Professional, Inc. v. Mutual Benefit Insurance ( 2020 )

J. A02037/20
NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P. 65.37
PROFESSIONAL, INC. D/B/A : IN THE SUPERIOR COURT OF
PROFESSIONAL AUTO BODY : PENNSYLVANIA
:
v. :
:
MUTUAL BENEFIT INSURANCE :
COMPANY, : No. 1155 WDA 2019
:
Appellant :
Appeal from the Order Dated June 27, 2019,
in the Court of Common Pleas of Blair County
Civil Division at No. 2017-GN-2597
BEFORE: SHOGAN, J., OLSON, J., AND FORD ELLIOTT, P.J.E.
MEMORANDUM BY FORD ELLIOTT, P.J.E.: FILED NOVEMBER 17, 2020
Mutual Benefit Insurance Company (“Mutual”) appeals from the
June 27, 2019 order entered by the Court of Common Pleas of Blair County
sustaining in part and overruling in part Mutual’s preliminary objections to
Professional, Inc. d/b/a Professionals Auto Body (“Professionals”) amended
complaint. After careful review, we affirm, albeit for different reasons than
those expressed by the trial court.1
The trial court provided the following factual and procedural history:
[Professionals] is an automobile body repair shop with
two locations in the Altoona, Blair County,
[Pennsylvania] area.
1 “Moreover, we are not limited by a trial court’s rationale, and we may affirm
its decision on any basis.” Rosiecki v. Rosiecki, 231 A.3d 928, 933
(Pa.Super. 2020) (citation omitted).
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[Mutual] is an insurance company licensed to and
providing automobile insurance coverage for
automobile owners in Pennsylvania [].
In the amended complaint[], Professionals alleges
that on various dates leading up to the filing of its
pleading[,] individuals insured by [Mutual] brought
their vehicle to Professionals for repairs in accord with
their policy of insurance.
In addition, Professionals alleges that third parties,
who claimed that their vehicle was damaged by the
negligence of an individual insured by [Mutual],
brought their vehicle to Professionals for repairs.
Each automobile owner who brought their vehicle to
Professionals for repairs executed a written
authorization for Professionals to repair their vehicle
and to perform the repairs reasonable and necessary
to restore the vehicle to its pre-loss condition.
Each individual also executed an “Assignment of
Proceeds” authorizing Professionals to recover any
unpaid amount for services rendered and repairs
made by Professionals pursuant to the written
authorization each executed.
The assignment was in the following form:
ASSIGNMENT OF PROCEEDS
Hereinafter, “Customer,” has suffered
damages to his/her vehicle following an
accident. The repairs recquired [sic]
following Customer’s accident and for
which Customer utilized the services of
Professionals [] do constitute a
compensable loss under an insurance
policy. Those repairs are to be paid for by
_________ hereinafter “Insurer,”
according to the terms of the underlying
policy.
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Customer has a right to payment of all
costs that were necessary for repair of
his/her vehicle, and Insurer is obligated
by the applicable insurance policy to pay
for such repair costs. The repair costs
that Insurer is obligated to pay do
constitute “proceeds” of the policy.
In consideration of Professionals[’]
agreement to make all repairs to
Customer’s damaged vehicle, Customer
desires to and does hereby assign to
Professionals [] any and all right, claim or
other interest in any proceeds necessary
to pay for repairs to Customer’s vehicle as
stated in the attached contract for repairs.
As such, Professionals [] is entitled to
pursue payment of all proceeds of the
insurance policy from Insurer in the
amount of $______ as stated in the
attached contract for repairs.
If any portion of the above agreement
should be found unenforceable by a court
of law, the remainder of the agreement
shall remain operative, valid and
enforceable.
If any portion of the above agreement
should be found to be invalid, Customer
(Assignor) shall still be liable to
Professionals [] (Assignee) for the total
amount of repairs of Professionals [] to
pursue payment for the repairs it has
made to Customer’s (Assignor’s) vehicle
as stated in contract for repairs.
