Court Opinion

ID: 9634751
Source: CourtListenerOpinion
Date Created: 2023-08-22 13:22:29.365498+00
Date Added: 2024-06-11T18:09:09.674617
License: Public Domain

DEL SOLE, Judge,
dissenting:
Appellant, a guest passenger in an auto insured by Erie, was injured in a two vehicle accident. The second vehicle was *509not insured and it is claimed that both drivers were negligent. As a result of the accident, Appellant claimed damages in excess of the liability limits of the policy covering the host vehicle, which were paid to her. She sought recovery from the uninsured motorist portion of the Erie policy and was denied. The ultimate issue in this appeal is whether a guest passenger can be denied recovery for uncompensated damages because of policy language that reduces the limit of uninsured motorist benefits by the amount paid under the liability coverages of the policy covering the host vehicle. Because I conclude that the set-off language of the policy results in the denial of uninsured motorist coverage in this instance, I believe that it is contrary to the public policy of this Commonwealth as expressed by the mandatory coverage requirements of the Uninsured Motorists Coverage Act, 40 Pa.S. § 2000 et seq. (UMCA) and the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701 et seq. (MVFRL). Therefore, I dissent.
Under the provisions of both the UMCA and the MVFRL, as they applied to this case, Uninsured Motorist coverage was mandated. Under the UMCA, with two exceptions, no policy could issue unless coverage was provided for “the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles.” This requirement was designed to provide monetary protection to persons, who while lawfully using the highways, were caused to suffer injury at the hands of an irresponsible driver. Mitchell v. Prudential Property & Casualty Ins., 346 Pa.Super. 327, 499 A.2d 632 (1985). With the passage of the MVFRL the legislature declared that every motor vehicle liability insurance policy issued in this Commonwealth provide underinsured as well as uninsured motorist coverage. In so doing the legislature explicitly set out to require the purchase of uninsured and underinsured motorist coverages in amounts equal to, but not greater than, the liability coverage offered.1 *510Wolgemuth v. Harleysville Mutual Ins., 370 Pa.Super. 51, 535 A.2d 1145 (1988). The Act further required the purchase of liability coverage in specified minimum amounts. See 75 Pa.C.S.A. § 1702. “The legislature has thus prevented an insured from providing greater coverage, via uninsured/under-insured coverages, for himself and his additional insureds than the amount of coverage he provides for others injured through his negligence.” Id. at 55 ftn. 3., 535 A.2d at 1147.
In the instant case Uninsured Motorist Coverage was said to be provided in the policy, yet by its terms Appellant is not protected and not able to collect damages as a result of being injured by an uninsured driver. Appellant as an occupant of the vehicle insured by Erie was a person “protected” under the terms of the policy. The policy also provided that it was to pay damages “that the law entitles you or your legal representatives to recover from the driver or owner of an uninsured motor vehicle.” Despite these provisions Appellant cannot obtain uninsured motorist coverage under the instant policy because of the set-off language it contains.
The Majority accepts Erie’s position that its set-off provision is acceptable and not violative of public policy as demonstrated by previous decisions of the courts of this Commonwealth. Erie contends this same issue was addressed by the Court of Common Pleas of Carbon County in West American Insurance Company v. Large, 48 Pa.D. & C.3d 468 (1988), wherein similar policy language was enforced. Recognizing that this court is not bound by the decision in West American, Erie cites to the cases West American looked to in arriving at its decision. The Majority concludes from these decisions that where the claimant is not a named insured or a member of the named insured’s household and therefore has no contractual relationship with the insurer, policy provisions which operate *511to deny uninsured motorist benefits are enforceable. I disagree.
In support of its argument Erie begins with reference to McMullin v. Dallago, 353 Pa.Super. 527, 510 A.2d 787 (1986). Therein an uninsured pedestrian was injured when struck by a vehicle insured by Aetna and another vehicle which fled the scene and was concluded to be uninsured. The pedestrian sought to recover basic loss benefits, liability benefits and uninsured motorist coverage from Aetna. Although the court refused to allow the pedestrian to recover the uninsured motorist benefits, this matter was decided under the now repealed No-Fault Act.2
In reaching its decision the McMullin court relied on other cases decided under the No-Fault Act. The court recounted that in those situations where an uninsured driver was found liable for an insured victim’s injuries, the insured could recover basic loss benefits and damages in tort from the insured’s own insurer. See State Farm Mutual Automobile Insurance Co. v. Williams, 481 Pa. 130, 392 A.2d 281 (1978). In instances where an uninsured individual was injured through the fault of an other uninsured individual, the injured party “could receive both basic loss benefits and uninsured motorist benefits under the assigned claims plan, with the latter benefits covering the victim’s general tort damages” McMullin v. Dallago, 353 Pa.Super. 527, 533, 510 A.2d 787, 790. And, where an uninsured pedestrian was injured by an insured vehicle driven by an uninsured operator without permission, the victim could be paid both basic loss benefits and damages in tort. See Prudential Property & Casualty Ins. Co. v. Falligan, 335 Pa.Super. 195, 484 A.2d 88 (1984).
