Aetna Cas. & Sur. Co. v. Nationwide Mut. Ins.
| Decision Date | 15 June 1979 |
| Docket Number | Civ. A. No. 77-29. |
| Citation | 471 F. Supp. 1059 |
| Parties | AETNA CASUALTY AND SURETY COMPANY, Plaintiff, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Middle District of Pennsylvania |
COPYRIGHT MATERIAL OMITTED
Metzger, Hafer, Keefer, Thomas & Wood by James K. Thomas, II, Harrisburg, Pa., for plaintiff.
David E. Lehman, G. Thomas Miller, Harrisburg, Pa., for defendant.
This is an action brought by Aetna Casualty and Surety Company (Aetna), Plaintiff, against Nationwide Mutual Insurance Company (Nationwide), Defendant, with jurisdiction based upon diversity pursuant to 28 U.S.C. § 1332. The dispute arises out of an automobile accident and the denial of coverage by Defendant Nationwide to its insured William E. Cunnard.
1. Nationwide issued a policy of liability insurance to William E. Cunnard, an adult residing at R.D. # 5, Mechanicsburg, Pennsylvania, Policy No. 59-058879, in September of 1970.
2. The Nationwide policy, on or after June 9, 1970, described as the automobile insured under the policy, a 1960 Plymouth Sedan.
3. Cunnard purchased a 1958 Pontiac on or about August 14, 1970 from a private owner. He registered the car in his name and paid sales tax on that date.
4. The 1958 Pontiac was never identified as an insured automobile under the Nationwide policy, nor did Cunnard notify Nationwide of its purchase.
5. Before Cunnard purchased the 1958 Pontiac, he had had mechanical difficulties with the 1960 Plymouth; it had "gone out", and had valve and transmission problems and he felt he could not trust it to go anywhere.
6. When Cunnard bought the 1958 Pontiac he needed to have work done on it to get it running and have it inspected.
7. Cunnard obtained a separate license for the 1958 Pontiac and was intending to junk the deteriorating 1960 Plymouth.
8. Cunnard stopped driving the Plymouth before he got the Pontiac going, and had a co-worker at Capital Products take him to work during this time. At no time material to this action did Cunnard have more than one vehicle which was operable.
9. Cunnard had the needed repairs done to the 1958 Pontiac and secured a current state inspection for that vehicle.
10. Cunnard began driving the 1958 Pontiac on October 14, 1970 and stopped driving the 1960 Plymouth in October, 1970, before he began driving the 1958 Pontiac.
11. Cunnard allowed the state inspection sticker on the 1960 Plymouth to expire on October 31, 1970.
12. Cunnard continued to drive the 1958 Pontiac until December 6, 1970 and did not drive the 1960 Plymouth after early October.
13. On December 6, 1970 while Cunnard was driving the 1958 Pontiac, he was involved in a collision with a 1967 Ford owned by Carl I. Lisenbach, on the Trindle Road (Rt. 641) in Silver Springs Township, Cumberland County.
14. The accident occurred when the Cunnard vehicle crossed the center line of the two-lane highway and collided with the Lisenbach vehicle. From the facts of the accident, a prima facie claim of negligence lay against Cunnard.
15. Carl Lisenbach and Nadine Blocker, a passenger in his car, were both seriously injured in the accident.
16. Carl Lisenbach and his 1967 Ford vehicle were insured by Aetna Casualty and Surety Company under a policy of insurance. Said policy provided uninsured motorist coverage, in accordance with Pennsylvania law, with limits of $10,000. The Aetna policy also provided similar coverage for a second vehicle owned by Lisenbach, a 1965 Mercury.
17. After the accident Cunnard was in a body cast for eight weeks.
18. A claims adjuster for Nationwide, Paul J. Herb, visited Cunnard in the Carlisle hospital on December 14, 1970 to take a statement from Cunnard about the accident. Cunnard told the adjustor that he was driving the 1958 Pontiac and not the 1960 Plymouth at the time of the accident.
19. Cunnard was in pain and under sedation at the time the adjustor took the statement from him in the hospital on December 14, 1970.
