Northern Ins. Co. of New York v. Dottery, Civil Action No. 97-6288.

• Decision Date: 10 December 1998
• Docket Number: Civil Action No. 97-6288.
• Citation: 43 F.Supp.2d 509
• Parties: NORTHERN INSURANCE CO. OF NEW YORK, Plaintiff, v. Tina N. DOTTERY et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

43 F.Supp.2d 509

NORTHERN INSURANCE CO. OF NEW YORK, Plaintiff, v. Tina N. DOTTERY et al., Defendants.

Civil Action No. 97-6288.

United States District Court, E.D. Pennsylvania.

December 10, 1998.

COPYRIGHT MATERIAL OMITTED

Allan C. Molotsky, Post & Schell, P.C., Philadelphia, PA, for plaintiff.

Aaron Freiwald, Kline and Specter, Philadelphia, PA, for defendants.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

I. INTRODUCTION

This case involves a dispute over motor vehicle insurance coverage. Plaintiff, Northern Insurance Co. ("Northern") seeks a declaration that defendant, the Estate of Tara Lynn Dottery ("the Estate"), and Tara Lynn Dottery's parents (jointly with the Estate referred to as "the Estate") are not entitled to underinsured motorist ("UIM") benefits under three policies issued by Northern.

Dottery died in a one-car accident while riding in a Jeep driven by Richard Kulik. At the time of the accident, the Jeep was leased by John Kulik ("Kulik"), Richard's father, from Keystone Dodge, Inc. ("Keystone"). As required under the lease, the Jeep was covered by a motor vehicle liability insurance policy. This policy was issued by Harleysville Mutual Insurance Co. to Kulik ("Harleysville policy"), which provided financial responsibility to Kulik for the Jeep. After the accident, Harleysville paid the policy limits and obtained a release from the Estate. However, the amount of the damages sustained by Dottery in the accident exceeded the amount of the coverage under the Harleysville policy.

Keystone is in the business of leasing motor vehicles. At the time of the accident, Keystone was the named insured under a commercial policy, a package policy including a garage policy, and a commercial umbrella policy issued to Keystone by plaintiff Northern Insurance Co. (the "Northern policies"). Keystone did not waive UIM coverage in any of the Northern policies.

The Pennsylvania Motor Vehicle Financial Responsibility Law ("MVFRL"), 75 Pa. Cons.Stat. § 1701 et seq., provides that every motor vehicle liability insurance policy issued or delivered in Pennsylvania must provide for underinsured motorist coverage unless such coverage has been waived by the named insured. Therefore, since it is undisputed that the Keystone policies did not provide for underinsured coverage, and Keystone did not waive such coverage, if the Northern policies are motor vehicle liability policies, as claimed by the Estate, the Northern Policies must be reformed to afford the Estate UIM coverage.

Before the Court are cross-motions for summary judgment. For the reasons that follow, the Court finds that the Northern policies are clear and unambiguous, that they are not motor vehicle liability policies for the purposes of the UIM requirements under the MVFRL, and that, therefore, the Estate may not assert a claim for UIM coverage under them.

II. LEGAL STANDARD

A. Summary Judgment

Summary judgment is appropriate if the moving party can "show that 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). When ruling on a motion for summary judgment, the Court must view the evidence in the light most favorable to the non-movant. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court must accept the non-movant's version of the facts as true, and resolve conflicts in the non-movant's favor. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir.1992).

The moving party bears the initial burden of demonstrating the absence of genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has done so, however, the non-moving party cannot rest on its pleadings. See Fed.R.Civ.P. 56(e). Rather, the non-movant must then "make a showing sufficient to establish the existence of every element essential to his case, based on the affidavits or by depositions and admissions on file." Harter v. GAF Corp., 967 F.2d 846, 852 (3d Cir.1992); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

On cross-motions for summary judgment, the court must determine separately, as to each party's motion, whether judgment may be entered in accordance with the summary judgment standard. 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720, at 23-25 (2d ed. 1983).

