Selected Risks Ins. Co. v. Thompson

• Decision Date: 26 January 1989
• Citation: 552 A.2d 1382,520 Pa. 130
• Parties: SELECTED RISKS INSURANCE CO., Appellant, v. Richard L. THOMPSON, Appellee.
• Court: Pennsylvania Supreme Court

Page 1382

552 A.2d 1382

520 Pa. 130

SELECTED RISKS INSURANCE CO., Appellant, v. Richard L. THOMPSON, Appellee.

Supreme Court of Pennsylvania.

Argued March 9, 1988.

Decided Jan. 26, 1989.

Timothy J. Burdette, Anstandig, Leuicoff & McDyer, Pittsburgh, for appellant.

Seymour A. Sikov, Timothy P. O'Brien, Pittsburgh, for appellee.

Before LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and STOUT, JJ.

OPINION

McDERMOTT, Justice.

Appellant, Selected Risks Insurance Company (S.R.I.) appeals from the order of the Superior Court which affirmed the order of the Court of Common Pleas of Allegheny County denying its "Petition to Vacate, Modify or Correct" an arbitration panel's award.¹ The award of $174,060.00 had been entered in favor of appellee, Richard L. Thompson.

The facts leading up to the present controversy are as follows. In October, 1981, S.R.I. issued a comprehensive insurance policy to the New Galilee Volunteer Fire Department, an unincorporated volunteer fire association serving the residents of New Galilee, Beaver County, Pennsylvania. This policy, designated as a "Business Auto Policy" and issued in the name of the New Galilee Volunteer Fire Department, covered six (6) vehicles owned and operated by the department. The policy provided for uninsured motorist coverage, as mandated by the then extant Uninsured Motorist Act.² The applicable declarations limited S.R.I.'s uninsured motorist liability to $30,000.00 per accident for each vehicle. The association paid annual premiums totaling $30.00 for this coverage. This policy, as stated above, was issued in the name of the association and there were no individuals specified as named insureds.

On April 15, 1982, appellee, an elected trustee and volunteer firefighter with the department, while responding to an alarm, was involved in a collision with an automobile driven by an uninsured motorist. Upon impact appellee was thrown from the vehicle and sustained head and spinal cord injuries. As a result of these injuries appellee has been unable to resume his regular profession as an independent trucker. By the time the arbitration proceeding commenced appellee had received workmen's compensation benefits totalling $49,660.35 from P.M.A. Insurance Company. These benefits were paid pursuant to a policy issued to the Borough of New Galilee.

Appellee thereafter filed a claim with S.R.I. seeking uninsured motorist benefits under the policy. The parties disagreed as to the amount of coverage available. Consequently, the matter proceeded to arbitration in accordance with the Uniform Arbitration Act.³ The arbitrators unanimously agreed that appellee's compensatory damages were $200,000.00. However, on the issue of whether appellee should be permitted to cumulate or "stack" the $30,000.00 uninsured motorist limit for each of the six insured vehicles under the policy, the arbitrators, in a 2-1 decision, allowed appellee to aggregate the coverages to reach the $180,000.00 maximum limit. The arbitrators based their conclusion on the fact that although appellee was not a "named insured" under the policy, it was proper to infer, given the nature of an unincorporated association, that the parties intended each member of the fire department be deemed a "designated insured" for purposes of stacking uninsured motorist benefits. Therefore, under the stacking guidelines enunciated in Utica Mutual Insurance Company v. Contrisciane, 504 Pa. 328, 473 A.2d 1005 (1984), the arbitrators reasoned that appellee was a member of the "class one" category of "uninsured" and entitled to stack the coverages.

On October 17, 1985, S.R.I. filed a "Petition to Vacate, Modify or Correct Statutory Arbitration Award" in the Court of Common Pleas of Allegheny County asserting, inter alia, that the arbitrators exceeded their authority and entered an award contrary to law. It maintained that the court, pursuant to sections 7314(a)(1)(iii)⁴ and 7302(d)(2)⁵ of the Uniform Arbitration Act, was empowered to vacate, modify or correct the award. The court disagreed and instead concluded that the proper scope of review was governed by section 7315(a) of the Act, which provides that an award may be modified or corrected only under the following circumstances:

(1) there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;

(2) the arbitrators awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or

(3) the award is deficient in a matter of form, not affecting the merits of the controversy.

