J-A15045- 14
2014 PA Super 192

TIMOTHY AND DEBRA CLARKE, H/W, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellants

v.

MMG INSURANCE COMPANY AND F. FREDERICK BREUNINGER & SON, INSURANCE, INC. Appellees No. 2937 EDA 2013

Appeal from the Order Entered August 1 , 2013 In the Court of Common Pleas of Philadelphia County

Civil Division at No(s): 03407
BEFORE: PANELLA, LAZARUS AND JENKINS, JJ. OPINION BY JENKINS, J. FILED SEPTEMBER 04, 2014 Appellants Timothy and Debra Clarke appeal from the order entered in the Philadelphia Court of Common Pleas denying their motion for partial summary judgment and granting MMG Insurance Company’s ( “MMG Insurance”) cross -motion for partial summary judgment. 1 We vacate and remand for further proceedings. On April 16, 2012, Plaintiff-Appellant Timothy Clar ke suffered serious and permanent injuries in a motor vehicle accident. Mr . Clarke was driving his motorcycle when a car turned in front of him, causin g a collision that

____________________________________________ 1 F. Frederick Breuninger & Son, Insurance, Inc. is not a party to this appeal.J-A 15045

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threw him from his motorcycle. Mr. Clarke suffered mult iple injuries and was placed on life support for eleven days at Paoli Memori al Hospital. He underwent multiple surgical procedures before his release

. At the time of the accident, Mr. Clarke had two moto r vehicle insurance policies in effect. American Modern Select Insura nce Company issued the first for the motorcycle, and MMG Insurance Com pany issued the second for Mr. Clarke’s two automobiles— not his motorcycle. Appellants had underinsured motorist (“UIM”) coverage for the motorcycle through the American Modern Select Insurance policy. Mr. Clarke recei ved payments of $25,000 from American Modern Select Insurance Company f or his motorcycle policy and $1 00,000 from the other driver’s insurance company. Those payments, however, proved insufficient to cover M r. Clarke’s financial losses from the accident. Appellants then sought coverage under their insurance po licy issued by MMG Insurance Co.

— specifically under the UIM coverage clause, which provided coverage in the amount of $300,000 per accid ent. MMG Insurance, however, denied the UIM claim, based on the “Household Exclusion” clause. MMG Insurance asserted that the Household Exclusion clau se precluded coverage because the motorcycle involved in the accident was not a covered vehicle under the MMG Insurance policy, which only covere d two automobiles owned by Appellants.J-A 15045

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On October 24, 2012, Appellants filed their initial complaint and, on December 27, 20 12, filed an amended complaint. Appellants’ amended complaint named MMG Insurance Company and F. Frederick Breuninger & Son Insurance, Inc. (“Breuninger Insurance”) as defendants. The amended complaint sought declaratory relief against MMG Insurance (count I) and asserted claims of breach of contract (count II), neglige nce (count III), and breach of warranty (count IV) against both MMG Insurance and Breuninger
Insurance. On March 5, 2013, Appellants filed a motion for parti al summary judgment on their claim for declaratory relief agains t MMG Insurance. MMG Insurance opposed the motion and, on April 3, 2013, fi led a cross-motion for partial summary judgment. On April 16, 2013, the tri al court denied both parties’ motions. On April 25, 2013, Appellants filed a motion for reconsideration. On May 16, 2013, MMG Insurance opposed Appellant’s motion for reconsideration. On August 1, 2013, upon a second review, 2 the trial court denied Appellants’ motion for reconsiderati on (and thus also their partial summary judgment motion) and granted Appell ee MMG Insurance’s cross-motion for partial summary judgment.

