Opinion
Civil Action No. 02-8409.
July 20, 2004
MEMORANDUM
I. INTRODUCTION
Plaintiff Fire Casualty Company of Connecticut filed a complaint seeking a declaratory judgment that would cap its obligation to defendant, Mason Cook, for uninsured motorist (UM) benefits at $35,000. Now before me is plaintiff's motion for reconsideration of my order of April 28, 2004, granting plaintiff's motion for reconsideration but denying plaintiff's motion for summary judgment and granting defendant's cross motion for summary judgment. For the reasons stated below, I will deny plaintiff's motion.
II. BACKGROUND 1. Procedural History
On October 9, 2003, plaintiff filed a motion for summary judgment in this matter. Defendant filed a cross-motion for summary judgment on November 7, 2003. After considering the cross-motions and the parties' responses thereto, I denied both motions on March 16, 2004 holding that a genuine issue of material fact remained as to whether there was sufficient evidence in writing of the insured's intention to reduce the amount of UM coverage to $35,000.
On March 24, 2004, plaintiff filed a motion for reconsideration of my March 16 Order in which it argued that no factual issues remained and the matter was ripe for summary judgment. Defendant did not file his own motion seeking reconsideration of my March 16 Order; he did, however, file a response to plaintiff's motion for reconsideration on March 19, 2004 in which he agreed that I had all the evidence necessary to determine, as a matter of law, whether plaintiff made a written selection of $35,000 in UM coverage prior to defendant's accident. Accordingly, on April 28, 2004, I granted plaintiff's motion for reconsideration and granted summary judgment in favor of defendant holding that plaintiff has not established that the insured party made a written request for reduced UM coverage in conformance with the requirements of 75 Pa. C.S. Section 1734 and that plaintiff's obligation to defendant was not capped at $35,000.
Plaintiff filed this second motion for reconsideration on April 12, 2004. Defendant filed a response on April 28, 2004.
2. Facts
The dispute between plaintiff and defendant arose out of a May 1, 2001 motor vehicle accident in which defendant was operating a vehicle insured under a policy issued by plaintiff to Atlantic Express Transportation Group. Because the accident was allegedly caused by an uninsured motorist, defendant claims he is entitled to up to $1 million in UM benefits under the plaintiff's policy. Plaintiff, however, contends that Atlantic Express elected to cap both its UM and underinsured motorist (UIM) coverage at $35,000.
Nathan Schlenker, C.F.O. of Atlantic Express, signed a form requesting that plaintiff provide $35,000 in UIM coverage to the company but left blank the corresponding box on the form to reduce the amount of UM coverage. Plaintiff has not produced any other evidence of a written request from Atlantic Express for UM coverage limits of $35,000. Instead plaintiff has produced documents from Bob Lull, who was responsible for selling the policy at issue to Atlantic Express, that were prepared in connection with the issuance of the policy stating that it was the insured's intention to provide only the "statutory" or "basic" level of both UIM and UM coverage. Plaintiff has also produced affidavits from Schlenker and Lull stating that Atlantic Express intended the written request for reduced UIM coverage to apply to UM coverage as well and that they believed the term "statutory limits" meant coverage in the amount of $35,000.
Policy number AUTO01884, issued by plaintiff to Atlantic Express, provides liability coverage for bodily injury in the amount of $1 million. The policy itself directs readers to endorsement IL 1201 B for the correct amount of UM coverage. The policy does not note this cross-reference to the endorsement in the corresponding box for UIM coverage limits. Policy endorsement IL 1201 B (11/85), which is unsigned by an authorized representative, then states that in the Commonwealth of Pennsylvania both UM and UIM coverage are limited to $35,000 despite the absence of a prior written request asking for UM coverage to be limited to this amount.
III. STANDARD FOR MOTION FOR RECONSIDERATION
"The purpose of a motion for reconsideration is `to correct manifest errors of law or fact or to present newly discovered evidence.'" Sonders v. PNC Bank, N.A., No. 01-3083, 2003 U.S. Dist. LEXIS 17961, *3 (E.D. Pa. Oct. 9, 2003), quoting Blue Mountain Mushroom Co. v. Monterey Mushroom, Inc., 246 F. Supp. 2d 394, 398 (E.D. Pa. 2002). "In a motion for reconsideration, the burden is on the movant . . . to show `manifest' errors of law or fact or new evidence." Egervary v. Rooney, 80 F. Supp. 2d 491, 506 (E.D. Pa. 2000) (citation omitted). "[A] motion for reconsideration addresses only factual and legal matters that the Court may have overlooked. . . . It is improper on a motion for reconsideration to `ask the Court to rethink what [it] had already thought through — rightly or wrongly.'" Glendon Energy Co. v. Borough of Glendon, 836 F. Supp. 1109, 1122 (E.D. Pa. 1993) (citation omitted). "Motions for reconsideration should be granted sparingly because of the interests in finality and conservation of scarce judicial resources." Pennsylvania Ins. Guar. Ass'n v. Trabosh, 812 F. Supp. 522, 524.
