Windrim v. Nationwide Ins. Co.

• Decision Date: 14 July 1994
• Citation: 537 Pa. 129,641 A.2d 1154
• Parties: Allen WINDRIM, Appellee, v. NATIONWIDE INSURANCE COMPANY, Appellant.
• Court: Pennsylvania Supreme Court

Page 1154

641 A.2d 1154

537 Pa. 129

Allen WINDRIM, Appellee, v. NATIONWIDE INSURANCE COMPANY, Appellant.

Supreme Court of Pennsylvania.

Argued April 5, 1993.

Decided May 16, 1994.

Rearguments Denied June 29 and July 14, 1994.

[537 Pa. 130] Gregory F. Lepore, Lansdale, for Nationwide.

Edwin P. Smith, Philadelphia, for A. Windrim.

Peter J. Hoffman, Philadelphia, for amicus--defendant Inst.

Before NIX, C.J., and LARSEN, FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY and MONTEMURO, JJ.

OPINION

NIX, Chief Justice.

Nationwide Insurance Company ("Nationwide") appeals from the Order of the Superior Court affirming the Order of the Court of Common Pleas compelling uninsured motorist arbitration and invalidating an automobile insurance policy provision which excludes uninsured motorist benefits to a person operating his own uninsured automobile at the time of the accident. We granted allocatur in this case to determine whether public policy precludes the enforcement of such a provision. For the reasons that follow, we reverse and hold that the aforementioned provision is a valid and enforceable exclusion under Pennsylvania law.

Appellee, Allen Windrim, was injured as a result of a motor vehicle accident on December 3, 1989. Windrim has alleged, and Nationwide has denied, that the accident was the result of the negligence of an unidentified hit-and-run driver. At the time of the accident, Windrim was the sole owner and operator of his uninsured automobile. Windrim subsequently sought uninsured motorist coverage from Nationwide contending that he was insured pursuant to his mother's policy with Nationwide because he was a relative residing in his mother's household. Nationwide denied coverage based upon an exclusionary provision in Windrim's mother's policy which provides in pertinent part:

This Uninsured/Underinsured Motorists insurance does not apply as follows:

....

4. It does not apply to bodily injury suffered while occupying or from being hit by a motor vehicle owned by you or a relative living in your household, but not insured for Uninsured or Underinsured Motorists coverage under this policy.

Record at 13a.

Windrim filed a Motion to Compel Uninsured Motorist Arbitration contending that the foregoing provision was invalid under the Uninsured Motorist Act. ¹ Nationwide filed an answer, new matter, and a counterclaim requesting that the Court of Common Pleas enter a declaratory judgment against Windrim on the issue of the validity of the provision in question.

The court entered an order granting Windrim's Motion to Compel Arbitration and denying Nationwide's counterclaim for declaratory relief. It also declared the exclusionary provision invalid based on Bankes v. State Farm Mut. Auto. Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970). In Bankes, the Superior Court struck down a similar exclusionary provision on the ground that it was repugnant to the Uninsured Motorist Act. The Bankes decision was based on the Superior Court's examination of the legislative history of the Act which revealed that the legislators expressly rejected an exclusionary provision very similar to the one at issue in that case.

On appeal to the Superior Court, Nationwide argued that the trial court erroneously relied on Bankes because the Motor Vehicle Financial Responsibility Law ² ("MVFRL") was enacted after the Uninsured Motorist Act and the Bankes decision. Windrim v. Nationwide Mut. Ins. Co., 412 Pa.Super. 155, 158, 602 A.2d 1356, 1357 (1992). Nationwide maintained that the legislative intent behind the MVFRL was to prevent uninsured motorists from using public highways by denying them insurance benefits. Id. According to Nationwide, the enactment of the MVFRL represented a change in legislative intent and policy from that underlying the Uninsured Motorist Act and, therefore, the exclusionary provision in Windrim's mother's policy was valid in light of this change. Id. at 158, 602 A.2d at 1357-58.

The Superior Court disagreed with Nationwide's contentions and found "no change in the legislative intent underlying the Uninsured Motorist Act to that underlying the MVFRL. The legislative intent under both [was] to ensure [that] owners/operators of uninsured vehicles receive uninsured motorist benefits." Id. at 159-60, 602 A.2d at 1358. The court concluded that its holding in Bankes still controlled and consequently held the exclusionary provision invalid.

