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Travelers Property Casualty Co. of America v. State Automobile Mutual Insurance Co.

March 10, 2008


The opinion of the court was delivered by: Arthur J. Schwab United States District Judge



I. Introduction

This is an insurance coverage dispute. The insured, Sheila Biblis ("Biblis"), and fellow employee Adella Johnson ("Johnson"), were seriously injured by an underinsured motorist while Biblis was driving a rental vehicle within the course of her employment. Biblis was insured by Travelers Property Casualty Company of America ("Travelers"), on a business policy maintained by her employer, Whispering Oaks, and she was also insured by State Automobile Mutual Insurance Company ("State Auto") on a personal automobile policy. Biblis brought a claim for underinsured motorist coverage and because State Auto chose not to participate in the settlement, Travelers paid Biblis $425,000 for her injuries, and $535,000 for the injuries to her passenger.

Travelers then brought a two-count complaint before this Court seeking a declaration that State Auto and Travelers are in the same priority of underinsured motorist coverage and alleging a claim for pro rata contribution against State Auto. Before this Court are the parties cross- motions for summary judgment.

After careful consideration of the cross motions for summary judgment, the responses thereto, the supporting briefs, and the materials submitted in support of summary judgment, the Court finds that the order of priority is equal as a matter of law. Therefore, the Court will grant the motion for summary judgment brought by Travelers (doc. no. 24), and will deny the motion for summary judgment brought by State Auto (doc. no. 20).

II. Summary Judgment Standards

Summary judgment under Fed.R.Civ.P. 56(c) is appropriate "'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Woodside v. School Dist. of Philadelphia Bd. of Educ., 248 F.3d 129, 130 (3d Cir. 2001), quoting Foehl v. United States, 238 F.3d 474, 477 (3d Cir.2001) (citations omitted). In deciding a summary judgment motion, the court must "view the evidence ... through the prism of the substantive evidentiary burden" to determine "whether a jury could reasonably find either that the plaintiff proved his case by the quality and quantity of the evidence required by the governing law or that he did not." Anderson v. Consolidated Rail Corp., 297 F.3d 242, 247 (3d Cir. 2002), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986).

When the non-moving party will bear the burden of proof at trial, the moving party's burden can be "discharged by 'showing' -- that is, pointing out to the District Court -- that there is an absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the moving party has carried this burden, the burden shifts to the non- moving party who cannot rest on the allegations of the pleadings and must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). Thus the non-moving party cannot rest on the pleadings, but instead must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial," Fed.R.Civ.P. 56(e), and cannot rely on unsupported assertions, conclusory allegations, or mere suspicions in attempting to survive a summary judgment motion. Williams v. Borough of W. Chester, 891 F.2d 458, 460 (3d Cir.1989) (citing Celotex, 477 U.S. at 325 (1986)). The non-moving party must respond "by pointing to sufficient cognizable evidence to create material issues of fact concerning every element as to which the non-moving party will bear the burden of proof at trial." Simpson v. Kay Jewelers, Div. Of Sterling, Inc., 142 F. 3d 639, 643 n. 3 (3d Cir. 1998), quoting Fuentes v. Perskie, 32 F.3d 759, 762 n. 1 (3d Cir. 1994).

"In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence 'is to be believed and all justifiable inferences are to be drawn in his favor.' Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)." Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004.) See also Doe v. County of Centre, PA, 242 F.3d 437, 446 (3d Cir. 2001) (court must view facts in the light most favorable, draw all reasonable inferences, and resolve all doubts, in favor of the nonmoving party).

III. Material Facts

There are no genuine issues of material fact, only issues about the appropriate inferences and legal consequences of the undisputed material facts, and unless noted, the following facts are not disputed.

On February 22, 2001, Biblis was involved in an automobile accident while driving a rental vehicle during the course and scope of her employment with Whispering Oaks. Fellow employee Johnson was a passenger in the rental vehicle. Both Biblis and Johnson sustained serious injuries when the rental vehicle was struck by a vehicle driven by Ronald Mahonovich. Mahovich carried automobile liability insurance with Nationwide Insurance Company; however, his bodily injury limit was $25,000 per person. Those limits were paid to Biblis and Johnson but this sum was insufficient to compensate them for their injuries.

Whispering Oaks was an insured under a policy issued by Travelers to Holiday Retirement Corp. with effective dates of 12/1/2000-12/1/2001 and underinsured motorists (UIM) limits of $1,000,000. Travelers paid Johnson $535,000 in UIM benefits for her injuries, and paid Biblis $425,000 in UIM benefits for her injuries, based upon a fair and reasonable estimate of their damages.

Biblis was an insured under a personal automobile policy issued to her by Meridian Mutual Ins. Co., now State Auto, which was also in effect at the time of the accident. The State Auto policy, which listed three vehicles on its declaration page, and only two of which had underinsured coverage, had coverage limits of $250,000. However, State Auto does not have a valid waiver of stacking of underinsured motorist limits from Biblis.

Prior to the payment of UIM benefits to Biblis, Travelers invited State Auto, as successor to Meridian Mutual Ins. Co., to participate in the settlement on a pro-rata basis, based upon the fact that both policies were of the second priority of recovery. State Auto declined to participate because it disagreed that the two policies were both of the second priority of recovery.

After Travelers made its payment of UIM benefits to Biblis, State Auto paid Biblis $40,000 in UIM benefits. The rental car company did not provide UIM coverage for the rental vehicle.

The Travelers Policy

The starting point of this or any insurance coverage dispute is, of course, the insurance policy or policies.

The Travelers Policy contains Uninsured/Underinsured Motorists Coverage with limits of $1,000,000, governed by a Pennsylvania Underinsured Motorists Coverage - Nonstacked Endorsement. The Covered Auto Symbol for Uninsured and Underinsured Motorists Coverage is "2." The policy provides that Covered Auto Symbol 2 equals "OWNED 'AUTOS' ONLY," meaning "only those 'autos' you own (and for Liability Coverage any 'trailers' you don't own while attached to power units you own). This includes those 'autos' you acquire ownership of after the policy begins."

In other words, the coverage and limits of insurance section clearly provides that uninsured and underinsured motorists coverage is limited to owned autos only. Here, there is no dispute that the insured did not own the vehicle in question.

The Pennsylvania Underinsured Motorists Coverage - Nonstacked Endorsement of the Travelers Policy states:

A. Coverage

1. We will pay all sums the "insured" is legally entitled to recover as compensatory damages from the owner or driver of an "underinsured motor vehicle." The damages must result from "bodily injury" sustained by the "insured" caused by an "accident." The owner's or driver's liability for these damages must result from the ownership, maintenance or use of an "underinsured motor vehicle."

Exhibit 1, at p. 1 of 4.

The Pennsylvania Underinsured Motorists Coverage - Nonstacked Endorsement of the Travelers Policy defines who ...

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