Adelman v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 13 April 1978 |
| Citation | 255 Pa.Super. 116,386 A.2d 535 |
| Parties | Betty ADELMAN, Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. |
| Court | Pennsylvania Superior Court |
Argued Sept. 13, 1977.
James J. McCabe, Jr., Philadelphia, with him Joseph M. Hankins, Philadelphia, for appellant.
Arthur J. Seidner, Philadelphia, for appellee.
Before WATKINS, President Judge, and JACOBS, CERCONE, PRICE, VAN der VOORT and SPAETH, JJ.
On this appeal we are again faced with the question of whether an insurance company may contractually divide the uninsured motorist coverage in two or more automobile insurance policies to prevent "stacking" or "pyramiding" of recovery. [1] Appellant contends that the lower court erred in refusing to modify the award of $20,000 to appellee following arbitration conducted pursuant to the Arbitration Act of 1927, 5 P.S § 161 et seq. [2] We agree and therefore reverse and remand for the entry of an award in the amount of $10,000.
Appellee Betty Adelman, was injured in an automobile accident on June 28, 1974 when her 1966 Plymouth, which she was operating, was struck by an uninsured motorist. At the time of the accident both appellee's car and the 1970 Oldsmobile belonging to her husband were insured under separate policies issued by appellant, State Farm. Each policy provided uninsured motorist coverage of $10,000 for any one person injured in an accident as required by the Uninsured Motorist Act. [3] Appellee filed a claim for uninsured motorist coverage under both policies, requesting a total payment of $20,000. [4] Appellant maintained, however, that appellee was entitled to recover only under the policy covering her vehicle and the dispute was submitted to arbitration in accordance with the arbitration clause in the policies. See Record at 35a and 51a.
Following a hearing before a mutually agreed upon arbitrator on June 2, 1976, and the submission of written briefs, the arbitrator entered an award of $20,000 in favor of appellee. The decision, issued on June 17, 1976, clearly stated that the arbitrator had limited himself to the question of the interpretation to be given to the policy and considered Nationwide Mutual Insurance Co. v. Ealy, 221 Pa.Super. 138, 289 A.2d 113 (1972), to be the controlling authority. He determined, however, that the exclusion which we approved in Ealy did not exist in the State Farm policies in question. Appellant filed a timely motion to modify the award in the Court of Common Pleas of Philadelphia County, asserting that the arbitrator's award was contrary to law. The lower court entered an order denying the motion on October 20, 1976, and issued an opinion in support of that order on March 28, 1977.
Both the arbitrator and the trial judge based their decisions on the mistaken belief that the Ealy exclusion was not contained in the State Farm policies presently under scrutiny. [5] On the contrary, we clearly dealt in Ealy with the exclusion to the uninsured motorist coverage which prevented recovery by the named insured or his relatives for injuries sustained while occupying an insured-owned automobile not listed in the declarations of the policy. [6] The policies issued by appellant to appellee and her husband contain language nearly identical to that in Ealy. Exclusion (b) in Section III of the State Farm policies issued to Mr. and Mrs. Adelman provides that the uninsured motorist coverage does not apply
(b) to bodily injury to an insured while occupying or through being struck by a land motor vehicle owned by the named insured or any resident of the same household, if such vehicle is not an owned motor vehicle.
The only real difference between the Ealy exclusion and the one at issue is that in the latter the term "owned motor vehicle" is used rather than the term "insured land motor vehicle." [7] The definitions of these terms in the respective policies are, however, nearly identical. [8] The lower court was, therefore, incorrect in holding that the Ealy exclusion was not present in the Adelmans' State Farm policies.
Having determined that the same exclusion is present here as in Ealy, we must examine Exclusion (b) to ascertain if it operates to prevent Mrs. Adelman from recovering under Mr. Adelman's policy. The interpretation of an insurance policy is, of course, a question of law for the court. Baldwin v. Magen, 279 Pa. 302, 123 A.2d 815 (1924). Courts, however, cannot rewrite the terms of the policy or give them a construction in conflict with the accepted and plain meaning of the language used. Pennsylvania Manufacturers Association Insurance Co. v. Aetna Casualty & Surety Insurance Co., 426 Pa. 453, 233 A.2d 548 (1967). When a word used in the exclusion under scrutiny is specifically defined in the definitions section of the policy, it is that definition which must control in determining the applicability of the exclusion. Great American Insurance Co. v. State Farm Mutual Automobile Insurance Co., 412 Pa. 538, 194 A.2d 903 (1963). Any ambiguous terms must be given a construction most favorable to the insured. Patton v. Patton, 413 Pa. 566, 198 A.2d 578 (1964); but "(a) provision of an insurance policy is ambiguous (only) if reasonably intelligent men on considering it in the context of the entire policy would honestly differ as to its meaning." Celley v. Mutual Benefit Health & Accident Association, 229 Pa.Super. 475, 481-82, 324 A.2d 430, 434 (1974).
