2004 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
1-30-2004 

# F ir e & C slty Ins C o v

. Li gon P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 03-1283

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w . vi l l a no va . e du/thir dc ir c uit_2004/1058NOT PRE CEDENT IAL UNITED STATES COURT OF APPEALS FO R T HE TH IRD CIR CU IT
No. 03-1283
FIRE & CASUALTY INS URANCE COMPANY OF C ONNECTI CUT

v. QUENTI N LI GON, Appellant App eal from th e Un ited States District Co urt for the Easte rn D istrict of P enns ylvania (D.C. Civi l Action No. 01-cv-05300) District Judge: H onorab le Thom as N. O ’Neill, Jr. 

### Submitted Under Third Circuit LAR 34.1(a)

October 30, 2003 Be for e: S CIR ICA , Chief Judge , NY GA AR D a nd A M BR O, Circuit Judges (fil ed : January 30, 2004)

OPI NION
AM BR O, Circuit

Judge Que ntin Ligon appeals the d ecision of the District Cou rt granting sum mary judgm ent in favo r of Fire & Casua lty Insurance Com pany of C onnec ticut (“F&C ”). In2

Oc tober 2 001 F& C file d a de clarato ry judgm ent ac tion tha t soug ht to ca p its ob ligation to Ligon for underinsure d motoris t benefi ts at $35,000. We have j urisdi ction unde r 28 U.S.C. § 1291. For the r easons that fol low, we vacate t he decisi on of the Dist

rict Court and remand this case for further proceedings. I. The disputein thi s case arises f rom a motor vehi cle acci dent that occurred on Janu ary 31, 20 00. L igon wa s ope rating a mo tor veh icle ow ned b y his emp loyer, Atla ntic Express Trans portation Group (“Atl antic ”), and i nsured byF&C. He w as rear -ended by another ve hicle . Ligon se ttl ed with thevehicl e driver ’s ins urer for the poli cy l imit

of $100,000. Thereafter, Ligon sought coverage from F& C under the underinsured motorist pro visio n of Atl antic ’s po licy. More relevant

to thi s case, however, arethe fact s surr ounding the i ssuance of Atlanti c’s i nsurance bi nder and after-i ssued poli cy. In December 1999, Atl antic was seek ing to o btain a utom obile in suran ce fo r its ope rations in a va riety of states . For th is purpose, Atlanti c employ ed an insur ance broker , Capacit y CoverageCompany (“Capacity”) . The ins urance sought by Atl antic was a new policy . On December 23, 1999, Capacit

y faxed a binder of i nsurance cove rage to Atl antic . The coverageperiod bega n D ecem ber 3 1, 199 9 and expire d on Feb ruary 29 , 2001 . The bind er app lied to a ll vehicl es operated by Atl antic wherever loc ated (e xcept i n Massachusett s). The binder lis ted thebodily

injury l iabil ity

limi t as $1, 000,000 and provi ded for “st atutor y” uni nsured3

mo toris t cov erag e. At some unspecifi ed time, Nathan Schlenker , Chief Fi nancialOfficer of Atl antic , signe d an a ccord indica ting A tlantic’s e lection to limit u nder insure d m otorist co verag e to $35,000 in Penns yl vania. As discusse d in more det ail be low, the re are s everalapparent defici encies wit

h the accord. On February 3, 2000 (after Ligon’s accident), F&C issued pol icyno. AUT001884 providi ng coverage for