This agreement is the entire agreement
relative to the assignment of Customer’s
rights to pursue payment from Insurer for
those repairs of Customer’s vehicle set
forth in the attached contract for repairs.
Any other agreement that may be made
relative to Customer’s rights to pursue
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payment from Insurer for repairs of
Customer’s vehicle is set forth in the
attached contract for repairs shall be held
invalid and superseded by this
assignment of Customer’s rights.
For the mutual exchange of promises and
intending to be legally bound hereby,
witness my hand and seal this __ day of
_________ 20__ A.D.
Professionals repaired the vehicles of not only the
individuals insured by [Mutual] but also the third party
claimants.
[Mutual] made partial payments to Professionals on
account of the repairs made to the vehicles.
Professionals seek[s] in these actions the balance[]
owed by [Mutual] on account of [its] underpayment
for repairs to the vehicles. In addition, Professionals
requests “delay time costs” as well as administrative
costs” with respect to each vehicle.
Trial court memorandum, 6/27/19 at 3-4.
Each policy of insurance issued by [Mutual] to its
customers contained the following provision:
[]APPRAISAL
A. If we and you do not agree on the
amount of loss, either may demand
an appraisal of the loss. In this
event, each party will select [a]
competent and impartial appraiser.
The two appraisers will select an
umpire. The appraisers will state
separately the actual cash value
and the amount of loss. If they fail
to agree, they will submit their
differences to the umpire. A
decision agreed to by any two will
be binding. Each party will:
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1. Pay its chosen
appraiser; and
2. bear the other expenses
of the appraisal and the
umpire equally.
B. We do not waive any of our rights
under this policy by agreeing to an
appraisal.[]
In its preliminary objection, [Mutual] argued that each
insured had a “full, complete and adequate
non-statutory remedy at law” and were therefore
foreclosed as a matter of law from bringing this action.
[The trial c]ourt rejected this argument, concluding
that the contract provision with respect to appraisal
did not impose a mandatory obligation on the insureds
to utilize the appraisal method for resolution of the
dispute. Further[, the trial court] expressed the
opinion that the filing of suit was a revocation of any
right to proceed pursuant to the appraisal method.
See Dudzinski v. Great American Insurance
Company of New York, 90 Pa.Super. 540, 542
(1927).
Trial court memorandum, 9/13/19 at 3-4.
The trial court entered an order on June 27, 2019, sustaining in part and
overruling in part Mutual’s preliminary objections to Professionals’ amended
complaint; however, the trial court’s order was not docketed until July 3, 2019.
On July 29, 2019, Mutual filed a timely notice of appeal. The trial court
ordered it to file a concise statement of errors complained of on appeal
pursuant to Pa.R.A.P. 1925(b) and Mutual timely complied. The trial court
subsequently filed an opinion pursuant to Pa.R.A.P. 1925(a).
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On August 9, 2019, Professionals filed with this court a motion to quash
appeal, on the ground Mutual’s appeal is interlocutory and, therefore, not
appealable as of right. (Professionals’ motion to quash appeal, 8/9/19 at 5.)
Mutual filed an answer to Professionals’ motion. On August 23, 2019, this
court entered a per curiam order denying Professionals’ motion to quash
without prejudice to Professionals’ right to again raise the issue before the
merits panel.
Mutual raises the following issue for our review:
Whether the trial court erred in denying [Mutual’s]
Preliminary Objection under Pa.R.Civ.P. 1028(a)(6) in
the nature of a petition to compel arbitration with
regard to contract claims assigned to Professionals by
policyholders of [it], that are subject to a
contractually-mandated appraisal procedure, on the
grounds that the appraisal provision is voluntary and
optional, and was revoked [when] Professionals
commenced this action.
Mutual’s brief at 5.
Preliminarily, we note Mutual failed to divide the argument section of its
brief in compliance with Pa.R.A.P. 2119(a), which requires the argument to be
divided into as many parts as there are questions to be argued. We have the
authority to dismiss appeals for failing to comply with the Rules of Appellate
Procedure, and will do so in cases where such a failure hinders our ability to
conduct meaningful appellate review. Kern v. Kern, 892 A.2d 1, 5-6
(Pa.Super. 2005) (citation omitted), appeal denied, 903 A.2d 1234 (Pa.
