Erie Insurance Exchange v. Eachus, D.

J-A14044-23
2023 PA Super 264ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
DOMINIC EACHUS :
:
Appellant : No. 271 EDA 2023
Appeal from the Order Entered December 12, 2022
In the Court of Common Pleas of Chester County
Civil Division at No(s): 2021-08065-MJ
BEFORE: PANELLA, P.J., DUBOW, J., and SULLIVAN, J.
OPINION BY SULLIVAN, J.: FILED DECEMBER 12, 2023
Dominic Eachus (“Eachus”) appeals from the order granting the motion
for summary judgment filed by Erie Insurance Exchange (“Erie”) and denying
Eachus’s cross-motion for summary judgment. We affirm.
The parties stipulated to the factual and procedural history underlying
this insurance coverage dispute. On January 13, 2011, Eachus contacted his
insurance agent and requested a quote for a new auto policy. On that same
date, the agent provided Eachus with a quote for an auto policy from Erie
which provided, inter alia, uninsured motorist coverage (“UM”) and
underinsured motorist coverage (“UIM”) policy limits of $15,000 per
person/$30,000 per accident. Later that same day, Eachus signed a policy
application for an auto policy from Erie, effective January 20, 2011 through
January 20, 2012, providing bodily injury liability limits in the amount of
$100,000 per person/$300,000 per accident. In the policy application, Eachus
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requested UM/UIM limits in the amount of $15,000 per person/$30,000 per
accident. Additionally, Eachus signed an “Important Notice” form which
informed him of the availability of higher UM/UIM limits—up to the same
amount as the bodily injury liability coverage limits of $100,000 per
person/$300,000 per accident—if he wished to purchase them. Eachus also
signed a “Request for Lower Limits” form specifically requesting lower UM/UIM
policy limits at $15,000 per person/$30,000 per accident. The forms signed
by Eachus indicated a “binder” number of Q98-2037302. One week later, Erie
issued an auto policy to Eachus, as the named insured, effective January 20,
2011 through January 20, 2012, bearing policy number Q012011324 (“the
Erie policy”). The Erie policy provided bodily injury liability coverage in the
amount of $100,000 per person/$300,000 per accident. The Erie policy also
provided UM/UIM coverage limits of $15,000 per person/$30,000 per
accident, stacked over two vehicles, as Eachus had requested. Eachus paid a
reduced premium for the Erie policy based on his election to purchase lower
UM/UIM coverage limits. Between 2011 and 2015, Eachus renewed the Erie
policy annually by paying the renewal premium.
In 2015, Eachus was involved in a motor vehicle accident in which he
sustained injuries. The tortfeasor’s insurance policy limits were insufficient to
cover the extent of Eachus’s medical bills. Consequently, Eachus submitted a
claim for UIM benefits under the Erie policy. Erie accepted the UIM claim and
provided the full, per person policy limit of $15,000 UIM benefits, stacked over
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two vehicles, for a total claim payment to Eachus of $30,000. Eachus
challenged the limits of UIM coverage provided by the Erie policy. Erie then
initiated this declaratory judgment action, seeking a declaration of its rights
and obligations under the Erie policy. Following discovery, Erie filed a motion
for summary judgment and Eachus filed a cross-motion for summary
judgment. On December 12, 2022, the trial court entered an order
determining that Eachus was not entitled to any further UIM benefits under
the policy, thereby implicitly granting Erie’s motion for summary judgment
and denying Eachus’s cross-motion for summary judgment. Eachus filed a
timely notice of appeal, and both he and the trial court complied with Pa.R.A.P.
1925.1
Eachus raises the following issues for our review:
A. Did the trial court commit [an] error of law in determining there
was no ambiguity and the Request for Lower Limits forms
associated with the Erie insurance binder application No. Q98-
2037302 also applied to [the] Erie policy . . . Q012011324?
B. Since there is not a Request for Lower Limits form applicable
to [the] Erie policy Q012011324[,] should the applicable limits
available to . . . Eachus for the . . . 2015 auto accident be
$200,000.00?
Eachus’s Brief at 4 (unnecessary capitalization omitted).
