . . .").
31 Gz`ddings, 2015 WL 1566597, at *3 (emphasis added) (referencing 12 Del. C. § 2l02(a)).
32 Idaho
33 2013 WL 2987903 (Del. Ch. June 17, 2013).
34 Id. at *4 (emphasis added) (quoting Wz`tco Corp. v. Beekhuz`s, 38 F.Bd 682, 690 (3d Cir. 1994)).
35 Id. (emphasis added).
35 1976 WL 5206 (Del. Ch. Aug. 17, 1976).
37 Id. at *4 (emphasis in original) (internal quotation marks ornitted).
16
In this case, the Superior Court observed, Section 2102 also has a different
function than statutes of limitations generally do.38 The Court of Chancery explained
this difference in Holz‘on:
From the language of the "non-clairn" statute we believe
the legislative intent is clear and its purposes evident. The
intent and purpose is to compel claimants with demands
against decedent’s estate . . . to present their claims within
the specified time, and when the claims are rejected, to
seek prompt enforcement thereof, so that decedent’s estate
can be settled within a reasonable time. This seems to us
to be the logical and sole purpose of the statute.
The legislative purpose behind 12 Del. C. § 2102(a) is
therefore distinguishable from that of a general statute of
limitations which merely seeks to avoid stale claims.
Prompt distribution of the assets of the estate is the
ultimate goal of the statute.39
We agree with these decisions by the Superior Court and the Court of Chancery that
distinguish the goal of Section 2102 from the rationale behind statutes of
limitations."° Therefore, we hold that Section 2102 is a non-claim statute.
Accordingly, the Superior Court correctly granted Giddings’s Estate’s motion to
38 See Gz`ddings, 2015 WL 1566597, at *4.
39 Holton, 1976 WL 5206, at *2 (internal quotation marks omitted); see also Cummings, 2013 WL
2987903, at *4.
4° Other states have come to similar conclusions in comparing their equivalents of Section 2102 to
general statutes of lirnitations. See, e.g., In re Estate of Ostler, 227 P.3d 242, 246 (Utah 2009)
(adopting the reasoning of Colorado courts in distinguishing between the Utah equivalent of
Section 2102 and statutes of lirnitations); In re Estate of Hall, 948 P.2d 539, 541 n.3 (Colo. 1997)
(en banc) (interpreting Colorado’s equivalent of Section 2102 and concluding: "Although a
nonclaim statute appears to be in the nature of a statute of lirnitations, the two concepts are distinct.
Unlike a statute of lirnitations, the nonclaim statute may not be waived or tolled. The nonclaim
statute imposes a condition precedent to the enforcement of a right of action; by contrast, a statute
of lirnitations does not bar the right of action, but only the remedy.").
17
dismiss under Section 2102 despite Giddings’s Estate’s delay in bringing that
motion.
Conclusion
We reverse the Superior Court’s grant of summary judgment to the State on
sovereign immunity grounds. We affirm the Superior Court’s denial of Doe’s
motion for partial summary judgment and its grant of Giddings’s Estate’s motion to
dismiss. This matter is remanded for further proceedings in accordance with this
opinion.
18
Doe alleged that Giddings then drove her to a remote area and told Doe that he would
let her go home if she performed oral sex on him. If she did not, Giddings said he
would take Doe to court and Doe would have to spend the weekend in jail. Doe
performed oral sex on Giddings in his police car. Giddings then dropped:_;ljjoe off at
her home.
After Doe reported the incident to the Delaware State Police, a sergeant
investigated the allegations. The sergeant eventually arrested Giddings on charges
of sexual extortion, receiving a bribe, and official misconduct. Giddings admitted
to having sex with Doe in his police car, but he asserted that it had been consensual.
Shortly after Giddings was arrested, he committed suicide.
Procedural Histo)y
On August 18, 2010, Doe sued the State of Delaware and Giddings’s Estate.z
Doe sought damages for assault, battery, and rape. She asserted that the State was
liable on the theory of respondeat superior
On May 7, 2012, the Superior Court granted summary judgment to the State,
reasoning that the State could not be liable for Giddings’s conduct under respondeat
superior because Giddings’s conduct was not within the scope of his employment.
4lO0925 (Del. Super. July 29, 20l4), and Doe v. Gz`ddz'ngs, 2015 WL 1566597 (Del. Super. Apr.
8, 2015).
2 Doe also died, unexpectedly, on January 28, 2015. This opinion will refer to Doe and Doe’s
estate collectively as "Doe."
