White v. Concord Mut. Ins. Co.

Citation442 A.2d 713,296 Pa.Super. 171
PartiesFrank WHITE, Jr., Appellant, v. CONCORD MUTUAL INSURANCE COMPANY and Commercial Union Insurance Company.
Decision Date16 February 1982
CourtSuperior Court of Pennsylvania

Page 713

442 A.2d 713
296 Pa.Super. 171
Frank WHITE, Jr., Appellant,
v.
CONCORD MUTUAL INSURANCE COMPANY and Commercial Union
Insurance Company.
Superior Court of Pennsylvania.
Argued June 25, 1981.
Filed Feb. 16, 1982.

Page 714

[296 Pa.Super. 173] Edwin P. Smith, Philadelphia, for appellant.

James J. McCabe, Jr., Philadelphia, for appellees.

William V. Coleman, Philadelphia, for participating party.

Before CERCONE, President Judge and SPAETH, HESTER, WICKERSHAM, BROSKY, JOHNSON, POPOVICH, DiSALLE and SHERTZ, JJ.

SPAETH, Judge:

This is an appeal from an order denying a petition for the appointment of an arbitrator to decide an uninsured motorist claim. In denying the petition, the lower court held that the uninsured motorist coverage required by the Act of August 14, 1963, as amended, 40 P.S. § 2000(a), does not extend to a case where all of the automobiles involved in an accident have at least the minimum amount of liability insurance required by Pennsylvania law but where because of the number of persons injured a claimant recovers less than the minimum amount. After the appeal had been argued before a panel of this court, we ordered reargument before the court en banc. We now affirm.

1

On July 2, 1977, appellant was injured while a passenger in an automobile that was insured by the Aetna Insurance Company under a $35,000 single limit policy. The other automobile involved in the accident was insured by State Farm Mutual Insurance Company under a policy with limits of $15,000 per person and $30,000 per accident. Because other persons were injured in the accident and participated in the recovery, only $13,000 was available to appellant-$7,000 from one carrier and $6,000 from the other. Claiming that his damages exceeded $13,000, appellant filed claims under the uninsured motorist provisions of his father's and [296 Pa.Super. 174] stepmother's insurance policies, which had been issued by appellees, Concord Mutual Insurance Company and Commercial Union Insurance Company. 1 Appellees denied appellant's claims and also, each refused to appoint an arbitrator.

Appellant filed in the lower court a "Petition for the Appointment of Arbitrator Pursuant to Uninsured Motorist Coverage." This petition alleged only that appellant was insured under policies containing uninsured

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motorist coverage, that he had been severely injured in a motor vehicle collision, that a dispute had arisen as to whether an uninsured motorist was responsible, and that appellees had not complied with his demand for arbitration. However, the petition was accompanied by a memorandum of law, which recited the additional facts that the tortfeasors were insured but that appellant's recovery was limited to $7,000 from one insurance carrier and $6,000 from the other because of the existence of multiple claimants, and which argued that this constituted a "denial of coverage" because these amounts were less than the minimum coverage required by law. Also attached to the petition, although not specifically incorporated into it, were copies of the arbitration clauses from both appellees' policies and the definition of an "uninsured automobile" from appellee Concord Mutual's policy.

Appellee Commercial Union Insurance Company filed an answer to appellant's petition for the appointment of an arbitrator, denying that an uninsured motorist had been involved in the accident, and alleging in new matter the identities and policy limits of the insurance carriers that provided coverage to the owner of the automobile in which appellant was a passenger and to the owner of the other automobile involved in the accident. 2 This answer was also [296 Pa.Super. 175] accompanied by a memorandum of law. Appellant filed a reply to Commercial Union's new matter, which again admitted that both tortfeasors had been insured while repeating the claim that the tortfeasors' insurance carriers had "denied coverage as to a portion of the applicable limits(.)"

