The opinion of the court was delivered by: Judge Conaboy
Here we give final consideration to what the Court has construed as the parties' cross-motions for summary judgment.*fn1 (Doc. 18.) This opinion supplements the prior Memorandum and Order of this Court entered on May 30, 2006. (Doc. 30.) Transguard Insurance Company of America ("Plaintiff" or "Transguard"), seeks declaratory judgment of the amount of underinsured motorist ("UIM") coverage available to Michael and Sharon Hinchey ("Defendants"). (Doc. 1.)
Plaintiff is a foreign corporation organized and existing under the laws of Illinois. (Doc. 1, ¶ 1.) Defendants are residents of Pennsylvania. (Doc. 1, ¶ 3-4.) Therefore, this declaratory action comes before the Court through diversity jurisdiction. 28 U.S.C. §§ 1332(a), 2201. There is no dispute that Pennsylvania substantive law applies. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78-80 (1938).
I. FACTUAL BACKGROUND*fn2
Michael Hinchey ("Defendant") was injured on December 21, 2002, in a motor vehicle accident. (Doc. 36 at 1.) An insurance policy existed between the insurer, Transguard, and Matheson Warehouse Company ("Matheson"), with an effective period of May 5, 2002, to May 5, 2003. (Doc. 1 at 2, ¶ 8.) At the time of the accident, Defendant was driving a vehicle listed in the policy as a Covered Auto. (Doc. 1 at 4, ¶ 16.) The policy covered a large number of vehicles. (Doc. 30 at 2.) Additionally, eight (8) vehicles were designated for personal use by employees, including the vehicle driven by Defendant. Id.
Paul Hertel & Comapny ("Hertel"), the insurance broker, and Transguard previously executed an agency contract. (Doc. 36 at 4-5, Ex. A.) The contract was effective until canceled by one of the companies. Id. According to Susan Richardson, an executive of Transguard, agency contracts, like the one here, were executed between Transguard and brokers that would like to submit insurance applications on behalf of their customers. (Doc. 36, Ex. A.) Further, Transguard's agency contract contained agreements defining how Transguard and the brokers would conduct business with each other. (Doc. 36 at 4-5, Ex. A.)
Initially, Matheson, through the insurance broker, Hertel, applied for insurance with Transguard on or about February 23, 2001. (Doc. 37 at 3.) On May 4, 2001, Bill Smith, an employee of Hertel, sent an electronic message ("e-mail") to Susan Richardson, an executive of Transguard. (Doc. 37 at 3, Ex. B.) In the e-mail, Smith stated that certain changes to coverage were to be made. (Doc. 37, Ex. B.) The e-mail from Smith included, among several other requests relating to Matheson's policy, a request for UIM limits of $500,000.00 per vehicle. Id. The requested UIM coverage was less than the bodily injury liability limits of $1,000,000.00 per vehicle. (Doc. 37 at 3.)
Also in the e-mail, Smith requested Richardson to provide him with the premium amount so that he could bill Matheson. (Doc. 37, Ex. B.) Richardson replied to Smith's e-mail with a quote dated May 17, 2001. (Doc. 37 at 3, Ex. C.) On August, 17, 2001, Traci Pepe, an employee of Hertel, signed the policy acceptance form on behalf of Matheson. Id.
II. PROCEDURAL BACKGROUND
In the prior Memorandum and Order of May 30, 2006, the Court originally considered the parties' arguments for cross-motions for summary judgment. (Doc. 30.) At that time, Plaintiff argued that the amount of UIM coverage on the eight vehicles designated for personal use was limited to $500,000.00 for each vehicle. (Doc. 25 at 13.) This argument was based on a request via e-mail made to Plaintiff by the insurance broker, Hertel. Id. Plaintiff argued the e-mail satisfied the statutory requirements for a request for UIM coverage in an amount less than the bodily injury limit under the Pennsylvania Motor Vehicle Financial Responsibility Law ("MVFRL"), as set forth in 75 Pa. C.S. § 1734. Id.
In contrast, Defendants argued that the UIM coverage was equivalent to the liability limit of $1,000,000.00 per vehicle and $8,000,000.00 after stacking coverage. (Doc. 29 at 18.) Defendants asserted that the coverage amount requested by the insurance broker for reduced UIM coverage was not valid under 75 Pa. C.S. § 1734. (Doc. 29 at 7.) Further, Defendants maintained the e-mail was ineffective because it was not a written request by the named insured. (Doc. 29 at 5-6.) Defendants also alleged that the broker was acting as the agent of the insurer, Transguard, and not as an agent of the named insured. (Doc. 29 at 6.) Therefore, according to Defendants, the e-mail could not be construed as a written request by the named insured. (Doc. 29 at 6.)
This Court made the following findings:
1. The named insured, Matheson Warehouse Company ("Matheson"), purchased a Transguard Insurance Company of America insurance policy through Paul Hertel & Company ("Hertel"), an insurance broker (Doc. 30 at 18);
2. The policy covered a large number of vehicles, of which, eight (8) vehicles owned by Matheson were designated for personal use (Doc. 30 at 2) by employees, such as Michael Hinchey, and their spouses (Doc. 30 at 17);
3. The stacking of UIM coverage was available for the eight (8) personal use vehicles (Doc. 30 at 2);
4. Michael Hinchey ("Defendant") was an officer and employee of Matheson (Doc. 30 at 17);
5. Defendant was severely injured in an automobile accident while driving a vehicle covered by the insurance policy issued by Plaintiff (Doc. 30 at 16-17); and
6. Defendants were entitled to stack UIM coverage for the eight (8) vehicles designated for personal use (Doc. 30 at 17).
This Court summarized the remaining issue as whether the request via e-mail of an employee of the insurance broker was sufficient to meet the requirements of 75 Pa. C.S. § 1734. (Doc. 30 at 18.) We concluded that the proper inquiry began with the question of whether the insurance broker acted as an agent of the named insured, Matheson, or the insurer, Transguard. Id. This Court determined that disposition of the issue was not appropriate at that time and reserved the determination of the amount of UIM coverage available to Defendants until after further hearing on the remaining issue. (Doc. 30 at 20.)
Counsel for the parties have submitted the required briefs on the remaining issue (Docs. 36-38), and the Court heard oral argument on October 19, 2006, and the remaining issue is now ripe for disposition.
Based upon the oral argument and the written submissions of the parties, the Court finds that:
1. There was a valid commercial auto insurance policy issued by Transguard to Matheson;
2. The policy was in force on the day of the accident;
3. Michael Hinchey was an insured under the policy and was driving a covered vehicle on the day of the accident;
4. The policy provided coverage of eight (8) vehicles, among other things, for the personal use of parties like the Hincheys;
5. The broker, Hertel, was at all times pertinent to the outcome of this case, acting as the agent of the named insured, Matheson, not the insurer, Transguard;
6. The e-mail request made by the broker was not a valid request under the Pennsylvania MVFRL under § 1734 to limit the amount of UIM coverage on each vehicle to $500,000.00;
7. The available UIM coverage is in the amount of $1,000,000.00 per vehicle;
8. Defendants are entitled to stack the coverage under the policy, resulting in a total amount of UIM ...