The McMullin court noted that in these earlier decisions the courts were concerned with effectuating the concept of maximum feasible restoration, which absent the inclusion of uninsured motorist benefits was not possible since both the victims and the tortfeasors were uninsured. Since the plain*512tiffs would only have been able to recover basic loss benefits, but not their damages in tort, it was necessary to award these plaintiffs uninsured motorist benefits.
In denying the recovery of uninsured motorist benefits in the case before it, the McMullin court found that maximum feasible restoration was already attained. In McMullin the uninsured victim was injured by both an unidentified vehicle, deemed uninsured, and an car covered by Aetna with a policy of basic loss insurance. The court ruled that since the plaintiff would receive basic loss benefits and damages in tort from the insurer, Aetna, it could not allow for the recovery of uninsured motorist benefits. The receipt of damages in tort and uninsured motorist benefits would amount to “double compensation” and was, therefore, disallowed. The court stated: ‘“we cannot in equity and good conscience allow [Appellant] to receive more than one satisfaction for [his] injuries, by permitting [him] to be twice compensated for them at the expense of [Aetna]’ ” McMullin v. Dallago, 353 Pa.Super. at 536, 510 A.2d at 792, citing Rossi v. State Farm Automobile Insurance Co., 318 Pa.Super. 386, 392, 465 A.2d 8, 11 (1983).
I find the decision in McMullin v. Dallago unhelpful in a resolution of the issue before us. The court in McMullin did not make its decision with reference to any policy provisions and the pedestrian’s rights under that policy. An issue regarding a set-off provision, as is found in this case, was apparently not of concern. More importantly the McMullin decision was based upon the pedestrian’s recovery under the repealed provisions of the No-Fault Act. Its ruling was premised on the concept that maximum feasible restoration was achieved under the Act with the receipt of basic loss benefits and damages in tort. The additional receipt of uninsured motorist benefits constituted a double recovery. Such is not of concern in the present action.
The injured guest passenger here is seeking only to recover for uncompensated injuries. While she sought recovery under the liability provision and uninsured motorist provision of Appellee’s policy, the issue of a double recovery of basic loss *513benefits, damages in tort and a receipt of uninsured motorist benefits is not an issue as it was previously under the No-Fault Act. Because this Appellant is seeking only maximum feasible restoration under the present law and not more than one satisfaction, I find the McMullin decision disallowing the recovery of uninsured motorist benefits, clearly distinguishable.
Erie finds the application of Wolgemuth v. Harleysville Mutual Insurance Co., supra, “even more relevant and important to the present case.” The issue in Wolgemuth was framed by the court as a question of “whether a guest passenger, who is a covered person under the terms of a policy ... applicable to the host vehicle, and who is injured in a single, vehicle accident, may recover underinsurance benefits ... when that passenger has already received the limits of the liability coverage under that same policy.” Id. 370 Pa.Super. at 53, 535 A.2d at 1146. [emphasis added.] The policy at issue in Wolgemuth provided that the insured vehicle could not be an “underinsured motor vehicle” for purposes of determining entitlement to underinsured motorist benefits and the court upheld this provision which operated to preclude recovery of underinsured benefits from the estate of the guest passenger.
Erie contends that this decision is particularly relevant because the court rejected an attack on the policy language based upon a public policy argument. Relying on the fact that the person who sought to recover under the policy in Wolgemuth, like Appellant in the instant case, was a guest passenger and not a named insured, Erie maintains that the Wolgemuth decision should be persuasive in a resolution of the matter before us.
The Wolgemuth court did call attention to the fact that the claimant was a “class two beneficiary” [a guest passenger] and therefor had “no recognizable contractual relationship with the insurer.” Id. at 59, 535 A.2d at 1149. The court ruled that to permit the appellant to recover underinsured motorist benefits “under the circumstances of this case would be to convert the essentially first party underinsured motorist coverage into *514third party liability coverage.” Id. at 60, 535 A.2d at 1150. These conclusions were based, however, on the fact that underinsurance motorist coverage, by its nature, requires the existence of at least two applicable policies of motor vehicle insurance. The court stated:
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 (which is ultimately insufficient to fully compensate the victim), and a second policy, under which the injured claimant is either an insured or a covered person. It is the second policy which the statute contemplates as the source of underinsured motorist coverage, where the liability coverage provided by the first policy of insurance is insufficient to fully compensate the claimant for his injuries.
Id. at 58, 535 A.2d at 1145.
