The opinion of the court was delivered by: Katz, Senior District Judge.
Before the court are cross-motions for summary judgment
submitted by the plaintiff and the defendant in this declaratory
action pertaining to insurance coverage. Because the court finds
that the insurance policy in question permits the defendant to
recover both underinsured motorist benefits and liability
benefits in some circumstances, the defendant's motion will be
On April 17, 1997, the defendant Leon Kubek was a passenger in
an automobile driven by his wife, Marsha Kubek, which was
involved in a collision with another vehicle driven by Nancy
Moritz. The Kubeks' vehicle was covered by an insurance policy
issued by Continental Insurance Company, the plaintiff. Moritz's
vehicle was covered by an Allstate Insurance Company policy with
bodily injury liability coverage of $100,000 per person. In March
1998, the Kubeks filed suit against Moritz in the Philadelphia
County Court of Common Pleas. Moritz subsequently joined Marsha
Kubek as an additional defendant.
Prior to any judicial determination of liability, the
underlying action was settled. Allstate agreed to pay Leon Kubek
$62,645 and Marsha Kubek $6,300 under its bodily injury liability
coverage. Continental agreed to pay Leon Kubek $11,055 in bodily
injury liability coverage under the Continental policy on behalf
of Marsha Kubek. As part of the settlement, the Kubeks executed a
General Release that released Nancy Moritz, Allstate Insurance
Company, and Marsha Kubek from further claims. The General
Release contained a provision stating,
Notwithstanding any other Provision herein to the
contrary, it is expressly agreed that this Release
shall not operate as a bar to any claim or cause of
action Releasors may have against CNA Insurance
Company for underinsured motorist benefits arising
out of the subject motor vehicle accident of April
General Release ¶ 10 (Stip. Facts Ex. B). Accompanying the
General Release was a transmittal letter from the Kubeks'
attorney that included the following,
As you will note, I have deleted CNA Insurance
Company as a "released party" and added an additional
paragraph to the Release concerning the claim of my
clients against CNA for underinsured motorist
benefits. These modifications preserve the UIM claim,
which comports with our understanding in settling the
third party action.
Transmittal Letter (Stip. Facts Ex. B).
Mr. Kubek now seeks underinsured motorist (UIM) benefits from
Continental. In response, Continental filed this suit for a
declaratory judgment that Mr. Kubek may not recover UIM benefits
under its policy.
Continental argues that the so-called "family vehicle
exclusion" included in its policy means that the vehicle owned by
the Kubeks may not itself be considered an "underinsured vehicle"
and that Mr. Kubek is therefore precluded from receiving UIM
benefits. Mr. Kubek argues that the family vehicle exclusion is
irrelevant because Ms. Moritz's automobile was the underinsured
vehicle. Mr. Kubek contends that Continental is only entitled to
a set-off for amounts paid by Allstate and Continental under
their respective liability policies. He also argues that the
terms of the release establish that he has a right to recover UIM
benefits from Continental.
Pennsylvania has well-established rules regarding the
interpretation of such coverage disputes. Ordinarily the court
rather than the jury interprets the insurance contract with the
goal of determining the intent of the parties as indicated by the
language of the policy itself. See, e.g., Paylor v. Hartford
Ins. Co., 536 Pa. 583, 640 A.2d 1234, 1235 (1994). When the
language of the contract is unambiguous, the court must give
effect to that language. See id.; Standard Venetian Blind Co. v.
American Empire Ins. Co., 503 Pa. 300, 469 A.2d 563, 566 (1983).
A provision is ambiguous if "reasonably intelligent" people "on
considering it in the context of the entire policy would honestly
differ as to its meaning." Northbrook Ins. Co. v. Kuljian
Corp., 690 F.2d 368, 372 (3d Cir. 1982) (citations omitted).
Ambiguous language must be strictly construed against the
insurer, see, e.g., Pempkowski v. State Farm Mut. Auto. Ins.
506 Pa. Super. 61, 678 A.2d 398, 401 (1996), Standard Venetian Blind
Co., 469 A.2d at 566, but the court should read policy
provisions so as to avoid ambiguity and not twist the language or
rewrite the contract to create doubts where none exist. See
Northbrook Ins. Co., 690 F.2d at 372.
The policy provision on which Continental relies in arguing
that Mr. Kubek may not recover UIM benefits is found in the