Derr, W. v. Natl. Fire Ins. Co. of Hartford

J-A01041-20
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WILLIAM M. DERR AND : IN THE SUPERIOR COURT OF
KIMBERLY DERR : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 1340 EDA 2019
NATIONAL FIRE INSURANCE :
COMPANY OF HARTFORD :
Appeal from the Order Dated April 30, 2019
In the Court of Common Pleas of Delaware County Civil Division at
No(s): 2017-001949
BEFORE: NICHOLS, J., MURRAY, J., and COLINS, J.*
MEMORANDUM BY COLINS, J.: FILED FEBRUARY 06, 2020
Appellants, William M. Derr and Kimberly Derr, appeal from the order
entered on April 30, 2019, sustaining the preliminary objections of Appellee,
National Fire Insurance Company of Hartford, to Appellants’ complaint
challenging Appellee’s denial of underinsured motorist (“UIM”) benefits, after
an automobile operated by Mr. Derr and owned by his employer, Radnor
Township, was struck by another vehicle. Appellants contend that the denial
and disclaimer of coverage by Appellee violated the Pennsylvania Motor
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* Retired Senior Judge assigned to the Superior Court.
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Vehicle Financial Responsibility Law (“MVFRL”)1 and the public policy of the
Commonwealth of Pennsylvania. After careful review, we affirm.
Th[e trial c]ourt held a hearing on Appellee’s Preliminary
Objections to the Complaint on April 25, 2019 where Appellants
and Appellee presented oral argument. Following the hearing, the
[trial c]ourt issued the Order4 that is the subject of this appeal,
sustaining Appellee’s Preliminary Objections and dismissing the
Complaint. The [trial c]ourt’s Order was based on the argument
that Radnor Township was the named insured on the policy and
therefore properly waived UIM coverage on behalf of Appellants.
As a result of the waiver, Radnor Township was not charged for
UIM coverage, did not pay for such coverage, and therefore the
employees of Radnor Township operating fleet vehicles under the
policy did not have such coverage. . . .
4 Dated April 30, 2019.
Appellants timely filed their Notice of Appeal on May 3, 2019. Th[e
trial c]ourt issued a 1925(b) Order5 requiring Appellants to submit
a Concise Statement of Matters Complained of on Appeal within
twenty-one (21) days of that Order. Appellants timely filed and
served upon the Court their Concise Statement on May 28, 2019.
5 Dated May 8, 2019.
Trial Court Opinion, filed June 10, 2019, at 3-4.
Appellant presents the following issues for our review:
75 Pa.C.S.A. §1731 requires underinsured motorist coverage be
provided on every motor vehicle insurance policy absent an
insured’s knowing and voluntary waiver. When a collision occurs,
a permissive occupant of a vehicle is also deemed to be an insured
under that vehicle’s policy for underinsured motorist coverage. As
such, when an employer maintains a fleet of vehicles (like a police
department), must its insurance company require that the
employer provide advance notice to all employees of its intent to
reject mandatory [UIM] coverage?
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1 75 Pa.C.S. §§ 1701-1799.
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Appellants’ Brief at 4.2
“In considering an appeal from an order granting preliminary objections
in the nature of a demurrer, which is a question of law, our standard of review
is de novo[.]” Heldring v. Lundy Beldecos & Milby, P.C., 151 A.3d 634,
641 (Pa. Super. 2016).
Preliminarily, we note that that, according to the MVFRL, all automobile
insurance policies in Pennsylvania must carry UIM benefits unless this
coverage is properly rejected:
No motor vehicle liability insurance policy shall be delivered or
issued for delivery in this Commonwealth, with respect to any
motor vehicle registered or principally garaged in this
Commonwealth, unless uninsured motorist and underinsured
motorist coverages are offered therein or supplemental thereto in
amounts as provided in section 1734 (relating to request for lower
limits of coverage). Purchase of uninsured motorist and
underinsured motorist coverages is optional. . . .
Underinsured motorist coverage shall provide protection for
persons who suffer injury arising out of the maintenance or use of
a motor vehicle and are legally entitled to recover damages
therefor from owners or operators of underinsured motor vehicles.
