2001 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-18-2001

Nationwide Mutl Ins v. Cosenza

Precedential or Non-Precedential:

Docket 00-4151

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2001

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2001 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Nationwide Mutl Ins v. Cosenza" (2001). 2001 Decisions. Paper 158.

http://digitalcommons.law.villanova.edu/thirdcircuit_2001/158
Filed July 18, 2001 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 00-4151 

NATIONWIDE MUTUAL INSURANCE COMPANY 

v. 

WILLIAM COSENZA; ANGELINA C. COSENZA, h/w; 

PATSY DEZII 

 William Cosenza; Angelina C. Cosenza; 

 Patsy Dezii, 

 Appellants 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Civil No. 99-cv-03533) 

District Judge: Hon. Eduardo C. Robreno 

Argued May 31, 2001 

Before: SLOVITER, FUENTES and COWEN, 

Circuit Judges 

(Filed: July 18, 2001) 

 David C. Corujo, Esq. 

 (Argued) 

 Fronefield & de Furia 

 17 E. Front Street 

 P.O. Box 647 

 Media, PA 19063 

 Counsel for Appellants 
 James C. Haggerty, Esq. 

 Scott J. Tredwell, Esq. 

 (Argued) 

 Christine P. Busch, Esq. 

 Swartz, Campbell & Detweiler 

 1601 Market Street, 34th Floor 

 Philadelphia, PA 19103 

 Counsel for Appellee 

OPINION OF THE COURT 

COWEN, Circuit Judge. 

This appeal presents a question of first impr ession 

relating to the construction and enforceability of an 

exclusion in an automobile insurance contract stating that 

an insured cannot recover benefits under both the liability 

coverage and the underinsured motorist coverage of the 

insurance contract. The District Court exercised 

jurisdiction based on diversity of citizenship under 28 

U.S.C. S 1332. We exercise appellate jurisdiction under 28 

U.S.C. S 1291. We hold that, on the facts of this case, the 

"dual recovery" prohibition is invalid and unenforceable 

pursuant to Pennsylvania's Motor Vehicle Financial 

Responsibility Law (MVFRL). 75 Pa. C.S.A. S 1701 et seq. 

I 

This case is a dispute about insurance coverage arising 

from the following facts. On July 16, 1995, Mrs. Cosenza 

was driving a vehicle in which her husband and mother 

(Ms. Dezii) were passengers when they collided with a 

vehicle driven by Angela Nicolucci. Mr. Cosenza and Dezii 

were very seriously injured in the crash and Mrs. Cosenza 

sustained some injuries as well. They instituted suit in 

state court against Nicolucci. Nicolucci joined Mrs. Cosenza 

as a defendant, claiming that she was contributorily 

negligent. Nationwide Insurance, the Cosenzas' insur er and 

the appellee in this case, assumed the defense of Mrs. 

Cosenza and consistently asserted her lack of fault. On the 

eve of trial, the suit was settled. 

 2 
Under the terms of the settlement, appellants received 

$15,000 from Nicolucci's insurer, the full amount of 

coverage available under her liability policy. Mr . Cosenza 

and Dezii also received some payment under the liability 

portion of Nationwide's auto policy, but did not exhaust the 

full amount of the coverage available under that policy. The 

Cosenzas' vehicle was covered by an auto insurance policy 

issued by Nationwide Insurance. That policy pr ovided 

$500,000 in liability coverage and $500,000 in 

underinsured motorist coverage. Mr. Cosenza also 

maintained an umbrella insurance policy that pr ovided an 

additional $1,000,000 in total liability coverage and 

$500,000 in underinsured motorist coverage. The 

settlement did not include any payments by Nationwide 

under either the underinsured motorist portion of the policy 

or under the umbrella policy. 

Thereafter, the Cosenzas and Dezii, the appellants in this 

appeal, notified Nationwide of their intention to proceed 

with underinsured motorist arbitration under their auto 

insurance policy and the supplemental umbrella insurance 

policy. They filed a petition in state court to compel 

arbitration. In response, Nationwide filed a notice of 

removal of the proceedings to the district court and also 

filed a complaint seeking a declaratory judgment preventing 

arbitration. Each of the parties moved for summary 

judgment with the following results: 

 1) The District Court determined that the dispute did 

 not fall within the insurance contract's arbitration 

 clause and was, therefore, properly before the court; 

 2) Mr. Cosenza and Dezii, who recover ed under the 

 liability portion, were prohibited fr om recovering 

 underinsured motorist benefits for their own injuries 

 under the auto policy or the umbrella policy; 

 3) Mrs. Cosenza, who did not recover under the liability 

 coverage, was allowed to seek recovery under the 

 underinsured motorist provision of the auto policy and 

 the umbrella policy; 

 4) Mrs. Cosenza was prohibited from r ecovering loss of 

 consortium benefits for her husband's injuries under 

 the underinsured motorist provisions; 

 3 
 5) Mr. Cosenza was allowed to seek loss of consortium 

 benefits for his wife's injuries under the underinsured 

 motorist provision; 

 6) The court determined that Nationwide was not 

 entitled to a credit in the amount of payments already 

 received by the insureds pursuant to the state court 

 settlement. 

Appellants appeal the District Court's ruling that this 

dispute is not subject to arbitration. Alter natively, they 

appeal the court's holding that Mr. Cosenza and Dezii are 

barred from recovering under the underinsured motorist 

provision of the auto policy and under the umbr ella policy. 

They also appeal the court's ruling that Mrs. Cosenza is 

barred from recovering loss of consortium damages based 

on her husband's injuries under the underinsur ed motorist 

provision of the auto policy and under the umbr ella policy. 

Nationwide purports to cross-appeal the district court's 

findings as to Mrs. Cosenza's eligibility for r ecovery, Mr. 

Cosenza's right to recover for loss of consortium for his 

wife's injuries, and the court's ruling that Nationwide is not 

entitled to a credit for payments made in the state court 

settlement. 

II 

Before proceeding to a discussion of the substantive 

issues in this case there are two thr eshold issues that must 

be addressed - whether the district court had jurisdiction to 

decide the issues raised in this case and whether this Court 

can properly entertain Nationwide's purported cross-appeal 

of the adverse portions of the District Court's judgment. As 

a federal court sitting in diversity, we are bound to 

adjudicate the case in accordance with applicable state law. 

See Erie Railroad v. Tompkins, 304 U.S. 64 (1938). Both 

parties agree that Pennsylvania law gover ns this dispute. 

