Fernandez, B. v. Erie Insurance Group

J-S06034-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BRIDGET FERNANDEZ IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
ERIE INSURANCE GROUP
No. 1002 EDA 2016
Appeal from the Order Entered February 23, 2016
in the Court of Common Pleas of Montgomery County Civil Division
at No(s): 2014-01257
BEFORE: MOULTON, RANSOM, and FITZGERALD,* JJ.
MEMORANDUM BY FITZGERALD, J.: FILED APRIL 18, 2017
Appellant, Bridget Fernandez, appeals from an order of the
Montgomery County Court of Common Pleas granting the motion for
summary judgment of Appellee, Erie Insurance Group, to limit the amount of
Appellant’s underinsured motorist (“UIM”) benefits to $37,000.00. Appellant
objects to the trial court’s ruling that an award entered by an arbitrator in
Appellant’s underlying personal injury action against the tortfeasor
collaterally estopped her from obtaining UIM benefits in excess of
$37,000.00. We reverse and remand for further proceedings.
On December 22, 2009, Appellant was driving her car in Bucks
County, Pennsylvania when her vehicle was struck from behind by a vehicle
driven by Holly Trask. At the time of the accident, Trask was insured by
*
Former Justice specially assigned to the Superior Court.
J-S06034-17
State Farm with liability limits of $50,000. On October 5, 2011, Appellant
filed a civil complaint against Trask and her husband in the Philadelphia
Court of Common Pleas at October Term, 2011, No. 336, for injuries that
she sustained in the accident.
On October 24, 2012, counsel for Appellant notified the Philadelphia
County court that the parties agreed to submit the case to “binding
arbitration.” R.R. 410a.1 Two days later, the court ordered the case
transferred to binding arbitration. R.R. 408a.
On or about March 12, 2013, the arbitrator entered the following
report and award:
This matter was submitted to me as binding sole
arbitrator on March 12, 2013. I heard testimony from all
parties and accepted evidence. After hearing the
testimony, and reviewing the evidence submitted and upon
deliberations, I find in favor of [Appellant] and render
the following award:
In favor of [Appellant] in the amount of
$87,000.00. The award is made up of $75,000.00 for
pain and suffering and $12,000.00 for medical bills. The
$12,000.00 figure is based on approximately $9,400.00 in
charges from the lien that at least appeared to be related
to this accident. I came to that figure by taking off
amounts charged by providers that clearly were not related
to this incident such as the Rheumatic Disease Associates
and the surgery for [Appellant]’s cyst removal. I also
included an additional amount for the Act VI figure bills for
the outstanding amounts to NovaCare and Dr. Biddle. I
understand in speaking to the parties that based on
their prior agreement that this amount is to be
molded to a finding in the amount of $50,000.00.
1
For the convenience of the parties, we refer to the reproduced record.
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R.R. 411a (emphases added).
On September 6, 2013, Appellant signed the following release entitled
“General Release In Full Settlement Of All Claims”:
For the Sole Consideration of Fifty Thousand Dollars
($50,000), the receipt and sufficiency whereof is hereby
acknowledged, the undersigned hereby releases and
forever discharges Holly Trask and John Trask and State
Farm Mutual Automobile Insurance Company, their heirs,
executors, administrators, agents and assigns, and all
other persons, firms or corporations liable or, who might
be claimed to be liable, none of whom admit any liability to
the undersigned but all expressly deny any liability, from
any and all claims, demands, damages, actions, causes of
action or suits of any kind or nature whatsoever, and
particularly on account of all injuries, known and unknown,
both to person and property, which have resulted or may
in the future develop from an accident which occurred on
or about December 22, 2009 at or near Philadelphia, PA
and which was the subject of a lawsuit filed in the Court of
Common Pleas of Philadelphia County at #1110 00336 and
captioned Bridget A. Fernandez vs. John Trask and Holly
Trask.
This settlement include[s] any and all medical expenses
arising from the alleged accident and any and all liens of
any kind whatsoever, and [Appellant] expressly agrees
that [she] shall be responsible for paying them . . .
R.R. 412a. In between the first and second paragraphs of the foregoing
text, Appellant wrote and initialed the following: “By signing this release,
[Appellant] expressly reserves the right to pursue her underinsured motorist
claim against Erie Insurance Co.” Id.
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On September 23, 2013, the Philadelphia County court marked
Appellant’s action against the Trasks settled, discontinued and ended. R.R.
409a.
