Court Opinion

ID: 7797811
Source: CourtListenerOpinion
Date Created: 2022-08-04 16:13:41.618227+00
Date Added: 2024-06-11T16:28:41.452549
License: Public Domain

J-A14036-22

                                   2022 PA Super 131

    BRYAN D. KOCH, EXECUTOR OF THE             :   IN THE SUPERIOR COURT OF
    ESTATE OF RHEA LYNN KOCH,                  :        PENNSYLVANIA
    DECEASED, AND BRYAN D. KOCH, IN            :
    HIS OWN RIGHT                              :
                                               :
                                               :
                v.                             :
                                               :
                                               :   No. 1302 MDA 2021
    PROGRESSIVE DIRECT INSURANCE               :
    COMPANY                                    :
                                               :
                       Appellant               :

               Appeal from the Order Entered September 14, 2021
      In the Court of Common Pleas of Berks County Civil Division at No(s):
                                   19-2281

BEFORE:      BENDER, P.J.E., STABILE, J., and STEVENS, P.J.E.*

OPINION BY STEVENS, P.J.E.:                          FILED: AUGUST 4, 2022

        Progressive Direct Insurance Company (“Progressive Direct”) appeals

the order entered by the Court of Common Pleas of Berks County denying its

motion for summary judgment and granting the cross motion for summary

judgment filed by Appellee Bryan D. Koch, in his capacity as Executor of the

Estate of Rhea Lynn Koch and in his own right.           After careful review, we

reverse the trial court’s order.

        On June 7, 2015, Bryan Koch (“Koch”) was driving his 2013 Harley

Davidson motorcycle while his wife, Rhea Lynn Koch (“Mrs. Koch”) was riding

with him as a passenger. Their motorcycle was struck by a 1997 Ford Explorer

driven by Sean Eyrick, who was later determined to be driving under the

____________________________________________

*   Former Justice specially assigned to the Superior Court.
J-A14036-22

influence of alcohol when the accident occurred. Mrs. Koch was killed in the

accident and Koch suffered injuries that required the amputation of his left leg

above his knee.

       The parties do not dispute that Eyrick was solely at fault for causing the

accident. Ultimately, Koch decided to settle the claims against Eyrich for his

available policy limits of $15,000.00 for each plaintiff.1   The damages that

Koch sustained from the accident in relation to the fatal injuries of his wife,

Rhea Koch, and the injuries he sustained in his own right exceeded the liability

coverage of Eyrich, who was an underinsured motorist (UIM).

       At the time of the accident, Koch’s motorcycle had been insured by

Progressive Direct under a policy which provided bodily injury coverage of

$100,000 each person and $300,000 each accident.             Koch presented a

demand to Progressive Direct for bodily injury and UIM benefits. Progressive

Direct refused to pay the requested UIM benefits based on its allegation that

Koch had signed a waiver form rejecting UIM coverage.2
____________________________________________

1 Eyrick was charged with homicide by vehicle while driving under the influence
and other related charges in connection with this accident.
2 We note the Kochs had separate policies with Erie Insurance Co. (“Erie”) for

their household automobiles. Before the instant action was filed, Erie filed a
declaratory judgment action seeking a determination that UIM coverage was
not available under the Erie automobile policy for the accident at issue in this
case because the Koch had rejected UIM coverage under the Progressive
Direct motorcycle policy. On June 17, 2020, the trial court consolidated the
Erie litigation with this case for the purposes of discovery and trial.
       However, we note that complete consolidation of the Erie and
Progressive Direct litigation did not occur because the actions lack complete
identity of parties or claims. See Malanchuk v. Tsimura, 635 Pa. 488, 497,
(Footnote Continued Next Page)

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       On September 9, 2019, Koch filed this breach of contract action,

individually and as executor of the Estate, asserting that Progressive Direct

had breached the insurance policy by failing to properly and timely evaluate

the claim and pay the insured’s UIM policy limits. Koch claimed that he as an

individual and the Estate were each entitled to available UIM benefits in the

amount of $100,000.00.