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1 The trial court judge who entered the order granting Erie’s motion for
summary judgment and denying Eachus’s cross-motion for summary
judgment passed away after the entry of that order. A successor trial court
judge authored a Rule 1925(a) opinion incorporating the reasoning of the
predecessor judge as expressed in the summary judgment order.
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Our standard of review of an order granting or denying summary
judgment is well-settled:
We view the record in the light most favorable to the
nonmoving 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.
Siciliano v. Mueller, 149 A.3d 863, 864 (Pa. Super. 2016).
Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”), 75
Pa.C.S.A. § 1701, et seq., is a comprehensive body of legislation governing
the rights and obligations of the insurance company and the insured under
liability insurance policies covering motor vehicles. See Rush v. Erie Ins.
Exch., 265 A.3d 794, 796 (Pa. Super. 2021). The provisions of the MVFRL
are mandatory, and where insurance policy provisions fail to comply with the
provisions of the MVFRL, the policy provisions will be found unenforceable.
See id.Section 1731 of the MVFRL “requires every motor vehicle insurance
policy issued in Pennsylvania to include an offer of both UM and UIM motorist
coverage equal to the bodily injury liability amount. See 75 Pa.C.S.A. §
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1731(a). However, an insured may decline all UM/UIM coverage2 or opt for
UM/UIM limits in an amount less than the bodily injury liability limits of the
policy. In the absence of an express written rejection of all UM/UIM coverage
or an express written election for UM/UIM limits which are less than the bodily
injury liability limits of the policy, the insurer must provide UM/UIM coverage
“equal to the bodily injury liability limits.” 75 Pa.C.S.A. § 1731(c)(1).
Regarding an insured’s election to opt for UM/UIM coverage limits which
are less than the bodily injury liability limits of the policy, section 1734 of the
MVFRL provides: “[a] named insured may request in writing the issuance of
coverages under section 1731 (relating to availability, scope and amount of
coverage) in amounts equal to or less than the limits of liability for bodily
injury.” 75 Pa.C.S.A. § 1734. Unlike the stricter statutory provisions
regarding rejection of all UM/UIM coverage under section 1731, section 1734
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2 In order to reject all UM/UIM coverages, section 1731 requires that the
insured be provided with specific information to explain the separate purposes
of UM/UIM coverage and sign written rejection forms—with specified language
in prominent type and location—in order to establish that the insured
knowingly and voluntarily rejected each type of coverage. See 75 Pa.C.S.A.
§ 1731(b)-(c). Additionally, the insured must sign and date separate forms
to reject all UM and all UIM coverage. See 75 Pa.C.S.A. § 1731(b)-(c). In
light of these requirements, section 1731 provides that the insured will not be
deemed to have waived all UM and/or all UIM coverage if the insurer fails to
produce a valid rejection form. In interpreting section 1731, this Court has
held that an insured’s affirmative decision to waive all UM/UIM coverage is
presumed to be in effect throughout the lifetime of that policy until
“affirmatively changed” by the insured. Koch v. Progressive Direct Ins.
Co., 280 A.3d 1060, 1067 (Pa. Super. 2022) (citing Smith v. Hartford Ins.
Co., 849 A.2d 277, 281 (Pa. Super. 2004)).
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does not specify the type of form or language required for the insured to opt
for lower UM/UIM coverage limits. However, our Supreme Court has ruled
that “a [section] 1734 written request must include . . . the signature of the
insured[ and] an express designation of the amount of coverage requested
. . ..” Orsag v. Farmer New Century Ins., 15 A.3d 896, 901 (Pa. 2011)
(quoting Lewis v. Erie Ins. Exch., 793 A.2d 143, 153 (Pa. 2002)).
Section 1791 provides certain legal presumptions if an insured signs an
“Important Notice” form which advises the insured of the availability of
UM/UIM coverage in amounts equal to the bodily injury liability limits. See
75 Pa.C.S.A. § 1791. Specifically, section 1791 provides that, if “at the time
of application for original coverage” the insured is provided with an
“IMPORTANT NOTICE” which states certain specified language “in bold print of
at least ten-point type,” then “[i]t shall be presumed that the insured has been
advised of the benefits and limits [of UM/UIM coverage] available . . . and no
other notice or rejection shall be required.” Id. (emphasis added). The
language specified by section 1791 to be included in the “Important Notice” is
as follows:
Insurance companies operating in the Commonwealth of
Pennsylvania are required by law to make available for purchase
the following benefits for you . . .
