Gallagher v. Ohio Cas. Ins. Co.

• Decision Date: 09 April 2014
• Docket Number: CIVIL ACTION NO. 13-0168
• Parties: MARIANNE GALLAGHER Plaintiff v. OHIO CASUALTY INSURANCE COMPANY Defendant
• Court: U.S. District Court — Eastern District of Pennsylvania

MARIANNE GALLAGHER Plaintiff v. OHIO CASUALTY INSURANCE COMPANY Defendant

CIVIL ACTION NO. 13-0168

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

APRIL 9, 2014

NITZA I. QUIÑONES ALEJANDRO, J.

MEMORANDUM OPINION

INTRODUCTION

Before the Court is a motion for summary judgment filed by Ohio Casualty Insurance Company ("Ohio Casualty"), premised on the arguments that: (1) Plaintiff, Marianne Gallagher ("Gallagher"), is not entitled to underinsured motorist ("UIM") insurance coverage, and (2) the doctrine of collateral estoppel precludes recovery since liability and damages were decided by an arbitrator in the underlying state court action which, subsequently, settled. [ECF 15]. Gallagher opposes the motion for summary judgment [ECF 16]. The parties filed additional replies, [ECF 19, 22], and the matter is ripe for consideration.¹

For the reasons set forth herein, the motion for summary judgment is granted.

BACKGROUND

Based upon a careful review of the pleadings, depositions, and exhibits, the pertinent facts, viewed in the light most favorable to Gallagher as the nonmoving party, are summarized as follows:

On March 25, 2009, Gallagher, a resident of Pennsylvania,² sustained injuries when her motor vehicle was struck by a vehicle driven by Maya Rondel ("Rondel"). At the time of the accident, Rondel was insured by Allstate Insurance Company ("Allstate") with a policy limiting liability coverage at $100,000; Gallagher was insured by Peerless Indemnity Insurance Company ("Peerless"), Policy Number PLP W464343 ("Policy") with a policy liability coverage also of $100,000.³ Gallagher made a claim for Underinsured Motorist ("UIM") benefits under her own policy, which provided $100,000 UIM coverage,⁴ and a timely demand for Personal Injury Protection coverage.⁵

On December 13, 2010,⁶ Gallagher filed a complaint in Bucks County Court of Common Pleas, Number 2010-12763, against Maya and Victor Rondel, alleging negligence and damages in excess of $50,000.⁷

Prior to the resolution of the state court action, on January 11, 2013, Gallagher filed this breach of contract action against Ohio Casualty (a Delaware corporation with a principal place of business in Ohio), seeking the underinsured motorist benefits coverage denied for injuries suffered in the March 25, 2009, motor vehicle accident.

On July 12, 2013, Gallagher and Rondel agreed to submit the state court matter to a private non-binding arbitration before Stephen J. Negro, Esquire. After holding an evidentiary hearing, Attorney Negro issued a document dated July 24, 2013, entitled "Settlement Value", in which he found "that the total value of Plaintiff's damages was $41,715."⁸ Although in the federal complaint, Plaintiff avers that Rondel was found to be underinsured,⁹ this conclusion is not indicated in the Settlement Value document.

Gallagher declined the settlement value determination and on July 29, 2013, sent a Statement of Intention to Proceed to the Bucks County Prothonotary requesting to move the pending matter forward. However, on August 6, 2013, this civil action was marked terminated.

On August 13, 2013, pursuant to the provisions of her Policy, Gallagher's counsel corresponded with Ohio Casualty, seeking approval of the tentative settlement. On September 4, 2013, Ohio Casualty responded to counsel's Notice of a Tentative Settlement, advising that it had no objection. Thereafter, Gallagher received $41,715, as settlement from Allstate and signed a settlement release that contained the following language: "[t]his releases all third party claims only and not claims for underinsured motorist coverage under Ohio Casualty Insurance Company, Policy No. PLP W464343, Claim No. 103624830."

LEGAL STANDARD OF REVIEW

When reviewing a motion for summary judgment, the court must determine "whether the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show that there is no genuine issue of material fact and whether the moving party is, therefore, entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Macfarlan v. Ivy Hill SNF, LLC, 675 F.3d 266, 271 (3d Cir. 2012) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). A disputed issue is 'genuine' only if there is a sufficient evidentiary basis on which a reasonable jury could find for the nonmoving party. See Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A factual dispute is 'material' only if it might affect the outcome of the suit under governing law. Burton v. Teleflex Inc., 707 F.3d 417, 425 (3d Cir. 2013) (citing Scheidemantle v. Slippery Rock Univ. State Sys. of Higher Educ, 470 F.3d 535, 538 (3d Cir. 2006)); Doe v. Luzerne County, 660 F.3d 169, 175 (3d Cir. 2011) (citing Gray v. York Papers, Inc., 957 F.2d 1070, 1078 (3d Cir. 1992)). A court's task is not to resolve disputed issues of fact, but to determine whether there exist any factual issues to be tried. See Anderson, 477 U.S. at 248-49.