The named insured shall be informed that he may reject
underinsured motorist coverage by signing the following written
rejection form:
REJECTION OF UNDERINSURED MOTORIST
PROTECTION
By signing this waiver I am rejecting underinsured motorist
coverage under this policy, for myself and all relatives
residing in my household. Underinsured coverage protects
me and relatives living in my household for losses and
damages suffered if injury is caused by the negligence of a
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2An amicus curiae brief has been filed in this appeal by the Pennsylvania
Association for Justice in support of Appellants.
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driver who does not have enough insurance to pay for all
losses and damages. I knowingly and voluntarily reject this
coverage.
Signature of First Named Insured
Date
75 Pa.C.S. § 1731(a), (c).
In the current action, Appellants contend that, when an insurance
company, such as Appellee, “makes a mandatory offer of UIM coverage under
75 Pa.C.S. §1731(a) . . . to an employer that maintains a fleet of vehicles that
its employees must use on a daily basis[,] . . . [p]ublic policy[3] says” that the
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3 The MVFRL contains no explicit statement of purpose. See 75 Pa.C.S.
§§ 1701-1799. Without any citation, Appellants state that “Pennsylvania’s
dominant and overreaching public policy [is] that innocent victims of
automobile collisions should be compensated for their injuries[.]” Appellants’
Brief at 14. However, the Supreme Court of Pennsylvania has found the public
policy of the MVFRL to be more complicated and nuanced than that:
“Public policy is to be ascertained by reference to the laws and
legal precedents and not from general considerations of supposed
public interest.” Guardian Life Insurance Co. v. Zerance, 505
Pa. 345, 354, 479 A.2d 949, 954 (1984) (Citations omitted). “It
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 what is or is not in accord
with public policy].” Mamlin v. Genoe, 340 Pa. 320, 325, 17
A.2d 407, 409 (1941). . . . [T]he enactment of the MVFRL reflected
a legislative concern for the spiralling consumer cost of automobile
insurance and the resultant increase in the number of uninsured
motorists driving on public highways. The legislative concern for
the increasing cost of insurance is the public policy that is to be
advanced by statutory interpretation of the MVFRL.
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MVFRL must “require that insurer to ensure that the employer notify its
employees if it decides to reject UIM coverage on the fleet[.]” Appellants’
Brief at 13. Appellants continue that “[t]he recognized policy underlying the
MVFRL—maximization of recovery and the protection of the citizens of the
Commonwealth--demands that notice of such a rejection of UIM benefits be
provided to an insured’s employees.” Id. at 14. Appellants further argue that
the trial court opinion in Bielec v. American International Group, Inc.,
Court of Common Pleas of Philadelphia County Docket Number 01440
September Term 2014, filed December 5, 2016 (“Bielec TCO”), “properly
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Paylor v. Hartford Insurance Co., 640 A.2d 1234, 1235 (Pa. 1994). The
Pennsylvania Supreme Court later wrote:
[T]he repeal of the No–Fault Motor Vehicle Insurance Act,
40 P.S. § 1009.101, and the simultaneous enactment of the
MVFRL, reflected a legislative “concern for the spiralling
consumer cost of automobile insurance and resultant
increase in the number of uninsured motorists driving on
public highways.”
Rump v. Aetna Casualty & Surety Co., 551 Pa. 339, 710 A.2d
1093 (1998). The purpose behind underinsured motorist
coverage is to protect the insured from the risk that a negligent
driver of another vehicle will cause injury to the insured and will
have inadequate insurance coverage to compensate the insured
for his injuries. . . . [U]nderinsured motorist coverage serves the
purpose of protecting innocent victims from underinsured
motorists who cannot adequately compensate the victims for their
injuries. That purpose, however, does not rise to the level of
public policy overriding every other consideration of contract
construction.
Eichelman v. Nationwide Insurance Co., 711 A.2d 1006, 1008–10 (Pa.
1998).
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recognized the significance of notice to the insured of the ramifications of the
decision to reject underinsured motorist coverage.” Appellants’ Brief at 15.
