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CINCINNATI INS. v. HERR SIGNAL & LIGHTING

February 26, 1991

THE CINCINNATI INSURANCE COMPANY, PLAINTIFF,
v.
HERR SIGNAL & LIGHTING CO., INC., AND/OR RONALD R. AND SUSAN E. HERR, HIS WIFE, AND WAYNE A. AND SHELBY HERR, HIS WIFE, DEFENDANTS.



The opinion of the court was delivered by: Caldwell, District Judge.

MEMORANDUM

I. Introduction.

We are currently considering cross-motions for summary judgment filed pursuant to Fed.R.Civ.P. 56 by the plaintiff, The Cincinnati Insurance Company (Cincinnati), and defendants, Ronald R. Herr and Susan E. Herr (the Herrs). Cincinnati filed this declaratory judgment action to determine its obligations under the portion of one of its comprehensive casualty and property policies providing automobile insurance. The defendants are the named insureds under the policy, Herr Signal & Lighting Co., Inc., Ronald R. Herr, Susan E. Herr, Wayne A. Herr and Shelby Herr.*fn1 This is a diversity case controlled by Pennsylvania law. We will evaluate the motions under the well established standard. See Williams v. Borough of West Chester, 891 F.2d 458 (3d Cir. 1989).

II. Background And Discussion.

We must deal with issues presented by the underinsured motorist (hereinafter "UIM") coverage. Ronald R. Herr, president of Herr Signal & Lighting Co., sustained serious personal injuries on or about May 22, 1986, while engaged in the course and scope of his duties as a flagman on a construction project when he was struck by a car operated by Norman Snelgrove. Herr received workmen's compensation benefits from his company's worker's compensation carrier. He also obtained a verdict against Snelgrove in the Court of Common Pleas of Adams County, Pennsylvania, in the amount of $275,821. The trial court denied his post-trial motion contesting the verdict as grossly inadequate to compensate him for his injuries, and he has filed an appeal of that order to the Pennsylvania Superior Court. Snelgrove's liability insurance provided maximum coverage of $25,000 so Herr was also able to obtain UIM coverage from his personal automobile insurance carriers.

The immediate impetus for this lawsuit was Herr's notification to Cincinnati on or about May 19, 1989, that he intended to make a claim for UIM coverage under its policy as well. The declaration page of the policy states that it provides third party coverage for bodily injury liability up to $500,000 and UIM limits of $35,000. There is no dispute that, counting certain trailers as insured vehicles, there are at least thirteen vehicles covered by the policy. Herr's position is that he is entitled to stack the coverages for the thirteen vehicles. Moreover, the amount used in this calculation should equal the liability limits of the policy, $500,000, rather than the stated UIM limits, $35,000, because Cincinnati failed to obtain his consent to the reduction in UIM coverage in accordance with Pennsylvania law. This would entitle him to $6,500,000 of UIM coverage.

Cincinnati's complaint alleges that it has no obligation under the policy for two reasons. First, Herr violated the policy provision requiring prompt notice of the accident by waiting for about three years before submitting his claim. Second, since the accident occurred during the course of Herr's employment, his exclusive remedy is the Workmen's Compensation Act. Alternatively, Cincinnati contends that, if Herr is entitled to UIM coverage, that coverage should be the limits stated on the declaration page, $35,000. Further, if stacking were appropriate, the overall limit of recovery should be the liability limits of the policy, $500,000.*fn2 Plaintiff also requests that we declare on the basis of collateral estoppel that Herr's recovery be limited by his judgment in the amount of $275,821 against the tortfeasor in the state court trial.*fn3

A. Workmen's Compensation As the Exclusive Remedy.

Cincinnati contends that Herr's claim for UIM coverage is barred by the provision in the Pennsylvania Workmen's Compensation Act providing that a worker's exclusive remedy against his employer is under the Act. See 77 P.S. § 481(a) (Purdon Pamphlet 1990-91). Cincinnati contends that it is entitled to this protection as the insurance carrier for Herr's employer. There is support in the case law for plaintiff's position, principally Aetna Casualty & Surety Co. v. Castagnola, 1989 WL 49523 (E.D.Pa.). But there are cases to the contrary. See Ponzio v. Liberty Mutual Insurance Co., 1990 WL 27362 (E.D.Pa.). See also Travelers Indemnity Co. v. McGrath, 1990 WL 106730 (E.D.Pa.); P.I.E. Nationwide, Inc. v. Foga, 1990 WL 72946 (E.D.Pa.); American Motorists Insurance Co. v. Harris, 1990 WL 55375 (E.D.Pa.). The Pennsylvania Superior Court has also held that an injured worker may claim both workmen's compensation benefits and benefits from his employer's UIM carrier. See Odom v. Carolina Casualty Insurance Co., 394 Pa. Super. 283, 575 A.2d 631, appeal granted ___ Pa. ___, 582 A.2d 324 (1990); Chatham v. Aetna Life & Casualty Co., 391 Pa. Super. 53, 570 A.2d 509 (1989), appeal granted, ___ Pa. ___, 584 A.2d 310 (Pa. 1990).

It is apparent from these opinions that the correct resolution of the issue depends upon the impact of the Pennsylvania Supreme Court's opinion in Selected Risks Insurance Co. v. Thompson, 520 Pa. 130, 552 A.2d 1382 (1989) upon its earlier opinion in Lewis v. School District of Philadelphia, 517 Pa. 461, 538 A.2d 862 (1988). Compare Castagnola, supra with Odom, supra.

While we are inclined to agree with those courts which have held that worker's compensation is not the exclusive remedy, we fortunately have the further assistance of a recent Pennsylvania Supreme Court opinion which was issued after briefing had been completed on the cross-motions. The opinion clearly indicates that the supreme court would permit recovery of both UIM benefits from employer's automobile insurance carrier and worker's compensation benefits.

In Azpell v. Old Republic Insurance Co., ___ Pa. ___, 584 A.2d 950 (1991), the appellant was a police officer injured in the course of his employment. He received worker's compensation benefits and sought uninsured motorist benefits from the appellee, Old Republic Insurance Co., his employer's insurance carrier. The appellee denied the claim but the appellant won in arbitration. The superior court affirmed the trial court's vacation of the arbitration award, holding that Lewis, supra, left the appellee with only worker's compensation as his exclusive remedy.

The supreme court reversed on the ground that the lower courts had no authority to review the merits of the arbitration award under the Pennsylvania Uniform Arbitration Act, which the policy provided would govern the resolution of disputes. Significantly, however, the court stated the following in connection with the merits:

  Because of our disposition of this appeal, we need
  not address appellant's second issue. However, it
  is quite clear that Selected Risks Insurance Co. v.
  Thompson, 520 Pa. 130, 552 A.2d 1382 (1989) is
  controlling and that Appellant is entitled to
  uninsured ...

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