IV. DISCUSSION 1. Grant of Summary Judgment to Defendant
My Order of April 28, 2004 did not amount to an improper sua sponte grant of summary judgment to defendant. Plaintiff argues that because defendant did not file a motion for reconsideration prior to April 28, 2004, I should not have granted summary judgment in his favor as his response to plaintiff's motion, which asserted that I should grant summary judgment in his favor and against plaintiff, amounted to an untimely motion for reconsideration of my Order of March 16, 2004. However, as defendant asserts, an order denying a motion for summary judgment is not a final order; it does not terminate litigation between the parties. An order denying a motion for summary judgment under Fed.R.Civ.P. 56 is an interlocutory order. Under Rule 54(b) of the Federal Rules of Civil Procedure, any order that
adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.
"A federal district court has the inherent power to reconsider interlocutory orders when it is consonant with justice to do so."American Guar. Liab. Ins. Co. v. Fojanini, 99 F. Supp. 2d 558, 560 (E.D.Pa. 2000).
In United States v. Jerry, 487 F.2d 600, 604 (3d Cir. 1973), applying the Federal Rules of Criminal Procedure, the court explained,
[n]othing in the Rules limits the power of the court to correct mistakes made in its handling of a case so long as the court's jurisdiction continues, i.e. until the entry of judgment. In short, the power to grant relief from erroneous interlocutory orders, exercised in justice and good conscience, has long been recognized as within the plenary power of courts until entry of final judgment and is not inconsistent with any of the rules.
My Order of March 16, 2004 denying the parties' cross-motions for summary judgment adjudicated less than all the rights and liabilities of the parties because it made no determination as to the final outcome of the merits of the case, but merely held that there were material issues of fact remaining to be resolved at trial. My subsequent determination that only a question of law remained, a conclusion with which both parties agreed, was therefore not barred by the Rules.
In effect, plaintiff argues that because defendant had not renewed his demand that I grant summary judgment in his favor, the case should have proceeded to trial although both plaintiff and defendant agreed that the matter was ripe for summary judgment as only a question of law remained for determination. While it may have been preferable for defendant to file his own motion for reconsideration, I am not prohibited from entering judgment in his favor merely because of his failure to do so. The parties had already filed cross-motions for summary judgment. "Where cross-motions for summary judgment are presented, each side essentially contends that there are no issues of material fact from the point of view of that party." Bencivenga v. Western Pa. Teamsters, 763 F.2d 574, 576 n. 2 (3d Cir. 1985). Prior to filing its motion for reconsideration, plaintiff had ample opportunity to review and respond to defendant's arguments in favor of summary judgment for him. Plaintiff filed a response to defendant's summary judgment motion in November, 2003, a supplemental response in February 2004, and addressed the issues in this case again in its March 2004 motion for reconsideration.
2. Amount of Uninsured Motorist Coverage
75 Pa. C.S. Section 1734 provides that "[a] named insured may request in writing the issuance of coverages . . . in amounts equal to or less than the limits of liability for bodily injury" (emphasis added)). Although the policy issued to Atlantic Express included an endorsement providing for $35,000 limits of both UM and UIM coverage, an amount below the bodily injury liability limits, because there was no written request by Atlantic Express for $35,000 in UM coverage within the meaning of Section 1734, the $35,000 UM limit in the endorsement is invalid.
As noted above, the only document produced by plaintiff that could constitute a written request for UM coverage asked for UM coverage to be provided at the "statutory" level. Plaintiff has not produced new evidence or established errors of law sufficient to alter my prior holding that the verifications of Schlenker and Lull could not be used to clarify the meaning of the term "statutory" as used in the documents Lull prepared on behalf of Atlantic Express in connection with the issuance of the policy at issue. Plaintiff argues that it should have been allowed to introduce parol evidence of the named insured's intention with respect to the amount of uninsured motorist coverage desired because the insurance contract is ambiguous. It claims that because it issued a policy that was not in accordance with the written request of the named insured that it created an ambiguity.
