decided: April 11, 1974.
UNITED SERVICES AUTOMOBILE ASSOCIATION APPEAL
Appeal from order of Court of Common Pleas, Trial Division, of Philadelphia, Jan. T., 1973, No. 746, in the matter of the Arbitration between Evans W. Webb and Elizabeth Webb, and United Services Automobile Association.
Robert C. Steiger, for appellant.
Allen Weinberg, for appellees.
Wright, P. J., Watkins, Jacobs, Hoffman, Cercone, and Spaeth, JJ. (Spaulding, J., absent). Opinion by Spaeth, J.
[ 227 Pa. Super. Page 510]
Appellees sustained personal injuries as a result of an automobile accident that they allege occurred when an unknown motorist swerved his car in front of theirs, causing them to hit a third car. The unknown motorist drove on and disappeared. The third car was insured, but appellees brought an action against appellant as their carrier under the policy's uninsured motorist clause on the theory that the unknown motorist's car was a "hit-and-run" car.*fn1 The case went to arbitration pursuant to a standard clause in the policy. The arbitration panel's decision was that appellees are bound by a provision of their insurance policy defining a "hit-and-run" car as one causing injury "arising out of physical contact;" since there was no allegation of any contact between appellees' car and the car appellees swerved to avoid, there was no coverage.
Appellees then filed a petition and rule to vacate the award of the arbitrators and return the matter to arbitration on the questions of fault and damages alone. Argument was heard on the motion,*fn2 and appellees' petition was granted.
On this appeal from that order appellant challenges both the jurisdiction of the court below and the merits of its decision. We hold that the court had jurisdiction and that its decision was correct, and therefore affirm.
The opinion of the court below makes no reference to whether it had jurisdiction, although that issue is extremely difficult. Pennsylvania courts have said repeatedly that all questions under an uninsured motorist
[ 227 Pa. Super. Page 511]
clause with an arbitration provision are within the exclusive jurisdiction of the arbitrators. Allstate Insurance Co. v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972); Nationwide Mutual Ins. Co. v. Barbera, 443 Pa. 93, 277 A.2d 821 (1971); Preferred Risk Mut. Ins. Co. v. Martin, 436 Pa. 374, 260 A.2d 804 (1970); Great American Ins. Co. v. American Arbitration Association, 436 Pa. 370, 260 A.2d 769 (1970); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969); Allstate Insurance Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969); Merchants Mut. Ins. Co. v. Am. Arb. Assoc., 433 Pa. 250, 248 A.2d 842 (1969); Harleysville Mut. Ins. Co. v. Medycki, 431 Pa. 67, 244 A.2d 655 (1968); National Grange Mut. Ins. Co. v. Kuhn, 428 Pa. 179, 236 A.2d 758 (1968); Hartford Ins. Grp. v. Kassler, 227 Pa. Superior Ct. 47, 324 A.2d 521 (1974); Allstate Ins. Co. v. Blackwell, 223 Pa. Superior Ct. 401, 301 A.2d 890 (1973).
There have been instances, however, when an appellate court has taken jurisdiction over cases dealing with such clauses. See Harleysville Mut. Cas. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968); Nationwide Mut. Ins. Co. v. Ealy, 221 Pa. Superior Ct. 138, 289 A.2d 113 (1972); Bankes v. State Farm Mut. Auto. Ins. Co., 216 Pa. Superior Ct. 162, 264 A.2d 197 (1970); Ellison v. Safeguard Mut. Ins. Co., 209 Pa. Superior Ct. 492, 229 A.2d 482 (1967).
It is therefore necessary to examine the cases to sort out the seemingly contradictory statements about jurisdiction. When this is done, certain consistent general principles emerge.
There have been several cases in which the insurance company has sought an injunction against arbitration. It has been consistently held that because the parties to the policy have chosen arbitration as the forum, one party cannot seek to enjoin arbitration, and all matters arising under a standard uninsured motorist clause
[ 227 Pa. Super. Page 512]
must go to arbitration rather than to court. Allstate Ins. Co. v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972) (policy claimed to have expired six days prior to accident); Preferred Risk Mt. Ins. Co. v. Martin, 436 Pa. 374, 260 A.2d 804 (1970) (claim that foster child was not covered by policy); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969) (failure to put dollar limit on uninsured motorist coverage alleged to be mutual mistake); Allstate Ins. Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969) (claimant alleged not to be member of policyholder's household); Harleysville Mut. Ins. Co. v. Medycki, 431 Pa. 67, 244 A.2d 655 (1968) (alleged that claimant had not cooperated with company in seeking litigation); National Grange Mut. Ins. Co. v. Kuhn, 428 Pa. 179, 236 A.2d 758 (1968) (alleged that third party was not an "uninsured motorist" under the terms of the policy).
