Byoung Suk an v. Victoria Fire & Casualty Co. ( 2015 )

J-A05041-15
2015 PA Super 84BYOUNG SUK AN, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
VICTORIA FIRE & CASUALTY CO., D/B/A
TITAN AUTO INSURANCE AND MATTHEW
GILMORE AND ZAINAB WALKER,
Appellees No. 2120 EDA 2014
Appeal from the Order Entered June 23, 2014
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): 2013-006320
BEFORE: GANTMAN, P.J., SHOGAN, and ALLEN, JJ.
OPINION BY SHOGAN, J.: FILED APRIL 17, 2015
Appellant, Byoung Suk An, appeals from the order dated June 20,
2014, and entered June 23, 2014, denying his motion for summary
judgment.1 On appeal, Appellant challenges the trial court’s determination
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1
Both Appellant and Appellee, Victoria Fire and Casualty Company
(‘Victoria”), filed motions for summary judgment and the trial court disposed
of each motion with a separate order. Both orders were dated June 20,
2014, and both were entered June 23, 2014. Appellant’s notice of appeal
stated that he was appealing the order denying his motion for summary
judgment. Typically, an order denying a motion for summary judgment is
interlocutory and not appealable. French v. United Parcel Service, 547
A.2d 411, 413 (Pa. Super. 1988). The procedural history of this case,
however, presents us with a unique scenario. Here, the orders were
executed on the same date and both were filed on the same date. While an
appeal would properly lie from the trial court’s order granting Victoria’s
motion for summary judgment, we deem Appellant’s failure to identify that
(Footnote Continued Next Page)
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that the “named driver only” automobile policy issued to Zainab Walker
(“Walker”) does not violate section 1718(c) of the Pennsylvania Motor
Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa.C.S. § 1718(c), and is
not contrary to public policy. For the reasons that follow, we affirm.
On August 2, 2012, Appellant filed a complaint in the Montgomery
County Court of Common Pleas against Matthew Gilmore (“Gilmore”) and
Walker. In the underlying complaint, Appellant alleged he was injured in a
motor vehicle accident on March 20, 2011, which involved a vehicle owned
by Walker and operated by Gilmore.2 The complaint included a count
against Gilmore for negligent operation of Walker’s vehicle and a count
against Walker for negligently entrusting her vehicle to Gilmore. At the time
of the alleged accident, the motor vehicle owned by Walker was insured
under a Pennsylvania Personal Automobile Policy (“Policy”) issued by Titan
_______________________
(Footnote Continued)
specific order, issued on the same date, as an oversight. Indeed, had the
trial court issued a single order disposing of both motions for summary
judgment, the appeal would be proper. Additionally, in conjunction with the
trial court’s decision to grant Victoria’s motion for summary judgment, the
issues in this case have been finally decided. Thus, based on the specific
facts of this case, we interpret Appellant’s notice of appeal to be from the
trial court’s order granting Victoria’s motion for summary judgment and
proceed to address the merits of his claims. “[I]nterests of judicial economy
allow us to ‘regard as done that which ought to have been done.’” Hill v.
Thorne, 635 A.2d 186, 188 (Pa. Super. 1993) (quoting McCormick v.
Northeastern Bank of Pennsylvania, 561 A.2d 328, 330, n. 1 (Pa.
1989)).
2
The record reflects that Gilmore was a friend of Walker’s teenage son,
Aquil, and that Aquil had given Gilmore permission to drive the car at the
time of the accident. Walker Deposition, 11/5/13, at 10-18.
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Indemnity Company d/b/a Titan Auto Insurance and underwritten by Victoria
Fire and Casualty Company (“Victoria”).3 The Policy did not provide liability
coverage for any person not listed as a named driver on the Policy. Walker
was the sole driver listed on the Policy.
Appellant filed an action for declaratory judgment on March 26, 2013,
seeking a declaration by the court that Victoria had a duty to defend and
provide insurance coverage to Walker and Gilmore for all claims arising out
of the alleged motor vehicle accident. On February 12, 2014, Victoria filed a
motion for summary judgment claiming it had no duty to defend or
indemnify Walker or Gilmore because the Policy specifically stated that
Victoria “will not provide coverage when the driver of your auto is not listed
on the policy.” Victoria’s Motion for Summary Judgment, 2/12/14, at 3.
Appellant subsequently filed a cross-motion for summary judgment on March
26, 2014, arguing the “named driver only” Policy violates section 1718(c) of
the MVFRL and is against public policy. Appellant’s Motion for Summary
Judgment, 3/26/14, at 7-9. Oral argument on the cross-motions for
summary judgment was held.
