United Farm Bureau Mut. Ins. Co. v. U.S. Fidelity and Guar. Co.
| Decision Date | 18 July 1983 |
| Citation | 501 Pa. 646,462 A.2d 1300 |
| Parties | UNITED FARM BUREAU MUTUAL INSURANCE COMPANY, a mutual insurance company, Appellant-Defendant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellee-Plaintiff, and Loran Palmer, Brenda Palmer, Regina Palmer and Ryan Palmer, by their parents and natural guardians, Loran and Brenda Palmer, and Harrington & Schweers, P.A., Appellees-Defendants. |
| Court | Pennsylvania Supreme Court |
David B. Helwig, Sharlock, Repcheck, Engel & Mahler, Gary F. Sharlock, Pittsburgh, for appellant.
Dennis C. Harrington, Harrington & Schweers, Pittsburgh, for Loran Palmer, et al.
Richard S. Dorfzaun, Pittsburgh, for U.S. Fidelity and Guar. Co.
Before ROBERTS, C.J., and NIX, LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON and ZAPPALA, JJ.
This case presents a single question: does Pennsylvania have the minimal contacts due process requires to exercise personal jurisdiction over a non-resident liability carrier in a suit brought by a Pennsylvania no-fault assigned risk carrier? In this suit for a declaratory judgment the local no-fault carrier asserts the non-resident liability carrier is responsible for Pennsylvania no-fault benefits arguably due the foreign carrier's insureds. 1
The insureds' claim to Pennsylvania no-fault benefits resulted from an auto accident in Pennsylvania. The claimants reside in the same state as the liability carrier. That state does not provide no-fault benefits. Their liability carrier is not authorized to do business in Pennsylvania, but did contract to indemnify its insureds against liability to the extent required by the financial responsibility laws of any state, including Pennsylvania.
Under these circumstances we hold the insureds' Indiana liability carrier is not subject to direct action in Pennsylvania for Pennsylvania no-fault benefits. Specifically, we determine that appellant, an Indiana insurance company, does not have contacts with Pennsylvania of a quantity and quality sufficient for a Pennsylvania court to assert jurisdiction within the limits set by the due process clause of the Fourteenth Amendment.
This Court does not believe a carrier who promises to indemnify and provide a defense against liability could reasonably foresee that those obligations would subject it to direct action for foreign no-fault benefits. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Here the foreign company's only contact with Pennsylvania is an automobile accident involving its insureds under a liability insurance policy. That policy contains nothing more than a provision for compliance with state financial responsibility laws. By itself, that contact is insufficient to confer jurisdiction in a declaratory judgment action brought by a Pennsylvania no-fault assigned risk carrier where the fundamental nature of the action requires determination of the contractual obligations of a foreign insurer to a foreign insured under an insurance contract executed in a foreign state. By promising to indemnify its insured in accord with the minimum requirements of financial responsibility laws the foreign insurer could not anticipate being haled into court in a sister state to litigate whether it is obligated to provide that state's no-fault benefits to its insureds. To hold otherwise would permit a state to impose its no-fault policy on a foreign carrier domiciled in a state which does not provide no-fault coverage for auto accidents involving its residents.
On March 26, 1976, the Palmer family was involved in an automobile accident on Interstate Route 80 in Mercer County, Pennsylvania. 2 At the time of the accident they were residents of Jeffersonville, Indiana. They have remained Indiana residents to the present. Four members of the family sustained injuries in the accident. The fifth victim, Loran Palmer's mother-in-law, was killed. The four injured members of the family, including the driver, filed claims for no-fault benefits under the Assigned Claims Plan of the Pennsylvania No-Fault Act. 3 In accordance with the Assigned Claims Plan, 40 P.S. § 1009.108, United States Fidelity and Guarantee Company (hereinafter U.S.F. & G.), a carrier authorized to write automobile insurance policies in Pennsylvania, was assigned to administer appellees' claims. U.S.F. & G. refused to pay no-fault benefits and asserted that any benefits to which appellees were entitled were owed by United Farm Bureau Mutual Insurance Company (hereinafter United Farm), an Indiana insurance company, which had issued a liability policy to Loran Palmer in Indiana.