Judge Popovich dissented from the majority and indicated that his "review of the MVFRL disclose[d] that it [was] silent on the issue of whether the operator of uninsured vehicle may recover uninsured motorist benefits under a policy applicable to another vehicle owned by the driver or a relative residing with the driver." Id. at 160, 602 A.2d at 1359 (Popovich, J., dissenting). In addition, Judge Popovich found the reasoning of the Court of Appeals for the Third Circuit to be very persuasive in the factually similar case of Nationwide Mut. Ins. Co. v. Hampton, 935 F.2d 578 (1991). Id., 412 Pa.Super. at 161, 602 A.2d at 1359. In Hampton, the owner/operator of an uninsured motorcycle attempted to recover underinsured benefits from his father's insurance policy after he was injured in an accident. The insurance policy contained an exclusion identical to the one in the instant case.

The Hampton court conducted an extensive review of the legislative history of the MVFRL as well as prior, relevant decisions in Pennsylvania. In reversing the order allowing the owner/operator to recover benefits under his father's policy, the court stated "[t]he MVFRL embodies a new policy, expressed in § 1714, of deterring motorists from failing to insure their vehicles by barring recovery of private insurance benefits." Hampton, 935 F.2d at 587. ³

We agree with both Judge Popovich and the Third Circuit that the MVFRL reflects a heightened concern by the General Assembly toward the increasing consumer cost of automobile insurance attributable in part to motorists who ignore the legal requirement that they insure their vehicles. See House Journal, Dec. 13, 1983 at 2148. Indeed, the Superior Court has also considered the legislative intent behind the MVFRL:

In passing the [MVFRL], the Legislature was primarily concerned with the rising consumer cost of automobile insurance, created in part by the substantial number of uninsured motorists who contributed nothing to the pool of insurance funds from which claims were paid. The [MVFRL] has the effect of requiring all owners of registered vehicles to share in the burden of insurance before they can obtain the benefits. By denying benefits to a certain class of people--those not insuring their registered vehicles--the [MVFRL] encourages the purchase of insurance by all owners who register vehicles which can be legally operated on the highways.

Allen v. Erie Ins. Co., 369 Pa.Super. 6, 10, 534 A.2d 839, 840-41 (1987) (citations omitted).

Despite the foregoing, the Superior Court's analysis in the instant case relied almost exclusively on its decision in Henrich v. Harleysville Ins. Co., 403 Pa.Super. 98, 588 A.2d 50 (1991), aff'd, 533 Pa. 181, 620 A.2d 1122 (1993). Henrich involved the issue of whether section 1714 of the MVFRL itself precluded the recovery of uninsured motorist benefits by the owner of an uninsured car who was injured while a passenger in a different uninsured car. The Superior Court concluded that section 1714 did not bar the plaintiff from recovering uninsured motorist benefits from her father's insurance policy, under which she was covered.

The court in Henrich specifically stated that the plaintiff was not "contractually precluded" from recovering uninsured motorist benefits. Henrich, 403 Pa.Super. at 103, 588 A.2d at 52. It did not analyze the public policy aims of the MVFRL because it was only required to interpret the actual language of section 1714 to determine whether the plaintiff was permitted to recover under the statute.

On appeal, this Court affirmed the decision of the Superior Court. Henrich v. Harleysville Ins. Co., 533 Pa. 181, 620 A.2d 1122 (1993). We observed that the MVFRL and section 1714 were "designed to deter people from failing to insure their vehicles more forcefully than the prior [no-fault] statute," and it was ultimately held that section 1714 did not apply to the plaintiff "because she was not operating her own uninsured motor vehicle at the time of the accident." Id. at 185, 620 A.2d at 1124 (footnote omitted). Because the plaintiff had not been injured while operating her own uninsured vehicle, we declined to express an opinion as to whether the deterrent purpose of section 1714 might be applicable in that particular instance. Id.

We are now, however, confronted with a situation where an individual was operating his own uninsured vehicle at the time of the accident. In addition, the insurance policy under which Appellee Windrim seeks recovery contains an unambiguous exclusionary provision, unlike the policy in Henrich which contained no such exclusion. Henrich is therefore distinguishable from the instant case. Accordingly, we find that the Superior Court erroneously relied upon Henrich in concluding that the legislative intent underlying the Uninsured Motorist Act, as ascertained in Bankes, remained the same as that underlying the MVFRL with respect to uninsured motorist benefits.

Appellee Windrim has never argued that the exclusionary language in his mother's policy is unclear or ambiguous. Rather, he contends that the provision is void as applied to him because it violates public policy. A clear and unambiguous contract provision must be given its plain meaning, unless to do so would be contrary to a clearly expressed public policy. Antanovich v. Allstate Ins. Co., 507 Pa. 68, 76, 488 A.2d 571, 575 (1985). Furthermore,

"[i]t is only when a given policy is so obviously for or against the public health, safety, morals or welfare that there is a virtual unanimity of opinion in regard to it, that a...