Exclusion (b) in Mr. Adelman's policy is totally unambiguous. [9] It reads, with interpolations from the definitions section, as follows:
This insurance does not apply:
(b) to bodily injury to an insured [10] (Mrs. Adelman) while operating or through being struck by a land motor vehicle owned by the named insured (Mr. Adelman) or any resident of the same household (Mrs. Adelman), if such vehicle is not an owned motor vehicle (the motor vehicle described in the declarations of Mr. Adelman's policy). (footnote added).
In other words, the uninsured motorist coverage provided by Mr. Adelman's policy on his 1970 Oldsmobile does not apply to Mrs. Adelman (or to any other relative residing in the same household) when she is driving any vehicle owned by her or her husband other than the 1970 Oldsmobile (the sole vehicle described in the declarations of Mr. Adelman's policy). [11] The question then becomes whether this unambiguous contractual limitation on uninsured motorist coverage is permissible under regulations promulgated by the Insurance Commissioner and under the Uninsured Motorist Act.
The regulations promulgated by the Insurance Commissioner provide that the extent of coverage under the uninsured motorist endorsement of an insurance policy shall be at least that provided by the sample form, which conforms to the national standard form. [12] 31 Pa.Code § 63.2. The sample form sets forth the following exclusion:
This endorsement does not apply:
(b) to bodily injury to an insured while occupying an automobile (other than an insured automobile) owned by a named insured or any relative resident in the same household, or through being struck by such an automobile. . . .
31 Pa.Code § 63.2, Exhibit C at 184.
To this point the sample exclusion is virtually identical to Exclusion (b) in the State Farm policies with which we are concerned. The Insurance Commissioner's sample form goes on to state, however, that, "(T)his exclusion does not apply to the principal named insured or his relatives while occupying or if struck by an automobile owned by an insured named in the schedule or his relatives." Id.
Since the State Farm policies do not contain the latter clause, [13] it is necessary to ask whether the omission is fatal in this case. "Even though the policy does not exactly match the Commissioner's sample form, if the policy as applied to this case . . . has the same effect as the form, it should not be held in violation of the regulations under which the form was promulgated." Wilbert v. Harleysville Mutual Insurance Co., J. 132/76, slip opinion at 3. What then is the meaning of the omitted clause and, more particularly, of the words "insured named in the schedule?" [14]
The first part of Exclusion (b), both in the State Farm policies and in the sample form, is relatively clear. It denies coverage to an insured who is occupying, or is struck by, any vehicle owned by the named insured or his relatives, other than the vehicle described in the declarations of the policy. The concluding portion of the paragraph, on the other hand, contains an exception to that exclusion. To paraphrase the exception, Exclusion (b) does not apply when the named insured or his relatives are riding in a vehicle owned by an insured named in the schedule (or his relatives) rather than one owned by a named insured (or his relatives). The term "insured named in the schedule," as used in the Commissioner's sample form, means a "designated insured." [15] There is no doubt that Exclusion (b) in Mr. Adelman's policy precludes Mrs. Adelman from applying the uninsured motorist coverage in her husband's policy to injuries which she sustained while occupying her own automobile. She is an "insured" under her husband's policy, but she was driving an automobile owned by her (a relative of the named insured, Mr. Adelman) which is not described in the declarations of Mr. Adelman's policy. The result would be no different if Exclusion (b) had contained the exception set forth in the Commissioner's sample form and the national standard form. Mrs. Adelman is not named in the schedule to Mr. Adelman's policy as a "designated insured." Obviously, therefore, her 1966 Plymouth could not be a vehicle owned by a "designated insured" and the exception to the exclusion does not come into play. The policy, as...
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