Nationwide Ins. Co. v. Chiao

• Decision Date: 01 July 2005
• Docket Number: No. CIV. 4:CV-04CV2154.,CIV. 4:CV-04CV2154.
• Citation: 374 F.Supp.2d 432
• Parties: NATIONWIDE INSURANCE COMPANY, Plaintiff, v. Sharon CHIAO and Charles P. Chiao, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

374 F.Supp.2d 432

NATIONWIDE INSURANCE COMPANY, Plaintiff, v. Sharon CHIAO and Charles P. Chiao, Defendants.

No. CIV. 4:CV-04CV2154.

United States District Court, M.D. Pennsylvania.

July 1, 2005.

Jill R. Snyder, Jacobs & Associates, Bethlehem, PA, for Plaintiff.

Frank L. Tamulonis, Jr., John B. Lieberman, Zimmerman, Lieberman, Tamulonis & Crossen, Pottsville, PA, for Defendants.

MEMORANDUM AND ORDER

JONES, District Judge.

THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

Pending before the Court are cross-motions for Summary Judgment filed by Plaintiff Nationwide Insurance Company ("Nationwide" or "Plaintiff") and by Defendants Sharon and Charles P. Chiao ("Defendants"). (Rec. Docs. 10 and 13). Following briefing by the parties, we held oral argument on the Motions on May 13, 2005. The Motions are now ripe for our review. Diversity jurisdiction in this Court is proper pursuant to 42 U.S.C. § 1332.

For the following reasons, we will grant the Defendants' Motion for Summary Judgment and deny Plaintiff's Motion for Summary Judgment.

STANDARD OF REVIEW:

Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R. Civ. P. 56(c); see also Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir.1990). The party moving for summary judgment bears the burden of showing "there is no genuine issue for trial." Young v. Quinlan, 960 F.2d 351, 357 (3d Cir.1992). Summary judgment should not be granted when there is a disagreement about the facts or the proper inferences which a fact finder could draw from them. Peterson v. Lehigh Valley Dist. Council, 676 F.2d 81, 84 (3d Cir.1982).

Initially, the moving party has a burden of demonstrating the absence of a genuine issue of material fact. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This may be met by the moving party pointing out to the court that there is an absence of evidence to support an essential element as to which the non-moving party will bear the burden of proof at trial. Id. at 325, 106 S.Ct. 2548.

Federal Rule of Civil Procedure 56 provides that, where such a motion is made and properly supported, the non-moving party must then show by affidavits, pleadings, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). The United States Supreme Court has commented that this requirement is tantamount to the non-moving party making a sufficient showing as to the essential elements of their case that a reasonable jury could find in its favor. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548.

It is important to note that "the non-moving party cannot rely upon conclusory allegations in its pleadings or in memoranda and briefs to establish a genuine issue of material fact." Pastore v. Bell Tel. Co. of Pa., 24 F.3d 508, 511 (3d Cir.1994) (citation omitted). However, all inferences "should be drawn in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true." Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992), cert. denied, 507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993) (citations omitted).

Still, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)(emphasis in original). "As to materiality, the substantive law will identify which facts are material." Id. at 248, 106 S.Ct. 2505. A dispute is considered to be genuine only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

STATEMENT OF MATERIAL FACTS:

The facts of this case are, in the main, undisputed.¹ On December 8, 1998 Defendant Sharon Chiao was a passenger in a 1990 Plymouth Voyager owned and operated by Chiao's coworker Janet K. Wilkinson ("Wilkinson") that was involved in a serious accident. At the time of the accident the two women were both employees of the Pennsylvania State University and were returning from Reading, Pennsylvania to their homes in Schuylkill County, Pennsylvania where they had traveled for an employer-sponsored meeting.

The incident occurred when Wilkinson's attention to the road temporarily lapsed as she put out her cigarette. When Wilkinson's attention refocused on the road, she saw a vehicle stopped for a school bus immediately in front of her minivan. In an attempt to avoid a collision with the stopped vehicle, Wilkinson swerved to the right towards an embankment. The vehicle hit the embankment and flipped over. Passenger Sharon Chiao suffered significant and life-altering personal injuries.

Following the incident, the Chiaos asserted a claim against Wilkinson, who was insured by the Progressive Insurance Company. In settlement of the Chiaos' claim, Progressive paid her the entire $15,000 value of Wilkinson's policy. In addition, Sharon Chiao's employer has paid her workers' compensation benefits pursuant to the Pennsylvania Workmen's Compensation Act, codified at 77 Pa. Cons.Stat. § 1 et seq. ("WCA").

