IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

WAUSAU INSURANCE :

COMPANIES, INC. : CIVIL ACTION

v. :

: NO. 05-CV-2706

LISA P. LIGUORI and : 

WILLIARD, INC. :

LISA P. LIGUORI :

 : CIVIL ACTION

v. :

: NO. 05-CV-3678

WAUSAU INSURANCE :

COMPANIES, INC. and :

NATIONWIDE MUTUAL :

INSURANCE COMPANY :

SURRICK, J. SEPTEMBER 7, 2006

MEMORANDUM & ORDER

Presently before the Court are Lisa P. Liguori’s (“Liguori”) Motion To Dismiss

Plaintiff’s Declaratory Judgment Complaint Pursuant To Federal Rule Of Procedure 12(b)(1)

And 12(b)(6) (Doc. No. 6, 05-cv-2706), Wausau Insurance Companies, Inc.’s (“Wausau”)

Motions To Consolidate Actions And To Dismiss The Petition To Compel Underinsured

Motorist Arbitration And Appoint Arbitrator (Doc. No. 2, 05-cv-3678), Wausau’s Motion For

Summary Judgment (Doc. No. 9, 05-cv-2706), Liguori’s Motion To Remand (Doc. No. 3, 05-cv3678), and Wausau’s Motion For Leave To File Sur Reply In Response To Petitioner Liguori’s

Reply And In Further Opposition To Petitioner Liguori’s Motion To Remand (Doc. No. 7, 05-

cv-3678). For the following reasons, Liguori’s Motion to Remand will be denied, Wausau’s

Motion for Leave to File Sur Reply will be granted, Wausau’s Motion to Consolidate will be

denied, Wausau’s Motion to Dismiss the Petition to Compel will be denied, Wausau’s Motion

for Summary Judgment will be denied, Liguori’s Motion to Dismiss will be granted, and

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 1 of 19
2

Liguori’s Petition to Compel Arbitration will be granted. The parties will be directed to proceed

to arbitration in accordance with the terms of their agreement.

I. BACKGROUND

A. Factual Background

The above-listed civil actions stem from an automobile accident that occurred on March

13, 1990 in Tinicum Township, Pennsylvania. The accident resulted in the death of Mark J.

Liguori. Lisa P. Liguori is Mark Liguori’s widow and the Executrix of his Estate. 

At the time of his death, Mark Liguori was operating a 1989 Ford Aerostar van in the

course and scope of his employment at Williard, Inc. (Doc. No. 1, 05-cv-3678, at Ex. A ¶ 14.) 

Mark Liguori was insured under a commercial auto policy issued by Wausau Insurance

Companies, Inc. to Williard, Inc. and Anjou International, Inc. under policy number 2220-02-

051982 for the period of April 1, 1989 to April 1, 1990 (the “Policy”). (Doc. No. 6, 05-cv-2706,

at Exs. A, B.) This Policy provided bodily injury liability coverage up to a limit of $1,000,000. 

(Id. at Ex. A.) As per the Policy’s “Pennsylvania Uninsured and Underinsured Motorists

Coverage Endorsement” (“UM/UIM Endorsement”), it also provided underinsured (“UIM”)

motorist coverage. (Id. at Ex. C.) The UM/UIM Endorsement contained the following clause

concerning arbitration:

ARBITRATION

a. If we and an “insured” disagree whether the “insured” is legally entitled to

recover damages from the owner or driver of an “uninsured motor vehicle” or an

“underinsured motor vehicle” or do not agree as to the amount of damages, either

party may make a written demand for arbitration. Each party will select an

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 2 of 19
 The Nationwide arbitration clause provides as follows:

1

If we and the insured do not agree about the insured’s right to recover damages or the amount of

damages, the following arbitration procedure will be used:

After written demand for arbitration by either party, each party will select a competent and

disinterested arbitrator. The two so selected will select a third. If selection of the third arbitrator

cannot be agreed upon within 30 days, the insured or the company may request that selection be

made by a judge of a court of record in the county and state in which arbitration is pending. 

Each party will pay its chosen arbitrator, and bear equally expenses for the third and all other

expenses of arbitration.

3

arbitrator. The two arbitrators will select a third. If they cannot agree within 30

days, either may request that selection be made by a judge of a court having

jurisdiction. Each party will pay the expenses it incurs and bear the expenses of

the third arbitrator equally.

b. Arbitration shall be conducted in accordance with the Pennsylvania Uniform

Arbitration Act. Unless both parties agree otherwise, arbitration will take place in

the county in which the “insured” lives. Local rules of law as to arbitration

procedure and evidence will apply. A decision agreed to by two of the arbitrators

will be binding.

