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Vanderhoff v. Harleysville Insurance Co.

July 6, 2010


Appeal from Order of the Superior Court entered 03-01-2006 at No. 1984 MDA 2004 which Reversed the Order of Luzerne County Court of Common Pleas, Civil Division Entered 11-17-2004 at No. 5611-C-2003.

The opinion of the court was delivered by: Mr. Justice BAER*fn1


ARGUED: April 14, 2008


In this case, we consider the effect of the inclusion of a provision in the Motor Vehicle Financial Responsibility Law's (MVFRL), 75 Pa.C.S. §§ 1701-1799.7, definition of "uninsured motor vehicle," providing for notification of police and the insurer within thirty days of an accident caused by an unidentified vehicle. Specifically, we examine the continued applicability of the long-standing precedent of this Court conditioning an insurer's denial of benefits, due to the insured's failure to provide notice, upon the insurance company's ability to demonstrate prejudice. See Brakeman v. Potomac Insurance Co., 371 A.2d 193 (Pa. 1977) (holding that to deny benefits an insurer must demonstrate prejudice resulting from the insured's failure to provide notice). We conclude that the application of the reporting provisions in this case is not controlled by our recent decision in State Farm Mutual Automobile Insurance Co. v. Foster, 889 A.2d 78 (Pa. 2005), which specifically involved the failure to notify law enforcement, but instead is governed by our decision in Brakeman. Accordingly, we reverse the decision of the Superior Court, which in reliance on Foster, did not require a demonstration of prejudice by the insurer.

On October 4, 2001, a motor vehicle collision occurred between a truck driven by Appellant Forester Vanderhoff and a car driven by Mr. Ryan Piontkowski on the Sans Souci Parkway in Hanover Township, Luzerne County. Appellant was operating the truck in the course of his employment with Respiratory and Convalescent Specialties, under a motor vehicle insurance policy with Harleysville Insurance Co. Prior to the collision, both vehicles were preparing to turn left at a busy intersection controlled by a stoplight, with Mr. Piontkowski's car in front of Appellant's truck. Appellant avers that when the green turning arrow appeared, he began proceeding forward, but took his eyes off the road for a second. When he looked back to the road, he discovered that Mr. Piontkowski's car had stopped in front of him. Although he applied his brakes, Appellant nonetheless struck Mr. Piontkowski's car.

A critical factual dispute in this case involved whether Mr. Piontkowski stopped to avoid an unidentified car. If the unidentified car existed and caused the accident, the so-called "phantom vehicle" could constitute an uninsured motor vehicle, under the definition provided in § 1702 of the MVFRL,*fn2 which could trigger Appellant's recovery of uninsured motorist benefits under the Harleysville insurance policy covering his employer's vehicle. The existence of the phantom vehicle, however, was disputed because, while Appellant testified to its existence, Mr. Piontkowski denied it. Moreover, Appellant apparently did not mention the phantom vehicle in the account he provided to the hospital after the accident, nor when filing his workers' compensation claim with Harleysville, which was also his employer's workers' compensation carrier. Additionally, the original police report did not reference a phantom vehicle. Instead, Appellant asserts that when he received the police report several months after the accident he noticed the omission of the phantom vehicle and, in September 2002, requested that the Hanover Police Department correct the report. The request was denied.

Central to the issues before this Court is a dispute concerning whether Appellant notified Harleysville of the accident, including the existence of the phantom vehicle. Although Appellant filed a workers' compensation claim with Harleysville twenty days after the accident, he did not file a claim for uninsured motor vehicle benefits with Harleysville until June 14, 2002, over eight months after the October 2001 accident, despite a provision in the insurance contract requiring prompt notice and § 1702 of the MVFRL requiring notice within thirty days of the accident. Appellant, however, asserted that he thought Harleysville had notice of the accident and was aware of the surrounding facts as a result of his workers' compensation claim, especially given that Harleysville told Appellant it was investigating the accident, and sent him to be examined by Harleysville's doctor. Appellant also assumed that the police report indicated the existence of the phantom vehicle, although, as noted above, it actually did not contain any such information.

