Solera Holdings, Inc. v. XL Specialty Insurance Company ( 2019 )

SUPERIOR COURT
OF THE
STATE OF DELAWARE
ABIGAIL M. LEGROW LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
TELEPHONE (302) 255-0669
August 29, 2019
To: All Counsel of Record
Via File&ServeXpress
RE: Solera Holdings, Inc. v. XL Specialty Insurance Company, et al.
C.A. No. N18C-08-315 AML CCLD
Dear Counsel,
On July 31, 2019, I issued an opinion (the “Opinion”) resolving a motion for
summary judgment in this insurance coverage case.’ The motion was filed by two
of the named insurance company defendants, ACE American Insurance Company
and Federal Insurance Company and was joined by several other defendants,
including Endurance American Insurance Company, now known as Sompo
International (“Sompo’’).
On August 7, 2019, Sompo filed a Motion for Reconsideration or
Clarification of the Court’s Opinion (the “Motion”). In the Motion, Sompo argues
“it is premature to rule that Delaware law — or any other law — applies to the
' Solera Holdings, Inc. v. XL Specialty Insur. Co., 2019 WL 3453232 (Del. Super. July 31, 2019)
(hereinafter “Opinion”).
August 29, 2019
Page 2
2 Sompo therefore seeks to clarify that
coverage issues [in this case].
“notwithstanding [the Court’s] comment in the Opinion that Delaware law applied
to certain issues at this juncture, choice of law issues remain to be explored
through discovery and, ultimately, in further motions or pretrial proceedings in this
case.”? Sompo contends it is “likely” that Texas law, not Delaware law, governs
the insurance policy in this case and argues there is a conflict between Texas and
Delaware law as to whether a consent to defense expenses clause in an insurance
policy contains an implied prejudice requirement.’
The plaintiff, Solera Holdings, Inc. (“Solera”), argues in response that the
Court should deny the Motion because Sompo has not identified a conflict between
Delaware and Texas law. Solera contends the Texas cases Sompo cites as being in
conflict with this Court’s holding are not factually or procedurally similar to this
case. Solera also points out, correctly, that Sompo never raised this particular
conflict in its joinder to the summary judgment motion. Finally, Solera argues that
even if such a conflict exists, the record demonstrates that Delaware law applies.
* Motion for Reconsideration or Clarification (hereinafter “Motion”) at 2.
3 Motion at 1-2.
* I do not understand the purpose of Sompo’s seemingly gratuitous questioning of the correctness
of the Court’s holding that Delaware law implies a prejudice requirement in consent to defense
expenses clauses. See Motion at 3 (“But if Delaware law holds that a consent to defense
expenses clause contains an implied prejudice requirement, there are clear conflicts between
Delaware and Texas law.”) (emphasis in original). To the extent Sompo’s comments seek
reargument of that ruling, such an effort is improper in the context of the present motion. To the
extent the comment or emphasis on certain words simply seeks to express Sompo’s disagreement
or displeasure with the Court’s holding, such disagreement or displeasure is presumed, need not
be expressed, and should be reserved for appeal. For now, the holding constitutes the law of the
case. See Frank G.W. v. Carol M.W., 457 A.2d 715, 718 (Del. 1983). Future unnecessary
commentary of this nature on this or any other issue will not fare well before this Court.
August 29, 2019
Page 3
Although I believe it was clear from the Opinion, this letter should serve to
clarify that the Opinion did not rule on choice of law because that issue was not
ripe for consideration. The joining defendants neither asked the Court to decide
what state’s law applied to the policy nor identified a conflict between Delaware
and any other state on the issues raised in the summary judgment motion.” Unless
and until such a conflict is raised, choice of law remains a potentially interesting,
but entirely hypothetical argument.° For that reason, the Opinion noted that the
joining defendants had raised the argument as a basis for denying Solera’s request
for summary judgment, but did not decide any conflict of law issue. Instead, the
Court held that even if Delaware law applied, factual issues made summary
judgment inappropriate at this stage.’
Accordingly, the parties are free to raise at a later date the issue of whether a
conflict exists between Delaware law and another state on any issue before the
Court, and — to the extent such a conflict exists — the parties are free to argue how
the Court should resolve the Restatement’s “most significant relationship” test. In
> See Opinion at *6. Notably, the joining defendants, including Sompo, never argued in their
briefs or at oral argument that there was even a potential conflict between Delaware and Texas
law on the interpretation of the Consent Clause. Rather, the joining defendants argued there was
a potential conflict between Delaware and Texas law on whether the policy’s definition of
“Loss” included prejudgment interest on a non-covered loss. Even on that issue, however, the
joining defendants simply argued that the potential (unidentified) conflict, and the factual
question of which state’s law applied, precluded summary judgment in Solera’s favor.
Mills Ltd. Partnership v. Liberty Mutual Ins. Co., 2010 WL 8250837, at *4 (Del. Super. Nov. 5,
2010); Great Am. Opportunities, Inc. vy. Cherrydale Fundraising LLC, 2010 WL 338219, at *8
(Del. Ch. Jan. 29, 2010).
’ Opinion at *6-7.
August 29, 2019
Page 4
other words, the Opinion does not preclude the parties from raising a conflict of
law argument at the appropriate time. IT IS SO ORDERED.
Sincerely,
bo DAK
Abigail M-LeGrow/Judge