Kromer v. Reliance Ins. Co.

• Decision Date: 04 June 1996
• Citation: 677 A.2d 1224,450 Pa.Super. 631
• Parties: Leroy KROMER, Jr., Appellant, v. RELIANCE INSURANCE COMPANY; Federal Insurance Company and Solid Waste Services, Inc., Hoch Sanitation Services, Inc., George J. Balikian. George J. BALIKIAN, Appellant, v. RELIANCE INSURANCE COMPANY; Federal Insurance Company and Solid Waste Services, Inc., Hoch Sanitation Services, Inc., Leroy Kromer, Jr.
• Court: Pennsylvania Superior Court

Page 1224

677 A.2d 1224

450 Pa.Super. 631

Leroy KROMER, Jr., Appellant, v. RELIANCE INSURANCE COMPANY; Federal Insurance Company and Solid Waste Services, Inc., Hoch Sanitation

Services, Inc., George J. Balikian.

George J. BALIKIAN, Appellant, v. RELIANCE INSURANCE COMPANY; Federal Insurance Company and Solid Waste Services, Inc., Hoch Sanitation

Services, Inc., Leroy Kromer, Jr.

Superior Court of Pennsylvania.

Argued Jan. 31, 1996.

Filed June 4, 1996.

Matthew Kurzweg, Pittsburgh, for Kromer.

Frank J. Madey, Allentown, for Balikian.

John E. Freund, III, Allentown, for Reliance Insurance, appellee.

Michael J. Plevyak, Paoli, for Federal Insurance Company and Solid Waste Services, Inc., and Hoch Sanitation Services, Inc., appellees.

Before CAVANAUGH, EAKIN and OLSZEWSKI, JJ.

CAVANAUGH, Judge.

This is an appeal from a consolidated Declaratory Judgment Action in which the trial court entered a judgment in favor of appellees Reliance Insurance Company and Federal Insurance Company, and against appellants Leroy Kromer, Jr. and George J. Balikian. Appellants argue that Reliance's excess-umbrella policy and Federal's commercial excess policy are "motor vehicle liability insurance policies", as defined by the 1984 Pennsylvania Motor Vehicle Financial Responsibility Law ["PMVFRL"] and, that they therefore, are required to provide uninsured and underinsured motorist coverage in the amount of their stated bodily injury liability coverage. 75 Pa.C.S.A. § 1731(a) (1984). We disagree and affirm.

There was evidence to support the following: Appellants Leroy Kromer and George Balikian were employed by Hoch Sanitation Services, Inc., and both worked as runners on a garbage truck. While working, appellants were struck and injured by a vehicle insured by State Farm Insurance Company. Both appellants settled with State Farm for the limits of coverage under the State Farm policy ($100,000/$300,000).

Hoch Sanitation maintained a business automobile insurance policy with Reliance/Planet Insurance Company which provided uninsured and underinsured motorist coverage with a $1,000,000 liability limit. Both appellants submitted claims and received compensation, with Balikian receiving $750,000 and Kromer receiving $250,000.

Reliance had also issued an excess-umbrella policy to Hoch Sanitation with a $1,000,000 liability limit. In addition, Federal Insurance Company issued a commercial excess liability policy with an $8,000,000 limit to cover any excess claims above Reliance's excess-umbrella policy. Appellants sought Declaratory Judgment from the Lehigh County Court of Common Pleas that the subject excess-umbrella policies were motor vehicle liability insurance policies as defined by the PMVFRL, and therefore, provided additional underinsured motorist coverage.

Before rendering its decision, the trial court not only recognized that the Pennsylvania appellate courts have not addressed whether umbrella/excess policies provide uninsured/underinsured motorist coverage, but also noted the existing split of authority over this issue. The trial court then concluded that the better rule (which is followed by the majority of jurisdictions and is consistent with the decision of Electric Insurance Company v. Rubin, 32 F.3d 814 (3d Cir.1994), which, in turn, predicted how our Supreme Court would decide this issue) is that umbrella and excess liability policies do not provide uninsured/underinsured motorist coverage. Upon reviewing the language of Reliance's umbrella policy and Federal's excess liability policy, and considering the purpose and scope of such policies in general, the trial court concluded that neither policy is a motor vehicle insurance policy within the meaning of the PMVFRL and, therefore, did not provide underinsured motorist coverage. This appeal followed.

Appellants argue that the subject policies are indeed motor vehicle insurance policies and that they are entitled to full recovery as under the terms of any motor vehicle liability policy.

The governing provision states (a) General rule.--No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverages are provided therein or supplemental thereto in amounts equal to the bodily injury liability coverage except as provided in section 1734 (relating to request for lower or higher limits of coverage).

