Treski v. Kemper Nat. Ins. Companies

• Decision Date: 08 April 1996
• Citation: 449 Pa.Super. 620,674 A.2d 1106
• Parties: Alan R. and Amy A. TRESKI and Joseph and Patricia Tracy and William and Josephine Schneider, on behalf of themselves and all others similarly situated, Appellants, v. KEMPER NATIONAL INSURANCE COMPANIES d/b/a American Motorists Insurance Company and CNA Insurance Companies d/b/a Continental Casualty Co. and General Accident Co. of America, on behalf of themselves and all others similarly situated, Appellees.
• Court: Pennsylvania Superior Court

Page 1106

674 A.2d 1106

449 Pa.Super. 620

Alan R. and Amy A. TRESKI and Joseph and Patricia Tracy and William and Josephine Schneider, on behalf of themselves and all others similarly situated, Appellants, v. KEMPER NATIONAL INSURANCE COMPANIES d/b/a American Motorists Insurance Company and CNA Insurance Companies d/b/a Continental Casualty Co. and General Accident Co. of America, on behalf of themselves and all others similarly situated, Appellees.

Superior Court of Pennsylvania.

Argued Feb. 27, 1996.

Filed April 8, 1996.

Appeal from the Order of the Court of Common Pleas of Bucks County, Civil Division, No. 94007476-09-1; Before Rufe, J.

Jay S. Cohen, Lower Gwynedd, for appellants.

James C. Haggerty, Philadelphia, for Kemper National Insurance, appellee.

James Nyeste, Chicago, IL, for Continental Casualty, appellee.

Before BECK, HUDOCK and JAMIESON, JJ.

HUDOCK, Judge:

In this appeal we must decide whether Appellants have standing to assert a cause of action against Appellee insurance companies for an alleged violation of the Uniform Trade Practices and Consumer Protection Law (UTPCPL) and negligent misrepresentation. Finding that Appellants are not "aggrieved persons" and thus lack standing, we affirm the trial court's order which sustained Appellees' preliminary objections and dismissed Appellants' bilateral class action complaint.

Appellants, three married couples who reside in Pennsylvania and purchased automobile insurance policies from the Appellee insurance companies, ¹ (Insurers) filed a class action suit on September 29, 1994 against the named insurers and all other similarly situated insurance companies. Appellants raised two counts, one based on an alleged violation of the UTPCPL, 73 P.S. section 201-1 et seq., and one based on negligent misrepresentation. Appellants explained in their complaint that when they purchased their automobile insurance policies, the respective insurer advised them that they could purchase either "full tort" or "limited tort" coverage as defined in the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S.A. section 1701 et seq. See 75 Pa.C.S.A. section 1705(c) and (d) for an explanation of full tort and limited tort alternatives. Each respective insurer gave Appellants the required statutory notice set forth in 75 Pa.C.S.A. section 1791.1(b), which advised them of their right to elect the full tort or limited tort option. The form notice of tort options given to Appellants stated:

The laws of the Commonwealth of Pennsylvania give you the right to choose either of the following two tort options:

A. "Limited Tort" Option--This form of insurance limits your right and the rights of members of your household to seek financial compensation for injuries caused by other drivers. Under this form of insurance, you and other household members covered under this policy may seek recovery for all medical and other out-of-pocket expenses, but not for pain and suffering or other nonmonetary damages unless the injuries suffered fall within the definition of "serious injury," as set forth in the policy, or unless one of several other exceptions noted in the policy applies.

B. "Full Tort" Option--This form of insurance allows you to maintain an unrestricted right for yourself and other members of your household to seek financial compensation for injuries caused by other drivers. Under this form of insurance, you and other household members covered under this policy may seek recovery for all medical and other out-of-pocket expenses and may also seek financial compensation for pain and suffering or other nonmonetary damages as a result of injuries caused by other drivers.

If you wish to change the tort option that currently applies to your policy, you must notify your agent, broker or company and request and complete the appropriate form.

75 Pa.C.S.A. § 1791.1(b) (emphasis added).

Appellants signed the notice and selected the full tort option under section 1705(a)(1)(B). Under this full tort option Appellants preserved an "unrestricted right" to seek all alleged tort damages including non-economic damages for pain and suffering. See 75 Pa.C.S.A. § 1705(a)(1)(B) and § 1705(c). By choosing the full tort option, Appellants agreed to pay a higher premium in exchange for more comprehensive tort coverage. If Appellants had chosen the limited tort option, they would have paid lower insurance premiums, but would be unable to recover for non-economic damages unless they suffered a "serious injury" as defined by section 1702 of the MVFRL. See 75 Pa.C.S.A. § 1705(d).