A. Jurisdiction/Arbitrability of Claims Raised 

To determine the arbitrability of a dispute a court must 

address two issues: 1) whether the parties for med an 

agreement to arbitrate; and 2) whether the dispute in 

question falls within the scope of that agreement. Messa v. 

 4 
State Farm Ins. Co., 641 A.2d 1167, 1168 (Pa. Super. 

1994). In this case, both parties concede the existence of an 

agreement to arbitrate. Thus, the sole question is whether 

the dispute regarding appellants' entitlement to seek 

recovery under the underinsured motorist (UIM) provision 

of the contract falls within the scope of the arbitration 

agreement. 

Appellants argue that the District Court did not have 

jurisdiction to rule on the summary judgment motions that 

are the subject of this appeal because the insurance 

contracts require arbitration of their claim.1 The UIM 

provision of the Cosenza's insurance policy pr ovides: 

 RECOVERY 

 1. Before recovery, we and any party seeking

 protection under this [UIM] coverage must agree on 

 two points: 

 a) whether there is a legal right to r ecover damages 

 from the owner or driver of an underinsur ed

 motor vehicle; and if so, 

 b) the amount of such damages. 

_________________________________________________________________ 

1. Nationwide argues that the appellants have not properly preserved 

this particular issue for appeal pursuant to F .R.A.P. 3(c)(1)(B), which 

requires an appellant's Notice of Appeal to "designate the judgment, 

order, or part thereof being appealed." Appellants' Notice of Appeal 

designated the District Court's November 2, 2000 Or der, which did not 

address the arbitration issue, instead of its October 27 Order, which did 

dispose of that issue. Appellants' failure to specifically designate the 

October 27 Order for appeal is not fatal because a policy of liberal 

construction of notices of appeal prevails in the Third Circuit where the 

intent to appeal an unmentioned or mislabeled ruling is apparent and 

there is no prejudice to the adverse party. Williams v. Guzzardi, 875 F.2d 

46, 49 (3d Cir. 1989)("if from the notice of appeal itself and the 

subsequent proceedings . . . it appears that the appeal was intended to 

have been taken from an unspecified . . . or der . . . , the notice may be 

construed as bringing up the unspecified or der for review."); Murray v. 

Commercial Union Insurance Co., 782 F .2d 432, 434-35 (3d Cir. 

1986)(exercising jurisdiction because despite the mislabeled Notice of 

Appeal, "in their appellate briefs all parties addressed every issue 

presented"). 

 5 
 If agreement can't be reached, the matter will go to 

 arbitration. 

 2. Questions between the injured party and us 

 regarding whether the injured party is an insured 

 under this coverage, or the limits of such coverage, 

 are not subject to arbitration and shall be decided 

 by a Court of law. 

(Endorsement 2360, Underinsured Motorist Coverage -- 

Non-Stacked (Pennsylvania) App. 39a) (emphasis in 

original). Thus, according to the clear ter ms of the 

arbitration agreement, questions regar ding whether a 

claimant is an "insured" for the purposes of UIM coverage 

or questions regarding the limits of UIM coverage are to be 

decided by the courts. All other questions should be 

submitted for arbitration.2 

First, we consider if this case presents the question of 

whether the appellants are "insureds" for the purpose of 

UIM coverage. The insurance policy defines an"insured" as 

"one who is described as entitled to protection under each 

coverage." (App. 12a)(emphasis added). Accor dingly, we look 

to the section governing UIM coverage to deter mine whether 

the appellants are entitled to protection thereunder. That 

coverage endorsement provides that Nationwide will pay 

"compensatory damages, including derivative claims, which 

are due by law to you or a relative fr om the owner or driver 

of an underinsured motor vehicle because of bodily injury 

suffered by you or a relative." (UIM Endorsement 2360, 

App. 38a)(emphasis added). Thus, for the purposes of this 

UIM coverage, an "insured" is the policy holder and

relatives of the policy holder who are entitled by law to 

_________________________________________________________________ 

2. Appellants also reference an arbitration provision found in the UIM 

coverage section of the auto insurance contract stating that "if we and 

the insured disagree about the right to r ecover damages, or the amount 

of such damages . . ." arbitration will ensue. (App. 29a). However, this 

broader arbitration provision was "r eplaced" by Endorsement 2360 to the 

insurance policy, which states "[t]his endorsement replaces the policy's 

Underinsured Motorists coverage section. Coverage is subject to all terms 

and conditions of the policy, except as changed by this endorsement." 

(App. 38a). Accordingly, we look to the arbitration provision set out in 

Endorsement 2360 to determine the arbitrability of the instant dispute. 

 6 
recover damages from the driver or owner of the 

underinsured vehicle. 

Nationwide argues that because appellants have 

recovered under the liability provisions and are prohibited 

by the policy language from also recovering under the UIM 

provisions that there are no damages"due by law" and 

thus, appellants do not fit within the definition of an 

"insured." This argument misappr ehends the definition of 

an "insured" set out in the UIM pr ovisions. The definition 

does not require that damages be due by law under the 

insurance contract, as Nationwide argues. Instead, the 

definition requires only that damages be due by law from 

the driver of an underinsured vehicle. Nowhere does

Nationwide suggest that the appellants are not entitled 

under the law to recover additional damages fr om Nicolucci, 

the driver of the underinsured vehicle. Even if Nationwide 

did advance such an argument, the issue of whether 

appellants are legally entitled to damages fr om Nicolucci is 

an issue that falls squarely within the agr eement to 

arbitrate, as set forth above. Further, Nationwide's 

argument begs the question of who is an "insured" because 

it argues that the appellants are not"insureds" because 

Nationwide is correct about the underlying dispute 

regarding whether or not the dual r ecovery prohibition is 

enforceable. The question of whether that pr ovision is 

enforceable, however, is a separate and distinct question 

from whether the appellants are "insur eds" under the UIM 

coverage. 

The fallacy of Nationwide's argument is also 

demonstrated by the "limits of payment" pr ovision of the 

contract, which Nationwide references in support of its 

argument. That provision states, "[t]he insured may recover 

for bodily injury under the auto liability coverage or the 

underinsured motorist coverage of this policy, but not 

under both coverages." (UIM Endorsement 2360, App. 40a) 

(emphasis added). This provision forms the basis of

Nationwide's argument that there ar e no damages "due by 

law" and that, therefore, appellants ar e not insureds. 

