Opinion
CIVIL ACTION NO. 02-6601; NO. 02-6634;
November 1, 2002
MEMORANDUM
These are two actions consolidated for pretrial proceedings. The first is a declaratory judgment action brought under 28 U.S.C. § 2201. The second is a petition to compel underinsured motorist arbitration. Prudential Property and Casualty Insurance Company ("Prudential") seeks a declaration that it has no contractual obligation either to pay underinsured motorist benefits to its insureds, William and Carole Lamenia, or to arbitrate their claim for such benefits. The Lamenias urge the court to compel Prudential to arbitrate their claim for underinsured motorist benefits or, in the alternative, to hold that they are entitled to underinsured motorist coverage. Before the court are cross-motions for summary judgment.
We may grant summary judgment only if there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). We review all evidence and make all reasonable inferences from the evidence in the light most favorable to the non-movant. See Wicker v. Consol. Rail Corp., 142 F.3d 690, 696 (3d Cir. 1998).
I.
For purposes of the pending motions, the following facts are undisputed. Prudential had issued to the Lamenias a personal automobile insurance policy (# 28 8A102615) which provided underinsured motorist benefits in the amount of $100,000 per person and $300,000 per accident. It was in effect at all relevant times. On May 2, 1999, William Lamenia sustained injuries when he was struck by a car driven by Michael Cramer. The accident occurred while Mr. Lamenia was operating a tractor within the scope of his employment with Stroehmann Bakeries ("Stroehmann"). It was a usual part of his job to use the tractor in issue. Although Mr. Lamenia did receive some compensation from Mr. Cramer, it did not constitute full restitution for his injuries. Stroehmann did not carry underinsured motorist insurance on the tractor.
The Lamenias, through their attorney, made a demand on Prudential for payment of underinsured motorist benefits under their personal automobile insurance policy. In the alternative, the Lamenias made a demand for arbitration. Pursuant to the policy, the Lamenias' attorney also appointed an arbitrator and demanded that Prudential arbitrate the dispute. Prudential has refused to do so.
The section of the policy related to underinsured motorist benefits states:
If [ Prudential] and an insured do not agree:
1. Whether that person is entitled to recover damages resulting from the negligence of the owner or operator of an underinsured motor vehicle; or
2. As to the amount of compensatory damages;
Either party may make a written demand for arbitration. In this event, each party will select an arbitrator from the county where the insured lives. The two arbitrators will select a third arbitrator from the same county. If they cannot agree within 30 days, either party may request selection from a judge of a common pleas court having jurisdiction where the insured claiming coverage lives; or by a judge in the Federal District Court whose jurisdiction includes the county where the insured claiming coverage lives . . . .
[ Prudential] will not arbitrate questions of coverage or law as to whether a person making a claim is covered under the policy, or is ex[c]luded under the policy. All disputes affecting the scope of coverage, the amount of coverage, a person's right or eligibility to make a claim, or the insured's selection of coverage, will be determined by the court in the county where the insured lives at the time the demand for arbitration is made; or a Federal District Court whose jurisdiction includes the county where the insured lives.
Prudential maintains that the current dispute involves questions of coverage and therefore should not be arbitrated. It contends that the Lamenias' underinsured motorist claim are not covered under the terms of the Prudential policy because: (1) the tractor which Mr. Lamenia was driving at the time of the accident was not a "car" covered by the policy; and (2) the policy's "regularly used non-owned motor vehicles" exclusion bars the Lamenias' claim.
The Prudential policy defines car as "a private passenger automobile, station wagon, jeep-type, or van with four wheels which is designed for use mainly on public roads. A pick-up truck with four or six wheels and a load capacity of one ton or less is also a car." Motor vehicle is defined as "a self-propelled land vehicle which is required to be registered and licensed by the laws of your state for use on public roads."
The underinsured motorist portion of the policy states, in pertinent part, that "[t]his part covers cars for which a premium charge for this coverage is shown in the Declarations." The Declarations section of the policy does not list the tractor which Mr. Lamenia was driving on the day of the automobile accident. Another section of the underinsured motorist section of the policy states, "[i]f you have this coverage (see the Declarations), we will pay up to our limit of liability for bodily injury that is covered under this part when an insured (whether or not occupying a car) is struck by an underinsured motor vehicle." In the section entitled Losses We Will Not Pay For, the policy explains that "[ w] e will not pay for bodily injury to you or a household resident using a non-owned motor vehicle not insured under this part, regularly used by you or a household resident."
II.
Since this is a diversity action, we will apply Pennsylvania law in construing the language of the policy in issue. Where the wording is clear and unambiguous, we will enforce that wording. Little v. MGIC Indem. Corp., 836 F.2d 789, 793 (3d Cir. 1987) (citation omitted). If possible, we will interpret the policy so as to avoid ambiguities and give effect to all of its provisions. Id. (citation omitted). If its language is "either ambiguous, obscure, uncertain or susceptible to more than one construction, the language must be construed most strongly against the insurer, and the construction most favorable to the insured must be adopted." Vale Chem. Co. v. Hartford Accident Indem. Co., 490 A.2d 896, 903 (Pa.Super. 1985), rev'd on other grounds, 516 A.2d 684 (Pa. 1986) (citations omitted); see also ACandS, Inc. v. Aetna Cas. Sur. Co., 764 F.2d 968, 973 (3d Cir. 1985); Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 566 (Pa. 1983).