42 Pa.C.S. § 7315(a). The court, having determined that the issues raised in appellant's petition were questions of law, and therefore beyond the narrow constraints of section 7315(a), declined to address the merits, denied the petition, and granted appellee's petition to confirm the award.

On appeal, the Superior Court held that the "contrary to law" standard, as set forth in section 7302(d)(2), should have been applied by the lower court. Nonetheless, the Superior Court affirmed the award. Thereafter, S.R.I. petitioned this Court for allowance of appeal, which was granted. We now affirm in part and reverse in part.

S.R.I. raises two basic issues in this appeal: whether appellee, as a member of an unincorporated volunteer fire association, should be permitted to stack the uninsured motorist coverages provided under the "Business Auto Policy" issued in the name of the association; and whether the uninsured motorist coverage awarded should be reduced or "set-off" by the amount of workmen's compensation benefits received by appellee.⁶

The first issue, involving the propriety of cumulating benefits by a member of a volunteer fire association, brings us directly to our decision in Utica Mutual, supra. In that case we discussed the different classifications contained in most uninsured motorist policies, e.g., "class one", "class two" and "class three" coverage, and then proceeded to delineate the circumstances under which one is entitled to stack uninsured motorist coverages.⁷

There we held, inter alia, that the right to stack coverages lies with all persons within the "class one" category of "insured", and that a "class two" claimant, who is insured only because he is an occupant in a vehicle, is not entitled to stack coverages. The rationale underlying our decision was that a claimant whose coverage was solely a result of membership in the second category had not paid premiums, nor was he a specifically intended beneficiary of the policy. Thus, he had no recognizable contractual relationship with the insurer, and there existed no basis upon which he could reasonably expect multiple coverage. Utica Mutual, at 338-39, 473 A.2d at 1010-11.

We now turn to the factual circumstances of this case to decide whether appellee, as a member of a volunteer fire department, should be permitted to aggregate the uninsured motorist coverage available for each of the six vehicles insured under the policy. Resolution of this question will turn on whether appellee was a specifically intended beneficiary of the policy.⁸

Prior to arbitration the parties stipulated that New Galilee Fire Department was an unincorporated association. It was primarily this fact that weighed heavily in the minds of both the arbitrators and the Superior Court in concluding that appellee was a "class one" insured for stacking purposes.⁹ The Superior Court, relying on this Court's decision in DeVillars v. Hessler, 363 Pa. 498, 70 A.2d 333 (1950), concluded that unincorporated associations "are not recognized as entities at law, and have no existence separate and apart from that of their individual members." Selected Risks Insurance Company v. Thompson, 363 Pa.Super. 34, 39, 525 A.2d 411, 413 (1987) citing P.L.E. Associations and Clubs § 1. However, the court's reliance on these authorities was misplaced.

In DeVillars, supra, the issue before the Court was whether a member of an unincorporated fraternal association could institute an action in tort against the association and its officers for their alleged negligence in connection with the operation of a propane steam preparation table. In affirming the lower court's entry of judgment on the pleadings for defendants this Court reasoned that plaintiff, by virtue of her membership in the association and her voluntary assumption of a participating role in the operation of the table, was

cooperatively engaged with those who were allegedly guilty of negligence [and therefore] became subject to the legal principle that where persons join in the prosecution of a common enterprise there is thereby created a mutual relationship of agency among them, with the result that the negligence of any of them is imputed to each and all of them. Since, therefore, the negligence of which she complains is legally imputed to herself, she cannot recover from the association or from any of its members, other than, ... the individuals who actually committed the tort which caused her injuries.

DeVillars, 363 Pa. at 500-01, 70 A.2d at 335.

It is apparent from the above language that the Court in DeVillars predicated its holding on an agency theory and not on the proposition that an unincorporated association has no existence separate and apart from its members.

The general common law rule is that an unincorporated association "is not an entity, and has no status distinct from the persons composing it, but is rather a body of individuals acting together for the prosecution of a common enterprise without a corporate charter but upon methods and forms used by corporations." 6 Am.Jur.2d Associations and Clubs § 1 (footnotes omitted). See P.L.E. Associations and Clubs § 1. However, it is inappropriate to apply this general proposition to all unincorporated associations.¹⁰

A volunteer fire department is more than a social club or a fraternal...