However, this same provision effectively states that 

appellants are considered "insur eds" within the meaning of 

the UIM coverage. Thus, the underlying dispute in this case 

 7 
cannot be characterized as a dispute regar ding whether the 

injured party is an insured and cannot escape arbitration 

on that basis. 

We must also consider whether this case pr esents a

question regarding the limits of UIM coverage. We conclude 

that the dispute does not fall within the arbitration 

agreement because it is clearly within the second prong of 

the arbitration agreement as a dispute about the "limits" of 

the coverage. The UIM Endorsement contains the following 

provision: 

 LIMITS OF PAYMENT 

 Amounts Payable for Underinsured Motorists Losses 

 We agree to pay up to the limits stated in the policy 

 Declarations. The following applies to these limits: 

 *** 

 4. The insured may recover for bodily injury under the 

 Auto Liability coverage or the Underinsured Motorists 

 coverage of this policy, but not under both coverages. 

(UIM Endorsement 2360, App. 40a). According to the 

express terms of the UIM endorsement, the underlying 

dispute is a question between the injured parties and 

Nationwide regarding the limits of coverage and must, by 

the very terms of the insurance agreements, be decided by 

a court of law. 

Appellants argue that, in light of the important state law 

public policy favoring arbitration of automobile insurance 

disputes, this dispute must be dismissed by the court and 

submitted to arbitration. Indeed, Pennsylvania public policy 

does favor arbitration of insurance claims. Bor gia v. 

Prudential Insurance Co., 758 A.2d 843, 847-50 (Pa. 2000); 

Brennan v. General Accident Fire and Life Assurance Corp., 

574 A.2d 580 (Pa. Super. 1980). However , state courts have 

not favored arbitration when to do so would contravene the 

express terms of a binding arbitration agreement. Brennan, 

574 A.2d 580 (dismissing dispute as arbitrable, but

disclaiming that it would have done so had ther e been any 

limiting language in the arbitration clause); Messa v. State 

Farm Ins. Co., 641 A.2d 1167, 1168 (Pa. Super. 1994) 

 8 
(scope of arbitrator's authority is limited by ter ms of 

arbitration agreement). Therefore, despite Pennsylvania's 

preference for arbitration of auto insurance disputes, the 

District Court properly concluded that the dispute in this 

case is specifically excluded from the arbitration agreement 

and appropriately maintained jurisdiction over the claim. 

B. Nationwide's Purported Cross-Appeal 

In its brief Appellee Nationwide asks this Court to reverse 

the District Court on every issue where its conclusions were 

adverse to the insurance company. Specifically Nationwide 

argues the District Court erred in holding that Mrs. 

Cosenza is not excluded from seeking recovery under the 

UIM provision for her injuries, that Mr . Cosenza is not 

precluded from seeking recovery under the UIM provision 

for loss of consortium due to Mrs. Cosenza's injuries, and 

that Nationwide is not entitled to a credit for its

contribution to the tort settlement. However , Nationwide 

failed to follow the procedures for lodging a cross-appeal on 

any of these issues. It is settled law that "what (an appellee) 

may not do in the absence of a cross-appeal is to `attack 

the decree with a view either to enlarging his own rights 

thereunder or of lessening the rights of his adversary, 

whether what he seeks is to correct an err or or to

supplement the decree with respect to a matter not dealt 

with below.' " Morley Constr. Co. v. Maryland Casualty Co., 

300 U.S. 185, 191, 57 S.Ct. 325 (1937)(quoting United 

States v. American Ry. Express Co., 265 U.S. 425, 435, 44 

S.Ct. 560 (1924)). Because a reversal on any of the three 

adverse holdings would enlarge Nationwide's rights and 

lessen Appellants' rights, Nationwide was required to file a 

cross-appeal. 

Nationwide responds that its failure to cr oss-appeal is 

immaterial because this Court may affirm the District 

Court on any basis which finds support in the r ecord 

and/or that as long as the issue raised is mer ely an 

alternative argument relative to the judgment below, a 

cross-appeal on that issue is unnecessary. While these are 

accurate statements of law, they are inapplicable here 

because Nationwide is asking us to reverse the District 

Court, not to affirm on the basis of r ecord evidence. 

Additionally, Nationwide does not present any"alternative 

 9 
arguments relative to the judgment below." On the 

contrary, it plainly asks us to reverse the District Court's 

holdings and constrict the appellants' rights, which we 

cannot do in the absence of a properly filed cross-appeal. 

Because Nationwide failed to file a cross-appeal, none of the 

three issues on which the District Court ruled adversely to 

Nationwide are properly before us on appeal. 

III 

Due to Nationwide's failure to file a cr oss-appeal, the only 

remaining substantive issues revolve ar ound the effect of 

the insurance policy's "dual recovery" pr ohibition. A 

determination as to the proper construction and the validity 

of the dual recovery prohibition disposes of the three 

remaining substantive issues in this case. First, the District 

Court concluded that the contractual prohibition on

recovering under both the liability coverage and the UIM 

coverage, precluded Mr. Cosenza and Ms. Dezii from 

seeking recovery for their own injuries under the UIM 

coverage and precluded Mrs. Cosenza from seeking recovery 

for loss of consortium based on her husband's injuries 

under the UIM coverage. 

Second, Mr. Cosenza also maintained an umbr ella 

insurance policy designed to protect against losses in 

excess of the amount covered by his other liability

insurance policies, which provided an additional 

$1,000,000 in liability coverage and $500,000 in UIM 

coverage. The umbrella policy here included the limitation 

that "[i]t is agreed that this endorsement is subject to the 

terms and conditions of the underinsur ed motorist coverage 

included in [the auto policy] . . ." (App. 49a). Accordingly, 

when the District Court concluded that no recovery was 

available under the UIM coverage of the auto policy for any 

injuries suffered by Mr. Cosenza or Dezii, it also had to 

conclude that they could not seek recovery under the 

umbrella policy. However, the converse is true as well. That 

is, if the dual recovery prohibition is unenforceable or 

interpreted narrowly as allowing UIM coverage for the 

appellants, they would be entitled to coverage under the 

umbrella policy as well. 

