Lambert v. McClure

HOFFMAN, Judge:

This appeal is from a July 31, 1990 order granting the motion of appellee, Wendy Lambert, for judgment on the pleadings. Appellant, Donegal Mutual Insurance Co. (“Donegal”), contends that the trial court erred in holding that the liability limitation provision in appellee’s decedent’s insurance policy was contrary to the public policy of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa.C.S.A. §§ 1701-1798.4, and, thus, was void.¹ For the following reasons, we affirm.

This case arises from a single vehicle automobile accident that occurred on July 15, 1988 in Mineral Township, Venango County. At the time of the accident, Darrell Dean McClure was operating the vehicle, and appellee’s decedent, Timothy Lambert (“Lambert”), was a passenger. Lambert was killed when McClure lost control of the vehicle causing it to leave the roadway. The vehicle was owned by Lambert and insured by Donegal. Under the insurance policy, Donegal provides $100,000 liability coverage for one person injured in a single accident. If, however, that one person is the insured or a family member, an Endorsement to the policy limits the liability coverage to the statutory minimum ($15,000). On October 11, 1988, appellee filed a complaint against McClure and Donegal. The first two counts were directed at McClure, and the third count was directed at Donegal. In the third count, appellee alleged that because McClure was an uninsured motorist, Donegal was liable to appellee under the terms of Lambert’s insurance policy in the amount of $100,000. Donegal responded that its maximum potential liability was $15,000 due to the specific limitation set forth in the policy at Endorsement No. PP0151. On August 16, 1989, with the consent of Donegal and McClure, appellee filed an amended complaint. Thereafter, on September 22, appellee filed a motion for judgment on the pleadings with respect to the third count solely against Donegal. On October 2, Donegal filed a cross-motion for judgment on the pleadings against appellee with respect to the third count of the complaint. Subsequently, appellee, Donegal, and McClure entered into a stipulation, filed on November 21, 1989, in which they agreed to amend appellee’s complaint and Donegal’s answer. On July 31, 1990, the court granted appellee’s motion for judgment on the pleadings and denied appellant’s cross-motion.² This timely appeal followed.

Our review of the trial court’s order granting judgment on the pleadings is guided by the following standard:

[A] motion for judgment on the pleadings may be granted in cases which are so free from doubt that a trial would clearly be a fruitless exercise. Such a motion is in the nature of a demurrer; all of the opposing party’s well pleaded allegations are viewed as true but only those facts specifically admitted by him may be considered against him.

Gallo v. J.C. Penney Cas. Ins. Co., 328 Pa.Super. 267, 270, 476 A.2d 1322, 1324 (1984) (citations omitted). See also Pa.R.Civ.P. 1034. Furthermore, in conducting this inquiry, the court’s consideration is confined to the pleadings and other relevant documents; no affidavits, depositions or briefs may be considered. See Gallo v. J.C. Penney Cas. Ins. Co., supra (citations omitted). Finally, we note that in cases turning upon the construction of a written agreement, the granting of a motion for judgment on the pleadings may be particularly appropriate. See id., 328 Pa.Superior Ct. at 270-71, 476 A.2d at 1324 (citation omitted).

In granting appellee’s motion, the trial court found that Endorsement No. PP0151 was ineffective because it was contrary to the public policy embodied in the MVFRL. Appellant contends that the court’s construction of the policy and the MVFRL was erroneous. Specifically, appellant claims that the liability limitation provision is consistent with §§ 1791 and 1792 of the MVFRL and, therefore, is not void. Thus, appellant claims that appellee is entitled to recover a maximum amount of $15,000.

It is well-settled that the interpretation of an insurance policy is a question of law for the Court. See Geisler v. Motorists Mut. Ins. Co., 382 Pa.Super. 622, 626, 556 A.2d 391, 393 (1989) (citations omitted); Duffy v. Nationwide Ins. Co., 374 Pa.Super. 55, 57, 542 A.2d 144, 145 (1988) (citation omitted). We are mindful to construe policy clauses providing coverage “in a manner which affords the greatest possible protection to the insured____ The in-

sured’s reasonable expectations are the focal point in reading the contract language.” Geisler v. Motorists Mut. Ins. Co., supra. With these principles in mind, we turn to the policy at issue.

