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HESS v. ALLSTATE INS. CO.

July 31, 1985

DONALD L. HESS, Plaintiff,
v.
ALLSTATE INSURANCE COMPANY, Defendant



The opinion of the court was delivered by: COHILL

 Presently before us is Defendant's Motion for Partial Summary Judgment. This action was originally filed in the Court of Common Pleas of Allegheny County and removed to the Court pursuant to 28 U.S.C. § 1441. We have jurisdiction based on diversity of citizenship, 28 U.S.C. § 1332. The amount in controversy exceeds $10,000.

 Introduction

 Plaintiff in this case claims that a "coordination of benefits" provision in an automobile no-fault insurance policy, which he purchased from Defendant, should not be given effect. The coordination of benefits provision provided that, in return for a reduction in Plaintiff's insurance premium, Plaintiff's health insurance would be the primary source of benefits in case of an accident, with Plaintiff's automobile insurance covering any additional costs. Plaintiff claims that he is entitled to payment from Defendant of the full value of his medical claims, in spite of the coordination of benefits provision, because Defendant's agent allegedly fraudulently induced him into making the election, and misrepresented or omitted relevant information in selling him the policy.

 Plaintiff alleges causes of action based on breach of contract, common law fraud, and violation of the Pennsylvania Unfair Trade Practices Act, 40 Pa. Stat. Ann. 1171 et seq. (Purdon Supp. 1984)

 Allstate has moved for partial summary judgment as to Plaintiff's claims for additional medical benefits. While Plaintiff's original complaint also stated a claim for additional work loss benefits, based on a "stacking" theory, counsel for Plaintiff conceded at oral argument that this claim is no longer valid in light of the decision of the Pennsylvania Supreme Court in Antanovich v. Allstate Insurance Co. 507 Pa. 68, 488 A.2d 571 (1985).

 The parties have filed pretrial statements as well as a stipulation of facts. Because we find that there are no material facts in dispute, and because we find Defendant is entitled to judgment as a matter of law, we will grant Defendant's motion and enter judgment for Defendant in this case.

 FACTS

 Plaintiff, Donald Hess, resided in Ohio from 1967 to 1969, where he was employed as an insurance agent for Allstate. Stip. para. 5. He held an automobile insurance policy issued by Allstate while he lived in Ohio. Subsequently, Hess moved to Pennsylvania and left the employ of Allstate. Id. The Ohio policy was transferred to Pennsylvania and remained in effect through July 18, 1975. On that date, Plaintiff's policy was amended to include no-fault coverage, pursuant to the Pennsylvania No-Fault Motor Vehicle Insurance Act, 40 Pa. Stat. Ann. § 1009.101 et seq. (Purdon Supp. 1984), repealed, Act of February 12, 1984, P.L. 26, No. 84-11 as amended by Act of February 12, 1984, P.L. 53, No. 84-12, 1984 Pa. Legis. Serv. 91 ("No-Fault Act"). That policy, as amended, remained in effect until it was cancelled on August 21, 1978.

 From September 1, 1978 until September 1, 1980, Plaintiff held an assigned-risk automobile insurance policy issued by Allstate. The policy covered two cars, and was referred to Allstate by the Pennsylvania Automobile Insurance Plan. Id. para. 6.

 On or about July 31, 1980, Allstate sent Plaintiff renewal materials for the policy expiring September 1, 1980, and a letter (the "Takeout Letter") offering to insure Plaintiff as a regular (non-assigned risk) policyholder at Allstate's regular rates. Id. para. 7. The Takeout Letter stated, in part,

 
DO YOU WISH TO ACCEPT OUR OFFER OF COVERAGE? IF SO, BRING THIS LETTER TO AN ALLSTATE AGENT. THE AGENT WILL BE HAPPY TO EXPLAIN, IN DETAIL, THE COVERAGES, AND BENEFITS AVAILABLE UNDER A POLICY ISSUED BY ALLSTATE INDEMNITY COMPANY. AN AGENT CAN ALSO INITIATE THE ISSUANCE OF A POLICY AT YOUR REQUEST.

 Id. See also Stip. Ex. B.

 On August 29, 1980, Plaintiff took the Takeout Letter to an Allstate office. Id. para. 8. Plaintiff spoke with Janet Haggerty, an Allstate agent, who took Plaintiff's application for a policy of voluntary private passenger insurance. Plaintiff signed the application. Id. Pursuant to the application, Allstate issued Plaintiff a policy which contained a coordination of benefits endorsement. Id.

 Section 203 of the No-Fault Act provides, in part,

 
(b) The owner or operator of a motor vehicle may elect to provide for security in whole or in part for the payment of basic loss benefits through a program, group, contract or other arrangement that would pay to or on behalf of the victim or members of his family residing with him or the survivor of a deceased victim, allowable expense, loss of income, work loss, replacement services loss and survivors loss.
 
In all such instances, each contract of insurance issued by an insurer shall be construed to contain a provision that all basic loss benefits provided therein shall be in excess of any valid and collectible benefits otherwise provided through such program, group, contract or other arrangement as designated at the election of the owner or operator which shall be primary.
 
(c) An insurer providing basic loss benefits and tort liability in accordance with the provisions of subsection (b) above shall reduce the cost of such contract of insurance to reflect the anticipated reduction in basic loss benefits payable by the insurer by reason of the election of the owner or operator to provide substitute security.

 40 Pa. Stat. Ann § 1009.203(b),(c).

 In order to implement the provisions of section 203 of the No-Fault Act, Allstate developed an endorsement which provides, in part,

 
Coordination of Benefits
 
In consideration of a reduction in premium and subject to the coverages and limits shown in the ...

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