 10 
Third, the district court concluded that Mrs. Cosenza's 

loss of consortium claim is ultimately based on bodily 

injuries suffered by Mr. Cosenza and is therefore derivative 

of his claim. Setting aside the dual recovery issue, under 

Pennsylvania law the success of a derivative claim is 

"always dependent upon the injured spouse's right to 

recover." Scattaragia v. Shin Shen Wu, 495 A.2d 552, 554 

(Pa. Super. 1985). Thus, the District Court concluded that 

because Mr. Cosenza, as the injured spouse, had no right 

to recover under the UIM coverage or the umbr ella policy, 

Mrs. Cosenza could have no right to recover derivatively 

under those same insurance contracts. Again, however , 

because this conclusion is based on the assumption that 

Mr. Cosenza had no right of recovery under the UIM 

coverage or the umbrella policy, a reversal on that issue 

necessitates a reversal on Mrs. Cosenza's derivative loss of 

consortium claim.3 Thus, a r esolution of the dual recovery 

issue effectively resolves all of the substantive issues in this 

case. 

A. The Express Terms of the UIM Insurance Coverage 

Endorsement 2360 to Appellants' UIM insurance 

contract, which "replaces the policy's Underinsured

Motorists coverage section," provides that"[t]he insured 

may recover for bodily injury under the Auto Liability 

coverage or the Underinsured Motorists coverage of this 

policy, but not under both coverages." (App. 38a & 40a) 

(emphasis added). Nationwide argues that this language 

clearly and unambiguously precludes Mr. Cosenza and

Dezii, who have already received some payment under the 

liability coverage, from also recovering under the UIM 

coverage. Nationwide also argues that this dual recovery 

prohibition precludes Mrs. Cosenza fr om recovering

derivatively under the UIM coverage for loss of consortium 

based on her husband's bodily injuries, because he 

recovered some damages under the liability coverage. 

When interpreting the terms of an insurance contract the 

court must generally attempt to effectuate the intent of the 

_________________________________________________________________ 

3. It is undisputed that the UIM coverage includes coverage for derivative 

claims, such as a loss of consortium claim, based on bodily injuries 

suffered by Mr. Cosenza. 

 11 
parties as manifested by the language of the written 

instrument. Standard Venetian Blind Co. v. American

Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983); Mohn v. 

American Cas. Co. of Reading, 326 A.2d 346, 451 (Pa. 

1974). To that end, courts must generally enforce the clear, 

unambiguous terms of the policy. See, e.g., The Medical 

Protective Co. v. Watkins, 198 F .3d 100 (3d Cir. 1999); 

Madison Construction Co. v. Harleysville Mut. Ins. Co., 735 

A.2d 100 (Pa. 1999). Nationwide argues that the terms of 

UIM coverage prohibiting dual recovery ar e clear and 

unambiguous and must therefore be enfor ced by this court. 

The burden is on the insured to establish coverage under 

an insurance policy. Erie Ins. Exchange v. T ransamerica 

Ins. Co., 533 A.2d 1363, 1366-67 (Pa. 1987). As we 

concluded in the discussion on arbitrability above,

appellants are clearly insureds under both the auto

insurance policy and the umbrella policy. It is the insurer, 

however, that bears the burden of establishing the 

applicability of an exclusion in an insurance contract, 

American States Ins. Co. v. Maryland Cas. Co., 628 A.2d 

880, 887 (Pa. Super. 1993), and exclusions ar e always 

strictly construed against the insurer and in favor of the 

insured. Selko v. Home Ins. Co., 139 F .3d 146, 152 n. 3 (3d 

Cir. 1983). 

B. Invalidating Clear and Unambiguous Exclusions in

Insurance Contracts 

Instead of arguing that the dual recovery provision is 

ambiguous, appellants' main avenue of attack is to argue 

that the provision is unenforceable as violative of public 

policy as evidenced by case law and the intent of the 

Pennsylvania Motor Vehicle Financial Responsibility Law 

(MVFRL), 75 Pa. C.S.A. S 1701, et seq. Nationwide takes the 

exactly contrary position and argues that not only is 

enforcement of the dual recovery pr ohibition consistent 

with public policy, dual recovery is never allowed under 

Pennsylvania law regardless of whether the insurance 

contract at issue expressly prohibits it. 

Pennsylvania courts have consistently held that"even 

clear and unambiguous insurance policy language may

conflict with an applicable statute, [including] . . . the 

 12 
MVFRL." Kmonk-Sullivan v. State Farm Mut. Ins. Co., 746 

A.2d 1118, 1121 (Pa. Super. 1999). See also Allwein v. 

Donegal Mut. Ins. Co., 671 A.2d 744, 752 (Pa. Super. 1996) 

(en banc). While courts do not have a license to r ewrite 

insurance contracts, insurers do not have a right to rewrite 

or undercut state legislation or policy. Allwein, 671 A.2d at 

752; Kmonk-Sullivan, 746 A.2d at 1121. In such situations, 

courts will not give effect to the contract pr ovision: 

 As a general rule, stipulations in a contract of 

 insurance in conflict with, or repugnant to, statutory 

 provisions which are applicable to, and consequently 

 form a part of, the contract, must yield to the statute, 

 and are invalid, since contracts cannot change existing 

 statutory laws. 

Id. See also George J. Couch, Couch on Insurance 2d (Rev. 

ed.) S 13.7 at 827 (1984). Accordingly, if the dual recovery 

prohibition contained in appellants' UIM coverage conflicts 

with the MVFRL or the public policy inherent therein, this 

Court must declare it invalid and unenfor ceable. 

The Pennsylvania Supreme Court has provided the 

following guidelines to assist in determining when an 

insurance contract provision is against public policy: 

 Public policy is to be ascertained by refer ence to the 

 laws and legal precedents and not from general 

 considerations of supposed public interest. It 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 

 court may constitute itself the voice of the community 

 in declaring what is or is not in accord with public 

 policy. The phrase "public policy" has been used also 

 when the courts have interpreted statutes br oadly to 

 help manifest their legislative intent. 

Paylor v. Hartford Ins. Co., 640 A.2d 1234, 1235 

(1994)(emphasis added) (citations omitted). Other state 

courts have further elaborated that "in deciding whether to 

uphold an insurance policy exclusion, which operates to 

deny coverage to an injured party, [our focus] is the factual 

circumstances of the particular case." Kmonk-Sullivan, 746 

A.2d at 1123. See also Paylor v. Hartfor d Ins. Co., 640 A.2d 

 13 
1234, 1240 (Pa. 1994). Moreover, "[c]ontract provisions 

[that] are not in accord with public policy, and are not 

advantageous to the insured are particularly subject to a 

finding of invalidity." Kmonk-Sullivan, 746 A.2d at 1123. 