(Id.) 

Mark Liguori was also insured under a personal automobile insurance policy issued by

Nationwide Mutual Insurance Company (“Nationwide”) under policy number 58 C 254469 for

the period September 24, 1989 to March 24, 1990. (Doc. No. 5, 05-cv-3678, at 2.) This policy

covered two vehicles—neither of which were involved in this accident—and included UIM

motorist coverage up to a stacked limit of $50,000. (Doc. No. 3, 05-cv-3678, at 3.) The

Nationwide policy also contained an arbitration clause.1

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 3 of 19
Arbitration shall be conducted in accordance with the provisions of the Pennsylvania Uniform

Arbitration Act.

Unless the insured and the company agree otherwise, arbitration will take place in the county and

state in which the insured lives. Arbitration will be subject to the usual rules of procedure and

evidence in such county and state. The arbitrators will determine questions in dispute.

 Marter was driving the tractor-trailer truck that collided with Mark Liguori’s van in the 2

aforementioned accident. Blue Skies Transport Inc. and Dunn owned the tractor and trailer,

respectively, that were operated by Marter. (Doc. No. 1, 05-cv-3678, ¶ 14.)

4

(Doc. No. 1, 05-cv-3678, at Ex. A.)

On April 3, 1990, counsel for Liguori, Frank J. Wesner, Jr., notified Wausau in writing of

Liguori’s intent to make a claim for UIM benefits and requested certification of the amount of

UIM coverage available. (Doc. No. 2, 05-cv-3678, at Ex. 2.) On June 6, 1990, Wausau

responded to Wesner’s letter, informing counsel that the UIM coverage was limited to $35,000

per accident and providing counsel with a copy of a UM/UIM Endorsement and a UM/UIM 

schedule of coverage by state. (Id. at Ex. 3.) Wausau asserts that no further communication was

received from Liguori or her attorney in pursuit of the UIM claim, and Wausau therefore closed

its file on this claim in October 1991. (Id. at 4.)

Following her husband’s death, Liguori filed suit in the Court of Common Pleas of

Delaware County against defendants Stanley Edward Marter, Blue Skies Transport Inc., and

Nathaniel Dunn. (Doc. No. 1, 05-cv-3678, ¶ 15; Doc. No. 2, 05-cv-3678, at Ex. 8.) According 2

to Liguori, the trial of that case, which is docketed at No. 90-3698, has been significantly

delayed by the bankruptcy of Blue Skies Transport, Inc. and by the Pennsylvania Supreme

Court’s final disposition of Golkalb v. Pennsylvania Manufacturers’ Ass’n Co., 719 A.2d 1033

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 4 of 19
 In Golkalb, the Supreme Court of Pennsylvania affirmed a decision denying appellant 3

insurance carrier’s request for subrogation from the proceeds of a third-party settlement received

by appellee in a worker’s compensation claim. 719 A.2d at 1035. Appellee’s claims stemmed

from an automobile accident that occurred before Pennsylvania’s Worker’s Compensation Act,

17 Pa. Cons. Stat. § 1720, was amended to allow for subrogation in such situations. However,

the third-party settlement occurred after such amendment. The Supreme Court found that the

law in effect on the date of appellee’s injuries controlled and therefore denied the request for

subrogation. Golkalb, 719 A.2d at 1035.

 This communication was directed to Liberty Mutual Insurance Company, the holding 4

company which had acquired Wausau.

5

(Pa. 1998). (Doc. No. 2, 05-cv-3678, at Ex. 8.) Liguori’s case, which is presently assigned to 3

the Honorable George A. Pagano, was placed in the trial pool for April 2005, but trial was 

continued at the request of Defendants. (Doc. No. 1, 05-cv-3678, ¶ 16.) 

On March 3, 2005, Wesner advised Wausau of the status of Liguori’s third-party action

in the Delaware County Court. By letter dated April 12, 2005, Wesner informed Wausau of 4

Liguori’s demand to arbitrate her UIM claim pursuant to the UM/UIM Endorsement and of

Liguori’s selection of an arbitrator. (Doc. No. 6, 05-cv-2706, at Ex. F.) Wausau refused 

Liguori’s request to arbitrate. Liguori made a similar demand for arbitration to Nationwide,

which subsequently appointed an arbitrator. (Doc. No. 2, 05-cv-3678, at Ex. 6.) By letter dated

May 2, 2005, Wesner articulated Liguori’s demand to Wausau:

for the amount of [UIM] benefits equal to the limits of liability insurance

coverage for bodily injury[, $1,000,000 under this Policy,] unless there exists a

written request for the issuance of UIM coverage in an amount less than the limits

of liability insurance for bodily injury pursuant to § 1734 of the Pennsylvania

Motor Vehicle Financial Responsibility Law [(“MVFRL”)], 75 Pa. Cons. Stat. §

1701, et seq.

