No. 492 October Term 1979, Appeal from the Order of the Court of Common Pleas, Trial Division, Civil Section of Phila. County at No. 1538 December Term 1978.
Edwin P. Smith, Philadelphia, for appellant.
James J. McCabe, Jr., Philadelphia, for appellees.
William V. Coleman, Philadelphia, for participating party.
Cercone, President Judge and Spaeth, Hester, Wickersham, Brosky, Johnson, Popovich, DiSalle and Shertz, JJ. Shertz, J., files a dissenting opinion in which Cercone, President Judge, joins. The decision in this case was rendered prior to the expiration of Judges Shertz and DiSalle's commission on the Superior Court of Pennsylvania.
[ 296 Pa. Super. Page 173]
This is an appeal from an order denying a petition for the appointment of an arbitrator to decide an uninsured motorist claim. In denying the petition, the lower court held that the uninsured motorist coverage required by the Act of August 14, 1963, as amended, 40 P.S. § 2000(a), does not extend to a case where all of the automobiles involved in an accident have at least the minimum amount of liability insurance required by Pennsylvania law but where because of the number of persons injured a claimant recovers less than the minimum amount. After the appeal had been argued before a panel of this court, we ordered reargument before the court en banc. We now affirm.
On July 2, 1977, appellant was injured while a passenger in an automobile that was insured by the Aetna Insurance Company under a $35,000 single limit policy. The other automobile involved in the accident was insured by State Farm Mutual Insurance Company under a policy with limits of $15,000 per person and $30,000 per accident. Because other persons were injured in the accident and participated in the recovery, only $13,000 was available to appellant -- $7,000 from one carrier and $6,000 from the other. Claiming that his damages exceeded $13,000, appellant filed claims under the uninsured motorist provisions of his father's and
[ 296 Pa. Super. Page 174]
stepmother's insurance policies, which had been issued by appellees, Concord Mutual Insurance Company and Commercial Union Insurance Company.*fn1 Appellees denied appellant's claims and also, each refused to appoint an arbitrator.
Appellant filed in the lower court a "Petition for the Appointment of Arbitrator Pursuant to Uninsured Motorist Coverage." This petition alleged only that appellant was insured under policies containing uninsured motorist coverage, that he had been severely injured in a motor vehicle collision, that a dispute had arisen as to whether an uninsured motorist was responsible, and that appellees had not complied with his demand for arbitration. However, the petition was accompanied by a memorandum of law, which recited the additional facts that the tortfeasors were insured but that appellant's recovery was limited to $7,000 from one insurance carrier and $6,000 from the other because of the existence of multiple claimants, and which argued that this constituted a "denial of coverage" because these amounts were less than the minimum coverage required by law. Also attached to the petition, although not specifically incorporated into it, were copies of the arbitration clauses from both appellees' policies and the definition of an "uninsured automobile" from appellee Concord Mutual's policy.
Appellee Commercial Union Insurance Company filed an answer to appellant's petition for the appointment of an arbitrator, denying that an uninsured motorist had been involved in the accident, and alleging in new matter the identities and policy limits of the insurance carriers that provided coverage to the owner of the automobile in which appellant was a passenger and to the owner of the other automobile involved in the accident.*fn2 This answer was also
[ 296 Pa. Super. Page 175]
accompanied by a memorandum of law. Appellant filed a reply to Commercial Union's new matter, which again admitted that both tortfeasors had been insured while repeating the claim that the tortfeasors' insurance carriers had "denied coverage as to a portion of the applicable limits[.]"
Appellant's only argument on appeal is that the issue of whether uninsured motorist benefits are available under the facts of this case is within the scope of the arbitration clauses of appellees' policies, and that the lower court therefore erred by doing anything other than appointing an arbitrator as requested in his petition.*fn3
As a general rule, questions under an uninsured motorist clause with an arbitration provision are within the exclusive jurisdiction of the arbitrators. See, e.g., Preferred Risk Mut. Ins. Co. v. Martin, 436 Pa. 374, 260 A.2d 804, cert. denied, 398 U.S. 905, 90 S.Ct. 1697, 26 L.Ed.2d 65 (1970); Pennsylvania General Ins. Co. v. Barr, 435 Pa. 456, 257 A.2d 550 (1969); Merchants Mut. Ins. Co. v. American Arb. Ass'n, 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); Smith v. Employers' Liability Assurance Corp., Ltd., 217 Pa. Superior Ct. 31, 268 A.2d 200 (1970). In some cases, however, an appellate court has decided such questions. In
[ 296 Pa. Super. Page 176]
of them, as disclosed by its statement of the issue presented, bring this case within the rule of United Services Auto Ass'n Appeal, supra.
The definition of "uninsured automobile" in appellee Concord Mutual's policy, which was attached to appellant's petition, is taken verbatim from the regulations issued by the Insurance Commissioner.*fn4 In those regulations an "uninsured automobile" is defined as
an automobile with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured automobile is principally garaged, no bodily injury liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such automobile, or with respect to which there is a bodily injury liability bond or insurance policy applicable at the time of the accident but the company writing the same denies coverage thereunder[.]
