Hoffmaster v. Harleysville Ins. Co.

Decision Date25 April 1995
Citation657 A.2d 1274,441 Pa.Super. 490
PartiesGrace A. HOFFMASTER, an Individual, and Keystone Insurance Company, a Corporation, Appellant, v. HARLEYSVILLE INSURANCE COMPANY, a Corporation, Blair Vilsack, an Individual, City of Pittsburgh, a Municipal Corporation, Bloomfield Italian Independent Club and Marlene Studeny and Gerald Studeny.
CourtPennsylvania Superior Court

Keithley D. Mulvihill, Pittsburgh, for appellees.

Before ROWLEY, President Judge, and McEWEN and POPOVICH, JJ.

POPOVICH, Judge:

This is an appeal from the order of March 16, 1994, entered in the Court of Common Pleas of Allegheny County, denying the motion for summary judgment filed by appellants, Grace Hoffmaster and Keystone Insurance Company ("Keystone"), and granting the motion for summary judgment filed by appellees, Blair Vilsack and Harleysville Insurance Company ("Harleysville"). 1 Herein, we are presented with questions of first impression for a Pennsylvania appellate court: whether "other insurance" clauses provided by each automobile liability insurance policy containing virtually identical language should be disregarded as mutually repugnant thereby rendering each insurer to share generally in the loss; and whether apportionment of the loss should be made equally or be prorated on the basis of the maximum coverage limit of each policy. Upon review, we affirm.

The case was submitted to the lower court on the following stipulated facts:

STIPULATED STATEMENT OF FACTS

This case arises out of an accident on June 13, 1986 at the intersection of Sapphire Way and Adeline Street in the City of Pittsburgh. A car owned by Blair Vilsack and driven by Grace Hoffmaster collided with a car driven by Marlene Studeny. Mr. Vilsack was insured under a policy issued by Harleysville Mutual Insurance Company with a liability limit of $100,000. Ms. Hoffmaster was insured under a policy issued by Keystone Insurance Company with a liability limit of $50,000.

Marlene Studeny filed a lawsuit against Grace Hoffmaster and Blair Vilsack. Without admitting liability, Harleysville paid $25,000 and Keystone paid $5,000 to Marlene Studeny in settlement of her claim.

Both the Harleysville and Keystone policies would provide coverage to Grace Hoffmaster as the driver of Blair Vilsack's car in the absence of any other applicable insurance. The two policies contain identical clauses which are set forth under the heading "Other Insurance" and state:

If there is other applicable insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess over any other collectible insurance.

Copies of the clauses from the Harleysville and Keystone policies are attached and marked Exhibits A and B. 2

R.11.

On June 17, 1991, Keystone filed a complaint in a declaratory judgment action against Harleysville seeking indemnity and defense costs incurred by Keystone in the lawsuit between Marlene Studeny and Grace Hoffmaster. R.1. Thereafter, both Harleysville and Keystone filed cross-motions for summary judgment. R.10-13. On March 16, 1994, the court below entered a memorandum opinion and order denying Keystone's motion for summary judgment and granting Harleysville's motion for summary judgment. The lower court rejected Keystone's argument that the two policies be read congruently so that Keystone would be deemed an excess insurer and Harleysville a primary insurer. Instead, the lower court found that the "Other Insurance" clauses were mutually repugnant and held each insurer to share equally in indemnity and defense costs. Trial Opinion 3/16/94 at 3-4. This timely appeal ensued.

Keystone poses the following issues for our review:

1. Whether the plain language of identical "Other Insurance" clauses, based upon facts in this case, can be read in conjunction to determine primary and excess liability as between insurance companies.

2. Assuming that the defense and indemnification must be shared on a pro rata basis, whether each insurance company should pay equally despite different liability limits in each policy.

Appellant's Brief at 2.

"The proper construction of a policy of insurance is a matter of law which may properly be resolved by a court pursuant to a motion for summary judgment." Fisher v. Harleysville Ins. Co., 423 Pa.Super. 362, 365, 621 A.2d 158, 159 (1993), citing, Steinbacher v. Page, 410 Pa.Super. 586, 588, 600 A.2d 608, 609 (1991); Vale Chem. Co. v. Hartford Accident & Indem. Co., 340 Pa.Super. 510, 516 n. 4, 490 A.2d 896, 899 n. 4 (1985), rev'd on other grounds, 512 Pa. 290, 516 A.2d 684 (1986). Summary judgment may only be entered where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fisher, 423 Pa.Super. at 363-65, 621 A.2d at 159; Pa.R.Civ.P. 1035(b), 42 Pa.C.S.A. An appellate court may disturb a trial court's entry of summary judgment only where there has been an error of law or clear abuse of discretion. DeWeese v. Anchor Hocking Consumer And Industrial Products Group, 427 Pa.Super. 47, 50-52, 628 A.2d 421, 423 (1993); Dibble v. Security of America Life Ins. Co., 404 Pa.Super. 205, 207-09, 590 A.2d 352, 353 (1991).

