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RUTH SAVAGE AND MEESHA SCOTT v. COMMERCIAL UNION INSURANCE COMPANY (03/13/84)

filed: March 13, 1984.

RUTH SAVAGE AND MEESHA SCOTT, A MINOR, BY HER PARENT AND NATURAL GUARDIAN, DELORES SCOTT AND DELORES SCOTT, IN HER OWN RIGHT, APPELLANTS,
v.
COMMERCIAL UNION INSURANCE COMPANY



No. 1536 Philadelphia 1983, Appeal from the Order of the Court of Common Pleas of Philadelphia County, Civil Division at No. 2255 January Term, 1982.

COUNSEL

Allen L. Feingold, Philadelphia, for appellants.

Gary V. Gittleman, Philadelphia, for appellee.

Cavanaugh, Brosky and Popovich, JJ.

Author: Popovich

[ 326 Pa. Super. Page 205]

This is an appeal from that portion of the June 3, 1983 Order of the Court of Common Pleas of Philadelphia County (per Judge DiBona) "dismiss[ing] with prejudice" appellants', Ruth Savage's, Dolores Scott's and Meesha Scott's, Petition for Uninsured Motorist Arbitration. We reverse.

The record reveals the following: On May 13, 1974, appellants had entered a taxicab in Philadelphia, Pennsylvania, which was struck by a vehicle insured by Safeguard Mutual Insurance Company (Safeguard). Because the appellants had sustained injuries, and Safeguard was declared insolvent, they sought entitlement to benefits by filing a claim with the taxicab's insurer, appellee-Commercial Union Insurance Company (CUIC), under The Pennsylvania Insurance Guaranty Association Act. 40 Pa.C.S.A. ยง 1701.101 et seq.

By letter dated August 10, 1981, counsel for the appellants notified CUIC of "the[ir] wish to file an uninsured motorist claim" in regard to the 5/13/74 accident and to have the matter resolved by a three-member panel of arbitrators, with the neutral arbitrator selected by the other two members chosen by each side. Appellants listed their choice and went on to state that if a response was not received within a reasonable time from CUIC, they would "commence suit accordingly." Thereafter, on January 18, 1982, appellants filed a "Petition to Appoint a Neutral

[ 326 Pa. Super. Page 206]

Arbitrator" claiming that the two sides had "not been able to mutually select [sic] a neutral arbitrator to hear th[e] uninsured motorist claim and/or [CUIC] ha[d] failed and/or refused to mutually select [sic] an arbitrator." Appellants also made averments concerning the occurrence of the accident, their injury and the filing of a claim with the appellee.

In its Answer, appellee denied all of the appellants' allegations save for the admission "that the Petitioners were passengers in the insured's vehicle." Further, appellee mentioned that it had "selected Edward Leach as its arbitrator . . . [and] requeste[d] the Petitioners to advise who they had selected as their arbitrator in order that a neutral arbitrator c[ould] be selected." It is to be noted that appellants named their choice (Joseph Mellace) in their August 10, 1981 letter to the appellee, but the appellee, in a "Memorandum" attached to its Answer, asserted that the petition was the first demand by the appellants' attorney for an uninsured motorist arbitration and that appellants' attorney had never advised it of their choice for an arbitrator. As a result, appellee requested that the petition be dismissed as premature.

Judge Gafni entered two Orders. The first was dated April 2, 1982, directing that the matter proceed to arbitration within 45 days, and that he would appoint the third arbitrator if he were not advised within 20 days that such an appointment had occurred. The judge's second Order, issued April 27, did what the parties had failed to accomplish, i.e., appointed a neutral arbitrator. In the interim, appellee had sought to depose appellants. However, by letter dated April 19, 1982, counsel for the appellants informed CUIC that, inter alia, because it "ha[d] no right to a sworn statement," neither he nor his clients would be present at the scheduled deposition. As a result thereof, counsel for the appellee submitted a "Petition to Stay Uninsured Motorist Arbitration," and, in support thereof, attached a "Memorandum of Law." Both documents made reference to the source of appellants' right to recoupment, i.e., appellee's policy of insurance. Appellee

[ 326 Pa. Super. Page 207]

    alleged that "unless and until the [appellants] ha[d] met their obligations under the terms of the . . . policy" they had no right to an arbitration hearing. In particular, appellee averred:

In view of the facts and the allegations made by the plaintiffs, they are bound to comply with the terms of the same policy of insurance issued by Commercial Union as stated in the defendant's Petition attached hereto, the "Conditions" part of the policy provides as follows:

"3. Proof of Claim; Medical reports: As soon as practicable, the insured or other person making claim shall give to the Company written proof of claim, under oath if required, including full particulars of the nature and extent of the injuries, treatment, and other details entering into the determination of the amount payable hereunder. The insured and every other person making claim hereunder shall submit to examinations under oath by any person named by the Company and subscribe the same, as often as may reasonably be required . . .". (See Exhibit "D-2" paragraph 3)

The aforementioned policy under the "Conditions" section also provides:

"11. Action Against Company: No action shall lie against the Company unless, as a condition precedent thereto, the insured or his legal representative has fully complied with all the terms of this endorsement". (See Exhibit "D-2" paragraph 11)

The plaintiffs have clearly failed to comply with the conditions precedents [sic] set forth in the policy. The plaintiffs cannot seek to claim rights under said policy without being subject to the condition set forth therein. The defendant is entitled to take the sworn statements of the plaintiffs herein in order to properly prepare [sic] its case for trial and evaluate its exposure.

Additionally, our review of Paragraph 8 of the "Conditions" portion of the policy of insurance indicates that disputes concerning "entitlement to recover damages" or "the amount of payment" allegedly owed by the insurer to a

[ 326 Pa. Super. Page 208]

    claimant "shall be settled by arbitration in accordance with the rules of the American Arbitration Association[.]"*fn1

In the Answer to appellee's petition, appellants did not dispute their refusal to give a sworn statement, contending that "they [were] not required to under the laws of this Commonwealth; and[,] more importantly, they [were] not required under the Orders of Judge Gafni . . . directing that a hearing commencing within 45 days from the date of his original Order" take place. Further, appellants argued that since "[t]his [was] the first time that the issue of giving a sworn statement ha[d] been raised[,]" because the petition to proceed to arbitration had been granted and the court had appointed a neutral arbitrator, appellee's petition to stay the arbitration should be denied.

Judge Gafni disagreed and, in an Order issued May 27, 1982, directed the appellants to appear in appellee's counsel's office for the taking of sworn statements, as well as holding in abeyance any arbitration proceedings until such time as the appellants appeared for their sworn statements.

[ 326 Pa. Super. Page 209]

The deposition, having been initially postponed because Ms. Savage had been released from the hospital the date it was scheduled, was held on December 20, 1982, in appellee's counsel's office.

Ms. Savage, during questioning by counsel for the appellee, answered inquiries regarding her marital situation, living accomodations and employment status. Ms. Savage responded to the last question by stating that, upon the advice of her doctors, she had not worked since the date of the accident. Also, she testified that, as of eight years after the accident, treatment was still being administered to her for injuries sustained as a result thereof. However, when counsel for appellee asked Ms. Savage if she had paid ...


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