Kmonk-Sullivan v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 19 December 2001 |
| Parties | Michelle C. KMONK-SULLIVAN, George Laufer, Mary Marano, Abby L. Resnick, Lesia Cuccaro, Joseph Dziniak, Frank Scialabba, Cristy Holmes, Joseph Orth, Lisa Hopson, Jennifer Eggan, James Fierle, Donald Greg, Theodore Romano, Theodore J. Slippy, Robert Whalen, Mary Ann Woods, Geraldine Young, Jamie Winkler, Christena Kovatch, Jerry Kovatch, Christopher Blickenderfer, Joyce Calabrese, Richard Carryer, Shannon Moore, Eileen Rhodes, Doris Robinson, Robert Mowery, Jean Ryer, Nan Camp, Donna Tieren, John Caskey, Gloria Somerhalder, Karen Weil, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Nationwide Insurance Companies, Commercial Union Insurance Companies, Prudential Insurance Company Of America, Aetna, Inc, Erie Insurance Group, Allstate Insurance Company, Progressive Casualty Insurance Company, Metropolitan Life Insurance Company, Liberty Mutual Insurance Group, American States Insurance, Todd Prugar, Patricia Madden, Janet Bradley, Susan Johnson, Paul Johnson, Catherine Dahlgaard, Donald Edgar, Elaine Kruzynski, Lawrence Pavlok, Joseph Etheridge, Stephanie Beck, Joint Appeal of Nationwide Insurance Companies, Commercial Union Insurance Companies, Prudential Insurance Company of America, Aetna, Inc., Erie Insurance Group, Allstate Insurance Company and American States Insurance. Sandra W. Midili, In her own right, and as Executrix of the Estate of Arnold W. Midili, Deceased, v. Erie Insurance Group, Joint Appeal of Nationwide Insurance Companies, Commercial Union Insurance Companies, Prudential Insurance Company of America, Aetna, Inc., Erie Insurance Group, Allstate Insurance Company and American States Insurance. |
| Court | Pennsylvania Supreme Court |
Dale G. Larrimore, Philadelphia, for PA Trial Lawyers Ass'n, amicus curiae.
Stephen McCloskey, for Erie Ins. Group.
Avrum Levicoff, for Aetna & Surety Co.f
Daniel P. McDyer, Pittsburgh, for American States Ins. Co.
Larry Alan Silverman, Robert J. Marino, Pittsburgh, for Allstate Ins. Co.
James C. Haggerty, Philadelphia, for Nationwide Ins. Co.
Scott J. Tredwell, Philadelphia, for Nationwide Ins. Companies, et al.
Peter B. Skeel, Lauren M. Wylie, for Prudential Ins. Co. of America.
Gary Stephen Turetsky, Philadelphia, for Selective Ins. Group, Inc., amicus curiae.
John P. Gismondi, Pittsburgh, for Kmonk-Sullivan.
John A. Tumolo, Pittsburgh, for Sandra W. Midili.
Steven Craig Gillman, Philadelphia, for Martin and Allen, amicus curiae.
Before JOHN P. FLAHERTY, C.J., and ZAPPALA, CAPPY, CASTILLE, NIGRO, NEWMAN, and SAYLOR, JJ.
This appeal involves multiple underinsured motorist (hereinafter "UIM") claims in two independent cases. The plaintiffs commenced their claims against their insurers after they were unable to obtain full recoveries from the government entities that caused their injuries because of the statutory limits on the amount of damages that a Commonwealth or local agency may be required to pay pursuant to Sections 8528 and 8549 of the Judicial Code, 42 Pa.C.S §§ 8528 and 8549, respectively. The issue in this case is whether the Appellant-insurers' policy exclusion of government vehicles from the definition of underinsured motor vehicles violated the Motor Vehicle Financial Responsibility Law (hereinafter "MVFRL"), 75 Pa.C.S. §§ 1701-1799.
Before turning to a discussion of the legal issue, we set forth the facts and procedural history of the two cases, Kmonk-Sullivan v. State Farm Mutual Automobile Insurance Company and Midili v. Erie Insurance Group.
In Kmonk-Sullivan, approximately fifty passengers on a Port Authority of Allegheny County (hereinafter "PAT") bus sustained injuries when it collided head-on with another PAT bus. PAT is a Commonwealth agency and is therefore subject to the statutory provisions for sovereign immunity and exceptions to sovereign immunity pursuant to the Judicial Code. The Judicial Code provides that, in an action against the Commonwealth arising from the "same cause of action or transaction or occurrence," the damages the Commonwealth must pay are limited to no more than $250,000.00 for any one person or a total of $1,000,000.00. 42 Pa.C.S. § 8528(b).
PAT filed an interpleader action in the Court of Common Pleas of Allegheny County and paid the injured individuals $1,000,000.00. Unfortunately, once the money was distributed among the injured individuals, it only satisfied approximately one-third of their damages.