____________________________________________ 2 On June 20, 2013, the trial court marked Appellants’ motion for reconsideration “moot.” After a case management conference with the trial court, the parties stipulated to vacate the June 20, 2 013 order and place Appellants’ motion for reconsideration b efore the trial court for its determination again.J-A 15045

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The trial court denied Appellants’ motion on the grou nds that “the policy language of the Household Exclusion clause clearly and unambiguously excludes the coverage sought by [Appella nts], and because the Order is consistent with Pennsylvania public policy re garding Household Exclusion clauses.” Trial Court Opini on, 12/30/13, at 4. On September 12, 2013, Appellants filed a praecipe to settle, discontinue, and end all remaining claims against MMG I nsurance and Breuninger Insurance. 3 On the same day, Appellants filed a timely notice of appeal. Both Appellants and the trial court complied with Pennsylvania Rule of Appellate Procedure 1925. 4 Appellants raise the following issues for our considerati on:

1. Where the language of the policy agreement between Appellee MMG Insurance Company and Appellants clearly and unambiguously excludes underinsured motorist coverage only where the injury is sustained while occupying a vehicle that has no underinsured motorist coverage, did the [t]rial [c]ourt err as a matter of law when it concluded MMG Insurance Company did not owe the Appellants underinsured motorist coverage for injuries

____________________________________________ 3 The remaining claims were as follows: breach of contra ct (count II), negligence (count III), and breach of warranty (count I V) against both MMG Insurance and Breuninger Insurance.
4 On October 18, 2013, the trial court ordered Appella nts to file a statement of matters complained of on appeal within twenty-one days. On November 4, 2013, Appellants submitted their statement. On December 30, 2013, the trial court submitted its 1925(a) opinion.J-A 15045

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- 5 - sustained while occupying a vehicle which had underinsured motorist coverage?
2. Where the terms of an underinsured motorist exclusion used by MMG Insurance Company excluded coverage only for injuries that occurred in a vehicle that was not covered for underinsured motorist coverage, was it error for the [t]rial [c]ourt, in determining the intent of the parties to the agreement, to ignore the different language used by the insurer in the exclusion for uninsured motorist coverage which, by its terms, excluded coverage if the injuries occurred in a vehicle which was not covered for uninsured motorist coverage under the MMG Insurance policy, and therefore the [c]ourt erred in its determination that Appellee MMG Insurance Company owed no underinsured motorist coverage to Appellants who were injured while occupying a vehicle which had underinsured motorist coverage?
3. In determining the intent of the policy agreement between Appellee MMG Insurance Company and Appellants, did the [t]rial [c]ourt err in examining and relying upon public policy rather than the plain language of the policy agreement, and therefore err in its determination that Appellee MMG Insurance Company owed no underinsured motorist coverage to Appellants who were injured while occupying a vehicle which had underinsured motorist coverage?
4. In the alternative, did the [t]rial [c]ourt err as a matter of law in denying Appellants’ Motion for Partial Summary Judgment and granting the Appellee MMG Insurance Company’s Cross -Motion for Partial Summary Judgment when it failed to construe the ambiguous language in the underinsured motorist coverage provision of the policy in favor ofJ-A 15045

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- 6 - Appellants, which would entitle the Appellants to underinsured motorist coverage under their MMG Insurance Company policy? Appellants’ Brief at 5 -6. The interpretation of an insurance contract is a question of law. United Services Auto. Assoc. v. Elitzky , 517 A.2d 982, 986 (Pa.Super.1986), appeal denied , 528 A.2d 957 (Pa.1987). The standard of review of questions of law is de novo , and the scope of review is plenary. Genaeya Corp. v. Harco Nat’l Ins. Co. , 991 A.2d 342, 346 (Pa.Super.2010) (citing Buffalo Twp. v. Jones , 813 A.2d 659, 666 n.8 (Pa.2002)). Thus, in interpreting a contract, this Cour t need not defer to the trial court. United Services Auto. Assoc., 517 A.2d at 986. Appellants’ first two issues ask this Court to interpret t he exclusionary language of the UIM Coverage provision in their insu rance policy agreement with MMG Insurance. In their first issue on appeal, A ppellants argue the language of the policy clearly and unambiguously cover s Mr. Clarke’s injuries sustained from the underinsured motorcycle involved in t he accident up to $300,000.00. In their second issue on appeal, Appellant s assert that the trial court erred in its interpretation of the policy by fai ling to give effect to all of its language. Specifically, Appellants allege the trial court erred when it
tr eated the different exclusionary language used by th e insurer in the Uninsured Motorist (“UM”) coverage provision, which was no t present in the UIM coverage provision, as surplusage. We agree.J-A 15045

