Opinion
46046 Record No. 870869
June 9, 1989
Present: All the Justices
Because a portion of an insurance policy provided for unlimited medical expense benefits for plaintiff and at the same time, when read together with the applicable state statute it purported to limit her benefits, the policy was ambiguous and ought to have been construed against the insurer. The trial court judgment to the contrary is reversed.
Insurance Liability — No-fault — Construction of Contracts — Ambiguity — Benefits — Medical Benefits
Plaintiff, a resident of Virginia, was seriously injured in an accident in Colorado while a passenger in an automobile operated by defendant's insured, a resident of Pennsylvania. Pennsylvania no-fault insurance law governs the rights of the parties. The defendant contended that because the plaintiff was a nonresident of Pennsylvania when she was injured and the accident occurred in Colorado, the Act directs that the benefits available to her should be determined pursuant to Colorado's no-fault insurance plan. Plaintiff contends that the policy provides for unlimited medical expense benefits for an eligible person, and that if the policy and the Colorado Act are read together to limit her benefits, the Act is ambiguous, in which case it must be construed against the insurer. The trial court found for the defendant insurer, limiting the medical benefits, and the plaintiff appeals.
1. A contract of insurance is ambiguous if it is susceptible of two meanings, and under established Pennsylvania law all ambiguous insurance policies will be construed against the insurer.
2. In the present case, the endorsement to the policy is susceptible of two meanings respecting the plaintiff's entitlement to medical expense benefits and, because this ambiguity exists, the Court must construe the policy in a light most strongly supporting the insured to provide unlimited medical benefits to his passenger.
3. While the language of a contract should not be tortured to create an ambiguity where none exists, the apparent difference between the demands of the statute and the provisions of the policy clearly does create an ambiguity which must be construed against the insurer.
Appeal from a judgment of the Circuit Court of Fairfax County. Hon. Johanna L. Fitzpatrick, judge presiding.
Reversed and remanded.
William D. Dolan, III (Kenneth C. Bass, III; Carolyn S. Motes; Katherine Davidow-Lucas; Venable, Baetjer Howard; Motes, Fite O'Brien, on briefs), for appellant.
William L. Carey (Gerald R. Walsh; Miles Stockbridge; Crews Hancock, on brief), for appellees
The dispositive issue in this appeal is whether an insurance policy is ambiguous. In deciding this question, we must apply Pennsylvania law.
Linda Jean Hunt's motion for judgment, as it relates to this appeal, sought a judgment declaring that under the terms of an insurance policy issued by Erie Insurance Exchange (Erie), she "is entitled to coverage for unlimited medical and rehabilitation expenses." Erie defended on the ground that it had paid Hunt the full amount of the benefits due under the policy, which it alleged was $50,000 for medical and rehabilitative expenses. Following a bench trial, the trial court entered judgment in favor of Erie, and Hunt appeals.
On June 26, 1982, Hunt, a resident of the Commonwealth of Virginia, was seriously and permanently injured in an automobile accident that occurred in the State of Colorado. At the time, she was a passenger in an automobile operated by Ronald Rebottini and was insured under an insurance policy issued by Erie to Robert L. Rebottini, a resident of the Commonwealth of Pennsylvania.
The parties agree that Pennsylvania law governs their rights as established under the insurance policy and that the policy incorporated the terms of the Pennsylvania No-Fault Motor Vehicle Insurance Act, 40 Pa. Stat. Ann. Sections 1009.101 through 1009.701 (Purdon 1984) (the Act). The parties also agree that Hunt is an "eligible person" as defined in the policy. They disagree, however, over whether the medical expense benefits are unlimited, as Hunt contends, or whether the benefits are limited to $50,000 as Erie contends.
The Act is no longer in effect, having been repealed by the Pennsylvania legislature. See 75 Pa. Stat. Ann. Sec. 1701 (Purdon 1984); Act of February 12, 1984, P.L. 26, No. 11, Sec. 8(c), effective October 1, 1984
The policy defines an "eligible person" as:
(a) the named Insured or any relative who sustains injury while occupying, or as a pedestrian struck by, any motor vehicle;
(b) any other person who sustains injury while occupying, or as a pedestrian struck by, the insured motor vehicle.
Five portions of the endorsement to the insurance policy are relevant to this appeal. First, the endorsement contains a "Benefits Table" which states that the "named Insured and any relative . . . [and] all other eligible persons" shall receive "[u]nlimited" medical expense benefits.
A copy of the "Benefits Table" is set forth in the appendix to this opinion.
Second, the endorsement states that "[i]n accordance with the Pennsylvania No-Fault Motor Vehicle Insurance Act, the ERIE will pay any or all personal injury protection benefits for: (a) medical expenses . . . for bodily injury to an eligible person due to an accident resulting from the maintenance or use of a motor vehicle as a vehicle." (Emphasis added.)
Third, under a subheading entitled "LIMITS OF LIABILITY," the endorsement provides in pertinent part:
Regardless of the number of persons insured, . . . the ERIE's liability for personal injury protection benefits with respect to bodily injury to any one eligible person in any one motor vehicle accident is limited: . . . .
(b) for any other eligible person to the "Basic Limits" amounts shown on the Benefits Table which is on page 1 of this endorsement.
The "Benefits Table" referred to under "LIMITS OF LIABILITY" is the table previously mentioned, which states that the "Basic Limits" for medical expense benefits are "Unlimited."
