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ANGELA M. HAYES v. ERIE INSURANCE EXCHANGE (02/05/81)

decided: February 5, 1981.

ANGELA M. HAYES, APPELLANT,
v.
ERIE INSURANCE EXCHANGE, APPELLEE



No. 80-1-127, Appeal from the Order of the Supreme Court at NO. 455 April Term, 1979, affirming the Judgment of the Erie County Court of Common Pleas at No. 1886-A-1976.

COUNSEL

Joseph A. Yochim, Colussi, Yochim, Skiba & Vogel, Erie, for appellant.

T. Warren Jones, MacDonald, Illig, Jones & Britton, Erie, for appellee.

O'Brien, C. J., and Roberts, Nix, Larsen, Flaherty and Kauffman, JJ.

Author: Larsen

[ 493 Pa. Page 152]

OPINION OF THE COURT

On January 6, 1976, appellant, Angela Hayes, was struck and seriously injured by an automobile while crossing a street in Erie. The vehicle was insured by appellee, Erie Insurance Exchange (Erie), under the Pennsylvania No-Fault Motor Vehicle Insurance Act (the Act), 40 P.S. §§ 1009.101-1009.701 (supp. 1980-81). Mrs. Hayes did not carry insurance on her own vehicle.

Mrs. Hayes submitted a claim with Erie for personal injury protection benefits pursuant to § 204(a)(4) of the Act, and submitted all necessary proofs of damages. Erie denied the claim asserting the legislature could not have intended to "penalize" the insurance carrier of the vehicle owner where the victim failed to comply with the mandate of § 104 of the Act requiring all owners of vehicles to obtain no-fault insurance.

Mrs. Hayes filed an action in assumpsit against Erie in the Court of Common Pleas of Erie County, which court entered summary judgment in favor of Mrs. Hayes, holding that personal injury protection benefits were recoverable from Erie. That court refused, however, to make an award of counsel fees, see § 107 of the Act, 40 P.S. § 1009.107. On appeal, the Superior Court affirmed both aspects of the trial

[ 493 Pa. Page 153]

    court's decision. Hayes v. Erie Insurance Exchange, 261 Pa. Super. 171, 395 A.2d 1370 (1978).

Thereafter, Erie promptly paid the amount due, with interest calculated at the rate of 6% per annum. Mrs. Hayes insisted she was due interest at the rate of 18% pursuant to § 106(a)(1) of the Act, 40 P.S. § 1009.106(a)(1), relating to overdue payments. Upon Erie's denial of that claim, Mrs. Hayes filed a motion for assessment of damages at 18% and for attorney's fees, again with the Court of Common Pleas of Erie County. That court denied the motion, which denial was upheld by the Superior Court, reasoning that Erie's "good faith and reasonable cause" for its initial denial of Mrs. Hayes' claim excused it from the 18% interest payment as well as from the claim for attorney's fees. Hayes v. Erie Insurance Exchange, 276 Pa. Super. 424, at 427, 419 A.2d 531, at 532 (1980).

This Court then granted Mrs. Hayes' petition for allowance of appeal. For the reasons stated below, we reverse in part and affirm in part.

Unlike most cases wherein the courts have been called upon to glean the legislature's intent from various provisions of the No-fault Act, this is one of the few cases in which the following statement can be made: the intent of the legislature is clear. Section 106, "Payment of claims for no-fault benefits", provides, in relevant portion:

[ 493 Pa. Page 154]

(a)(2) No-fault benefits are overdue if not paid within thirty days after the receipt by the obligor of each submission of reasonable proof of the fact and amount of loss sustained, unless the obligor designates, upon receipt of an initial claim for no-fault benefits, periods not to exceed thirty-one days each for accumulating all such claims received within each such period, in which case such benefits are overdue if not paid within fifteen days after the close of each such period. If reasonable proof is supplied as to only part of a claim, but the part amounts to one hundred dollars ($100) or more, benefits for such part are overdue if not paid within the time mandated by this paragraph . . . . Overdue payments bear interest at Page 154} the rate of eighteen per cent (18%) per annum. (emphasis added)

There is no uncertainty in this section which defines "overdue" payments simply in terms of specified time periods, and simply states the consequences of a payment which is "overdue" -- such payment bears 18% interest. There is no suggestion in § 106 that a late payment is any less overdue because the insurer denied the claim in "good faith and with reasonable foundation".

Nevertheless, the Superior Court engrafted a "good faith/reasonable foundation" exception upon § 106 ...


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