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When the language of a policy is clear and unambiguous , the court is bound to give effect to the policy and cannot interpre t the policy to mean anything other than “what it says.” Nationwide Mut. Ins. Co. v. Cummings , 652 A.2d 1338, 1342 (Pa.Super.1994) (internal cita tions omitted). The “goal [of the Court in] interp reting an insurance policy . . . is to determine the intent of the parties as manifested b y the language of the policy.” Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commerc ial Union Ins. Co. , 908 A.2d 888, 897 (Pa.2006) (internal citations omi tted).
Dis putes over coverage must be resolved only by “reference t o the [] provisions of the policy” itself. Cohen v. Erie Indem. Co. , 432 A.2d 596, 597 (Pa.Super.1981). An insurance policy must be read as a whole, and not “in discrete units.” Luko v. Lloyd's London , 573 A.2d 1139, 1142 (Pa.Super.1990). Therefore, the two exclusions must b e read together and construed according to the meaning of their words, “whil e at the same time giving effect to all of [the policy’s] provisions.” Masters v. Celina Mut. Ins. Co. , 224 A.2d 774, 776 (Pa.Super.1966). “Our rules of construction do not permit words in a contra ct to be treated as surplusage . . . if any reasonable meaning co nsistent with the other parts can be given to it.” Tenos v. State Farm Ins. Co. , 716 A.2d 626, 6 31 (Pa.Super.1998). Indeed, if the court is “forced to choose between two competing interpretations of an insurance policy, we are bound, as aJ-A 15045

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matter of law, to choose the interpretation which allo ws us to give effect to all of the policy’s language.” Millers Capital Ins. Co. v. Gambone Bros. Dev. Co. , 941 A.2d 706, 716 (Pa.Super.2007), appeal denied , 963 A.2d 471 (Pa.2008). A principle frequently applied as an aid i n arriving at the policy’s intention is that the mention of one thing implies th e exclusion of another thing. See Rimpa v. Erie Ins. Exchange , 590 A.2d 784, 787-90 (Pa.Super.1991) (interpreting the language of a stat ute) (citing Omodio v. Aetna Life and Cas. , 559 A.2d 570 (Pa.Super.1989)). Here, the trial court disregarded the clear and unambi guous language of the UIM exclusion in the policy agreement when re ad in the context of the agreement as a whole. It also did not apply well-deve loped and fundamental principles of contractual interpretation or rules of con struction. To ascertain the intent of the parties to the policy a greement, we must examine the language of the insurance policy agreemen t as a whole, which requires reading the UIM exclusion and the UM exclusio n together, and construing the words according to their reasonable meani ng within the policy. See Millers Capital Ins. Co. , 941 A.2d at 716; Masters , 224 A.2d at 776. The UIM coverage section excludes coverage for i njuries sustained in vehicles “not insured for this coverage.” 5 A plain reading of the UIM

____________________________________________ 5 Appellants paid for UIM coverage under this policy. T he policy included the following exclusion to UIM coverage: (Footnote Continued Next Page)J-A 15045

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exclusionary language, standing alone, dictates coverage . The vehicle that Mr. Clarke was occupying was “insured for this coverage” beca use Appellants had UIM coverage for the motorcycle through a separate insurance policy issued by American Modern Select Insurance. When the MMG Insurance policy, including the UM excl usion language, is examined as a whole, it becomes apparent that the d ecision to deny coverage was premised on a misreading of the terms of th e UIM exclusion. The UIM exclusion provision relied upon by MMG Insura nce to deny coverage is actually missing exclusionary language that appears elsewhere in the MMG Insurance policy (namely, the UM exclusion provision). The trial court opined, “[the] policy, when read as a whole, clearly and unambiguously shows the intent of the parties to provide UIM coverage only for the two (Footnote Continued) _______________________

