Peters v. Nat'l Interstate Ins. Co.

108 A.3d 38

2014 PA Super 276

Michael PETERS and Malinda Peters, H/W and Robert Weston, as Guardian of Jaden Peters, Appellees

v.NATIONAL INTERSTATE INSURANCE COMPANY and Evans Delivery Company, Inc., Appellants.

No. 445 EDA 2014

Superior Court of Pennsylvania.

Argued Aug. 20, 2014.

Filed Dec. 16, 2014.

Reargument Denied Feb. 24, 2015.

Dennis M. Marconi, Trenton, NJ, for appellants.

Benjamin Scherner, Powell, OH, for guardian ad litem.

Lawrence D. Abramson, Columbus, OH, for appellees.

BEFORE: GANTMAN, P.J., BENDER, P.J.E., and PLATT, J.^*

Opinion

OPINION BY PLATT, J.:

Appellants, National Interstate Insurance Company, and Evans Delivery Company, Inc., appeal from the order declaring that Appellees, Michael Peters and Malinda Peters, husband and wife, and Robert Weston, guardian of Jaden Peters (the Peters' minor daughter), Ohio residents, could make a claim against National Interstate for under-insured motorist benefits (UIM) pursuant to the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)¹ for an accident in Ohio.² Appellees have no legally enforceable claim for UIM under Pennsylvania law. Accordingly, we vacate the order, reverse the trial court's determination of coverage, and remand.

There is no significant dispute about the underlying history of the case. The parties entered into a joint stipulation of facts. (See Joint Stipulations at Certified Docket Entry No. 47; Memorandum Opinion, 9/10/13, at 2–7; R.R. at R–148a–R–158a). We summarize the facts most relevant to our analysis.

The accident occurred in Kent County, Ohio, on August 21, 2009. (See Joint Stipulation of Facts [Stipulation], ¶ 3). Both Michael Peters, the driver, and his minor daughter, Jaden, who was traveling with him as a passenger, were seriously injured in the accident.³ At the time of the accident Michael Peters, an Ohio resident, was employed as a truck driver by Evans Delivery, a Pennsylvania corporation. National Interstate issued a commercial vehicle policy to Evans Delivery in Pennsylvania.

The truck Michael Peters was driving was registered in Ohio and not principally garaged in Pennsylvania. (See id. at ¶ 5). The other driver, Matthew Knecht, hit the Peters' vehicle head-on. Knecht had insufficient insurance coverage to satisfy the Peters' entire damages claim. Knecht's insurer paid the policy limits of $200,000.00. The parties here stipulated that the Peters' damages substantially exceed $200,000.00. (See id. at ¶ 18, ¶ 19).

Appellees made a UIM claim pursuant to the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)⁴ against National Interstate under the Evans Delivery commercial vehicle policy.⁵ (See First Amended Action for Declaratory Judgment, ¶ 33, ¶ 40). National Interstate refused coverage. (See Stipulation ¶ 21; First Amended Action for Declaratory Judgment, ¶ 34). Appellees brought the underlying complaint, seeking a declaratory judgment of coverage. They alleged that the form signed by Evans Delivery, rejecting UIM, was “invalid, illegal and void[.]” (First Amended Action for Declaratory Judgment, ¶ 51).

The trial court held a non-jury trial on June 17, 2013. The trial consisted of argument only. Neither of the parties called any witnesses, or offered additional evidence, relying on the Joint Stipulation and the Joint Trial Exhibits, plus the amended complaint for declaratory judgment and the answer. (See N.T. Trial, 6/17/13, at 4–5; see also Trial Court Opinion, 9/10/13, at 1). The trial court filed an opinion and order on September 10, 2013. In essence, the trial court reasoned that because the policy offered “no information on how the premium for UM/UIM was calculated ... its terms are ambiguous and therefore must be construed in favor of the [Appellees].” (Trial Ct. Op., 9/10/13, at 12; Trial Ct. Op., 2/18/14, at 13). Appellants filed a motion for post trial relief, which the court denied, after oral argument, on December 23, 2013. This timely appeal followed.⁶

Appellants present one over-arching generic question and seven subsidiary questions for our review:⁷

Did the trial court abuse its discretion and commit an error of law by:

1. Holding that an alleged ambiguity in the calculation of the premium charged for uninsured and underinsured motorist coverage in states that required a mandatory minimum amount of coverage was equivalent to an ambiguity in the terms of the contract and scope of coverage offered under the policy that must be resolved against the [A]ppellants-insurer and named insured[?]