The significance of the concept referred to in Wolgemuth, that requires the existence of at least two applicable policies of motor vehicle insurance before the matter of underinsurance coverage can be an issue, is evidenced by this court’s decision in Caldararo v. Keystone Insurance Co., 393 Pa.Super. 103, 573 A.2d 1108 (1990). There we found that the claimant’s status as a class one or class two beneficiary was not the basis for the Wolgemuth decision. Rather, the purpose of underinsured motorist coverage, which presumes the applicability of two policies, formed the basis for the court’s decision. The Caldararo court determined that it would enforce a policy exclusion which operated to deny the appellant the right to recover underinsured motorist benefits under a provision which declared that an “underinsured motor vehicle” does not include any vehicle “owned by ... you or any family member.” The appellant, who did own the vehicle in which he was traveling with his wife at the time of the accident, was unsuccessful in his attempt to persuade the court that his status as insured distinguished him from the class two beneficiary passenger who sought recovery in Wolgemuth.
*515Caldararo highlights the fact the the claimant’s beneficiary status in a single vehicle accident does not control the outcome of the claimant’s underinsured motorist claim. The decision to enforce a provision precluding such recovery in Wolgemuth was based upon the fact that a single vehicle accident, and thus one policy of insurance was involved and yet recovery was being sought for underinsured motorist coverage, which contemplates the existence of a two policy. The second policy should be the source of coverage in the event the liability coverage provided in the first policy did not fully compensate the claimant.
Because the Wolgemuth decision rests with an examination of the nature of underinsured motorist coverage and the application of two policies, it is inapplicable to the instant case. Uninsured motorist coverage is sought precisely because no other policy exists. While two policies would be required in an underinsured motorist case, by its very nature uninsured motorist protection contemplates only one policy. Because of this clear distinction, the Wolgemuth line of authority has no place in the analysis of this uninsured motorist case.
As an aid to examination of the policy before us, it is appropriate to consider the mandatory nature of the coverage at issue, the rationale provided in the decisions from other jurisdictions and the guidance offered by the Pennsylvania Insurance Department. It is in this later category where the Majority claims support, while my interpretation would lead to an opposite result. See Majority Opinion at 505-06, ftn. 9.
The Majority quotes the language of a sample form provided by the Department and states that it is “seemingly parallel” to the language at issue. Id. The sample form provides that “any payment made under this endorsement to or for any insured shall be applied in reduction of the amount of damages which he may be entitled to recover from any person insured under the Bodily Injury Liability Coverage of the policy.” The Department’s sample form only limits the amount potentially recoverable as damages. It would allow for the amount of a claimant’s total liability damages to be reduced by the amount collected under the uninsured motorist *516provisions of a policy. Such a provision protects against the payment of a double recovery. I do not disagree with such a provision. In this case the application of a similar provision would result in Appellant deducting from her total damages, the amount received under the liability portion of the policy, $100,000. However, it is because her damages are in excess of the amount she received under the liability portion of the policy that she is entitled to receive the benefits of the uninsured motorist coverage, to the extent that she is fully compensated or the uninsured motorist policy limits are exhausted. The language in the instant policy does not allow for such recovery, and in so doing does not, in effect, provide uninsured motorist coverage.
In contrast to the form language, the policy at issue does far more than simply reduce the amount of damages recoverable. Rather, it completely eliminates recovery of uninsured motorist benefits where the maximum amount of liability benefits have been received. Where one suffers damages in excess of the liability limits, and receives payment of those limits, the policy precludes the recovery of uninsured motorist benefits, despite the failure of the injured person to be fully compensated, and the legislature’s insistence that such coverage is mandatory. Clearly the legislature did not intend this limited class of persons be denied the opportunity to seek full recovery. Further, such an offset is not sanctioned by any interpretation of the Insurance Department’s sample form language.
The Supreme Court of Arizona considered a policy provision which also sought to reduce mandated coverage. It began by noting the purpose of a statute which made compulsory the inclusion of a stated minimal amount of uninsured motorists benefits.
Thus, [the statute] allows the driver to protect himself and his passengers—most often his own family and friends— from the loss by injury caused by uninsured drivers to the same extent that he protects others from the risk of his own negligence.
*517Spain v. Valley Forge Ins. Co., 152 Ariz. 189, 731 P.2d 84, 87 (1986).
The court remarked that the insured therefore: insured herself and her passenger against two separate risks: the risk of liability if she should negligently injure someone, and the risk of having no source from which to recover damages caused by a financially irresponsible driver who might injure her and/or another insured under her policy.

