State Farm Mut. Auto. Ins. Co. v. Patterson, 7 A.3d 454 (Del. Supr. 2010)

This action involved a dispute over Delaware uninsured motorist (UM) benefits. Aneita Patterson is a Delaware resident that was injured while driving her automobile in New Jersey. The accident was the fault of a New Jersey resident, Jean Armstrong. Patterson filed a claim against Armstrong's insurance carrier, Allstate. Allstate denied the claim because it did not believe that Patterson had pierced the "verbal threshold" under the New Jersey Verbal Tort Threshold Statute, which limits tort-based recovery in New Jersey. Patterson then brought this action for UM benefits against her Delaware insurance carrier, State Farm. State Farm moved for summary judgment on the ground that Patterson was not legally entitled to recover from Armstrong under New Jersey law and, therefore, was not eligible to receive UM benefits under the State Farm policy. The Superior Court determined that Delaware law applied and Patterson could recover UM benefits to the extent that she could prove fault and damages. Therefore, it denied State Farm's motion for summary judgment and compensatory damages were awarded to Patterson.

On appeal, State Farm argued that the Superior Court erred as a matter of law in concluding that Patterson was "legally entitled to recover" against the tortfeasor under title 18, section 3902(a) of the Delaware Code. There was no dispute that if Delaware law applied, Patterson was entitled to recover damages which the New Jersey Statute disallowed. Although a claim for insurance policy benefits arises out of contract, the Court noted that tort law governs the assessment of the underlying damages. Therefore, the issue was which law, Delaware or New Jersey, should be applied to determine whether Patterson was legally entitled to recover the underlying damages. Using the "most significant relationship" test set forth in Section 145(1) of the Restatement (Second) of Conflict of Laws, the Supreme Court held that Delaware had a more significant relationship to the occurrence and parties. Accordingly, the Superior Court decision was affirmed.