Stefan Freeth v. Zurich American Insurance Co

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-2924
_____________
STEFAN FREETH
v.
ZURICH AMERICAN INSURANCE CO.,
Appellant
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-14-cv-02274)
District Judge: Hon. Gerald A. McHugh
_____________
Submitted under Third Circuit LAR 34.1(a)
March 14, 2016
Before: FUENTES, CHAGARES, and RESTREPO, Circuit Judges
(Filed: March 24, 2016 )
______________
OPINION
______________
CHAGARES, Circuit Judge.
Defendant Zurich American Insurance Co. (“Zurich”) appeals a summary
judgment order entered by the United States District Court for the Eastern District of

This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
Pennsylvania on July 16, 2015, declaring that Zurich is liable for up to $1,000,000 in
uninsured motorist (“UM”) insurance coverage in relation to injuries suffered by plaintiff
Stefan Freeth. For the reasons that follow, we will affirm.
I.
Because we write exclusively for the parties, we set forth only those facts
necessary to our disposition. Freeth was seriously injured in September 2012 while
working on the back of a truck owned by his employer, Road-Con, Inc. A passing
tractor-trailer struck a traffic sign, propelling it into Freeth’s leg. Because the tractor-
trailer was never identified, Road-Con’s business insurance provided UM coverage for
Freeth’s injuries. That insurance policy was issued by Zurich.
Freeth filed this lawsuit seeking a declaration that the policy provides $1,000,000
in UM coverage. In response, Zurich argued that the policy has a much lower limit of
$35,000 in UM coverage because in February 2012, prior to Freeth’s injury, Road-Con
(through its president) signed an Uninsured/Underinsured Motorists Coverage
Selection/Rejection Limits Summary Form (“Summary Form”) electing to reduce the
UM coverage to $35,000. Freeth argued that the signature on the Summary Form was
not a sufficiently clear manifestation of intent to reduce the coverage, especially in light
of language in both the Summary Form and the cover letter accompanying it, which
warned Road-Con that it was not enough merely to sign and return the Summary Form
because it was also necessary to review and sign state-specific forms enclosed with the
Summary Form. Thus, argued Freeth, the UM coverage defaulted to the same amount as
the bodily injury liability coverage, or $1,000,000, by operation of Pennsylvania law.
2
The parties filed cross-motions for summary judgment. On July 16, 2015, the
District Court granted Freeth’s summary judgment motion, declaring that Zurich must
provide $1,000,000 in UM coverage, and denied Zurich’s motion. It reasoned that
because Zurich did not enclose, and Road-Con did not sign, any Pennsylvania-specific
form designating $35,000 as the amount of UM coverage, the requirements stated in the
Summary Form and cover letter for reducing coverage were not met, and coverage
defaulted to limits imposed by operation of state law. Zurich timely appealed.
II.
The District Court exercised jurisdiction under 28 U.S.C. § 1332(a)(1), and we
have jurisdiction under 28 U.S.C. § 1291 to review the District Court’s final decision.
“We exercise plenary review over a district court order granting summary judgment.”
Willis v. UPMC Children’s Hosp. of Pittsburgh, 808 F.3d 638, 643 (3d Cir. 2015).
“Summary judgment is appropriate when ‘the movant shows that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)).
III.
Under 75 Pa. Cons. Stat. § 1731, “an insurance company issuing a policy in the
Commonwealth of Pennsylvania must provide [uninsured/underinsured motorist]
coverage equal to the bodily injury liability coverage, unless the insured validly rejects
UM/UIM coverage or validly requests lower limits of coverage pursuant to section
1734.” Weilacher v. State Farm Mut. Auto. Ins. Co., 65 A.3d 976, 983 (Pa. Super. Ct.
2013). Section 1734, in turn, provides that “[a] named insured may request in writing the
3
issuance of coverages . . . in amounts equal to or less than the limits of liability for bodily
injury.” 75 Pa. Cons. Stat. § 1734. “[T]o conform with § 1734, the written request must
be signed by the insured and must contain an express designation of the amount of
coverage requested, all manifesting the insured’s desire to purchase coverage in amounts
less than the bodily injury limits.” Weilacher, 65 A.3d at 983 (quoting Nationwide Mut.
Ins. Co. v. Catalini, 18 A.3d 1206, 1209 (Pa. Super. Ct. 2011)). Section 1734 does not
“dictate[ ] the particular language that the parties must utilize.” Hartford Ins. Co. v.
O’Mara, 907 A.2d 589, 603 (Pa. Super. Ct. 2006) (en banc). “[T]he language utilized
need only convey an insured’s desire to purchase uninsured and underinsured coverage in
amounts less than or equal to bodily injury limits and the amount of the requested
coverage.” Id.
Freeth does not dispute that there was a signed writing (the Summary Form) that
contained a table listing “Selected Limits” for “Uninsured/Underinsured Motorists
Coverage” in each state, including a limit of $35,000 for Pennsylvania. Rather, he argues
that the Summary Form did not constitute a “request” under section 1734 manifesting
Road-Con’s desire to purchase that amount of coverage. We agree.
Like the District Court, we find it significant that the Summary Form contained
the following language, located before the table that listed the proposed amount of
reduced coverage for each state:
Your policy(s) contain Uninsured/Underinsured Motorists Coverage
Selection/Rejection and Limits Options forms which allow you to reject
coverage or to select various limits and coverage options. Your signature
on this summary form indicates that you have read and understand each
state-specific form and that the selections or rejections marked on the state
4
forms have been accepted by you. This form provides a summary of the
selected Limits by State. However, in those states [including Pennsylvania]
marked with an asterisk (*), the first named insured must sign that state’s
selection/rejection form.
