Opinion
Civil Action No. 02-8409.
April 29, 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 March 16, 2004, denying the parties' cross-motions for summary judgment.
II. BACKGROUND
On May 1, 2001, while operating a vehicle insured under a policy issued by plaintiff to Atlantic Express Transportation Group, Cook was involved in a motor vehicle accident allegedly caused by an uninsured motorist. Cook claims he is entitled to up to $1 million in UM benefits under the plaintiff's policy. Plaintiff contends that Atlantic Express elected to cap both its UM and underinsured motorist (UIM) coverage at $35,000.
Cook and plaintiff have entered into a partial release agreement whereby Cook has received $35,000, the undisputed amount of UM coverage under the policy.
Policy number AUTO01884, issued by plaintiff to Atlantic Express, provides liability coverage for bodily injury in the amount of $1 million. Nathan Schlenker, C.F.O. of Atlantic Express, signed a form dated December 31, 1999 requesting UIM coverage with limits of $35,000. The corresponding box on the form to reduce UM coverage was, however, left blank. In contrast, the policy itself, noting a diversion from the $1 million liability limit for UM coverage, 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 furnishes both UM and UIM coverage limits of $35,000 for the Commonwealth of Pennsylvania.
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).
IV. DISCUSSION
Both plaintiff and defendant argue this matter is ripe for summary judgment as only a question of law remains for determination by the court. Both parties agree that I have all the evidence needed to determine, as a matter of law, whether Atlantic Express made a written selection of $35,000 in UM coverage prior to defendant's accident.
Plaintiff's evidence establishes it was Atlantic Express' intention to purchase $35,000 of both UM and UIM coverage. Both Nathan Schlenker and Bob Lull, who was responsible for selling the policy at issue to Atlantic Express, stated in verifications that it was their understanding that the UM coverage would be identical to the UIM coverage and that it was the usual practice of Atlantic Express to select $35,000 of both UM and UIM coverage in Pennsylvania. The documents Lull prepared on behalf of Atlantic Express in connection with the issuance of the policy at issue show that it was the insured's intention to provide only the "statutory" or "basic" level of both UIM and UM coverage. Both Schlenker and Lull verified that they believed the term "statutory limits" meant coverage in the amount of $35,000. Atlantic Express' premium payment to plaintiff reflected UM coverage of $35,000, rather than $1 million. Atlantic Express' policy itself, by reference to endorsement IL 1201 B, provides that the UM coverage limit is $35,000.
Under Pennsylvania law, however, a request to reduce the amount of UM or UIM coverage below a policy's liability limits for bodily injury must be made in writing by a named insured. See 75 Pa. C.S. § 1734 ("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)). The statute does not prescribe a specific written format for a reduction in the amount of coverage. Contra 75 Pa. C.S. § 1731 (providing specific written rejection forms to be used when rejecting all UM and UIM coverage). The Pennsylvania Supreme Court has held however, that "requests for specific limits coverage, in contrast to outright waiver/rejection, require not only the signature of the insured, but also, an express designation of the amount of coverage requested, thus lessening the potential for confusion." Lewis v. Erie Ins. Exch., 793 A.2d 143, 153 (Pa. 2002) (emphasis added).
Therefore, in order for Atlantic Express to have reduced the amount of UM coverage below the policy's $1 million bodily injury liability limits to $35,000, there must be a signed writing from an agent of Atlantic Express expressly designating this reduced sum as the desired coverage level. The form signed by Schlenker, dated December 31, 1999, requesting Pennsylvania UIM coverage with limits of $35,000 but leaving blank the corresponding box on the form to reduce UM coverage is therefore not sufficient to meet the requirements of Section 1734. Cf. Motorists Ins. Co. v. Emig, 664 A.2d 559, 561 (Pa.Super. 1995) (holding Section 1734's writing requirement was not met where neither of the blank boxes applicable to UM/UIM coverage on insured's policy change request form were checked). This writing provides no indication that Atlantic Express wished to limit its UM coverage to $35,000.
