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Chudyk-Heishman v. Liberty Mutual Insurance Co.

April 3, 2006


The opinion of the court was delivered by: Magistrate Judge Smyser


This case was removed to this court from the Court of Common Pleas of Cumberland County.

The case was initiated in that court on July 15, 2005 in the form of a Motion to Vacate and/or Modify the Award of the Arbitrators filed by Maribeth Chudyk-Heishman (referred to herein as "plaintiff" or as "Chudyk-Heishman"). The case was removed to this court on August 3, 2005 by the defendant, Liberty Mutual Insurance Company. The removal notice states that there is diversity of citizenship and that this court has jurisdiction under 28 U.S.C. § 1332.

Liberty Mutual Insurance Company is Chudyk-Heishman's underinsured motorist insurance carrier.

The motion to vacate (Doc. 1) avers that Maribeth Chudyk-Heishman was involved in an automobile accident on May 5, 2000 in Cumberland County on Route 81.*fn1

It is averred that Chudyk-Heishman was operating a vehicle that was behind the vehicle operated by Abigail Mearig. The vehicle operated by Steven Verdensky was behind the vehicle operated by Chudyk-Heishman. It is averred that Mearig applied her brakes and pulled off on to the left hand shoulder or median strip of the highway. Chudyk-Heishman was forced by Mearig's action to slow her vehicle, and the Verdensky vehicle collided into the rear end of the Chudyk-Heishman vehicle. Chudyk-Heishman filed suit in the Cumberland County Court of Common Pleas against both Verdensky and Mearig. With the consent of Liberty Mutual Insurance Company, Chudyk-Heishman settled her claim against Verdensky for the policy limits under Verdensky's policy. It is averred that Chudyk-Heishman entered a pro rata release, which eliminated any potential joint and several liability on the part of defendant Mearig. ChudykHeishman had prior to the settlement, sought affirmation from Liberty Mutual that if the potential for joint and several liability were eliminated, Mearig would be legally responsible for only her "pro rata share" of the total verdict and that, therefore, Liberty Mutual as the underinsured motorist coverage carrier, would receive credit only for "Mearig's pro rata share" in any underinsured motorist claim. There was no affirmation of this construct given by Liberty Mutual.

Chudyk-Heishman made a claim to Liberty Mutual for underinsured motorist benefits. The matter was submitted to arbitration. Chudyk-Heishman asked the arbitration panel to determine whether Mearig was negligent and, if so, to state her "pro rata" share of responsibility. In May of 2003, the arbitrators issued a decision stating that if Chudyk-Heishman were to proceed to underinsured arbitration prior to resolving the third party claim against Mearig, Liberty Mutual would receive credit for the entire insurance policy of Mearig and not just for Mearig's pro rata share of responsibility. Chudyk-Heishman subsequently settled with Mearig for an amount less than the policy limits under Mearig's policy.

An arbitration occurred on May 24, 2005. An issue that was argued was the amount of credit that Liberty Mutual should receive based upon the Mearig settlement. On June 16, 2005, the arbitrator decided that the gross amount of damages to which Chudyk-Heishman is entitled is $300,000. The arbitrators determined that the $300,000 should be reduced by all payments made on behalf of Verdensky and the policy limits applicable to the vehicle driven by Mearig. In effect, the arbitrators determined that Liberty Mutual was entitled to credit for the entire policy limits applicable to both Verdensky and Mearig without a determination of Mearig's pro rata share of responsibility.

The Liberty Mutual policy provides that Liberty Mutual will pay underinsured motorist benefits if the limits of liability under any applicable bodily injury bonds or policies have been exhausted. Chudyk-Heishman asserts in the Motion to Vacate that this policy language violates Pennsylvania public policy in that it does not require or permit a determination of whether Mearig was causally negligent so as to determine whether the insured is legally entitled to recover from Mearig or a determination of the comparative negligence of multiple tortfeasors. The Motion to Vacate asserts that Pennsylvania public policy is violated by this policy language because this provision forces an insured to proceed to trial against various tortfeasors to determine the amount that the insured is legally entitled to recover from potential tortfeasors and because Pennsylvania law, 75 Pa. C.S. § 1731, requires insurers to provide underinsured motorist benefits that the insured is "legally entitled to receive."

By Order of October 31, 2005, pursuant to 28 U.S.C. § 636(c), this case was assigned to this magistrate judge. A case management conference was held, and a case management order was entered (Doc. 11) on November 18, 2005. Motions for summary judgment were filed, and supporting briefs were filed (Docs. 13-17).

A statement of agreed facts was filed (Doc. 15). The following facts are undisputed:

1. On May 4, 1999, Maribeth Chudyk-Heishman was operating her 1997 Ford Escort in the left lane of Northbound Interstate 81 in Cumberland County, Pennsylvania. Immediately in front of her vehicle, also in the left lane, was a vehicle operated by Ms. Abigail Mearig. Directly behind Ms. ChudykHeisman was a vehicle operated by Steven Verdensky. Ms. Mearig suddenly applied her brakes and pulled her vehicle onto the left hand berm of the roadway. Ms. Chudyk-Heisman applied her brakes and veered her vehicle left to avoid rear ending Ms. Mearig's vehicle but was struck in the rear by the vehicle operated by Mr. Verdensky. At no time did Ms. Chudyk-Heisman's vehicle strike or make contact with the vehicle operated by Ms. Mearig.

2. As a result of the injuries sustained in this accident, Ms. Chudyk-Heisman filed a civil action in Cumberland County against both Verdensky and Mearig alleging negligence on both their parts.

3. The Chudyk-Heisman vehicle was insured under a policy of automobile insurance issued by Liberty Mutual Company which ...

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