****
(6) Uninsured, underinsured and bodily injury liability coverage up
to at least $100,000 because of injury to one person in any one
accident and up to at least $300,000 because of injury to two or
more persons in any one accident or, at the option of the insurer,
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up to at least $300,000 in a single limit for these coverages,
except for policies issued under the Assigned Risk Plan. Also, at
least $5,000 for damage to property of others in any one accident.
Additionally, insurers may offer higher benefit levels than those
enumerated above as well as additional benefits. However, an
insured may elect to purchase lower benefit levels than those
enumerated above.
Your signature on this notice or your payment of any
renewal premium evidences your actual knowledge and
understanding of the availability of these benefits and
limits as well as the benefits and limits you have selected.
Id. (emphasis added).
“It is the custom of the insurance industry, and sound public policy, to
provide on-the-spot temporary insurance coverage in the form of a binder
until the application information can be verified and a formal policy issued.”
Klopp v. Keystone Ins. Companies, 595 A.2d 1, 4 n.5 (Pa. 1991). Under
Pennsylvania law, a binder constitutes evidence that insurance coverage has
attached at a specific time and continues in effect until either the policy is
issued, or the risk is declined and notice thereof is given. See Strickler v.
Huffine, 618 A.2d 430, 433 (Pa. Super. 1992). Thus, absent any defect in
the application process, an insurance policy is deemed effective from the date
the binder is issued. See Klopp, 595 A.2d at 4 n.5.
As Eachus’s issues are interrelated, we will address them together.
Eachus argues that “the request for lower limits form contained in the
application/binder contains only the application/binder number, does not
include any incorporation or any language indicating it would apply to any
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subsequently issued policy, nor does the application/binder itself provide any
language indicating any documents or forms would carry over to any
subsequently issued policy.” Eachus’s Brief at 12-13. Eachus maintains that
the request for lower limits form that he signed only applied to lower UIM
limits under the binder and not to the subsequently issued Erie policy or any
renewal policies. Eachus asserts that “binders are temporary insurance and
exist until a policy is issued or rejected, at which time the binder ceases to
exist.” Id. at 15. According to Eachus, “Erie cannot produce a written request
for lower limits applicable to [the Erie] policy . . ..” Id. at 13. Utilizing this
logic, Eachus posits that, “[s]ince Erie cannot produce a request for lower
limits form applicable to [the Erie] policy . . ., the applicable available limits
for [UIM] coverage . . . should be equal to bodily injury limits which would be
$200,000.00 (for 2 vehicles stacked at $100,000.00).” Id. at 14.
Alternatively, Eachus claims that an ambiguity existed as to what
instrument the request for lower limits form applied due to the inclusion of the
binder number on the forms he signed and the lack of any language indicating
that the forms would apply to the Erie policy.3 Eachus asserts that “Erie failed
to include incorporation language and created ambiguity as to whether the
request for lower limits form applied to the binder, the policy or both.” Id. at
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3 Generally, if there is any doubt or ambiguity as to the meaning of an
insurance policy, the doubts or ambiguities will be resolved in favor of the
insured. See Blue Anchor Overall Co. v. Pa. Lumbermens Mut. Ins. Co.,
397, 123 A.2d 413, 415 (Pa. 1956).
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18. Eachus reasons that, “[s]ince Erie was the drafter of all of the forms and
had total control over the language used[,] any ambiguity related to
application relating to the request for lower limits form and the extent of its
applications falls totally on Erie.” Id.The trial court considered Eachus’s arguments and concluded that they
lacked merit. The court reasoned:
Contrary to Eachus’[s] assertion, there is no ambiguity in
the application, which sets forth a binder number, but also
identifies the policy period as January 20, 2011 to January 20,
2012 and an annual premium. Further, when Eachus signed the
[Important] Notice, he acknowledged his “knowledge and
understanding” of both the availability of alternate limits as well
as the limits he selected in the application:
YOUR SIGNATURE ON THIS NOTICE OR YOUR PAYMENT OF
ANY RENEWAL PREMIUM EVIDENCES YOUR ACTUAL KNOWLEDGE
AND UNDERSTANDING OF THE AVAILABILTY OF THESE BENEFITS
AND LIMITS AS WELL AS THE BENEFITS AND LIMITS YOU HAVE
SELCETED.