See also Allwein, 671 A.2d at 753 (quoting Geor ge J. 

Couch, Couch on Insurance S 13.7, at 827-29 (2d ed. rev. 

1984)). There is also a presumption that"the Legislature 

intends to favor the public interest as opposed to any 

private interest." Pennsylvania Fin. Responsibility Assigned 

Claims Plan v. English, 664 A.2d 84, 87 (Pa. 1995)(citations 

omitted). See also Allwein, 671 A.2d at 751; KmonkSullivan, 746 A.2d at 1123; 1 Pa. C.S. S 1922. These 

guidelines are read to favor coverage for the insured in 

close or doubtful cases. Kmonk-Sullivan, 746 A.2d at 1123; 

Allwein, 671 A.2d at 751. 

This Court has also had occasion to consider limits on 

the enforceability of clear and unambiguous pr ovisions in 

insurance contracts under Pennsylvania law. In Bensalem 

Twp. v. International Surplus Lines Ins. Co. , after a review 

of Pennsylvania law, we concluded that under limited 

circumstances the reasonable expectations of the insured 

may override the clear and unambiguous terms of the

contract. 38 F.3d 1303, 1311 (3d Cir. 1994). In reaching 

this conclusion, the court observed: 

 We are unable to draw any categorical distinction 

 between the types of cases in which Pennsylvania 

 courts will allow the reasonable expectations of the 

 insured to defeat the unambiguous language of an 

 insurance policy and those in which the courts will 

 follow the general rule of adhering to the pr ecise terms 

 of the policy. One theme that emerges fr om all the 

 cases, however, is that courts are to be chary about 

 allowing insurance companies to abuse their position 

 vis-a-vis their customers. Thus, we are confident that 

 where the insurer or its agent cr eates in the insured a 

 reasonable expectation of coverage that is not supported 

 by the terms of the policy that expectation will prevail 

 over the language of the policy. 

Id. (emphasis added). 

As discussed in more detail below, the obligation of 

courts to invalidate insurance contract provisions that are 

 14 
contrary to state law or policy has been taken very

seriously by Pennsylvania courts. However, before we can 

determine if state law or policy is implicated we must 

examine the legislative intent and policies underlying 

Pennsylvania's MVFRL. 

C. Pennsylvania Public Policy and the MVFRL 

Generally, statutes requiring underinsur ed motorist 

coverage are remedial and must be construed liberally, 

narrowly interpreting exclusions so as to provide the desired 

remedy. Couch, supra SS 45:624. The purpose of these 

statutes is limited to protecting those persons who

purchase motor vehicle liability insurance and then suffer 

bodily injury or property damage caused by a motorist who 

did not purchase similar coverage. Id. Pennsylvania

embodied its public policy of protecting such persons in the 

MVFRL. Applicable standards of statutory construction 

compel Pennsylvania courts to "ascertain and ef fectuate the 

intention of the General Assembly" and to strive to give 

effect to all provisions in a statute. 1 Pa.C.S. S 1921(a). See 

also Kmonk-Sullivan, 746 A.2d at 1121. 

The MVFRL contains no explicit statement of legislative 

intent or purpose. However, Pennsylvania courts are

unanimous that the legislative intent underlying the 

MVFRL was to establish a liberal compensatory scheme of 

underinsured motorist protection. See, e.g., KmonkSullivan, 746 A.2d at 1123; Marroquin v. Mutual Benefit Ins. 

Co., 591 A.2d 290, 293 (Pa. Super. 1991). Courts also agree 

that the MVFRL is a remedial statute that must be liberally 

construed to effectuate its policy of indemnifying victims of 

accidents for harm they suffer on Pennsylvania highways. 

See, e.g., Kmonk-Sullivan, 746 A.2d at 1123; Allwein, 671 

A.2d at 751; Wolgemuth v. Harleysville Mut. Ins. Co., 535 

A.2d 1145, 1151 (Pa. Super. 1988). 

More specifically, UIM insurance is designed to protect an 

insured from a negligent driver of another vehicle who 

causes injury to the insured, but through no fault of the 

insured, lacks adequate insurance coverage to compensate 

the insured for his or her injuries. Eichelman v. Nationwide 

Ins. Co., 711 A.2d 1006, 1008 (Pa. 1998); Kmonk-Sullivan, 

746 A.2d at 1123; Wolgemuth, 535 A.2d at 1149. 

 15 
Pennsylvania courts have been especially attentive to the 

fact that UIM coverage is purchased "to pr otect oneself from 

other drivers whose liability insurance purchasing decisions 

are beyond one's control." Paylor , 640 A.2d at 1238. See 

also Kmonk-Sullivan, 746 A.2d at 1123. 

In cases such as this one Pennsylvania courts have also 

been attentive to whether or not there wer e two or more 

insurance contracts at play: 

 The language of the [MVFRL] itself suggests that 

 underinsurance motorist coverage requir es the 

 existence of at least two applicable policies of motor 

 vehicle insurance. See 75 Pa. C.S. S 1731(c). An 

 underinsured motor vehicle, must, by definition, be an 

 insured vehicle. Thus, the statute contemplates one 

 policy applicable to the vehicle which is at fault in 

 causing the injury to the claimant and which is the 

 source of liability coverage . . . , and a second policy 

 . . . which the statute contemplates as the sour ce of 

 underinsured motorist coverage. . . . 

Wolgemuth, 535 A.2d at 1149 (emphasis in original). It is 

noteworthy that this condition is met here. That is, there 

are two policies at play - the liability insurance policy of 

Nicolucci and the UIM insurance policy of the appellants. 

As discussed below, in virtually all instances wher e UIM 

insurance exclusions are upheld it is because this condition 

is NOT present and the insureds ar e attempting to convert 

inexpensive UIM coverage in their policy into the more 

expensive liability insurance under the same policy. 

In 1990 the legislature amended the MVFRL, which had 

previously made the purchase of UIM insurance mandatory, 

to give insureds the choice of saving money on premiums or 

purchasing more protective coverage, such as UIM 

coverage. See generally Kmonk-Sullivan, 746 A.2d at 1124. 

The Pennsylvania Supreme Court finds these amendments 

relevant in that "there is a corr elation between premiums 

paid by the insured and the coverage the claimant should 

reasonably expect to receive." Eichelman, 711 A.2d at 1010 

(quoting Hall v. Amica Mut. Ins. Co., 648 A.2d 755, 761 (Pa. 