3
This Court reversed that grant of summary judgment in a September l2, 2013
decision, and remanded the case for further proceedings. ln doing so, this Court held
that "[t]he question of whether a tortfeasor is acting within the scope of his
employment is fact-specific, and, ordinarily, is for the jury to decide."3
On remand, the Superior Court permitted limited discovery. On March 20,
20l4, the State again moved for summary judgment. This time, the State argued that
sovereign immunity barred Doe’s claims against it. Doe moved for partial summary
judgment on the issue of liability on the theory of respondeat superior
On July 29, ’2:014, the Superior Court granted the State’s motion for summary
judgment and denied Doe’s motion. First, the Superior Court concluded that
sovereign immunity barred Doe’s claims against the State. The court reasoned that
although sovereign immunity is waived for any conduct for which the State has
insurance coverage, the State’s self-insurance policy (the "Policy") does not cover
Giddings’s alleged sexual assault. Second, as to the respondeat superior issue, the
Superior Court ruled that a jury must decide whether Giddings acted within the scope
of his employment.
In July 2014, Giddings’s Estate filed a motion to dismiss Doe’s claims against
it, arguing that these claims were barred by 12 Del. C. § 2l02(a). That statute
requires all claims against an estate that arose before the decedent’s death be
3 Doe, 76 A.3d at 776.
presented within eight months of the death. Doe contested the motion, arguing that
Giddings’s Estate waived this argument by failing to assert it earlier in the litigation.
On April 8, 20l5, the Superior Court granted Giddings’s Estate’s motion to dismiss.
The court concluded that Section 2102 is a "non-claim statute," which completely
bars claims against an estate that are filed more than eight months after a decedent’s
death, and cannot be waived.
State Waived S0vereign Immunity
Doe’s first argument on appeal is that the Superior Court erred by granting the
State’s motion for summary judgment on sovereign immunity grounds. This Court
reviews the Superior Court’s grant of summary judgment de n0v0.4 We also review
questions of law, including the interpretation of insurance policies, de n0v0.5
Generally, "sovereign immunity provides that neither the State nor a State
agency can be sued without its consent."6 Pursuant to 18 Del. C. § 651 l, however,
"[t]he defense of sovereignty is waived and cannot . . . be asserted as to any risk or
loss covered by the state insurance coverage program."7 This Court has explained:
[T]he General Assembly made it clear when it enacted 18
Del. C. § 6511 that it intended to waive sovereign
immunity only to the extent that either the State insurance
program was funded by direct appropriation
4 ConAgra Foods, Inc. v. Lexz'ngton Ins. Co., 21 A.3d 62, 68 (Del. 201 1).
5 O’Brz`en v. Progressz've N. Ins. Co., 785 A.2d 28l, 286 (Del. 200l).
6 Pauzey v. Rezn@ehz, 848 A.2d 569, 573 (Del. 2004).
718 Del. C. §6511.
(self-insurance) or that the State purchased commercially
available insurance to cover the loss.s
The issue here is whether the State’s self-insurance Policy covers the alleged sexual
assault. If so, the State has waived sovereign immunity.
T he Policy Language
When the State decided to self-insure for law enforcement professional
liability, it adopted verbatim the terms and conditions of its prior commercial
insurance policy with lrnperial Casualty and Indemnity Company (the "Irnperial
Policy"). The self-insurance Policy at issue provides coverage for "all sums which
the lnsured shall become legally obligated to pay as damages because of wrongful
acts arising out of Law Enforcement activities."9 This includes damages for
"Personal lnjury," which the Policy defines as:
[F]alse arrest, erroneous service of civil papers, false
imprisonment, malicious prosecution, assault and battery,
libel, slander, defamation of character, discrimination,
violation of property or deprivation of any rights,
privileges or immunities secured by the Constitution and
Laws of the United States of America or the State for
which the named lnsured may be held liable to the party
injured in any action at law, suit in equity, or other proper
proceedings for redress. However, no act shall be deemed
to be or result in personal injury unless committed in the
regular course of duty by the lnsured.l°
8 Pauley, 848 A.Zd at 573.
9 A0029.
1° A0030.