The Palmers filed an action in assumpsit against U.S.F. & G. to recover Pennsylvania no-fault benefits. 4 U.S.F. & G. then filed a Petition for Declaratory Judgment seeking a determination that under the terms of the policy issued to Loran Palmer by United Farm and the provisions of the No-Fault Act, any amounts payable to the Palmers are owed by United Farm or, in the alternative, benefits under the No-Fault Act are not owed to the Palmers. 5
United Farm filed preliminary objections asserting lack of personal jurisdiction and forum non conveniens. 6 For purposes of this appeal from the dismissal of its objections we must assume United Farm's factual averments are true. Thus, we know United Farm is a mutual insurance company incorporated and licensed in the state of Indiana and does business exclusively in that state. It is not incorporated under the laws of Pennsylvania or qualified as a foreign corporation in Pennsylvania. United Farm has no offices or agents in Pennsylvania, nor has it authorized its agents to transact business in the Commonwealth. It has never consented to the exercise of jurisdiction by the courts of Pennsylvania. Based on these facts United Farm contends that it has never contracted to insure any person, property or risk located within the Commonwealth of Pennsylvania. See 42 Pa.C.S.A. § 5322(a)(6)(i).
As stated, United Farm's preliminary objections were dismissed. Upon motion by counsel for United Farm, the order dismissing the preliminary objections was amended to state that the preliminary objections raised a substantial issue of jurisdiction. On appeal 7 Superior Court affirmed. United States Fidelity and Guaranty Co. v. United Farm Bureau Mutual Insurance Co., 297 Pa.Superior Ct. 25, 443 A.2d 280 (1981). Since the case presents an important question of first impression in connection with the administration of Pennsylvania's system of no-fault benefits, we granted review. See Pa.R.A.P. 1114.
Under our No-Fault Act, "any victim or any survivor of a deceased victim is entitled to receive basic loss benefits in accordance with the provisions of this act" if the accident causing injury occurs in Pennsylvania. 40 P.S. § 1009.201 (Supp.1982). 8 The basic loss benefits available to the victim are determined by the no-fault plan in effect in the state of domicile of the victim or if there is no such plan, the plan in effect in the state in which the accident occurred. 40 P.S. § 1009.110(c)(1) (Supp.1982). Indiana does not have a no-fault plan. Thus, Pennsylvania's no-fault plan applies. For individuals who do not possess insurance providing basic loss benefits, the No-Fault Act provides an Assigned Claims Plan. 40 P.S. § 1009.108 (Supp.1982). U.S.F. & G. says it is entitled to have Pennsylvania determine the question of whether such an Indiana policy provides Pennsylvania no-fault benefits. Under the Pennsylvania No-Fault Plan victims may obtain basic loss benefits by filing a claim with the Assigned Claims Bureau and having their claim handled by an assigned risk carrier. 9 We should construe this provision consonant with the Pennsylvania legislature's avowed purpose of providing basic loss benefits quickly, cheaply and with a minimum of litigation. 40 P.S. § 1009.102. In this connection we note U.S.F. & G.'s refusal to provide benefits until its responsibility vis a vis an out of state liability carrier is judicially declared has left the Palmers without a determination of their entitlement.
The Palmers' policy with United Farm provided liability coverage for bodily injury and property damage. It applied to "accidents, occurrences, and loss during the policy period and while the automobile is within the United States of America, its territories or possessions, or Canada, or between parts thereof." The policy also provided that it
shall comply with the motor vehicle financial responsibility laws of any state or province which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of an automobile insured hereunder, to the extent of the coverage and limits of liability required by such law.
The insured agreed to reimburse the company for any payments made by the company which it would not have been obligated to make but for complying with a state's financial responsibility laws. The Palmers' policy is a liability policy, not a no-fault policy, and has no provision for basic loss benefits, 10 as that term is defined by Pennsylvania.
U.S.F. & G. asserts that the provisions of our No-Fault Act, taken with the terms of the Palmers' policy with United Farm, insulate it from responsibility to the Palmers for no-fault benefits under our Assigned Claims Plan. In this action for a declaratory judgment we are not called upon to determine which company is liable to the Palmers for no-fault benefits, or whether the Palmers are entitled to no-fault benefits at all. We must determine only whether personal jurisdiction, consistent with the due process clause of the Fourteenth Amendment, may be exercised over United Farm in U.S.F. & G.'s action for declaratory judgment. 11
Common Pleas based its finding of jurisdiction on its interpretation of 42 Pa.C.S.A. § 5322(a)(6)(i) and 42 Pa.C.S.A. § 5322(b), 12 as well as its application of the "minimum...
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