EXCLUSIONS * * * A. We do not provide Underinsured Motorists Coverage f or “bodily injury” sustained: 1. By you while "occupying", or when struck by, any motor vehicle you own which is not insured for this coverage. This includes a trailer of any type used with that veh icle. 2. By a "family member who owns an auto, while "occupyin g", or when struck by, any motor vehicle owned by you or a ny "family member" which is not insured for this coverage. This includes a trailer of any type used with that veh icle. Appellants’ Brief at 15 -16 (emphasis added in brief).J-A 15045

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covered automobiles [listed on the MMG Insurance policy] and not for any other vehicles, such as the motorcycle.” This reasoning, how ever, undermines the plain language of the exclusion, which does not require that the insured maintain the UIM coverage under the MMG insurance policy. See Cummings , 652 A.2d at 1342. Any potential ambiguity implicated by the phrase “for this coverage” – specifically, whether it refers to UIM coverage through any insurer or UIM

co verage under the particular policy

– is resolved when viewed in light of the language of the UM exclusion in the same policy. The UM coverage clause excludes coverage for injuries sustained in vehicles “not i nsured for this
coverage under this policy .” 6 Th us, the lack of the phrase “under this

____________________________________________ 6 When the MMG Insurance Co. policy is examined as a wh ole, and the UIM exclusion is compared to other exclusions

— namely, the UM exclusion

— the distinction is apparent. The UM exclusion explicitly sta tes that coverage does not extend to vehicles covered for UM coverage “under t his policy.”

EXCLUSIONS * * * A. We do not provide Uninsured Motorist Coverage for “bodily injury” sustained: 1. By an “insured” while “occupying”, or when struck by, any motor vehicle owned by that “insured” which is not insured for this coverage under this policy

. . . . . 2. By any “family member” while “occupying”, or when stuck by, any motor vehicle you own which is insured for this coverage on a primary basis under any other policy. (Footnote Continued Next Page)J-A 15045

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policy” in the UIM exclusion clause when read in the cont ext of the exclusionary language of UM coverage and, thus, the po licy as a whole, dictates coverage because the motorcycle was insured for UIM coverage through another insurer. See Rimpa , 590 A.2d at 787- 90. Further, the missing language “under this policy” confirm s that MMG Insurance understood how to exclude coverage for injuri es occurring in vehicles not insured by MMG Insurance, and confirms that t he policy intended to include UIM coverage as long as the Clarkes maintained first-tier UIM coverage through any insurer. Specifically, and in distinction to the UIM exclusions, the exclusions for UM coverage state that th e policy only covered vehicles which were both “insured for this coverage” and wh en that coverage was “under this policy.” The phrase “under this policy” is not mere surplusage. If t he UIM and UM exclusions were intended to have the same meaning, they would have the same language. See Cohen v. Erie Indem. Co. , 14 Pa. D.&C. 3d 444 , 448 affirmed , 432 A.2d 596 (Pa.Super.1981) (insurance policy subsect ions would be similarly phrased if their intention were th e same); Farmers Ins. Co. of Washington v. U.S.F. & G. Co., 537 P.2d 839, 842 (1975) (same); cf 101 Pa.Code § 15.141(b)(5) (guidelines for choice of w ords and phrases
(Footnote Continued) _______________________ Appellants’ Brief at 16 -17 (emphasis added in brief).J-A 15045

