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MARGARET MCMONAGLE v. ALLSTATE INSURANCE COMPANY (01/27/75)

SUPREME COURT OF PENNSYLVANIA


decided: January 27, 1975.

MARGARET MCMONAGLE, APPELLANT,
v.
ALLSTATE INSURANCE COMPANY, A CORPORATION

COUNSEL

Joseph M. Zoffer, Martino, Ferris & Zoffer, Pittsburgh, for appellant.

Robert S. Grigsby, Thomas A. Matis, Thomson, Rhodes & Grigsby, Pittsburgh, for appellee.

Howard A. Specter, Litman, Litman, Harris & Specter, P. A., Pittsburgh, for amicus curiae.

Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Pomeroy and Nix, JJ., concur in the result.

Author: Roberts

[ 460 Pa. Page 161]

OPINION OF THE COURT

This action was commenced by plaintiff on behalf of herself and all others similarly situated. The trial court determined that the action could not be maintained as a class action but entered judgment for plaintiff individually. 122 Pitt.L.J. 107 (Pa.C.P.1973). Plaintiff appealed the adverse ruling on the class action. A divided Superior Court affirmed. 227 Pa. Super. 205, 324 A.2d 414 (1974). We allowed this appeal*fn1 because of the importance of the question presented.*fn2 We affirm.

[ 460 Pa. Page 162]

The complex history of this case was well summarized by the trial court:

"The plaintiff, Margaret McMonagle, . . . was the insured under a policy of insurance issued by the defendant, Allstate Insurance Company . . . . The policy of insurance provided coverage, inter alia, for automobile medical payments insurance up to $2,000.00 and uninsured motorist.

"On February 14, 1969, McMonagle was injured while a guest passenger in an uninsured automobile. She incurred medical expense as a result of the accident in the amount of $978.50.

"On December 15, 1971, by letter to Allstate, McMonagle made demand for an arbitration hearing under the uninsured motorist provisions of her policy. In the demand letter, McMonagle listed medical expenses in the amount of $1,086.05 and lost wages in the amount of $180.00. On February 3, 1972, she made a demand for arbitration to the American Arbitration Association. Allstate notified both McMonagle and the American Arbitration Association that no policy of insurance covering McMonagle was in force on . . . the date of the accident. Allstate on May 18, 1972, brought an action in equity . . . to enjoin the arbitration proceeding, alleging that the policy of insurance had lapsed due to non-payment of the premium. McMonagle filed preliminary objections to the complaint contending the matter was exclusively for

[ 460 Pa. Page 163]

    arbitration pursuant to the terms of the policy of insurance. The preliminary objection was overruled . . . . McMonagle filed an appeal to the Supreme Court . . . which . . . reversed . . . and dismissed the complaint. [ Allstate Insurance Co. v. McMonagle, 449 Pa. 362, 296 A.2d 738 (1972).]

"On February 21, 1973, an arbitration hearing was held pursuant to the uninsured motorist provisions of the policy of insurance and on April 2, 1973, an award was made in favor of McMonagle in the amount of $3,314.50. Allstate promptly paid the award.

"On April 6, 1973, McMonagle by letter to Allstate made demand upon Allstate for her medical bills under the automobile medical payments provision of the policy in the amount of $1,005.85. On April 9, 1973, McMonagle by letter to Allstate, referring to a phone conversation previously had, submitted copies of all medical bills totaling $1,005.85.

"On April 11, 1973, McMonagle filed the within class action which was served on Allstate on April 16, 1973.

"On April 12, 1973, Allstate issued its check to McMonagle in the amount of $1,005.85, and deposited the same in the United States mail.

"On April 17, 1973, the envelope containing the aforesaid check of Allstate was marked refused by McMonagle and was returned to Allstate.

"McMonagle filed this action as a class action alleging that she brought the action on behalf of herself and as representative of a class of Allstate policyholders in the Commonwealth of Pennsylvania to receive money due them wherein Allstate has in fact failed to make payment under the automobile medical payments provisions of its policy after an award is made under the uninsured motorist provisions of its policy in favor of the insured, either by deducting and thus diluting the payment due and owing under the medical payments

[ 460 Pa. Page 164]

    provisions from the amount of the uninsured motorist award, or by failing to pay the medical expenses due and owing under the medical payments provision of its policy at all, subsequent to the uninsured motorist award . . . ."

After completion of some discovery, cross-motions for summary judgment were filed, Allstate conceding, for purposes of this action, its liability to McMonagle. The court held that the case should not proceed as a class action because, inter alia, individual actions were a superior manner of resolving the dispute.

McMonagle appealed the determination that this was not a proper class action. The Superior Court affirmed, two judges taking the position that it was a proper class action, one judge concluding that affirmance was proper regardless of whether this was a proper class action and one judge concurring in the result without opinion.