The Policy provides that "Wrongfdl Act" means "[a]ctual or alleged error,
misstatement or misleading statement, omission, neglect or breach of duty by the
lnsured individual or collectively, while acting or failing to act within the scope of
employment or official duties pertaining to the law enforcement f1mctions of the
Insured."“
The Policy also contains a list of exclusions, one of which is at the center of
the sovereign immunity issue in this case. "Exclusion B" provides:
THIS POLICY DOES NOT APPLY . . . . (B) to damages
arising out of the willful violation of a penal code or
ordinance committed by or with the knowledge or consent
of any lnsured or claims or injury arising out of acts of
fraud committed by or at the discretion of the lnsured with
affirmative dishonesty or actual intent to deceive or
defraud, however, does not apply to the named Insured
or the political subdivision in which the named lnsured
is located. 12
The tenn "Insured" is defined in a section of the Policy entitled "Definitions":
lNSURED Means (1) Named lnsured and all paid full or
part time employees; (B) unpaid volunteers or reserves
while performing law enforcement functions for the
named lnsured; (C) the political subdivision in which the
named lnsured is located, should such political
subdivision be named in any action or suit against the
named lnsured or any employee for any act, error or
omission for which this policy affords protection, and
elected or appointed officials or other personnel or units of
the political subdivision of which the named lnsured is a
11 1a
12 Id. (emphasis added).
unit thereof, with respect to their responsibilities to law
enforcement.”
This section of the Policy defines the term "lnsured" as any individual or entity
provided coverage under the Policy. This includes "all paid full or part time
employees" as well as the "Named Insured," which is not defined in this section.
"Named lnsured" is defined on the declarations page of the Policy.l‘* The "Named
Insured" under the Policy is the "Department of Public Safety, Division of State
Police."” Accordingly, the term "Insured" is broader, and includes the Named
lnsured and all paid employees, including Giddings.
Exclusion B And Its Exception
Most liability policies contain an express exclusion for damages arising Hom
injury intentionally inflicted by an lnsured, e.g., dishonest, fraudulent, criminal or
16
malicious acts. In this Policy, Exclusion B applied to two types of intentional
conduct by an lnsured: willful violations of a penal code or acts of fraud. But,
Exclusion B includes an exception: "does not apply to the named lnsured or the
political subdivision in which the named lnsured is located.""
13 A0030-31 (emphasis added).
14 AO029.
15
16 Nat’l Fire & Cas. Co. v. West, 107 F.3d 531, 536 (7th Cir. 1997) (noting that the "fraudu1ent,
criminal or malicious acts" exclusion is a rather common exclusion used in insurance policies).
17 A0030
The Superior Court failed to recognize that Exclusion B in the Policy provided
a single exclusion for two types of intentional conduct by an Insured. Instead, the
Superior Court parsed the Exclusion B provision for intentional conduct into two
parts (willful violations of a penal code and acts of &aud) and then applied the
exception in Exclusion B only to acts of fraud. That reading is not supported by the
text of Exclusion B and its exception. As this opinion will explain, the language of
Exclusion B and its exception did not draw a distinction between criminal acts and
acts of fraud but did distinguish between denying coverage for the intentional actor
(employee) and maintaining coverage for the non-actor named lnsured (employer).
The issue of whether sovereign immunity is waived by the State centers on
what part(s) of Exclusion B the "however" language exception modifies. Doe
asserts that the "however" language exception in Exclusion B applies to all
intentional conduct described in the paragraph_including the willful violation of a
penal code provision-and not just the fraud provision as the Superior Court
concluded. We agree with Doe’s assertion.
The plain language of Exclusion B reflects that there is no comma or
semicolon between the penal code and fraud references, which demonstrates a
purpose to create one exclusion for the two types of intentional conduct. The Policy
could have listed the penal code and fraud provisions as separate exclusions, if the
purpose was for the "however" exception clause to modify only the fraud exclusion.
Instead, the penal code and fraud references are listed as a single exclusion-
Exclusion B-without any indication that the "however" clause modifies only the
latter. Thus, the "however" exception language modifies the Exclusion B in its
entirety for two types of intentional conduct: the willful violation of a penal code
and acts of fraud.
In construing Exclusion B, it became obvious to this Court that the State
copied and adopted the lmperial Policy as its own with a word or words already
omitted after "however" in Exclusion B. An examination of other standard
commercial insurance policies suggests that the words omitted after "however" in
Exclusion B are: "this exclusion." For example, one typical commercial insurance
policy that excludes coverage for "criminal, &audulent, malicious, dishonest or
9)18
intentional acts also provides the following "however" exception to that
exclusion:
B. Exclusions . . .
1. Criminal, Fraudulent, Malicious, Dishonest Or
lntentional Acts
. . . However, this exclusion does not apply to any
"insured" who did not:
a. Personally commit;
18 1. Criminal, Fraudulent, Malicious, Dishonest Or lntentional Acts
Damages arising out of any criminal, i`raudulent, malicious, dishonest or intentional "act, error or
omission" by an "insured," including the willful or reckless violation of any law or regulation
Available at: http://www.iiat.org/infocentral/policy-coverages/auto-dealers-(iso)/acts-errors-or-
omissions-liability-coverages#exclusions.
lO