National Union Fire Ins. Co. v. Irex Corp.

• Decision Date: 18 May 1998
• Citation: 713 A.2d 1145
• Parties: NATIONAL UNION FIRE INSURANCE CO., Appellant, v. IREX CORPORATION and Barbara Devenny, Personal Representative of the Estate of George Devenny, Deceased, and Barbara Devenny, in Her Own Right.
• Court: Pennsylvania Superior Court

Page 1145

713 A.2d 1145

NATIONAL UNION FIRE INSURANCE CO., Appellant, v. IREX CORPORATION and Barbara Devenny, Personal Representative of the Estate of George Devenny Deceased, and Barbara Devenny, in Her Own Right.

Superior Court of Pennsylvania.

Argued Nov. 12, 1997.

Filed May 18, 1998.

Timothy Costello, Philadelphia, for appellant.

Gregory J. Kelly, Philadelphia, for appellee.

Before CIRILLO, President Judge Emeritus, and SCHILLER and HOFFMAN, JJ.

CIRILLO, President Judge Emeritus:

National Union Fire Insurance Co. (National Union) appeals from the order entered in the Court of Common Pleas of Delaware County granting summary judgment in favor of Appellees Barbara Devenny, individually and as the personal representative of the estate of her deceased husband, George Devenny, and Irex Corporation (Irex). We affirm.

National Union filed the underlying declaratory judgment action to determine whether it had a duty to provide uninsured motorist (UM) benefits to the Devennys for personal injuries they sustained in an automobile accident with an uninsured motorist on January 30, 1994. ¹ At the time of the accident, George Devenny was employed by AC & S Corporation, a subsidiary of Irex. National Union had issued a motor vehicle insurance policy to Irex that covered Irex company cars that were supplied to its employees and subsidiaries. This policy was in effect at the time of the January, 1994 accident.

After the Devennys filed a claim for UM benefits under the National Union-Irex policy, National Union denied coverage and instituted the underlying declaratory judgment action. National Union asserted that when Irex renewed its auto insurance policy, it had specifically rejected UM coverage. This rejection, in the form of a written endorsement was signed by Irex's Vice-President/Secretary-Treasurer, R.E. Fink and became effective April 1, 1991. Accordingly, National Union alleged that the rejection was knowing and voluntary and should preclude Irex and the Devennys from recovering UM benefits equal to the amount of the parties' policy for bodily injury liability, or, two million dollars. The court subsequently granted a motion for summary judgment in favor of the Devennys, holding that: (1) Mrs. Devenny was a permissive user of the Irex company car that had been assigned to her husband as an employee of Irex; (2) the Devennys were entitled to UM benefits because the form used by Irex to reject UM coverage was void for noncompliance with section 1731 of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL); and (3) the amount of UM benefits awarded should be equal to the National Union policy's bodily injury liability limit pursuant to section 1731(c.1) of the MVFRL. See 75 Pa.C.S.A. § 1731.

National Union filed a notice of appeal from the trial court's summary judgment order and now presents the following issues for our review:

(1) Whether the trial court erred in ruling that the National Union policy includes uninsured motorist coverage in Pennsylvania as a result of alleged non-compliance with the requirements of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701 et seq ?

(2) Whether the trial court erred in granting summary judgment in favor of Appellees where there were outstanding issues of material fact relating to the named insured's knowing and voluntary election of lower uninsured motorist coverage limits?

(3) Whether the trial court erred in reforming the insurance policy to include $2 million of uninsured motorist coverage for alleged non-compliance with the requirements of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701 et seq., when the parties to the policy agree that the insured knowingly and voluntarily elected lower limits of uninsured motorist coverage and there was no evidence of any prejudice to the named insured?

Our standard of review in cases of summary judgment is well settled. This court will only reverse the trial court's entry of summary judgment where there was an abuse of discretion or an error of law. Merriweather v. Philadelphia Newspapers, Inc., 453 Pa.Super. 464, 470-72, 684 A.2d 137, 140 (1996). Summary judgment is proper when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits demonstrate that there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Pa.R.C.P. 1035.2; 42 Pa.C.S.A. In determining whether to grant summary judgment a trial court must resolve all doubts against the moving party and examine the record in a light most favorable to the non-moving party. Id. Summary judgment may only be granted in cases where it is clear and free from doubt the moving party is entitled to judgment as a matter of law. Id.