B. Interpretation of Insurance Contracts

Under Pennsylvania law, the interpretation of insurance contracts is a matter for the court to decide.¹ Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir.1997) (citing Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (Pa.1983)). The focus of the inquiry is the reasonable expectation of the insured, and the court must examine the totality of the insurance transaction. Bubis v. Prudential Property & Cas. Ins. Co., 718 A.2d 1270, 1272 (Pa.Super.1998) (citing Dibble v. Security of America Life Ins. Co., 404 Pa.Super. 205, 590 A.2d 352, 354 (1991)). "While reasonable expectations of the insured are the focal points in interpreting the contract language of insurance policies, an insured may not complain that his or her reasonable expectations were frustrated by policy limitations which are clear and unambiguous." Id. (internal citations omitted). Therefore, "`[w]here ... the language of the contract is clear and unambiguous, a court is required to give effect to that language.'" Bensalem Township v. International Surplus Lines Ins. Co., 38 F.3d 1303, 1309 (3d Cir.1994)(quoting Standard Venetian Blind, 469 A.2d at 566 (1983)). Determining whether a policy is ambiguous is a question of law. Gift v. Nationwide Ins. Co., No. 97-6934, 1998 WL 164997, at *2 (E.D.Pa. Apr.9, 1998)(citing Pacific Indem. Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985)). "A provision is ambiguous only if reasonably intelligent persons, considering it in the light of the entire policy, can honestly differ as to its meaning." Curbee, Ltd. v. Rhubart, 406 Pa.Super. 505, 594 A.2d 733, 735 (1991). For the reasons set forth below, the Court finds the language of the Northern policies to be clear and unambiguous.

III. DISCUSSION

A. The Parties' Contentions

Plaintiff Northern contends that the responsibility to provide UIM coverage fell upon Kulik, the lessee of the vehicle in question. Since it is undisputed that Kulik obtained UIM coverage for the Jeep under the Harleysville motor vehicle liability policy Northern argues the MVFRL was satisfied. Northern further argues that the Northern policies are not motor vehicle liability policies for the purposes of the UIM requirements of the MVFRL, rather they are special policies or excess policies intended to cover liability claims against Keystone, as the named insured, which Keystone may be legally required to pay over and above its primary insurance coverage. Northern, therefore, contends that the MVFRL does not mandate that UIM coverage be provided under the Northern policies.

Defendants retort that the Northern policies are motor vehicle liability policies. Defendants contend that Pennsylvania law requires that every motor vehicle liability insurance policy issued or delivered in Pennsylvania provide underinsured coverage unless such coverage is waived.² Further, according to defendants, since the Northern policies were issued in Pennsylvania and did not provide for UIM coverage nor was there a written waiver of UIM coverage executed by Keystone, the Northern policies must be reformed to provide for UIM coverage.

The ultimate issue before the Court, as to each Northern policy, is whether the policy was "written to satisfy the MVFRL." Electric Ins. Co. v. Rubin, 32 F.3d 814, 818 (3d Cir.1994).

B. The Statutory Framework

The MVFRL provides that "[e]very motor vehicle of the type required to be registered under this title which is operated or currently registered shall be covered by financial responsibility." 75 Pa. Cons. Stat. § 1786(a). "Financial responsibility" is the "ability to respond in damages for liability on account of accidents arising out of the maintenance or use of a motor vehicle in the amount of $15,000 because of injury to one person in any one accident, in the amount of $30,000 because of injury to two or more persons in any one accident in the amount of $5,000 because of damage to property of others in any one accident." 75 Pa. Cons.Stat. § 1702. The Pennsylvania Department of Insurance defines "financial responsibility" as "[a] motor vehicle liability insurance policy or program of self insurance, complying with the requirements of 75 Pa.C.S. Section 1787 (relating to self insurance) and approved by the Department covering all motor vehicles registered in a person's name." 67 Pa. Code § 221.2 (1998). Maintaining financial responsibility for a vehicle is the responsibility of the vehicle's owner or registrant. 75 Pa. Cons.Stat. § 1786; Lebanon Coach Co. v. Carolina Cas. Ins. Co., 450 Pa.Super. 1, 675 A.2d 279, 284 (1996), appeal denied, 546 Pa. 695, 687 A.2d 378 (1997).

The MVFRL also provides for the availability of uninsured and underinsured coverage. 75 Pa. Cons.Stat. § 1731. UIM insurance is designed to permit persons to recover damages, 75 Pa. Cons.Stat. § 1731(c), from an owner or operator of "a motor vehicle for which the limits of available liability insurance and self insurance are insufficient to pay loss or damages," 75 Pa. Cons.Stat. § 1702. The MVFRL provides that every motor vehicle liability insurance policy issued or delivered in Pennsylvania include UIM coverage equal to bodily injury liability coverage provided for in the policy, unless the UIM coverage is rejected by the insured. 75 Pa. Cons. Stat. § 1731(a). The named insured must be informed of the availability of UIM coverage thus allowing the named insured to reject UIM...