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2006). Here, because our ability to conduct meaningful appellate review has
not been hindered, we shall reach a decision on the merits.
Based on our reading of Mutual’s brief, the following issues for appellate
review can be gleaned from the point headings:
I. [Whether t]his appeal is properly taken as of
right from the trial court’s order overruling
[Mutual’s] preliminary objection under
Pa.R.Civ.P. 1028(a)(6)[?]
II. [Whether t]he appraisal provisions in the
policies governing the first-party claims are
valid and enforceable[?]
III. [Whether Mutual waived] its right to demand
appraisal[?]
Mutual’s brief at unnumbered page i (extraneous capitalization omitted).
In its first issue, Mutual addresses whether the trial court’s order is
appealable, thereby invoking this court’s jurisdiction to decide the substantive
issues before us. (See id. at 20-22.) As noted by Mutual, Professionals does
not address this issue in its brief. (See Mutual’s reply brief at 3 n.3.) Because
this raises an issue of jurisdiction, we may raise the issue sua sponte,
regardless of whether Professionals included the issue in its brief. Forrester
v. Hanson, 901 A.2d 548, 554 (Pa.Super. 2006) (citation omitted). As the
Forrester court further notes:
This Court does not have jurisdiction to entertain an
appeal from a non-appealable, interlocutory order.
Davis Supermarkets, Inc. v. United Food and
Commercial Workers, Local 23, [] 533 A.2d 1068([Pa.Super.] 1987).
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“It is well settled that an appeal will lie only from a
final order unless otherwise permitted by statute.”
Techtman v. Howie, 720 A.2d 143, 145 (Pa.Super.
1998). The Pennsylvania Rules of Appellate Procedure
define a final order as follows:
Rule 341. Final Orders; Generally
******
(b) Definition of final order. A final
order is any order that:
(1) disposes of all claims and
of all parties; or
(2) any order that is
expressly defined as a
final order by statute; or
(3) any order entered as a
final order pursuant to
subdivision (c) or this
rule.
(c) Determination of finality. When
more than one claim for relief is
presented in an action, whether as
a claim, counterclaim, cross-claim,
or third-party claim or when
multiple parties are involved, the
trial court or governmental unit may
enter a final order as to one or more
but fewer than all of the claims and
parties only upon an express
determination that an immediate
appeal would facilitate resolution of
the entire case. Such an order
becomes appealable when entered.
In the absence of such a
determination and entry of a final
order, any order or other form of
decision that adjudicates fewer than
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all the claims and parties shall not
constitute a final order.
******
Pa.R.A.P. 341(b), (c).
Forrester, 901 A.2d at 554-555.
Here, as noted above, Mutual appeals from the trial court’s June 27,
2019 order sustaining in part and overruling in part its preliminary objections
to Professionals’ amended complaint. As a general rule, orders denying
preliminary objections are interlocutory and, therefore, are not appealable as
of right. Armstrong World Industries, Inc. v. Travelers Indem. Co., 115
A.3d 342, 346 (Pa.Super. 2015) (citation omitted), appeal denied, 128 A.3d
218 (Pa. 2015). However,
[o]ur jurisdiction to review the propriety of the trial
court’s order overruling preliminary objections in the
nature of a motion to compel arbitration is conferred
by Pa.R.A.P. 311(a)(8), which provides that an
interlocutory appeal may be taken as of right from any
order made appealable by statute, and by
42 Pa.C.S.[A.] § 7320(a)(1) of the Uniform Arbitration
Act, which authorizes an appeal from “[a] court order
denying an application to compel arbitration.” We
review such a claim “for an abuse of discretion and to
determine whether the trial court’s findings are
supported by substantial evidence.” Taylor v.