Guided by the aforementioned standard of review, we proceed in addressing the merits of Keystone's claims. Initially, we note that there are three general categories of "other insurance" clauses which determine how liability is to be assigned when multiple coverage exists. "The first, a 'pro-rata' clause, limits the liability of an insurer to a proportion of the total loss. The second, an 'escape' clause, seeks to avoid all liability. The third, an 'excess' clause ... provides that the insurance will only be excess." Carriers Ins. Co. v. American Policyholders' Ins. Co., 404 A.2d 216, 218 (Me.1979). See Western Cas. & Sur. v. Universal Underwriters, 232 Kan. 606, 609-12, 657 P.2d 576 579-80 (1983); 7A Am.Jur.2d Automobile Insurance § 434 (2d ed. 1980).

Here, the policies provided by Keystone and Harleysville each have "pro-rata" and "excess" clauses. The parties have stipulated that the language of those clauses is identical. Keystone asserts that although the "Other Insurance" clauses are identical, they do not conflict when properly interpreted as the insurers intended. Keystone maintains that a construction of both policies, in light of the facts of this case, reveals that the parties intended Keystone to provide excess insurance and Harleysville, primary insurance. Keystone directs our court's attention to the definition of "you" stated in both policies to buttress its argument that only Keystone intended to provide excess insurance to Grace Hoffmaster.

We note that Keystone's brief in support of its motion for summary judgment, which was presented to the lower court, does not mention how the definition of "you" affects the construction of the "Other Insurance" clauses, and the court below did not address this claim. R.11, 14.

"Issues not raised in the lower court are waived and cannot be raised for the first time on appeal." Pa.R.A.P. 302(a), 42 Pa.C.S.A. See Kryeski v. Schott Glass Technologies, Inc., 426 Pa.Super. 105, 626 A.2d 595 (1993).

Consequently, we find as waived appellant's argument that the policies' definitions control the question of which insurer provides primary coverage.

Even if review of the policies' definitions were appropriate at this juncture, we decline to delve into such semantic microscopy. "It merely encourages the continuing draftsmanship battle by which insurers seek still more specific policy terms, and the end is not in sight." Carriers Ins. Co., 404 A.2d at 219, quoting, Note, Concurrent Coverage in Automobile Liability Insurance, 65 Colum.L.Rev. 319 (1965). "The question of whether the particular insurance is primary or excess is not a public matter but merely a concern of the insurance companies which have extended coverage to the risk." Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 563, 147 A.2d 529, 534 (1959) (citations omitted). We wholeheartedly embrace the following reasoning articulated by the Supreme Judicial Court of Maine in Carriers Ins. Co., 404 A.2d at 220:

We perceive no methodology which is neither arbitrary nor utterly mechanical by which we could rationally resolve the enigma of which policy should be given effect over the other. Both clauses attempt to occupy the same legal status. Any construction this Court renders should attempt to maintain the status quo. This goal can be achieved only by abandoning the search for the mythical "primary" insurer and insisting instead that both insurers share in the loss. Such an approach best carries out the intent of the insurers which was to reduce or limit their liability.

We are of the opinion that the Supreme Court of Pennsylvania would subscribe to the rule shared by the vast majority of courts from other jurisdictions. That rule provides that irreconcilable "other insurance" clauses in automobile liability insurance policies are to be disregarded as mutually repugnant thereby rendering each of the coverages to be treated as primary insurance. See Universal Underwriters Ins. Co. v. Allstate Ins. Co., 99 Md.App. 595, 602-04, 638 A.2d 1220, 1224 (1994).

"[I]f literal effect were given to both 'excess insurance' clauses of the applicable policies, neither policy would cover the loss and such a result would produce an unintended absurdity." 7A Am.Jur.2d Automobile Insurance § 434, pp. 87-88. "[A]ny attempt to give effect to the 'other insurance' provision of one policy while rejecting it in another is like pursuing a will o' the wisp." Lamb-Weston, Inc. v. Oregon Automobile Ins. Co., 219 Or. 110, 122, 341 P.2d 110, 115-116 (1959). "[W]here the clause in each policy ... attempts to make...

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