       While the complaint sounded in breach of contract, Koch specifically

requested that the trial court make “a determination of the availability of UIM

coverage to [the Kochs] under the Progressive Direct Insurance Company

policy covering the motorcycle [Koch] was operating” at the time of the June

7, 2015 accident. Complaint, at ¶ 19.

       On February 25, 2021, Progressive Direct filed a motion for summary

judgment, alleging Koch had originally rejected UIM coverage in the inception

of a policy held by Progressive Halcyon Insurance Co. that was issued in

February 2004 for Koch’s 2002 Honda motorcycle. While Progressive Halcyon

changed its name to Progressive Direct on June 9, 2006, Koch maintained a

policy with this company for various motorcycles. Progressive Direct argued

that Koch’s rejection of UIM coverage in 2004 was still effective and carried

forward through the addition and deletion of different motorcycles to the policy

as Koch never affirmatively changed this designation rejecting UIM coverage.
____________________________________________

137 A.3d 1283, 1288 (2016) (finding that “complete consolidation (or merger
or fusion of actions) does not occur absent a complete identity of parties and
claims; separate actions lacking such overlap retain their separate identities
and require distinct judgments”).

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     On March 29, 2021, Koch filed a cross motion for summary judgment,

seeking an order declaring that UIM coverage is available under Koch’s

Progressive Direct policy in the amount of $200,000.00.     Cross-Motion for

Summary Judgment, at 2. In support of this motion, Koch presented evidence

of a telephonic conversation he had with a representative of Progressive

Direct, on or about August 20, 2014, nine months before the accident, during

which he sought to purchase additional coverage for his 2013 Harley Davidson

motorcycle. The relevant portions of that conversation were as follows:

     [Koch:] uh, I just had a, a friend who was in a bad accident years
     ago, and he told me, you know, a lot of times on the coverage
     you’ve got basic coverage, but it doesn’t really cover a whole lot
     in terms of hospital, and maybe other things. What, uh, even at
     the 1,500 where I’m at, what, are there things I should be adding
     to that policy to, uh, not just to insure the bike, but if you were
     ever hospitalized for an extended period of time, things like that?

     [Progressive Direct representative:] Definitely. So, um, I’m not
     licensed in the state of Pennsylvania, but I can kinda go over what
     coverages that we offer in your state.

Recorded Conversation of Koch and Progressive Direct representative, lines

94-99.

     The conversation continued on to include the following discussion:

     [Progressive Direct representative:]       You also don’t have
     uninsured motorist coverage. That’s for if, you know, if somebody
     else causes an accident, and injures you or your bike, they would
     pay for all your injuries and damages. But if they are not
     responsible and they don’t have insurance, then you …

     [Koch:]   You’re stuck.

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      [Progressive Direct representative:] … you’re stuck with, um,
      everything on your own. Unless you have the uninsured motorist
      coverage here.

      [Koch:] M’kay.

      [Progressive Direct representative:] So you do have that option.
      So it’s like you’re kinda paying for somebody else not to be
      responsible.

      [Koch:] Yeah.

      [Progressive Direct representative:]        But you’re protecting
      yourself.

      [Koch:] Yeah.

Recorded Conversation of Koch and Progressive Direct representative, lines

128-145.

      At the conclusion of this conversation, Koch added uninsured motorist

(UM) coverage to his policy in the amount of $100,000 each person and

$300,000 per accident. The Progressive Direct representative never discussed

the availability of underinsured motorist (UIM) coverage.

      On September 14, 2021, the trial court entered an order granting

summary judgment in favor of Koch and denied Progressive’s motion for

summary    judgment.      The   trial   court   found   the   Progressive   Direct

representative “misled [Koch] and created an incongruous uninsured motorist

coverage and underinsured motorist coverage selection process” when she

discussed UM protection but failed to advise Appellant of the option of UIM

coverage in response to his inquiry about purchasing additional coverage.

Trial Court Opinion (T.C.O.), 9/14/21, at 4.

