St. Paul Mercury Ins. Co. v. Perry

• Decision Date: 15 October 2002
• Docket Number: Civil Action No. 01-4992.
• Citation: 227 F.Supp.2d 430
• Parties: ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff, v. Timothy PERRY and Donna Perry, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

227 F.Supp.2d 430

ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff, v. Timothy PERRY and Donna Perry, Defendants.

Civil Action No. 01-4992.

United States District Court, E.D. Pennsylvania.

October 15, 2002.

COPYRIGHT MATERIAL OMITTED

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

Robert F. Stranick, Black and Associates, P.C., Media, PA, for Defendants.

MEMORANDUM

BAYLSON, District Judge.

This case involves whether an insurance company is obligated to pay uninsured motorist benefits to policyholders involved in an accident in a vehicle covered under a different policy. This declaratory judgment action has been brought before the Court by plaintiff St. Paul Mercury Insurance Company's ("Plaintiff"), and defendants Timothy and Donna Perry's ("defendants") cross-motions for summary judgment. Oral arguments were heard on September 13, 2002. For the reasons which follow, Plaintiff's Motion for Summary Judgment will be granted.

I. Background

The parties have stipulated to the following facts. Plaintiff issued an antique automobile policy to defendants with a policy period running from October 15, 1999 through October 15, 2000. The policy covered a 1966 Ford F150 pickup truck owned by defendants and included uninsured motorist ("UM") limits of $300,000 per occurrence.

On December 23, 1999, Donna Perry was in Sharon Hill, Pennsylvania, driving her 1988 Chevrolet Camaro, a vehicle which she owned and insured through a separate insurance policy issued by AAA Mid-Atlantic Insurance Company. Her husband, Timothy Perry, was a passenger. The car was struck by an uninsured vehicle, and Timothy Perry sustained injuries as a result of the collision.

After exhausting their $300,000 UM benefits under their AAA Mid-Atlantic policy, Def.'s Mot. for Summ. J. at 7, defendants made a UM claim under their antique automobile policy with Plaintiff. Plaintiff initiated action in this Court, seeking a declaratory judgment that it is not liable to defendants for UM benefits. Defendants and Plaintiff then filed Cross-Motions for Summary Judgment, which are now before this Court.

II. Legal Standard and Jurisdiction

The standards by which a court decides a summary judgment motion do not change when the parties file cross-motions. Southeastern Pa. Trans. Auth. v. Pennsylvania Pub. Util. Comm'n, 826 F.Supp. 1506, 1512 (E.D.Pa.1993). Summary judgment is appropriate "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." Fed.R.Civ.P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.

A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325, 106 S.Ct. 2548. After the moving party has met its initial burden, "the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

Plaintiff is a corporation organized and existing under the laws of the State of Minnesota. Defendants are citizens of and reside in the Commonwealth of Pennsylvania. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a) because there is diversity of citizenship and the amount in controversy exceeds $75,000, exclusive of interest and costs. Venue is proper under 28 U.S.C. § 1391(a).

III. Analysis

This diversity action is governed by substantive state law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). When ascertaining Pennsylvania law, the decisions of the Pennsylvania Supreme Court are the authoritative source. See State Farm Mut. Automobile Ins. Co. v. Coviello, 233 F.3d 710, 713 (3d Cir.2000) (citing Connecticut Mut. Life Ins. Co. v. Wyman, 718 F.2d 63, 65 (3d Cir.1983)). If the Pennsylvania Supreme Court has not yet passed on an issue, then this court will consider the pronouncements of the lower state courts. See id.

A. Plaintiff's Arguments

1. Plaintiff Not Obligated to Provide UM Benefits to Defendants

Plaintiff asserts that it is not obligated to provide UM benefits to Defendants under the terms of its policy. The relevant portions of the antique automobile policy follow:

The UM endorsement to the policy provides:

"A. We will pay compensatory damages which an `insured' is legally entitled to recover from the owner or operator of an `uninsured motor vehicle' because of `bodily injury':

1. Sustained by an `insured'; and

2. Caused by an accident."

Stipulation of Facts Ex. D at 1.

The UM endorsement to the policy defines "insured" as follows:

"`Insured' as used in this endorsement means:

1. You or any `family member';

2. Any other person `occupying' `your covered auto.'

3. Any person for damages that person is entitled to recover because of `bodily injury' to which this coverage applies sustained by a person described in 1. or 2. above."

Id.

Endorsement 50912 to the policy amends the UM endorsement as follows:

"The definition of `Insured' as used in the Uninsured Motorists Coverage (Stacked) Insuring Agreement is amended to read as follows:

`Insured' as used in this endorsement means:

1. Any person occupying `your covered auto'.

2. Any person for damages that person is entitled to recover because of `bodily injury' to which this coverage applies sustained by a person described in 1. above."

Stipulation of Facts Ex. E.

Specifically, Plaintiff refers to Endorsement 50912 to demonstrate that an insured can properly receive coverage only if occupying the antique auto covered under the policy. Plaintiff contends that since Defendants at the time of the accident were not occupying the antique automobile covered under their policy that they are not entitled to UM coverage.

In St. Paul Mercury Ins. Co. v. Corbett, 428 Pa.Super. 54, 630 A.2d 28 (1993), the Pennsylvania Superior Court considered an antique auto policy similar to the one at issue and found that coverage was not applicable. In Corbett, the defendant had been injured while operating a vehicle owned and insured by his employer when he was struck by a hit-and-run vehicle. Id. at 29. He recovered UM benefits under his employer's automobile policy and then sought coverage under three other policies, one of which was an antique automobile policy. Id. The plaintiff insurance company filed a declaratory judgment action seeking a declaration that it was not obligated to provide UM coverage to the defendant because he was not operating the antique automobile at the time of his accident. Id.

The Court found that the defendant was not entitled to UM benefits under the antique automobile policy because in order to be a "covered person" under the policy, it was necessary for the named insured to be occupying the covered vehicle at the time of the accident. Id. at 31. Part of the Court's rationale follows:

"The very limited use of antique automobiles does not subject them to the normal exposure or danger from uninsured motorists. These vehicles are seldom driven on highways for fear of wear and tear or breakdown. In fact, owners of antique automobiles often have their antique cars transported on flatbed trucks. Because of the decreased risks associated with antique vehicles, premiums for these special insurance policies are lower than those for personal automobile policies. To invalidate the restrictions found in the policy would force insurance companies to raise rates on antique automobile policies to account for the attendant increased risks. If coverage is permitted under the circumstances presented here, the distinctions between antique automobile insurance and other types of insurance will be eradicated and premiums for antique vehicle insurance will be on par with personal automobile insurance. This result was not contemplated by the Legislature in enacting the MVFRL." (Citations omitted.)

"Finally the fact that Pennsylvania provides for special registration plates and fees for antique automobiles and proscribes certain uses of such vehicles also illustrates the Legislature's intent to maintain distinct classifications of automobiles. Different classifications of automobiles have different insurance needs. In this case, the antique policy issued to Corbett was not meant to compensate the insured or a covered person in an accident involving an uninsured motor vehicle unless that uninsured motor vehicle hits the antique car. Based on the foregoing, we do not find that this definition of `uninsured motor vehicle' in the insurance agreement offends public policy." (Citations omitted.)

Id. at 32-33.

In this case, the policy issued by Plaintiff...