Extendicare Health Facilities, Inc., 113 A.3d 317,
320 (Pa.Super. 2015). We employ a two-part test to
determine whether arbitration was proper. First, we
ascertain whether a valid agreement to arbitrate
exists. If so, we examine whether the dispute is
within the scope of this agreement. Pisano v.
Extendicare Homes, Inc., 77 A.3d 651, 654
(Pa.Super. 2013); see also Elwyn v. DeLuca, 48
A.3d 457, 461 (Pa.Super. 2012).
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Collier v. National Penn Bank, 128 A.3d 307, 309 (Pa.Super. 2018),
appeal denied, 138 A.3d 1 (Pa. 2016).
Before we can apply the two-part test set forth in Collier, we must first
address Professionals’ claim Mutual did not file a petition to compel arbitration;
rather, “[it] requested in its preliminary objections that the amended
complaint be demurred for failure to follow the appraisal method.”
(Professionals’ brief in support of motion to quash, 8/9/19 at 2-3 (extraneous
capitalization omitted).) Specifically, Professionals contends the language
cited by Mutual in its preliminary objections is not a valid agreement to
arbitrate, arguing, “[t]he cited language is unconscionable and [is] a contract
of adhesion.” (Id. at 3.) Professionals further alleges Mutual never asked the
trial court to either compel arbitration or direct the parties to engage in the
appraisal method. (Id.)
In response, Mutual characterizes Professionals’ argument as one of
“form over substance,” and directs us to this court’s decision in Midomo Co.
v. Presbyterian Hous. Dev. Co., 739 A.2d 180 (Pa.Super. 1999). In
Midomo, a dispute arose over a lease agreement containing an arbitration
provision. Midomo, 739 A.2d at 183. As in the instant matter, preliminary
objections were filed instead of a petition to compel arbitration. Id.The Midomo court stated it would not “exalt form over substance.” Id.(citation omitted). The court ultimately held the trial court’s order, “denying
preliminary objections alleging alternative dispute resolution and requesting
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that the [trial] court order [one of the parties] to arbitrate the dispute was an
interlocutory order, appealable as of right pursuant to Pa.R.A.P. 311(a)(8),
Pa.R.Civ.P. 1028(a)(6) and Note, and 42 Pa.C.S.A. §§ 7342(a), 7320(a)(1),
and 7304(a).” Id. (citation omitted). Accordingly, the Midomo court
concluded it had jurisdiction to address the issues raised on appeal. Midomo,
739 A.2d at 183.
The procedural history of the instant case is on point with the procedural
posture in Midomo. Here, in its preliminary objections, Mutual requested the
trial court to “dismiss stay [sic] Professionals’ breach of contract claim relating
to the first party claims based upon the pendency of a prior agreement for
alternative dispute resolution.” (Mutual’s preliminary objections to
Professionals’ amended complaint, 10/12/17 at 14, ¶ 55.) By comparison,
the preliminary objections before the Midomo court were described as a
request the trial court “determine that a valid arbitration agreement existed
and to order [the plaintiff] to seek its remedy in arbitration.” Midomo, 739
A.2d at 183. As in Midomo, we will not exalt form over substance, and we
find that we may proceed to apply the two-part test set forth in Collier,
supra.
Initially, we again mention the instant matter concerns an appraisal
clause, not an arbitration clause. However, this court has held:
Both the appraisal and arbitration process are
intended as alternatives to litigation whereby the
parties submit the issues in dispute to an independent
counsel for resolution. The only distinction between
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arbitration and appraisal is the scope of issues
encompassed in each proceeding. An appraisal is
limited to determining the amount of the loss with all
other issues reserved for settlement by either
negotiation or litigation, while arbitration considers all
issues necessary for disposition of the entire
controversy between the parties. Ice City, Inc. v.
Ins. Co. of North America, [] 314 A.2d 236,
240 n.12 ([Pa.] 1974). For purposes of
enforceability, there is no distinction between
arbitration and appraisal. Ice City, 314 A.2d at
240; see also Boulevard Associates v. Seltzer
Partnership, [] 664 A.2d 983, 987 ([Pa.Super.]