1994)). Thus, by choosing to purchase UIM insurance, in 

the event of an injury caused by an underinsur ed 

 16 
tortfeasor, an insured reasonably expects to shift the risk of 

loss to his or her insurer. Kmonk-Sullivan, 746 A.2d at 

1124. Any other approach would shift the costs to the 

insureds who had no part in creating the risk that led to 

their injuries and who had no control over the tortfeasor's 

insurance decisions. "Allowing the insurers to evade 

payment of UIM benefits in [such a] case, where the

insured had paid a premium to procur e UIM coverage, 

would be against public policy." Kmonk-Sullivan, 746 A.2d 

at 1124 & 1126. 

D. Application of the MVFRL's Policies to UIM Insurance 

Contracts 

As noted briefly above, Pennsylvania courts take their 

obligation to review and invalidate insurance contract 

provisions that are contrary to state law very seriously. 

There are innumerable cases addressing this issue and 

while state courts do not invalidate clear and unambiguous 

insurance clauses in every instance, neither have they been 

reticent about doing so, especially in cases involving 

attempts by insurers to withhold paid-for UIM benefits. 

There are two cases of particular r elevance to the instant 

case. 

In Trapper v. Maryland Cas. Ins. Co., the Pennsylvania 

Court of Common Pleas invalidated a clear contractual 

provision that excluded an insured fr om recovering UIM 

benefits after he had already recover ed liability benefits 

under the same insurance contract. 17 Pa. D. & C. 4th 165 

(1992). Trapper is factually indistinguishable from the 

instant case in that it involved a clear and unambiguous 

policy exclusion and that it was a two vehicle accident 

involving two tortfeasors. The court noted, "the operation of 

this clause excludes a class of plaintiffs in joint tortfeasor, 

two-car accidents who have paid for coverage and who have 

no control over the choice or type of coverage for a second 

non-occupied, non-owned vehicle." Id. at 168. The court 

concluded that the exclusion of UIM benefits in such a 

situation extinguishes UIM coverage for accident victims, 

regardless of the severity of their injuries, when a family 

member is the driver of one of the vehicles. Id. at 169. "The 

elimination of UIM motorist benefits in this situation 

results in the insured paying for benefits that cannot be 

 17 
recovered. Clearly this cannot be the intent of the MVFRL." 

Id. The Trapper court's analysis is even more applicable to 

our case, where the appellants paid for very substantial 

liability coverage and substantial UIM coverage with the 

expectation that, as a result, they would be fully covered for 

any injuries sustained in a car accident regar dless of the 

amount of liability coverage purchased by the other driver. 

The second case of particular relevance is Continental Ins. 

Co. v. Kubek decided by a federal District Court applying 

Pennsylvania law. 86 F.Supp.2d 503 (E.D. Pa. 2000). The 

issue in Kubek was whether an insurer was required to 

provide UIM coverage to an insured who had already 

recovered liability benefits from his insurer and from the 

other driver's insurer. Id. The insurer moved for summary 

judgment based on a "family vehicle exclusion," which 

operated to preclude dual recovery in the same way that 

the dual recovery prohibition in the Cosenzas' contract 

purportedly precludes recovery. Id. Thus, while the policy 

exclusion in Kubek is not identical to the exclusion at issue 

in our case, it has the exact same effect in the exact same 

factual circumstances. 

After an extensive review of state case law, the Kubek 

court refused to uphold the family car exclusion, 

concluding that cases involving only one tortfeasor were not 

applicable to determining the enforceability of coverage 

exclusions in joint tortfeasor cases. Id. at 505-07. After 

reviewing the reasoning behind upholding exclusions in 

single tortfeasor cases and the intent behind the MVFRL, 

the District Court concluded that even though the victim 

received liability benefits under his wife's (one of the 

drivers) policy, that recovery was based only on her role in 

the accident and had no effect on the victim's ability to 

claim UIM benefits under the same policy for the other 

tortfeasor's negligence. Id. at 509. This conclusion was 

based on the rationale that "[a]s ther e are two policies in 

play, the prohibition on recovering fr om a single policy is 

not at issue; Mr. Kubek is not attempting to convert his 

UIM coverage into liability coverage." Id. 

Finally, it is noteworthy that Pennsylvania courts have 

invalidated express UIM provisions excluding coverage as 

violative of public policy or the intent of the MVFRL in other 

 18 
instances as well. For example, courts have r epeatedly 

refused to enforce clear and unambiguous definitions of 

underinsured vehicles that exclude vehicles owned by 

government agencies. See, e.g., Midili v. Erie Insurance 

Group, 746 A.2d 1126 (Pa. Super. 2000); Kmonk-Sullivan v. 

State Farm Mut. Ins. Co., 746 A.2d 1118 (Pa. Super. 1999). 

Courts have also refused to enforce contract provisions that 

provide for gap UIM coverage, which provides less coverage 

than excess UIM coverage, because such provisions are 

contrary to the intent of the MVFRL. See, e.g., Allwein v. 

Donegal Mut. Ins. Co., 671 A.2d 744 (Pa. Super . 1996). 

E. Application of the MVFRL to Dual Recovery Exclusion 

Before moving to a specific discussion of how the relevant 

case law and the MVFRL applies to the facts of this case 

and this insurance contract, it is helpful to first address 

Nationwide's two arguments in favor of enfor cing the 

exclusion on dual recovery. First, Nationwide argues 

extensively that, regardless of the existence of a provision 

in the contract prohibiting recovery of both liability and 

UIM benefits, Pennsylvania public policy never allows dual 

recovery. Obviously, the Trapper and Kubek cases 

referenced above directly contradict this assertion. Further, 

however, even in cases upholding exclusions that preclude 

recovery of UIM benefits, including the cases Nationwide 

cites in support of its argument, the courts have noted that 

dual recovery is not prohibited in all cases. See, e.g., 

Pempkowski v. State Farm Mutual Auto Ins. Co. , 678 A.2d 

398, 403 (Pa. Super. 1996)(finding dual r ecovery prohibited 

because case involved only a single tortfeasor , but noting 

that such recovery would be allowed in cases involving joint 

tortfeasors and two insurance policies). Instead, whether a 

victim can recover both liability benefits and UIM benefits 

under the same insurance policy depends on the particular 

facts of the case at bar. 