Id.

In voiding a policy provision which required a reduction in the limits of liability under the uninsured motorist coverage by sums paid under the liability coverage provisions, the court determined that such an offset would operate to allow insurers, by contract, to alter the dictates of the statute and to escape all or part of the liability which the legislature intended that they should provide. The court stated:
The clear meaning of this [statutory] provision is that an insured who exercises the statutory right to purchase UM coverage equal to the limit of liability coverage has available the total of the two in the event of an accident such as occurred here. Any attempt to reduce this coverage from the amount the legislature has given the insured the right to buy violates the uninsured motorist statute and is therefore void as against public policy.

Id.

See also Muir v. Hartford Accident and Indemnity Co., 147 Vt. 590, 522 A.2d 236 (1987) and Johnson v. Jackson, 504 So.2d 88 (La.App. 2d Cir.1987).
Here the policy provision clearly operates to deny Appellant, a “protected” person under the terms of the policy, from receiving uninsured motorist benefits, benefits which the legislature has required be included in policies. The host driver, Erie’s insured, paid for liability insurance and uninsured motorist coverage. The later coverage was purchased to protect the insured, members of the insured’s household, and “protected” persons, namely an individual such as Appellant, who was the insured’s mother and a passenger in her vehicle, from *518injuries caused by an irresponsible operator of another vehicle who is uninsured.
Appellant, as a guest passenger in the vehicle insured by Erie would be entitled to recover liability benefits under the Erie policy based upon the negligence of the host driver. Recovery of uninsured motorist benefits should also be allowed in this case since it is based upon the negligence and absence of coverage of a second driver. With regard to the collection of uninsured motorist benefits, the negligence and inadequacy of coverage of the host driver is not an issue. Uninsured motorist coverage is to benefit a covered person for uncompensated injuries received as a result of the negligence of an uninsured driver.
Erie’s insured sought to purchase, as required by statute, uninsured motorist coverage to protect her and other “protected” persons from an unfortunate accident with an uninsured vehicle. In the instant case, Erie’s insured purchased such coverage as directed by statute in an amount equal to the bodily injury liability coverage she purchased, $100,000. A provision which disallows recovery of uncompensated damages caused by an uninsured motorist where the injured party has collected maximum liability benefits under the policy, results in an elimination of uninsured motorist coverage, which coverage is mandated by statute. I deem such a provision to be inconsistent with the mandatory coverage requirements expressed by our legislature and contrary to the public policy of this Commonwealth.
I would thus conclude that Appellant as a “protected person” under the terms of the policy is entitled to pursue her claim for recovery of damages, up to the limits of the policy, for uncompensated injuries which she alleges were caused by the negligence of an uninsured driver. Accordingly, I dissent.

. Section 1731 of the MVFRL provided:
(a) [Mandatory offering] No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with *510respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverages are provided therein or supplemental thereto in amounts equal to the bodily injury liability coverage except as provided in section 1734 (relating to request for lower or higher limits of coverage.)

. Act of July 19, 1974, P.L. 489, No 176, 40 P.S. § 1009.101 et seq., repealed by Act of February 12, 1984, P.L. 26, No. 11, § 8(a), effective October 1, 1984.