filed: December 28, 1988.
ALEXANDER MEERZON AND LILIA GROYSMAN, APPELLANTS,
ERIE INSURANCE COMPANY
Appeal from the Judgment entered November 17, 1988 in the Court of Common Pleas of Philadelphia County, Civil Division, at No. 2090 FEB 1986
Paul R. Sacks, Philadelphia, for appellants.
Joseph M. Oberlies, Philadelphia, for appellee.
Olszewski, Kelly and Hoffman, JJ.
[ 380 Pa. Super. Page 387]
This appeal is from the order below confirming an arbitration award. Appellants contend that the lower court erred in refusing to set aside the award because (1) the court employed the wrong standard of review; and (2) considered under the proper standard of review, the arbitration panel erred in concluding that appellants had failed to prove that the vehicle that struck their car was uninsured. For the reasons that follow, we agree and, accordingly, we reverse the order below, we vacate the arbitration award, and we remand the case for proceedings consistent with this Opinion.
On December 12, 1984, a car owned and driven by appellant Alexander Meerzon was involved in an automobile accident. As a result of the collision, both Meerzon and a passenger in his car, appellant Lilia Groysman, were injured. In February, 1986, appellants instituted this action by filing a petition to Compel Uninsured Motorist Arbitration against Meerzon's own insurer, appellee, Erie Insurance Company. On November 6, 1986, an arbitration hearing was held on the uninsured motorist claim. Following that hearing, the parties submitted supplemental memoranda.
[ 380 Pa. Super. Page 388]
On March 25, 1987, the arbitrators, with one arbitrator dissenting, recommended that judgment be entered in favor of appellee. On June 2, 1987, the panel reaffirmed this decision. On July 2, 1987, appellants filed a petition in the Court of Common Pleas seeking to set aside the arbitration award. The lower court denied the petition and this timely appeal followed.
I. STANDARD OF REVIEW
Appellants first contend that the lower court erred because it reviewed the arbitration decision pursuant to principles of common law arbitration rather than statutory arbitration.*fn1 Preliminarily, we note that "[i]t is always open to contracting parties to provide for statutory, rather than common law, arbitration." Allstate Ins. Co. v. Fioravanti, 451 Pa. 108, 116 n. 6, 299 A.2d 585, 589 n. 6 (1973). An important difference between the two types of arbitration is that statutory arbitration is subject to much broader judicial review than is common law arbitration. Cf. Obdyke v. Harleysville Mutual Ins. Co., 299 Pa. Super. 298, 301, 445 A.2d 763, 765 (1982) (construing Pennsylvania Arbitration Act of 1927).*fn2
Here, the car accident in which appellants were injured occurred on December 12, 1984. The insurance policy issued by appellee was in effect from September 22, 1984
[ 380 Pa. Super. Page 389]
until September 22, 1985. See R.R. at 39a. The policy provided that if either party demanded arbitration to resolve a dispute regarding uninsured motorist coverage, the arbitration "shall be conducted in accordance with the Pennsylvania Arbitration Act of 1927." See Insurance Agreement at 9, R.R. at 118a. In addition, the parties stipulated that the arbitration proceeding was "a statutory arbitration under Act 27." N.T. November 6, 1986 at 35. Although the Act of 1927 was repealed and replaced by the Act of 1980 (codified at 42 Pa.C.S.A. §§ 7301-7362), the current statute contains provisions that govern agreements to arbitrate under the prior Act. Thus, section 501(b) of the 1980 Act provides, in relevant part, that,
(b) The provisions of 42 Pa.C.S. § 7302(d)(2) (relating to special application) shall be applicable to any non-judicial arbitration pursuant to:
(2) An agreement heretofore or hereafter made which expressly provides for arbitration pursuant to the former provisions of the Act of April 25, 1927 . . ., relating to statutory arbitration.
Act of 1980, Oct. 5, P.L. 693, No. 142 (codified as the Historical Note to 42 Pa.C.S.A. § 7302(d)(2)) (emphasis added). Section 7302(d)(2), in turn, provides the following standard of review:
(2) [A] court in reviewing an arbitration award pursuant to this subchapter shall, notwithstanding any other provision of this subchapter, modify or correct the award where the award is contrary to law and is such that had it been a verdict of a jury the court would have entered a different judgment or a judgment notwithstanding the verdict.
Id. See also Ragin v. Royal Globe Ins. Co., 315 Pa. Super. 179, 184, 461 A.2d 856, 858 (1983) (under § 7302, arbitration award may be vacated when award was due to egregious mistake of law on part of arbitrators); id., 315 Pa. Superior Ct. at 184-85, 461 A.2d at 859 ("In order to establish legal order within the arbitration process, courts must refuse to
[ 380 Pa. Super. Page 390]
sanction monetary awards which are contrary to law, inequitable, unjust, or the apparent result of prejudice on the part of the arbitrators."). In light of the agreement between the parties and the provisions of the 1980 Act quoted above, we hold that the "contrary to law" scope of review should have been applied by the lower court.