There is a certain category of cases wher e courts have 

uniformly declined to invalidate insurance exclusions that 

preclude recovery of both UIM benefits and liability 

benefits. It is these case and only these cases that 

Nationwide cites in support of its argument that dual 

recovery is always prohibited. These cases are easily 

distinguishable from the appellants' case, however, because 

 19 
all of these cases involve single tortfeasor accidents and 

usually only one insurance policy. See W olgemuth, 535 

A.2d 1145 (Pa. Super. 1988 (en banc) (single vehicle 

accident, exclusion enforceable to prevent conversion of 

UIM benefits to liability benefits); Newkirk v. USAA, 597 

A.2d 1153 (Pa. Super. 1990)(same); Sturkie v. Erie, 595 

A.2d 152 (Pa. Super. 1991)(same); Caldararo v. Keystone 

Ins. Co., 573 A.2d 1108 (Pa. Super. 1990)(single vehicle 

accident, family car exclusion enforceable to prevent 

conversion of benefits); Cooperstein v. Liberty Mut. Fire Ins. 

Co., 611 A.2d 721 (Pa. Super. 1992)(multiple vehicle 

accident, but exclusion upheld to avoid conversion of UIM 

benefits to liability benefits because ther e was only one 

tortfeasor). We are in accord with the Kubek court's 

extensive analysis, which concluded that these single 

tortfeasor cases were inapplicable to multiple tortfeasor, 

multiple insurance contract cases such as this one.

Moreover, the rationale behind pr ohibiting dual recovery in 

single tortfeasor cases is simply inapplicable to joint 

tortfeasor cases. 

Liability insurance is the most expensive for m of 

insurance in Pennsylvania. UIM insurance, on the other 

hand, is relatively inexpensive. As a r esult, Pennsylvania 

courts have refused to invalidate insurance contract 

exclusions that bar an insured from converting inexpensive 

UIM insurance into the more expensive liability insurance. 

Such a conversion can be accomplished when an insur ed 

purchases a small amount of liability insurance and then, 

once the insured is injured in an accident for which he or 

she was at fault, attempt to claim UIM benefits under the 

same insurance contract on the theory that the vehicle was 

underinsured. The Kubek court's apt summary of 

Pennsylvania law is instructive: 

 The true holdings of Wolgemuth and its progeny are 

 that an individual should not be able to convert the 

 relatively inexpensive underinsured motorist insurance 

 into the more expensive liability insurance simply by 

 undercovering him or herself for liability insurance and 

 then claiming that the vehicle was `underinsur ed.' 

86 F.Supp.2d at 508. The rationale behind UIM insurance 

is inapplicable in single tortfeasor cases, wher e injured 

 20 
parties can ensure that they have adequate coverage simply 

by purchasing adequate liability insurance. These are not 

cases where the victim is injured by someone whose 

liability insurance choices are beyond the victim's control. 

Finally, in accord with its thorough analysis of 

Pennsylvania state law, the Kubek court concluded that 

enforcing the family car exception is a "limited exception to 

the general rule that such provisions ar e invalid as against 

the policy of the MVFRL." Id. at 508. See also Paylor, 640 

A.2d at 1240; Marroquin, 591 A.2d 296-97. Thus, it is the 

exception, rather than the rule, to enforce such 

exclusionary provisions. 

The Pennsylvania Supreme Court has clearly stated that 

the primary consideration in determining the enforceability 

of an exclusion in an UIM contract is whether or not 

allowing recovering would effect a conversion of UIM 

coverage to liability coverage. In Paylor v. Hartford Ins. Co., 

the Court concluded that a family car exclusion was

enforceable. In reaching this conclusion, however, the Court 

explained that the key issue in determining the 

enforceability of this type of UIM exclusion is whether, 

based on the facts of the particular case, the insur ed is 

attempting to convert UIM coverage into liability coverage. 

640 A.2d 1234, 1240-41 (Pa. 1994). 

Because a case by case analysis is requir ed we must 

determine whether invalidating the dual r ecovery 

prohibition in this case would allow appellants to effect an 

unlawful conversion of UIM benefits to liability benefits. 

This inquiry also allows us to address Nationwide's second 

argument in favor of enforcing the coverage exclusion. 

Allowing appellants to recover UIM benefits in the instant 

case would not effect a conversion of UIM benefits to 

liability benefits. In this case, when the umbr ella insurance 

policy is taken into account, appellants pur chased very 

substantial liability insurance (in excess of $1,500,000). 

However, if the dual recovery pr ohibition is enforced, it is 

irrelevant how much liability insurance they purchased. 

They still would not be able to recover for the full value of 

their injuries because they were injured by a driver who 

purchased inadequate liability insurance. This is not a case 

where appellants would be fully compensated for their 

 21 
injuries if only they had purchased mor e liability insurance. 

In fact, it is the opposite case. They purchased very large 

liability insurance coverage AND very large UIM coverage 

($1,000,000) with the expectation that they would be 

compensated for their injuries regardless of who was at 

fault and how much insurance that person had opted to 

purchase. To prohibit recovery denies them the UIM 

benefits that they paid for for many years and is contrary 

to the Pennsylvania Supreme Court's statement that 

insureds should receive the coverage for which they pay 

and that voluntarily choosing to purchase UIM insurance 

shifts the risk of loss to the insurer. See Eichelman, 711 

A.2d at 1010; Hall, 648 A.2d at 761; Kmonk-Sullivan, 746 

A.2d at 1124. Further, appellants' voluntary decision to 

purchase such substantial liability and UIM insurance 

policies reasonably created an expectation that they would 

be covered. As we held in Bensalem Twp., when a 

reasonable expectation of coverage is not supported by the 

terms of the policy, the expectation of coverage prevails 

over the language of the policy. 38 F.3d at 1311. 

Nationwide argues that allowing recovery would effect a 

conversion of UIM benefits into liability benefits because of 

the laws of joint and several liability. It ar gues that 

appellants will attempt to recover UIM damages for all of 

their injuries, including those injuries attributable to the 

negligence of Mrs. Cosenza, who was a named insur ed. The 

argument is that under principles of joint and several 

liability Nationwide will be required to pay for all of the 

damages, but will be unable to recover those damages that 

are due to the comparative negligence of the driver for 

whom they have already paid liability benefits. This 

argument is unavailing for several reasons. First, it has not 

been established in this case that Mrs. Cosenza, the driver 

insured under Nationwide's liability policy, has any fault for 

the accident. Second, no Pennsylvania court has expr essed 

the slightest bit of concern over the fatalistic scenario that 

the application of joint and several liability will lead to a 

conversion of coverage, despite the fact that at least two 

courts have allowed dual recovery. Finally, Nationwide 

provides no evidence whatsoever that the application of 

such principles is mandatory in arbitration of these cases 

or that appellants would demand damages for all of their 

 22 
injuries, as opposed to seeking recovery only for those 

injuries attributable to the comparative negligence of the 

underinsured motorist. The latter is appellants' 

acknowledged position in this appeal. Further , it is our 

expectation that, consistent with Pennsylvania law and this 

opinion, an arbitrator would allow recovery of damages 

attributable to the underinsured motorist's negligence, but 

would reject a demand for recovery of damages attributable 

to any contributory negligence by Mrs. Cosenza as contrary 

to the MVFRL. 