The maintenance of a class action in our courts is governed by Pa.R.Civ.P. 2230(a), which provides:

"If persons constituting a class are so numerous as to make it impracticable to join all as parties, any one or more of them who will adequately represent the interest of all may sue or be sued on behalf of all, but the judgment entered in such action shall not impose personal liability upon anyone not a party thereto."

This rule was derived from Fed.R.Civ.P. 23(a) as it existed when Rule 2230 was adopted (Original Rule 23).*fn3

[ 460 Pa. Page 165]

Rule 23 was amended in 1966 to take its present form (Amended Rule 23).*fn4 The obvious relevance of federal practice under Rule 23 was made explicit by a drafter's note to Rule 2230(a):

"This subdivision adopts the practice under Pennsylvania Equity Rule 16 and F.R.C.P. 23(a) . . . in providing for a class suit where the members of a class

[ 460 Pa. Page 166]

    are so numerous as to make it impractical to join all parties."

Before passing on the propriety for the asserted class action in this case, we shall first consider the contention, accepted by Judge Cercone in the Superior Court, that affirmance is required regardless of the propriety of the class action. This position rests on the drafter's note "adopting" the practice under Original Rule 23(a). Consequently, it is argued, Rule 2230 incorporated the threefold categorization of class actions embodied in Original Rule 23 -- the so-called true, hybrid, and spurious class actions.*fn5 Under that categorization, this class action is clearly of the sort denoted "spurious," and any judgment will be effective only as to those parties actually before the court.*fn6 Because McMonagle was the only member of the purported class before the court at the time judgment was rendered, only she would be affected even if the class were proper. Thus, no consequences would flow from a determination that the class action was properly brought and affirmance is proper.

We cannot accept this argument. The fatal flaw is in the initial premise. The threefold categorization rested on language conspicuously absent from our Rule 2230, which is otherwise almost identical to Original Rule

[ 460 Pa. Page 16723]

(a).*fn7 Clearly, the drafters of Rule 2230 wisely foresaw that the distinctions drawn by this categorization would be unworkable and intentionally omitted them from Rule 2230. Their wisdom was confirmed when Rule 23 was amended to eliminate these distinctions because they had "proved obscure and uncertain" and failed to "provide an adequate guide to the proper extent of the judgments in class actions."*fn8

We think it is clear that determination of sensitive questions regarding the maintenance of class actions requires more than ritual incantation of formulae derived from discarded federal rules.

"[W]e are not bound by [the criteria that have in the past been applied by the federal courts]. Our rule is more general and thus less restrictive than the Federal rule. Where we find cases decided under the Federal Rule persuasive . . . we may follow them, but if we do not find them persuasive, we are free to go in a different direction. . . . The experience with class actions in the Federal Courts has been difficult. Hopefully we may benefit from it, and do better."

McMonagle v. Allstate Insurance Co., 227 Pa. Super. 205, 237, 324 A.2d 414, 429 (1974) (Spaeth, J., dissenting).

We therefore find it necessary to determine the propriety of the class action and conclude that this is not a proper class action because McMonagle is not a member of the class she purports to represent. Rule 2230 allows suit only by "one or more" of the "persons constituting a class." Class membership is also required of the representative by both Original and Amended Rule 23(a).*fn9

[ 460 Pa. Page 168]

The essence of the injury allegedly suffered by the class members is "dilution" of payments under one coverage of the policy due to payments previously made under another coverage. McMonagle never suffered such "dilution." McMonagle's claim under the uninsured motorist coverage was paid promptly after the arbitration award of April 2, 1973. No claim predicated explicitly upon the medical payments coverage of the policy was made until April 6, 1973, and Allstate issued a check in payment of that claim on April 12, 1973, four days before it learned of this action. It is argued, however, that the listing of medical expenses in the claim of December 15, 1971 (explicitly based on the uninsured motorist coverage) was a sufficient claim under the medical payments coverage which Allstate, by its failure to pay, denied. This argument misses the point. Allstate's denial was based on the contention that McMonagle's policy had lapsed for non-payment of premiums and not on any prior payment of benefits under a different coverage of the policy. Consequently, there was no "dilution" of the sort allegedly suffered by the members of the class.

We emphasize that this is not a case where the defendant, after the commencement of a class action seeks to avoid a class adjudication by satisfying the representative's individual claim,*fn10 nor one where simple passage of

[ 460 Pa. Page 169]

    time has caused the individual claim of a proper class representative to become moot.*fn11 We hold only that one who has never been subjected to or threatened with subjection to the challenged conduct may not maintain a class action on behalf of those who allegedly were victimized by that conduct.

The order of the Superior Court affirming the judgment of the court of common pleas is affirmed.


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