On January 20, 2014, Appellant filed a two-count complaint in the
Montgomery County trial court against Appellee alleging breach of contract
and bad faith under 42 Pa.C.S. § 8371. Appellant averred that: (1) Appellee
issued Appellant an auto insurance policy from the period between October
1, 2009 through October 1, 2010 which provided $250,000.00 in UIM
benefits; (2) Appellant was involved in an auto accident with Trask during
the policy period; (3) Appellant sued Trask and her husband and ultimately
obtained a settlement of $50,000.00, the bodily injury insurance coverage
limit for the Trasks’ policy with State Farm; and (4) Appellee was notified of
and consented to the settlement. R.R. 100a. Appellee admitted all of these
facts in its answer to the complaint. R.R. 121-22a.
The trial court scheduled a jury trial for March 6, 2016. On February
18, 2016, only two and a half weeks before trial, Appellee filed a motion for
summary judgment in which it argued that the arbitrator’s award in
Appellant’s action against the Trasks collaterally estopped Appellant from
seeking damages in excess of the award. R. 380-83a. Appellee requested
the court to grant Appellant a total of $37,000.00 in UIM benefits, i.e., the
$87,000.00 arbitration award less the $50,000.00 obtained in Appellant’s
settlement with the Trasks. Id.
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On February 22, 2016, Appellant filed a response in opposition to
Appellee’s motion for summary judgment. On February 23, 2016, the trial
court held oral argument and docketed an order granting Appellee’s motion
for summary judgment and entering judgment in favor of Appellant and
against Appellee in the amount of $37,000.00.
On March 24, 2016, Appellant timely appealed. Both Appellant and
the trial court complied with Pa.R.A.P. 1925. Relying on Incollingo v.
Maurer, 575 A.2d 939 (Pa. Super. 1990), the trial court concluded that
Appellant’s arbitration award collaterally estopped her from obtaining UIM
benefits in excess of $37,000.00. Trial Ct. Op., 7/12/16, at 4-6.
Appellant raises two arguments on appeal, which we re-order for the
sake of disposition: (1) the lower court committed an error of law in finding
the arbitrator’s award precluded Appellant’s Recovery of UIM damages in
excess of $37,000.00; and (2) the lower court unfairly prejudiced Appellant
in accepting, and ruling on, Appellee’s motion for summary judgment.
Appellant’s Brief at 8, 22.2
We apply the following standard of review to an order granting a
motion for summary judgment:
2
We recite the headings from Appellant’s argument section because the
argument heading states the issues clearly and because Appellant omitted
the second issue from her Statement of Question Involved in violation of
Pa.R.A.P. 2116(a). Our disposition of Appellant’s first issue makes it
unnecessary to review her second issue.
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We 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. Only where there is no genuine issue as to
any material fact and it is clear that the moving party is
entitled to a judgment as a matter of law will summary
judgment be entered. Our scope of review of a trial
court’s order granting or denying summary judgment is
plenary, and our standard of review is clear: the trial
court’s order will be reversed only where it is established
that the court committed an error of law or abused its
discretion.
Daley v. A.W. Chesterton, Inc., 37 A.3d 1175, 1179 (Pa. 2012) (citation
omitted).
In her first argument, Appellant asserts that the trial court erred in
determining that the arbitrator’s award in Appellant’s action against the
Trasks collaterally estopped her from obtaining UIM benefits in excess of
$37,000.00. We agree.
Collateral estoppel, or issue preclusion, is a doctrine which
prevents re-litigation of an issue in a later action, despite
the fact that it is based on a cause of action different from
the one previously litigated.
Collateral estoppel applies if (1) the issue decided in
the prior case is identical to one presented in the
later case; (2) there was a final judgment on the
merits; (3) the party against whom the plea is
asserted was a party or in privity with a party in the
prior case; (4) the party or person privy to the party
against whom the doctrine is asserted had a full and
fair opportunity to litigate the issue in the prior
proceeding and (5) the determination in the prior
proceeding was essential to the judgment.
Selective Way Ins. Co. v. Hospitality Grp. Servs., Inc., 119 A.3d 1035,
1042 (Pa. Super. 2015) (en banc) (citations and internal quotation marks
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omitted). Collateral estoppel applies when, inter alia, “a defendant seeks to
prevent a plaintiff from asserting a claim the plaintiff has previously litigated
and lost against another defendant.” Office of Disciplinary Counsel v.
Kiesewetter, 889 A.2d 47, 51 (Pa. 2005) (citation omitted).
Appellee argues that Appellant is collaterally estopped from obtaining
UIM benefits in excess of $37,000.00 based on the terms of the arbitration
award and the release in Appellant’s underlying personal injury action.