Appellants brought suit on behalf of themselves and all similarly situated persons and businesses residing in southeastern Pennsylvania who purchased automobile insurance policies from Appellees or any member of the defendant class and elected the full tort option since July 1, 1990. ² Appellants Joseph and Patricia Tracy also brought the action on behalf of a sub-class of Pennsylvania policyholders who were injured in an automobile accident in New Jersey since July 1, 1990 and whose full tort policy claim was denied because of the New Jersey law, N.J.S.A. 17:28-1.4, known as the "Deemer Statute." ³ Appellants defined the defendant class as "all insurance companies who have issued automobile insurance policies in Pennsylvania with the full tort option since July 1, 1990 and have also coextensively issued automobile insurance policies in the state of New Jersey during that time frame." See Appellants' Complaint, p 14.

Similar to the Pennsylvania MVFRL, New Jersey law provides insureds two options of tort recovery--full tort or basic tort. The basic tort option, also known as the "verbal threshold" option, is similar to the Pennsylvania limited tort option as it limits the insured's right to recover for non-economic damages unless the injuries sustained satisfy at least one of nine statutorily enumerated categories. N.J.S.A. 39:6A-8(a). The full tort option in New Jersey, also known as "no threshold", is analogous to the Pennsylvania full tort coverage. This option allows the insured to recover for all damages, including pain and suffering, without any proof of a serious injury. N.J.S.A. 39:6A-8(b). Unlike section 1705(a)(3) of the Pennsylvania MVFRL, if an insured fails to make an election of tort recovery in New Jersey, he is presumed to have chosen the basic tort or verbal threshold coverage. See N.J.S.A. 39:6A-8.

The New Jersey Legislature also enacted a provision in its motor vehicle law known as the Deemer statute, which precludes non-resident insureds from selecting the full tort recovery. See supra n. 3. The effect of the Deemer statute is to subject out of state drivers to a verbal threshold which requires an injured plaintiff to prove serious injury before he may pursue civil damages for non-economic loss if the insured's insurance carrier is authorized to issue motor vehicle liability insurance coverage in New Jersey. All non-resident insureds who purchase insurance from a company licensed in both New Jersey and in their home state are "deemed" by operation of law to have selected the basic tort option under New Jersey law. This statute only applies if the non-resident insured purchased their policy from an insurance company which is licensed in New Jersey and another state in the U.S. or a province of Canada. If the insurer is not licensed to do business in New Jersey, the Deemer statute does not bar a non-resident's claim for non-economic losses.

In Count I of their complaint, Appellants averred that Insurers engaged in unfair or deceptive acts or practices in violation of the Pennsylvania UTPCPL, 73 P.S. section 201-2(4). Appellants alleged that Insurers failed to adequately inform them of the effect of the New Jersey Deemer statute on their ability to recover for non-economic losses if they were injured in an accident in New Jersey. Appellants claimed that Insurers, who were authorized to transact insurance business in New Jersey and sold them a policy in Pennsylvania, knew that despite the election of full tort under the Pennsylvania MVFRL, Appellants would not be permitted to recover damages for non-economic losses in New Jersey unless they met the verbal threshold by sustaining a serious injury. Appellants claimed that the notice Insurers provided them, which stated that they would have the "unrestricted right" to sue for non-economic injuries, was deceptive in that it did not fully disclose that the New Jersey Deemer statute would limit their full tort recovery. Specifically, Appellants claimed that Insurers violated section 201-2(4)(v) and (vii) of the UTPCPL which define unfair or deceptive acts or practices as:

(v) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation or connection that he does not have;

* * * * * *

(vii) Representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another[.]

73 P.S. §§ 201-2(4)(v) and (vii).

Appellants also averred in Count II of the complaint that Insurers negligently misrepresented the extent of full tort coverage they would be entitled to in New Jersey. Appellants claimed that they were induced to purchase automobile insurance from Insurers with full tort coverage based on the misrepresentation that they would have the unrestricted right to recover for pain and suffering. Appellants sought money damages to reimburse them for the higher premiums they paid for full tort recovery without knowing that their recovery might be limited if New Jersey law applied. In addition to compensatory damages Appellants requested a declaratory judgment against Insurers forcing them to advise their policyholders regarding "the effect and nature of the New Jersey Deemer Statute as it applies to the election of...