Adamitis v. Erie Ins. Exch.

• Decision Date: 25 September 2012
• Citation: 54 A.3d 371,2012 PA Super 204
• Parties: Matthew J. ADAMITIS, Appellant v. ERIE INSURANCE EXCHANGE, Appellee.
• Court: Pennsylvania Superior Court

54 A.3d 371

2012 PA Super 204

Matthew J. ADAMITIS, Appellant

v.ERIE INSURANCE EXCHANGE, Appellee.

Superior Court of Pennsylvania.

Argued June 5, 2012.

Filed Sept. 25, 2012.

Scott B. Cooper, Harrisburg, for appellant.

Suzanne Tighe, Wilkes–Barre, for appellee.

BEFORE: STEVENS, P.J., LAZARUS, J., and COLVILLE, J.^*

OPINION BY STEVENS, P.J.

This appeal comes from the judgment entered in the Court of Common Pleas of Philadelphia County, which denied Plaintiff/Appellant Matthew J. Adamitis' motion for declaratory judgment and instead entered judgment in favor of Defendant/Appellee Erie Insurance Exchange on Appellant's claim for underinsured motorist coverage benefits for injuries sustained while driving at work. We affirm.

The trial court has provided an apt recitation of fact and procedural history to the case as follows:

PROCEDURAL HISTORY

When Matthew J. Adamitis was denied his claim for underinsured motorist coverage (“UIM”) by Erie Insurance Exchange (“Erie”), he filed [a] Complaint for Declaratory Judgment, 42 Pa.C.S.A. § 7531 et seq., to determine his rights under his motor vehicle insurance policy. Specifically he seeks an Order from the Court which concludes that he is entitled to underinsured motorist coverage for his October, 2005 accident.

When Erie Filed its Answer to the Complaint with New Matter, the Defendant–Insurance Company denied that Plaintiff–Adamitis is entitled to UIM coverage under the circumstances presented here. Further, Erie seeks an Order from the Court declaring that the plaintiff is not entitled to recover underinsured motor[ist] benefits from the Erie policy.

The parties agreed to proceed in a non-jury trial. Counsel provided comprehensivepre-trial and trial submissions—legal research, stipulation of facts, trial memoranda, and numerous exhibits—for consideration by [the trial court].

On October 16, 2009, [the trial court] presided at the non-jury trial. After careful consideration of the evidence presented and the law, the [court entered a Judgment Order] in favor of Erie Insurance Exchange and against Matthew J. Adamitis.

FACTUAL BACKGROUND

Many of the facts are not in dispute. On October 7, 2005, Mr. Matthew Adamitis was working as a bus driver for the Berks Area Reading Transit Authority (“BARTA”). While working in the course and scope of his employment, Mr. Adamitis was involved in a serious motor vehicle accident with an underinsured motorist.

The plaintiff [Adamitis] has been a customer of Erie since 2001, with policies for automobile, homeowners, and liability coverage. Plaintiff–Adamatis paid premiums to Defendant–Erie Insurance Exchange for a Pioneer Family Auto Policy to cover his personal vehicles. After resolving his claims against the underinsured motorist who caused the October, 2005 accident, Mr. Adamitis sought UIM coverage from Erie. The plaintiff testified that when his UIM claim was rejected by Erie, that was the first time he knew or became aware of the regular use exclusion clause.

The parties stipulated that although the exclusion clause was part of the UM/UIM policy which Mr. Adamitis had at the time of the October 5, 2005 motor vehicle accident, his original (2001) Pioneer automobile policy did not include a regular use exclusion clause. Mr. Adamitis testified that he does not recall ever receiving Erie's Notice, dated April 10, 2004, which provides in pertinent part:

“Under LIMITATIONS ON OUR DUTY TO PAY:

• exclusion 10 has been added. Because of this exclusion, Uninsured/Underinsured Motorists Coverage is not provided for bodily injury to you or a resident arising from the use of a ‘non-owned motor vehicle or a non-owned miscellaneous vehicle which is regularly used by you or a resident, but not insured for Uninsured or Underinsured Motorists Coverage under this policy.’ ”

He stated that when his annual renewal paperwork arrives for all of his Erie policies, he reads all of the materials and compares the bills. He believes that he never received the April, 2004 Notice.

Ms. Theresa Huzinec, Erie's Supervisor of Automobile Product Development, explained the manner in which the documents are mailed to Erie customers. It is an automated, computer-driven process. She testified that Mr. Adamitis did receive the April, 2004 Notice with his renewal billing. This Court concludes that Plaintiff–Adamitis did receive the form entitled, “Changes that Affect Your Uninsured/Underinsured Motorist Coverage—Pennsylvania Notice UF–4179 (Ed. 4/04).

The parties stipulated that in October, 2005, the BARTA bus did not carry underinsured motorist coverage As a self-insured entity, BARTA was not required to carry UIM coverage. Mr Adamitis had no role in the purchase of BARTA insurance and no control over whether or not BARTA maintained UIM coverage. It was also stipulated that in October, 2005, although Erie did not have available for purchase any automobile policy in Pennsylvania which did not include the regular use exclusion clause, there were other Pennsylvania insurers who did offer personal automobile policies which did not have the exclusion clause.

