Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Freeth v. Zurich American Insurance Co.

United States District Court, E.D. Pennsylvania

July 15, 2015

STEFAN FREETH, Plaintiff,
v.
ZURICH AMERICAN INSURANCE CO., Defendant

          For STEFAN FREETH, Plaintiff: THOMAS MORIBONDO, LEAD ATTORNEY, LAW OFFICE OF THOMAS MORIBONDO, WEST CHESTER, PA.

         For ZURICH AMERICAN INSURANCE CO., Defendant: MARC J. SYKEN, LEAD ATTORNEY, BODELL BOVE LLC, PHILADELPHIA, PA.

         MEMORANDUM

         Gerald Austin McHugh, United States District Judge.

         This case involves the complex and conceptually muddled area of Pennsylvania's law on automobile insurance coverage. At issue is Zurich American Insurance Company's (" Zurich" ) compliance with the technical requirements for lowering limits of uninsured motorist (" UM" ) and underinsured motorist (" UIM" ) coverage. That narrow question has great practical significance, because, depending on the answer, Plaintiff Stefan Freeth, an employee of Road-Con, Inc. (" Road-Con" ), either can seek up to one million dollars in benefits, or will be limited to collecting thirty-five thousand dollars for a serious work-related accident. The precise question presented is whether Zurich's use of a general Summary Form, when coupled with certain Pennsylvania specific forms, was legally sufficient to elect lower limits of uninsured coverage as required by the Pennsylvania Motor Vehicle Financial Responsibility Law (" MVFRL" ), 75 Pa.C.S.A. § 1701, et seq. Although the issue is a close one, because Defendant failed to procure a written, express election of reduced UM coverage, I conclude that Zurich's Business Automobile Insurance Policy (" the Policy" ) does not satisfy the requirements of Pennsylvania law. Consequently, by operation of law, Defendant is required to provide UM benefits in the amount of one million dollars to Freeth in connection with the underlying action.

         I. Factual Allegations and Procedural Background

         On September 21, 2012, Plaintiff Stefan Freeth was working from his truck in the course of his employment with Road-Con, performing repairs on the Northeast Extension of the Pennsylvania Turnpike. Freeth Compl. at ¶ 17. While standing on the tailgate of his vehicle in the northbound lanes, a southbound tractor trailer struck a traffic sign, causing it to propel into Plaintiff's left leg, resulting in " serious, disabling injuries." Id. ¶ 17-19. The tractor trailer has not been identified, giving rise to a claim for uninsured motorist benefits.

         There is no dispute that Mr. Freeth is eligible to receive UM benefits.[1] The sole question is the limit of coverage. The face of the Policy provides for liability coverage with a limit of one million dollars and UM/UIM in the amount of $35,000. Id. at 5; Plaintiff's Exhibit A; Defendant's Exhibit B & C.

         After the accident, Freeth submitted a claim for UM coverage in the amount of $1,000,000.00 to Defendant Zurich, the commercial auto insurer for Road-Con, contending that Zurich's failure to follow proper procedures in the selection of coverages rendered the Policy's UM limit equal to the liability limit, by operation of law. Zurich responded that it has no obligation to provide Plaintiff with UM benefits in excess of $35,000.00, resulting in this declaratory judgment action. The parties have cross-filed for summary judgment, asking the Court to choose between these competing interpretations of the Policy and documents leading to its formation.

         II. The Insurance Policy

         Pennsylvania, as a matter of public policy, favors the inclusion of adequate amounts of UM benefits in auto insurance policies. Therefore, the limits of UM coverage are deemed equal to the limits of liability coverage, unless the insured has requested in writing that lower limits of UM coverage are sought. In this case, Zurich relies upon a Summary Form meant to encompass the requirements of each state, supplemented with state-specific forms where states have additional technical requirements for waiver/rejection or reduced coverage. Plaintiff argues that the Uninsured/Underinsured Motorists Coverage Selection/Rejection Limits Summary Form (" Summary Form" ), signed by the President of Road-Con,[2] was legally insufficient under Section 1734 of the Pennsylvania MVFRL in violation of state law. Specifically, Plaintiff contends that Defendant's Summary Form simply lists the UM coverage limits for every state, which fails to satisfy Pennsylvania's specific statutory requirements. Zurich counters that the Summary Form qualifies as a written election of lower UM limits, in full compliance with the PA MVFRL.

         The Summary Form at the center of the dispute reads, in relevant part:

UNINSURED/UNDERINSURED MOTORISTS COVERAGE SELECTION/REJECTION/LIMITS SUMMARY FORM
. . .
Your policy(s) contains Uninsured/Underinsured Motorists Coverage Selection/Rejection and Limits Options forms which allow you to reject coverage or to select various limits and coverage options. Your signature on this summary form indicates that you have read and understand each state-specific form and that the selections or rejections marked on the state forms have been accepted by you.

 

OPTION II State Min UM/UIM -- Combined Single Limit

STATE

Selected Limits

. . .

[alphabetical listing of states]

[dollar amount of coverage limits]

. . .

Pennsylvania*

$35,00

. . .
Please Note: * Indicates the attached State Form MUST be signed by the First Named Insured.
Failure to return the Uninsured/Underinsured Motorist (UM/UIM) Selection/Rejection Summary Form and required state-specific forms prior to the policy inception dates will result in the policy being issued with coverage limits imposed by the operation of state law. In such event, you shall reimburse us for the payments made on UM/UIM claims. The amount of your reimbursement obligation shall be equal to the amount of loss paid in excess of the IM/IUM limits shown in the Automobile Liability Limits section of the proposal.
THIS SUMMARY IS NOT A SUBSTITUTE FOR REVIEWING EACH INDIVIDUAL STATE'S SELECTION/REJECTION FORM FOR UM AND UIM COVERAGE. YOU ARE REQUIRED TO DO SO.
. . .
I acknowledge that I have reviewed each individual state's selection/rejection form, I have made the elections indicated and that I have the authority to sign this form on behalf of all Named Insureds on those policies listed above.

         Defendant's Exhibit C.

         Defendant also emphasizes that the above Summary Form followed a cover letter from Zurich Account Manager, Dave Russow, explaining the purpose of the Summary Form as follows:

Enclosed please find the following forms that reflect the coverage limits requested for Uninsured Motorists (UM) Coverage . . . The Summary Form was designed to reduce the number of state-specific forms required to be signed and dated by the First Named Insured. . . Because you have requested Uninsured/Underinsured Motorist coverage with limits lower than your Auto Liability limit, we have prepared a package ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.