Erie Ins. Exch. v. Bristol

174 A.3d 578

ERIE INSURANCE EXCHANGE

v.Michael BRISTOL and RCC, Inc.

Appeal of: Michael Bristol

No. 124 MAP 2016

Supreme Court of Pennsylvania.

Argued: May 10, 2017

Decided: November 22, 2017

Jessica Lynn Bowman, Esq., Walsh Pancio, LLC, Joseph Patrick Walsh, Esq., for Erie Insurance Exchange, Appellee.

Thomas More Holland, Esq., Law Offices of Thomas Holland, Daniel Joel Siegel, Esq., Law Offices of Daniel J. Siegel, L.L.C., for Michael Bristol, Appellant.

Paul Timothy Kelly, Esq., Needle Law Firm, for Pennsylvania Association for Justice, Amicus Curiae.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE MUNDY

We granted allowance of appeal in this case to determine when the statute of limitations¹ begins to run on an uninsured motorist (UM) claim under an insurance policy.² Specifically, we must determine when the statute of limitations begins to run on an insured's ability to initiate a court action to enforce a UM claim in a policy containing an arbitration agreement. The Superior Court held that, for the purpose of UM and underinsured motorist (UIM) claims, the statute of limitations begins to run when a claimant injured in an automobile accident first learns that the other driver is uninsured or underinsured.³ However, this conclusion is not adequately grounded in the pertinent statutory text, prevailing statute of limitations doctrine, or significant public policy concerns. Accordingly, we hold that statute of limitations principles attending contract claims apply, and that the running of the statute is commenced upon an alleged breach of a contractual duty, which in this case would be occasioned by the insurer's denial of coverage or refusal to arbitrate. We therefore reverse the Superior Court's order to the contrary.

This matter was initiated when Bristol reported he was injured on July 22, 2005, in a hit-and-run incident while engaged within the scope of his employment as a lineman for RCC, Inc. in Upper Dublin Township, Montgomery County, Pennsylvania. At the time, RCC, Inc. was insured under a Pioneer Commercial Auto Fleet Policy, policy no. Q88–0200396 (the Policy), through Erie Insurance Exchange (Erie). The Policy contained an Uninsured/Underinsured Motorist Coverage Endorsement, which afforded coverage of $500,000.00 per accident. An arbitration clause was included in the Endorsement. The arbitration clause provided for binding resolution of disputes over liability and the amount of damages under the Endorsement, reserving other disputes, including the applicability of any statute of limitations, to the courts.⁴ Bristol, through his attorney, put Erie on notice by letter of his UM claim on June 19, 2007. By letter dated July 9, 2007, Erie reserved its rights.⁵ Subsequently, both parties selected arbitrators and Erie obtained a statement under oath from Bristol. In September 2012, the parties exchanged correspondence concerning Bristol's intervening, but unrelated, incarceration and the need to await his release to schedule further proceedings. No further action on the record was taken until Erie filed an action for declaratory judgment on May 29, 2013. Therein, Erie sought a determination of whether Bristol's UM claim was barred by the four-year statute of limitations under Section 5525(a)(8).⁶ On September 11, 2014, Erie filed a motion for summary judgment. Erie asserted the statute of limitations began to run on the date of the accident, July 22, 2005, when Bristol was unable to identify the vehicle involved in the hit-and-run, i.e., when he became aware he had a UM claim. Erie averred that, by failing to file a "savings action with a court of competent jurisdiction" by the date the four-year limitation expired on July 22, 2009, Bristol's UM claim was time barred. In his cross-motion for summary judgment, Bristol asserted that Erie's reservation of rights and agreement to arbitrate precluded application of the statute of limitations because, in such circumstances, there is no contractual requirement to file a court action. Bristol's Motion for Summary Judgment, 10/10/14, at 6–7. Alternatively, Bristol argued that if the statute commenced, it was tolled by the agreement to arbitrate and selection of the first two arbitrators. Id. at 9.

The trial court granted Erie's motion for summary judgment on March 18, 2014. It denied Bristol's motion for reconsideration on April 9, 2014. The trial court rejected Bristol's arguments, determining that the statute in this case commenced to run on the day of the accident, which occurred over a year prior to the selection of any arbitrators, and that, pursuant to the Superior Court case of Hopkins v. Erie Ins. Co. , 65 A.3d 452 (Pa. Super. 2013), commencement of court action is required to toll the running of the four-year time limitation. Bristol timely appealed to the Superior Court.