Disputing Appellant's claim to benefits, Harleysville instituted a declaratory judgment action in September 2003. A few days later, Appellant filed a Petition for the Appointment of a Neutral Arbitrator. In May 2004, the trial court held a hearing to determine whether an uninsured motor vehicle was involved in the accident and whether Appellant satisfied the notification requirements of the MVFRL and his policy, as resolution of these issues was necessary before a decision could be rendered on the issue of whether the case should be submitted to arbitration.

At the hearing, Appellant and Mr. Piontkowski testified regarding their memory of the accident. Additionally, the police officer who investigated the accident testified that neither driver reported the involvement of a phantom vehicle at the scene of the accident, but that Appellant had later requested amendment of the police report. The officer also noted that it is not uncommon for those involved in accidents to report differing versions of the facts and to leave out details in the immediate aftermath of a crash. Finally, a representative of Harleysville testified that the first notice provided by Appellant of the potential uninsured motorist claim was not given until June 2002, and that the representative was unaware of Appellant's related workers' compensation petition filed with the same insurance company.

After the trial court entered an order in favor of Appellant, Harleysville filed a notice of appeal to the Superior Court challenging the trial court's conclusions that a phantom vehicle existed and that Appellant provided proper notice to Harleysville and the police of an accident involving a phantom vehicle. In its opinion pursuant to Pa.R.A.P. 1925(a), the trial court stated that it "had the opportunity to [weigh] the testimony of Mr. Piontkowski as opposed to that of [Appellant] and the other witnesses and views [Appellant's] testimony as being more credible and believable." Tr. Ct. Op. at 3. It also concluded that Appellant "took steps to notify both Harleysville and the Police Department by verbally telling representatives of Harleysville about the existence of the phantom vehicle after the collision occurred while processing his worker's compensation file and he also verbally notified the investigating police officer." Tr. Ct. Op. at 7. The court concluded that Appellant "simply told the representative of Harleysville about the phantom vehicle and this Court believes [Appellant] took such action." Tr. Ct. Op. at 8.

The Superior Court reversed the decision of the trial court regarding its finding that Appellant provided notice to Harleysville. First, however, the Superior Court acknowledged that it could not second guess the fact finding of the trial court on the issue of the existence of a phantom vehicle, given that the trial court clearly stated that it found Appellant's testimony to be credible on that issue. Additionally, the Superior Court noted that it was bound by the trial court's determination that Appellant reported the accident to the police as soon as practicable because the trial court found credible Appellant's testimony that he was unaware that the police report did not reference the phantom vehicle and that he attempted to correct the report as soon as he discovered the discrepancy. Conversely, the Superior Court found that the record did not support the trial court's finding that Appellant "notified his employer as well as Harleysville Insurance of the facts surrounding the collision, including the phantom vehicle" as soon as practicable. Super. Ct. Slip Op. at 7. Instead, the Superior Court observed, "nowhere in the record does [Appellant] testify that he verbally notified Harleysville of the phantom vehicle. Rather, he simply asserts that he thought Harleysville was aware of the facts of his case. Merely assuming that Harleysville knew of the phantom vehicle is not enough." Id. at 8 (internal citation omitted). The Superior Court concluded that the MVFRL required Appellant to notify Harleysville of an accident involving a phantom vehicle within thirty days or as soon as practicable, and that the earliest evidence that Appellant actually provided notice was during a independent medical examination in February 2002. The court concluded that the notice was not sufficient.

Additionally, the Superior Court rejected Appellant's counter argument that under Brakeman even if he failed to provide proper notice to Harleysville, Harleysville could not deny him benefits as a result of that failure unless it could demonstrate that it suffered prejudice. The Superior Court quoted our recent decision in Foster to conclude that "Brakeman's prejudice requirement is inapplicable to the notice provisions of §1702." Id. at 9. Therefore, the court reversed the judgment in favor of Appellant.

We granted allowance of appeal to decide the following question: "Whether an insurance carrier should be required to prove prejudice relative to the late reporting to the carrier of an accident involving an unidentified vehicle when such accident was timely reported to law enforcement ...

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