Sands v. Andino

• Decision Date: 07 May 1991
• Citation: 404 Pa.Super. 238,590 A.2d 761
• Parties: Suzanne SANDS, Appellant, v. Frank ANDINO and State Farm Insurance Company.
• Court: Pennsylvania Superior Court

Page 761

590 A.2d 761

404 Pa.Super. 238

Suzanne SANDS, Appellant, v. Frank ANDINO and State Farm Insurance Company.

Superior Court of Pennsylvania.

Argued Jan. 29, 1991.

Filed May 7, 1991.

Richard J. Orloski, Allentown, for appellant.

Charles J. Fonzone, Allentown, for State Farm, appellee.

Before CAVANAUGH, CIRILLO and BROSKY, JJ.

BROSKY, Judge.

This is an appeal from an order of the trial court which granted summary judgment in favor of appellee. The sole issue presented for review is whether the trial court's grant of summary judgment was proper. ¹ For the reasons set forth below, we affirm.

Before proceeding to address the question advanced by appellant, it is necessary to briefly recount the relevant facts of this case. On July 11, 1987, appellant, Suzanne Sands, was operating her vehicle in Allentown, Pennsylvania, when her car collided with or was struck by an automobile operated by Frank Andino. Mr. Andino did not maintain insurance as required by the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. §§ 1701-1798.4. Andino was therefore an uninsured motorist. At the time of the collision, Sands maintained an insurance policy issued by appellee, State Farm Insurance Co., pursuant to which Sands had purchased uninsured motorists' coverage, with a maximum limit of $50,000.00.

Appellant commenced a civil action against Andino, docketed at No. 87-C2421, on November 5, 1987. Andino never entered an appearance nor otherwise defended the action. Consequently, a default judgment on the issue of liability was entered against Andino on April 4, 1988. A non-jury trial on the issue of appellant's damages was subsequently held on August 17, 1989. Andino again failed to appear or enter a defense, and appellant was awarded $60,000.00 in damages. Judgment on the award was entered on August 21, 1989.

Following the entry of judgment against Andino, appellant notified appellee of the award and requested that appellee pay her $50,000.00 in uninsured motorist benefits. Appellee denied appellant's request, and indicated that the question of appellant's entitlement to uninsured motorists' coverage must be submitted to arbitration since the policy expressly provided that appellee was not bound by any judgment obtained without its consent. On October 10, 1989, appellant initiated this declaratory judgment action in which appellant sought to have the judgment entered against Andino declared binding on appellee. Each party thereafter filed motions for summary judgment. In granting appellee's motion and denying appellant's motion, the trial court concluded that appellee was not bound by the judgment obtained against Andino. This timely appeal followed.

Although not addressed by either of the parties, we must first ascertain whether the declaratory judgment action was properly before the lower court. With regard to this matter, the Declaratory Judgment Act expressly provides that a party is not entitled to declaratory relief with respect to any "[p]roceeding within the exclusive jurisdiction of a tribunal other than a court." 42 Pa.C.S.A. § 7541(c)(2). § 7541(c)(2) has been held applicable to arbitration proceedings, and it is well-settled that a declaratory judgment action may not be entertained with respect to matters that are within the jurisdiction of the arbitrators. See Jewelcor, Inc. v. Pre-Fab Panelwall, Inc., 397 Pa.Super. 78, 82-83, 579 A.2d 940, 942 (1990), citing Allstate Insurance Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969). See also, Brennan v. General Accident, Fire & Life Assurance Corp., Ltd., 524 Pa. 542, 549, 574 A.2d 580, 583 (1990) (in which the Supreme Court held that once it has been determined that a substantive dispute is arbitrable, the arbitration panel normally has the authority to decide all matters necessary to dispose of the claim, unless the parties have expressly restricted the matters to be submitted to arbitration); Nationwide Mutual Insurance Co. v. Pitts, 400 Pa.Super. 269, 271, 583 A.2d 489, 491 (1990) (in which this court held that an issue of whether the insurer was contractually bound to provide underinsured motorist coverage was within the jurisdiction of the arbitration panel); and Lamar v. Colonial Penn Insurance Co., 396 Pa.Super. 527, 530-531, 578 A.2d 1337, 1338-1339 (1990) (in which this court held that a question relating to an insured's intent to select a higher amount of coverage must be submitted to arbitration).