(Id. at Ex. 5.)

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B. Procedural Background

On June 8, 2005, Wausau filed an action for declaratory relief in this Court, naming both

Liguori and Williard, Inc. as Defendants. (Doc. No. 1, 05-cv-2706.) Wausau seeks a declaration

that Liguori’s claim for UIM benefits is barred by the applicable statute of limitations. (Id. ¶¶

24-30.) Wausau contends that Liguori’s claim is time-barred regardless of whether the Court

applies the MVFRL’s statute of limitations for first-party benefits, 75 Pa. Cons. Stat. § 1721, or

Pennsylvania’s statute of limitations for breach of contract actions, both of which are four years. 

(Id. ¶¶ 25-28.) In the alternative, Wausau seeks a declaration that Liguori is limited to UIM

benefits of $35,000 based on the doctrine of laches. (Id. ¶¶ 31-41.) Wausau points to its June 6,

1990 letter to Wesner and the fact that Liguori took no action to question or dispute the stated

amount of coverage from 1990 to 2005, during which time Wausau failed to retain certain

documents concerning the Policy, including any written request for UIM coverage in an amount

less than the $1,000,000 limit of liability. (Id. ¶¶ 34, 36-38.)

On June 24, 2005, Liguori filed a Petition to Compel Underinsured Motorist Arbitration

and to Appoint Arbitrator for Wausau Insurance Companies, Inc. (Doc. No. 1, 05-cv-3678, at

Ex. A.) This action, which was filed in the Court of Common Pleas of Delaware County, named

both Wausau and Nationwide as Defendants. (Id.) In her Petition, Liguori contends that

Wausau’s failure and refusal to appoint an arbitrator and to commence arbitration of Liguori’s

UIM claim has “effectively blocked [the] arbitration of her claims for [UIM] benefits from

Nationwide,” since the exhaustion of first-level UIM benefits is a condition precedent on any

second-level recovery. (Id. ¶ 26.) On July 14, 2005, Wausau filed a Notice of Removal based

on diversity of citizenship thereby removing Liguori’s Petition to this Court. (Id. ¶¶ 5-10.)

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 6 of 19
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On August 1, 2005, Liguori filed a Motion to Remand. (Doc. No. 3, 05-cv-3678.)

II. MOTION TO REMAND

 Under 28 U.S.C. § 1441(a), a defendant in a state court action may remove a case to

federal court if the federal court could have originally exercised jurisdiction over the matter. A

case removed to federal court may be remanded to state court “if at any time before final

judgment it appears that the district court lacks subject matter jurisdiction.” Id. § 1447(c). The

removing party bears the burden of proving to a legal certainty that federal subject matter

jurisdiction exists. Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004). 

Because § 1441 is strictly construed against removal, Boyer v. Snap-On Tools Corp., 913 F.2d

108, 111 (3d Cir. 1990), all doubts as to whether a plaintiff satisfies the diversity requirement

must be resolved in favor of remand. Samuel-Bassett, 357 F.3d at 403.

Courts have interpreted §§ 1441 and 1446 to create a so-called “rule of unanimity,”

which requires that all defendants join in a removal petition or consent to removal of a case. 

Jordan v. Phila. Housing Auth., Civ. A. No. 91-6191, 1991 U.S. Dist. LEXIS 15970, at *3 (E.D.

Pa. Nov. 5, 1991) (citing Lewis v. Rego Co., 757 F.2d 66, 68 (3d Cir. 1985)). Where the rule is

violated, remand is appropriate. See McManus v. Gasman’s Wynnefield Inc., 710 F. Supp. 1043,

1045 (E.D. Pa. 1989). However, there are three instances where the rule may not apply: (1)

when the nonjoining defendant is a nominal party; (2) when the defendant has been fraudulently

joined; or (3) when a defendant had not been served when the removing defendants filed their

notice of removal. Shepard v. City of Phila., Civ. A. No. 00-CV-6076, 2001 U.S. Dist. LEXIS

783, at *4 n.1 (E.D. Pa. Jan. 31, 2001). In this case, Nationwide has notified the parties of its

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 7 of 19
 In its Response to Liguori’s Motion, Wausau briefly addresses its separate argument 5

that Nationwide was fraudulently joined in this action. (Doc. No. 5, 05-cv-3878, at 15.) See

infra, at 7-10. We need not address this argument since we conclude that Nationwide is not a

necessary or indispensable party.