Appendix (“App.”) 187. Following the table was another proviso:
Failure to return the signed Uninsured/Underinsured Motorist (UM/UIM)
Selection/Rejection Summary Form and required state-specific forms prior
to the policy inception date(s) will result in the policy being issued with
coverage limits imposed by operation of state law. . . . THIS SUMMARY
IS NOT A SUBSTITUTE FOR REVIEWING EACH INDIVIDUAL
STATE’S SELECTION/REJECTION FORM FOR UM AND UIM
COVERAGE. YOU ARE REQUIRED TO DO SO.
Id. at 188. And by signing, Road-Con “acknowledge[d] that [it] ha[d] reviewed each
individual state’s selection/rejection form.” Id. The cover letter accompanying the forms
contained similar warnings. Id. at 255-57.
Road-Con never signed a state-specific Pennsylvania form requesting reduced UM
coverage, even though it did so for other states. Thus, to prevail, Zurich must show that
the Summary Form by itself constituted a “request,” notwithstanding the language in the
Summary Form warning insureds that signing the Summary Form was insufficient to
effect a reduction in coverage. Zurich fails to do so.
It is true that Road-Con signed and returned three Pennsylvania-specific forms,
which dealt with other issues. Id. at 233-35. It could therefore be argued that Road-Con
satisfied all the requirements set out in the Summary Form for reducing coverage, insofar
as it signed and returned Pennsylvania-specific forms that were included.
But such a reading of the Summary Form is hyper-technical and unnatural.
“When analyzing an insurance policy, a court must construe words of common usage in
5
their natural, plain, and ordinary sense.” D’Adamo v. Erie Ins. Exch., 4 A.3d 1090, 1096
(Pa. Super. Ct. 2010) (quoting Continental Cas. Co. v. Pro Machine, 916 A.2d 1111,
1118 (Pa. Super. Ct. 2007) (quotation marks omitted). “A court must not ‘distort the
meaning of the language or resort to a strained contrivance in order to find an
ambiguity.’” Id. (quoting Mitsock v. Erie Ins. Exch., 909 A.2d 828, 831 (Pa. Super. Ct.
2006)). To any reasonable reader, the repeated emphatic warnings in the Summary Form
would create an expectation that coverage amounts within a given state would be set at
levels provided by law unless a form designed and submitted specifically for that state
requested otherwise. Zurich need not send such a form to its insureds, nor is such a form
required to reduce UM coverage under Pennsylvania law. See Nationwide Mut. Ins. Co.
v. Buffetta, 230 F.3d 634, 639 (3d Cir. 2000); Lewis v. Erie Ins. Exch., 793 A.2d 143,
155 (Pa. 2002). But if Zurich warned its insureds that an additional state-specific form
was needed to reduce coverage and did not enclose the form (or enclosed it but never
received it back), it cannot now prevail on the theory that an insured’s signature on the
very document that contained the warning was, in the absence of the state-specific form,
a sufficient manifestation of intent to reduce coverage. Cf. Stemple v. Zurich Am. Ins.
Co., 584 F. Supp. 2d 1304, 1311 (D. Kan. 2008) (“[T]he Summary Form clearly indicates
that elections made on individual state forms control what selections or rejections have
been made, rather than the Summary Form itself.”).
We do not mean to suggest that short summary documents akin to the Summary
Form can never suffice to reduce coverage under section 1734; they can suffice. See
Orsag v. Farmers New Century Ins., 15 A.3d 896, 897, 901 (Pa. 2011) (enforcing a
6
coverage reduction where an insured wrote desired coverage amounts on blanks on a
two-page “mostly pre-printed” insurance application). Nor does our conclusion rest on
Freeth’s contention that Pennsylvania law requires insureds to perform an “affirmative
act” of writing beyond signing a preprinted document (such as handwriting the desired
dollar amount of coverage, or placing checkmarks or initials immediately beside the
dollar amounts) in order to manifest their intent to reduce UM coverage. There is some
support for that view among non-binding authorities,1 but other cases suggest otherwise,2
and the Pennsylvania Supreme Court has not, to our knowledge, spoken directly to the
issue.3 In any event, this case does not require us to opine on the matter. Even if the
mere act of signing a document like the Summary Form would ordinarily suffice to
reduce coverage, it did not suffice here for the reason already given — namely, that
language on the Summary Form itself clearly and repeatedly stated that signing the
Summary Form was insufficient to effect a reduction in coverage.
IV.
For the foregoing reasons, the judgment of the District Court will be affirmed.
1
Brethren Mut. Ins. Co. v. Triboski-Gray, 584 F. Supp. 2d 687, 690-91, 694-97
(M.D. Pa. 2008); Erie Ins. Exch. v. Larrimore, 987 A.2d 732, 734-42 (Pa. Super. Ct.
2009).
2
Davis v. Allstate Prop. & Cas. Co., No. 13-CV-07038, 2014 WL 4857434, at *6-
7 (E.D. Pa. Sept. 30, 2014); State Farm Mut. Auto. Ins. Co. v. Hughes, 438 F. Supp. 2d
526, 535-39 (E.D. Pa. 2006).
3
In Orsag, the Pennsylvania Supreme Court noted that the use of handwritten
markings, though relevant to the issue of intent, was not dispositive. 15 A.3d at 901 n.3
(“Although not dispositive in this case, this argument is even more compelling here as the
amounts of UM/UIM were handwritten on the application, suggesting the amount of
coverage desired was discussed and considered by appellants prior to making their
selection.”).
7