The moving party bears the initial burden of showing that there is no genuine issue of material fact and is entitled to relief. See Celotex Corp., 477 U.S. at 323. Once the moving party has met its initial burden, the nonmoving party must present "specific facts showing that there isa genuine issue for trial," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)), offering concrete evidence supporting each essential element of the claim. See Celotex Corp., 477 U.S. at 322-23. The nonmoving party must show more than "[t]he mere existence of a scintilla of evidence" for elements on which said party bears the burden of production, Anderson, 477 U.S. at 252, and may not "rely merely upon bare assertions, conclusory allegations or suspicions." Fed. R. Civ. P. 56(e); Fireman's Ins. Co. of Newark, New Jersey v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). There must be evidence on which the jury could reasonably find for the nonmovant. See Jakimas v. Hoffmann-La Roche, Inc., 485 F.3d 770, 777 (3d Cir. 2007) (quoting Anderson, 477 U.S. at 252).

In deciding a motion for summary judgment, the reviewing court should view the facts in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Scheidemantle, 470 F.3d at 538; Bouriez v. Carnegie Mellon Univ., 585 F.3d 765, 770 (3d Cir. 2009). Whenever a factual issue arises which cannot be resolved without a credibility determination, the court must credit the nonmoving party's evidence over that presented by the moving party. See Anderson, 477 U.S. at 255. If there is no factual issue and if only one reasonable conclusion could arise from the record regarding the potential outcome under the governing law, summary judgment must be awarded in favor of the moving party. Id. at 250.

DISCUSSION

The pertinent facts alleged in the complaint are not disputed. Succinctly, these facts are: Gallagher was involved in a motor vehicle accident with Rondel. She filed a state court action and the matter was submitted by agreement to non-binding arbitration. Damages were assessedin favor of Gallagher and against Rondel. Gallagher initially refused the arbitration assessed amount of damages but later settled the case for an identical amount.¹⁰

At issue before this Court is whether Gallagher has a viable legal claim. To that end, this Court will examine the arguments made regarding the applicable provisions of Pennsylvania Motor Vehicle Financial Responsibility Law; the exhaustion clause in the underinsured motorist coverage provision of Gallagher's insurance policy and relevant case law; and the doctrine of collateral estoppel.

Pennsylvania Motor Vehicle Financial Responsibility Law

In a diversity matter such as this, a federal court must apply the substantive law of the state which encompasses its district, Erie R.R. v. Tompkins, 304 U.S. 64 (1938), including the conflict of law rules of the forum state. DiSantis v. Allstate Ins. Co., 1996 U.S. Dist. LEXIS 5320, at *7 n. 4 (E.D. Pa. April 19, 1996) (citation omitted). To resolve this issue, Pennsylvania courts employ a "hybrid approach that combines the approaches of both Restatement II ... and interest analysis." Id. (citing Carrick v. Zurich-American Ins. Group, 14 F.3d 907, 909 (3d Cir. 1994) (quoting Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir. 1991) (internal punctuation omitted)). Based upon this approach, it is clear to this Court that Pennsylvania's substantive law applies in this matter since (1) the accident occurred in Pennsylvania, (2) Gallagher is a resident of Pennsylvania, and (3) the insurance contract between Gallagher and Ohio Casualty's insurance agent was entered into in Pennsylvania.¹¹ Id. (citing PECO Energy Co. v. Boden, 64 F.3d 852, 855 (3d Cir. 1995)).

Relevant to the arguments made in the motion for summary judgment, the Pennsylvania Motor Vehicle Financial Responsibility Law ("MVFRL") § 1731 requires uninsured ("UM")¹²and underinsured ("UIM") motorist coverage in amounts equal to the policy's liability amount for bodily injury. 75 Pa. C.S. § 1731; see also State Farm Mut. Auto. Ins. Co. v. Gillespie, 152 Fed. Appx. 201, 202 (3d Cir. 2005). The MVFRL defines "underinsured motor vehicle" as one for which the limits of available liability insurance and self-insurance are insufficient to pay losses and damages. 75 Pa. C.S. § 1702 (emphasis added). Thus, a purpose of the UIM provisions is to provide coverage to those injured by a tortfeasor who lacks adequate insurance coverage for the injuries caused. See D'Adamo v. Erie Insurance Exchange, 4 A.3d 1090, 1095 (Pa. Super. 2010); Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180, 1192 (Pa. 2008) (citing Pennsylvania National Mut. Cas. Co. v. Black, 916 A.2d 569, 580 (Pa. 2007)) (emphasis added). UIM coverage is triggered when the tortfeasor's insurance liability coverage is not sufficient to compensate the innocent person for the...