75 Pa.C.S.A. § 1731(a)(1984). ¹ The legislature has not defined "motor vehicle liability insurance" thereby leaving the question open as to whether umbrella or excess liability policies fall within the statute. This issue has not been addressed by the Pennsylvania appellate courts, but has been addressed by other jurisdictions while interpreting similar uninsured/underinsured motorist statutes. Courts in other jurisdictions have come to different conclusions over this issue and have typically based their resolution of the issue on the language of the uninsured/underinsured motorist statute enacted in their state.

Courts that have addressed this issue have often observed that there are generally two (2) types of uninsured/underinsured motorists statutes: "minimum liability" statutes and "full recovery" statutes. The majority of jurisdictions have "minimum liability" statutes which are "intended to protect injured motorists by insuring that they will be able to recover at least an amount equivalent to what would have been available if the insured had been injured by a driver who maintained the required statutory minimum liability coverage." Sidelnik v. American States Insurance Co., 914 S.W.2d 689, 693 (Tex.App.1996) (emphasis added). On the other hand, "[f]ull recovery" statutes require insurers to provide uninsured/underinsured motorist coverage equal to the amount of bodily injury liability insurance that the policy provides. Rowe v. Travelers Indemnity Co., 245 Mont. 413, 800 P.2d 157, 159 (1990). The often stated policy considerations underlying "full recovery" statutes is to "allow full recovery under the terms of any applicable policies when a person is injured by an uninsured motorist." Continental Insurance Co. v. Howe, 488 So.2d 917, 919 (Fla.Dist.Ct.App.1986).

Here, the premise of the appellants' argument is that the Pennsylvania uninsured/underinsured motorist statute is a "full recovery" statute. 75 Pa.C.S.A. § 1731(a) (1984). Appellant argues that unlike "minimum liability" jurisdictions where most courts have refused to include excess and umbrella policies within the definition of a motor vehicle liability insurance policy ², "full recovery" jurisdictions have ruled that such policies are indeed motor vehicle liability insurance policies, thus providing uninsured/underinsured motorists coverage. To support his argument, appellant cites cases from "full recovery" jurisdictions that have found umbrella and excess liability policies to be within the definition of a motor vehicle liability insurance policy as defined by their respective uninsured/underinsured motorist statutes. See Southern American Insurance Co. v. Dobson, 441 So.2d 1185, 1191 (La.1983) (Full recovery statutes reflect the policy "to provide full recovery under the terms of any applicable polic[y] to a person injured, through no fault of his own, by an uninsured or underinsured motorist"); Ormsbee v. Allstate Insurance Co., 176 Ariz. 109, 859 P.2d 732, 735 (1993) (Finding umbrella policy within the statute; "Because the statute links the amount of uninsured/underinsured coverage to the amount of liability coverage, it makes sense that, as the latter increases, as through umbrella policies, the former must also increase"); House v. State Auto. Mutual Insurance Co., 44 Ohio App.3d 12, 540 N.E.2d 738 (1988)(excess liability policy must comport with full recovery statute as no exception has been made for such policies); accord, American Economy Insurance Co. v. Canamore, 114 Or.App. 348, 834 P.2d 542 (1992).

Appellants argue that Reliance's umbrella policy and Federal's excess commercial liability policy are identical in all material respects to the policies addressed in the aforementioned "full recovery" jurisdictions. Appellants point out that these jurisdictions have "full recovery" statutes similar to § 1731 of the PMVFRL; that both Federal and Reliance's policies make reference to automobile coverage; that neither policy specifically excludes uninsured or underinsured motorist coverage; and that Pennsylvania did not statutorily exclude umbrella or excess commercial liability policies from the 1984 PMVFRL, nor did they restrict the phrase "motor vehicle liability insurance policies" to mean only primary coverage. Appellant maintains that, in light of these factors, we should adopt the rule followed by the cited jurisdictions, and find that excess and umbrella policies are motor vehicle liability insurance policies as defined by § 1731(a), and thus required to provide uninsured/underinsured motorist coverage. We disagree, and first look to relevant federal court decisions which we find highly persuasive.

The U.S. District Court for the Eastern District of Pennsylvania and the Third Circuit Court of Appeals have rejected the notion that uninsured and underinsured motorist benefits should be included in umbrella and excess liability policies. In Electric Insurance Company v. Rubin, 32 F.3d 814 (3d Cir.1994), the court held that Electric had no obligation to provide coverage under a personal excess liability insurance policy it had issued to Nathan Rubin for claims made by Patricia Rubin arising from an automobile accident. The application identified the Rubins' two automobiles and included a $2,000,000 liability limit along with a statement indicating that the applicants must have underlying liability policies. Rubin argued that the excess policy was governed by the PMVFRL and, therefore,...