Miller v. Keystone Ins. Co.

• Decision Date: 05 March 1991
• Citation: 402 Pa.Super. 213,586 A.2d 936
• Parties: Mary C. MILLER, Administratrix of the Estate of John R. Miller, Deceased; and All Others Similarly Situated, Appellants, v. KEYSTONE INSURANCE COMPANY.
• Court: Pennsylvania Superior Court

Page 936

586 A.2d 936

402 Pa.Super. 213

Mary C. MILLER, Administratrix of the Estate of John R Miller, Deceased; and All Others Similarly Situated, Appellants, v. KEYSTONE INSURANCE COMPANY.

Superior Court of Pennsylvania.

Argued Jan. 17, 1990.

Filed Jan. 8, 1991.

Reargument Denied March 5, 1991.

Richard C. Angino, Harrisburg, for appellants.

A. Richard Feldman, Philadelphia, for appellees.

Before ROWLEY, FORD ELLIOTT and HOFFMAN, JJ.

FORD ELLIOTT, Judge:

Plaintiff/appellant Mary C. Miller, administratrix of the estate of her son, John Miller, who was killed in a motor vehicle accident on August 12, 1980, sought to bring a class action lawsuit to force defendant/appellee Keystone Insurance Company to pay post-mortem work loss benefits pursuant to the now-repealed No-fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, No. 176 §§ 101-701, 40 P.S. §§ 1009.101-1009.701 (Supp.1982). Her motion for class certification was challenged by Keystone. In an attempt to ensure that the class would have a representative plaintiff, petitions to intervene and to become additional representative plaintiffs were filed by petitioners/appellants Deborah Steward, Danny Gilbert, Suzanne Shadler, and Phil Sanchez, all of whom were, or had applied to become, administrators of the estates of persons killed in automobile accidents.

In orders entered on May 16, 1989, the trial court granted Keystone's motion for summary judgment as to Mary Miller's individual claim; denied, on various grounds, all of the petitions to intervene; and denied the motion for class certification, as no representative plaintiff remained to lead the class. Judgment in favor of Keystone was entered on June 2, 1989.

In this timely appeal, appellants contend that the trial court erred in granting summary judgment against Mary Miller, in denying the petitions to intervene, and, consequently, in denying the motion for class certification.

I.

We turn first to appellants' challenge to the award of summary judgment in favor of Keystone and against Mary Miller. Pursuant to Pa.R.C.P. 1035(b), such a motion is properly granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, along with any affidavits, show 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. In ruling upon such a motion, the court must examine the record in the light most favorable to the nonmoving party and must resolve any doubt against the moving party. The court's function is not to decide issues of fact, but solely to determine whether there is such an issue to be tried. Washington Federal Savings and Loan Association v. Stein, 357 Pa.Super. 286, 288-89, 515 A.2d 980, 981 (1986).

John Miller, the son of Mary Miller, was the named insured on a No-fault automobile insurance policy issued by Keystone. Following his death in a motor vehicle accident on August 12, 1980, Keystone paid collision, funeral, and survivor's loss benefits with the last benefits being paid in April, 1982. Work loss benefits were not paid by Keystone and were not sought by Mary Miller until August 11, 1986, when she filed the complaint initiating the present action. In the complaint Mary Miller, as administratrix of her son's estate and representative plaintiff, sought post-mortem work loss benefits, plus interest and counsel fees, "for herself and the class which she represents."

In the opinion accompanying its orders of May 16, 1989, the trial court held that Miller's claim was barred by the statute of limitations as set forth in § 1009.106(c)(1) of the No-fault Act, 40 P.S. § 1009.106(c)(1). ¹ In this appeal, appellants do not dispute the trial court's interpretation of the applicable statute of limitations. Instead, they contend that Keystone knowingly misrepresented the benefits due to Mary Miller, thus breaching the duty of "good faith and fair dealing" as announced in Dercoli v. Pennsylvania National Mutual Insurance Company, 520 Pa. 471, 554 A.2d 906 (1989). Therefore, since Keystone's knowing misrepresentation was the cause of Miller's failure to bring a timely action to recover post-mortem work loss benefits, appellants argue, Keystone's action should operate to toll the statute of limitations and allow Miller to recover the benefits to which she is entitled. ² Appellant's Dercoli argument is premised on the theory that Keystone breached a duty of good faith and fair dealing to its insured, John Miller's estate, by failing to disclose the estate's entitlement to post-mortem work loss benefits at the time of processing the estate's claim for benefits.