II. SUFFICIENCY OF EVIDENCE REGARDING UNINSUREDNESS
We now turn to the merits of appellants' underlying contention. See Selected Risks Ins. Co. v. Thompson, 363 Pa. Super. 34, 37, 525 A.2d 411, 412 (1987), allocatur granted, 516 Pa. 614, 531 A.2d 781 (1987). Appellants contend that the arbitration panel majority erred in concluding that appellants had failed to prove the uninsuredness of the vehicle that struck them. In recommending that judgment be entered in favor of appellee, the neutral member of the arbitration panel, writing for the panel majority, reasoned as follows:
The record and supplemental data are without any evidence to establish that the vehicle or operator of the 1976 Ford which struck [appellants'] vehicle was uninsured. As a result, I am left with no choice but to recommend the entry of judgment in favor of Erie Insurance Company and against [appellants] in this Arbitration.
I was most reluctant to reach this result because I do believe that the statute strongly favors providing insurance where individuals are hurt through no fault of their own by an uninsured vehicle. However, the statute and policy set forth a condition precedent, i.e. proof that the vehicle was uninsured, which is completely absent, here.
See Supp.R.R. at 16b. The resolution of appellants' contention turns on the construction to be given the term "uninsured motor vehicles", or more precisely the word "uninsured", as that word is used in Pennsylvania's Uninsured Motorist Act ("Act"), 40 P.S. § 2000.
[ 380 Pa. Super. Page 391]
The Act requires that all automobile insurers offer policies that provide for coverage for bodily injury or death resulting from the actions of "owners or operators of uninsured motor vehicles." Id. § 2000(a).*fn3 The Act neither defines the term "uninsured", nor does it provide any guidance regarding the type or quality of proof necessary to show that a vehicle is uninsured.*fn4 It, therefore, is this Court's task to define the parameters of the term, see Davis v. Government Employees Ins. Co., 500 Pa. 84, 88 n. 5, 454 A.2d 973, 975 n. 5 (1982);*fn5 id., 500 Pa. at 95, 454 A.2d at 978
[ 380 Pa. Super. Page 392]
(Larsen, J., dissenting), and we must do so in a manner "which harmonizes with the subject matter and its general purpose and object." Busy Beaver Bldg. Centers v. Tueche, 295 Pa. Super. 504, 512, 442 A.2d 252, 256 (1981). See also Davis v. Government Employees Ins. Co., supra 500 Pa. at 95, 454 A.2d at 978 (Larsen, J., dissenting); Habecker v. Nationwide Ins. Co., 299 Pa. Super. 463, 468, 445 A.2d 1222, 1224 (1982) (when statute is unclear, court is bound to consider legislative purpose). Accord 1 Pa.C.S.A. § 1921(a) ("The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly.").
[ 380 Pa. Super. Page 393]
The courts of this Commonwealth have consistently emphasized the remedial purpose behind the Act. Thus, in Boyle v. State Farm Mutual Automobile Insurance Co., 310 Pa. Super. 10, 456 A.2d 156 (1983), allocatur denied, we noted that "[t]he purpose of the uninsured motorist law has been frequently and consistently interpreted by our courts as providing protection to innocent victims of uninsured drivers." Id., 310 Pa. Superior Ct. at 21, 456 A.2d at 162. See also Harleysville Mut. Cas. Co. v. Blumling, 429 Pa. 389, 241 A.2d 112 (1968). The object to be accomplished by this coverage "is to 'afford financial recompense to persons who receive injuries or the dependents of those who are killed, solely through the negligence of motorists, who, because they are uninsured and not financially responsible, cannot be made to satisfy a judgment.'" Johnson v. Concord Mut. Ins. Co., 450 Pa. 614, 619, 300 A.2d 61, 64 (1973) (citation omitted). See also Harleysville Mut. Cas. Co. v. Blumling, supra 429 Pa. at 395, 241 A.2d at 115 (uninsured motorist statute is "designed to give monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injury through the negligent use of those highways by others.") (citation omitted); Webb v. United Serv. Assoc. Page 393} Appeal, 227 Pa. Super. 508, 323 A.2d 737 (1974), allocatur denied. Moreover, the courts have repeatedly emphasized that, in order to give effect to the broad remedial purpose of the uninsured motorist law, the Act must be construed liberally. Johnson v. Concord Mut. Ins. Co., supra; Harleysville Mut. Cas. Co. v. Blumling, supra; Pattani v. Keystone Ins. Co., 426 Pa. 332, 231 A.2d 402 (1967). See also Boyle v. State Farm Mut. Auto Ins. Co., supra 310 Pa. Super. at 22, 456 A.2d at 162 ("[t]he legislative intent in enacting the uninsured motorist law requires a liberal construction of the statute, and a pronounced propensity on the part of the court to find coverage unless equally strong legal or equitable considerations to the contrary are present."). Accord 1 Pa.C.S.A. § 1928(c).