Atlanti c. An unsigned endor sement form attached t o the poli cy sets t he u nin sure d/u nde rinsu red mo toris t limit s fo r Pe nns ylvan ia at $ 35,0 00. II. W e ex ercis e ple nar y revie w o ver a de cisio n gr antin g su mm ary jud gm ent. Witkowski v. Welch , 173 F.3d 192, 198 (3d Cir. C ir. 1999). In deciding a summ ary judg men t motio n, “the test is w hethe r there is a genu ine issu e of m aterial fa ct and , if not, whether themoving party is entitl ed to judgment

as a matt er of la w.” Med. Protective Co. v. Watkins , 198 F.3d 100, 103 (3d Cir. 1999). “Summaryjudgment wil l not l ie if the dispu te abo ut a m aterial fa ct is ‘gen uine,’ th at is, if the e viden ce is su ch tha t a reaso nable jurycould ret

urn a verdi ct for t

he nonmoving party. ” Anderson v. Liber tyLobby, I nc. , 477 U.S . 242, 2 50 (1 986 ). We mu st also e xam ine the evide nce in the ligh t mos t favo rable to, an d re solv e all in fere nce s in f avo r of , the n on- mo vin g pa rty. Matsushita Elect. Indus. Co. v. Zenit

h Radio Corp. , 475 U.S . 574 587 (19 86)
.1 A federal court exerc isi ng divers ity juri sdiction is to apply

the choi ce-of-l aw rules of th e fo rum state . Shuder v. McDonald’s Corp. , 859 F.2 d 26 6, 26 9 (3 d C ir. 19 88)
. Under Pennsyl vania l aw, an insur ance poli cy i s interpreted accordi ng to the l aw of the state wh ere it wa s de liver ed. Crawford v. Manhattan Li fe Ins. Co. , 221 A.2d 877, 880-81 (Pa. S uper . Ct. 19 66); see also Traveler s Indem. Co. v. Fantozzi ex rel. Fantozzi , 825 F.S upp . 80, 8 4 (E .D. P a. 19 93) . Th e ins ura nce bin der wa s de liver ed in Ne w Y ork
. However, because Pennsylvania law does not di ffer from New York law on the rel evant issues , and as t

his cas e involve s int erpret ation of a Pennsy lvania

stat ute, we cite t o cases from both jurisdicti ons. 4 III. The insura nce b inder is sued by F& C w as an enfo rceab le insur ance docu men t until
ca nc ele d o r re pl ac ed by a fo rm al p ol icy. Th e b in de r p ro vi de d f or “s tat ut or y” underinsured motorist coverage. Pursuant t o Pennsylvania stat ute, underinsured motorist
cove rage is equa l to the liab ility limits of a p olicy until or unles s a low er limit is requested. And although Atlantic executed an accord — lowering underinsured motorist coverage t o $35,000 — an issue of mater ial f act exi sts as to when the accord was executed and whether

it app lies to the b ind er, th e af ter-is sue d po licy or b oth
. As to wh ether th e bind er issue d by F& C is a valid in suran ce co ntract, “[ i]t is we ll settled in Penns yl vania that a bi nder constitutes evidenc e that insurance coverage has atta ched at a s pecifi c time, and conti nues in effe ct unti l eit her the pol icyis i ssued or t he risk i s decli ned and noti ce ther eof is gi ven.” Stri ckler v. Huffine , 618 A.2d 430, 433 (Pa. Super. Ct. 1992) (ci ting Harris v. Sachse , 52 A .2d 37 5, 378 (Pa. S uper . Ct. 19 47)); see also Springer

v. Alls tateLife Ins. Co. , 731 N .E.2d. 1106 , 1108 (N .Y. 2000 ). 1 “It i s the custom of theinsurance indust ry , and sound publ ic poli cy, to provi de on-the- spot2 “Pennsy lvania courts are unani mous that t he legi slative intent underlyi ng the MV FRL w as to establi sh a liberal compensatoryscheme of und erinsured motorist protect ion.” Nationwide Mut. I ns. Co. v. Consensza , 258 F.3d 197, 208 (3d Cir. 200 1).
3 The facts i n Peele are very simil ar to t

hose in our

case. I n fact, both Peeleand Ligo n w ere em ployed b y Atlantic at the tim e of th eir resp ective accid ents. W e also n ote that t he District Court