Trial Court Opinion in Support of Judgment Order, dated 11/24/09.

On appeal, Mr. Adamitis (“Appellant”) raises the following issues for our review:

I. WHETHER THE TRIAL COURT SHOULD BE REVERSED BECAUSE THE “REGULAR USE” EXCLUSION RESTRICTS AND CONFLICTS WITH THE MANDATE OF THE PENNSYLVANIA MOTOR VEHICLE FINANCIAL RESPONSIBILITY LAW IN SECTION 1731 WHICH REQUIRES UNDERINSURED MOTORIST COVERAGE BE PROVIDED FOR AN INSURED WHO DOES NOT REJECT UNDERINSURED MOTORIST [COVERAGE] AND IS NOT SUBJECT TO A LIMITATION ON RECOVERY UNDER § 1731(d)?

II. WHETHER THE TRIAL COURT SHOULD BE REVERSED BECAUSE THE UNILATERALLY ADDED “REGULAR USE” EXCLUSION IS AMBIGUOUS WHEN THERE IS ALREADY ANOTHER PORTION OF THE POLICY WHICH ALREADY DEFINES REGULAR USE AS 45 CONSECUTIVE DAYS?

III. WHETHER THE TRIAL COURT SHOULD BE REVERSED WHEN THE INSURED IS NOT PROPERLY NOTIFIED AND EXPLAINED ABOUT THE UNILATERAL ADDITION OF THE “REGULAR USE” EXCLUSION AND THUS, HIS REASONABLE EXPECTATIONS WERE NOT MET UNDER THE TOTALITY OF CIRCUMSTANCES[?]

IV. WHETHER THE TRIAL COURT SHOULD BE REVERSED BECAUSE THE “REGULAR USE” EXCLUSION, AS APPLIED IN THIS CASE, IS AGAINST PUBLIC POLICY WHEN: (1) THE INSURED IS IN AN ACCIDENT IN THE COURSE AND SCOPE OF EMPLOYMENT, (2) THE INSURANCE COMPANY KNOWS ABOUT THE INSURED'S REGULAR USED VEHICLE, (3) THE INSURANCE COMPANY ADMITS THE INSURED HAS NO CONTROL OVER THE PURCHASE OF UNDERINSURED MOTORIST COVERAGE ON THE ‘REGULARLY USED VEHICLE NOR AN ABILITY TO NEGOTIATE UNDERINSURED MOTORIST COVERAGE ON THAT VEHICLE, (4) THE INSURED HAD NO OPTION BUT TO ACCEPT THE UNILATERALLY ADDED EXCLUSION AND (5) THE INSURED FOR UNDERINSURED MOTORIST COVERAGE [SIC]?

Brief for Appellant at 8.

In Issues I and IV, Appellant asks whether the regular-use exclusion both violates Section 1731 of the MVFRL and is void against public policy. As these issues are purely legal, our scope of review is plenary and our standard of review is de novo. Generette v. Donegal Mut. Ins. Co., 598 Pa. 505, 957 A.2d 1180, 1189 (2008). It is well-settled that

[i]n construing a policy of insurance, we are required to give plain meaning to a clear and unambiguous contract provision unless such provision violates a clearly expressed public policy. Burstein [ v. Prudential Property & Cas. Ins. Co.] , 570 Pa. 177, 809 A.2d [204], 206 (2002) (citing Eichelman v. Nationwide Ins. Co., 551 Pa. 558, 711 A.2d 1006, 1008 (1998)); Prudential Prop. and Cas. Ins. Co. v. Colbert, 572 Pa. 82, 813 A.2d 747, 750 (2002) (same). Here, Appellant concedes that the policy language is unambiguous, thereby challenging the exclusion solely on the grounds of public policy. We consistently have been reluctant to invalidate a contractual provision due to public policy concerns. In Eichelman, we stated:

Generally, a clear and unambiguous contract provision must be given its plain meaning unless to do so would be contrary to a clearly expressed public policy. When examining whether a contract violates public policy, this Court is mindful that public policy is more than a vague goal which may be used to circumvent the plain meaning of the contract. As this Court has stated:

Public policy is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interest. As the term “public policy” is vague, there must be found definite indications in the law of the sovereignty to justify the invalidation of a contract as contrary to that policy[.] ... Only dominant public policy would justify such action. In the absence of a plain indication of that policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts ... contrary to public policy. The courts must be content to await legislative action.

This Court has further elaborated that:

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 so declaring [that the contract is against public policy].

Eichelman, 711 A.2d at 1008 (internal citations omitted).

In Eichelman, we also addressed the general policy underlying underinsured motorist coverage. We stated:

[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. As this Court has stated, “there is a correlation between premiums paid by the insured and the coverage the claimant should reasonably expect to receive.” Hall v. Amica Mut. Ins. Co., 538 Pa. 337, 349, 648 A.2d 755, 761 (2004) [ (1994) ].

Id. at 1010.

Moreover, in...