Opinion ID: 3013508
Heading Depth: 2
Heading Rank: 2

Heading: Interpretation of the Policy Language

Text: We turn to the proper interpretation of the clause “operated by a duly licensed common carrier for regular passenger service.” A reasoned analysis reveals that “regular passenger service” modifies the adjective “licensed,” so that coverage extends narrowly to those common carriers specifically licensed to conduct regular passenger service. 1. Pennsylvania Law on the Interpretation of Insurance Contracts Pennsylvania law, under which this insurance policy must be interpreted, provides several well-settled principles governing the interpretation of insurance policies. As a threshold matter, “[t]he task of interpreting a contract is generally performed by a court, rather than by a jury. The goal of that task is, of course, to ascertain the intent of the parties as manifested by the language of the written instrument.” Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983) (citations omitted). Where an insurance policy provision is ambiguous, it is to “be construed against the insurer and in favor of the insured . . . .” McMillan, 922 F.2d at 1075; State Farm Fire & Cas. Co. v. MacDonald, 850 A.2d 707, 710 (Pa. Super. Ct. 2004). An ambiguity exists when the questionable term or language, viewed in the context of the entire policy, is “reasonably susceptible of different constructions and capable of being understood in more than one sense.” Med. Protective, 198 F.3d at 103 (citing Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir. 1997), in turn citing Gamble Farm Inn, Inc. v. 10 Selective Ins. Co., 656 A.2d 142, 143-44 (Pa. Super. Ct. 1995) (quoting Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 390 (Pa. 1986))). Where, however, “the language of an insurance contract is clear and unambiguous, a court is required to enforce that language.” Med. Protective, 198 F.3d at 103 (citing Standard Venetian Blind, 469 A.2d at 566). That is, “a court must refrain from torturing the language of a policy to create ambiguities where none exist.” McMillan, 922 F.2d at 1075; MacDonald, 850 A.2d at 711. In addition, wherever possible, “a court should interpret the policy so as to avoid ambiguities and give effect to all of its provisions.” Little v. MGIC Indemnity Corp., 836 F.2d 789, 793 (3d Cir. 1987). “The policy must be construed as a whole, not in discrete units.” Giancristoforo v. Mission Gas & Oil Products, Inc., 776 F. Supp. 1037, 1041 (E.D. Pa. 1991) (citing Luko v. Lloyd's London, 573 A.2d 1139, 1142 (Pa. Super. Ct. 1990)). Thus, “[w]here the policy contains definitions for the words contained therein, the court will apply those definitions in interpreting the policy.” Monti v. Rockwood Ins. Co., 450 A.2d 24, 25 (Pa. Super. Ct. 1982) (citing Adelman v. State Farm Mut. Auto Ins. Co., 386 A.2d 535 (Pa. Super. Ct. 1978)). In the instant case, the policy requires that the insured must have been traveling in a public conveyance “operated by a duly licensed common carrier for regular passenger service by . . . air.” The parties dispute which word the clause “for regular passenger service” modifies. The Pilosis argue that the phrase “for regular passenger service” 11 modifies “operated,” meaning that the common carrier must be duly licensed and must be operated for regular passenger service. On the other hand, J.C. Penney Life argues that the disputed clause modifies “licensed,” so a carrier is not covered unless its license specifically authorizes regular passenger service. Although the meaning of the clause is disputed, “[a] contract is not rendered ambiguous by the mere fact that the parties do not agree upon the proper construction.” MacDonald, 850 A.2d at 710. When the disputed language is read in context with the policy’s definitions, only one interpretation is reasonable. As stated above, the insurance policy requires that the conveyance be “operated by a duly licensed common carrier for regular passenger service by . . . air.” The policy, in turn, defines “common carrier” to mean “an air . . . conveyance operated under a license for regularly scheduled passenger service.” Read in context, therefore, the phrase requires the airline to possess a license for regularly scheduled passenger service to qualify as “a common carrier for regular passenger service.” There is no reasonable alternative interpretation. The explicit definition of “common carrier” is adequate to put the Pilosis on notice that there would be no coverage unless the carrier was licensed for regular passenger service. Peerless Dyeing Co., Inc. v. Indus. Risk Insurers, 573 A.2d 541, 544 (Pa. Super. Ct. 1990) (“When a word or phrase is specifically defined within the policy, that definition controls in determining the applicability of the policy.”). The Pilosis believe the policy language is ambiguous. They therefore urge 12 application of the rule of insurance construction that interprets policy clauses providing coverage in a manner which affords the greatest possible protection to the insured. See Geisler v. Motorists Mut. Ins. Co., 556 A.2d 391, 393 (Pa. Super. Ct. 1989). Although this rule does, indeed, represent the law in this area, application is warranted only where the language is, in fact, ambiguous. The canon does not apply where, as here, the language of the policy, viewed in context, is clear. Treasure Craft Jewelers, Inc. v. Jefferson Ins. Co. of N.Y., 431 F. Supp. 1160, 1163 (E.D. Pa. 1977) (“[R]ule of strict construction against the insurance company has no application where the language is clear and unambiguous.”) (citing Sidebothom v. Metro. Life Ins. Co., 14 A.2d 131, 132 (Pa. 1940)). The plain