did not havethe benefi t of Peele . It was decided i n December 2003, al most a fullyear after the Dist rict Court fil ed its opinion. 5 temporary

insurance coverage i n the form of a bi nder unti l the application i nformati on can be veri fied and a formal poli cy i ssued. ” Klopp v. Keystone Ins. Cos. , 595 A.2 d 1, 4 n.5 (Pa. 1991). The “Condit ions” se ction of

the binde r als o provides that, absent notice of cancell ation, the binde r remains in effect until“repla ced by apolicy .” Legallythe pres umption i s that the ins urance bi nder is sued by F&C provides $1,000,000 i n underins ured motori st cover age. The binde r states t hat underi nsured motoris t covera ge is “s tatutory .” The Pennsy lvania Motor Vehicle Fi nancial Responsibi lit

y Law (“MVFR L”) 2 requires insurers t o offer unins ured and underi nsured
mo torist cov erage “equ al to bo dily injury liability cove rage e xcep t wh ere the insure d, in writing , reque sts U M /UIM cove rages in am oun ts less tha n the lim its of liab ility for bod ily injury pur chased bythe ins ured.” Salazar v. Alls tateIns. Co. , 675 A.2d 1259, 1262 (Pa. Sup er. Ct. 1 996 ); accord 75 Pa. Cons. Stat. §§ 1731, 1734. A recent Pennsylvania case interpre ting the term “ statutory” in an ins uran ce bin der co nclud ed tha t it unam bigu ously prov ided u nder insure d cov erage in the a mo unt o f the p olicy’s bo dily injury liability limits
. Peele v. Atl. Expr ess Transp. Group, Inc. , 2003 PA Super. 514 , ¶ 13. 3 Even if the term st atutor

y i s ambiguous, we generall y must inter pret t he provis ions of an i nsurance6

pol icy ag ains t the i nsu rer a nd i n fa vor of th e ins ure d. See , e.g. , Jeffrey v. Eri e Ins. Exchange , 621 A .2d 635, 63 8 (Pa. Sup er. Ct. 1993) ( en banc ); but see 12th Stre etGy m, Inc. v. Gen. Star I ndem. Co. , 93 F .3d 11 58, 11 66 (3 d C ir. 1996 ) (stating “a co urt w ill only
cons true am bigu ous la ngu age a gains t the dra fter in th e abs ence of rele vant e xtrinsic evidence” and that, in such a s ituat ion, t he factfi nder shoul d normally resol ve the amb iguity). Th erefo re, until o r unles s Atla ntic m ade a written requ est to low er its underinsu red mo torist coverage, or u ntil the insurance b inder w as replaced b y an afterissu ed p olicy a s to w hich Atl antic req ues ted lo we r un der insu red mo toris t cov erag e, Ligo n w as en titled to $1 ,000,0 00 in und erinsu red m otorist co verag e – the bind er’s bo dily inju ry liabili ty limit. In addition, Li gon’s ri ghts under the ins urance bi nder vested on January31, 2000, the dayof his acc ident. The replace ment of the bi nder bythe after-i ssued ins urance pol icy (on Feb rua ry 3, 20 00) can not retro activ ely strip Lig on o f the se rig hts. See Peele , 2003 PA Super. 514 , ¶ 13 ( rejec ting argument that a request

to lower underinsure d
mo torist cov erage und er 75 Pa. C ons. S tat. § 17 34 co uld b e app lied retro active ly); see also Turleyv. John Hancock Mut. I ns. Co. , 173 A. 163, 165 (Pa. 1934) (concludi ng that an employ ee’s subs equent di scharge di d not affect his ri ghts under

a disabi lit

y i nsurance policy carri ed by hi s employ er becausethe employ ee’s rights vested [ i.e . , h e be came disabled] prior to h is termination); Bennacer v. Travelers Ins. Co. , 695 N.Y.S.2d 846 (N.Y. App. Div. 1999) (findi ng that i nsurer was obl igate d to indemni fy and def end7