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      As a result, the trial court concluded that Appellant had not made a

“knowing waiver” of UIM coverage and found the Rejection of UIM form that

Koch signed in 2004 during the inception of the policy was void pursuant to

the Motor Vehicle Financial Responsibility Law (MVFRL).     Further, the trial

court determined that there is a total of $200,000.00 of available UIM

coverage under Koch’s policy in place at the time of the accident. This timely

appeal followed.

      Progressive Direct raises the following claims for our review on appeal:

      1. Whether a rejection of underinsured motorist coverage made
         at the delivery of the policy remains valid until affirmatively
         changed by the insured.

      2. Whether the telephone conversation between the Progressive
         representative and [Koch], discussing different coverages,
         created a duty on behalf of Progressive to advise [Koch] about
         underinsured motorist coverage.

      3. Whether the trial court erred in finding that the Progressive
         representative’s failure to offer underinsured motorist
         coverage to [Koch] required reformation of the policy to allow
         for underinsured motorist coverage?

Progressive’s Brief, at 6.

      Before reaching the merits of these arguments, we must determine

whether this appeal is properly before this Court, as the “appealability of an

order directly implicates the jurisdiction of the court asked to review the

order.” Schmitt v. State Farm Mut. Auto. Ins. Co., 245 A.3d 678, 681

(Pa.Super. 2021) (quoting Knopick v. Boyle, 189 A.3d 432, 436 (Pa.Super.

2018) (internal citation omitted)).   As such, “this Court has the power to

inquire at any time, sua sponte, whether an order is appealable.” Knopick,

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189 A.3d at 436 (quoting In re Estate of Considine v. Wachovia Bank,

966 A.2d 1148, 1151 (Pa.Super. 2009)).

      It is well-established that “[i]n this Commonwealth, an appeal may only

be taken from: 1) a final order or one certified by the trial court as final; 2)

an interlocutory order as of right; 3) an interlocutory order by permission; or

4) a collateral order.” Estate of Considine, 966 A.2d at 1151.

      Our rules of appellate procedure provide that parties have the right to

file an appeal from a final order, which is defined as any order that: “(1)

disposes of all claims and of all parties; (2) is expressly defined as a final order

by statute; or (3) is entered as a final order pursuant to subdivision (c) of this

rule.” Pa.R.A.P. 341(a), (b)(1)-(3). An appeal may also be taken from “an

order that is made final or appealable by statute or general rule, even though

the order does not dispose of all claims and of all parties.” Pa.R.A.P. 311(a)(8).

      Section 7532 of the Declaratory Judgments Act states, in pertinent part:

      [c]ourts of record, within their respective jurisdictions, shall have
      power to declare rights, status, and other legal relations whether
      or not further relief is or could be claimed. ... The declaration may
      be either affirmative or negative in form and effect, and such
      declarations shall have the force and effect of a final judgment or
      decree.

42 Pa.C.S.A. § 7532.

      As noted above, Progressive Direct appealed the trial court’s order which

granted Koch’s motion for summary judgment and declared that the UIM form

produced by Progressive Direct was void under the MVFRL and that there was

$200,000.00 of UIM benefits available to Koch under his Progressive Direct

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policy.     While Koch’s complaint sounded in breach of contract, he had

requested that the trial court make an express determination on whether UIM

coverage was available under the Progressive Direct policy.        Both parties

requested this determination in their motions for summary judgment.

      Our Supreme Court recently set forth the following two-part test to

apply when determining whether an order declaring the rights of parties is

final and appealable:

      (1) what is the effect of the lower court's decision on the scope of
      the litigation; and (2) what practical effect does the court's
      decision have on the ultimate outcome of the case. ... If the order
      in question merely narrows the scope of the litigation and does
      not resolve the entirety of the parties’ eligibility for declaratory
      relief, then the order is interlocutory and not immediately
      appealable.

Pennsylvania Manufacturers’ Assoc. Ins. Co. v. Johnson Matthey, Inc.,

647 Pa. 85, 188 A.3d 396 (2018).

      In Schmitt, this Court quashed as interlocutory State Farm’s appeal

from the trial court’s order which resolved the plaintiff’s declaratory judgment

claims and determined that the plaintiff’s insurance policy entitled him to UIM

benefits.    This Court found that the appeal was improper upon summary

judgment on the issue of coverage as the trial court had not yet resolved the

claims seeking to determine the plaintiff’s claims related to damages.