Fourth, paragraph I of the endorsement's "CONDITIONS" provides in pertinent part:
I. Applicable Law. Regardless of any other provisions of this endorsement, the personal injury protection coverage available to an eligible person . . . shall be in accordance with the Pennsylvania No-Fault Motor Vehicle Insurance Act.
With respect to nonresidents of Pennsylvania, the Act provides in pertinent part:
(c) Applicable law. —
(1) The basic loss benefits available to any victim . . . shall be determined pursuant to the provisions of the state no-fault plan for motor vehicle insurance in effect in the state of domicile of the victim on the date when the motor vehicle accident resulting in injury occurs. If there is no such state no-fault plan in effect or if the victim is not domiciled in any state, then basic loss benefits available to any victim shall be determined pursuant to the provisions of the state no-fault plan for motor vehicle insurance, if any, in effect in the state in which the accident resulting in injury occurs.
40 Pa. Stat. Ann. Sec. 1009.110(c)(1). Colorado's no-fault plan, as set forth in the Colorado Auto Accident Reparations Act, established a minimum no-fault coverage of $25,000 for medical expenses and $25,000 for rehabilitation expenses. Colo. Rev. Stat. Sections 10-4-706(1)(b), -706(1)(c)(II) (1979).
Fifth, Section II of the endorsement states in part that "[t]he premiums for and the coverage of this policy conform to the Pennsylvania No-Fault Motor Vehicle Insurance Act."
Erie contends that when the policy and the Act are read together, no ambiguity exists. Erie focuses upon Condition I, which states that "[r]egardless of any other provisions of this endorsement, the . . . coverage available to an eligible person . . . shall be in accordance with [the Act]." Erie asserts that because Hunt was a nonresident of Pennsylvania when she was injured and the accident occurred in Colorado, the Act directs that the "basic loss benefits available to [her] shall be determined pursuant to the provisions of [Colorado's] no-fault plan for motor vehicle insurance." 40 Pa. Stat. Ann. Sec. 1009.1 10(c)(1).
Hunt contends, however, that the policy provides for unlimited medical expense benefits for an eligible person, and if Condition I and the Act purport to limit her benefits, the policy is ambiguous. Because the policy is ambiguous, Hunt asserts, the policy must be construed against the insurer.
A contract of insurance is ambiguous if it is susceptible of two meanings. See Armon v. Aetna Casualty Surety Co., 369 Pa. 465, 468, 87 A.2d 302, 303 (1952). Under established Pennsylvania law, all ambiguous insurance policies will be construed against the insurer. E.g., Standard Venetian Blind Co. v. American Empire Ins. Co., 503 Pa. 300, 305, 469 A.2d 563, 566 (1983); Mohn v. American Casualty Co., 458 Pa. 576, 586, 326 A.2d 346, 351 (1974).
In the present case, the endorsement to the policy is susceptible of two meanings respecting Hunt's entitlement to medical expense benefits. The endorsement provides in three separate places that an "eligible person" is entitled to unlimited benefits. A condition of the endorsement, however, purports to limit coverage. The condition references the Act. The Act, in turn, references the no-fault plan of the state in which the accident occurred, which, in this case, is Colorado. Thus, because an ambiguity exists, we must construe the policy "in a light most strongly supporting the insured," Mohn, 458 Pa. at 586, 326 A.2d at 351, viz, to provide unlimited medical benefits to Hunt.
We have not found, nor have the parties cited, a Pennsylvania case on point. However, the conclusion we reach is supported by the holding in Shishko v. State Farm Insurance Co., 553 F. Supp. 308 (E.D. Pa. 1982), aff'd w/o pub'd opinion, 722 F.2d 734 (3d Cir. 1983), a factually similar case applying Pennsylvania law.
Erie strongly relies upon Swezey v. Home Indemnity Co., 571 F. Supp. 224 (D. Del. 1983), on remand from Swezey v. Home Indemnity Co., 691 F.2d 163 (3d Cir. 1982), vacating Swezey v. Home Indemnity Co., 529 F. Supp. 608 (D. Del. 1982). Swezey, however, is inapposite. There, the plaintiff was injured in an automobile accident that occurred in the State of Delaware. The plaintiff claimed basic medical benefits under the Pennsylvania Act. The policy provided that the insurer would pay "any or all" medical expense benefits "[i]n accordance with the [Pennsylvania Act]." The court held that the Act was incorporated into the policy, and therefore, the coverage limits of the Delaware no-fault statute applied. 571 F. Supp. at 230.
Swezey, is distinguishable from the present case in two particulars. First, unlike Erie's policy, the policy in Swezey contained no "Benefits Table" providing for unlimited benefits. Second, nothing suggests that a claim of ambiguity was made in Swezey.
In Shishko, a New York domiciliary was injured by an automobile insured by a Pennsylvania no-fault policy. The policy contained a schedule, virtually identical to the "Benefits Table" in the present case, that appeared to offer Shishko unlimited benefits. However, another policy provision, incorporating Pennsylvania's no-fault statute, purported to limit Shishko's medical benefits to $50,000 — the amount allegedly recoverable under New York's no-fault insurance statute. In holding that Shishko was entitled to unlimited medical expense benefits, the court said:
While the language of a contract should not be tortured to create an ambiguity where none exists . . . the apparent difference between the demands of the statute and the provisions of the policy clearly does create an ambiguity. That ambiguity must be construed against [the insurer].
Id. at 313.
For the foregoing reasons, we will reverse the trial court's judgment and remand the case for further proceedings consistent with the views expressed herein.
Reversed and remanded.
APPENDIX
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