Chartan v. Chubb Corp.
| Decision Date | 15 November 1989 |
| Docket Number | Civ. A. No. 88-7993. |
| Citation | 725 F. Supp. 849 |
| Parties | Amy CHARTAN, Individually and on behalf of her children, Eric J. Chartan and Dana E. Chartan, and as Co-Executrix of the Estate of Steven P. Chartan, deceased v. The CHUBB CORPORATION and Chubb and Son, Inc. and the Sea Insurance Company, Ltd. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Morris M. Shuster, Cohen, Shapiro, Polisher, Shiekman and Cohen, Philadelphia, Pa., for plaintiff.
Robert B. White, Jr., Rapp, White, Janssen & German, Ltd., Philadelphia, Pa., for defendants.
Plaintiff Amy Chartan commenced this action to recover uninsured motorist benefits under an excess insurance policy. The claim stems from injuries sustained by plaintiff's decedent husband in an automobile accident. Presently before the court are cross motions for partial summary judgment filed by plaintiff and defendant Sea Insurance Company, Ltd. ("Sea") regarding the maximum amount recoverable under the excess policy. In addition, Sea requests that, once this court determines the applicable policy limit, the court stay further adjudication as to fault and amount pending commercial arbitration of those issues. For the reasons set forth below, the court holds that plaintiff is entitled to a maximum of $1,000,000 uninsured motorist coverage under the Sea policy, and that the issues of fault and amount are arbitrable. The court will therefore stay further proceedings pending commercial arbitration.
The following facts are undisputed. On November 28, 1986, plaintiff's decedent, Dr. Steven P. Chartan, was fatally injured by an uninsured motorist. At the time of the accident, decedent was insured under two policies, a primary policy written by The Aetna Casualty and Surety Company ("Aetna") and an excess policy written by defendant Sea. Both the Aetna and Sea policies covered two automobiles owned by decedent.
The Aetna primary policy provided $305,000 of liability coverage and $305,000 of uninsured motorist coverage for each accident. Separate provisions of the Sea excess policy stated that the limits for liability coverage and uninsured motorist coverage would not exceed that amount listed on the policy's coverage page. The coverage page stated, among other things, "Limit of Liability $1,000,000." At the bottom of the page was typed, "YOUR POLICY COV-
ERS 1 RESIDENTIAL PROPERTY, 2 VEHICLES, 2 LICENSED DRIVERS."
In the fall of 1988, plaintiff arbitrated her claim for uninsured motorist benefits against Aetna under the primary policy. After hearing, the arbitration panel awarded plaintiff $610,000 from Aetna. Aetna made full satisfaction of this award in November 1988, in return for which plaintiff released Aetna from further liability. Shortly after the arbitration award, plaintiff commenced this action against, inter alia, Sea to recover uninsured motorist benefits under the Sea excess policy.
A motion for summary judgment will be granted only if the moving party can demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). Whether such a genuine issue exists is determined by whether the evidence is such that the factfinder could find reasonably in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
In this case, there remains a factual dispute regarding the precise manner in which the accident in question happened. However, these factual discrepancies will be relevant only when the questions of fault and damage amount are addressed at a later time. For purposes of deciding the parties' pending cross motions for summary judgment as to policy limit and arbitrability, there is no genuine issue of material fact. Moreover, the Third Circuit has recently held that issues such as policy limits and the arbitrability of claims, which relate to the interpretation of an insurance policy, are issues properly left to legal determination. Myers v. State Farm Insurance Co., 842 F.2d 705, 708 (3d Cir.1988).
Plaintiff seeks to recover $2,000,000 from Sea, claiming that she is entitled to "stack" the uninsured motorist coverage on the two automobiles insured under the excess policy. Sea acknowledges that under Pennsylvania law plaintiff is entitled to stack uninsured motorist benefits even in the face of clear and unambiguous contractual language to the contrary. However, Sea contends that such stacking may not exceed the limits of third person liability coverage set forth in the plaintiff's policy. Sea maintains that plaintiff's recovery is necessarily limited to $1,000,000, the maximum amount available to third parties under the bodily injury provisions of her policy.