8

express refusal to consent to removal. (Doc. No. 3, 05-cv-3678, at Ex. 3.) Wausau argues that

remand is not appropriate because Nationwide is a nominal party and its consent is not required.5

A nominal party is defined as one that is “neither necessary nor indispensable to join in

the action.” Mallalieu-Goldner Ins. Agency, Inc. v. Executive Risk Indem., Inc., 254 F. Supp. 2d

521, 524-25 (M.D. Pa. 2003) (internal quotations omitted). Upon removal, the issue of whether

a party is indispensable to an action is determined based on federal law, id. at 252 (citing Shetter

v. Amerada Hess Corp., 14 F.2d 934, 938 (3d Cir. 1994)), and is governed by Federal Rule of

Civil Procedure 19. Rule 19 establishes that a party is “necessary” if:

(1) in the person’s absence complete relief cannot be accorded among those

already parties, or 

(2) the person claims an interest relating to the subject of the action and is so

situated that the disposition of the action in the person’s absence may 

(i) as a practical matter impair or impede the person’s ability to protect

that interest or 

(ii) leave any of the persons already parties subject to a substantial risk of 

incurring double, multiple, or otherwise inconsistent obligations by reason

of the claimed interest.

Fed. R. Civ. P. 19(a). Where it is determined that a party is not “necessary,” that party is “by

definition not ‘indispensable’ to the action.” Mallalieu-Goldner, 254 F. Supp. 2d at 525.

In cases such as this, where one party seeks relief from two other parties based on two

separate contracts, the “third party is not a necessary or indispensable party to [the] action to

determine the rights of [the] other parties under [their] contract, simply because the third party’s

rights or obligations under [that] entirely separate contract will be seriously affected by the

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 8 of 19
 Section 1733 of the MVFRL dealing with priority of recovery provides: 6

 (a) General Rule - Where multiple policies apply, payment shall be made in the 

 following order of priority:

(1) A policy covering a motor vehicle occupied by the injured person at 

the time of the accident;

 (2) A policy covering a motor vehicle not involved in the accident with 

respect to which the injured person is an insured.

9

action.” Special Jet Servs., Inc. v. Fed. Ins. Co., 83 F.R.D. 596, 599 (W.D. Pa. 1979). This

principle has been extended to cases involving a first or primary insurer and a second insurer:

6

The fact that an insurer is concerned with the results of a lawsuit does not mean

that it is a real party in interest nor a necessary party therein. Thus an insurance

company may be interested in the result of an action against another insurance

company on a policy, without being a real party in interest so as to be a necessary

party, as, for instance, where such first company will be liable for the amount

sued for, if it is not recovered in the action brought.

18 Couch on Insurance § 74:502 (2d ed. 1968) (cited in Special Jet, 83 F.R.D. at 599). Clearly,

the general rule is that the “additional . . . insurers are not necessary parties to a suit between an

insured and its primary . . . insurer.” Remington Arms Co. v. Liberty Mutual Ins. Co., 748 F.

Supp. 1057, 1065 (D. Del. 1990); see also Aetna Cas. & Sur. Co. v. Dow Chem. Co., 44 F. Supp.

2d 870, 877 (E.D. Mich. 1999). This rule results from the fact that the absence of the second

insurer does not prevent a court from providing relief as against the primary insurer. Remington

Arms Co., 748 F. Supp. at 1065. “A subsequent contribution action among [insurers liable on

separate and different contracts] would not render the judgment [in the case against the primary

insurer] ‘hollow’ or partial, or constitute the type of repeated lawsuit Rule 19 is designed to

avoid.” Rhone-Poulenc, Inc. v. Int’l Ins. Co., No. 94 C 3303, 1996 WL 435180, at *6 (N.D. Ill.

July 31, 1996).