The insurance policy issued by appellant provides liability coverage in the amount of $100,000 for each accident. An amendment to the policy, however, includes Endorsement No. PP0151 which provides as follows:

We do not provide Liability Coverage for any person for “bodily injury” to you or any “family member” to the extent that the limits of liability for this coverage exceed the limits of liability required by the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984.

See Complaint, Exhibit A, Form No. PP0151. After looking to the relevant provision of the MVFRL, the effect of this policy provision becomes clear.³ The MVFRL requires a minimum liability of $15,000 for an accident causing injury to one person. Id. § 1702. Thus, the Endorsement, if it is enforceable, reduces the available coverage in this case to $15,000. The question we now must decide is whether the provision is contrary to the MVFRL.

The MVFRL must be construed liberally to effect its objects and promote justice. See 1 Pa.C.S.A. § 1928(c); Wolgemuth v. Harleysville Mut. Ins. Co., 370 Pa.Super. 51, 62, 535 A.2d 1145, 1151 (1988) (citation omitted) (en banc), alloc. denied, 520 Pa. 590, 551 A.2d 216 (1989). Moreover, with regard to the interpretation of a statute, legislative intent controls. See 1 Pa.C.S.A. § 1921. “When the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.” Id. § 1921(b). One purpose of the MVFRL is to reduce the escalating costs of purchasing motor vehicle insurance. See Wolgemuth v. Harleysville Mut. Ins. Co., supra 370 Pa.Super. at 63, 535 A.2d at 1151. The statute also attempts to address the problems caused by the increasingly high numbers of uninsured motorists. See id. To reach these objectives, the statute explicitly sets out the minimum amounts of .coverage that must be offered to the insured. See Tallman v. Aetna Cas. and Sur. Co., 372 Pa.Super. 593, 597, 539 A.2d 1354, 1356 (1988) (citation omitted).

The MVFRL requires that certain liability coverages be made available to an insured:

[A]n insurer issuing a policy of bodily injury liability coverage pursuant to this chapter shall make available for purchase higher limits of uninsured, underinsured and bodily injury liability coverages up to at least $100,000 because of injury to one person in any one accident____

Id. § 1792 (emphasis added). Furthermore, regarding adequate notice of these coverage options to an insured, the MYFRL provides that

[i]t shall be presumed that the insured has been advised of the benefits and limits available under this chapter provided the following notice in bold print of at least ten-point type is given to the applicant at the time of application for original coverage or at the time of the first renewal after October 1, 1984, and no other notice or rejection shall be required____

Id. § 1791. Section 1791 then sets out the “Important Notice,” which would inform potential insureds of, inter alia, (1) the insurance company’s legal responsibility “to make available for purchase the following benefits” for the insured and the insured’s family; and (2) the amounts of those benefits. Id.

Here, a careful review of the pleadings reveals that appellant never made the insured aware that he had an option to purchase more than $15,000 for bodily injury to family members or that they offered such coverage.⁴ Furthermore, appellant did not allege that it gave Lambert the “Important Notice” of § 1791 or any other adequate notice of the benefits and limits that were available to him. See id. Indeed, in a stipulation with appellee that amended the pleadings, appellant directly rebutted the presumption in § 1791 by admitting that,

[s]ince 1986, Endorsement No. PP0151 has been automatically issued by the Defendant, Donegal Mutual Insurance Company as part of each personal motor vehicle insurance policy which it issues in the Commonwealth of Pennsylvania.

Stipulation as to Amendment of Pleadings, filed November 21, 1989.⁵ The effect of this stipulation was to amend appellee’s complaint and appellant’s answer and new matter to include the averment and admission. See id. In light of these undisputed facts, we find that appellant did not “make available” to the insured those benefits required by the MVFRL.