However, the appellate courts have also recognized that "[w]here ... a claimant challenges a provision of an uninsured motorist clause as being contrary to a statute, the Court of Common Pleas may exercise jurisdiction over the claim." Azpell v. Old Republic Insurance Co., 526 Pa. 179, ----, 584 A.2d 950, 952 (1991), quoting Davis v. Government Employees Insurance Co., 500 Pa. 84, 88 n. 5, 454 A.2d 973, 975 n. 5 (1982) and United Services Automobile Association Appeal, 227 Pa.Super. 508, 516, 323 A.2d 737, 741 (1974), allocatur refused. As stated by this court:

[t]he law is clear that, although a case turning on the application or construction of an uninsured motorist clause is within the exclusive jurisdiction of the arbitration system, when the issue is whether a particular provision of the contract is contrary to a constitutional, legislative or administrative mandate, the courts properly exercise their jurisdiction over the entire matter.

Kester v. Erie Insurance Exchange, 399 Pa.Super. 206, 209, 582 A.2d 17, 19 (1990), quoting Daley-Sand v. West American Insurance Co., 387 Pa.Super. 630, 637, 564 A.2d 965, 969 (1989).

In applying these principles to the facts of this case, we must first examine the policy and determine whether the parties intended to restrict the jurisdiction of the arbitration panel. With regard to this matter, the policy provides:

Deciding Fault and Amount

Two questions must be decided by agreement between the insured and us:

1. Is the insured legally entitled to collect damages from the owner or driver of an uninsured motor vehicle or underinsured motor vehicle; and

2. If so, in what amount?

If there is no agreement, these questions shall be decided by arbitration at the request of the insured or us. The Pennsylvania Uniform Arbitration Act, as amended from time to time, shall apply.... The written decision of any two arbitratiors [sic] shall be binding on each party.

See Appellee's Cross-Motion for Summary Judgment, exhibit A (copy of the insurance policy), at 15. ² Language of this type has been interpreted as providing for broad jurisdiction to be vested in the arbitration panel. See Brennan, supra. Consequently, all issues which relate to appellant's entitlement to uninsured motorists' coverage, and the amount of such coverage, must clearly be submitted to arbitration.

The dispute in this case does not pertain to the above-quoted language. Rather, the parties disagree as to the effect and operation of the following language contained in the policy:

Consent to Be Bound We are not bound by any judgment against any person or organization obtained without our written consent.

See Appellee's Cross-Motion for Summary Judgment, Exhibit A at 17. Appellee seeks to invoke this clause so that appellant will be required to prove the amount of her damages, if the arbitrators determine that appellant is entitled to recover uninsured motorists' benefits under the policy. Appellant, however, objects to the application of the provision on the basis that it contravenes public policy by allowing an insurer to ignore a validly entered judgment. When viewed in this context, it is apparent that the issue in this case does not relate to either of the questions which the parties agreed to submit to arbitration, but involves a question of whether a provision in the insurance policy violates a constitutional, legislative or administrative mandate. Accordingly, we find that the trial court properly exercised jurisdiction over this dispute.

Having reached this conclusion, we must now ascertain whether summary judgment entered in favor of appellee was proper. Summary judgment may only be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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." Pa.R.C.P., Rule 1035, 42 Pa.C.S.A. In reviewing the trial court's grant of a motion for summary judgment, "the appellate court examines the record in the light most favorable to the non-moving party, and will not disturb the trial court's order absent an error of law or manifest abuse of discretion." Dyer v. The Travelers, Designee of the Pennsylvania Financial Responsibility Assigned Claims Plan, 392 Pa.Super. 202, 204, 572 A.2d 762, 763 (1990). We shall evaluate appellant's arguments in accordance with this standard.

In support of her claim that the trial court erroneously entered summary judgment in favor of appellee, appellant initially argues that the contract is devoid of any language which would permit the insurer to ignore a verdict entered by the trial court. Essentially, appellant suggests that because the insurance policy only refers to judgments, and not verdicts, appellee is bound by the verdict entered in appellant's favor. Appellant cites no authority for this novel interpretation, nor has our own research uncovered any cases which have interpreted policies in the manner posited by appellant. We nevertheless find appellant's reasoning to be fundamentally flawed.

We first note that the record is devoid of any evidence that a verdict was entered against Andino. See Appellant's Motion for Summary Judgment, Exhibit E (list of docket entries for appellant's action against Andino). Instead, the record reveals that after the non-jury trial was held on August 17, 1989, a judgment was entered on August 21, 1989. See id., Exhibits A (copy of order, dated 8/21/89, which enters...