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METROPOLITAN PROPERTY AND LIABILITY INSURANCE COMPANY v. INSURANCE COMMISSIONER COMMONWEALTH PENNSYLVANIA AND BONNIE BECK (12/30/87)

decided: December 30, 1987.

METROPOLITAN PROPERTY AND LIABILITY INSURANCE COMPANY, APPELLANT,
v.
INSURANCE COMMISSIONER OF THE COMMONWEALTH OF PENNSYLVANIA AND BONNIE BECK, APPELLEES. STATE FARM FIRE AND CASUALTY COMPANY, APPELLANT, V. INSURANCE COMMISSIONER OF THE COMMONWEALTH OF PENNSYLVANIA, APPELLEE



Appeal from the Order of the Commonwealth Court entered May 13, 1986 at No. 1448 C.D. 1985, affirming the Order and Adjudication of the Pennsylvania Insurance Commissioner entered May 23, 1985 at No. P 84-5-2. Pa. Commw. , Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Zappala, J., joins in this opinion. Nix, C.j., files a concurring opinion in which Flaherty and Papadakos, JJ., join. Larsen, J., concurs in the result. Hutchinson, Former J., did not participate in the decision of this case.

Author: Mcdermott

[ 517 Pa. Page 220]

OPINION ANNOUNCING THE JUDGMENT OF THE COURT

These cases were consolidated in order to address a common issue, to wit: whether an insurance company may rescind an automobile insurance policy upon learning that

[ 517 Pa. Page 221]

    the application for insurance contained material misrepresentations. The germane facts of these cases are set out below.

No. 120 E.D. Appeal Docket 1986

On August 1, 1983, Bonnie Beck applied to Metropolitan Property and Liability Insurance Company for automobile insurance coverage. In response to questions regarding her prior driving history Ms. Beck indicated that she had no moving traffic violations, and that she had never had her license suspended or revoked. Ms. Beck tendered a $170.00 premium payment to the Metropolitan agent. The payment was accepted, and a binder was executed immediately extending coverage to Ms. Beck. Less than a week later, on August 7, 1983, Ms. Beck submitted a claim under her new policy to Metropolitan. The claim was for property damage caused by vandalism and was in the amount of $878.00.

While Ms. Beck's claim was being reviewed Metropolitan was also reviewing her application. As part of this latter process the company requested and received a motor vehicle report from the Pennsylvania Department of Transportation. That report indicated that Ms. Beck had misrepresented her driving record.*fn1 Consequently, on September 16, 1983, Metropolitan informed Ms. Beck that due to the misrepresentations in her application her insurance policy was rescinded. At that time Metropolitan returned to Ms. Beck the $170.00 premium it had received.

Ms. Beck thereupon reported the rescission to the Pennsylvania Insurance Department, which in turn determined that Metropolitan's actions violated the termination procedures provided in the automobile insurance act known as

[ 517 Pa. Page 222]

Act 78,*fn2 40 P.S. § 1008.1 et seq. Metropolitan sought review of this decision before the Commonwealth Court. However, that court affirmed in a five to two en banc decision, Crumlish, P.J., and Doyle, J., dissenting, 97 Pa. Commw. 219, 509 A.2d 1346. Metropolitan then sought allowance of appeal, which was granted.

No. 46 M.D. Appeal Docket 1986

On December 9, 1983, Darryl Jones applied to State Farm Fire and Casualty Company for automobile insurance coverage. In response to questions regarding his prior driving history, Mr. Jones indicated that he had no previous accidents or moving traffic violations. Mr. Jones tendered a $500.00 premium payment to the State Farm agent. The payment was accepted, and a binder was executed immediately extending coverage to Mr. Jones. The next day, December 10, 1983, Mr. Jones' car was missing. On December 12, 1983, Mr. Jones submitted a claim for coverage based on the theft of his car and its contents. Two days later, on December 14, 1983, the car was recovered, but Mr. Jones claimed that substantial damage had been done to the car, and that a leather jacket had been stolen from the car. He claimed $3363.86 in damages for repairs and replacement value for the jacket, and $480.00 for a rental car during the time his car was being repaired.

While Mr. Jones' claim was being reviewed State Farm was also reviewing his application. As part of this latter process State Farm requested and received a motor vehicle report from the Pennsylvania Department of Transportation. That report indicated that Mr. Jones had misrepresented his driving record.*fn3 Consequently, on February 1, 1984, State Farm informed Mr. Jones that due to the misrepresentations in his application his insurance policy was rescinded.

[ 517 Pa. Page 223]

At that time State Farm returned to Mr. Jones the $500.00 premium it had received.

Mr. Jones thereupon reported the rescission to the Pennsylvania Insurance Department, which in turn determined that State Farm's actions violated the termination procedures provided in Act 78, 40 P.S. § 1008.1 et seq. State Farm sought review of this decision before the Commonwealth Court. However, that court affirmed in a two to one decision, Crumlish, P.J. dissenting. State Farm then sought allowance of appeal, which was granted.

The threshold issue in this case is whether the termination procedures of Act 78 are the exclusive means by which a Pennsylvania insurance company can sever its ties to an insured party.

In Pennsylvania the General Assembly has deemed it necessary to control the sale of automobile insurance. Consequently, Act 78 was enacted to regulate the conduct of automobile insurers vis a vis their present and prospective policy holders. The extent of the statutory regulation ranges from restricting insurers' ability to pick and choose their customers,*fn4 to defining the procedures by which an insurer may terminate coverage.*fn5 Appellants acknowledge that Act 78 was intended to regulate their conduct with their policy holders. However, they basically contend that the Act was only intended to apply to those situations that it specifically addressed, and that it was not intended to supplant common law contract remedies about which it is silent, such as rescission.

Although the Act is silent about supplanting rescission, the question remains as to whether the General Assembly, by enacting a comprehensive scheme regulating the insurance relationship, intended to preempt previously existing rules governing that same relationship; and since the statute in this instance does not explicitly resolve the issue it is our duty to ascertain and effectuate the intention

[ 517 Pa. Page 224]

    of the General Assembly. See Commonwealth v. Fisher, 485 Pa. 8, 400 A.2d 1284 (1979).

Whenever we are called upon to interpret a statute, our analysis must begin with the Statutory Construction Act.*fn6 Section 1921(c) of that Act provides:

(c) When the words of the statute are not explicit, the intention of the General Assembly may be ascertained by ...


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