Burstein v. PRUDENTIAL PROPERTY AND CAS.

• Decision Date: 17 July 2002
• Citation: Burstein v. PRUDENTIAL PROPERTY AND CAS., 809 A.2d 204, 570 Pa. 177 (Pa. 2002)
• Parties: Sid BURSTEIN and Doreen Burstein, H/W, Appellees, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Supreme Court

809 A.2d 204

570 Pa. 177

Sid BURSTEIN and Doreen Burstein, H/W, Appellees, v. PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant.

Supreme Court of Pennsylvania.

Argued January 29, 2001.

Decided July 17, 2002.

Reargument Denied September 26, 2002.

Charles W. Craven, Philadelphia, for Prudential Property Casualty Insurance Company.

Christine P. Busch, James C. Haggerty, Philadelphia, for Pennsylvania Defense Institute.

Milton J. Frank, Philadelphia, for Sid and Doreen Berstein.

Dale G. Larrimore, Philadelphia, for Pennsylvania Trial Lawyers Association.

Before: FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, and SAYLOR, JJ.

OPINION

Chief Justice ZAPPALA.

We granted allocatur to determine whether the "regularly used, non-owned car" exclusion and its ensuing contractual restraint on underinsured motorist (UIM) coverage portability violate public policy. For the reasons that follow, we reverse the order of the Superior Court.

On September 4, 1993, Sid and Doreen Burstein were driving in Lower Southampton, Pennsylvania. A speeding motorcyclist struck their vehicle and injured both Mr. and Mrs. Burstein. Subsequently, the motorcyclist's insurance policy surrendered the maximum amount payable under its liability limits, but failed to fully compensate the Bursteins for their injuries. This inadequacy forced the Bursteins to determine whether another insurance policy could cover their damages.

At the time of the accident, Mr. Burstein was driving the vehicle that Mrs. Burstein's employer had provided to her as a benefit of employment. Mrs. Burstein regularly drove the vehicle, both for business and personal use, and had driven employer-provided vehicles throughout the previous eight years.¹ Mr. Burstein, on the other hand, did not regularly drive the vehicle; in fact, he had only driven it twice prior to the collision. The employer maintained liability insurance on the vehicle through Kemper Insurance Company, but declined uninsured motorist (UM) and UIM coverage. Although Mrs. Burstein received a Kemper insurance card, she never knew that the vehicle lacked UM and UIM coverage. Due to the employer's declination of UM and UIM coverage, the Bursteins could not recover UIM benefits from the Kemper policy.

The Bursteins also owned three vehicles, none of which were involved in the collision. All of these vehicles were insured with liability, UM, and UIM coverage through Prudential Property and Casualty Insurance Company. The Bursteins submitted a claim for UIM benefits under the Prudential policy. Prudential denied the claim because the policy specifically excluded regularly used, non-owned cars, such as Mrs. Burstein's employer-provided vehicle. Thereafter, the Bursteins sued Prudential and claimed that the regularly used, non-owned car exclusion is unenforceable because it violates public policy.

A panel of arbitrators determined that the policy exclusion violates public policy as applied to Mr. Burstein, but not as applied to Mrs. Burstein. Both Prudential and the Bursteins petitioned the trial court for a modification of the arbitration decision. While the Bursteins argued that the exclusion violates public policy as applied to both, Prudential defended that the exclusion did not violate public policy in either instance. The trial court held that the exclusion violated public policy as applied to both insureds, thereby affirming the arbitrator's decision as to Mr. Burstein, but reversing as to Mrs. Burstein.

Prudential appealed and a divided panel of the Superior Court affirmed. Upon Prudential's application for reargument, the court granted reargument en banc and withdrew its memorandum decision. The Superior Court, en banc, affirmed. Burstein v. Prudential Prop. & Cas. Ins. Co., 742 A.2d 684 (Pa.Super.1999) (plurality opinion). Judge Schiller, joined by Judges Kelly and Stevens, authored the opinion in support of affirmance. The court relied on three "prevailing policies" that, in its view, favored voiding the regularly used, non-owned car exclusion: (1) Pennsylvania's Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §§ 1701-1799.7, hereinafter MVFRL, should be construed to provide the greatest possible coverage to injured claimants; (2) providing UIM coverage is in the public's best interest; and (3) UIM coverage is first-party coverage and therefore "follows the person, not the vehicle." Burstein, 742 A.2d at 687-88. Thus, the court held that voiding the exclusion "furthers the aforementioned public policies by providing the greatest possible coverage to the [Bursteins], by compensating them for injuries caused by a tortfeasor who had inadequate coverage, and by allowing them to recover underinsured motorist coverage they had specifically paid for under their policy with [Prudential]." Id. at 688.