Schmitt, 245 A.3d at 686.

      This case, however, is distinguishable as the trial court determined in

its order that $200,000.00 of UIM benefits are available under Koch’s policy

with Progressive Direct as defined by the policy limits. In response to this

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Court’s rule to show cause as to why this appeal should not be quashed,

Progressive Direct agreed to stipulate that Koch would be entitled to the

maximum UIM coverage of $100,000 each for the Estate and Koch individually

if this Court affirmed the trial court’s decision with respect to coverage.

Progressive Direct also points out that any award or judgment in excess of the

UIM coverage limits would be molded to the available UIM coverage.         See

Marlette v. State Farm, 57 A.3d 1224 (Pa.Super. 2012).

       As the trial court’s order granting summary judgment declared that Koch

was entitled to $200,000.00 of UIM benefits available under the Progressive

Direct Policy, we may characterize the order as final and appealable as there

is no legal theory upon which Progressive Direct could prevail. Since the order

resolved Koch’s breach of contract action for all practical purposes,3 we

conclude that this appeal is properly before this Court.

       On the merits of this appeal, Progressive Direct argues that the trial

court erred in finding that Koch was entitled to UIM coverage under the

Progressive Direct policy and that the Underinsured Motorist Protection (UIM)

form produced by Progressive Direct is void pursuant to the MVFRL.

       Specifically, Progressive Direct claims that the trial court essentially

determined that Progressive Direct should have required Koch to sign a new

Rejection of UIM coverage form in light of the conversation that Koch had with

the Progressive Direct representative on August 20, 2014. Progressive Direct
____________________________________________

3 The only issue left for the trial court to resolve is the amount of delay
damages, which could not be made until the parties’ action had been resolved.

                                           -9-
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asserts that the original rejection form that Koch had signed waiving UIM

coverage at the initial delivery of the policy in 2004 remained valid at the time

of the accident.

      In response, Koch argues that the rejection form he signed in 2004

cannot serve as the basis for a valid denial of UIM coverage under his

Progressive Direct Policy.      Koch asserts that when he contacted the

Progressive Direct representative in 2014, stated his desire to purchase

additional coverage, and added UM coverage, he affirmatively changed his

previous rejection of UM/UIM protection made at the time of the delivery of

the policy.

      Koch faults the Progressive representative for failing to advise him about

the availability of UIM coverage when he specifically asked what coverage was

available.    Koch alleges that, had the Progressive Direct representative

discussed the differences between UI and UIM coverage, Koch would have

purchased both UI and UIM coverage.

      As an initial matter, we note that to the extent that the trial court found

the Progressive Direct representative “misled” Koch when she advised him

about the availability of uninsured motorist coverage but did not discuss the

option of underinsured motorist protection, Koch’s complaint does not seek to

find Progressive Direct liable on a tort theory of misrepresentation, but rather

is based on a claim of breach of contract. In addition, Koch does not allege

that the Progressive Direct representative was negligent or established a

fiduciary relationship with him during his inquiry for increased insurance

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coverage.   Accordingly, our review must be limited to whether summary

judgment was appropriate in the context of Koch’s breach of contract claim.

      Section 1731 of the Motor Vehicle Code requires insurers upon the

delivery or issuance of a motor vehicle insurance policy to offer the insured

uninsured and underinsured motorist coverage.         This section specifically

provides that “no motor vehicle liability insurance policy shall be delivered or

issued for delivery in this Commonwealth, with respect to any motor vehicle

registered or principally garaged in this Commonwealth, unless uninsured

motorist and underinsured motorist coverages are offered therein or

supplemental thereto in amounts as provided in section 1734 (relating to

request for lower limits of coverage).” 75 Pa.C.S.A. § 1731(a)-(c).