National Union's first issue concerns whether the Devennys effectuated a valid section 1731 waiver or rejection of UM benefits. National Union argues that Irex, a sophisticated company, knowingly and voluntarily rejected UM coverage when its vice president signed an endorsement that intended to waive such coverage. The insurance company asserts that the court should overlook its failure to comply with technical requirements enumerated in section 1731 of the MVFRL and find that the evidence shows that Irex clearly and unmistakably intended to reject UM coverage. In essence, National Union claims that the trial court's decision is an "improper elevation of form over substance." Not only is this argument completely devoid of merit, but it is an attempt to thwart established rules promulgated by our legislature and to throw by the wayside a strong public interest in protecting consumers of motor vehicle insurance policies. See Johnson v. Concord Mutual Ins. Co., 450 Pa. 614, 622, 300 A.2d 61, 66 (1973) ("[b]ecause uninsured [UM] motorist coverage has been legislatively declared to be a matter of public policy, a deletion of coverage is not to be determined by reference to traditional rules of waiver and estoppel.") cited in Botsko v. Donegal Mutual Ins. Co., 423 Pa.Super. 41, 48, 620 A.2d 30, 33 (1993). See also Motorists Ins. Companies v. Emig, 444 Pa.Super. 524, 537-39, 664 A.2d 559, 566 (1995) (we must always keep in mind the critical premise that the MVFRL "is to be construed liberally in order to promote justice and to give effect to its object[ives]."). See Donnelly v. Bauer, 453 Pa.Super. 396, 407-09, 683 A.2d 1242, 1248 (1996), allocatur granted, 548 Pa. 627, 693 A.2d 967 (1997) ("rules of statutory construction require that in interpreting statutes we must at all times seek to ascertain and effectuate the legislative intent.").

The MVFRL provides that insurers must offer UM/UIM coverage equal to bodily injury liability coverage except when the insured requests in writing UM/UIM coverage in amounts less than the limits of liability for bodily injury. ² 75 Pa.C.S.A. §§ 1731, 1734. In order to validly elect such coverage, however, it is axiomatic that the insured first be given notice by the insurer of the existence of UM/UIM coverage. Section 1791 ³ of the MVFRL provides general notice of available benefits and limits contained within insurance policies, including: medical benefits, extraordinary medical benefits, income loss benefits, accidental death benefits, death benefits, UM, UIM, and bodily injury liability coverage. 75 Pa.C.S.A. § 1791 (emphasis added). Section 1791, however, does not provide an applicant with the ability to select, reject or reduce the benefits and types of coverages enumerated within its own section. It is presumed that an insured has been advised of the benefits and limits contained within section 1791 if a required notice, in bold print and at least ten-point type, is given to an applicant at the time he or she first applies for insurance coverage, and, pending that no other notice or rejection shall be required. 75 Pa.C.S.A. § 1791. This notice is referred to as a "conclusive presumption under section 1791."

Where an insurer has failed to give section 1791 notice, the insurer may still prove that the insured validly elected to waive coverage or benefits listed in section 1791 provided that the insurer fulfills the rule set forth by our supreme court in Johnson v. Concord Mutual Ins. Co., 450 Pa. 614, 300 A.2d 61 (1973), and more recently restated by this court in Tukovits v. Prudential Ins. Co. of America, 448 Pa.Super. 540, 548-50, 672 A.2d, 786, 790 (1996). First, the insured must have been made aware of the coverage that was available. Tukovits, 448 Pa.Super. at 548-50, 672 A.2d at 790. Second, upon finding evidence that the insured was made aware of available coverage, a court may look to events which occurred prior to and after the election in writing for further evidence that the insured acted knowingly and intelligently. Id. With regard to the second prong of this rule, the court may look to whether the insured previously obtained the same level of UM/UIM coverage, whether the premiums paid reflected the reduced level of UM/UIM coverage, whether the insured ever questioned the level of UM/UIM coverage, whether the insured amended or added vehicles to its policy, and whether the forms that evidenced such transactions reflect the level of UM/UIM coverage. Id., citing Groff v. Continental Ins. Co., 741 F.Supp. 109, 112 (M.D.Pa.1992).

Section 1731 of the MVFRL sets forth the availability, scope and amount of coverage specifically in the context of UM/UIM benefits. While section 1731(a) provides specialized notice of the availability of UM/UIM benefits/coverage and also informs an insurance applicant that he or she may purchase or reject UM/UIM coverage, section 1791 provides general notice of the coverages and benefits available under this Commonwealth's motor vehicle statutes. Emig, 444 Pa.Super. at 541-43, 664 A.2d at 568. Section 1731 states that:

(a) Mandatory offering.--No motor vehicle liability insurance policy shall be delivered or...