Appellants provide us with no precedential case law or statue requiring
that an insurance company must require that an insured employer provide
advance notice to all of its employees of its intent to reject mandatory UIM
coverage. See generally id. Pursuant to our own research, we find that the
question of whether public policy requires that employers notify their
employees when coverage is waived has never been analyzed by Pennsylvania
appellate courts.
Turning to Bielec, the case relied upon by Appellants, id. at 15, the
Court of Common Pleas of Philadelphia County4 granted summary judgment
in favor of a plaintiff-employee who filed for UIM coverage, because the court
concluded that the employer’s rejection of UIM coverage was void, as the form
did not comply with statutory requirements.5 Bielec TCO at 1. Specifically,
the UIM coverage rejection form had a signature line at the bottom of the
document, with at least three paragraphs between the language taken from
75 Pa.C.S. § 1731(c) and the signature line. Bielec TCO at 2-3. One of the
interposing paragraphs described rejection of “stacked limits of underinsured
motorist coverage”; accordingly, the court concluded that the form did not
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4Although we are not bound by decisions of lower courts in Pennsylvania, we
may use them for guidance if we find them persuasive. Newell v. Montana
West, Inc., 154 A.3d 819, 823 (Pa. Super. 2017).
5 Appellants in the current action do not argue that there were any errors with
the UIM coverage rejection form. See Appellants’ Brief at 12-22.
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comply with 75 Pa.C.S. § 1731. Bielec TCO at 5. The court added, “Even if
[the employer’s] UIM rejection were deemed valid on statutory text analysis,
we believe an employer who fails to notify its employee driver that UIM
coverage has been rejected is acting against public policy.” Id. at 13. On
appeal, this Court affirmed but provided no guidance on the public policy issue,
stating: “In light of our disposition, we decline to address the public policy
issues raised by the trial court’s summary conclusion that ‘an employer who
fails to notify its employee driver that UIM coverage has been rejected is
acting against public policy.’” Bielec v. American International Group,
Inc., No. 336 EDA 2017, unpublished memorandum at 12 n.4 (Pa. Super.
filed December 26, 2017).
This identical issue concerning the appropriate application of “public
policy” to 75 Pa.C.S. § 1731 has also been considered by the United States
District Court for the Eastern District of Pennsylvania, which reached a
conclusion contrary to Bielec.6 Recently, in an unpublished memorandum, in
Morales v. Travelers Property Casualty Co. of America, No. CV 17-5579,
2019 WL 653088 (E.D. Pa. February 14, 2019), the Eastern District of
Pennsylvania was presented with the question of the intersection of Section
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6“We may use decisions from other jurisdictions ‘for guidance to the degree
we find them useful and not incompatible with Pennsylvania law.’” Newell,
154 A.3d at 823 n.6 (quoting Trach v. Fellin, 817 A.2d 1102, 1115 (Pa.
Super. 2003) (en banc)).
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1731 and public policy. Morales was an insurance dispute in which the
plaintiff contended that:
summary judgment should be granted in his favor because (1) he
was not given notice from his [former] employer that UIM
coverage had been rejected, which would have given him an
opportunity to purchase his own; and (2) the rejection form failed
to meet the statutory requirements of 75 Pa. C.S.A. 1731(c).
Id. at *2. Like Appellants, the plaintiff in Morales relied upon the trial court
opinion in Bielec to support his first argument. 2019 WL 653088 at *2. The
defendants, the plaintiff’s former employer and its insurance company, also
filed for summary judgment, on the basis that the employer’s use of the
insurer’s “rejection form to reject UIM coverage complied with § 1731(c), and
that [the employer’s] rejection of UIM coverage on behalf of its employees
without notice to the employees does not contravene public policy.” Id. at
*3. The insurer added that “the public policy language” in Bielec’s trial court
opinion “was mere dicta, as the case was decided based upon the additional
language in the rejection form that the court found to have created an
ambiguity.” Id. at *4. Upon consideration of the plaintiff’s public policy
argument, the court stated: “The only support for Plaintiff’s argument that
public policy would support our granting summary judgment in his favor is the
Bielec case. [The] discussion of public policy in the Common Pleas Court
decision is arguably dicta, and was not a basis for the Superior Court affirming
that decision.” Id. at *5. Consequently, the federal court rejected the public
policy argument advanced in Bielec, denied summary judgment in favor of
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the plaintiff, and granted summary judgment in the defendants’ favor. Id. at
*5-*6.
