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filed: June 22, 1984.


No. 444 Philadelphia 1982, Appeal from the Judgment in the Court of Common Pleas, Civil Division, of Philadelphia County at No. 4194 August Term, 1981.


Roger J. Harrington, Philadelphia, for appellant.

Paul D. Keenan, Philadelphia, for appellee.

Wickersham, Wieand and Lipez, JJ.

Author: Wickersham

[ 330 Pa. Super. Page 484]

This is an appeal from the judgment of the Court of Common Pleas of Philadelphia County, which resulted from an order denying appellant's petition to vacate or modify the arbitrator's award, and confirming the award of the arbitrators.

In July of 1978, Linda C. Haegele, age 16, died of injuries suffered while a passenger in an automobile owned by a Mr. Kaisinger. Linda's estate (hereinafter "Estate") received a payment of $15,000.00 under the liability provision of Kaisinger's automobile insurance policy. The payment was the maximum amount allowed per person in a single accident under Kaisinger's policy.

Because the Estate alleged damages exceeding $15,000.00,*fn1 and because Linda was covered under her father's insurance policy on two different vehicles,*fn2 the Estate filed a claim with its insurer, Pennsylvania General Insurance Company (hereinafter "Insurer"), appellant herein. The Estate sought $60,000.00 in underinsured motorist benefits under the policy, pursuant to provisions containing $30,000.00 in underinsurance coverage for each of the two vehicles insured by the Haegele family. In essence, the Estate sought to cumulate or "stack" the coverage.

When the Insurer refused to make payment on the claim, the Estate petitioned the Court of Common Pleas of Philadelphia County to compel the Insurer to arbitrate the claim pursuant to an arbitration provision in the policy. On March 4, 1981, the court ordered that the claim proceed to arbitration. Thereupon, the matter proceeded to arbitration under the terms of the Pennsylvania Uniform Arbitration

[ 330 Pa. Super. Page 485]

Act, 42 Pa.C.S. § 7301 et seq.*fn3 After a hearing on the merits, the arbitrators unanimously found in favor of the Estate for $60,000.00 in underinsurance coverage.

On August 25, 1981, the Insurer filed a timely petition to vacate or modify the arbitrators' award with the Court of Common Pleas of Philadelphia County. The Insurer's position was that the policy terms limited the underinsurance coverage to $30,000.00 -- the amount provided for one vehicle. The Estate responded by filing preliminary objections, which were treated by the lower court as an answer to the Insurer's petition. After hearing oral argument, the Honorable Eugene Gelfand entered an order on January 14, 1982, denying the Insurer's petition to vacate or modify, and confirming the arbitrators' award.

The Insurer filed no exceptions to Judge Gelfand's final order and on February 8, 1982, judgment was entered upon the order and award. The Insurer filed a timely notice of appeal from the lower court's denial of its petition and from the entry of judgment on the arbitrators' award. The Estate filed a motion to dismiss the appeal, citing the Insurer's failure to file exceptions and preserve issues for appeal. On May 26, 1982, our court denied the motion to dismiss, but directed the parties to address this issue in their briefs.*fn4

Appellant Insurer raises the following questions:

I. Was the proceeding before Judge Gelfand a hearing on a petition and not a bench trial therefore not

[ 330 Pa. Super. Page 486]

    depriving this court of jurisdiction based on the failure to file exceptions?

II. Was the arbitrators' award against the law of this Commonwealth and as such should it have been modified and/or vacated by the lower court?

III. Was the set-off clause contained within the underinsurance coverage endorsement valid, and if so, should it not have reduced the arbitrators' award accordingly?

Brief for Appellant at 3. We must first address the waiver issue.