Thereafter, thirty-four of the injured individuals filed UIM claims with their own automobile insurance carriers (Appellant-insurers) to recover the remaining portion of their damages. Based on the exclusions in each policy, which explicitly excluded governmental vehicles from the definition of an underinsured vehicle, the insurers denied the claims.
The injured individuals filed an application for declaratory judgment in the Court of Common Pleas of Allegheny County. The trial court entered an Adjudication and Decree Nisi on stipulated facts in favor of the insureds finding that "a statutory damage cap on the amount of damages does not preclude a claimant from being legally entitled to recover damages." Kmonk-Sullivan v. State Farm Mutual Automotive Ins. Co., GD 97-01115, slip. op. at 5 (Allegheny Co. Ct. of Commom Pleas, Oct. 10, 1997). On December 10, 1997, the trial court then denied the insurers' post-trial motions and entered a final judgment.
The insurance companies filed an appeal with the Superior Court. On September 3, 1998, a three-judge panel reversed the trial court. However, on April 1, 1999, the Superior Court granted the insureds' Application for Reargument. The Superior Court en banc affirmed the decision of the trial court in favor of the insureds and concluded that the government vehicle exclusions impermissibly conflicted with the provisions of the MVFRL and violated public policy. Kmonk-Sullivan v. State Farm Mutual Automobile Insurance Co., 746 A.2d 1118 (Pa.Super.1999).
In the second case in this appeal, Arnold W. Midili died in an automobile accident in which a motor vehicle operated by an employee of Allegheny County struck the car he was driving. There is no dispute that the death of Mr. Midili resulted from the negligent conduct of the county employee. Allegheny County paid Sandra Midili, the decedent's wife, $500,000.00, the maximum amount payable for a single tort claim against a local government unit pursuant to 42 Pa.C.S. § 8553(b).
Mrs. Midili then submitted a claim to Erie Insurance Group (hereinafter "Erie") in an attempt to recover $300,000.00 in UIM benefits pursuant to the personal automobile insurance policy Erie had issued to her and her decedent-husband. Notwithstanding that Erie admitted that Mrs. Midili's total damages exceed $800,000.00, it refused to pay the claim. Erie denied coverage because it concluded that the government vehicle exclusion in its policy precluded Mrs. Midili from recovering UIM benefits, given that Mr. Midili was killed in an automobile accident caused by the negligence of a county employee while operating a government vehicle. On June 20, 1997, a board of arbitrators found in favor of Erie. On October 27, 1997, a Washington County trial court adopted the arbitrators' decision, and refused Mrs. Midili's motion to vacate the award.
Mrs. Midili filed an appeal to the Superior Court. On September 3, 1998, a three-judge panel of the Superior Court upheld the denial of benefits to Mrs. Midili. The Superior Court granted reargument, and on April 1, 1999, the court en banc heard argument in Midili and Kmonk-Sullivan, supra at the same time.
Consistent with Kmonk-Sullivan, the Superior Court determined that the government vehicle exclusion violated the terms of the MVFRL and was against public policy. Therefore, the Superior Court reversed the judgement of the Court of Common Pleas of Washington County, which had upheld the denial of UIM benefits, and remanded with instructions to enter judgment in favor of Mrs. Midili. Midili v. Erie Insurance Group, 746 A.2d 1126 (Pa.Super.2000).
Faced with the Opinions of the Superior Court determining that Appellants (insurers in Kmonk-Sullivan and Midili (collectively, "insurers") would be required to provide coverage despite their express exclusion of government vehicles from their UIM policies. Insurers sought review, which this Court granted. The insurers assert that the policies define "Underinsured Motor Vehicle" in such a way as to explicitly exclude government vehicles and, thereby, specifically foreclose recovery of UIM benefits when the tortfeasor is a government entity.1 They reason that an underinsured vehicle is defined as one for which "limits of available ... self-insurance are insufficient" [75 Pa.C.S. § 1702] and that the available limits of the government's self-insurance may not be made insufficient by the damages cap of the Judicial Code. Accordingly, the insurers conclude that they may permissibly exclude government vehicles from coverage because the MVFRL's definition of underinsured vehicles does not include government vehicles.
Insureds in Kmonk-Sullivan and Midili (collectively "insureds") admit that the insurance companies' policy language is unambiguous, however, they assert that it is not the terms of the policies that are in dispute, but whether the terms violate the provisions of the MVFRL. Insureds argue that because the MVFRL is broad enough to include government vehicles in the definition of "underinsured motor vehicle[s]," the insurers' exclusion of the vehicles from coverage violates the MVFRL.
As we have often observed, when statutes have a bearing on the outcome of a case, we begin by analyzing the express words of the statutes. Philadelphia Housing Authority v. Commonwealth of Pennsylvania Labor Relations Board, 508...
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