(Application, p. 13)[.] This acknowledgement appears above
Eachus’[s] signature and immediately below his signature is the
“Policy Effective Date 1/20/11.” The coverage[s] Eachus elected
in the application were clearly intended for the policy that was
issued and not simply for a binder. There was no need for a
second set of forms to be signed, as suggested by Eachus,
because the application contained all the forms required to lower
UIM coverage in the policy.
Trial Court Order, 12/12/22, at 1 n.1 (unnecessary capitalization omitted).
We discern no error of law or abuse of discretion by the trial court in
granting Erie’s motion for summary judgment and denying Eachus’s cross-
motion for summary judgment. During the application process, Eachus was
offered UM/UIM coverage in an amount equal to the bodily injury liability limits
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(i.e., $100,000 per person/$300,000 per accident) of the policy he sought
from Erie. However, Eachus elected not to purchase UM/UIM coverage limits
in an amount equal to the bodily injury liability limits and indicated that he
wished to purchase UM/UIM coverage in the amount of $15,000 per
person/$30,000 per accident. Accordingly, Eachus’s insurance agent
presented him with a policy application which specified that he was applying
for the issuance of an auto policy from Erie which only provided UM/UIM
coverage in the amount of $15,000 per person/$30,000 per accident. See
Application, 1/13/11, at 4. Consistent with Eachus’s election, the application
also contained a “Request for Lower Limits” form specifically requesting lower
UIM policy limits at $15,000 per person/$30,000 per accident. See id. at 12.
The application included a separate “Important Notice” form which tracked the
language specified by section 1791 and which informed Eachus of the
availability of higher UM/UIM limits if he wished to purchase them. See id. at
13. Eachus signed all three forms.
When Eachus signed the “Request for Lower Limits” form in which he
specifically requesting lower UIM policy limits at $15,000 per person/$30,000
per accident, Erie satisfied section 1734’s writing requirement, as the form
clearly indicated Eachus’s desire for reduced UM/UIM coverage, and the form
was signed by Eachus, as the named insured. See Orsag, 15 A.3d at 901
(providing that a section 1734 written request must include the signature of
the insured and an express designation of the amount of coverage requested).
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Further, by signing the “Important Notice” form, Eachus evidenced his “actual
knowledge and understanding of the availability of [higher UM/UIM] limits as
well as the benefits and limits [he had] selected.” 75 Pa.C.S.A. § 1791.
Contrary to Eachus’s assertion otherwise, no other language, notice, or
document was required. See id. § 1791 (providing that “no other notice or
rejection shall be required”). Moreover, each time that Eachus renewed the
Erie policy and paid the renewal premium, his payment to Erie evidenced not
only his actual knowledge and understanding of the availability of higher
UM/UIM limits, but also his actual knowledge and understanding of the lower
limits of UM/UIM coverage that he had selected. See id.
Had Eachus desired to purchase UM/UIM limits in an amount equal to
the bodily injury liability limits of the Erie policy, he could have selected that
option at any time and paid the corresponding increased premium. See
Orsag, 15 A.3d at 901 (noting that, if the insured desired to purchase UM/UIM
limits in an amount equal to the bodily injury liability limits of the policy, “the
cost of premiums could increase significantly, which, presumably, is what the
applicant was hoping to avoid by initially requesting the reduced [UM/UIM]
coverage”). However, Eachus did not do so. Accordingly, Eachus was able to
pay a reduced renewal premium each year for the lower amount of UM/UIM
coverage he selected. As Eachus is not entitled to coverage for which he
neither requested nor paid, he is due no relief.
Order affirmed.
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Date: 12/12/2023
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