31 Pa.Code § 63.2 (Exhibit C II(c)(1)).*fn5
Automobiles registered in Pennsylvania are required to be covered by liability insurance with limits of at least $15,000 per person and $30,000 per accident, 40 P.S. § 1009.104. Insurance in this amount constitutes proof of financial responsibility, 75 Pa.C.S.A. § 1747. Here, it was uncontested in the pleadings before the lower court that both automobiles had insurance in at least the required amounts. It was also uncontested that the carriers had not denied the applicability of their policies. Accordingly, the lower court found that under the Commissioner's regulations, as reflected in
[ 296 Pa. Super. Page 178]
the policies written by appellees, there was no uninsured automobile involved. (The court italicized its finding that the motorists were "insured.") The court was then faced with appellant's claim that automobiles that were "insured" according to the Commissioner's regulations were nonetheless "uninsured" according to the requirements of the statute, 40 P.S. § 2000(a). It is apparent that this claim is but another way of saying that the Commissioner's regulations are contrary to the statute. This case is therefore within the rule of United Services Auto Ass'n Appeal, from which it follows that the lower court properly denied the petition for appointment of an arbitrator and took jurisdiction so that it could itself decide the validity of appellant's attack on the uninsured motorist clauses in appellees' policies.
The dissent argues that the holding of the Supreme Court in National Grange Mutual Insurance Company v. Kuhn, supra, requires that this case be submitted to arbitration. Dissenting at 723-725. It is true that National Grange, in which the Supreme Court ordered arbitration, did involve a dispute as to whether a motorist was uninsured or not. However, there is no indication that that determination depended on anything but factual questions, much less that it depended on the validity of the Insurance Commissioner's definition of "uninsured automobile."
The only authority appellant cites in support of arbitration is Mapp v. Nationwide Ins. Co., 268 Pa. Superior Ct. 404, 408 A.2d 850 (1979), where on facts similar to those in this case a panel of this court held that the lower court's refusal to appoint an arbitrator was error. The same result has since been reached by two other cases, Gordon v. Keystone Insurance Company, 277 Pa. Superior Ct. 198, 419 A.2d 730 (1980); Hart v. State Farm Ins. Co., 288 Pa. Superior Ct. 53, 431 A.2d 283 (1981). However, Mapp was wrongly decided, and we now overrule it, and, with it, Gordon and Hart.
Mapp contains no analysis and cites only three cases: Runewicz v. Keystone Ins. Co., 476 Pa. 456, 383 A.2d 189 (1978); Grange Mutual Casualty Co. v. Pennsylvania Manufacturers Association Insurance Co., 438 Pa. 95, 263 A.2d 732
[ 296 Pa. Super. Page 179]
(1970); and Gallagher v. Educator and Executive Insurers, Inc., 252 Pa. Superior Ct. 414, 381 A.2d 986 (1977). These cases are distinguishable.*fn6
In Runewicz, where the underlying issue was basically the same as in this case, the insurance company proceeded to arbitration without objection, in contrast to this case, where the insurance companies have refused to arbitrate. The Supreme Court sustained the arbitrators' award on the grounds that judicial review of common law arbitration is extremely narrow and the insurance company had not made the required "showing of denial of a hearing or fraud, misconduct, corruption, or similar irregularity leading to an unjust, inequitable or unconscionable award." 476 Pa. at 461, 383 A.2d at 192. The majority did not reach the issue of whether the policy definition of "uninsured automobile" was a matter that the parties were required to submit to arbitration. This procedural difference from the present case is critical. For although "[t]he issue of whether [a] dispute is one that is covered by the terms of the arbitration agreement is one for the court to determine," Women's SPCA v. Savage, 440 Pa. 34, 36, 269 A.2d 888, 890 (1970), a party that proceeds to arbitration without objecting that the matter at issue is outside the arbitration agreement waives that objection. Cf., Rosenbaum v. Drucker, 346 Pa. 434, 31 A.2d 117 (1943); Britex Waste Co. v. Nathan Schwab & Sons, 139 Pa. Superior Ct. 474, 12 A.2d 473 (1940). Thus, when the insurance company in Runewicz proceeded to arbitration without objection it bound itself to accept the arbitrators' result subject only to the extremely narrow judicial review of common law arbitration.
In Grange Mutual the "other" automobile's insurance company disclaimed coverage on the ground that the driver had not obtained the insured's permission to use it. In
[ 296 Pa. Super. Page 180]
response to an action by the victim's insurance company seeking a declaratory judgment that the driver was covered, and therefore was not "uninsured," the court ordered arbitration of the purely factual issue of whether that driver had the insured's permission.
Finally, in Gallagher the insured appealed an award in the insurance company's favor on the ground that the arbitrators might have relied on exclusionary language in the policy, which she claimed was invalid under Pennsylvania law. This court upheld the award, noting that the insurance company had raised other ...