Appeal from the Order entered in the Court of Common Pleas of Allegheny County, Civil Division at No. GD 87-17827.
David M. McQuiston, Pittsburgh, for appellee.
Cirillo, President Judge, and Beck and Popovich, JJ.
[ 377 Pa. Super. Page 401]
This is an appeal from the order of the Court of Common Pleas of Allegheny County affirming an arbitration award entered in favor of Motorists Mutual Insurance Company and against the appellant/Marlene M. Bateman, Administratrix of the Estate of William J. Bateman, Jr. We affirm in a case of first impression.
All relevant facts have been stipulated to by the parties and reveal that William J. Bateman, Jr., died as a result of injuries received in a two-car collision on Washington Pike in South Fayette Township on November 19, 1983.
An administratrix was named for the decedent's estate. She initiated suit against the driver of the other vehicle involved in the accident (Ronald Lenhart) on negligence grounds, the owners of a tavern (Ronald and John Demsher, t/d/b/a "The Wheel") premised upon the Dram Shop Act and the manufacturer of the vehicle (Ford Motor Company) on theories of strict liability and product liability. Thereafter, the administratrix reached a settlement with all three parties and discontinued the wrongful death and survival actions. Settlement consisted of payment of $30,000 by Ford Motor Company, $15,000 from Lenhart and $33,334 was received from the Demshers.*fn1
[ 377 Pa. Super. Page 402]
Consistent with the policy of insurance it had with the decedent, Motorists approved all settlements without prejudice to its rights and defenses under the policy limiting its "underinsured" motorist liability to $50,000.*fn2
Because the damages incurred were in excess of the total of all settlements ($78,334) and underinsurance coverage ($50,000),*fn3 the administratrix filed a claim with the insurer to recoup the $50,000 of underinsurance coverage. Motorists refused. In accordance with the insurance policy, the matter was submitted to a three-member board of arbitrators who ruled, two to one, to deny the decedent's estate payment of the monies claimed due. It concluded that the insurance policy, as written, required that the amounts secured by the administratrix through settlement negotiations were to be used as a set-off against the dollar figure provided for under the insurer's limits of its liability coverage and not the dollar amount claimed due for damages by the estate. In other words, because the settlement figure ($78,334) exceeded the liability limitation to which the insurer was exposed ($50,000), this dispensed with the insurer having to pay the insured's estate anything.
The estate's contention that the settlement figure was to be set-off against the total amount of damages sought to be recovered vis-a-vis the insurer's limits of liability, or, at the very most, only tortfeasor/Lenhart's payment to the estate of $15,000 should be utilized as a set-off against the insurer's limits of liability since the Demshers and Ford Motor Company did not qualify as operators of underinsured motor
[ 377 Pa. Super. Page 403]
vehicles, proved to be unpersuasive. On appeal to Common Pleas Court, the award of the arbitrators was affirmed and judgment was directed to be entered by order of court in favor of Motorists. This appeal followed.
The first issue raised for our consideration is framed by the administratrix at page 8 of her brief and reads:
The arbitrators and the court below erred as a matter of law in applying the offset clause contained in Motorists' policy against the limits of its liability for underinsured motorists coverage as opposed to the total amount of damages suffered by the Administratrix.
The "offset" clause appears in Part C of the policy of insurance and purports to limit the insurer's liability for uninsured, and by extension reproduced at 31a of the record, underinsured motorist benefits. It reads in pertinent part:
The limit of liability shown in the Declaration for "each person" for Uninsured[/Underinsured] Motorists Coverage is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. Subject to this limit for "each person", the limit of liability shown in the Declaration for "each accident" for Uninsured[/Underinsured] Motorist Coverage is our maximum limit of liability for all damages ...