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NATIONWIDE MUTUAL INSURANCE COMPANY v. COSENZA

November 2, 2000

NATIONWIDE MUTUAL INSURANCE COMPANY, PLAINTIFF,
V.
WILLIAM COSENZA, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Eduardo C. Robreno, Judge.

MEMORANDUM

I. INTRODUCTION

This case involves a dispute over insurance coverage arising out of an auto accident involving two cars, three claimants, and three insurance policies.

The defendants in this case are the driver, Mrs. Angeline Cosenza, and passengers, Mr. William Cosenza and Patsy Dezii, of a vehicle that collided with another vehicle, allegedly resulting in personal injuries to defendants. Defendants' vehicle was insured under an automobile policy ("the auto policy") issued by plaintiff, Nationwide Mutual Insurance Company ("Nationwide"), that contained both liability and underinsured motorist coverage ("the liability and underinsured portions of the auto policy"). The defendants' vehicle's policy holder, Mr. Cosenza, also carried an umbrella policy issued by Nationwide. The other vehicle involved in the accident was covered by an automobile liability policy issued by Progressive Casualty Insurance Company ("Progressive").

After the accident, defendants filed suit in state court against the driver of the other vehicle. The parties subsequently settled the state court action. Under the terms of the settlement, defendants received the full amount of the coverage available under the Progressive liability policy. Two of the three defendants, Mr. Cosenza and Dezii, also received some payment under Nationwide's auto policy, but did not exhaust the full amount of the coverage available under that policy. No payment was made under either Nationwide's underinsured portion of the auto policy or under the umbrella policy.

The defendants have now made claims for additional recovery under the underinsured portion of the auto policy. In this action, Nationwide now seeks a declaratory judgment that defines the rights of defendants under the auto policy. Before the court are cross-motions for summary judgment. The primary issue raised by the motions is whether defendants are prohibited from further recovery under the terms of the auto policy.

For the reasons that follow, the court will grant in part and deny in part both motions as follows: (1) Mr. Cosenza and Dezii, who recovered liability benefits under the auto policy, are prohibited from recovering underinsured motorist benefits for their own injuries under either the auto policy or the umbrella policy by the plain language of the auto policy barring recovery of both liability and underinsured benefits; (2) Mrs. Cosenza is not prohibited from recovering underinsured motorist benefits for her own injuries under either the auto policy or the umbrella policy because the other vehicle involved in the accident insured by Progressive and not the vehicle insured by Nationwide is the "underinsured motor vehicle" upon which her claim is predicated; (3) Mrs. Cosenza is prohibited from recovering loss of consortium underinsured motorist benefits stemming from Mr. Cosenza's injuries under either the auto policy or the umbrella policy because her claim is derivative of her husband's claim, and her husband is prohibited from recovering underinsured motorist benefits for his own injuries by the plain language of the auto policy; (4) Mr. Cosenza is not prohibited from recovering loss of consortium underinsured motorist benefits stemming from his wife's injuries under either the auto policy or the umbrella policy because the ambiguous language of the auto policy, when construed against Nationwide, does not bar Mr. Cozensa's claim for underinsured motorist benefits; and (5) Nationwide is not entitled to a credit for payments already received by defendants pursuant to the state court settlement.

II. FACTS

The relevant facts are undisputed. On July 16, 1995, William Cosenza and Patsy Dezii were passengers in an automobile driven by Angeline Cosenza ("defendants' vehicle") which was involved in a collision with another vehicle driven by Angela M. Nicolucci ("Nicolucci's vehicle").*fn1 Defendants' vehicle was covered by an automobile insurance policy issued to defendant Mr. Cosenza by the plaintiff, Nationwide Mutual Insurance Company. The auto policy provided up to $500,000 in coverage for each of the two portions of the auto policy relevant to this action: liability coverage and underinsured motorist coverage. Mr. Cosenza was also the insured under an umbrella insurance policy ("the umbrella policy") issued by Nationwide, that provided coverage in the amount of $500,000 for underinsured motorist coverage and $1,000,000 in total liability coverage. Nicolucci's vehicle was covered by a liability policy issued by Progressive with bodily injury coverage limits of $15,000/$30,000.

Thereafter, the three defendants to this action made claims upon Nationwide for underinsured motorist benefits under both the auto policy and the umbrella policy.*fn3 In response, Nationwide filed the instant declaratory judgment action.

Nationwide contends that defendants are prohibited from recovering underinsured motorist benefits under the auto policy for three alternative reasons. First, Nationwide argues that the defendants' vehicle is not an "underinsured motor vehicle" under the auto policy. Second, Nationwide asserts that even if the defendants' vehicle is an "underinsured motor vehicle" as defined in the auto policy, defendants are prohibited under the auto policy from recovering both liability and underinsured benefits for the same injuries. Third, Nationwide contends that it is entitled to a credit equal to the full amount of the coverage limits under both the auto policy and the Progressive policy. Finally, Nationwide argues that because defendants are prohibited from recovering underinsured motorist benefits under the auto policy, and recovery under the umbrella policy depends upon recovery under the auto policy, defendants are likewise prohibited from recovering underinsured motorist benefits under the umbrella policy.

In response, defendants argue that Nationwide misconstrues their claims for underinsured motorist benefits. Defendants argue that Nicolucci's vehicle, not defendants' vehicle, is the "underinsured motor vehicle" upon which their claim for recovery is predicated in this case. According to defendants, the prohibition against recovering under both the liability and underinsured portions of the auto policy is inapplicable where defendants' claims are based upon the underinsured status of Nicolucci's vehicle. Defendants also argue that even if defendants Mr. and Mrs. Cosenza are prohibited from recovering underinsured motorist benefits for their own injuries, they may still recover derivatively for each other's injuries through their loss of consortium claims. Finally, defendants contend that because they are not prohibited from recovering underinsured motorist benefits under the auto policy, they are likewise not prohibited from recovering any supplemental benefits due under the umbrella policy.

III. LEGAL STANDARD

A. Summary Judgment Under Fed.R.Civ.P. 56

Summary judgment is appropriate if the moving party can "show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Where the movant is the party bearing the burden of proof at trial, it must come forward with evidence entitling it to a directed verdict. See Paramount Aviation Corp. v. Augusta, 178 F.3d 132, 146 (3d Cir. 1999), cert. denied, 120 S.Ct. 188 (1999). When ruling on a motion for summary judgment, the court must view the evidence in the light most favorable to the non-movant. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The court must accept the non-movant's version of the facts as ...


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