insure d as to a matter t

hat theafter -iss ued insur ance poli cy exc luded cover age, but the binder was ambiguous as to cover age when the event in question occurred during t he 30- day perio d du ring w hich th e bind er w as eff ective ); See also State Farm Mu t. Auto. Ins. Co . v. Ke ndall , 122 S.E. 2d 139, 143 (Ga. Ct . App. 1961) ( “Rights against [an] ins urer aris e immediat elyupon the happeni ng of the acci dent and cannot be destroyed by attem pted sub seq uen t can cella tion , relea se o r co mp rom ise b y insu red and insu rer.” ). Fina lly, although Atlan tic CF O N athan Sch lenke r exec uted a n acc ord re ques ting to limit u nde rinsu red mo toris t cov erag e at $ 35,0 00, g enu ine is sue s ofma teria l fac t rem ain. Specifi call y, it i s unclear when the accord was executed and whether i t appli ed to the bin der , the a fter -issu ed in sura nce pol icy, or b oth
. As to when the accor d was executed, the dat e “12/31/99” appears i n the upper right -hand corner

of the document. Based on this , and other extrinsi c evidence of Atlantic’s gen eral intent, the District Cou rt concluded that this was the d ate the accord was sign ed. Exam ination of the rec ord, how ever, dem onstrates that reason able jurors could disag ree w ith this co nclus ion. T he da te field n ext to S chlen ker’s s ignatu re is empty. While Schlenker executed a c erti fication indi cati ng the reduc tion i n underins ured motoris t covera ge was requested knowinglyand inte lli gently , thecerti fication is sil ent on when the accord was si gned. Furt her, F&C has fail ed to produceany evi dence about wh en it rec eived the ac cord . Nath an L ull, the P reside nt of C apac ity, admitted in his dep ositio n th at S chle nke r ma y hav e ex ecu ted th e ac cor d af ter F ebr uar y 1, 20 03.8

Examination of

the rec ord als o indicates t hat the“12/31/99” date mayhave been ente red by Cap acity (to cor relate w ith the e ffec tive da te of th e bind er) and then f orw arded to Atlanti c for execution. I n additi on, evi dence in the record s hows Schlenker and Lul l may have been unaware of the Pennsy lvania underins ured motori st sche me (and hence the
nee d to req ues t low er lev els o f un der insu red cov erag e) in De cem ber 199 9. Based on the evi dence in the record, an issueof materi al fact also r emains whether the accord amends the i nsurance bi nder, t he after -iss ued polic y or both. The Dis tri ct Co urt’s op inion f ocus ed on the rec ord e viden ce ind icating Atlan tic’s gen eral de sire to minimize c overage and thus insur ance premiums. The accord it self, however, is sil ent as to what it amends. And as stated above, examination of the record indicates t hat at least Atlanti c and Capacity — there i s no evidencein the record from anyF&C officer or employe e — m ay not

have possess ed a fullunderst anding of Pennsy lvania ’s underi nsured
mo torist sch eme . Acc ordin gly, they may ha ve be en un aw are w hat the term “ statutory” in the ins urance bi nder even meant. Further , in c ontras t to t he binder, the after-i ssued poli cy aff irma tivel y limits u nde rinsu red mo toris t cov erag e in P enn sylvan ia to $ 35,0 00. Exa minin g the a vailab le evid ence in the lig ht mo st favo rable to and d raw ing all infere nces in fa vor of Ligon, a reasonabl e jurycould concl ude F&C and A tlant ic intended th e a cc or d t o a pp ly ex clu siv ely t o t he af ter -is su ed po lic y. * * * * * In this context, we vacate the decision of the District Court and remand this case9

for further proceedings.

TO THE C LERK: Please fi le theforegoing Opini on.
By the C ourt,

/s/ Thomas L. Ambro, Circui t Judge