The facts are not in dispute.*fn6 The evidence presented at the arbitration hearing and in supplemental memoranda established that, after the accident, appellant Meerzon spoke with the driver of the other vehicle, and exchanged ownership and insurance information. As a result of this exchange, appellants learned the other driver's name and his telephone number, the year, make, and license plate number of his car, the name of his insurance company, and his insurance policy number.*fn7 Appellants' counsel attempted to verify the information provided by the other driver, so that appellants could institute an action against the owner/driver of the other vehicle and his insurance company. Appellants thereafter discovered, however, that the driver of the car that struck them had misrepresented his name, his telephone number, his insurance company, his policy
[ 380 Pa. Super. Page 394]
number, and his license plate number.*fn8 In short, all of the information provided appellants at the scene of the accident was falsified. As a result of these misrepresentations, appellants, despite their best efforts both at the scene of the accident and afterwards, were unable to determine the identity of the driver or owner of the car that struck them.
Considering these facts in light of the remedial purpose behind the Act, we are convinced that the arbitration panel erred in concluding, as a matter of law, that appellants had failed to produce sufficient evidence to warrant a finding that the other vehicle was "uninsured." In many instances, proof of uninsuredness may be uncontested: for example, the tortfeasor may admit to being uninsured, or vehicle registration and insurance records may conclusively establish the fact of uninsuredness. Here, in the arbitrators' view, the difficulty with appellants' proof was that they could not demonstrate that the other vehicle was uninsured in such an affirmative manner. We note, however, that there is no legislative requirement that uninsuredness be proven in such a manner; instead, the Act is silent regarding the manner of proof. Accordingly, the letter of the Act does not prevent appellants' recovery in this case.
We note further that, although appellants could not establish uninsuredness through such admissions or documentary evidence, they did establish that despite their best efforts, and due to misrepresentations made by the other driver, it was not possible to ascertain whether the other vehicle was insured. Thus, the arbitration panel was presented with a situation in which the claimants were innocent victims, injured by an irresponsible driver, who, through his false statements, had rendered himself unidentifiable and hence judgment-proof. When viewed in light of the remedial purpose behind the Act and the presumption in favor of coverage, we see no principled difference between the case at bar and a situation in which the fact of uninsuredness is undisputed: in both instances, the claimant is
[ 380 Pa. Super. Page 395]
an innocent victim who has suffered injury at the hands of a financially irresponsible driver. Moreover, in both instances the claimant cannot recover pursuant to an insurance policy held by the tortfeasor, and the claimant's only hope for financial recompense rests in his or her own insurance policy. We therefore hold, as a matter of law, that appellants produced sufficient evidence to establish that the vehicle that injured them was uninsured. Because the arbitrators' award was based on their erroneous construction of the term "uninsured", the award is contrary to law and must be vacated. See 42 Pa.C.S.A. § 7302(d)(2); id. § 7314(a)(1)(iii); Ragin v. Royal Globe Ins. Co., supra.
We find further support for our conclusion in the fact that, in an analogous situation (involving hit and run drivers), the legislature has defined the term "uninsured motor vehicle" to include instances where, as here, it is impossible to determine whether the other car was insured or uninsured. Thus, the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. §§ 1701-1798 (effective October 1, 1984), provides that an "uninsured motor vehicle" may include
An unidentified motor vehicle that causes an accident resulting in injury provided the accident is reported to the police or proper governmental authority and the claimant notifies his insurer within 30 days, or as soon as practicable thereafter, that the claimant or his legal representative has a legal action arising out of the accident.
Id. § 1702 (emphasis supplied).*fn9 This expansive definition of the term "uninsured" is consistent with the remedial purpose behind all uninsured motorist legislation.
[ 380 Pa. Super. Page 396]
Although appellants do not argue that the car that injured them was a hit and run vehicle, this case is similar to a hit and run situation.*fn10 The main distinction is that, here, the vehicle has been rendered unidentifiable because of the other driver's misrepresentations, whereas in the classic hit and run case, the vehicle is "unidentified" because of the other driver's flight.*fn11 In both situations, however, it is impossible to determine whether the other vehicle was insured or uninsured. Moreover, each situation involves an innocent claimant, injured by an irresponsible driver who, through his criminal misconduct, has rendered himself judgment-proof. We can find no principled justification for a rule that would allow recovery when a vehicle is unidentified because of the other driver's criminal flight, but disallow recovery when the vehicle is unidentified because of the other driver's criminal misrepresentations.
In summary, appellants have shown that, despite their best efforts, they were unable to identify the driver or owner of the vehicle that had injured them. We hold that
[ 380 Pa. Super. Page 397]
this evidence was sufficient to establish that the vehicle that had injured appellants was "uninsured" as that term is employed in the Uninsured Motorist Act. Because the arbitrators' award was based on their erroneous construction of the term "uninsured", the award is contrary to law and should have been vacated.*fn12
For the foregoing reasons, we reverse the order below, we vacate the arbitration award, and we remand the case to the lower court for proceedings consistent with this Opinion.
Reversed and remanded. Jurisdiction relinquished.
Reversed and remanded. Jurisdiction relinquished.