      Although the purchase of uninsured motorist and underinsured motorist

coverages is optional, Section 1731 provides that the insured must be

provided with specific information to explain the separate purposes of UI/UIM

coverage and must sign written rejection forms with certain stated language

in prominent type and location in order to knowingly and voluntarily reject

each type of coverage. 75 Pa.C.S.A. § 1731(b)-(c). The insured must sign

and date separate forms to reject UI and UIM coverage.          75 Pa.C.S.A. §

1731(b)-(c).

      In light of these requirements, Section 1731 provides that the insured

will not be deemed to have waived UI and/or UIM coverage if the insurer fails

to produce a valid rejection form. Further, in cases where the insured has

rejected UI and/or UIM coverage, Section 1731 also requires insurers to notify

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the insured on all policy renewals in prominent type that the policy “does not

provide protection against uninsured and underinsured motorists.”               75

Pa.C.S.A. § 1731(b)-(c).

       In the instant case, the record supports the trial court’s finding that Koch

signed a valid rejection of UI/UIM coverage form on February 14, 2004, upon

the initial delivery of the Progressive Halcyon policy for his 2002 Honda

motorcycle.     Although Progressive Halcyon changed its company name to

Progressive Direct in 2006, the trial court determined that Progressive Direct

had shown that its name change did not result in the creation of a new

company and that Koch’s policy remained the same throughout the years.4

       In addition, Progressive Direct presented evidence that it had

consistently sent Koch policy renewals which stated that Koch had rejected

UIM coverage. After Koch had contacted Progressive Direct on August 20,

2014, increased his coverage, and purchased UI insurance, Progressive Direct

sent Koch a policy renewal on January 3, 2015, which stated that the policy

now included uninsured motorist coverage in the amount of $100,000 each

person and $300,000 each accident and listed the corresponding premium for

this coverage. Renewal Declarations Page, 1/3/15, at 2. This policy renewal

listed the “underinsured motorist bodily injury” coverage as “rejected.” Id.

____________________________________________

4  See Breuninger v. Pennland Insurance Company, 675 A.2d 353
(Pa.Super. 1996) (holding that the transfer of a motor vehicle insurance policy
from one company to another does not necessarily constitute a “new” policy).

                                          - 12 -
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These coverage selections were in place at the time of the accident at issue

that subsequently occurred on June 7, 2015.

      The issue before this Court is whether the trial court erred in finding that

the conversation on August 20, 2014 between Koch and the Progressive Direct

representative created a duty or a legal obligation for the representative to

offer Koch UIM coverage, notify him about UIM coverage, or to obtain a new

UIM rejection form where this coverage had been previously waived in a valid

rejection form.    The trial court found that when Koch had contacted

Progressive Direct and sought more information about obtaining additional

coverage, Koch made it “obvious” that he no longer wanted to reject the

coverage that he had previously declined. T.C.O., 11/18/21, at 5.

      In interpreting Section 1731, this Court has held that an insured’s

affirmative decision to waive UIM coverage is presumed to be in effect

throughout the lifetime of that policy until “affirmatively changed” by the

insured. Smith v. Hartford Ins. Co., 849 A.2d 277, 281 (Pa.Super. 2004).

      In addition, the language of Section 1731 specifically provides that any

individual who completes valid waiver forms rejecting UI and/or UIM

protection under Sections 1731(b)-(c) is “precluded from claiming liability of

any person based upon inadequate information.” 75 Pa.C.S.A. § 1731(c.1).

Further, Section 1791 of the MVFRL provides that

      [i]t shall be presumed that the insured has been advised of the
      benefits and limits available under this chapter provided the
      following notice in bold print of at least ten-point type is given to
      the applicant at the time of application for original coverage, and
      no other notice or rejection shall be required.”

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75 Pa.C.S.A. § 1791 (emphasis added).

      In Smith, the first named insured (Smith) initially executed a valid

waiver of UIM coverage in a policy with Hartford Insurance that covered Smith

and his wife (Mrs. Smith).     Smith subsequently raised the policy’s liability

coverage, but did not change his UIM rejection. When Mrs. Smith was injured

in an accident caused by an underinsured driver, she sought UIM benefits

under the policy.   The trial court found sua sponte that, by increasing the

policy limits, the insured purchased a “new” policy, which then required

Hartford Insurance to supply the Smiths with a new UIM rejection form.