Appellant's only argument on appeal is that the issue of whether uninsured motorist benefits are available under the facts of this case is within the scope of the arbitration clauses of appellees' policies, and that the lower court therefore erred by doing anything other than appointing an arbitrator as requested in his petition. 3

As a general rule, questions under an uninsured motorist clause with an arbitration provision are within the exclusive jurisdiction of the arbitrators. See, e.g., Preferred Risk Mut. Ins. Co. v. Martin, 436 Pa. 374, 260 A.2d 804, cert. denied, 398 U.S. 905, 90 S.Ct. 1697, 26 L.Ed.2d 65 (1970); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969); Merchants Mut. Ins. Co. v. American Arb. Ass'n, 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); Smith v. Employers' Liability Assurance Corp., Ltd., 217 Pa.Superior Ct. 31, 268 A.2d 200 (1970). In some cases, however, an appellate court has decided such questions. In [296 Pa.Super. 176] United Services Auto Ass'n Appeal, 227 Pa.Superior Ct. 508, 323 A.2d 737 (1974), we had occasion to examine these cases, and concluded that

the rule, to which all the cases conform, is that where the application or construction of the uninsured motorist clause is at issue the dispute is within the exclusive jurisdiction of the arbitrators; the courts will take jurisdiction only where the claimant attacks a particular provision of

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the clause itself as being contrary to a constitutional, legislative, or administrative mandate, or against public policy, or unconscionable.

Id. at 516, 323 A.2d at 741 (footnotes omitted).

And see Wilbert v. Harleysville Mut. Ins. Co., 254 Pa.Superior Ct. 217, 220 n. 3, 385 A.2d 987, 983 n. 3 (1978).

Thus, in this case the lower court properly took jurisdiction if the effect of appellant's claim is to attack the uninsured motorist clauses in appellees' policies as being contrary to a constitutional, legislative, or administrative mandate.

As we have noted, appellant's petition alleged that a dispute had arisen as to whether an uninsured motorist was involved in the accident, and appellee Commercial Union's answer denied that any dispute had arisen as to whether an uninsured motorist was involved in the accident, since one of the automobiles was covered by a $35,000 single limit policy and the other by a policy with limits of $15,000 per person and $30,000 per accident. The lower court stated the issue before it as being "to what extent automobile casualty insurers writing business in Pennsylvania and thus required to afford uninsured motorist protection to their insured can be held to create a fund for settlement as to acts of an insured motorist where a castastrophic accident renderes (sic) the $15,000/$30,000 liability coverage required by the financial responsibility laws and actually maintained inadequate to compensate all victims for all losses." Slip op. at 5 (emphasis in original; footnote omitted). Reflection will disclose that the pleadings, and the lower court's understanding[296 Pa.Super. 177] of them, as disclosed by its statement of the issue presented, bring this case within the rule of United Services Auto Ass'n Appeal, supra.

The definition of "uninsured automobile" in appellee Concord Mutual's policy, which was attached to appellant's petition, is taken verbatim from the regulations issued by the Insurance Commissioner. 4 In those regulations an "uninsured automobile" is defined as

an automobile with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured automobile is principally garaged, no bodily injury liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such automobile, or with respect to which there is a bodily injury liability bond or insurance policy applicable at the time of the accident but the company writing the same denies coverage thereunder(.)

31 Pa.Code § 63.2 (Exhibit C II(c)(1)). 5

Automobiles registered in Pennsylvania are required to be covered by liability insurance with limits of at least $15,000 per person and $30,000 per accident, 40 P.S. § 1009.104. Insurance in this amount constitutes proof of financial responsibility, 75 Pa.C.S.A. § 1747. Here, it was uncontested in the pleadings before the lower court that both automobiles had insurance in at least the required amounts. It was also uncontested that the carriers had not denied the applicability of their policies. Accordingly, the lower court found that under the Commissioner's regulations, as reflected in [296 Pa.Super. 178] the policies written by appellees, there was no uninsured automobile involved. (The court italicized its finding that the motorists were "insured.") The court was then faced with appellant's claim that automobiles that were "insured" according to the Commissioner's regulations were nonetheless "uninsured"

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according to the requirements of the statute, 40 P.S. § 2000(a). It is apparent that this claim is but another way of saying that the Commissioner's regulations are contrary to the statute. This case is therefore within the rule of United Services Auto Ass'n Appeal, from which it follows that the lower court properly denied the petition for appointment of an arbitrator and took jurisdiction so that it could itself decide the validity of appellant's attack on the uninsured motorist clauses in appellees' policies.

The dissent argues that the holding of the Supreme Court in National Grange Mutual Insurance Company v. Kuhn, supra, requires that this case be submitted to arbitration. Dissenting at 723-725. It is true that National Grange, in which the Supreme Court ordered arbitration, did involve a dispute as to whether a motorist was...

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