Plaintiff previously made this argument at length in its February 2004 filing.
As I noted in my prior opinion, the Pennsylvania Superior Court has held that the use of the term "statutory" to refer to UM/UIM coverage levels is unambiguous and refers to the statutory language of 75 Pa. C.S. Section 1731, which states that if UM/UIM coverage is not properly rejected, UM and/or UIM coverage "shall be equal to the bodily injury liability limits." Peele v. Atlantic Express Transportation Group, Inc., et al., 840 A.2d 1008, 1011-12 (Pa.Super. 2003). A term is ambiguous if it can have two or more reasonable meanings. See, e.g., 12th Street Gym, Inc. v. Gen. Star Indem. Co., 93 F.3d 1158, 1166 (3d Cir. 1996). Despite Schlenker and Lull's verifications, the term "statutory," when read in the context of a document referring to the desired amount of UM and UIM coverage under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), cannot reasonably be found to refer to $35,000 when there is no reference in any relevant Pennsylvania statute to a $35,000 amount.
Even if the use of the term statutory created an ambiguity, any ambiguity must be resolved in favor of the insured (here, defendant). See, e.g., Fire and Casualty Ins. Co. v. Ligon, 86 Fed. Appx. 517, 520 (3d Cir. Jan. 30, 2004); Allstate Ins. Co. v. Drumheller, 285 F. Supp. 2d 605, 611 (E.D. Pa. 2003),citing Pacific Indemnity Co. v. Linn, 766 F.2d 754, 761 (3d Cir. 1985). In other words, the term statutory would be found to refer to coverage equal to the bodily injury liability limits and not plaintiff's alternative interpretation of $35,000.
In Fire Casualty Insurance Company of Connecticut v. Ligon, No. 03-1283, 2004 U.S. App. LEXIS 1424 (3d Cir. Jan. 30, 2004) the Court of Appeals for the Third Circuit considered a case involving the determination of the correct amount of UIM coverage to award defendant under the same insurance policy as the one at issue in this case. The court held that although (unlike in this case) there was a written request lowering UIM coverage to $35,000, an issue of material fact remained as to when the written request was made and whether it applied to the binder of insurance coverage which applied at the time of defendant's accident or only to the policy which was issued after his accident.
The binder in Ligon stated that UIM motorist coverage was "statutory." Citing to Peele v. Atl. Express Transp. Group, Inc., 840 A.2d 1008 n. 3 (Pa.Super. 2003), the Court of Appeals for the Third Circuit held that the use of the term "statutory" in the binder was not sufficient to reduce the amount of UIM coverage below the amount of the bodily injury liability limits. The court explained:
[t]herefore, until or unless Atlantic made a written request to lower its underinsured motorist coverage, or until the insurance binder was replaced by an after-issued policy as to which Atlantic requested lower underinsured motorist coverage, [defendant] was entitled to $1,000,000 in underinsured motorist coverage — the binder's bodily injury liability limit.Ligon, No. 03-1283, 2004 U.S. App. LEXIS 1424 at **7.
"Pennsylvania courts are unanimous that the legislative intent underlying the MVFRL was to establish a liberal compensatory scheme of underinsured motorist protection." Nationwide Mut. Ins. Co. v. Consensza, 258 F.3d 197, 208 (3d Cir. 2001). This intent also extends to uninsured motorist protection.
While it is true that the MVFRL was concerned with the spiralling [sic] costs of automobile insurance under the then-existing no-fault laws, the reason for the concern was the increasing number of uninsured and underinsured drivers on the highways, and the resultant inability of those drivers to indemnify their victims for losses and damages sustained as a result of their negligence. . . . The goal of reducing costs was, therefore, tied to the broader goal of indemnification.Allwein v. Donegal Mut. Ins. Co., 671 A.2d 744, 751 (Pa.Super. 1996), citing Windrim v. Nationwide Insurance Co., 641 A.2d 1154 (Pa. 1994).
The goal of statutory construction is to ascertain and effectuate the intention of the legislature. See 1 Pa.C.S. § 1921(a). Interpreting the term "statutory" to refer to coverage equal to the bodily injury liability limits is consistent with this goal while also affirming the validity of Section 1734's requirement that a request for reduced UM coverage be made in writing and for a specific amount by the holder of an insurance policy. As I noted in my prior opinion, the writing requirement serves to lessen the potential for confusion such as that which has resulted here from the absence of a writing designating a specific amount of coverage. See Nationwide Mut. Ins. Co. v. Heintz, 804 A.2d 1209 (Pa.Super. 2002), appeal denied 818 A.2d 505 (Pa. 2003). Likewise, the writing requirement serves to lessen the need for litigation regarding the sufficiency of testimonial evidence to support a finding that decreased UM or UIM limits were requested by a named insured.