For the same reason the company will not be allowed to avoid arbitration by seeking a declaratory judgment. Allstate Ins. Co. v. Taylor, supra; Hartford Insurance Group v. Kassler, 227 Pa. Superior Ct. 47, 324 A.2d 521 (1974) (alleged that the automobile in question was not "uninsured" as defined in the policy).
It is also settled that the proper procedure to obtain review of an arbitrator's award is not by equitable action but by petition to the Court of Common Pleas to vacate the award. Nationwide Mut. Ins. Co. v. Barbera, 443 Pa. 93, 277 A.2d 821 (1971); Great American Ins. Co. v. Am. Arb. Assoc., 436 Pa. 370, 260 A.2d 769 (1970). Such a petition will not succeed, however, unless it can be shown by clear, precise, and indubitable evidence that a party was denied a hearing, or that there was fraud, misconduct, or other irregularity that has caused the rendition of an unjust, inequitable, or unconscionable award. Allstate Ins. Co. v. Fioravanti, 451 Pa. 108, 299 A.2d 585 (1973); Press v. Maryland Cas. Co., 227 Pa. Superior Ct. 537, 324 A.2d 403
[ 227 Pa. Super. Page 513]
(1974). This is a difficult burden. In Fioravanti the arbitrators decided that the carrier should be estopped to deny that the claimant was covered by the policy and refused to allow the carrier to submit a memorandum of law on the issue. This was held not to be such an irregularity as to deny the carrier a full and fair hearing, and the award was upheld. Similarly, a claimant was held not to have been denied a full and fair hearing where the arbitrators refused to hear her case because she had identified the name on the side of the truck that hit her and could presumably trace it through the fleet owner. Smith v. Employers' Liability Assurance Corp., Ltd., 217 Pa. Superior Ct. 31, 268 A.2d 200 (1970).
In the preceding cases both of the parties affirmed the language of the policy but disagreed in their interpretations of it. The principles stated apply to that situation consistently. They do not, however, necessarily apply to such a case as this one, in which the claimant alleges that one of the policy's terms offends a mandate of the state legislature.*fn3 Whether in such a case a different set of principles applies is a question yet to be squarely decided by our courts.
Despite the frequent references in the cases to the exclusive jurisdiction of the arbitrators, there are a
[ 227 Pa. Super. Page 514]
number of cases in which the Supreme Court or this court has taken jurisdiction.
In Ellison v. Safeguard Mutual Ins. Co., 209 Pa. Superior Ct. 492, 229 A.2d 482 (1967), the claimant filed for arbitration even though there was neither an uninsured motorist clause nor an arbitration clause in his policy. The arbitrators agreed with the claimant's position that the Uninsured Motorist Coverage Act, Act of August 14, 1963, P. L. 909, § 1, as amended, December 19, 1968, P. L. 1254, No. 397, § 1, 40 P.S. § 2000,*fn4 required that such a clause be on the policy and that under a regulation promulgated by the Insurance Department an arbitration clause should also be included. The panel therefore awarded claimant damages, and a judgment was entered by the court. This court decided that to hold that the arbitration provisions were part of the contract because of the regulation would be to attribute to the legislature an unlawful delegation of power.*fn5 Judge Hoffman, joined by Judge Spaulding, concurred in the result, but only because the lack of an arbitration clause created a jurisdictional defect which negated the award, adding, "Furthermore, I wish to express no view on the critical question of whether a court could read the omitted coverage into this policy. I do not believe that the insured is foreclosed by our action today from pressing his claim in a proper forum." Id. at 498, 229 A.2d at 485. Since the policy itself lacked an arbitration clause, court action was not precluded by any agreement. The power of the court to hear the issue before it (i.e., whether the arbitration panel had jurisdiction) was not a question.