Appellant nevertheless suggests that Lambert was free to purchase other accident benefits, and, in fact, it would have provided Lambert greater benefits if he had sought them. Thus, argues appellant, it complied with the MVFRL. We cannot agree. In our construction of the policy, we must focus on Lambert’s reasonable expectations. See Geisler v. Motorists Mut. Ins. Co., supra. Here, appellant’s admitted practice of automatically attaching Endorsement No. PP0151 to its insurance policies without explaining the coverage options that it was required to offer under the MVFRL would leave the insured with the belief that there were no other coverage options offered by the insurer. Such a practice violates the language and intent of the MVFRL.⁶ See 75 Pa.C.S.A. §§ 1791, 1792; see also Trial Court Opinion at 14. Accordingly, the trial court did not err in finding that the liability limitation contained in Endorsement No. PP0151 is void, and appellee may be entitled, under Lambert’s policy, to the full amount of liability coverage of $100,000, less the amount of additional premiums that appellee’s decedent would have paid, had he been offered, and accepted, the option to purchase additional bodily injury coverage for himself and his family.⁷

For the foregoing reasons, we affirm the trial court’s order granting appellee’s motion for judgment on the pleadings.

Order affirmed.

WIEAND, J., files a dissenting opinion.

1 . Appellant also contends that the trial court erred in its alternative finding that the insurance policy, including the liability limitation provision, was ambiguous. In light of our finding that the provision is void, we need not address this issue.

2 . On August 28, the trial court entered an amended order limiting the grant of appellee’s motion for judgment on the pleadings to the issue of liability coverage and the validity of the liability limitation provision of the policy.

3 . Although the dissent properly notes that when the language of an insurance policy is clear and unambiguous, a court is required to give effect thereto, see Dissenting Op. at 634, we cannot agree with the dissent’s conclusion that Endorsement No. PP0151 was clear and unambiguous. Rather, the coverage for bodily injury to the insured was confined to the "limits of liability required by the Pennsylvania Motor Vehicle Financial Responsibility Law of 1984" (emphasis added.) The insured could not ascertain the amount of the limitation from the face of the document or the language of the provision, but was instead compelled to go outside the policy, to the referenced law, to determine the extent of coverage.

4 . Contrary to the dissent’s assertion that "it is clear that the insured was aware that excess coverage was available ... because, in fact, he purchased such additional coverage,” Slip Dissenting Op. at 634, there is no indication that the insurer ever informed the insured of the option to purchase additional bodily injury coverage for himself and his family. It appears that the insurer did offer the insured the option to purchase additional liability coverage, an offer the insured ultimately accepted. However, absent any other evidence, this fact does not establish that the insured was offered the disputed option as well. Section 1791's presumption that the insured has been fully advised of available benefits arises only when the required notice is given. We cannot create by judicial construction a presumption greater than that afforded by the MVFRL.

5 . Appellant also admitted in the stipulation that Endorsement No. PP0151 was included in Lambert’s first policy, which was obtained on April 24, 1987, and cancelled on August 31, 1987. Appellant did not explicitly admit that Endorsement No. PP0151 was included in Lambert's second policy, which was in effect at the time of the accident. However, the second policy was issued in January of 1988, and, as noted above, the stipulation stated that since 1986 appellant automatically included the Endorsement as part of each motor vehicle insurance policy. See Stipulation as to Amendment of Pleadings, filed November 21, 1989.

6 . The dissent appears to misperceive the focus of our holding. We do not hold that."the endorsement imposing the limitation is void because it was not called to the attention of the named insured with instructions that it could be removed by the payment of an additional premium.” Dissenting Op. at 634. Rather, we are most concerned with the insurer's failure to comply with sections 1791 and 1792 of the MVFRL, and we hold that this noncompliance, combined with the insurer’s automatic issuance of the disputed limitation, left the insured with the impression that $15,000 was the extent of bodily injury coverage available to him and his family members, a result inconsistent with the MVFRL.

7 . In light of our conclusion, we need not reach appellant’s argument regarding the propriety of the trial court’s conclusion that Endorsement No. PP0151 also violates public policy. See Trial Court Opinion at 12.