Application of the principles underlying the MVFRL also 

supports invalidating the dual recovery pr ohibition in 

multiple tortfeasor cases. First, as discussed above, 

enforcing the dual recovery prohibition would result in 

denying appellants benefits for which they voluntarily paid 

additional premiums. Such a denial is contrary to the 

intent of the amendments to the MVFRL, which gave 

consumers the option of purchasing UIM benefits, but that 

also assumes consumers are entitled to the benefits that 

they voluntarily opted to purchase. Further , it denies them 

paid-for benefits in a case where they wer e injured by 

someone whose liability insurance purchasing decisions 

they could not control, the very situation they sought to 

avoid by purchasing UIM benefits and the very purpose for 

which UIM insurance exists. See Paylor, 640 A.2d at 1238; 

Eichelman, 711 A.2d at 1008; Kmonk-Sullivan , 746 A.2d at 

1123. 

Second, the only directly applicable case law, that which 

involves two or more tortfeasors and two or mor e insurance 

policies, invalidated insurance exclusions that operated to 

deny UIM benefits. Trapper, 17 Pa. D. & C. 4th 165; Kubek, 

86 F.Supp.2d 503. These two decisions find additional 

support in the cases discussed above that uphold UIM 

exclusions, but that nonetheless recognize that cases 

involving two tortfeasors and two insurance policies are 

analytically distinct. See Wolgemuth, 535 A.2d at 1135; 

Pempkowski, 678 A.2d at 403. As the Pempkowski court 

noted, in joint tortfeasor situations, a claimant is not 

always precluded from seeking liability and UIM insurance 

benefits under the same policy. 678 A.2d at 403. See also 

Kubek, 86 F.Supp.2d at 505-09. The Pennsylvania Supreme 

 23 
Court's decision in Paylor also supports r ecovery for the 

appellants because, under the facts of this case, allowing 

recovery would not allow the insureds to convert 

inexpensive UIM coverage into more costly liability

coverage. 640 A.2d at 1240-41. 

Third, upholding the dual recovery pr ohibition in 

multiple tortfeasor cases would be counter to the express 

purpose of UIM insurance, which is "protecting those 

persons who purchase motor vehicle liability insurance and 

then suffer bodily injury or property damage caused by a 

motorist who did not purchase similar coverage." Couch, 

supra S 45:624; Kmonk-Sullivan, 746 A.2d at 1123. Clearly, 

if the underinsured driver, Nicolucci, had purchased the 

same amount of liability coverage that appellants 

purchased, they could have recover ed for the full extent of 

their injuries. A fourth, and related, r eason to find the dual 

recovery provision unenforceable in this case, is that the 

MVFRL is a remedial statute that must be br oadly 

construed to effectuate its goal of fully compensating 

victims injured on Pennsylvania highways. Accor dingly, 

Pennsylvania courts narrowly construe exclusions such as 

the one at issue here. Kmonk-Sullivan, 746 A.2d at 1123; 

Allwein, 671 A.2d at 751. See also Couch, supra S 45:624. 

In this case, the only construction of the dual r ecovery 

prohibition consistent with Pennsylvania case law and the 

MVFRL, is to limit its enforceability to situations involving 

single tortfeasors, where invalidating the exclusion would 

permit the conversion of UIM benefits to liability benefits. 

Fifth, and finally, state law requires that, in close cases, 

courts opt for an interpretation of the MVFRL and 

contractual provisions that provides coverage for the 

insured. English, 664 A.2d at 87; Kmonk-Sullivan, 764 A.2d 

at 1123; Allwein, 671 A.2d at 751. This appr oach is in 

accord with the presumption that the state legislature 

intends to favor the public interest over the private interest. 

English, 664 A.2d at 87. 

For the foregoing reasons, we conclude that enforcement 

of the dual recovery prohibition in multiple tortfeasor cases 

such as this one is violative of the MVFRL. However , as the 

preceding discussion indicates, in single tortfeasor cases 

the dual recovery exclusion actually pr omotes the goals of 

 24 
the MVFRL by barring unlawful conversion of UIM coverage 

to liability coverage. We cannot, ther efore, categorically 

declare that the exclusion is invalid and unenforceable. 

Instead, following the Pennsylvania Supreme Court's

mandate to narrowly construe exclusions in insurance 

contracts, we construe the dual recovery pr ohibition as 

speaking only to single tortfeasor accidents wher e allowing 

recovery would effectuate a conversion of UIM coverage. 

This construction reads the exclusion as incorporating the 

case law pronouncements on the dual recovery issue into 

the insurance contract and invalidates the exclusion only in 

joint tortfeasor cases where enforcing it would be contrary 

to applicable case law and the intent of the MVFRL.

Accordingly, we cannot agree with the District Court's 

holding that the dual recovery provision prohibits Mr. 

Cosenza and Ms. Dezii from seeking UIM benefits under the 

auto insurance policy or the umbrella policy for any 

damages due by law as a result of Nicolucci's negligence. 

We also hold that Mrs. Cosenza may seek loss of 

consortium benefits based on her husband's injuries under 

both the UIM coverage of the auto insurance policy and the 

umbrella policy. 

IV 

For the foregoing reasons, the District Court's Order of 

October 27, 1999 declining to dismiss the case for lack of 

jurisdiction is affirmed. The District Court's Order of 

November 3, 2000, prohibiting appellants fr om seeking 

recovery of underinsured motorist benefits, is reversed, and 

the matter is remanded back to the District Court for the 

entry of an Order referring the matter to arbitration for the 

purpose of determining the amount of an awar d under the 

underinsured motorist provisions of the auto insurance 

policy and the umbrella policy. Costs taxed against the 

appellee. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 25