On June 23, 2014, the trial court entered an order denying Appellant’s
motion for summary judgment, and a separate order granting Victoria’s
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3
Appellant did not plead, and the record does not reflect, that Gilmore was
insured by another motor vehicle insurance policy at the time of the accident
or that he sought first party benefits.
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motion for summary judgment, thereby dismissing Appellant’s action for
declaratory judgment. Appellant timely appealed.
Appellant presents the following issues for our review, which we set
forth verbatim:
A. Whether the trial court committed an error of law and
abused its discretion in finding that Victoria Fire & Casualty
Company does not have a duty to provide insurance coverage
and a defense to Matthew Gilmore and Zainab Walker for any
and all claims arising out of a March 20, 2011 motor vehicle
accident involving Byoung Suk An, including, but not limited to,
claim number 80011002887 and the lawsuit filed by Byoung Suk
An in connection therewith in the Montgomery County Court of
Common Pleas, case number 2012-21107, when the “named
driver only” coverage exclusion contained in the subject
automobile insurance policy issued by Victoria Fire & Casualty
Company conflicts with and is contrary to the “named driver
exclusion” of the Pennsylvania Motor Vehicle Financial
Responsibility Law, 75 Pa.C.S. § 1718(c)(2), and is therefore
invalid?
B. Whether the trial court committed an error of law and
abused its discretion in finding that Victoria Fire & Casualty
Company does not have a duty to provide insurance coverage
and a defense to Matthew Gilmore and Zainab Walker for any
and all claims arising out of a March 20, 2011 motor vehicle
accident involving Byoung Suk An, including, but not limited to,
claim number 80011002887 and the lawsuit filed by Byoung Suk
An in connection therewith in the Montgomery County Court of
Common Pleas, case number 2012-21107, when the “named
driver only” coverage exclusion contained in the subject
automobile insurance policy issued by Victoria Fire & Casualty
Company conflicts with and is contrary to public policy in
Pennsylvania, and is therefore invalid?
Appellant’s Brief at 4-5.
Our standard of review with respect to a trial court’s decision to grant
or deny a motion for summary judgment is as follows:
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A reviewing court may disturb the order of the trial court only
where it is established that the court committed an error of law
or abused its discretion. As with all questions of law, our review
is plenary.
In evaluating the trial court’s decision to enter summary
judgment, we focus on the legal standard articulated in the
summary judgment rule. Pa.R.C.P. 1035.2. The rule states that
where there is no genuine issue of material fact and the moving
party is entitled to relief as a matter of law, summary judgment
may be entered. Where the non-moving party bears the burden
of proof on an issue, he may not merely rely on his pleadings or
answers in order to survive summary judgment. Failure of a
nonmoving party to adduce sufficient evidence on an issue
essential to his case and on which it bears the burden of proof
establishes the entitlement of the moving party to judgment as a
matter of law. Lastly, we will view the record in the light most
favorable to the non-moving party, and all doubts as to the
existence of a genuine issue of material fact must be resolved
against the moving party.
Matharu v. Muir, 86 A.3d 250, 255 (Pa. Super. 2014).
Appellant first argues that the trial court committed an error of law
and abused its discretion in ruling that 75 Pa.C.S. § 1718(c) is inapplicable
to the Policy in the present case. Appellant’s Brief at 14. The trial court
concluded that section 1718(c) refers to “named driver exclusion” policies
which exclude a particular driver, as opposed to the situation presented in
the Policy currently at issue, where only the named driver is provided
coverage. Appellant contends that Victoria’s “named driver only” coverage
impermissibly expands the legislature’s exclusion outlined in section 1718(c)
to include “any person not listed as an insured on your policy” without
requiring that the first named insured request that the person be excluded
from coverage, or a determination as to whether the excluded person is
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insured on another policy of motor vehicle liability insurance. Id. Appellant
asserts that Victoria’s Policy impermissibly rewrites section 1718(c) to
exclude from coverage any person not listed as an insured, thereby turning
section 1718(c)(2) “on its head.” Id. at 17. Because the coverage
exclusion at issue is repugnant to the MVFRL, Appellant contends, the Policy
must be deemed invalid by this Court. Id. As such, Appellant maintains
that he is entitled to judgment as a matter of law and that the trial court
committed an error of law and abused its discretion by denying Appellant’s
motion for summary judgment. Id.