Plaintiff argues that the proposal submitted to plaintiff by Lull on behalf of Atlantic Express requesting UM coverage at "statutory" levels is enough to qualify as a writing under Section 1734. In support of this argument, plaintiff cites MIC Property and Casualty Insurance Company v. Crawford, No. 01-0714, 2001 U.S. Dist. LEXIS 24212, at *7-10 (E.D. Pa. Oct. 26, 2001), where the court held that because an insurance broker was an agent of an insured, it could make a written request for reduced UM coverage on an insured's behalf. In Crawford, the agent's written request consisted of a handwritten application to MIC on which the agent handwrote $35,000 as the amount of limited UM coverage selected. Id. at *7 n. 5. Lull's proposal to plaintiff may therefore be considered a written request made on Atlantic Express' behalf. However, if Lull's proposal, and not Schlenker's form, may be used to satisfy the Section 1734 writing requirement, the issue remains whether the term "statutory" used to designate the amount of coverage desired is sufficient to meet the requirements of Section 1734.
Despite Schlenker and Lull's verifications of their understanding of the term "statutory" to mean $35,000, their interpretation of the term is unusual, particularly where the statute requires insurance companies to provide UM coverage in an amount equal to the insured's bodily injury liability coverage unless there is a written request for a different amount of coverage. Indeed, in Peele v. Atlantic Express Transportation Group, Inc., et al., 840 A.2d 1008, 1011-12 (Pa.Super. 2003), the Superior Court of Pennsylvania upheld a trial court's ruling that the use of the term "statutory" to refer to UM/UIM coverage levels
was unambiguous, and referred to the statutory language of 75 Pa. C.S. § 1731, which requires that insurers offer UM/UIM coverage to their insured and . . . if a proper rejection is not obtained by the insurer, "uninsured or underinsured coverage, or both as the case may be, under that policy shall be equal to the bodily injury liability limits."Id. quoting 75 Pa. C.S. § 1731 (c.1) (emphasis added). I therefore predict the Supreme Court of Pennsylvania would find the term "statutory," as used in the documents Lull prepared on behalf of Atlantic Express, is not sufficient to meet the requirements of Section 1734, which asks that "a named insured may request in writing the issuance of coverages . . . in amounts equal to or less than the limits of liability." 75 Pa. C.S. § 1734 (emphasis added).
Plaintiff's argument is particularly unpersuasive since Atlantic Express, the insured in this case, was a party to the litigation where this very issue was decided, albeit in reference to an insurance binder issued by a different insurance company.
Although plaintiff has established that it was the insured's intention to request reduced UM coverage limits, under Section 1734, Atlantic Express' intentions alone are not sufficient to effect a reduction in the amount of UM coverage. The statutory language unambiguously mandates that a selection of lower coverage be in writing and, as already noted, the Pennsylvania courts, more specifically, have required "not only the signature of the insured, but also an express designation of the amount of coverage requested, thus lessening the potential for confusion." Nationwide Mut. Ins. Co. v. Heintz, 804 A.2d 1209 (Pa.Super. 2002), appeal denied 818 A.2d 505 (Pa. 2003), quoting Lewis v. Erie Ins. Exch., 793 A.2d at 153. The writing that plaintiff argues satisfies Section 1734 does not serve to eliminate this confusion, as its nonstandard use of the term "statutory" fails to clearly designate the requested coverage amount.
It is the duty of insured parties to make certain that their requests for reduced UM and/or UIM coverage conform to the statutory requirements. It is further incumbent on insurers to insist they have a written request for reduced UM and/or UIM coverage that conforms to Section 1734's requirements prior to providing such reduced coverage to their clients. If I were to diverge from the writing requirement and allow plaintiff's evidence of the insured's intentions to control my decision, I would open the doors to repeated litigation about the sufficiency of testimonial evidence to support findings that insureds have reduced their limits of UM or UIM coverage, an outcome the writing requirement was undoubtedly intended to avoid.
I will therefore vacate my Order dated March 16, 2004 which denied summary judgment to plaintiff and defendant. Because plaintiff has not established that the insured party made a request for reduced uninsured motorist (UM) coverage that conformed to the requirements of Section 1734, I will grant summary judgment in favor of defendant and against plaintiff.