Insurance Commissioner of Delaware v. Sun Life Assurance Co. of Canada
2011 Del. LEXIS 247
Del.2011Background
- Delaware amended 18 Del. C. § 702(c)(2) in 1994 adding a declining tax rate based on net premiums per case.
- The 1994 definition treated a case as contracts issued to a single employer or to a single private placement.
- The 1998 amendment removed the word 'single' and created two subsections, including (c)(2)(b) defining a case as all contracts issued to all employers/trusts in a private placement under federal securities laws.
- Sun Life issued seven employer/trust-owned life insurance policies through separate private placement memoranda.
- Sun Life originally reported each policy as a separate case and later sought refunds claiming these seven policies could be aggregated as one case under 702(c)(2)(b).
- The Delaware Department of Insurance denied aggregation, and Superior Court reversed; the Supreme Court reversed the Superior Court, upholding the Department’s interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether seven policies can be aggregated into one case under 702(c)(2)(b). | Sun Life argues all policies should be one case. | Department contends different private placements mean separate cases. | Aggregation not permitted; must be one private placement for one case. |
| Does the phrase 'a private placement' mean single or any private placement? | Sun Life treats 'a private placement' as multiple possible placements. | Department argues 'a private placement' is singular. | Plain meaning is singular; one private placement per case. |
| Did the 1998 amendments constitute a material change creating ambiguity? | Sun Life argues amendments materially changed the definition. | Department argues amendments were technical, not substantive. | Amendments not material; no ambiguity created. |
Key Cases Cited
- Dir. of Revenue v. CNA Holdings, Inc., 818 A.2d 953 (Del.2003) (statutory construction and ordinary meaning guidance in tax context)
- Chase Alexa, LLC v. Kent Cnty. Levy Ct., 991 A.2d 1148 (Del.2010) (plenary review of agency statutory interpretation)
- Eliason v. Englehart, 733 A.2d 944 (Del.1999) (statutory interpretation principles)
- LeVan v. Indep. Mall, Inc., 940 A.2d 929 (Del.2007) (ordinary meaning of undefined terms)