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Wiley v. Universal Underwriters Insurance Co.

United States District Court, E.D. Pennsylvania

February 7, 2017

BRYANT WILEY, Plaintiff,
v.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Defendant.

          MEMORANDUM

          STENGEL, J.

         Bryant Wiley is the plaintiff and counterclaim defendant in this insurance dispute against defendant and counterclaim plaintiff Universal Underwriters Insurance Company. The parties have filed cross-motions for summary judgment on Universal's counterclaim, which seeks a declaratory judgment that Universal has no obligation to provide underinsured motorists benefits to Wiley in connection with the December 27, 2013 motor vehicle accident described in the complaint. Under the terms of the insurance policy at issue in this case, Wiley is not entitled to underinsured motorist benefits. Accordingly, Universal's motion for summary judgment is granted, and Wiley's motion for summary judgment is denied.

         I. FACTUAL BACKGROUND

         On December 27, 2013, Wiley was operating a vehicle owned by his employer, CarSense, with CarSense's knowledge and permission. (Joint Stipulation of Facts ¶¶ 19-20.) CarSense had previously purchased an insurance policy with Universal, which included garage operations and property coverage, and which was in effect from July 1, 2013 to July 1, 2014. (Id. ¶ 8.) While operating the vehicle, Wiley was allegedly injured by another vehicle driven by Michael Lenge. (Id. ¶ 21.) Wiley contends that Lenge was negligent in causing the accident, and was an underinsured motorist. (Id. ¶ 22.) Lenge's liability auto insurer tendered its policy limits to Wiley, who accepted the tender after seeking and receiving Universal's consent to do so. (Id. ¶¶ 23-24.) Universal provided its consent without prejudice to claim that there was no underinsured motorist (“UIM”) coverage for Wiley under its policy. (Id. ¶ 24.) Wiley sought and collected Workers' Compensation benefits for the injuries he sustained in the accident. (Id. ¶ 25.) Wiley also sought UIM benefits from Universal, contending that the policy covering the car he was occupying was the first priority of recovery for UIM benefits. (Id. ¶ 26.) Universal denied coverage for UIM benefits. (Id. ¶ 27.)

         The policy at issue in this case declared CarSense as the first Named Insured, while Francis McGowan and Marion McGowan, the principals of CarSense, are identified as Named Insureds Other Insureds. (Id. ¶¶ 6, 8.) Prior to the inception of the policy, CarSense received and executed Pennsylvania Important Notice form. (Id. ¶ 9.) CarSense was fully informed regarding the options for first party benefits under the policy, and made informed and knowing decisions regarding the election and rejection of first party benefits, including UIM coverage and uninsured motorist (“UM”) coverage. (Id. ¶ 10.)

         With respect to UIM coverage, CarSense intended to reject UIM benefits for all of its employees, and to secure $300, 000 in UIM benefits for the McGowans only. (Id. ¶ 11.) To that end, CarSense executed the Pennsylvania Rejection of Underinsured Motorist Protection form on March 21, 2013, prior to the effective date of the policy. (Id. ¶ 12.) The Rejection form includes the exact text of 75 Pa. C.S. § 1731(c). (Id.) CarSense also executed a Pennsylvania Underinsured Motorist Elective Options Form, expressly designating $300, 000 of UIM coverage for the McGowans only, on March 21, 2013, prior to the effective date of the policy.[1] (Id. ¶ 13.)

         The policy declarations at Item 3, Garage Operations and Auto Hazard Coverage, specified UIM coverage for the McGowans only, with limits of $300, 000 per accident. (Id. ¶ 15.) The policy states that it insures “only those coverages shown in the declarations” and that the coverages in Item 3 “will not apply to any named insured, other insured, security interest or location unless its corresponding letter or number appears next to a specific coverage in Item 3.” (Id.) The named insured “01” is CarSense and named insured “02” is the McGowans, and the other insureds are “AA” Francis and Marion McGowan. (Id.) In Item 3, only “AA” is listed for UM and UIM coverage. (Id.)

         The policy includes Endorsement Number 91, related to UIM coverage, which states the following:

Underinsured motorist coverage applies only when Endorsement 91 is shown in the declarations. In Item 2 of the declarations, each named insured and other insured is given a corresponding letter or number designation. Insurance provided by Endorsement 091 will not apply to any named insured or other insured unless its corresponding letter or number appears next to a specific coverage in Item 3 of the declarations for Coverage Part 500 or Coverage Part 830. When Endorsement 091 is shown in the declarations as applicable to more than one coverage part, the terms and conditions of this endorsement apply only to the coverage part that provides coverage for the MOTOR VEHICLE involved in an ACCIDENT.
The General Conditions apply except as amended or replaced in this endorsement. The terms and conditions of this endorsement are separate and distinct from those of Coverage Parts 500- Garage and 830-Basic Auto.

(Id. ¶¶ 16-17 (emphasis added).) Under the section “Who Is An Insured, ” Endorsement 91 states that:

         If YOU are designated in the declarations as:

1. an individual, then the following are ...

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