Windrim v. Nationwide Insurance

OPINION

NIX, Chief Justice.

Nationwide Insurance Company (“Nationwide”) appeals from the Order of the Superior Court affirming the Order of the Court of Common Pleas compelling uninsured motorist arbitration and invalidating an automobile insurance policy provision which excludes uninsured motorist benefits to a person operating his own uninsured automobile at the time of the accident. We granted allocatur in this case to determine whether public policy precludes the enforcement of such a provision. For the reasons that follow, we reverse and hold that the aforementioned provision is a valid and enforceable exclusion under Pennsylvania law.

Appellee, Allen Windrim, was injured as a result of a motor vehicle accident on December 3, 1989. Windrim has alleged, and Nationwide has denied, that the accident was the result of the negligence of an unidentified hit-and-run driver. At the time of the accident, Windrim was the sole owner and operator of his uninsured automobile. Windrim subsequently sought uninsured motorist coverage from Nationwide contending that he was insured pursuant to his mother’s policy with Nationwide because he was a relative residing in his mother’s household. Nationwide denied coverage based upon an exclusionary provision in Windrim’s mother’s policy which provides in pertinent part:

This Uninsured/Underinsured Motorists insurance does not apply as follows:

4. It does not apply to bodily injury suffered while occupying or from being hit by a motor vehicle owned by you or a relative living in your household, but not insured for Uninsured or Underinsured Motorists coverage under this policy.

Record at 13a.

Windrim filed a Motion to Compel Uninsured Motorist Arbitration contending that the foregoing provision was invalid under the Uninsured Motorist Act.¹ Nationwide filed an answer, new matter, and .a counterclaim requesting that the Court of Common Pleas enter a declaratory judgment against Windrim on the issue of the validity of the provision in question.

The court entered an order granting Windrim’s Motion to Compel Arbitration and denying Nationwide’s counterclaim for declaratory relief. It also declared the exclusionary provision invalid based on Bankes v. State Farm Mut. Auto. Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970). In Bankes, the Superior Court struck down a similar exclusionary provision on the ground that it was repugnant to the Uninsured Motorist Act. The Bankes decision was based on the Superior Court’s examination of the legislative history of the Act which revealed that the legislators expressly rejected an exclusionary provision very similar to the one at issue in that case.

On appeal to the Superior Court, Nationwide argued that the trial court erroneously relied on Bankes because the Motor Vehicle Financial Responsibility Law² (“MVFRL”) was enacted after the Uninsured Motorist Act and the Bankes decision. Windrim v. Nationwide Mut. Ins. Co., 412 Pa.Super. 155, 158, 602 A.2d 1356, 1357 (1992). Nationwide maintained that the legislative intent behind the MVFRL was to prevent uninsured motorists from using public highways by denying them insurance benefits. Id. According to Nationwide, the enactment of the MVFRL represented a change in legislative intent and policy from that underlying the Uninsured Motorist Act and, therefore, the exclusionary provision in Windrim’s mother’s policy was valid in light of this change. Id. at 158, 602 A.2d at 1357-58.

The Superior Court disagreed with Nationwide’s contentions and found “no change in the legislative intent underlying the Uninsured Motorist Act to that underlying the MVFRL. The legislative intent under both [was] to ensure [that] owners/operators of uninsured vehicles receive uninsured motorist benefits.” Id. at 159-60, 602 A.2d at 1358. The court concluded that its holding in Bankes still controlled and consequently held the exclusionary provision invalid.

Judge Popovich dissented from the majority and indicated that his “review of the MVFRL diselose[d] that it [was] silent on the issue of whether the operator of uninsured vehicle may recover uninsured motorist benefits under a policy applicable to another vehicle owned by the driver or a relative residing with the driver.” Id. at 160, 602 A.2d at 1359 (Popovich, J., dissenting). In addition, Judge Popovich found the reasoning of the Court of Appeals for the Third Circuit to be very persuasive in the factually similar case of Nationwide Mut. Ins. Co. v. Hampton, 935 F.2d 578 (1991). Id., 412 Pa.Super. at 161, 602 A.2d at 1359. In Hampton, the owner/operator of an uninsured motorcycle attempted to recover underinsured benefits from his father’s insurance policy after he was injured in an accident. The insurance policy contained an exclusion identical to the one in the instant case.