Additionally, the Eastern District of Pennsylvania has found that
employer’s automobile insurance policies that only cover certain named
individuals for UIM benefits but not all employees are valid. See Wiley v.
Universal Underwriters Insurance Co., No. CV 15-5943, 2017 WL 495794,
at *4-5 (E.D. Pa. February 6, 2017) (memorandum) (system of insurance
where the policyholder-employer rejected UIM benefits for employees but not
for the employer’s principals was valid under the MVFRL and was not void as
a matter of public policy). Ergo, if it is not against public policy if some
employees are not covered for UIM if UIM benefits are explicitly rejected by
an employer, we may analogize that it is not against public policy if all
employees are not covered for UIM if UIM benefits were explicitly rejected by
an employer.
Furthermore, we find the case of Byoung Suk An v. Victoria Fire and
Casualty Co., 113 A.3d 1283 (Pa. Super. 2015), to be instructive. In it, this
Court was asked to determine whether an automobile insurance policy
provision which extended coverage to a “named driver only” was consistent
with the MVFRL and public policy. Id. at 1292. This Court determined that
the “provision of lost-cost, affordable policies in return for motor vehicle
liability coverage of only the named driver . . . does not violate public policy.”
Id. Hence, Byoung Suk An, id., stands for the notion that an insured may
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reject some drivers of its vehicles from coverage and not violate public policy;
to the extent that we may draw a parallel between Byoung Suk An and the
issue at the center of the current action, we can infer that any insured,
including an employer, may reject UIM coverage for any driver of its vehicles,
including its employees. See id.
Pursuant to the above review of relevant case law, we conclude that the
statement of the trial court in Bielec that “an employer who fails to notify its
employee driver that UIM coverage has been rejected is acting against public
policy” is an anomaly. Bielec TCO at 13. All other case law has either directly
found that a rejection of UIM coverage by an employer for its employees is
not against public policy or can be extrapolated to reach the same conclusion.
Byoung Suk An, 113 A.3d at 1292; Morales, 2019 WL 653088 at *2-6;
Wiley, 2017 WL 495794 at *4-5.7 For the reasons set forth above, we affirm
the trial court.
We note that this ruling, like all of our rulings, [is] not be
disposition-driven. We are bound by decisional and statutory legal
authority, even when equitable considerations may compel a
contrary result. We underscore our role as an intermediate
appellate court, recognizing that “the Superior Court is an error
correcting court and we are obliged to apply the decisional law as
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7 We do agree with Appellants that the reliance on Travelers Indemnity Co.
of Illinois v. DiBartolo, 171 F.3d 168 (3d. Cir. 1999), by Appellee and
reliance on Salazar v. Allstate Insurance Co., 702 A.2d 1038 (Pa. 1997),
in the amicus curiae brief are misplaced. Appellant’s Brief at 20; Appellee’s
Brief at 9, 15-16, 18; Amicus Curiae Brief at 8-11. While both cases concerned
the sufficiency of the notice for waiver of UIM coverage, neither directly
addressed the public policy argument raised by the trial court in Bielec and
by Appellants in the current action.
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determined by the Supreme Court of Pennsylvania.”
Commonwealth v. Montini, 712 A.2d at 769. “It is not the
prerogative of an intermediate appellate court to enunciate new
precepts of law or to expand existing legal doctrines. Such is a
province reserved to the Supreme Court.” Moses v. T.N.T. Red
Star Exp., 725 A.2d at 801.
In re M.P., 204 A.3d 976, 986 (Pa. Super. 2019).
Accordingly, we affirm the order of the trial court sustaining Appellee’s
preliminary objections and dismissing Appellants’ complaint in its entirety.
Order affirmed.
Judge Murray joins the memorandum.
Judge Nichols concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/6/20
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