Sparler v. Fireman's Insurance Co. of Newark

DEL SOLE, Judge,

concurring and dissenting:

I join the Opinion by my distinguished colleague, Judge Donald E. Wieand, insofar as it reviews the effect of a written release executed in favor of a tortfeasor and how *612 that release would apply to contractual claims arising under an insurance policy issued to the releasor.

With the greatest respect to my colleague, Judge Popovich, I believe that his analysis, if accepted, would represent a drastic change in the law of Pennsylvania. Certainly, one could extend his analysis to claims against accident and health insurers, hospitalization carriers and others similarly situated because of the nature of the language in the third party tortfeasor release. Since this is not, and never has been, the law of the Commonwealth, I believe that Judge Wieand’s Opinion correctly disposes of the release issue.

My disagreement with the majority Opinion centers on its discussion of underinsurance coverage in this case. First, it must be pointed out that there is no clear cut definition of the term “underinsured motorist” within the policy issued by the defendant. Rather, the policy states: “[t]he term ‘uninsured’ also includes an underinsured motor vehicle.” Absent any definition of “underinsured” in the terms of the policy, the majority refers back to the definition of the term “uninsured” in its analysis. The policy states:

By “uninsured motor vehicle” we mean a land motor vehicle ...

(a) with no bodily injury liability bond or policy applying at the time of the accident.

(b) with minimum legal liability bond or policy applying at the time of the accident as required by law governing the insured auto. However, the minimum is less than the Limit of Coverage of Part 6.

(c) with a bodily injury liability bond or policy applying at the time of the accident which is less than the minimum legal Limit of Coverage where the insured auto is principally garaged.

The record clearly reveals that the vehicle involved in the collision with the Appellant was not an uninsured motor vehicle as that term is defined in subparagraph (a). The stipulated set of facts indicate that Appellant received the policy limits on the vehicle. Accordingly, I agree with the majority that the vehicle was insured and therefore subpar *613 agraph (a) does not apply. Likewise, I agree with the Majority’s finding that under the facts presented in this case subparagraph (b) does not apply.

With regard to (c) the majority improperly concludes that we need to know the state of residence of the third party vehicle. The majority in arriving at this conclusion misreads the term “insured auto”. The term “insured auto” used by defendant in the policy, is clearly defined on page 4 of the policy as the vehicle shown on the Coverage Data Page, a newly acquired vehicle, a trailer, or a temporary substitute vehicle. The insured auto in this case is Appellant’s vehicle which is principally garaged in the Commonwealth of Pennsylvania. Thus, the majority’s conclusion that we cannot determine whether there was coverage since we do not know where the third party tortfeasor’s vehicle was garaged, is incorrect. The location where the third party tortfeasor’s vehicle is garaged is of no import relative to the definition of uninsured motorist as provided in the instant policy.

Not only do I believe the Majority incorrectly interpreted the language of subsection (c), but in my view neither subsections (a), (b) or (c) apply to the question at hand. The issue in this case in its simplest form is whether or not there was underinsured motorist coverage under the terms of this policy and, if so, how would that provision apply in this case. The policy itself does not provide a definition of “underinsured vehicle”. Compare Votedian v. General Acc. Fire & Life Assur., 330 Pa.Super. 13 , 478 A.2d 1324 (1984) ftn. 1 (where the policy at issue defined the term underinsured vehicle.) As recited, the only applicable language in the policy states: “The term uninsured motor vehicle also includes an underinsured motor vehicle.”. Unlike the majority I do not read this statement to provide that the terms uninsured and underinsured can be used interchangeably. The terms refer to two distinct situations. In Votedian v. General Acc. Fire & Life Assur., supra., this court held:

*614 Underinsured motorist coverage is not the same as uninsured motorist coverage. The Uninsured Motorist Coverage Act does not require underinsured motorist coverage ... Our legislature did not intend to provide additional insurance to those who although they suffered severe injury had recourse to at least the legal minimum of insurance through the other motorist.