In this case, Liguori’s claims against Wausau and Nationwide derive from two separate

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 9 of 19
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and distinct insurance contracts. Liguori agrees that under § 1733 of the MVFRL, the UIM

coverage provided by the Wausau Policy is primary to any coverage which may be available

under the policy issued by Nationwide. (Id. at 11; id. at Ex. 2.) Depending upon whether

Liguori recovers UIM benefits from Wausau, and in what amount, Liguori may be able to obtain

a second recovery from Nationwide. (Id. at 11.) Liguori argues that Nationwide, based on its

position in relation to Wausau, has a “legally and financially cognizable interest in the amount of

UIM coverage available from Wausau and in the disposition of Wausau’s UIM coverage at the

arbitration of this case.” (Id. at 12; Doc. No. 6, 05-cv-3578, at 4; Doc. No. 9, 05-cv-3678, at 3.) 

While this may be true, the clear weight of authority provides that this interest does not require a

finding that Nationwide, as a second insurer, is a necessary or indispensable party. Under the

circumstances, we are compelled to conclude that Nationwide is only a nominal party to this

action, and Liguori’s Motion to Remand must be denied. 

III. ARBITRABILITY OF THIS DISPUTE

Addressing next the issue of the arbitrability of this dispute, Liguori contends that the

issues raised in Wausau’s declaratory judgment action should be submitted to arbitration, along

with her underlying claim for UIM benefits, pursuant to the terms of the Wausau Policy. 

Wausau argues that the issues involved here are not arbitrable, but rather must be decided by this

Court.

A. Legal Standard

Liguori’s Motion to Dismiss Wausau’s Declaratory Complaint (Doc. No. 6, 05-cv-2706)

is brought pursuant to Rules 12(b)(1) and 12(b)(6). Wausau has filed a Motion to Dismiss

Liguori’s Petition (Doc. No. 2, 05-cv-3678) pursuant to Rule 12(b)(6) or, in the alternative, for

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 10 of 19
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Summary Judgment pursuant to Rule 56, as well as a Motion for Summary Judgment (Doc. No.

9, 05-cv-2706) pursuant to Rule 56(c).

Under Federal Rule of Civil Procedure 12(b)(1), a court must grant a motion to dismiss if

it lacks subject matter jurisdiction over the case. Fed. R. Civ. P. 12(b)(1). The person asserting

that jurisdiction is proper bears the burden of showing that jurisdiction exists. Kokkonen v.

Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Packard v. Provident Nat’l Bank, 994

F.2d 1039, 1045 (3d Cir. 1993). In reviewing the merits of a Rule 12(b)(1) motion, a district

court may consider evidence that is outside the pleadings. Graham v. United States, Civ. A. No.

97-1590, 2002 U.S. Dist. LEXIS 1765, at *4 (E.D. Pa. Feb. 5, 2002).

Rule 12(b)(6) allows a court to dismiss a complaint for failure to state a claim. A motion

to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. 

Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir. 1980) (citing Conley v. Gibson, 355 U.S. 41, 45-46

(1957)); Swin Res. Sys., Inc. v. Lycoming County, 883 F.2d 245, 247 (3d Cir. 1989) (citing

Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)). In evaluating a motion to dismiss, all

allegations in the complaint and all reasonable inferences that can be drawn therefrom must be

accepted as true and viewed in the light most favorable to the nonmoving party. Rock v. City of

Phila., 868 F.2d 644, 645 (3d Cir. 1989) (citing Wisniewski v. Johns-Manville Corp., 759 F.2d

271, 273 (3d Cir. 1985)). The court may dismiss a complaint, “only if it is certain that no relief

could be granted under any set of facts that could be proved consistent with the allegations.” 

Swin Res. Sys., Inc., 883 F.2d at 247.

Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 11 of 19
 Neither party directly addresses the issue of the applicable substantive law in this 7

diversity action. However, both cite extensively to Pennsylvania statutes and caselaw. Under

Pennsylvania’s choice of law rules, an “insurance contract is governed by the law of the state in

which the contract was made. An insurance contract is ‘made’ in the state in which the last act

legally necessary to bring the contract into force takes place. In most cases, this last act is

delivery of the policy to the insured and the payment of the first premium by him.” J.C. Penney

Life Ins. Co. v. Pilosi, 393 F.3d 356, 360-61 (3d Cir. 2004) (citations and quotation marks

omitted). Here, we lack evidence of the place of delivery. Nevertheless, a presumption exists

that delivery took place at the residence of the insured. Travelers Indem. Co. v. Fantozzi ex rel.

Fantozzi, 825 F. Supp. 80, 84 (E.D. Pa. 1993). Williard, Inc. maintained a place of business in 

Pennsylvania, and Mark Liguori was a citizen of this state. We are satisfied that Pennsylvania

law applies. 

