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Ford v. American States Insurance Co.

Supreme Court of Pennsylvania

February 22, 2017

ALISHA L. FORD, Appellant
v.
AMERICAN STATES INSURANCE COMPANY, Appellee

          ARGUED: November 2, 2016

         Appeal from the Order of the Superior Court entered December 30, 2015 at No. 1800 WDA 2014, affirming the Order of the Court of Common Pleas of Westmoreland County entered October 17, 2014 at No. 3733 of 2013.

          SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

          OPINION

          BAER JUSTICE.

         Section 1731 of the Motor Vehicle Financial Responsibility Law ("MVFRL") governs underinsured motorist ("UIM") and uninsured motorist coverage. 75 Pa.C.S. § 1731. Pertinent to this appeal, the MVFRL requires insurers to offer insureds UIM coverage.[1] Id. at § 1731(a). Insurers need to inform named insureds that they may reject UIM coverage by signing a written rejection form contained in Subsection 1731(c) of the MVFRL. Id. § 1731(c). Subsection 1731(c.1) of the MVFRL states that any UIM coverage rejection form that does not "specifically comply" with Section 1731 of the MVFRL is void and that, if an insurer fails to produce a valid UIM coverage rejection form, then UIM coverage shall be equal to the policy's bodily injury liability limits. Id. at § 1731(c.1). We granted allowance of appeal in this matter to determine whether an insurer's UIM coverage rejection form does "specifically comply" with Section 1731 of the MVFRL if the insurer's form is not a verbatim reproduction of the statutory rejection form found in Subsection 1731(c) of the MVFRL but, rather, differs from the statutory form in an inconsequential manner. For the reasons that follow, we hold that a UIM coverage rejection form specifically complies with Section 1731 of the MVFRL even if the form contains de minimis deviations from the statutory form. Because the Superior Court reached the proper result in this case, we affirm that court's judgment.

         The facts underlying this matter are undisputed. Audrey Ford ("Mother") is the mother of Appellant Alisha Ford ("Appellant"). Mother purchased a policy of motor vehicle insurance from Appellee American States Insurance Company ("American States"), insuring a 2000 Chevrolet Cavalier. At all times relevant to this matter, Appellant was an insured under Mother's policy because she was a resident of Mother's household. Importantly, Mother signed a UIM coverage rejection form on August 10, 2011, and neither she nor Appellant paid premiums for UIM coverage.

         On March 19, 2013, Appellant was driving the 2000 Chevrolet Cavalier in Union Township, Pennsylvania, when she collided with another vehicle. Appellant suffered personal injuries as a result of the accident. The driver of the other vehicle ("Tortfeasor") was responsible for the accident. Tortfeasor's automobile insurance company paid Appellant the liability policy limit of $25, 000. Appellant subsequently sought UIM coverage from American States under Mother's policy. However, because Mother had signed a UIM coverage rejection form, American States refused to provide UIM coverage to Appellant.

         On July 17, 2013, Appellant filed a complaint for declaratory judgment against American States. In her complaint, Appellant averred that, pursuant to Subsection 1731(c) of MVFRL, a named insured may reject UIM coverage by signing the following form:

         REJECTION OF UNDERINSURED MOTORIST PROTECTION

By signing this waiver I am rejecting underinsured motorist coverage under this policy, for myself and all relatives residing in my household. Underinsured coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.

75 Pa.C.S. § 1731(c).

         Appellant highlighted that Subsection 1731(c.1) of the MVRFL instructs an insurer that its UIM coverage rejection form must "specifically comply" with Section 1731 of the MVFRL or the form is void. 75 Pa.C.S. § 1731(c.1).[2] Appellant further noted that the same subsection of the MVFRL requires an insurer to produce a valid UIM coverage rejection form; otherwise, the insurer must provide UIM coverage equal to the policy's bodily injury liability limits. Id.

         As Appellant noted in her complaint, the UIM coverage rejection form that Mother signed and that American States relied upon when Appellant sought UIM benefits tracks the statutory rejection form found in Subsection 1731(c) of the MVFRL, save for a few minor deviations. The form at issue in this case references "motorists" instead of "motorist" in its title line and first sentence, and it injects the word "motorists" between "Underinsured" and "coverage" in the second sentence. Thus, with the deviations from the statutory language emphasized, it reads:

         REJECTION OF UNDERINSURED MOTORISTS PROTECTION

By signing this waiver I am rejecting underinsured motorists coverage under this policy, for myself and all relatives residing in my household. Underinsured motorists coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.

         Appellant's Complaint, 7/17/2013, Exhibit 3 (emphasis added).

         In her complaint, Appellant took the position that the UIM coverage rejection form that Mother signed is void because it fails to "specifically comply" with the rejection form contained in the MVFRL, due to the minor discrepancies between the statutory form and the policy's form. Accordingly, Appellant sought an order from the trial court declaring that American States must provide her with UIM coverage equal to the bodily injury liability limits of her Mother's policy.

         The trial court eventually ordered the parties to file any stipulations of fact and competing motions for summary judgment. The parties complied with the court's order. In support of her motion for summary judgment, Appellant reasserted the argument that she presented in her complaint, contending that Subsection 1731(c.1) of the MVFRL clearly and unambiguously requires a UIM rejection form to "specifically comply" with Section 1731 of the MVFRL and that the form in question fails to do so; therefore, the form is void, and she is entitled to UIM coverage. Appellant supported her position by citing to case law from this Court and the Superior Court.