The legal principles to be applied in reviewing coverage questions
arising under insurance contracts are well settled:
The interpretation of an insurance policy is a question of
law for the court. Our standard of review, therefore, is plenary.
In interpreting the language of an insurance policy, the goal is
“to ascertain the intent of the parties as manifested by the
language of the written instrument.” The polestar of our inquiry
is the language of the insurance policy. When analyzing a
policy, words of common usage are to be construed in their
natural, plain, and ordinary sense. When the language of the
insurance contract is clear and unambiguous, a court is required
to give effect to that language. Although a court must not resort
to a strained contrivance or distort the meaning of the language
in order to find an ambiguity, it must find that contractual terms
are ambiguous if they are subject to more than one reasonable
interpretation when applied to a particular set of facts. Where a
provision of a policy is ambiguous, the policy provision is to be
construed in favor of the insured and against the insurer.
Continental Cas. Co. v. Pro Machine, 916 A.2d 1111, 1118 (Pa. Super.
2007) (internal citations omitted). Further, courts should not “under the
guise of judicial interpretation,” expand coverage beyond that provided in
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the policy. Guardian Life Ins. Co. of America v. Zerance, 479 A.2d 949,
953 (Pa. 1984).
A “named driver exclusion” in an automobile policy excludes coverage
in a situation where coverage under the policy would otherwise be extended.
See, e.g., Donegal Mutual Insurance Co. v. Fackler, 835 A.2d 712, 717
(Pa. Super. 2003) (exclusion applied to the use of a motor vehicle “to which
the terms of the policy would ordinarily be extended” and “whether or not
such operation was with the express or implied permission of a person
insured under [the] policy.”) Section 1718(c) of the MVFRL specifically
addresses such exclusions, as follows:
(c) Named driver exclusion.--An insurer or the first named
insured may exclude any person or his personal representative
from benefits under a policy enumerated in section 1711 or 1712
when any of the following apply:
(1) The person is excluded from coverage while
operating a motor vehicle in accordance with the act
of June 5, 1968 (P.L. 140, No. 78), relating to the
writing, cancellation of or refusal to renew policies of
automobile insurance.
(2) The first named insured has requested that the
person be excluded from coverage while operating a
motor vehicle. This paragraph shall only apply if the
excluded person is insured on another policy of
motor vehicle liability insurance.
75 Pa.C.S. § 1718(c).
A review of Walker’s application for coverage and Policy reveals the
following. On February 12, 2011, Walker executed and signed a Titan Lite
Pennsylvania Auto Application (“Application”). Application, 2/12/11. In the
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Application, Walker agreed to and initialed the following applicant
warranties:
1. I have LISTED all persons who will be permitted at any time
to operate any vehicle that is either identified on the
Declarations or added to the policy after the date of
application.
2. A person that is NOT LISTED or disclosed to my agent (see
number 3 below) WILL NOT be permitted at any time to
operate any vehicle that is either identified on the
Declarations or added to the policy after the date of the
Application.
3. I will notify my agent before any person that is not LISTED is
permitted at any time to operate my vehicle that is either
identified on the Declarations or added to the policy after the
date of the Application.
Id. at 8 (unnumbered pages). In the questionnaire section of the
Application, Walker initialed and agreed to the following statement:
11. I understand that the policy being applied for WILL
NOT provide coverage when a vehicle listed in the Vehicle
Information section of the Application is being operated by any
driver that is NOT LISTED in the Driver Information section of
the application.
Id. at 8.
That Application also included the following statement:
APPLICANT’S STATEMENT – READ BEFORE SIGNING
WARNING
PLEASE NOTE: In order for us to offer you this low cost Lite
product, your policy contains a number of coverage restrictions.
This policy will not provide coverage when the driver of your
auto is not listed on the policy. This policy will not provide
coverage when you are driving a vehicle other than those listed
on the Declaration page. Automatic coverage for a newly
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acquired auto is also restricted to 72 hours after the purchase or
lease of that auto.
Id. at 5. Walker was the only driver identified on the Application. Id. at 1.
Based on the Application, Victoria issued the Policy to Walker. The
Policy included the following statement:
Pennsylvania Personal Automobile Policy
PLEASE NOTE: IN ORDER FOR US TO OFFER YOU THIS LOW-
COST EXPRESS PRODUCT, YOUR POLICY CONTAINS A NUMBER
OF COVERAGE RESTRICTIONS. THIS POLICY WILL NOT
PROVIDE COVERAGE WHEN THE DRIVER OF YOUR AUTO IS NOT
LISTED ON THE POLICY.