At the time of the incident, Chiao was herself insured by the Defendant. In addition to a standard automobile insurance policy, Chiao had purchased an underinsured motorist ("UIM") insurance policy (the "UIM Policy") from the Plaintiff, an optional coverage in Pennsylvania, against which Chiao has now asserted a claim as a result of the accident. Nationwide filed this action seeking a declaratory judgment that it need not pay Chiao for her injuries because she is not "due [payment] by law" as per the terms of the UIM Policy. (Cmplt.¶ 13, Rec.Doc. 1). The UIM Policy is governed by the Pennsylvania Motor Vehicle Financial Responsibility Law, codified at 75 Pa. Cons.Stat. § 1701 et seq. ("MVFRL").

DISCUSSION:

The question before the Court is a succinct and unresolved question of Pennsylvania law: whether an automobile insurer must provide coverage to an insured who has purchased supplemental UIM insurance when the insured was injured solely by a co-employee's negligence.²

A. Choice of Law

When a federal district court is presented with an unresolved question of state law, it must resolve the question by predicting how the state's supreme court would decide the issue. See Travelers Indem. Co. v. Dibartolo, 131 F.3d 343, 348 (3d Cir.1997). We apply Pennsylvania law to this action, because Pennsylvania's choice of law rules provide that courts apply the insurance laws of the state in which the policy was delivered. See Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 746 (3d Cir.1999). It is undisputed that the Policy was delivered to the Chiaos at their home in Pennsylvania, and therefore we shall apply the Commonwealth's statutory and common law to this case. Furthermore, we apply Pennsylvania law as it stood on December 8, 1998, the date of Sharon Chiao's accident. See Gokalp v. Pennsylvania Mfrs.' Assoc. Ins. Co., 553 Pa. 452, 719 A.2d 1033 (1998).

B. The Applicable Statutory Sections

Pennsylvania courts have long debated the intersection of workers' compensation and automobile insurance laws, and a review of the relevant case law and statutes is necessary to the resolution of the parties' Motions.

Under Pennsylvania's MVFRL law:

Underinsured motorist coverage shall provide protections for persons who suffer injury arising out of the maintenance or use of a motor vehicle and are legally entitled to recover damages therefore from owners or operators of underinsured motor vehicles....

75 Pa. Cons.Stat. § 1731(c)(emphasis added).³ Section 1731 also makes underinsured motorist insurance coverage optional for drivers in Pennsylvania.⁴ The parties differ in their interpretation of how we are to read "legally entitled to recover" in light of the following provisions of the WCA.

First, the WCA creates an exclusivity provision for employers:

The liability of an employer under this Act shall be exclusive and in place of any and all other liability to such employee, his legal representative, husband or wife, parents, dependents, next of kin or anyone else otherwise entitled to damages in any action at law or otherwise on account of an injury or death ....

77 Pa. Cons.Stat. § 481(a)(emphasis added)(the "exclusivity provision"). This exclusivity has been extended to co-employees:

If disability or death is compensable under this action, a person shall not be liable to anyone at common law or otherwise on account of such disability or death for any act or omission occurring while such person was in the same employ as the person disabled or killed, except for intentional wrong.

Id. § 72 (the exclusivity provision)(the "co-employee immunity provision"). Thus, both employers and co-employees are themselves immune from suit when an employee is harmed in an accident. As previously noted, the dispute before us lies at the intersection of these two WCA provisions and the rights of an insured under the MVFRL.

Pennsylvania requires two insurance policies to be in existence for an insured to receive coverage from his or her underinsured motorists policy. See Wolgemuth v. Harleysville Mut. Ins. Co., 370 Pa.Super. 51, 535 A.2d 1145, 1149 (1988)("The language of the [MVFRL] statute itself suggests that underinsurance motorist coverage requires the existence of at least two applicable policies of motor vehicle insurance."); see also 75 Pa. Cons.Stat. § 1731. Here, obviously the Chiaos' own UIM Policy is in play. We must now determine whether Wilkinson's auto insurance policy is also implicated in the dispute.

As previously noted, Progressive, Wilkinson's insurance carrier, settled with the Chiaos for $15,000, the coverage limit...