The legislature has not by statute established a policy which compels the writing of underinsured motorist coverage. 3 An insurance company is wholly free to issue a policy of automobile liability insurance which contains no protection whatsoever against underinsured motorists. Although companies, for an additional premium, may undertake to write such coverage, the underinsured motorist feature is purely optional. An insured may purchase such coverage or he may decline to pay the premium charged therefor and accept a policy which contains no such coverage. When underinsured motorist coverage is included, the terms and limitations thereof are not controlled by statute or by public policy but by the agreement reached by the parties. That agreement, as expressed in the policy of insurance, may place limitations upon underinsured motorist coverage, subject only to the requirement that the limitation be clearly worded and conspicuously displayed.

330 Pa.Super. at 18-19 , 478 A.2d 1324 . (citations omitted).

In the policy issued by defendant uninsured and underinsured motorist coverage is provided in Part 6, yet the term underinsured is not defined in the glossary or in Part 6. To the average individual the term underinsured motorist coverage obviously would refer to a situation where a third party tortfeasor lacks sufficient insurance limits to satisfy the insured’s claim and the insured is able to collect the difference from its carrier up to the limits of the policy. Even the general assembly in the new Act defines an *615 underinsured motor vehicle as “[a] motor vehicle for which the limits of available liability insurance and self-insurance are insufficient to pay damages.” 75 Pa.C.S.A. § 1702. If the defendant wished to proscribe a different definition to the term “underinsurance” than what is commonly used, the defendant should have specifically and clearly given such a definition in the agreement. Under the instant policy the insured is lead to believe he is being afforded the extra protection of underinsurance coverage, however the majority would rule that the definition which the policy provides for the term uninsured also applies to the term underinsured. The majority would find the coverage to be one in the same. I cannot subscribe to the majority’s interpretation which would, in defining the term underinsured, deviate from the generally accepted definition and which would do so absent a clear indication in the policy of such an intention.

Turning to the “set-off” provision contained in the policy, we find:

Any amounts payable under Part 6 shall be reduced by all sums:

(a) paid because of bodily injury by or on behalf of someone who may be liable. (Emphasis added).

The majority interprets this language and concludes that Appellant, who has received $25,000.00 from the third party tortfeasor which amount is in excess of the coverage limits, is not entitled to $15,000.00 due to this set-off language. In Votedian, the set-off provision stated: “ ‘limit of liability shall be reduced ...’ by payments made”. Votedian v. General Acc. Fire & Life Assur., 330 Pa.Super. at 20 , 478 A.2d 1324 . The court in Votedian found this language to be clear and unambiguous and to require the Appellees $30,000.00 liability limits to be reduced by the sum previously paid on behalf of the tortfeasor legally responsible for Appellees damages. The policy in the instant case provides a set-off for “amounts payable under Part 6” unlike the policy in Votedian which required a set-off from the “limits of liability”. While the “limits of liability” in this case are *616 $15,000.00, the “amounts payable under Part 6” are defined in part 6 B of the policy which provides:

We will pay damages which a Covered Person is legally entitled to recover from the owner or operator of an [underinsured] motor vehicle because of bodily injury

(a) sustained by a Covered Person; and

(b) caused by an accident.

(Emphasis added.)

In contrast to Votedian the set-off in this case is to be taken from the damage figure, not the figure which represents the limits of liability.

The parties have stipulated that the insured's damages were in excess of $40,000.00. Under the terms of the policy, this amount “shall be reduced by” $25,000.00, the sum paid by the third party tortfeasor. In this case the difference of $15,000.00 equals the liability limits under the policy and, therefore, I believe Appellant is entitled to collect $15,000.00 from the carrier under the terms of the policy.

. The Motor Vehicle Financial Responsibility Law, enacted February 12, 1984 and effective October 1, 1984, requires that future motor vehicle liability insurance policies contain both uninsured and under-insured motorist coverage. See: 75 Pa.C.S. § 1731(a).