Policy, 4/24/13, at 1. Additionally, the following provision was included
under the “auto liability” heading:
AUTO LIABILITY
(for damage or injury to others caused by your auto)
COVERAGE AGREEMENT
***
COVERAGE EXCLUSIONS
This coverage does not apply to:
1. Bodily injury or property damage arising out of
the ownership, maintenance or use of your auto
by any person not listed as an insured on your
policy.
Id. at 5-6. As noted, Walker was the only driver identified in the Policy.
As previously discussed, section 1718(c) addresses policies wherein an
insured specifically excludes a driver who would otherwise be covered from
benefits under the policy. An insured can exclude the named driver when
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circumstances outlined in either subsection 1718(c)(1) or (2) apply. 75
Pa.C.S. § 1718(c). A review of Walker’s Policy, however, reveals that the
Policy did not include a named driver exclusion as outlined in 75 Pa.C.S. §
1718(c). Instead, Walker’s Policy provided coverage only for the driver
named in the Policy. As was clearly outlined for Walker in the Application
and memorialized in the Policy, coverage was provided to the named driver
only, in exchange for substantially reduced premiums paid by Walker.
Thus, the Policy at issue does not conflict with, nor is it contrary to,
section 1718(c), as alleged by Appellant. Rather, section 1718(c) is
inapplicable to the Policy in this case. The “named driver only” Policy is not
contemplated by section 1718(c).4
Following Appellant’s argument to its logical end, pursuant to section
1718(c)(2), an insurer would not be liable for damages caused by any (and
every) driver only if any (and every) driver was 1) specifically excluded by
the named insured and 2) was insured under another policy. Such a
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4
Our research has revealed no specific provision in the MVFRL or
Pennsylvania state case law addressing a “named driver only” insurance
policy. For purposes of this discussion, we note that our research revealed
an unpublished federal district case, Infinity Indem. Ins. Co. v. Gonzalez,
2012 WL 1994772 (E.D. Pa. 2012), applying Pennsylvania law, that
addresses both the “named driver only” policy and the “named driver
exclusion.” That court explained that “named driver exclusions” exclude a
specific, identifiable individual or risk. “Named driver only” policies,
conversely, provide coverage only for the identified person. The federal
district court concluded that the “named driver only” policies were not
invalid. Id. at *4.
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requirement is absurd, and we cannot conclude that this was intended in the
drafting of section 1718(c) of the MVFRL. See 1 Pa.C.S. § 1922(1) (“In
ascertaining the intention of the General Assembly in the enactment of a
statute the following presumptions, among others, may be used: (1) That
the General Assembly does not intend a result that is absurd, impossible of
execution or unreasonable.”). Appellant’s attempt to interpret a “named
driver only” policy within the strictures of section 1718(c), that addresses
“named driver exclusion” provisions, is misdirected, as is evidenced by the
absurd conclusion of the argument identified above. Simply put, the “named
driver exclusion” provision contemplated by section 1718(c) and “named
driver only” policies are entirely different creatures.
Accordingly, Appellant’s assertion that the Policy provided by Victoria
improperly stretches the provisions of section 1718(c) is unfounded. We hold
that section 1718(c) is inapplicable to the Policy at issue in this case. We
further conclude that the Policy language is clear and unambiguous in
limiting coverage only to the named driver. As a result, we cannot agree
that the trial court erred or abused its discretion in determining that section
1718(c) did not apply and in subsequently denying Appellant’s motion for
summary judgment and granting Victoria’s motion for summary judgment.
Appellant next argues that the “named driver only” Policy at issue in
this case conflicts with, and is contrary to, public policy in Pennsylvania, and
is therefore invalid. Appellant’s Brief at 18. Appellant maintains that a
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corollary to the cost containment aims behind the MVFRL, as identified by
the trial court, is the concern about limiting the number of uninsured
motorists on Pennsylvania highways. Id. It is Appellant’s position that
Victoria’s “named driver only” policies increase the number of uninsured
motorists on Pennsylvania roads to the extent that Victoria denies coverage
to “any person not listed as an insured on your policy” without reference to
whether the excluded person is insured on another liability insurance policy.
Id. at 19. This is the very situation addressed by section 1718(c)(2),
Appellant contends, with its requirement that an excluded person be insured
on another policy of motor vehicle liability insurance in order for the “named
driver exclusion” to apply. Id.