In an unpublished memorandum opinion authored by Judge Olson, the Superior Court affirmed.⁷ The court noted the standard and scope of its review for a grant of summary judgment as requiring affirmance only if facts supporting relief are clear and no issue for a factfinder is present. Erie Ins. Exch. v. Bristol , 151 A.3d 1161, 2016 WL 3062309, at *2 (Pa. Super. 2016) (unpublished memorandum) (citing Englert v. Fazio Mech. Servs., Inc. , 932 A.2d 122, 124 (Pa. Super. 2007) ). The Superior Court held that the statute begins to run on a UM claim when an insured sustains an injury as a result of a motor vehicle accident and knows the owner or operator of the other vehicle is uninsured. Id. at *4 (citing Boyle v. State Farm Auto. Ins. Co. , 310 Pa.Super. 10, 456 A.2d 156, 162 (1983) ). Because it was undisputed that Bristol was aware at the time he was injured in the accident that he could not identify the hit-and-run driver or vehicle, the court concluded that a reasonable person would have known at the time of the accident that the unidentified alleged tortfeasor was presumptively uninsured. Id. at *2 (citing Seay v. Prudential Prop. & Cas. Ins. Co. , 375 Pa.Super. 37, 543 A.2d 1166, 1169 (1988), appeal dismissed , 520 Pa. 618, 554 A.2d 510 (1989) ).

The court further rejected Bristol's argument that his demand for arbitration made to Erie within four years of the date of the accident should be deemed to toll the statute of limitations. Relying on Hopkins , the Superior Court held that extrajudicial correspondence attempting to resolve a UM claim does not toll the statute of limitations. The court also concluded this result was consonant with the language of Section 5503, which, for commencement of an action, requires a filing asserting the claim in an authorized office.⁸ Thus, the court reasoned that the exchange of correspondence between the parties in this case relative to commencing contractual arbitration, including the appointment of two arbitrators, did not toll the statute. The Court held, "pursuant to Hopkins , [Bristol] was at all times required to commence his 'action' within the required time-period, by filing a praecipe for a writ of summons, a complaint, a petition to appoint arbitrator, or a petition to compel arbitration, with the Prothonotary." Id. at *6. Accordingly, the Superior Court determined that the trial court did not err in granting Erie's motion for summary judgment.

Judge Ott filed a concurring opinion agreeing that the "rules for determining the commencement of the statute of limitations for an uninsured motorist claim are well settled." Id. (Ott, J., concurring) (citing Boyle , 456 A.2d at 162 ). However, she expressed the view that the portion of Hopkins discussing the tolling requirements is dicta and that precedent was unclear about what actions are sufficient to toll the statute, because in no case was tolling at issue. The concurrence, therefore, advocated announcing a bright-line rule "that a claimant in an uninsured motorist action, seeking arbitration, must file a petition to appoint arbitrator and compel arbitration in order to toll the statute of limitations in such action." Id. at *7. We granted allowance of appeal.

Bristol relates the history and current state of Pennsylvania law relative to arbitration of UM claims. Bristol noted this Court held that policy provisions requiring arbitration of UM disputes are enforceable. Johnson v. Pa. Nat'l Ins. Cos. , 527 Pa. 504,594 A.2d 296, 300 (1991).⁹ The instant policy provides for compulsory arbitration for certain defined issues and requires court action for others. For issues not otherwise defined in the policy, the provision defaults to the requirements of Arbitration Act of 1927.¹⁰ Bristol notes he made a written demand for arbitration in accordance with the policy terms and Erie agreed to arbitrate. Each party selected an arbitrator, but further action, as evidenced by correspondence between the parties, was postponed without objection from Erie, due to Bristol's unrelated incarceration. Section 7304 of the Act provides that a party petitioning a court to compel arbitration must show, in addition to the existence of a controlling agreement, "that an opposing party refused to arbitrate." 42 Pa.C.S. § 7304(a). Accordingly, Bristol argues there was no basis under the specific language of the contractual agreement to arbitrate, or under the Arbitration Act itself, for him to initiate the court action required by the Superior Court to toll the running of the statute of limitations.

Bristol contends the Superior Court's reliance on Hopkins is relevant only to the question of an insured's presentation of the contractual UM claim to the insurer. Bristol advocates a determination that for a cause of action based on a contract to trigger the statute of limitations, it must be based on the occurrence of a breach. Bristol cites the Superior Court's decision in Myers v. USAA Casualty Insurance Co. , 298 Pa.Super. 366, 444 A.2d 1217 (1981), which interpreted the former No–Fault Act's definition of "loss" as employing the common law principle establishing a breach of contract to trigger the...