Court Opinion

ID: 4505327
Source: CourtListenerOpinion
Date Created: 2020-02-06 18:12:14.288757+00
Date Added: 2024-06-11T15:04:24.370229
License: Public Domain

J-A01041-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    WILLIAM M. DERR AND                        :   IN THE SUPERIOR COURT OF
    KIMBERLY DERR                              :        PENNSYLVANIA
                                               :
                       Appellants              :
                                               :
                                               :
                v.                             :
                                               :
                                               :   No. 1340 EDA 2019
    NATIONAL FIRE INSURANCE                    :
    COMPANY OF HARTFORD                        :

                  Appeal from the Order Dated April 30, 2019
       In the Court of Common Pleas of Delaware County Civil Division at
                             No(s): 2017-001949

BEFORE:      NICHOLS, J., MURRAY, J., and COLINS, J.*

MEMORANDUM BY COLINS, J.:                            FILED FEBRUARY 06, 2020

        Appellants, William M. Derr and Kimberly Derr, appeal from the order

entered on April 30, 2019, sustaining the preliminary objections of Appellee,

National Fire Insurance Company of Hartford, to Appellants’ complaint

challenging Appellee’s denial of underinsured motorist (“UIM”) benefits, after

an automobile operated by Mr. Derr and owned by his employer, Radnor

Township, was struck by another vehicle. Appellants contend that the denial

and disclaimer of coverage by Appellee violated the Pennsylvania Motor

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-A01041-20

Vehicle Financial Responsibility Law (“MVFRL”)1 and the public policy of the

Commonwealth of Pennsylvania. After careful review, we affirm.

        Th[e trial c]ourt held a hearing on Appellee’s Preliminary
        Objections to the Complaint on April 25, 2019 where Appellants
        and Appellee presented oral argument. Following the hearing, the
        [trial c]ourt issued the Order4 that is the subject of this appeal,
        sustaining Appellee’s Preliminary Objections and dismissing the
        Complaint. The [trial c]ourt’s Order was based on the argument
        that Radnor Township was the named insured on the policy and
        therefore properly waived UIM coverage on behalf of Appellants.
        As a result of the waiver, Radnor Township was not charged for
        UIM coverage, did not pay for such coverage, and therefore the
        employees of Radnor Township operating fleet vehicles under the
        policy did not have such coverage. . . .
           4   Dated April 30, 2019.

        Appellants timely filed their Notice of Appeal on May 3, 2019. Th[e
        trial c]ourt issued a 1925(b) Order5 requiring Appellants to submit
        a Concise Statement of Matters Complained of on Appeal within
        twenty-one (21) days of that Order. Appellants timely filed and
        served upon the Court their Concise Statement on May 28, 2019.
           5   Dated May 8, 2019.

Trial Court Opinion, filed June 10, 2019, at 3-4.

        Appellant presents the following issues for our review:

        75 Pa.C.S.A. §1731 requires underinsured motorist coverage be
        provided on every motor vehicle insurance policy absent an
        insured’s knowing and voluntary waiver. When a collision occurs,
        a permissive occupant of a vehicle is also deemed to be an insured
        under that vehicle’s policy for underinsured motorist coverage. As
        such, when an employer maintains a fleet of vehicles (like a police
        department), must its insurance company require that the
        employer provide advance notice to all employees of its intent to
        reject mandatory [UIM] coverage?

____________________________________________

1   75 Pa.C.S. §§ 1701-1799.

                                           -2-
J-A01041-20

Appellants’ Brief at 4.2

       “In considering an appeal from an order granting preliminary objections

in the nature of a demurrer, which is a question of law, our standard of review

is de novo[.]” Heldring v. Lundy Beldecos & Milby, P.C., 151 A.3d 634,

641 (Pa. Super. 2016).

       Preliminarily, we note that that, according to the MVFRL, all automobile

insurance policies in Pennsylvania must carry UIM benefits unless this

coverage is properly rejected:

       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).      Purchase of uninsured motorist and
       underinsured motorist coverages is optional. . . .