1995) (scope of judicial review of an appraisal
conducted pursuant to a private agreement analogous
to that used to review private agreement providing for
common law arbitration). We find that an appraisal
order is analogous to an arbitration order and will
review it accordingly.
McGourty v. Pennsylvania Millers Mut. Ins. Co., 704 A.2d 663, 664
(Pa.Super. 1997) (per curiam) (emphasis added).
As noted above, when deciding whether a trial court should have
compelled arbitration, we employ a two-part test: (1) does a valid agreement
to arbitrate exist, and (2) is the dispute within the scope of the agreement.
See Smay v. E.R. Stuebner, Inc., 864 A.2d 1266, 1270 (Pa.Super. 2004).
“[I]f a valid arbitration agreement exists between the parties and [the
plaintiff’s] claim is within the scope of the agreement, the controversy must
be submitted to arbitration.” Highmark Inc. v. Hospital Service Ass'n. of
Northeastern Pennsylvania, 785 A.2d 93, 98 (Pa.Super. 2001). “[T]he
scope of arbitration is determined by the intention of the parties as ascertained
in accordance with the rules governing contracts generally.” Henning v.
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State Farm Mut. Auto. Ins. Co., 795 A.2d 994, 996 (Pa.Super. 2002)
(citations and internal quotation marks omitted).
This court has thoroughly reviewed the submissions of the parties and
the trial court opinion in this matter, we disagree with the trial court’s
conclusion the initiation of suit acted as a revocation of any right to proceed
pursuant to the appraisal method. (Trial court memorandum, 9/13/19 at 6.)
However, because we find the dispute in question is not within the scope of
the agreement, we affirm the decision of the trial court.
The relevant portion of the appraisal clause reads, “If we and you do not
agree on the amount of loss, either may demand an appraisal of the loss. In
this event, each party will select a competent and impartial appraiser.”
(Personal auto policy, appraisal, at 13.) The language in the commercial auto
policy is nearly identical. (See commercial auto policy, business auto
conditions, at 7.)
In finding the appraisal agreement was not mandatory, the trial court
focused on the use of the word “may” in the first sentence but ignored the use
of the word “will” in the second sentence. The language of the policy and the
use of the word “may” makes it clear an appraisal is not a condition-precedent
to suit in every case. In that sense, the clause is not mandatory. However,
the use of the word “will” in the second sentence demonstrates, once either
party demands such an appraisal, the other side must comply. Thus, once
there is a dispute over the amount of loss and either party demands an
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appraisal, the clause becomes mandatory and the other party must select an
appraiser.
Moreover, we find the trial court’s reliance on Dudzinski, supra,
misplaced. Leaving aside the question of whether the holding in Dudzinski
is stale, we find it to be distinguishable. In Dudzinski, the insurance company
waited until after the insured rested its case at trial to raise the issue of a
mandatory appraisal. Dudzinski, 90 Pa.Super. at 541-542. In finding
revocation, this court relied on the insurance company’s failure to “raise
preliminarily any question with respect to the prematurity of this suit” as
well as the fact that the dispute was not over the amount of loss but a question
of liability. Id. at 544 (emphasis added). Certainly, the implication of the
discussion in Dudzinski, is the result would have been different if the
insurance company had raised the issue in a timely fashion and had the claim
been within the scope of the appraisal clause. Id.Here, Mutual promptly invoked the issue of the appraisal at the earliest
possible opportunity, by raising it in preliminary objections.2 Given this, we
disagree with the trial court’s reliance on Dudzinski for the proposition the
filing of suit acted as a revocation of the appraisal clause. Accordingly, for the
2 In its brief, Mutual contends it invoked the issue with respect to some of the
first-party claims at issue pre-suit. (Mutual’s brief at 12-13.) The trial court
did not address this issue and did not make any findings of fact with respect
to it; because such a finding is not necessary to our disposition, we decline to
address it.