The Hampton court conducted an extensive review of the legislative history of the MVFRL as well as prior, relevant decisions in Pennsylvania. In reversing the order allowing the owner/operator to recover benefits under his father’s policy, the court stated “[t]he MVFRL embodies a new policy, expressed in § 1714, of deterring motorists from failing to insure their vehicles by barring recovery of private insurance benefits.” Hampton, 935 F.2d at 587.³

We agree with both Judge Popovich and the Third Circuit that the MVFRL reflects a heightened concern by the General Assembly toward the increasing consumer cost of automobile insurance attributable in part to motorists who ignore the legal requirement that they insure their vehicles. See House Journal, Dec. 13, 1983 at 2148. Indeed, the Superior Court has also considered the legislative intent behind the MVFRL:

In passing the [MVFRL], the Legislature was primarily concerned with the rising consumer cost of automobile insurance, created in part by the substantial number of uninsured motorists who contributed nothing to the pool of insurance funds from which claims were paid. The [MVFRL] has the effect of requiring all owners of registered vehicles to share in the burden of insurance before they can obtain the benefits. By denying benefits to a certain class of people—those not insuring their registered vehicles—the [MVFRL] encourages the purchase of insurance by all owners who register vehicles which can be legally operated on the highways.

Allen v. Erie Ins. Co., 369 Pa.Super. 6, 10, 534 A.2d 839, 840-41 (1987) (citations omitted).

Despite the foregoing, the Superior Court’s analysis in the instant case relied almost exclusively on its decision in Henrich v. Harleysville Ins. Co., 403 Pa.Super. 98, 588 A.2d 50 (1991), aff'd, 533 Pa. 181, 620 A.2d 1122 (1993). Henrich involved the issue of whether section 1714 of the MVFRL itself precluded the recovery of uninsured motorist benefits by the owner of an uninsured car who was injured while a passenger in a different uninsured car. The Superior Court concluded that section 1714 did not bar the plaintiff from recovering uninsured motorist benefits from her father’s insurance policy, under which she was covered.

The court in Henrich specifically stated that the plaintiff was not “contractually precluded” from recovering uninsured motorist benefits. Henrich, 403 Pa.Super. at 103, 588 A.2d at 52. It did not analyze the public policy aims of the MVFRL because it was only required to interpret the actual language of section 1714 to determine whether the plaintiff was permitted to recover under the statute.

On appeal, this Court affirmed the decision of the Superior Court. Henrich v. Harleysville Ins. Co., 533 Pa. 181, 620 A.2d 1122 (1993). We observed that the MVFRL and section 1714 were “designed to deter people from failing to insure their vehicles more forcefully than the prior [no-fault] statute,” and it was ultimately held that section 1714 did not apply to the plaintiff “because she was not operating her own uninsured motor vehicle at the time of the accident.” Id. at 185, 620 A.2d at 1124 (footnote omitted). Because the plaintiff had not been injured while operating her own uninsured vehicle, we declined to express an opinion as to whether the deterrent purpose of section 1714 might be applicable in that particular instance. Id.

We are now, however, confronted with a situation where an individual was operating his own uninsured vehicle at the time of the accident. In addition, the insurance policy under which Appellee Windrim seeks recovery contains an unambiguous exclusionary provision, unlike the policy in Hen-rich which contained no such exclusion. Henrich is therefore distinguishable from the instant case. Accordingly, we find that the Superior Court erroneously relied upon Henrich in concluding that the legislative intent underlying the Uninsured Motorist Act, as ascertained in Bankes, remained the same as that underlying the MVFRL with respect to uninsured motorist benefits.