2. Holding that the intent of the Appellants was not clear[?]

3. Declaring that blanket underinsured motorist coverage existed under the commercial motor vehicle insurance policy number EDC 8160000000 issued by [A]ppellant National Interstate Insurance Company to [A]ppellant Evans Delivery Company, Inc.[?]

4. Declaring that underinsured motorist benefits under the subject policy equaled the liability limits of $1,000,000[?]

5. Misconstruing the issue of whether [A]ppellees had standing to challenge [A]ppellant Evans Delivery's waiver of UIM coverage under the policy[?]

[6]. Failing to address whether the Pennsylvania Motor Vehicle Financial Responsibility law applied to [A]ppellees['] vehicle registered in Ohio[?]

7. Failing to declare that the rejection of UIM coverage form for Pennsylvania was valid and enforceable[?]

(Appellants' Brief, at 3–4).

We note our standard of review, and related legal principles applicable to that review:

Our standard of review in a declaratory judgment action is limited to determining whether the trial court clearly abused its discretion or committed an error of law. We may not substitute our judgment for that of the trial court if the court's determination is supported by the evidence.

Additionally,

[w]e will review the decision of the lower court as we would a decree in equity and set aside the factual conclusions of that court only where they are not supported by adequate evidence. The application of the law, however, is always subject to our review.

As noted above, this case involves a dispute regarding insurance coverage. In actions arising under an insurance policy, our courts have established a general rule that it is a necessary prerequisite for the insured to establish that his claim falls within the coverage provided by the insurance policy. However, when the insurer relies on a policy exclusion as the basis for its denial of coverage, the insurer has asserted an affirmative defense and bears the burden of proving the exclusion.

Erie Ins. Group v. Catania, 95 A.3d 320, 322–23 (Pa.Super.2014) (citations and quotation marks omitted).

Herein, the Declaratory Judgment Act has been invoked to interpret the obligations of the parties under an insurance contract. The proper construction of an insurance policy is resolved as a matter of law to be decided by the court in a declaratory judgment action. Hence, as with all issues of law, our review is de novo. Our standard of review in a declaratory judgment action is narrow. We review the decision of the trial court as we would a decree in equity and set aside factual conclusions only where they are not supported by adequate evidence. We give plenary review, however, to the trial court's legal conclusions....

Insurance policies are contracts, and in reviewing the trial court's determination, we are mindful of the following principles. In interpreting a contract, the court must ascertain the intent of the parties. Such intent is to be inferred from the written provisions of the contract. Where the contract language is clear and unambiguous, we are required to give effect to that language unless it violates a clearly expressed public policy. We have been reluctant to invalidate a contractual provision due to public policy concerns.

Where a provision of a policy is ambiguous, the policy provision is to be construed in favor of the insured and against the insurer, the drafter of the agreement....

Policy provisions are ambiguous only when they are reasonably susceptible of different constructions and capable of being understood in more than one sense. A court cannot torture the policy language to create ambiguities where none exist. This is not a question to be resolved in a vacuum. Rather, contractual terms are ambiguous if they are subject to more than one reasonable interpretation when applied to a particular set of facts. [C]ourts must construe the terms of an insurance policy as written and may not modify the plain meaning of the words under the guise of “interpreting” the policy. If the terms of a policy are clear, this Court cannot rewrite it or give it a construction in conflict with the accepted and plain meaning of the language used.

Where, as here, a defense is based on an exception or exclusion in a policy, the burden is on the insurer to establish its application. Exclusionary clauses generally are strictly construed against the insurer and in favor of the insured.

Swarner v. Mutual Ben. Group, 72 A.3d 641, 644–45 (Pa.Super.2013), appeal denied, ––– Pa. ––––, 85 A.3d 484 (2014) (citations, some punctuation and internal quotation marks omitted) (emphases added).

Mandatory offering. —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.

75 Pa.C.S.A. § 1731(a) (emphasis added).

“[T]his Commonwealth does not require UIM coverage. See 75 Pa.C.S. § 1731(a) (requiring the offer of UM and UIM motorist coverage, but declaring that such coverage is optional).” Burstein v. Prudential Property and Cas. Ins. Co., 570 Pa. 177, 809 A.2d 204, 210 (2002).

Underinsured motorist coverage provides “protection for persons who suffer injury arising

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