Stoms v. Federated Service Insurance, 125 A.3d 1102

Background

Decedent David Stoms, a finance manager employed by Diamond Motor Sports, Inc., was killed when an uninsured motorist caused a fatal crash while David was driving a company-owned car authorized for personal use.
Diamond Motor carried a commercial automobile policy from Federated with: (a) $30,000 personal injury protection (PIP) per accident (paid to David’s estate), and (b) an uninsured motorists (UM) selection form that provided $300,000 UM coverage only for "directors, officers, partners or owners" while expressly rejecting UM for "any other person who qualifies as an insured."
Diamond’s president (Warren Price) checked the box selecting $300,000 UM only for directors/officers/partners/owners and rejected UM for other insureds on the insurer’s form.
Mrs. Epiphany Stoms sued Federated seeking UM benefits for David’s death; Federated moved for summary judgment asserting the UM form bars coverage for David.
The Superior Court granted Federated’s motion, holding (1) the selective UM election was not contrary to Delaware public policy because the statutory minimum was satisfied and insurers/forms allow written rejection, and (2) the terms "director" and "officer" unambiguously refer to corporate officers/directors (not a finance manager). This Court affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an employer’s policy that provides UM coverage only to a limited class of employees violates public policy	Stoms: The policy is void as against public policy because it limits UM coverage for some insured drivers and reduces coverage below statutory intent	Federated: The policy satisfies statutory minima; Delaware law permits written rejection and elective differing optional coverage levels among drivers	Court: No public policy violation; insured can reject UM in writing and allocate optional coverage among drivers so long as statutory minimums are met
Whether the UM selection language is ambiguous as to who is a "director" or "officer"	Stoms: Terms are ambiguous; ordinary/dictionary meanings could include managers (e.g., finance manager) so David might qualify	Federated: "Director" and "officer" must be read in corporate-law context given the policy is for a corporation and thus exclude rank-and-file managers	Court: Terms unambiguous when read in context; refer to corporate directors/officers, and David was not one
Applicability of the "reasonable expectations" doctrine to expand coverage	Stoms: Insureds reasonably expect managerial employees to be treated as officers for coverage purposes	Federated: Doctrine applies only if contract terms are ambiguous or contain hidden traps	Court: Doctrine inapplicable because terms are unambiguous; no reasonable expectation of officer-level UM for a finance manager
Whether summary judgment was appropriate	Stoms: Contract interpretation should favor insured; question of interpretation precludes summary judgment	Federated: Contract language is clear; no material factual dispute; summary judgment proper	Court: De novo review finds no material fact disputes and policy language yields judgment for Federated

Key Cases Cited

GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776 (Del. 2012) (standard of review for summary judgment)
Bermel v. Liberty Mut. Fire Ins. Co., 56 A.3d 1062 (Del. 2012) (discussion of when insurance provisions reducing statutorily prescribed coverage are void)
Miller v. State Farm Mut. Auto. Ins. Co., 993 A.2d 1049 (Del. 2010) (explaining optional nature of underinsured/uninsured motorist coverage and insured’s allocation choices)
ConAgra Foods, Inc. v. Lexington Ins. Co., 21 A.3d 62 (Del. 2011) (definition of ambiguity and contract interpretation principles)
Hallowell v. State Farm Mut. Auto. Ins. Co., 443 A.2d 925 (Del. 1982) (limits on Delaware’s reasonable expectations doctrine)
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) (policy must be read as a whole; cannot interpret isolated provisions)
United Fire & Cas. Ins. Co. v. Thompson, 758 F.3d 959 (8th Cir. 2014) (holding similar "director" language refers to board members, not employees who merely direct tasks)