Appellee Windrim has never argued that the exclusionary language in his mother’s policy is unclear or ambiguous. Rather, he contends that the provision is void as applied to him because it violates public policy. 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. Antanovich v. Allstate Ins. Co., 507 Pa. 68, 76, 488 A.2d 571, 575 (1985). Furthermore,

“[i]t 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 [declaring that policy to be against public policy].”

Guardian Life Ins. Co. v. Zerance, 505 Pa. 345, 354, 479 A.2d 949, 954 (1984) (quoting Mamlin v. Genoe, 340 Pa. 320, 325,17 A.2d 407, 409 (1941)). As stated previously, the legislative history of the MVFRL indicates that the primary concerns of the General Assembly in repealing the No-fault Act and enacting the MVFRL were the spiraling cost of automobile insurance and the resultant increase in the number of uninsured motorists driving on public highways.. See Senate Journal, Oct. 4,1988,1142-53; House Journal, Dec. 13,1983, 2139-59.

We therefore hold that the exclusion in Windrim’s mother’s insurance policy is a valid and enforceable provision. Our conclusion is bolstered by the fact that Windrim’s argument, if accepted, would actually contravene the legislative intent behind the MVFRL by serving as a disincentive to insure vehicles. As Judge Popovich observed, “[a] possible result ... is that many individuals owning several vehicles will purchase coverage for only one of them. Likewise, relatives living with an insured will be less inclined to purchase insurance for their vehicles, instead seeking uninsured motorist coverage under their relative’s insurance policy.” Windrim, 412 Pa.Super. at 162, 602 A.2d at 1360 (Popovich, J., dissenting). Clearly, the General Assembly did not envision nor intend such abuses of the system when it enacted the MVFRL.

Finally, Windrim contends that the exclusionary provision in the instant case is of no legal effect because it was not approved by the Pennsylvania Insurance Commissioner pursuant to section 477b of The Insurance Company Law of 1921, 40 P.S. § 477b.⁴ There is no evidence on the record to determine whether the provision at issue was ever submitted for approval. Since we have determined that the provision is valid and enforceable, the matter must be remanded to the Court of Common Pleas for a determination as to whether it was submitted for approval by the Insurance Commissioner in accordance with section 477b.

Accordingly, the Order of the Superior Court is reversed and the matter remanded to the Court of Common Pleas for proceedings consistent with this opinion.

LARSEN, J., did not participate in the decision of this case. CAPPY, J., files a concurring opinion. MONTEMURO, J., who was an appointed Justice of the Court at the time of argument, participated in the decision of this case in his capacity as a Senior Justice.^*

1 . Act of Aug. 14, 1963, P.L. 909, § 1, amended Dec. 19, 1968, P.L. 1254, No. 397, § 1 (codified as amended at 40 P.S. § 2000). Section 2000(a) provides:

No motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this State with respect to any motor vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto in limits for bodily injury or death ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death therefrom. ...

40 P.S. § 2000(a).

2 . Act of Feb. 12, 1984, P.L. 26, No. 11, § 3 (codified as amended at 75 Pa.C.S. §§ 1701-1799.7, repealing the No-fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, No. 176, §§ 101-701, previously codified at 40 P.S. §§ 1009.101-1009.701).

3 . Section 1714 of the MVFRL provides:

An owner of a currently registered motor vehicle who does not have financial responsibility or an operator or occupant of a recreational vehicle not intended for highway use, motorcycle, motor-driven cycle, motorized pedalcycle or like type vehicle required to be registered under this title cannot recover first party benefits.

75 Pa.C.S. § 1714.

4 . Section 477b provides:

It shall be unlawful for any insurance company ... doing business in this Commonwealth, to issue, sell, or dispose of any policy, contract, or certificate, covering life, health, accident, personal liability, fire, marine, title, and all forms of casualty insurance ... until the forms have been submitted to and formally approved by the Insurance Commissioner....

40 P.S. § 477b.