[ 227 Pa. Super. Page 515]
The Supreme Court has held, in Harleysville Mutual Cas. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968), that a standard "other insurance" clause was invalid because against the spirit of the Uninsured Motorist Coverage Act. The plaintiff in that case brought an action for a declaratory judgment against his carrier. Whether this was proper procedure is not discussed in the court's opinion, although by allowing the appeal and affirming a decision for the plaintiff on the merits it would seem that the court implicitly approved the procedure.*fn6
In Bankes v. State Farm Mutual Ins. Co., 216 Pa. Superior Ct. 162, 264 A.2d 197 (1970), it was held that a clause excluding motorcycle accidents from uninsured motorist coverage was unenforceable as contrary to the purpose of the Uninsured Motorist Coverage Act. Although the policy in dispute had an arbitration clause, this court accepted jurisdiction because neither party objected. However, in Allstate Ins. Co. v. Taylor, 434 Pa. 21, 252 A.2d 618 (1969), not cited in Bankes, the parties specifically stipulated that arbitration be stayed pending a declaratory judgment action on whether the party injured in the accident was a member of the insured's household. There the court said: "Despite the stipulation of the parties, the court below should not have entertained a declaratory judgment action. The dispute between the parties having arisen under the uninsured motorist provision of the
[ 227 Pa. Super. Page 516]
policy [, it] should have been settled by arbitration." Id. at 23, 252 A.2d at 619.
Finally there is Nationwide Mutual Ins. Co. v. Ealy, 221 Pa. Superior Ct. 138, 289 A.2d 113 (1972), in which the claimant succeeded in getting from the lower court a declaratory judgment that insurance companies operating in Pennsylvania may not contractually divide their uninsured motorist coverage into non-cumulative policies attaching separately to the insured's individual automobiles. This court, per Judge Jacobs, distinguished Bankes and Blumling and reversed on the merits without discussing jurisdiction.
Although not clearly apparent, there is a thread that runs through this maze. Ellison, Blumling, Bankes and Ealy may seem to be exceptions to the rule that all disputes arising under an uninsured motorist clause must go to arbitration (even if arbitration is waived), but in fact they are members of a very narrow separate class of cases that is not subject to the rule at all. What was in dispute in these four cases was the validity of some part of the uninsured motorist clause. What was in dispute in the other cases that have been cited (including Taylor) was the application of the clause and the construction of certain words and phrases in it. Thus the rule, to which all of the cases conform, is that where the application or construction of the uninsured motorist clause is at issue the dispute is within the exclusive jurisdiction of the arbitrators;*fn7 the courts will take jurisdiction only where the claimant attacks a particular provision of the clause itself as being contrary to a constitutional, legislative, or administrative mandate, or against public policy, or unconscionable.*fn8
[ 227 Pa. Super. Page 517]
In the present case appellees have attacked the "physical contact" requirement in appellant's policy as being repugnant to the Uninsured Motorist Coverage Act. The court below thus properly exercised jurisdiction.
Appellees contend that the requirement of "physical contact" in the clause defining "hit-and-run automobile" for purposes of "uninsured motorist" coverage*fn9 is more restrictive than is allowed under the Uninsured Motorist Coverage Act.*fn10 For the reasons that follow
[ 227 Pa. Super. Page 518]
we have concluded that there is merit to this contention.
Faced with an identical factual situation and statute, the Supreme Court of Alabama recently struck down this clause: "The design of the statute is to protect injured persons who can prove that the accident did in fact occur and that he [sic] was injured as a proximate result of the negligence of such other motorist who cannot respond in damages for such injuries." State Farm Fire and Casualty Co. v. Lambert, 291 Ala. 645, 647, 285 So. 2d 917, 919 (1973). Accord, Brown v. Progessive Mutual Ins. Co., 249 So. 2d 429 (Fla. 1971). This reasoning is persuasive. The Act speaks of "the protection of persons . . . who are legally entitled to recover damages from owners or operators of uninsured motor vehicles . . . ." It thus is designed to insure compensation to one who is injured through the fault of another driver from whom he cannot recover damages. "The purpose of the uninsured motorist law is to provide protection to innocent victims of irresponsible drivers." Harleysville Mut. Cas. Co. v. Blumling, 429 Pa. 389, 395, 241 A.2d 112, 115 (1968). To insist on contact is not necessary so long as the claimant can prove to the satisfaction of the arbitration panel that there was indeed another car involved. While this task is certainly easier when there was contact, it
[ 227 Pa. Super. Page 519]
should not be made impossible simply because there was not.