Plaintiff's argument that the MVFRL does not provide a remedy for violation of Section 1734 also fails. The Supreme Court of Pennsylvania has "expressed a certain amount of concern over any holding that would imply that there is no remedy for this basic requirement [of a written request for reduced UM/UIM coverage under Section 1734]." Heintz, 804 A.2d at 1222, citing Lewis v. Erie Ins. Exch., 793 A.2d 143, 154 n. 17, (Pa. 2002). The court in Lewis wrote that the written request "prescription is less technical in nature, and more directly in line with the traditional application of ordinary contract principles in the consumer insurance arena than Section 1732(c.1)'s separate-page requirement" for complete rejection of UM/UIM coverage. Lewis, 793 A.2d at 154 n. 17.
"In determining the legislative intent of the MVFRL, we may presume that the General Assembly did not intend an absurd or unreasonable result, and therefore intended no portions of the statute be rendered nugatory by the absence of an explicit remedy." Cebula v. Royal SunAlliance Ins. Co., 158 F. Supp. 2d 455, 462 (M.D. Pa. 2001). If I were not to allow reformation in this case, where there is no valid written request for decreased UM coverage amounts, Section 1734 would be rendered meaningless. Provisions in an insurance contract "in conflict with, or repugnant to, statutory provisions which are applicable to, and consequently form a part of, the contract, must yield to the statute, and are invalid, since contracts cannot change existing statutory laws." Kmonk-Sullivan v. State Farm Mut. Auto. Ins. Co., 746 A.2d 1118, 1121 (Pa.Super. 1999), citing, Allwein, 671 A.2d at 752. The policy provision allowing for $35,000 in UM coverage is in conflict with Section 1734's writing requirement and is therefore invalid.
"If the request [for reduced UM or UIM coverage] was not made in writing, then (1) the lower limits allegedly selected by the insured are a nullity; and (2) UM/UIM coverage is deemed to be equivalent to the bodily injury liability limits." Heintz, 804 A.2d at 1215. Indeed, reformation has been allowed in several cases where there was no valid Section 1734 request to reduce UM or UIM coverage. See DeSilva v. Kemper Nat'l Ins. Co., 837 F. Supp. 98, 101-102 (E.D. Pa. 1993), aff'd 30 F.3d 1485 (3d Cir. 1994) ("Because defendant has presented no evidence that the insured made a written request for UIM coverage in an amount less than the limit of liability for bodily injury, the Policy is required by law to provide $2,000,000 in UIM coverage and must be reformed to reflect this."); Cebula, 158 F. Supp. 2d at 462 (holding that reformation was necessitated in order for Section 1734 to be given effect where there was no evidence that plaintiff submitted a written request to have his UM/UIM coverage be less than the bodily injury liability coverage); Hayes v. Harleysville Mut. Ins. Co. 841 A.2d 121, 127 (Pa.Super. 2003) (holding "it was proper to reform the UIM coverage to the amount of $100,000 [(the policy's bodily injury liability limits)] . . . because [plaintiff] never authorized [defendant] to reduce the coverage limit" in writing). See also Byers v. Amerisure Ins. Co., 745 F. Supp. 1073, 1075-77 (E.D. Pa. 1990) (holding that under the MVFRL, where an insurer does not follow the statutory requirements for waiver of UIM coverage, the policy must be reformed to include that coverage). C.f. Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634 (3d Cir. 20000) (holding reformation was not appropriate because a Section 1734 written request for decreased UIM coverage had been executed by a former spouse who was a named insured under the policy); Clifford v. Prudential Prop. Cas. Ins. Co., No. 99-1788, 2001 U.S. Dist. LEXIS 13808, at *25-30 (M.D. Pa. 2001) (holding reformation was not appropriate where the insured signed a Section 1734 request for lower UM/UIM coverage amounts even though the insured claimed he had not knowingly and intelligently waived the higher UM/UIM benefits).
ORDER
AND NOW, this day of July 2004, after considering plaintiff Fire Casualty Insurance Company of Connecticut's motion for reconsideration of the Order of April 28, 2004 and defendant's response thereto, it is hereby ORDERED that plaintiff's motion is DENIED.