       Underinsured motorist coverage shall provide protection for
       persons who suffer injury arising out of the maintenance or use of
       a motor vehicle and are legally entitled to recover damages
       therefor from owners or operators of underinsured motor vehicles.
       The named insured shall be informed that he may reject
       underinsured motorist coverage by signing the following written
       rejection form:

          REJECTION            OF       UNDERINSURED     MOTORIST
          PROTECTION

          By signing this waiver I am rejecting underinsured motorist
          coverage under this policy, for myself and all relatives
          residing in my household. Underinsured coverage protects
          me and relatives living in my household for losses and
          damages suffered if injury is caused by the negligence of a
____________________________________________

2An amicus curiae brief has been filed in this appeal by the Pennsylvania
Association for Justice in support of Appellants.

                                           -3-
J-A01041-20

          driver who does not have enough insurance to pay for all
          losses and damages. I knowingly and voluntarily reject this
          coverage.

                            Signature of First Named Insured

                            Date

75 Pa.C.S. § 1731(a), (c).

       In the current action, Appellants contend that, when an insurance

company, such as Appellee, “makes a mandatory offer of UIM coverage under

75 Pa.C.S. §1731(a) . . . to an employer that maintains a fleet of vehicles that

its employees must use on a daily basis[,] . . . [p]ublic policy[3] says” that the
____________________________________________

3 The MVFRL contains no explicit statement of purpose. See 75 Pa.C.S.
§§ 1701-1799. Without any citation, Appellants state that “Pennsylvania’s
dominant and overreaching public policy [is] that innocent victims of
automobile collisions should be compensated for their injuries[.]” Appellants’
Brief at 14. However, the Supreme Court of Pennsylvania has found the public
policy of the MVFRL to be more complicated and nuanced than that:

       “Public policy is to be ascertained by reference to the laws and
       legal precedents and not from general considerations of supposed
       public interest.” Guardian Life Insurance Co. v. Zerance, 505
       Pa. 345, 354, 479 A.2d 949, 954 (1984) (Citations omitted). “It
       is only when a given policy is so obviously for or against the public
       health, safety, morals or welfare that there is a virtual unanimity
       of opinion in regard to it, that a court may constitute itself the
       voice of the community in [declaring what is or is not in accord
       with public policy].” Mamlin v. Genoe, 340 Pa. 320, 325, 17
       A.2d 407, 409 (1941). . . . [T]he enactment of the MVFRL reflected
       a legislative concern for the spiralling consumer cost of automobile
       insurance and the resultant increase in the number of uninsured
       motorists driving on public highways. The legislative concern for
       the increasing cost of insurance is the public policy that is to be
       advanced by statutory interpretation of the MVFRL.

                                           -4-
J-A01041-20

MVFRL must “require that insurer to ensure that the employer notify its

employees if it decides to reject UIM coverage on the fleet[.]” Appellants’

Brief at 13. Appellants continue that “[t]he recognized policy underlying the

MVFRL—maximization of recovery and the protection of the citizens of the

Commonwealth--demands that notice of such a rejection of UIM benefits be

provided to an insured’s employees.” Id. at 14. Appellants further argue that

the trial court opinion in Bielec v. American International Group, Inc.,

Court of Common Pleas of Philadelphia County Docket Number 01440

September Term 2014, filed December 5, 2016 (“Bielec TCO”), “properly
____________________________________________

Paylor v. Hartford Insurance Co., 640 A.2d 1234, 1235 (Pa. 1994). The
Pennsylvania Supreme Court later wrote:

          [T]he repeal of the No–Fault Motor Vehicle Insurance Act,
          40 P.S. § 1009.101, and the simultaneous enactment of the
          MVFRL, reflected a legislative “concern for the spiralling
          consumer cost of automobile insurance and resultant
          increase in the number of uninsured motorists driving on
          public highways.”

       Rump v. Aetna Casualty & Surety Co., 551 Pa. 339, 710 A.2d
       1093 (1998).         The purpose behind underinsured motorist
       coverage is to protect the insured from the risk that a negligent
       driver of another vehicle will cause injury to the insured and will
       have inadequate insurance coverage to compensate the insured
       for his injuries. . . . [U]nderinsured motorist coverage serves the
       purpose of protecting innocent victims from underinsured
       motorists who cannot adequately compensate the victims for their
       injuries. That purpose, however, does not rise to the level of
       public policy overriding every other consideration of contract
       construction.

Eichelman v. Nationwide Insurance Co., 711 A.2d 1006, 1008–10 (Pa.
1998).