We are aware that most of the jurisdictions that have dealt with this issue have decided that a physical contact clause is valid. Some of these cases have been decided within easily distinguishable statutory contexts. Certain states (in contrast to Pennsylvania) explicitly require physical contact so that a claim such as presented here could not arise. These states include California,*fn11 Esparza v. State Farm Mut. Auto. Ins. Co., 257 Cal. App. 2d 496, 65 Cal. Rptr. 245 (1967), New York, Motor Vehicle Accident Indemnification Corp. v. Eisenberg, 18 N.Y. 2d 1, 218 N.E. 2d 524, 271 N.Y.S. 2d 641 (1966), and South Carolina, Coker v. Nationwide Ins. Co., 251 S.C. 175, 161 S.E. 2d 175 (1968). Other cases come down hard on the words "hit-and-run" in the statute, a provision not found in the more general Pennsylvania statute.*fn12 See Hendricks v. U.S. Fidelity & Guaranty Co., 5 N.C. App. 181, 167 S.E. 2d 876 (1969); Prosk v. Allstate Ins. Co., 82 Ill. App. 2d 457, 226 N.E. 2d 498 (1967). Still other cases have defined legislative purpose mainly in terms of the possibility of fraud, deciding that this possibility is so great that the legislature could not have intended to rule out a physical contact requirement. Phelps v. Twin City Fire Ins. Co., 476 S.W. 2d 419 (Tex. Civ. App. 1972); Ely v. State Farm Mut. Auto. Ins. Co., 148 Ind. App. 586, 268 N.E. 2d 316 (1971); Lawrence v. Beneficial Fire and Cas. Ins. Co., 8 Ariz. App. 155, 444 P. 2d 446 (1968).
[ 227 Pa. Super. Page 520]
While it would certainly eliminate the possibility of fraud to hold the physical contact clause valid, it would also eliminate any hope of recovery in cases clearly involving another negligent motorist who has avoided liability by getting away. This latter situation is surely within the contemplation of the Uninsured Motorist Coverage Act, and the possibility of fraud can be mitigated by the burden of proof placed on the claimant. Two examples of unfortunate results from other states should demonstrate this point. In Collins v. New Orleans Public Service Inc., 234 S. 2d 270 (La. App. 1970), the plaintiff was a passenger on one of the defendant's buses. She was injured when the bus suddenly stopped to avoid hitting a car that had swerved in front of it. Many passengers on the bus corroborated her story, thus eliminating the possibility of fraud; but since there was no physical contact, her complaint was dismissed. In Amidzich v. Twin City Fire Ins. Co., 44 Wis. 2d 45, 170 N.W. 2d 813 (1969), plaintiff found two disinterested witnesses to testify that an unidentified truck had run his car off the road. Even though the truck driver was clearly negligent, since he could not be found and since there had been no contact, the plaintiff was barred from recovery.
These cases demonstrate what can happen when a rule is adopted that is too broad for its purpose. The Pennsylvania statute is broad enough to allow recovery in situations such as those presented in Collins and Amidzich. To provide the maximum coverage consistent with avoidance of fraudulent claims, it is only necessary to require that the plaintiff prove his case. In deciding whether the plaintiff has proved his case, the arbitrators should take into account the possibility of fraud according to the particular facts of the case.
In the present case, for instance, the other driver involved in the collision might well have seen the unknown motorist's car and so have satisfied the arbitrators
[ 227 Pa. Super. Page 521]
that it was not a phantom -- a clear showing that would be precluded were we to reverse the order below. As the Florida Supreme Court noted when it held a physical contact clause contrary to a statute similar to ours: "The only reason for such a requirement is to prove that the accident actually did occur as a claimant may say it did. This is a question of fact to be determined by the [trier of fact].*fn13 If the injured party can sustain the burden of proof that an accident did occur, he should be entitled to recover, regardless of the actuality of physical contact. If twenty witnesses will swear they saw the accident happen, their testimony should not be deemed worthless . . . ." Brown v. Progressive Mutual Ins. Co., 249 So. 2d 429, 430 (Fla. 1971). If the legislature intended to "provide protection to innocent victims of irresponsible drivers," Harleysville Mut. Cas. Co. v. Blumling, supra, it could not also intend that the motorist faced with the decision whether to collide with another vehicle or to avoid it should choose to collide or else lose his protection.*fn14
[ 227 Pa. Super. Page 522]
We therefore hold the physical contact requirement void and unenforcible as contrary to the Uninsured Motorist Coverage Act.
The order of the court below remanding the matter to the arbitration panel on the issues of fault and damages only is affirmed.