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09/09/97 STATE FARM MUTUAL AUTOMOBILE INSURANCE

September 9, 1997

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, APPELLEE
v.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY, APPELLANT



Appeal of the March 22, 1995 Opinion and Order of the Superior Court of Pennsylvania at Nos. 218 and 219 Harrisburg 1993, Vacating and Remanding the Order of the Court of Common Pleas of Lycoming County, Dated February 19, 1993 at Civil Action No. 90-02181.

Justice Cappy.

The opinion of the court was delivered by: Cappy

OPINION OF THE COURT

JUSTICE CAPPY:

DECIDED: SEPTEMBER 9, 1997

This is an appeal by allowance from the order of the Superior Court, vacating the order of the Court of Common Pleas of Lycoming County which granted in part and denied in part the summary judgment motion of State Farm Mutual Automobile Insurance Company ("State Farm"). This matter involves the interpretation of two automobile insurance policies, one issued by State Farm on the driver of the vehicle involved in the accident at question and the other issued by Universal Underwriters Insurance Company ("Universal") on the owner of the vehicle. Because we determine that the policy issued by Universal does not provide coverage for the driver of the automobile in question, we reverse the order of the Superior Court.

In October of 1988, Kinley's Subaru, Inc. ("Kinley's Subaru") loaned a car to a customer, Dottie Hill ("Hill"), for her to use while her car was being repaired. While driving this car, Hill collided with a car driven by Leo Lorson ("Lorson"). The collision damaged Lorson's car and injured a passenger in his car.

At the time of the accident, Kinley's Subaru had a policy of insurance issued by Universal. Hill was insured under a policy issued by State Farm.

State Farm defended Hill against the claims brought by Lorson and his passenger. These claims were settled for $17,300. State Farm then brought a declaratory judgment action against Universal to obtain compensation for part of the cost of the defense and settlement of the claims. Following discovery, both parties filed motions for summary judgment. Universal contended that Hill was not covered by its policy and therefore it had no duty to compensate State Farm for the costs of defending and settling the claims. State Farm asserted that as a matter of law, Universal had a duty to defend and indemnify Hill and that State Farm was entitled to judgment against Universal for 10/11ths of the total costs of defending and settling the claims. *fn1

The trial court partially granted State Farm's motion for summary judgment. First, it found that the Universal policy did cover Hill. The trial court also determined that a clause in the Universal policy which attempted to limit its coverage amounted to an unenforceable escape clause. The trial court, however, rejected State Farm's position on allocation of liability, and apportioned liability between State Farm and Universal equally rather than pro rata according to policy limits.

Both parties appealed to the Superior Court. The Superior Court agreed with the trial court that the Universal policy covered Hill and that the clause in the policy which attempted to limit liability amounted to an unenforceable escape clause. The Superior Court disagreed, however, with the trial court's apportionment of liability. It found that rather than apportioning liability equally, the proper method to apply was the "policy limits" method and thus held Universal liable for 10/11ths of the total costs of defending and settling the claims.

Universal filed a Petition for Allowance of Appeal with this court and we granted allocatur.

In examining this matter, as with all summary judgment cases, we must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Pennsylvania State University v. County of Centre, 532 Pa. 142, 144-145, 615 A.2d 303, 304 (1992). Summary judgment will be granted only in those cases which are free and clear from doubt. Marks v. Tasman, 527 Pa. 132, 589 A.2d 205 (1991). Our scope of review is plenary. See Phillips v. A-BEST Products Co., 542 Pa. 124, , 665 A.2d 1167, 1170 (1995).

The first issue we must examine is whether the lower courts were correct in determining that Hill was covered under the Universal policy. Interpretation of an insurance policy is a question of law, subject to plenary review by this court. See ...


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