      On appeal, this Court found there was no basis for the trial court’s

decision in the statute or in case law, but instead reiterated that the General

Assembly stated in Section 1791 that once the insured has applied for the

original coverage and been informed of the benefits and limits available, “no

other notice or rejection shall be required.” Smith, 849 A.2d at 280 (quoting

75 Pa.C.S.A. § 1791). Accordingly, this Court found that the trial court erred

when it found that Smith was entitled to a new UIM rejection form when the

Smiths increased the liability coverage on their existing policy.

      Similarly, in this case, Koch executed a valid waiver of UI and UIM

benefits upon the delivery of the original policy in February 2004. Pursuant

to Section 1791, there is a presumption that Koch was advised of the benefits

and limits available under his policy at the time of his application for coverage.

Thus, when Koch contacted Progressive Direct on August 20, 2014 and

indicated that he wished to obtain more coverage on the existing policy, the

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Progressive Direct representative was not required to give Koch additional

notice of a particular benefit or to obtain another UIM rejection form.

      We find the trial court’s citation to Barnard v. Travelers Home and

Marine Insurance Co., 654 Pa. 604, 216 A.3d 1045 (2019) is not applicable

to the instant case.    In Barnard, our Supreme Court determined that,

pursuant to a different statutory provision (Section 1738 of the MVFRL), the

insured’s decision to increase the UIM coverage limits on her two vehicles

covered in her policy was a “purchase” that entitled the insured to an

opportunity to waive stacking of the new sum of UIM coverage. The Supreme

Court held that where an insured increases the UIM coverage limit for multiple

vehicles under an existing policy, the insured must execute a new rejection

form to knowingly and voluntarily waive stacking of the new, aggregate

amount of UIM coverage.

      However, the result in Barnard was required by the plain language of

Section 1738, which specifically provides that “[e]ach named insured

purchasing uninsured or underinsured motorist coverage ... shall be provided

the opportunity to waive the stacked limits of coverage.” 75 Pa.C.S.A. § 1738

(emphasis added).

      Notably, the issue in this case does not pertain to stacking of UI or UIM

coverage, but the insured’s complete waiver of UI and UIM coverage. The

relevant statutory provision in this case (Section 1731), which applies to

circumstances in which UIM coverage has been wholly waived, does not

contain the same “purchase” requirement as set forth in Section 1738 or

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contain any language entitling the insured to another opportunity to waive UI

or UIM coverage.        Thus, there is no statutory basis for the trial court’s

speculation that Koch’s “purchase” of UI coverage at the recommendation of

the Progressive Direct representative entitled Koch to an opportunity to

affirmatively reject the purchase of UIM coverage.

       Instead, this case is controlled by the holding of Smith which provides

that an insured’s decision to waive UIM coverage will remain in effect

throughout the lifetime of that policy until affirmatively changed by the

insured. Smith, supra. See also Sackett v. Nationwide Mut. Ins. Co.

(Sackett I), 591 Pa. 416, 423, 919 A.2d 194, 198 (2007) (reaffirming the

decision in Smith which was “required by the relevant statutory language of

Sections 1731 and 1791”).5

       Based on this precedent and the language of Section 1731, we conclude

that the UIM rejection form signed by Koch at the delivery of the policy in

2004 remained valid such that Koch was not entitled to UIM coverage at the

time of the accident. Accordingly, we reverse the trial court’s decision to grant

Koch’s motion for summary judgment and deny Progressive Direct’s motion

for summary judgment.

       Order reversed. Case remanded for judgment to be entered in favor of

Progressive Direct on all issues. Jurisdiction relinquished.

____________________________________________

5Sackett I was modified on reargument on other grounds in Sackett v.
Nationwide Mut. Ins. Co. 596 Pa. 11, 940 A.2d 329 (2007) (Sackett II).

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Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/04/2022

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