                                           -5-
J-A01041-20

recognized the significance of notice to the insured of the ramifications of the

decision to reject underinsured motorist coverage.” Appellants’ Brief at 15.

       Appellants provide us with no precedential case law or statue requiring

that an insurance company must require that an insured employer provide

advance notice to all of its employees of its intent to reject mandatory UIM

coverage. See generally id. Pursuant to our own research, we find that the

question of whether public policy requires that employers notify their

employees when coverage is waived has never been analyzed by Pennsylvania

appellate courts.

       Turning to Bielec, the case relied upon by Appellants, id. at 15, the

Court of Common Pleas of Philadelphia County4 granted summary judgment

in favor of a plaintiff-employee who filed for UIM coverage, because the court

concluded that the employer’s rejection of UIM coverage was void, as the form

did not comply with statutory requirements.5 Bielec TCO at 1. Specifically,

the UIM coverage rejection form had a signature line at the bottom of the

document, with at least three paragraphs between the language taken from

75 Pa.C.S. § 1731(c) and the signature line. Bielec TCO at 2-3. One of the

interposing paragraphs described rejection of “stacked limits of underinsured

motorist coverage”; accordingly, the court concluded that the form did not
____________________________________________

4Although we are not bound by decisions of lower courts in Pennsylvania, we
may use them for guidance if we find them persuasive. Newell v. Montana
West, Inc., 154 A.3d 819, 823 (Pa. Super. 2017).
5 Appellants in the current action do not argue that there were any errors with
the UIM coverage rejection form. See Appellants’ Brief at 12-22.

                                           -6-
J-A01041-20

comply with 75 Pa.C.S. § 1731. Bielec TCO at 5. The court added, “Even if

[the employer’s] UIM rejection were deemed valid on statutory text analysis,

we believe an employer who fails to notify its employee driver that UIM

coverage has been rejected is acting against public policy.” Id. at 13. On

appeal, this Court affirmed but provided no guidance on the public policy issue,

stating: “In light of our disposition, we decline to address the public policy

issues raised by the trial court’s summary conclusion that ‘an employer who

fails to notify its employee driver that UIM coverage has been rejected is

acting against public policy.’”       Bielec v. American International Group,

Inc., No. 336 EDA 2017, unpublished memorandum at 12 n.4 (Pa. Super.

filed December 26, 2017).

       This identical issue concerning the appropriate application of “public

policy” to 75 Pa.C.S. § 1731 has also been considered by the United States

District Court for the Eastern District of Pennsylvania, which reached a

conclusion contrary to Bielec.6 Recently, in an unpublished memorandum, in

Morales v. Travelers Property Casualty Co. of America, No. CV 17-5579,

2019 WL 653088 (E.D. Pa. February 14, 2019), the Eastern District of

Pennsylvania was presented with the question of the intersection of Section

____________________________________________

6“We may use decisions from other jurisdictions ‘for guidance to the degree
we find them useful and not incompatible with Pennsylvania law.’” Newell,
154 A.3d at 823 n.6 (quoting Trach v. Fellin, 817 A.2d 1102, 1115 (Pa.
Super. 2003) (en banc)).

                                           -7-
J-A01041-20

1731 and public policy.     Morales was an insurance dispute in which the

plaintiff contended that:

      summary judgment should be granted in his favor because (1) he
      was not given notice from his [former] employer that UIM
      coverage had been rejected, which would have given him an
      opportunity to purchase his own; and (2) the rejection form failed
      to meet the statutory requirements of 75 Pa. C.S.A. 1731(c).

Id. at *2. Like Appellants, the plaintiff in Morales relied upon the trial court

opinion in Bielec to support his first argument. 2019 WL 653088 at *2. The

defendants, the plaintiff’s former employer and its insurance company, also

filed for summary judgment, on the basis that the employer’s use of the

insurer’s “rejection form to reject UIM coverage complied with § 1731(c), and

that [the employer’s] rejection of UIM coverage on behalf of its employees

without notice to the employees does not contravene public policy.” Id. at

*3. The insurer added that “the public policy language” in Bielec’s trial court

opinion “was mere dicta, as the case was decided based upon the additional

language in the rejection form that the court found to have created an

ambiguity.”   Id. at *4.    Upon consideration of the plaintiff’s public policy

argument, the court stated: “The only support for Plaintiff’s argument that

public policy would support our granting summary judgment in his favor is the

Bielec case. [The] discussion of public policy in the Common Pleas Court

decision is arguably dicta, and was not a basis for the Superior Court affirming

that decision.” Id. at *5. Consequently, the federal court rejected the public

policy argument advanced in Bielec, denied summary judgment in favor of

                                     -8-
J-A01041-20

the plaintiff, and granted summary judgment in the defendants’ favor. Id. at

*5-*6.