“In construing a policy of insurance, we are required to give plain
meaning to a clear and unambiguous contract provision unless such
provision violates a clearly expressed public policy.” Williams v. GEICO
Government Employees Ins. Co., 32 A.3d 1195, 1199-1200 (Pa. 2011).
Our Supreme Court has consistently been reluctant to invalidate contractual
provisions due to public policy concerns. Id. at 1200.
Generally, a clear and unambiguous contract provision must be
given its plain meaning unless to do so would be contrary to a
clearly expressed public policy. When examining whether a
contract violates public policy, this Court is mindful that public
policy is more than a vague goal which may be used to
circumvent the plain meaning of the contract. As this Court has
stated:
Public policy is to be ascertained by reference to the
laws and legal precedents and not from general
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considerations of supposed public interest. As the
term “public policy” is vague, there must be found
definite indications in the law of the sovereignty to
justify the invalidation of a contract as contrary to
that policy[.] ... Only dominant public policy would
justify such action. In the absence of a plain
indication of that policy through long governmental
practice or statutory enactments, or of violations of
obvious ethical or moral standards, the Court should
not assume to declare contracts ... contrary to public
policy. The courts must be content to await
legislative action.
***
It is only when a given policy is so obviously for or
against the public health, safety, morals or welfare
that there is a virtual unanimity of opinion in regard
to it, that a court may constitute itself the voice of
the community in so declaring [that the contract is
against public policy].
Id. (quoting Eichelman v. Nationwide Ins. Co., 711 A.2d 1006, 1008 (Pa.
1998)). Additionally, Pennsylvania public policy regarding automobile
insurance has been codified by the Pennsylvania MVFRL. See Erie Ins.
Exchange v. Baker, 972 A.2d 507, 511 n.7 (Pa. 2008) (“[A]n enactment by
the legislature- such as the MVFRL– is indeed the embodiment of public
policy.”).
Our Supreme Court had the opportunity to address public policy
concerns arising from the interpretation of automobile insurance policies in
Progressive Northern Ins. Co. v. Schneck, 813 A.2d 828 (Pa. 2002).
The insured in Schneck had named her husband as an excluded driver
pursuant to section 1718(c)(2) because he had a suspended driver’s license.
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Id. at 219. In recognizing the exclusion as being consistent with public
policy, the Court stated that:
The overarching public policy of the Motor Vehicle Financial
Responsibility Law (MVFRL) is concern over the increasing cost of
insurance premiums . . . [t]his public policy is exemplified by [75
Pa.C.S.] § 1718(c), which permits named driver exclusions.
These exclusions are designed by insurers to avoid covering
someone with a bad driving record or in a high-risk category . . .
since the premium for such coverage would be exceedingly high.
Id. at 831-832 (internal citations omitted). The Court thus concluded that
the “to the extent that a named driver exclusion operates to bar UM/UIM
coverage because of foregone liability coverage, the result is consistent with
the public policy of cost containment and consumer choice.” Id. at 832. In
so holding, the Court reiterated its observation that “[w]hile cost
containment is not the only objective of the statute, it has become an
increasingly significant one, and it is apparent that the General Assembly
has been employing the vehicle of free consumer choice with greater latitude
and frequency in furtherance of this objective.” Id. See also Fackler, 835
A.2d at 717 (in holding that the “named driver exclusion” was valid and that
the insurance company was not obligated to defend, indemnify or provide
liability coverage to the driver or insured, this Court found that the exclusion
was “completely consistent” with the public policy of the MVFRL as set forth
by our Supreme Court).
Although the above cases dealt with “named driver exclusions,” we
find them to be instructive in addressing the issue presented by this matter.
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Thus, we hold that the provision of low-cost, affordable policies in return for
motor vehicle liability coverage of only the named driver, and the
concomitant risk reduction, does not violate public policy. We cannot
conclude that this type of policy is “so obviously for or against the public
health, safety, morals or welfare that there is a virtual unanimity of opinion
in regard to it.” Williams, 32 A.3d at 1200. Therefore, we may not
constitute the voice of the community in declaring that the contract is
against public policy. Any such determination is a question for the
legislature. Id. (“In the absence of a plain indication of [dominant public]
policy through long governmental practice or statutory enactments, or of
violations of obvious ethical or moral standards, the Court should not
assume to declare contracts . . . contrary to public policy. The courts must
be content to await legislative action.”). Accordingly, Appellant is entitled to
no relief on his second claim.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/17/2015
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