In Dercoli, our supreme court reiterated that it has long been the law of this Commonwealth that "the utmost fair dealing should characterize the transactions between an insurance company and the insured." Dercoli, supra, 520 Pa. at 477, 554 A.2d at 909, citing Fedas v. Insurance Company of the State of Pennsylvania, 300 Pa. 555, 559, 151 A. 285 (1930). Also see Gray v. Nationwide Mutual Insurance Company, 422 Pa. 500, 223 A.2d 8 (1966) and Gedeon v. State Farm Mut. Auto. Insurance Company, 410 Pa. 55, 188 A.2d 320 (1963). The Dercoli court then expanded this duty to require that insurers must deal fairly and openly with their insured even though such dealing may be adverse to their own interests.

Dercoli involved an automobile accident where the husband-insured fell asleep at the wheel which caused the vehicle to cross over the center-line of a highway and crash into the rear wheels of an oncoming tractor-trailer. The husband was killed instantly and his wife, the claimant, was injured severely. In her claim for insurance benefits, the wife relied solely on the advice of the agents of two separate insurance companies to receive the benefits due her under two separate policies held by her deceased husband. ³ While appellant was still receiving benefits, and relying on the agents for advice, the supreme court decided Hack v. Hack, 495 Pa. 300, 433 A.2d 859 (1981), which abolished the defense of interspousal immunity in Pennsylvania as a bar to an action for personal injuries caused by the negligence of the injured victim spouse. Mrs. Dercoli subsequently learned of the applicability of the Hack decision to her case some four years later and instituted suit against the insurance carriers averring a breach of good faith and fair dealing for their failure to inform her of her newly created right to benefits following the Hack decision. In an opinion announcing the decision of the court, Justice Larsen held "[T]he duty of an insurance company to deal with the insured fairly and in good faith includes the duty of full and complete disclosure as to all of the benefits and every coverage that is provided by the applicable policy or policies along with all requirements including any time limitations for making a claim." Dercoli, supra, 520 Pa. at 478, 554 A.2d at 909.

Appellee argues that Dercoli should be given no precedential authority because Justice Larsen's opinion, joined in by former Justice Stout, expressed the views of only two justices. ⁴ However, appellee ignores that the Concurring Opinion, authored by Justice Papadakos, and joined in by Justice McDermott, is consistent with and adds further definition to the holding as enunciated by Justice Larsen. In concurrence, Justice Papadakos, initially disassociated himself from the lead opinion's statement that Taglianetti v. Workmen's Compensation Appeal Board, 503 Pa. 270, 469 A.2d 548 (1983), was decided wrongly, ⁵ however, he specifically concurred in the judgment of the court expressing general agreement with the reasoning set forth in the majority opinion. The thrust of his opinion countered the position taken by the dissent that the court's decision transformed insurance companies into legal service advisors for claimants.

The essence of the duty defined by both Justice Larsen's and Justice Papadakos' opinions is that when the insurer assumed the responsibility to provide Mrs. Dercoli with assistance and advice in securing all available benefits to which she was entitled under the policy, the insurer was required to deal with her in the spirit of good faith and fair dealing. This was so even though informing Mrs. Dercoli of the Hack decision was contrary to the insurer's own interests. As stated more succinctly by Justice Larsen:

This is especially true where the insurer undertakes to advise and counsel the insured in the insured's claim for benefits. Under such circumstances, the insurer has a duty to inform the insured of all benefits and coverage that may be available and of any adverse interest pertaining to the insurer's liability under the applicable policy.

Dercoli, supra, 520 Pa. at 4, 554 A.2d at 909. (Emphasis added).

Contrary to appellee's contention, we find the duty enunciated in Dercoli to be a logical and rational one which flows from the relationship as it in fact exists between insurers and their insured. In Dercoli, Justice Larsen cited the California case of Sarchett v. Blue Shield of California, 43 Cal.3d 1, 233 Cal.Rptr. 76, 729 P.2d 267 (1987) as supportive of a finding of a duty on the insurer. We find the language of another California case cited in Sarchett equally instructive.

Very recently, in Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 157 Cal.Rptr. 482, 598 P.2d 452, we summarized these principles, noting first that in insurance contracts, as in all contractual relationships, "[i]n addition to the duties imposed on contracting parties by the express terms of their agreement, the law implies in every contract a covenant of good faith and fair dealing. [Citations.] The implied promise requires each contracting party to refrain from doing anything to injure the right of the other to receive the benefits of the agreement. [Citation.] The precise nature and extent of the duty imposed by such an implied promise will depend on the...