The opinion of the court was delivered by: McLaughlin, J.
This is a declaratory judgment suit concerning underinsured motorist ("UIM") benefits sought by the plaintiff from his insurer, the defendant. The plaintiff seeks a declaratory judgment clarifying that the amount he is entitled to recover from the defendant for damages from a car accident can be reduced only by $15,000, the amount he has recovered from a settlement with one tortfeasor. The defendant contends that any recovery by the plaintiff should be reduced not only by the $15,000, but also by the insurance coverage of $300,000 held by another party against whom the plaintiff has a tort case pending in state court.
Both parties moved for summary judgment on the insurance contract underlying the plaintiff's claim. Under Pennsylvania law, an insured can only recover UIM benefits from his insurer in excess of the amount of coverage available from tortfeasors. Therefore, the Court will grant summary judgment in favor of the defendant.
I. Summary Judgment Record
The plaintiff was involved in a car accident on
September 15, 2007. Def. Br., Ex. F # 2. He brought two tort suits in state court, one against Lou, the other driver in the accident and another against Littel, a driver the plaintiff alleged "waived-on" Lou, contributing to the accident. Def. Br., Exs. D, E. The plaintiff settled his case with Lou for Lou's $15,000 insurance coverage. Def. Br., Ex. F # 11. The case against Littel is still pending in state court. Id. # 14. Littel's insurance policy provides liability coverage in the amount of $300,000. Id. # 13.
The plaintiff brought this declaratory judgment suit against his insurer, regarding his underinsurance motorist coverage for the September 15, 2007 accident. The defendant has taken the position that it is entitled to credit both the $15,000 paid and the $300,000 potentially available from Littel's insurer against any amount it might be found to owe the plaintiff. The plaintiff claims that only the $15,000 actually paid to him should apply and brought this suit seeking a declaratory judgment of his rights.
At issue in this case is the "Exhaustion Clause" of the plaintiff's policy with the defendant. It says:
In determining the amount payable under this Part III, the amount of damages that an insured person is entitled to recover for bodily injury will be reduced by all sums:
1. paid because of bodily injury by or on behalf of any person or organizations that may be legally responsible; and
2. paid or payable because of bodily injury under any of the following or similar laws:
a) workers' compensation law; or
b) disability benefits law.
However, if an insured person enters into a settlement agreement for an amount less than the sum of the limits of liability under all applicable bodily injury liability bonds and policies, our limit of liability for Underinsured Motorist Coverage shall not exceed the difference between the damages sustained by ...