Webb v. United Services Auto. Ass'n

• Decision Date: 11 April 1974
• Citation: 227 Pa.Super. 508,323 A.2d 737
• Parties: In the Matter of the Arbitration Between Evans W. WEBB and Elizabeth Webb and UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant. [*]
• Court: Pennsylvania Superior Court

323 A.2d 737

227 Pa.Super. 508

In the Matter of the Arbitration Between Evans W. WEBB and Elizabeth Webb and UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellant. ^[*]

Superior Court of Pennsylvania.

April 11, 1974.

Petition for Allowance of Appeal Denied Sept. 3, 1974.

Robert C. Steiger, Philadelphia, for appellant.

Allen Weinberg, Philadelphia, for appellees.

Before WRIGHT, President Judge, and WATKINS, JACOBS, HOFFMAN CERCONE and SPAETH, JJ.

SPAETH, Judge:

Appellees sustained personal injuries as a result of an automobile accident that they allege occurred when an unknown motorist swerved his car in front of theirs, causing them to hit a third car. The unknown motorist drove on and disappeared. The third car was insured, but appellees brought an action against appellant as their carrier under the policy's uninsured motorist clause on the theory that the unknown motorist's car was a 'hit-and-run' car. ^[1] The case went to arbitration pursuant to a standard clause in the policy. The arbitration panel's decision was that appellees are bound by a provision of their insurance policy defining a 'hit-and-run' car as one causing injury 'arising out of physical contact;' since there was no allegation any contact between appellees' car and the car appellees swerved to avoid, there was no coverage.

Appellees then filed a petition and rule to vacate the award of the arbitrators and return the matter to arbitration on the questions of fault and damages alone. Argument was heard on the motion, ^[2] and appellees' petition was granted.

On this appeal from that order appellant challenges both the jurisdiction of the court below and the merits of its decision. We hold that the court had jurisdiction and that its decision was correct, and therefore affirm.

I.

The opinion of the court below makes no reference to whether it had jurisdiction, although that issue is extremely difficult. Pennsylvania courts have said repeatedly that all questions under an uninsured motorist clause with an aribtration provision are within the exclusive jurisdiction of the arbitrators. Allstate Insurance Co v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972); Nationwide Mutual Ins. Co. v. Barbera, 443 Pa. 93 277 A.2d 821 (1971); Preferred Risk Mut. Ins. Co. v Martin, 436 Pa. 374, 260 A.2d 804 (1970); Great American Ins. Co. v. American Arbitration Association, 436 Pa. 370, 260 A.2d 769 (1969); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969); Allstate Insurance Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969); Merchants Mut. Ins. Co. v. Am. Arb. Assoc., 433 Pa. 250, 248 A.2d 842 (1969); Harleysville Mut. Ins. Co. v. Medycki, 431 Pa. 67, 244 A.2d 655 (1968); National Grange Mut. Ins. Co. v. Kuhn, 428 Pa. 179, 236 A.2d 758 (1968); Hartford Ins. Grp. v. Kassler, Pa.Super., 324 A.2d 521 (1974); Allstate Ins. Co. v. Blackwell, 223 Pa.Super. 401, 301 A.2d 890 (1973).

There have been instances, however, when an appellate court has taken jurisdiction over cases dealing with such clauses. See Harleysville Mut. Ins. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968); Nationwide Mut. Ins. Co. v. Ealy, 221 Pa.Super. 138, 289 A.2d 113 (1972); Bankes v. State Farm Mut. Auto. Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970); Ellison v. Safeguard Mut. Ins. Co., 209 Pa.Super. 492, 229 A.2d 482 (1967).

It is therefore necessary to examine the cases to sort out the seemingly contradictory statements about jurisdiction. When this is done, certain consistent general principles emerge.

There have been several cases in which the insurance company has sought an injunction against arbitration. It has been consistently held that because the parties to the policy have chosen arbitration as the forum, one party cannot seek to enjoin arbitration, and all matters arising under a standard uninsured motorist clause must go to arbitration rather than to court. Allstate Ins. Co. v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972) (policy claimed to have expired six days prior to accident); Preferred Risk Mt. Ins. Co. v. Martin, 436 Pa. 374, 260 A.2d 804 (1970) (claim that foster child was not covered by policy); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969) (failure to put dollar limit on uninsured motorist coverage alleged to be mutual mistake); Allstate Ins. Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969) (claimant alleged not to be member of policyholder's household); Harleysville Mut. Ins. Co. v. Medycki, 431 Pa. 67, 244 A.2d 655 (1968) (alleged that claimant had not cooperated with company in seeking litigation); National Grange Mut. Ins. Co. v. Kuhn, 428 Pa. 179, 236 A.2d 758 (1968) (alleged that third party was not an 'uninsured motorist' under the terms of the policy).