12

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

matter of law.” Fed. R. Civ. P. 56(c). A genuine issue of material fact exists only when “the

evidence is such that a reasonable jury could return a verdict for the non-moving party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party is not required to

file supporting affidavits “or other similar materials” with its motion. Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986); Fed. R. Civ. P. 56(b). However, the moving party still bears “the

initial burden of demonstrating that there are no facts supporting the nonmoving party’s legal

position.” Celotex Corp., 477 U.S. at 322-24. “[T]he party moving for summary judgment

cannot sustain his burden merely by denying the allegations in the opponent’s pleadings.”

Wright & Miller, Federal Practice & Procedure § 2727.

B. Legal Analysis

In Pennsylvania, “[w]hen one party to an agreement seeks to enjoin the other from 7

proceeding to arbitration, judicial inquiry is limited to the question of ‘(1) whether an agreement

to arbitrate was entered into and (2) whether the dispute comes within the ambit of the arbitration

provision.’” Messa v. State Farm Ins. Co., 641 A.2d 1167, 1168 (Pa. Super. Ct. 1994) (quoting

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 12 of 19
13

Rocca v. Pa. Gen. Ins. Co., 516 A.2d 772, 773 (Pa. Super. Ct. 1986)). Here, we focus entirely on

the second question. In interpreting the language of the Wausau Policy, we must “look to the

words of the agreement in order to determine the parties’ intent.” State Farm Mut. Auto. Ins. Co.

v. Coviello, 223 F.3d 710, 717 (3d Cir. 2000). “[W]e are bound to give effect to clear and

unambiguous language” and “are not at liberty to rewrite an insurance contract, or to construe

clear and unambiguous language to mean something other than what it says.” Id. (internal

citations omitted). However, where we find an ambiguity, it will generally be construed against

the insurer that drafted the policy. Nat’l Grange Mut. Ins. Co. v. Kuhn, 236 A.2d 758, 760 (Pa.

1968). We also note the presence of the “strong public policy favoring arbitration.” Cont’l Cas.

Co. v. Gezon, C.A. No. 94-1767, 1994 U.S. Dist. LEXIS 7190, at *6 (E.D. Pa. May 26, 1994). If

claimants were constantly forced to undertake judicial proceedings to compel arbitration, the

costs to claimants would be significant and submission to arbitration would be discouraged. Id. 

There exists a substantial body of caselaw indicating that the dispute at issue in this case 

should proceed to arbitration. The seminal case is Brennan v. General Accident Fire & Life

Assurance Corp., Ltd., 574 A.2d 580 (Pa. 1990), in which the Supreme Court of Pennsylvania

interpreted an arbitration clause almost identical to the clause involved here. The arbitration

clause at issue in Brennan provides, in pertinent part:

If we and the covered person disagree whether that person is legally entitled to

recover damages from the owners or operator of an underinsured motor vehicle,

or do not agree as to the amount of damages, either party may make a written

demand for arbitration. In this event each party will select

an arbitrator. The two arbitrators will select a third. If they cannot agree within

thirty days, either may request that selection be made by a judge or a court having

jurisdiction. Unless both parties agree otherwise, arbitration will take place in the

county and state in which the covered person lives. Local rules of law as to

procedure and evidence will apply. A decision agreed to by two of the arbitrators

will be binding.

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 13 of 19
 We note that the clause in Brennan provides for common law arbitration, while the 8

Wausau Policy dictates arbitration pursuant to the Pennsylvania Uniform Arbitration Act. This

difference does not compel a different result. See Messa, 641 A.2d at 1168; Nagle v. Allstate

Ins. Co., 516 A.2d 1191, 1197 (Pa. Super. Ct. 1986).

14

574 A.2d at 582.8

Upon review, the court found “no limit to the jurisdiction of the arbitrators over what issues may

be submitted” and held that, pursuant to the policy, “all disputes between the insurance company

and the insured will be arbitrated.” Id. at 583. Brennan has been interpreted broadly by

Pennsylvania courts and federal courts alike in similar disputes over insurance coverage. See

McAlister v. Sentry Ins. Co., 958 F.2d 550, 553-54 (3d Cir. 1992) (affirming decision to compel

arbitration, based on Brennan, given similar clause and coverage dispute concerning UIM

benefits); see also Gezon, 1994 U.S. Dist. LEXIS 7190, at *3-10 (applying Brennan and granting

petition to compel arbitration, given similar clause, where insurer argued UIM claimant was not

an “insured” under the policy); Borgia v. Prudential Ins. Co., 750 A.2d 843, 849-851 (Pa. 2000).