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in legislative drafting) (“[u] se the same word throughout if the same meaning is intended and do not use the same word to de note different

mean ings” ). The exclusions do not have the same words; there is an additional element included in the UM exclusion. Thu s, the parties did not intend the exclusions to have the same meaning. The pa rties utilized the phrase “for this coverage” and did not includ e the specific exclusionary language “under this policy”, and thereby purposefully e xcluded that term from the UIM household exclusion. The parties, therefo re, intended to provide coverage if a first-tier UIM policy existed. B ecause Appellants contracted with another insurer for first-tier UIM insu rance, a determination that they were also covered for UIM insurance under thi s policy gives effect to all of the language contained in the policy agree ment. Further, under the contractual interpretation maxim t hat the “mention of one thing implies the exclusion of another”, a cou rt may not add language to a provision, particularly where the language was co ntained in a separate provision but excluded from the provision at hand. See Madison Constr. Co. v. The Harleysville Mut. Ins. Co. , 144, 678 A.2d 802, 806 (Pa.Super.1996), affirmed , 735 A.2d 100 (Pa.1999). The trial court’s interpretation of the policy added new, extrinsic lang uage to the MMG Insurance policy —namely “under this policy” to the UIM exclusion. This wa s

error.J-A 15045

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Not only is the UIM exclusion different from the UM e xclusion, the UIM exclusion is also different from the language typically used in insurance policies to disclaim coverage for vehicles not listed in t he policy. “It is important to distinguish [an insurer- defendant’s] exclusionary provision from [] exclusion provisions found in many other insurance po licies.” Madison Constr. Co. , 678 A.2d at 805. Pennsylvania courts have upheld ho usehold exclusions which specifically stated that the coverage i s excluded for motor vehicles not insured for “coverage under this policy.” See, e.g., Erie Ins. Exch. v. Baker , 601 Pa. 355, 972 A.2d 507 (Pa.2009). In all of th e cases that upheld a household exclusion, the critical languag e — “under this policy” — merited the denial of UIM coverage and guided the co urt's interpretation of the policy as clearly and unambiguou sly excluding
coverage. Id . In contrast, the MMG Insurance policy, by its plain la nguage, does not exclude coverage for vehicles not covered for U IM coverage under that policy. Instead, the MMG Insurance policy excluded coverage for vehicles which did not maintain any UIM coverage under any policy. Because Appellants maintained first-tier UIM coverage through American Modern Select Insurance, they are entitled to UIM coverage un der their second-tier MMG Insurance policy. In their third issue on appeal, Appellants allege the trial court erred in examining and relying upon public policy rather than the plain language of the policy agreement. We agree.J-A 15045

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“[W]hen the question is one of contract interpretation, public policy arguments are irrelevant.” Municipality of Mt. Lebanon v. Reliance Ins. Co. , 778 A.2d 1228, 1232 (Pa.Super.2001). Public policy concerns are always secondary to the “clear and unambiguous [terms of a ] contract,” which “must be given its plain meaning....” Eichelman , 551 Pa. at 564, 711 A.2d at 1008. Courts are bound to give effect to clear contractual terms and only examine public policy w hen enforcement of those terms “would be contrary to a clearly expressed public policy.” Prudential Prop. & Cas. Ins. Co. v. Colbert , 813 A.2d 747, 752 (Pa.2002). By looking to public policy as a component of its interpretation of the MMG Insurance policy itself, the trial court failed to read, interpret, and apply the policy as it was written.
In Prudential v. Colbert , 813 A.2d 747, 752 (Pa.2002), the Court examined public policy concerns only after the plain mea ning of the policy exclusion justified a denial of coverage. Id . (there was “no dispute that, as a matter of contract interpretation, the ... policy exc lusion would justify [the insurer] in denying coverage”). Here, as discussed above, t he plain meaning of the policy exclusion is clear and unambiguous, and t hus must be given effect. In their fourth issue on appeal, Appellants assert, in the alternative, that the language of the UIM exclusion creates ambigu ity that requires the Court to construe the policy language against MMG Insur ance. Because weJ-A 15045

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fi nd the exclusionary language of the UIM coverage prov ision clear and unambiguous, it is unnecessary to address this issue. Order vacated . Case remanded . Jurisdiction relinquished

. Judge Lazarus joins the Opinion. Judge Panella files Dissenting Opinion. Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 9/4/2014