President Judge McEwen authored a concurring and dissenting opinion, which Judges Ford Elliott and Lally-Green joined. President Judge McEwen disagreed with the court's holding that UIM coverage "follows the person, not the vehicle." Id. at 691. Nonetheless, he agreed with the court's result because the Bursteins had purchased UIM insurance on all three of their owned vehicles and therefore were not attempting to reap UIM benefits for multiple vehicles from a single-vehicle policy. Id. at 693.

Judge Cavanaugh, joined by Judges Popovich and Johnson, authored a dissenting opinion. Judge Cavanaugh pointed out that the court's analysis ignored the legislative concern for the increasing cost of automobile insurance and argued that the majority's reasons for voiding the policy exclusion did not rise to the level of public policy. Id. at 694. Accordingly, the dissent would have upheld the regularly used, non-owned car exclusion. Prudential petitioned this Court for allowance of appeal, which we granted. Burstein v. Prudential Prop. & Cas. Ins. Co., 563 Pa. 670, 759 A.2d 919 (2000).

This Court is empowered to review an arbitration award that declares an insurance policy clause void as violative of public policy. Hall v. Amica Mut. Ins. Co., 538 Pa. 337, 648 A.2d 755, 758 (1994). Generally, courts must give plain meaning to a clear and unambiguous contract provision unless to do so would be contrary to a clearly expressed public policy. Eichelman v. Nationwide Ins. Co., 551 Pa. 558, 711 A.2d 1006, 1008 (1998) (citing Antanovich v. Allstate Ins. Co., 507 Pa. 68, 488 A.2d 571, 575 (1985)). Here, the contract provision is an automobile insurance policy exclusion, which reads, in relevant part:

PART 5[:] UNDERINSURED MOTORISTS... IF YOU ARE HIT BY A MOTOR VEHICLE THAT IS UNDERINSURED

* * *

LOSSES WE WILL NOT PAY FOR (PART 5)

* * *

REGULARLY USED NON-OWNED CARS

We will not pay for bodily injury to you or a household resident using a non-owned car not insured under this part, regularly used by you or a household resident.

R. at 25a-26a (emphasis omitted). The plain language of this provision clearly and unambiguously delineates an exclusion for regularly used, non-owned vehicles. Indeed, the parties agree that the exclusion, if applied, severs the portability of Appellees' UIM coverage to any regularly used, non-owned cars. As a result, the policy simply does not cover Appellees' claim. Thus, their only remaining avenue of relief is to demonstrate that the regularly used, non-owned car exclusion and its contractual restraint on UIM portability violate a clearly expressed public policy.

This Court has repeatedly confronted the formless face of public policy. Wary of its vague nature, we have adopted a circumspect posture:

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.

Eichelman, 711 A.2d at 1008; see also Hall, 648 A.2d at 760 (quoting Muschany v. United States, 324 U.S. 49, 66-67, 65 S.Ct. 442, 89 L.Ed. 744 (1945)). Moreover, the application of public policy concerns in determining the validity of an insurance exclusion is dependent upon the factual circumstances presented in each case. Paylor v. Hartford Ins. Co., 536 Pa. 583, 640 A.2d 1234, 1240 (1994).

Here, because the Pennsylvania Legislature has already enacted the MVFRL, the vexation of awaiting legislative action does not hinder our analysis. Pertaining to the public policy concerns of the MVFRL, our Court has repeatedly spelled out that

[t]he repeal of the No-Fault Act[²] and the enactment of the MVFRL reflected a legislative concern for the spiralling consumer cost of automobile insurance and the resultant increase in the number of uninsured motorists driving on public highways. The legislative concern for the increasing cost of insurance is the public policy that is to be advanced by statutory interpretation of the MVFRL. This reflects the General Assembly's departure from the principle of "maximum feasible restoration" embodied in the now defunct No-Fault Act.

Paylor, 640 A.2d at 1235; see also Donnelly v. Bauer, 553 Pa. 596, 720 A.2d 447, 452 (1998); Eichelman, 711 A.2d at 1008; Rump v. Aetna Cas. and Sur. Co., 551 Pa. 339, 710 A.2d 1093, 1096 (1998); Hall, 648 A.2d at 761; Windrim v. Nationwide Ins. Co., 537 Pa. 129, 641 A.2d 1154, 1157-58 (1994). Indeed, the Legislature's concern for the increasing cost of automobile insurance and the parallel aim of cost containment are easily gleaned from the legislative history of the MVFRL.³See Senate Journal, Oct. 4, 1983, 1142-53; House Journal, Dec. 13,...