Moreover, those cases where courts have refused to compel arbitration, including those

relied on by Wausau, are easily distinguished from the case at bar. In Coviello, the Third Circuit

addressed two arguments in support of reversal of a judgment compelling arbitration in a UIM

coverage dispute. Coviello, 233 F.3d at 710. First, the court determined that the specific issue in

dispute—whether the “family vehicle exclusion” in plaintiff’s UIM policy “r[an] counter to

legislative mandate set forth in the Pennsylvania MVFRL”—was a matter of public policy,

which might suggest the “‘approv[al of] the use of a declaratory judgment action despite the

presence of an arbitration agreement.’” Id. at 713, 715 (quoting Warner v. Cont’l/CNA Ins. Cos.,

688 A.2d 177, 181 (Pa. Super. Ct. 1996). The court found, however, that this issue was unsettled

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 14 of 19
 The arbitration clause in Coviello provided: 9

Section III – Uninsured . . . Underinsured Motor Vehicle Coverage

. . .

Deciding Fault and Amount – Coverages U, U3, W and W3

Two questions must be decided by agreement between the insured and us:

(1) Is the insured legally entitled to collect compensatory damages from

the owner or driver of an uninsured motor vehicle or underinsured motor vehicle;

and

(2) If so, in what amount?

If there is no agreement, these two questions shall be decided by

arbitration at the request of the insured or us. The arbitrators’ decision shall be

limited to these two questions.

Coviello, 233 F.3d at 717.

15

under state law and turned its analysis to an interpretation of the language of the arbitration

clause. Id. at 716. The court specifically distinguished the clause in Coviello’s policy from the

clause in Brennan and concluded that the Coviello dispute was outside the scope of arbitration in

that the Coviello “insurance policy place[d] an explicit limit on the arbitrators’ jurisdiction.”9

Id. at 719. More recently, in State Farm Mutual Automobile Insurance Co. v. Hughes, Civ. A.

No. 05-3391, 2005 U.S. Dist. LEXIS 37546 (E.D. Pa. Dec. 30, 2005), the district court

considered the arbitrability of a coverage dispute under an arbitration provision identical to that

in Coviello. Id. at *4-10. Noting the “stark” difference between the provision in Brennan and

the provision in the State Farm policy at issue in Coviello, the petition to compel arbitration was

denied. Id. at *10.

Wausau argues that its statute of limitations claim raises a matter of public policy and is

thus not arbitrable as per Coviello and Warner. However, Wausau offers no authority in support

of this argument. Morever, we note that in Holland v. Geico Gen. Ins. Co., No. Civ. A. 00-4979,

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 15 of 19
 The arbitration clause in Holland read: 10

If any insured making claim under this policy and we do not agree that he is

legally entitled to recover damages under this coverage from the owner or

operator of an uninsured motor vehicle because of bodily injury to the insured, or

do not agree as to amount payable, either party will have the right to arbitrate the

controversy under the provisions of the Pennsylvania Uniform Arbitration Act.

2001 WL 1818099, at *12 (emphasis added).

 Wausau argues that the arbitration clause in Holland is distinguishable, in that it allows 11

arbitration when the insured and insurer “do not agree as to amount payable,” whereas the

Wausau Policy is restricted to disagreements “as to the amount of damages.” (Doc. No. 9, 05-

cv-2706, at 17-18.) According to Wausau, GEICO’s policy thus encompassed “not only

disagreements about the amount of damages . . . but also, arguably, disagreements about the

scope of coverage provided by the policy for payment of those damages.” (Id. at 17.) We find

this argument unpersuasive.

16

2001 WL 1818099, at *2 (E.D. Pa. Dec. 5, 2001), aff’d, 62 Fed. App’x 415, 416 (3d Cir. 2002)

(citing Brennan, 574 A.2d at 580), a statute of limitations claim similar to Wausau’s claim was

submitted to arbitration after being bifurcated from another issue which was deemed a matter of

public policy. Id. at *2. The Holland court first addressed a dispute as to whether a UM claim

was barred under the Pennsylvania Workers’ Compensation Act, insofar as the parties agreed

that this “coverage issue should not be resolved by arbitration because [it] implicate[d] public

policy.” 2001 WL 1818099, at *4. The statute of limitations issue, however, was found to be

definitively within the scope of arbitration. Id. at 12; cf. Messa, 641 A.2d at 1169 (compelling 10

arbitration where insurer claims UM benefits were barred by statute of limitations); Merchants

Mut. Ins. Co. v. Am. Arbitration Assoc., 248 A.2d 842 (Pa. 1969) (same). The similarity between

the instant case and Holland is compelling.11

We find no support for Wausau’s contention that the statute of limitations dispute

implicates a matter of public policy and cannot be resolved in arbitration. Moreover, as

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 16 of 19
 Under the Pennsylvania Uniform Arbitration Act, pursuant to which this claim is to be 12

arbitrated, “[o]nce it has been determined that an agreement to arbitrate exists and that the

dispute falls within the arbitration provision, the trial court . . . must order the parties to proceed

with arbitration. In such cases, the court is not free to examine the merits of the controversy.” 