20. The adjustor wrote out a statement which he had Cunnard sign but which Cunnard did not and could not read. At the time of the statement Cunnard told the adjustor that the Plymouth had a noisy rear end and that was the reason he took it out of service.
21. Cunnard signed the statement which indicated that both cars were inspected and that he had run the Plymouth. Although Nationwide's adjustor was told by Cunnard at the time the statement was taken that Cunnard had taken the 1960 Plymouth out of service, he failed to record that fact in the statement.
22. It was not true that the 1960 Plymouth was currently inspected and that he had run the 1960 Plymouth.
23. Cunnard told the adjustor that the 1958 Pontiac was a replacement car.
24. Cunnard had the 1960 Plymouth repaired and operating for a few months after the accident and then sold it for $25.00.
25. Cunnard never notified Nationwide that he had changed cars.
26. The adjustor never went to Cunnard's house to interview him after he got home from the hospital, nor did the adjustor go to examine the 1960 Plymouth.
27. Nationwide, after investigation, on December 22, 1970, sent a letter to Cunnard advising that the Nationwide policy provided coverage for a 1960 Plymouth, and not the 1958 Pontiac and that coverage was being denied.
28. Cunnard's policy with Nationwide contained the following clause in Section IV relating to covered automobiles:
"(4) Newly Acquired Automobile—an automobile, ownership of which is acquired by the Named Insured or his spouse if a resident of the same household, if (i) it replaces an automobile owned by either and covered by this policy, or the Company insures all automobiles owned by the Named Insured and such spouse on the date of its delivery, and (ii) the Named Insured or such spouse notifies the Company within thirty days following such delivery date; but such notice is not required under Coverages E, F and division 1 of Coverage G if the newly acquired automobile replaces an owned automobile covered by this policy."
29. Coverage E provides:
30. Coverage F provides:
31. Coverage G provides:
32. Cunnard called Nationwide to protest the denial of coverage on May 12, 1971.
33. Nationwide was subsequently contacted by William F. Martson, counsel for Cunnard, advising again that the 1958 Pontiac did actually replace the 1960 Plymouth.
34. Nationwide's denial of coverage was based upon the fact that Cunnard retained ownership and possession of the 1960 Plymouth and disregarded his intentions with respect to replacement and the operational capabilities of that vehicle.
35. At no time after Cunnard and his counsel protested the denial of coverage did Nationwide conduct any additional investigation. Instead Nationwide relied upon the police report, the title documents, the statement taken from Cunnard in the hospital on December 14, 1970, and the telephone calls.
36. Nationwide failed to conduct any investigation to determine whether the 1960 Plymouth had in fact been retired from service prior to the 1958 Pontiac being made operational; it failed to interview neighbors; it failed to inspect the 1960 Plymouth; and it never attempted to ascertain whether the inspection had in fact expired on the 1960 Plymouth on October 31, 1970.
37. Nationwide's investigation was inadequate and Nationwide disregarded the Pennsylvania law with respect to a "replacement vehicle".
38. In issuing its denial of coverage to Cunnard Nationwide disregarded facts it could have found through reasonable investigation, as well as Pennsylvania law concerning replacement vehicles.
39. Aetna subsequently was compelled to pay Nadine Blocker's claim under its uninsured motorist coverage, Blocker v. Aetna Casualty & Surety Co., 95 Dauphin 436 (1973), and then brought this action to recover $27,995.04 in damages and attorneys' fees incurred on the theory that Nationwide's denial of coverage was wrongful.
40. Aetna made the following fair and reasonable payments on the dates indicated:
February 16, 1973 to Nadine Blocker $10,000.00
July 25, 1973 to Carl Linsenbach 4,407.69
December 28, 1973 to Metzger, Hafer
Keefer, Thomas and Wood 2,047.37
June 2, 1975 to Nadine Blocker 10,000.00
July 3, 1975 to Metzger, Hafer
Keefer, Thomas and Wood 5,947.67
41. All payments were proximately caused by Nationwide's denial of coverage to its insured, William E. Cunnard.
42. There is no issue as to the propriety of the underlying actions or claims for payments and subsequent payments.
43. The limit of liability coverage under the Nationwide policy was $10,000 for each claimant for personal injuries not to...
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