Appellee Estate argues that since no exceptions to the final order of the lower court (denying the Insurer's petition to vacate or modify the arbitrators' award and confirming that award) were filed, appellant Insurer has waived its right to object to the lower court's order. The Estate characterizes this to be a situation governed by Pa.R.C.P. 1038(d). Pa.R.C.P. 1038 deals with trial without a jury and states in pertinent part:

(d) Within ten (10) days after notice of the filing of the decision, exceptions may be filed by any party to the decision or any part thereof, to rulings on objections to evidence or to any other matters occurring during the trial. Each exception shall set forth a separate objection precisely and without discussion. Matters not covered by exceptions are deemed waived unless, prior to final judgment, leave is granted to file exceptions raising these matters. No motion for a new trial, for judgment non obstante veredicto, in arrest of judgment or to remove a non-suit may be filed.

The Estate bases its reasoning on 42 Pa.C.S. § 7320(b),*fn5 a section of the Pennsylvania Uniform Arbitration Act, which states that an appeal from a court order under this act "shall be taken in the manner, within the time and to the same extent as an appeal from a final order of court in a

[ 330 Pa. Super. Page 487]

    civil action." The manner applicable, according to the Estate, would be the assumpsit rules, and in particular, Pa.R.C.P. 1038(d).

The Insurer, on the other hand, argues that the proceeding before the trial court was a hearing on a petition and not a bench trial and therefore the failure to file exceptions does not deprive us of jurisdiction. As a hearing on a petition, the proceeding was not subject to Pa.R.C.P. 1038(d), which is directed toward the filing of exceptions to non-final orders after bench trials.*fn6

Judicial review of an arbitration award under the Uniform Arbitration Act as enacted in Pennsylvania, is obtainable (1) upon an application to the court to vacate the award, 42 Pa.C.S. § 7314, or (2) upon an application to the court to modify or correct the award, 42 Pa.C.S. § 7315. An application to vacate an award may be joined in the alternative with an application to modify or correct the award, as was done by the Insurer herein. 42 Pa.C.S. § 7315(c). 42 Pa.C.S. § 7316 states that upon the granting of a court order confirming, modifying, or correcting an award, a judgment or decree shall be entered in conformity with the order. Finally, 42 Pa.C.S. § 7317 states:

§ 7317. Form and service of applications to court

Except as otherwise prescribed by general rules, an application to the court under this subchapter shall be by petition and shall be heard in the manner and upon the notice provided or prescribed by law for the making and hearing of petitions in civil matters. Unless the parties

[ 330 Pa. Super. Page 488]

    otherwise agree, notice of an initial application for an order of court shall be served in the manner provided or prescribed by law for the service of a writ of summons in a civil action.

(emphasis added). It seems clear that under the above section, an application to the court under section 7314 or section 7315 shall be by petition and shall follow regular petition rules. The use of this type of procedure has been recognized and accepted by the courts. A party who seeks review of an arbitration award must petition the court of common pleas to vacate (or modify) the award. Reinhart v. State Automobile Insurance Association, 242 Pa. Super. 18, 363 A.2d 1138 (1976). The proper procedure to vacate an arbitrators' award is by petition to the court of common pleas and not by a complaint in equity. Nationwide Mutual Insurance Co. v. Barbera, 443 Pa. 93, 277 A.2d 821 (1971); Great American Insurance Co. v. American Arbitration Association, 436 Pa. 370, 260 A.2d 769 (1970).*fn7

Since the proceeding below was a matter exclusively governed by the rules of petition practice, and not an action in assumpsit subject to Pa.R.C.P. 1038(d), the Insurer was not required to file exceptions to the final order of the court. In Kennedy v. Frank L. Black, Jr., Inc., 271 Pa. Super. 454, 413 A.2d 1104 (1979), rev'd on other grounds 492 Pa. 397, 424 A.2d 1250 (1981), the court, in deciding whether to open a default judgment, discussed the difference between petition proceedings and assumpsit actions:

The critical distinction to be drawn is between petition proceedings, generally, and conventional cases tried by a jury or the court. Rule 1038 is applicable only to the latter, while the proceedings to open a default judgment

[ 330 Pa. Super. Page 489]

    are governed by the rules of the former. 7 Standard Pennsylvania Practice § 105. A hearing on a petition is not to be equated with a trial by the court sitting without a jury. Therefore, exceptions to the decision to open the judgment would not have been proper. . .