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reasons discussed above, we find there is a valid and enforceable appraisal
agreement in this matter.
However, this finding does not end our inquiry. The second part of the
test requires that we ascertain if the dispute falls within the scope of the
agreement. See Smay, 864 A.2d at 1270. The personal auto policy in the
section entitled “Appraisal” provides for one “if we and you do not agree on
the amount of loss.” (Personal auto policy, appraisal, at 13.) The commercial
auto policy in the section entitled “Business Auto Conditions,” the subsection
entitled “Loss Conditions,” and under the further subheading “Appraisal for
Physical Damage Loss” provides, “if you and we disagree on the amount of
‘loss’ other may demand an appraisal of the ‘loss.’” (Commercial auto policy,
business auto conditions, at 7.) Neither policy contains a definition of the
word “loss.”
In pertinent part, Black’s Law Dictionary defines loss as “the
disappearance or diminution of values, usu[ally] in an unexpected or relatively
unpredictable way.” Black’s Law Dictionary, 482 (5th Pocket ed. 1996). This
court has reviewed the law on this issue, and while it has been unable to find
a case which provides a specific definition of loss, there are certain
commonalities between the cases: (1) the word loss is used interchangeably
with the word damage or damages; (2) appraisal disputes generally arise
directly between the insured and the insurance company, not the insurance
company and a third-party assignee; and (3) the appraisal takes place before
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repairs are made to ascertain the nature and breadth of the loss or damages
and whether the property in question requires repair or replacement. See
McGourty, supra (insurance company demanded enforcement of appraisal
clause where parties could not agree on the value of fire damage); see also
Militello v. Allstate Prop. and Cas. Ins. Co., 2015 WL 7300530, at **1-2
(W.D.Pa. Nov. 18, 2015) (insurance company sought to enforce appraisal
clause to resolve ongoing dispute over extent of repairs needed to barn);
Correnti v. Merchants Pref. Ins. Co., 2013 WL 373273, at *1 (E.D.Pa.
Jan. 31, 2013) (granting summary judgment to insurance company after
homeowners refused to participate in appraisal of extent of damages to
home); Sydney v. Pacific Indem. Co., 2012 WL 3135529, at *1 (E.D.Pa.
Aug. 1, 2012) (insurance company demanded enforcement of appraisal clause
after dispute over whether roof needed to be replaced or repaired);
Campenalla Constr. Co. v. Great Amer. Ins. Co., 2010 WL 2076089, at *1
(E.D.Pa. May 21, 2010) (construction company sought to enforce appraisal
clause after disagreement with insurance company over water damages to
home they were renovating).3
Here, the loss in question has already been repaired. Moreover, Mutual
has already rendered partial payment for those repairs. (Mutual’s reply brief
3“While we recognize that federal court decisions are not binding on this court,
we are able to adopt their analysis as it appeals to our reason.” Kleban v.
Nat. Union Fire Ins. Co. of Pittsburgh, 771 A.2d 39, 43 (Pa.Super. 2001)
(citation omitted).
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at 9-10.) In its reply brief, Mutual admits the dispute in question is about the
use of new parts rather than refurbished parts to the make those repairs and
how much those new parts cost. (Id. at 1-2.) Further, in its reply brief,
Mutual appears to raise a coverage dispute, arguing the use of “new original
equipment manufacturer (“OEM”) parts . . . may not be coextensive with . . .
contractual obligations to its insureds.” It is settled a coverage dispute is not
within the scope of an appraisal clause; only the monetary value of the loss
at issue. Ice City, Inc. v. Ins. Co. of N.A., 314 A.2d 236, 241 (Pa. 1974)
(parallel citation omitted); McGourty, 704 A.2d at 664. Thus, we find the
dispute in question is not about the “amount of loss” or “physical damage loss”
but rather is a dispute over the costs of repairs only. We are simply unable
to find, and Mutual has provided no legal support for, a claim a dispute over
the cost of already completed repairs falls within the scope of an appraisal
clause. Accordingly, we affirm the order of June 27, 2019.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/17/2020
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