         Regarding this Court's precedent, Appellant cited Lewis v. Erie Insurance Exchange, 793 A.2d 143 (Pa. 2002), specifically referring to a footnote where this Court quoted the United States District Court for the Middle District of Pennsylvania which stated, "Section 1731(c.1) imposes something akin to strict liability on insurers who do not follow the legislature's guidelines on the proper format for rejection forms . . . ." Lewis, 793 A.2d at 153 n.14 (quoting Leymeister v. State Farm Mut. Auto. Ins. Co., 100 F.Supp.2d 269, 272 (M.D. Pa. 2000)).

         As to Superior Court decisions, Appellant first referenced American International Insurance Co. v. Vaxmonsky, 916 A.2d 1106 (Pa. Super. 2006). The insurer in Vaxmonsky deleted from its UIM coverage rejection form the word "all" from the phrase "all losses and damages." See 75 Pa.C.S. § 1731(c) (stating, in the statutory rejection form, that "[u]nderinsured motorists coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages") (emphasis added). The Vaxmonsky court concluded that the form was void, because the court could not find that the insurer specifically complied with Subsection 1731(c.1) of the MVFRL.[3] Vaxmonsky, 916 A.2d at 1109. In so doing, the Vaxmonsky court determined that, by omitting the word "all" from its UIM coverage rejection form, the insurer improperly limited coverage and created ambiguity in its form. Id.

         Appellant next turned to the Superior Court's opinion in Jones v. Unitrin Auto & Home Insurance Co., 40 A.3d 125 (Pa. Super. 2012). The UIM coverage rejection form in Jones tracked the statutory rejection form contained in Subsection 1731(c) of the MVFRL. However, at the end of the body of the form, but before the date and signature lines, the insurer added to its rejection form the following sentence: "By rejecting this coverage, I am also signing the waiver on P. 13 rejecting stacked limits of underinsured motorist coverage." Jones, 40 A.3d at 128. The Jones court examined the additional sentence in terms of its "proximal relationship" to the language that tracked Subsection 1731(c) and the required signature and date lines that were to follow this language. Id. at 129-30. The Jones court ultimately held that "additions to the prescribed language, and deviation from the proximal relationship of the components, of the UIM rejection form required by 75 Pa.C.S.[ ] § 1731 fail to specifically comply with the statute and is consequently void." Id. at 131 (footnote omitted).

         In arguing that she was entitled to summary judgment, Appellant generally maintained that the case law summarized above stands for the proposition that, to "specifically comply" with Section 1731 of the MVFRL, an insurer's UIM coverage rejection form must be a "copy and paste, " verbatim reproduction of the statutory rejection form found in Subsection 1731(c) of the MVFRL. See, e.g., Appellant's Brief in Support of Appellant's Motion for Summary Judgment, 8/20/2014, at 9 ("The insurer need only copy and paste a mere 72 words from section 1731, and if it fails to do this simple task, the UIM limits will equal the limits on the policy."). Because the UIM coverage rejection form at issue in this case does not exactly reflect the form contained in the MVFRL, Appellant argued that the policy's form is invalid. Thus, Appellant posited that she is entitled to a declaration that American States must provide her with UIM coverage.

         With respect to its motion for summary judgment, American States argued that its UIM coverage rejection form is valid because it does "specifically comply" with Section 1731 of the MVFRL. In support of its position, American States turned to case law from a court of common pleas and federal courts.

         American States initially relied upon a decision from the Court of Common Pleas of Philadelphia County, Rosas-Ramirez v. Bristol West Insurance Co., 2013 Phila.Ct.Com.Pl. Lexis 450. The insurer's UIM coverage rejection form in Rosas-Ramirez tracked the statutory form, except it added an "S" to the end of "MOTORIST" in the title line of the form. The Rosas-Ramirez court concluded that the additional "S" constituted a typographical error and that the insurer's form was valid because it specifically complied with Section 1731 of the MVFRL.

         An example of federal case law relied upon by American States is an opinion from the United States Court of Appeals for the Third Circuit, Robinson v. Travelers Indemnity Co., 520 Fed.Appx. 85 (3d Cir. 2013). The rejection form at issue in Robinson was exactly the same as the form in this case - it used "motorists" instead of "motorist" in its title line and first sentence, and it injected the word "motorists" between "Underinsured" and "coverage" in the second sentence. The insured argued that, because the insurer's rejection form included the word "motorists, " the form was void as it was noncompliant with the text of the statutory rejection form.

         In disagreeing with the insured, the Third Circuit observed that the MVFRL does not define the phrase "specifically comply" and that courts have not been uniform in their treatment of UIM coverage rejection forms that add language to the statutory form. Robinson, 520 Fed.Appx. at 88. As to the specific circumstances in the case, the court reasoned that the addition of the word "motorists" into the rejection form did not introduce any ambiguity and, in fact, made the form consistent with the rest of the MVFRL. Id. While the court opined that it is a better practice for insurance companies not to supplement the statutory language of the MVFRL's rejection form, the court nonetheless concluded that the insurer's rejection form was valid because: it included the entirety of the statutory text; the addition of the word "motorists" did not introduce ambiguity into the form and did not alter the scope of the coverage;[4] and the form indisputably did not contravene any party's understanding of the intended coverage.[5]

         American States also argued that the cases cited by Appellant, such as Vaxmonsky and Jones, are consistent with American States' position that its rejection form is valid. In this regard, American States posited that the invalid forms at issue in Vaxmonsky and Jones injected ambiguity and invited confusion into the rejection forms; whereas, ...


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