Whether a dispute is subject to arbitration is, of course, a matter of contract interpretation. Brennan v. Gen. Accident Fire Life Assurance Corp., 574 A.2d 580, 583 (Pa. 1990). We are mindful that "where the parties have chosen arbitration as the forum for resolution of their disputes, they are bound by that choice." Borgia v. Prudential Ins. Co., 750 A.2d 843, 849 (Pa. 2000).
In order to determine whether the parties intended this dispute to be resolved through arbitration, we look to the terms of the policy. Here the policy provides for arbitration of disputes where the insurer and the insured disagree as to whether the insured "is entitled to recover damages resulting from the negligence of the owner or operator of an underinsured motor vehicle." There is an express exception to the jurisdiction of the arbitrators which excludes from arbitration "questions of coverage."
The central issue in the dispute between Prudential and the Lamenias is whether Mr. Lamenia can recover underinsured motorist benefits for an accident which occurred while he was driving a tractor as part of his occupation. Clearly this is a dispute involving "questions of coverage" which by the express terms of the policy is not arbitrable. Since this dispute falls outside the ambit of the arbitration clause of the policy, the issue of coverage is, by the terms of the Prudential policy, one for the court to decide. See State Farm Mut. Auto. Ins. Co. v. Coviello, 233 F.3d 710, 717-18 (3d Cir. 2000).
III.
In order to determine whether the policy covers Mr. Lamenia's May 2, 1999 automobile accident, we must look to the terms of the Prudential policy. As indicated above, the policy states that Prudential "will not pay for bodily injury to you or a household resident using a non-owned motor vehicle not insured under this part, regularly used by you or a household resident." In interpreting policy language almost identical to this provision of the Prudential policy, the Pennsylvania Supreme Court found that "[t]he plain language of this provision clearly and unambiguously delineates an exclusion for regularly used, non-owned vehicles." Burstein v. Prudential Prop. Cas. Ins. Co., 2002 WL 1575094, at *2 (Pa. July 17, 2002). The policy provision in Burstein limited the exclusion to non-owned cars, whereas the provision at issue here excludes non-owned motor vehicles. The facts of Burstein are almost identical to the case before us. Mr. and Mrs. Burstein were involved in a car accident in a car that Mrs. Burstein's employer had provided for her use. The evidence in the record indicated that Mrs. Burstein regularly used that car. After failing to receive full compensation from the tortfeasor, the Bursteins filed a claim for underinsured motorist benefits under their personal automobile liability insurance policy with Prudential. As with the Mr. Lamenia here, Mrs. Burstein's employer did not maintain underinsured motorist insurance on the vehicle which it provided to her. The Pennsylvania Supreme Court found that the Bursteins' Prudential policy "simply does not cover Appellees' claim." Id. It further rejected the Bursteins' claim that the regularly used non-owned motor vehicles exception violated public policy. Id. at *5.
In its declaratory judgment complaint, Prudential states that "William A. Lamenia regularly used the vehicle provided by his employer Stroehmann Bakeries." In the Lamenias' answer, they state that "[i]t is admitted that plaintiff William A. Lamenia usually used the vehicle provided by his employer Stroehmann Bakeries in the course and scope of his employment. Plaintiff's characterization of that use as `regular' is ambiguous and is therefore denied." Webster's Dictionary defines usual as "[c]ommonly encountered, experienced, observed, or used; [h]abitual or customary." Webster's II New College Dictionary 1216. Mr. Lamenia's use of the tractor, like Mrs. Burstein's use of her employer's car, clearly falls under the regularly used non-owned motor vehicles exception of the Prudential policy.
In their memorandum in support of their motion for summary judgment, the Lamenias argue that the regularly used non-owned motor vehicles exception is ambiguous and therefore should be construed in their favor. We reject this argument. The Pennsylvania Supreme Court specifically held in Burstein that an almost identical Prudential policy was clear and unambiguous. See Burstein, 2002 WL 1575094, at *2. The only difference between the two policies, which is not relevant here, is that the one inBurstein applied to cars and the one here applies to motor vehicles.
Accordingly, we will grant the motion for summary judgment of Prudential Property and Casualty Insurance Company and deny the motion for summary judgment of William and Carole Lamenia.
Since we have granted summary judgment in favor of Prudential Property and Casualty Insurance Company on the basis of the regularly used non-owned motor vehicles exception, we will not address its alternative argument that the tractor which William Lamenia was driving at the time of the accident was not a "car" covered under the Prudential policy.
ORDER
AND NOW, this 1st day of November, 2002, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that:(1) the motion of Prudential Property and Casualty Insurance Company for summary judgment is GRANTED;
(2) the motion of William A. Lamenia and Carole A. Lamenia for summary judgment is DENIED; and
(3) judgment is entered in favor of Prudential Property and Casualty Insurance Company and against William A. Lamenia and Carole A. Lamenia declaring that Prudential Property Casualty Insurance Company Policy # 28 8A102615 does not provide coverage for the underinsured motorist claim of William A. Lamenia and Carole A. Lamenia related to the May 2, 1999 automobile accident between William A. Lamenia and Michael Cramer.
BY THE COURT.