For the same reason the company will not be allowed to avoid arbitration by seeking a declaratory judgment. Allstate Ins. Co. v. Taylor, Supra; Hartford Insurance Group v. Kassler, Pa.Super., 324 A.2d 521 (1974) (alleged that the automobile in question was not 'uninsured' as defined in the policy).

It is also settled that the proper procedure to obtain review of an arbitrator's award is not by equitable action but by petition to the Court of Common Pleas to vacate the award. Nationwide Mut. Ins. Co. v. Barbera, 443 Pa. 93, 277 A.2d 821 (1971); Great American Ins. Co. v. Am. Arb. Assoc., 436 Pa. 370, 260 A.2d 769 (1969). Such a petition will not succeed, however, unless it can be shown by clear, precise, and indubitable evidence that a party was denied a hearing, or that there was fraud, misconduct, or other irregularity that has caused the rendition of an unjust, inequitable, or unconscionable award. Allstate Ins. Co. v. Fioravanti, 451 Pa. 108, 299 A.2d 585 (1973); Press v. Maryland Cas. Co., Pa.Super., 324 A.2d 403 (1974). This is a difficult burden. In Fioravanti the arbitrators decided that the carrier should be estopped to deny that the claimant was covered by the policy and refused to allow the carrier to submit a memorandum of law on the issue. This was held not to be such an irregularity as to deny the carrier a full and fair hearing, and the award was upheld. Similarly, a claimant was held not to have been denied a full and fair hearing where the arbitrators refused to hear her case because she had identified the name on the side of the truck that hit her and could presumably trace it through the fleet owner. Smith v. Employer's Liability Assurance Grp., Ltd., 217 Pa.Super. 31, 268 A.2d 200 (1970).

In the preceding cases both of the parties affirmed the language of the policy but disagreed in their interpretations of it. The principles stated apply to that situation consistently. They do not, however, necessarily apply to such a case as this one, in which the claimant alleges that one of the policy's terms offends a mandate of the state legislature. ^[3] Whether in such a case a different set of principles applies is a question yet to be squarely decided by our courts.

Despite the frequent references in the cases to the exclusive jurisdiction of the arbitrators, there are a number of cases in which the Supreme Court or this court has taken jurisdiction.

In Ellison v. Safeguard Mutual Ins. Co., 209 PaSuper. 492, 229 A.2d 482 (1967), the claimant filed for arbitration even though there was neither an uninsured motorist clause nor an arbitration clause in his policy. The arbitrators agreed with the claimant's position that the Uninsured Motorist Coverage Act, Act of Aug. 14, 1963, P.L. 909, § 1, as amended Dec. 19, 1968, P.L. 1254, No. 397, § 1, 40 P.S. § 2000, ^[4] required that such a clause be on the policy and that under a regulation promulgated by the Insurance Department an arbitration clause should also be included. The panel therefore awarded cliamant damages, and a judgment was entered by the court. This court decided that to hold that the arbitration provisions were part of the contract because of the regulation would be to attribute to the legislature an unlawful delegation of power. ^[5] Judge HOFFMAN, joined by Judge SPAULDING, concurred in the result, but only because the lack of an arbitration clause created a jurisdictional defect which negated the award, adding, 'Furthermore, I wish to express no view on the critical question of whether a Court could read the omitted coverage into this policy. I do not believe that the insured is foreclosed by our action today from pressing his claim in a proper forum.' Id. at 498, 229 A.2d at 485. Since the policy itself lacked an arbitration clause, court action was not precluded by any agreement. The power of the court to hear the issue before it (I.e., whether the arbitration panel had jurisdiction) was not a question.

The Supreme Court has held, in Harleysville Mutual Cas. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968), that a standard 'other insurance' clause was invalid because against the spirit of the Uninsured Motorist Coverage Act. The plaintiff in that case brought an action for a declaratory judgment against his carrier. Whether this was proper procedure is not discussed in the court's opinion, although by allowing the appeal and affirming a decision for the plaintiff on the merits it would seem that the court implicitly approved the procedure. ^[6]

In Bankes v. State Farm Mutual Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970), it was held that a clause excluding motorcycle accidents from uninsured motorist coverage was unenforceable as contrary to the purpose of the Uninsured Motorist Coverage Act. Although the policy in dispute had an arbitration clause, this court accepted jurisdiction because neither party objected. However, in Allstate Ins. Co. v Taylor, 434 Pa. 21, 252 A.2d 618 (1969), not cited in Bankes, the parties specifically stipulated that arbitration be stayed pending a declaratory...