According to Appellee, Appellant agreed to litigate, and had full and fair
opportunity to litigate, her total amount of damages during binding
arbitration in the underlying personal injury action. Appellee claimed that
the arbitrator’s assessment of total damages in the amount of $87,000.00
estopped Appellant from seeking UIM benefits above $37,000.00, i.e.,
$87,000.00 less the $50,000.00 paid by the Trasks’ insurer to Appellant. In
other words, Appellee viewed Appellant’s action for additional UIM benefits
as a “claim [that she] previously litigated and lost against []other
defendant[s],” the Trasks. Kiesewetter, 889 A.2d at 51.
We agree that under collateral estoppel principles, the arbitration
award was binding on Appellant to the extent of the arbitrator’s
jurisdiction, which in turn depended on the terms of the arbitration
agreement between Appellant and the Trasks. See Stack v. Karavan
Trailers, Inc., 864 A.2d 551, 555 (Pa. Super. 2004) (“the arbitrator's
authority is restricted to the powers the parties have granted them in the
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arbitration agreement”). We cannot tell, however, whether Appellant and
the Trasks imposed any limit on the arbitrator’s jurisdiction. There is no
written agreement between Appellant and the Trasks in the record, and the
arbitrator’s award is unclear on this subject. One sentence of the arbitration
award provides that an “award” in Appellant’s favor “in the amount of
$87,000.00”—an indication that the arbitrator had jurisdiction to determine
the entire amount of damages. R.R. 411a. Another sentence, however,
states that the arbitrator will “mold” her finding to $50,000.00 “based on
[the parties’] prior agreement . . .” Id. In this context, “prior agreement”
could mean an agreement to determine the amount of damages up to, but
not in excess of, the Trasks’ policy limits of $50,000.00. Alternatively, it
could mean that the parties agreed that the arbitrator’s award would be
binding up to the policy limit of $50,000.00 but merely advisory above the
policy limit. To use Appellant’s phrase, under these constructions, any
reference by the arbitrator to damages in excess of $50,000.00 would be
non-binding “dicta.” Appellant’s Brief at 15. The jury must resolve this
ambiguity. See Kripp v. Kripp, 849 A.2d 1159, 1163 (Pa. 2004) (citation
omitted) (“[w]hile unambiguous contracts are interpreted by the court as a
matter of law, ambiguous writings are interpreted by the finder of fact”).
The release between Appellant and the Trasks is ambiguous as well.
The release has standard form language discharging the Trasks and “all
other persons, firms or corporations liable or, who might be claimed to be
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liable” from “any and all claims, demands, damages, actions, causes of
action or suits of any kind or nature whatsoever, and particularly on account
of all injuries, known and unknown[.]” R.R. 412a. But beneath this text,
Appellant wrote in her own hand: ”By signing this release, [Appellant]
expressly reserves the right to pursue her [UIM] claim against [Appellee].”
Id. This handwritten proviso carves out an exception which authorizes
Appellant to pursue UIM benefits from Appellant—but it does not address
whether the arbitration award places a ceiling on recoverable UIM benefits.
For these reasons, we disagree with Appellee’s contention that the
arbitration award and the release collaterally estop Appellant from
recovering UIM benefits in excess of $37,000.00. The award and release
simply do not resolve this question as a matter of law, which makes the
scope of the agreement between Appellant and the Trasks a fact question for
the jury. See Kripp, 849 A.2d at 1163.
The trial court’s reliance on Incollingo is misplaced. There, the
plaintiff was injured in an accident with a “phantom” vehicle and sought
recovery of uninsured motorist (“UM”) benefits against his insurer. Id., 575
A.2d at 940. An arbitration panel awarded him $70,000.00 of a possible
$90,000.00 limit under the policy. Id. Subsequently, the plaintiff and his
wife brought suit against the driver of a third vehicle involved in the accident
seeking damages for personal injuries, lost earnings and diminution of
earning capacity. Id. The trial court entered partial summary judgment
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against the plaintiff on the grounds of collateral estoppel, concluding the
arbitration panel had awarded the full amount of his damages in the UM
arbitration. Id. We affirmed based on our determination that “the issue of
all the damages suffered by the appellant was fully and fairly litigated at the
arbitration proceedings, and the appellant had the opportunity to present
whatever evidence he desired concerning the damages he suffered as a
result of the accident.” Id. at 942.
Incollingo is distinguishable from the present case, because the
arbitration award of $70,000.00 in Incollingo was well within its
jurisdictional limit of $90,000.00, while the present record leaves unclear
whether the arbitrator had jurisdiction to determine Appellant’s damages
above the Trasks’ policy limits of $50,000.00.
Accordingly, we reverse the order granting summary judgment to
Appellee and remand for further proceedings.
Order reversed. Case remanded for further proceedings in accordance
with this memorandum. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/18/2017
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