A threshold issue for the court to decide is whether liability coverage under the Sea policy is indeed unambiguously limited to $1,000,000. Plaintiff argues that the policy language, "Limit of Liability $1,000,000" and "YOUR POLICY COVERS ... 2 VEHICLES ..." is subject to two interpretations. According to plaintiff, this language could set a $1,000,000 coverage limit per vehicle for a total limit of $2,000,000, or it could set a maximum limit of $1,000,000 for two vehicles. Plaintiff contends that such ambiguity must be construed against the insurer, citing Blocker v. Aetna Casualty & Surety Co., 232 Pa. Super. 111, 332 A.2d 476 (1975).
While an ambiguity in an insurance policy is normally construed against the insurer, courts will not strive to create an ambiguity where none in fact exists. Patterson v. Reliance Insurance Companies, 332 Pa. Super. 592, 481 A.2d 947 (1984); Votedian v. General Accident Fire and Life Assurance Corp., 330 Pa.Super. 13, 478 A.2d 1324 (1984). Here, Sea's policy clearly indicated that its liability was limited to $1,000,000. Moreover, plaintiff's alternative construction of the policy language could give rise to ambiguity only if one permitted the stacking of liability coverage. However, this court has found no legal authority that would authorize the stacking of such third party liability coverage. On the contrary, where courts have held that stacking is permitted, the decisions have been limited to uninsured motorist coverage, see, e.g., Utica Mutual Insurance Co. v. Contrisciane, 504 Pa. 328, 473 A.2d 1005 (1984); Harleysville Mutual Casualty Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968), and underinsured motorist coverage, Tallman v. Aetna Casualty and Surety Co., 372 Pa.Super. 593, 539 A.2d 1354 (1988), appeal denied, 520 Pa. 607, 553 A.2d 969 (1988). For these reasons, the court is unpersuaded that one could sensibly construe the parties' agreement to provide $2,000,000 of liability coverage. The plain language of the policy unambiguously limits all coverage to $1,000,000.
The court must next determine whether, given the $1,000,000 liability coverage limit, plaintiff may nonetheless stack uninsured motorist coverage on the two automobiles insured under the excess policy. The controlling statute in this regard is the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.Cons.Stat. Ann. §§ 1701 et seq. ("the MVFRL"). Neither the MVFRL nor its predecessors, the No-Fault Motor Vehicle Insurance Act1 and the Uninsured Motorist Act,2 refer directly to the propriety of stacking uninsured and underinsured coverage. As a result, the courts have been forced to determine how the purpose and policy of the various acts relate to the stacking issue.
The Pennsylvania Supreme Court first addressed the issue in 1968 when it struck down policy clauses prohibiting the stacking of uninsured motorist benefits. In Harleysville Mutual Casualty Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968), the court held that such anti-stacking clauses, by failing to provide adequate protection to innocent victims of irresponsible drivers, violated public policy and the legislative intent behind the uninsured motorist statute. Later, in holding that all intended beneficiaries of an insurance policy were entitled to stack coverage, the Pennsylvania Supreme Court reiterated that stacking furthered the goal of the legislature to provide protection to innocent victims. Utica Mutual Insurance Company v. Contrisciane, 504 Pa. 328, 338, 473 A.2d 1005, 1010 (1984).3
An issue left unaddressed by earlier opinions, however, is when, if ever, contractual proscriptions against stacking are permissible. Against this backdrop, the General Assembly enacted the MVFRL. The basic provisions dealing with uninsured and underinsured motorist coverage are found in Subchapter C of the statute, §§ 1731-1736. Section 1731 sets general minimum requirements for uninsured and underinsured motorist coverage for a motor vehicle equal to the minimum amount of liability coverage required under the statute. 75 Pa.Cons.Stat.Ann. § 1731(a).4 The section also notes, in language parallelling that of the Uninsured Motorist Act, that a major purpose of the MVFRL is to provide protection to innocent persons injured by uninsured or underinsured drivers. 75 Pa. Cons.Stat.Ann. §§ 1731(c).
Sections 1734 and 1736 delineate the extent of this protection. Section 1734 allows an insured to elect uninsured and underinsured coverage in amounts less than the insured's liability coverage, provided that this coverage does not fall below the minimum requirements of §§ 1702 and 1731. Section 1736, however, states that an insured who purchases liability coverage in excess of the minimum amount required by the MVFRL may obtain uninsured and underinsured motorist coverage in an amount equal to, but not greater than, the amount of liability coverage. 75 Pa.Cons. Stat. § 1736 (emphasis added). Thus, the plain language of § 1736 undercuts plaintiff's argument by setting limits on the amount of recoverable uninsured benefits.
Permitting individuals to stack uninsured or underinsured motorist...
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