Id. 271 Pa. Super. at 459, 413 A.2d at 1107 (emphasis added). See also In Re Custody of Frank, 283 Pa. Super. 229, 423 A.2d 1229 (1980) (no exceptions required to grant of petition to confirm custody).*fn8 We find that the filing of exceptions

[ 330 Pa. Super. Page 490]

    is not a condition precedent to an appeal from the denial of a petition to vacate or modify an arbitrators' award or the confirmation of an arbitrators' award under the Uniform Arbitration Act.

Moving on to the merits of the Insurer's appeal, we must determine whether the arbitrators' award was against the law of Pennsylvania so that it should have been modified and/or vacated by the court below. Following the order of the lower court granting the Estate's petition to compel arbitration, a hearing was held and the arbitrators made an award in favor of the Estate in the amount of $60,000.00. It is this award that is contested.

Under 42 Pa.C.S. § 7302(d)(2), the lower court, in reviewing the arbitration award, should have modified or corrected the award if it was contrary to law and was such

[ 330 Pa. Super. Page 491]

    that had it been a jury verdict, the court would have entered a different judgment or a judgment n.o.v. This is the same standard of review recognized by the lower court in this case. Lower ct. op. at 4. Appellant Insurer argues that while the lower court recognized its proper scope of review, it failed to exercise its power under that scope, thereby committing reversible error.

Initially, we find no merit to the Insurer's argument that the arbitrators had no authority to decide whether stacking applied in this case. We interpret the underinsured motorist arbitration provision in Mr. Haegele's policy as requiring the arbitrators to determine whether a "covered" person is legally entitled to collect damages under the clause in question, and the amount of damages recoverable. This provision encompassed all the parties' claims concerning the above issues, including the availability of stacking.

At the arbitration hearing and on this appeal, the Estate argues that (1) the Insurer failed to meet its burden of proof, as required under Pennsylvania law, regarding the affirmative defense of policy limitations and (2) the Estate was entitled to collect benefits under the coverage for each insured vehicle as a matter of law. The Arbitrators agreed with the Estate, as did the lower court. The Insurer primarily argues that (1) the Estate was not entitled to collect benefits for each insured vehicle as a matter of law, and (2) Hionis v. Northern Mutual Insurance Co., 230 Pa. Super. 511, 327 A.2d 363 (1974) is not applicable to this case.

The provisions of the underinsured motorist coverage in the insurance policy issued to Mr. Haegele by the Insurer set out the rights and obligations of the parties. On the second page of the underinsurance section, which consisted of a single sheet of paper with page one on the front and a continuation on the back, a section entitled "Limit of Liability" read as follows:

The limit of liability shown in the Schedule for this coverage is our maximum limit of liability for all damages resulting from any one accident.

[ 330 Pa. Super. Page 492]

    or any clause of contract if court as a matter of law deems the contract or any clause of the contract to have been "unconscionable at the time it was made"). This record does not present such an occasion. We hold only that where, as here, the policy limitation relied upon by the insurer to deny coverage is clearly worded and conspicuously displayed, the insured may not avoid the consequences of that limitation by proof that he failed to read the limitation or that he did not understand it.

Id., 503 Pa. at 307, 469 A.2d at 567.

Since the Estate does not claim that the limitation clause was ambiguous or "unconscionable at the time it was made," we hold that the Hionis line of decisions does not apply in the instant case.*fn9

However, we must also examine the law of Pennsylvania on the stacking of underinsurance benefits. It is here that the Estate's argument must fall. Our court has recently held in Votedian v. General Accident Fire and Life Assurance Corp., 330 Pa. Super. 13, 478 A.2d 1324 (1984) that policy provisions identical to the one in the instant case, which prevent the stacking of underinsurance coverages and require a set-off for moneys paid by the tortfeasor, are valid and enforceable. Public policy is not violated by such provisions.

Therefore, we modify the award of the arbitrators to reflect the unambiguous agreement of the parties. The arbitrators award is reduced to $30,000.00, the amount provided for in the contract, and is further reduced to $15,000.00, to reflect the set-off provisions.

Judgment is modified as specified.

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