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filed: September 24, 1986.


Appeal From order Entered June 18, 1984 Court of Common Pleas, Civil Division, Philadelphia County, No. 5038 December Term, 1979


Edwin P. Smith, Philadelphia, for appellants.

Michael W. McCarrin, Philadelphia, for appellee.

Cirillo, President Judge, and Cavanaugh, Brosky, McEwen, Del Sole, Beck, Tamilia, Kelly and Johnson, JJ. Kelly, J., files a concurring opinion.

Author: Cavanaugh

[ 357 Pa. Super. Page 112]

Sylvia and Theodore Ostroff, individually and as administrators of the estate of their daughter, Marlene, appeal from an order of the Philadelphia Court of Common Pleas which vacated an award of arbitrators. We affirm.

On January 23, 1978, Marlene Ostroff died from injuries suffered in an accident which occurred while she was a passenger in an automobile driven by an insured of Keystone Insurance Company. At the time of her death, Ms. Ostroff was living with her parents (appellants herein) who also carried insurance on their two automobiles with Keystone. Ms. Ostroff's estate collected $15,000.00 from Keystone pursuant to the policy carried by the driver of the car in which she sustained her fatal injuries.

Pursuant to their own policy with Keystone, Mr. and Mrs. Ostroff (appellants) filed an underinsured motorist claim. Appellants' policy did not provide for under -insurance coverage, but did provide for un -insurance coverage. Keystone denied liability for underinsurance coverage and appellants petitioned the court to compel the appointment of an arbitrator. The lower court reluctantly ordered the matter to proceed to arbitration under the authority of Gordon v. Keystone Insurance Company, 277 Pa. Super. 198 n. 2, 419 A.2d 730 n. 2 (1980). In its opinion, the lower court wrote: "Although it is beyond the ken of this court how the term underinsured can be equated with the term uninsured except by the use of Orwellian logic wherein language means the opposite of what it says, this court is constrained to comply with . . . Gordon v. Keystone Insurance Company, supra, where the court in a similar case ordered the matter to proceed to arbitration on the narrow basis that the policy terms were ambiguous despite the fact

[ 357 Pa. Super. Page 113]

    that the term uninsured was explicitly defined and used throughout the arbitration provision." Lower court opinion at 2. Gordon was later expressly overruled in the en banc case of White v. Concord Mutual Insurance Co., 296 Pa. Super. 171, 442 A.2d 713 (1982). White held that when one recovers from another driver the minimum amount of liability insurance required by Pennsylvania law, he may not proceed to arbitration on the basis that his own policy provides for "uninsured" coverage. "Uninsured" is not the same as "underinsured", and the question of whether they are the same should not proceed to arbitration.

Keystone appealed to this court from the order appointing an arbitrator. This court affirmed the lower court and stated: "[T]he question [to be resolved in arbitration] is whether [appellants] had underinsured coverage." Ostroff v. Keystone Insurance Company, 301 Pa. Super. 73, 446 A.2d 1341 (1982). The matter was properly sent to arbitration because the insurance policy itself provides: "If we and a covered person disagree whether that person is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle or of an underinsured motor vehicle . . . either party may make a written demand for arbitration." Thus, it was appropriate that the arbitrators decide whether the policy contained underinsured coverage.

The history of this case leading up to arbitration suggests that the appellants sought arbitration to decide the question of whether the policy itself provided for underinsurance coverage. Appellant's original petition to appoint an arbitrator states: "[T]here is a question whether or not . . . said policy provides for underinsured coverage." Moreover, we have reviewed the brief which was submitted to this court by appellants when the matter was here on the appeal from the order to appoint an arbitrator. In that brief, appellants argued that the question of whether the policy provided underinsurance coverage is for arbitration. Nothing was suggested by the initial petition or aforementioned brief that appellants would seek recovery from Keystone on the basis of matters not found in the policy. More specifically,

[ 357 Pa. Super. Page 114]

    nothing was suggested that appellants would seek recovery based on alleged statements made by Keystone's policy representative which are separate from and nowhere found within the four corners of the insurance policy itself.

We further note that in their reply to Keystone's new matter, appellants wrote that the question as to whether they had purchased underinsurance coverage was a question of law.*fn1 This is in marked contrast to a cause of action grounded in fraud which is almost always a question of fact. M.H. Davis Estate Oil Co., Inc. v. Sure Way Oil Co., Inc., 266 Pa. Super. 64, 403 A.2d 95 (1979).

Thus, it seems clear that the theory upon which appellants urged this matter to be arbitrated was based on the language contained within the four corners of the written policy, not upon external fraud and misrepresentations allegedly made by Keystone's representative. The question for the arbitrators was therefore a very narrow one: Did the insurance policy's terms accord appellants underinsurance coverage?

The matter was then submitted to a panel of three arbitrators. After hearing all the testimony, two of the arbitrators rendered a decision in appellant's favor and awarded them $319,653.00. One arbitrator dissented.

Appellants argue on appeal that the insurer fraudulently misrepresented that appellants purchased underinsured coverage in the full amount. In support of the argument, they refer to their supplemental trial brief, which purports to summarize certain of the evidence presented at the arbitration hearings. That brief, which appellants have reprinted in their reproduced record, asserts the following. Mrs. Ostroff testified that when she sought to purchase insurance from Keystone, she made it perfectly clear that she wanted the maximum amount of automobile coverage written by Keystone. It was contended that the Keystone

[ 357 Pa. Super. Page 115]

    representative told her that the policy he was providing did in fact contain this maximum amount of coverage. Mrs. Ostroff asserted that she periodically called the Keystone representative during the period 1976-1977 whenever she bought new cars and that each time requested full coverage. The Keystone representative assured her that the policies given to her contained all coverages available and were for the maximum amount of coverage being written by Keystone. Appellants allege that at the arbitration proceedings (wherein the testimony proferred was not transcribed) they totally relied on the argument that fraudulent misrepresentations of the Keystone salesman entitled them to underinsured motorist coverage up to $500,000.00.

In effect, the appellants, having won access to an arbitration hearing, astonishingly abandoned their previous position of arguing that the policy itself provided underinsurance coverage and fashioned a new argument wherein they presented evidence wholly unrelated to the actual terms of the policy. Keystone motioned the lower court to vacate the award. The lower court, (Judge White presiding) granted the motion, and this appeal followed.

The language in the policy is clear and unambiguous: appellants do not have underinsured coverage. Appellants paid no premiums for the allegedly $500,000.00 worth of underinsurance coverage they claim they are entitled to. We note that had their daughter been injured in an accident with an un insured motorist, their policy itself allowed just $15,000.00 coverage. Yet, appellants would have us reinstate a decision that would grant them something in excess of $304,000.00 more than this for a type of coverage which is not even listed on the declarations sheet.

In the opinion of the lower court, the Honorable Thomas A. White noted that "this court . . . cannot find an underinsured motorist clause in the policy . . . ." Appellants do not persuade us that the lower court erred. On the declarations form of the policy, the following appears: "Coverage is provided where a premium or limit of liability is shown for the coverage." Beneath this, un insured motorist coverage

[ 357 Pa. Super. Page 116]

    is indicated, along with the premium charged, but under insured motorist ...

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