Messa, 641 A.2d 1168 (citing 42 Pa. Cons. Stat. § 7304).

17

discussed above, the arbitration clause in Wausau’s UM/UIM Endorsement is very similar to the

clauses in Brennan and Holland, and is different from the clauses in Coviello and Hughes. 

Under the former clauses, arbitration was compelled even in disputes where the Statute of

Limitations was at issue. In addition, Wausau’s alternative ground for declaratory relief—that

the doctrine of laches should limit Liguori’s UIM recovery to $35,000—evinces an obvious

disagreement as to “the amount of damages,” a matter undoubtedly within the scope of the

UM/UIM Endorsement’s arbitration clause. Under the circumstances, we conclude that

Liguori’s claim should properly be submitted to arbitration, where we expect that the arbitrators

will give careful consideration to the merits of Wausau’s statute of limitations defense and

Wausau’s claim that under the doctrine of laches the amount of damages recoverable under the

policy should be reduced. Accordingly, Wausau’s declaratory judgment action will be 12

dismissed pursuant to Liguori’s Motion to Dismiss, and Liguori’s Petition to Compel Arbitration

will be granted.

An appropriate Order follows.

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 17 of 19
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

WAUSAU INSURANCE :

COMPANIES, INC. : CIVIL ACTION

:

v. : NO. 05-CV-2706 

:

LISA P. LIGUORI and :

WILLIARD, INC. :

____________________________________________________________________

LISA P. LIGUOURI :

: CIVIL ACTION

v. :

: NO. 05-CV-3678

WAUSAU INSURANCE :

COMPANIES, INC. and :

NATIONWIDE MUTUAL :

INSURANCE COMPANY :

ORDER

AND NOW, this 7th day of September, 2006, upon consideration of Lisa P. Liguori’s

Motion To Dismiss Plaintiff’s Declaratory Judgment Complaint Pursuant To Federal Rule Of

Procedure 12(b)(1) And 12(b)(6) (Doc. No. 6, 05-cv-2706), Wausau Insurance Companies, Inc.’s

Motions To Consolidate Actions And To Dismiss The Petition To Compel Underinsured

Motorist Arbitration And Appoint Arbitrator (Doc. No. 2, 05-cv-3678), Wausau’s Motion For

Summary Judgment (Doc. No. 9, 05-cv-2706), Liguori’s Motion To Remand (Doc. No. 3, 05-cv3678), Wausau’s Motion For Leave To File Sur Reply In Response To Petitioner Liguori’s

Reply And In Further Opposition To Petitioner Liguori’s Motion To Remand (Doc. No. 7, 05-

cv-3678), it is ORDERED as follows:

1. Liguori’s Motion to Remand (Doc. No. 3, 05-cv-3678) is DENIED.

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 18 of 19
2. Wausau’s Motion for Leave to File Sur Reply (Doc. No. 7, 05-cv-3678) is

GRANTED.

3. Wausau’s Motion to Consolidate Actions (Doc. No. 2, 05-cv-3678) is DENIED.

4. Wausau’s Motion to Dismiss the Petition to Compel Underinsured Motorist

Arbitration and Appoint Arbitrator (Doc. No. 2, 05-cv-3678) is DENIED.

5. Wausau’s Motion for Summary Judgment (Doc. No. 9, 05-cv-2706) is DENIED. 

6. Liguori’s Motion to Dismiss Plaintiff’s Declaratory Judgment Complaint

Pursuant to Federal Rule of Procedure 12(b)(1) and 12(b)(6) (Doc. No. 6, 05-cv2706) is GRANTED.

7. Liguori’s Petition to Compel Arbitration is GRANTED. The parties are directed

to proceed to arbitration.

IT IS SO ORDERED.

BY THE COURT:

/s/ R. Barclay Surrick 

United States District Court Judge

Case 2:05-cv-03678-RBS Document 12 Filed 09/07/06 Page 19 of 19