      Additionally, the Eastern District of Pennsylvania has found that

employer’s automobile insurance policies that only cover certain named

individuals for UIM benefits but not all employees are valid. See Wiley v.

Universal Underwriters Insurance Co., No. CV 15-5943, 2017 WL 495794,

at *4-5 (E.D. Pa. February 6, 2017) (memorandum) (system of insurance

where the policyholder-employer rejected UIM benefits for employees but not

for the employer’s principals was valid under the MVFRL and was not void as

a matter of public policy).    Ergo, if it is not against public policy if some

employees are not covered for UIM if UIM benefits are explicitly rejected by

an employer, we may analogize that it is not against public policy if all

employees are not covered for UIM if UIM benefits were explicitly rejected by

an employer.

      Furthermore, we find the case of Byoung Suk An v. Victoria Fire and

Casualty Co., 113 A.3d 1283 (Pa. Super. 2015), to be instructive. In it, this

Court was asked to determine whether an automobile insurance policy

provision which extended coverage to a “named driver only” was consistent

with the MVFRL and public policy. Id. at 1292. This Court determined that

the “provision of lost-cost, affordable policies in return for motor vehicle

liability coverage of only the named driver . . . does not violate public policy.”

Id. Hence, Byoung Suk An, id., stands for the notion that an insured may

                                      -9-
J-A01041-20

reject some drivers of its vehicles from coverage and not violate public policy;

to the extent that we may draw a parallel between Byoung Suk An and the

issue at the center of the current action, we can infer that any insured,

including an employer, may reject UIM coverage for any driver of its vehicles,

including its employees. See id.

       Pursuant to the above review of relevant case law, we conclude that the

statement of the trial court in Bielec that “an employer who fails to notify its

employee driver that UIM coverage has been rejected is acting against public

policy” is an anomaly. Bielec TCO at 13. All other case law has either directly

found that a rejection of UIM coverage by an employer for its employees is

not against public policy or can be extrapolated to reach the same conclusion.

Byoung Suk An, 113 A.3d at 1292; Morales, 2019 WL 653088 at *2-6;

Wiley, 2017 WL 495794 at *4-5.7 For the reasons set forth above, we affirm

the trial court.

       We note that this ruling, like all of our rulings, [is] not be
       disposition-driven. We are bound by decisional and statutory legal
       authority, even when equitable considerations may compel a
       contrary result. We underscore our role as an intermediate
       appellate court, recognizing that “the Superior Court is an error
       correcting court and we are obliged to apply the decisional law as
____________________________________________

7 We do agree with Appellants that the reliance on Travelers Indemnity Co.
of Illinois v. DiBartolo, 171 F.3d 168 (3d. Cir. 1999), by Appellee and
reliance on Salazar v. Allstate Insurance Co., 702 A.2d 1038 (Pa. 1997),
in the amicus curiae brief are misplaced. Appellant’s Brief at 20; Appellee’s
Brief at 9, 15-16, 18; Amicus Curiae Brief at 8-11. While both cases concerned
the sufficiency of the notice for waiver of UIM coverage, neither directly
addressed the public policy argument raised by the trial court in Bielec and
by Appellants in the current action.

                                          - 10 -
J-A01041-20

      determined by the Supreme Court of Pennsylvania.”
      Commonwealth v. Montini, 712 A.2d at 769. “It is not the
      prerogative of an intermediate appellate court to enunciate new
      precepts of law or to expand existing legal doctrines. Such is a
      province reserved to the Supreme Court.” Moses v. T.N.T. Red
      Star Exp., 725 A.2d at 801.

In re M.P., 204 A.3d 976, 986 (Pa. Super. 2019).

      Accordingly, we affirm the order of the trial court sustaining Appellee’s

preliminary objections and dismissing Appellants’ complaint in its entirety.

      Order affirmed.

      Judge Murray joins the memorandum.

      Judge Nichols concurs in the result.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/6/20

                                    - 11 -