meaning of the phrase “operated by a duly licensed common carrier for regular passenger service,” when viewed in conjunction with the definition of “common carrier,” is that coverage extends only to those carriers that are licensed for regular passenger service. See Loomer v. M.R.T. Flying Serv., 558 A.2d 103, 105 (Pa. Super. Ct. 1989) (“Where the terms of the insurance contract are not ambiguous . . . [the] Court must read the policy in its entirety and give the words therein their plain and proper meanings.”). The interpretation suggested by the Pilosis fails to accord proper significance to the written contract, “historically . . . the true test of parties’ intentions.” Standard Venetian Blind, 469 A.2d at 567. To interpret the phrase as extending coverage beyond those airlines licensed specifically for regular passenger service renders the policy 13 definition of “common carrier” useless. Pennsylvania courts have held that “[n]o provision within a contract is to be treated as surplusage or redundant if any reasonable meaning consistent with the other parts can be given to it.” Sparler v. Fireman's Ins. Co. of Newark, N.J., 521 A.2d 433, 438 n.1 (Pa. Super. Ct. 1987); see Quigley v. W. & S. Life Ins. Co., 7 A.2d 70, 72 (Pa. Super. Ct. 1939) (“[Courts] have no right to add anything to the insurance contract or to give it a construction that renders any part of it useless and unnecessary, if it can be reasonably construed just as written and without any change, addition or elimination.”). Because J.C. Penney Life’s policy language can be reasonable construed as written, no portion of its language should be ignored. This is not a case where the insurance policy as a whole fails to provide the court with any additional tools to tease out the disputed phrase’s alleged plain meaning. See McMillan, 922 F.2d at 1076 (construing an ambiguous, undefined provision of an insurance policy against the insurer because “[n]either the context of the rest of the policy nor any other evidence extrinsic to the phrase itself renders the meaning of [the disputed phrase] more conspicuous”). Rather, the definition of “common carrier” provides ample clarification of any ambiguity that may result from the distal placement of the modifier “for regular passenger service.” Because the meaning of the disputed phrase is clear, this Court need not determine whether any reasonable person upon reading it could decide that it encompassed airlines operated for regular passenger service. To be sure, the burden of drafting with precision rests with the insurance 14 company, the author of the policy. McMillan, 922 F.2d at 1076. However, where, as here, the scrivener has adopted precise language to accomplish its purpose of limiting coverage to those carriers licensed for regular passenger service, that intent must control. Accordingly, it was erroneous to have found the language of Part I of the policy ambiguous. 2. Rules of Statutory Interpretation In addition to the plain language of the policy, rules of statutory interpretation demonstrate that the plane must be licensed for regularly scheduled passenger service. A general rule of statutory construction, the “doctrine of last antecedent,” teaches that “qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding, and are not to be construed as extending to and including others more remote.” Resolution Trust Corp. v. Nernberg, 3 F.3d 62, 65 (3d Cir. 1993); see United States v. Hodge, 321 F.3d 429, 436 (3d Cir. 2003); Commonwealth of Pa., Dep’t of Pub. Welfare v. United States Dep’t of Health & Human Servs., 80 F.3d 796, 808 (3d Cir. 1996). This rule suggests that the clause “for regular passenger service” modifies the antecedent adjective “licensed,” rather than the verb “operated,” which is located distally in the middle of the sentence. See also 2A Norman J. Singer, Sutherland Statutory Construction § 47.33 (6th ed. 2000) (“Referential and qualifying words and phrases, where no contrary intention appears, refer solely to the last antecedent.”). To be sure, “this rule [of the last antecedent] is not an absolute and can assuredly 15 be overcome by other indicia of meaning . . . .” Barnhart v. Thomas, 124 S. Ct. 376, 380 (2003) (applying the rule of last antecedent to statutes). However, in this case other indicia point overwhelmingly towards the conclusion that the clause modifies the word “licensed.” Even if we were to ignore the contrary meaning provided by the definition of “common carrier,” construing the phrase as the Pilosis urge would contort the language beyond its limits because such an interpretation would require a reorganization of the clause. The rewritten phrase would read: “operated by a duly licensed common carrier and operated for regular passenger service.” By contrast, interpreting the phrase to mean that the airlines must be licensed for regular passenger service requires no such reorganization. By rewriting the policy to read that EA was a “duly licensed carrier” and “operated for regular passenger service,” the District Court created an ambiguity where one does not exist. See Fosse v. Allianz Life Ins. Co. of N. Am., No. CIV.A. 93-CV-1110, 1994 WL 139413, at  (E.D. Pa. Apr. 20, 1994) (“An ambiguity does not arise simply because an alternative interpretation of a word can be created through reasoning that renders common words meaningless.”). In light of the plain language of the policy and the contextual clarity provided by the definition of “common carrier,” coupled with the absence of any reasonable alternative interpretation of the coverage language, the policy is unambiguous in requiring that the flight be licensed for regular passenger service.