Opinion
Civil Action No. 03-3936.
September 16, 2004
Jeffrey G. Trauger, Grim, Biehn Thatcher, Perkasie, PA, for Plaintiff.
Kevin R. McNulty, Gerolamo, McNulty, Divis Lewbart, Philadelphia, PA, for Defendant.
MEMORANDUM AND ORDER
Jason Schultz ("Schultz") was injured in an automobile accident and seeks declaratory judgment that he is covered under Loretta and Paul V. Schultz Sr.'s ("grandparents") automobile insurance policy, which Encompass Insurance ("Encompass") issued. Encompass claims Schultz is not covered by his grandparents' insurance policy because he is not a resident of their household. We find Schultz was not a resident of his grandparents' household at the time of the accident and, consequently, is not covered by their insurance policy.
Findings of Fact
1. Schultz is a citizen of the Commonwealth of Pennsylvania.
2. Encompass is an insurance company incorporated in a state other than Pennsylvania with its principal place of business located in a state other than Pennsylvania.
3. The amount in controversy in this case exceeds $75,000.
4. On September 8, 2002, Schultz was involved in a one-car accident while a passenger in his friend's, Walter Diedel's, car.
5. Schultz was taken to St. Luke's Hospital in Bethlehem, Pennsylvania where he was hospitalized for approximately 13 days and subsequently underwent physical therapy.
6. Schultz incurred costs for his medical treatment and attempted to recover his medical expenses from both Paul V. Schultz Jr.'s ("father") and his grandparents' automobile insurance.
7. Schultz did not have insurance coverage the day of the accident, but he did receive $15,000 from Walter Diedel's insurance company to settle any bodily injury claim against him.
8. Schultz's medical expenses far exceeded the $15,000 settlement amount. His family tried to assist him in paying his medical costs by seeking an underinsured motorist claim through one of their insurance policies
9. Schultz filed an underinsured motorist claim with his father's insurance company, Progressive. The father's insurance policy provides for $25,000 in underinsured motorist benefits to qualified claimants. While the claim was pending, Schultz, his family, and his attorney held a meeting in October 2002 to discuss Schultz's residency. On November 20, 2002, Progressive denied the claim.
10. Schultz was not a resident of his father's home at 141 Salem Road, Schwenksville, Pennsylvania at the time of the accident.
11. Even though Schultz's driving permit, Pennsylvania photo identification, and hospital records listed his father's address as Schultz's residence, Schultz and his family testified he did not live with his father. They testified Schultz visited his father infrequently and for short periods of time, contrary to the documentary evidence.
12. Schultz then filed an underinsured motorist claim with his grandparents' insurance company, Encompass, whose policy provided $100,000/$300,000 in underinsured motorist benefits per person/per accident respectively. Encompass denied the claim.
13. The grandparents' policy covered family members for underinsured motorist benefits and contained the following:
Family Member means a person related to you [the insured] by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child. For the purposes of this definition, to be considered a resident of your household when evaluating coverage for a loss a person must have been actually residing in your household on the date the loss occurred. However, your:
a. Son;
b. Daughter;
c. Ward; or
d. Foster child;
[i]n the United States military or away at school will be considered a resident of your household unless he or she has demonstrated an intent to reside elsewhere permanently.
(Ex. 1 of Plaintiff's Trial Exhibit Binder, Encompass Policy, p. 2) (emphasis added).
14. Schultz was not a resident of his grandparents' home at 316 East Broad Street, Quakertown, Pennsylvania at the time of the accident.
15. Encompass investigated Schultz's claim by conducting recorded examinations of Schultz and his family, examining documents from the Department of Transportation, and reviewing Schultz's medical records and income taxes. During the investigation, Encompass recorded a telephone interview with Schultz's grandfather and asked him whether Schultz has a permanent address elsewhere. The grandfather stated, "with his father on Salem Road in Schwenksville, Pennsylvania." (Exhibit D1).
16. Schultz testified he moved into his grandparents' home hours before the accident, while his grandparents testified he moved back the day before.
17. Schultz testified he lived with friends in Egg Harbor Township, New Jersey and Allentown, Pennsylvania between March and September 2002 to minimize his commute to work. Schultz also testified he stayed with his grandparents only on weekends. ( See also Exhibit P17, Examination of Jason Schultz, pp. 13-14). His grandparents, on the contrary, testified Schultz was usually picked up for work from their house.
18. Schultz gave his father's address to hospital staff as his permanent address, despite living with friends in Egg Harbor Township, New Jersey and Allentown, Pennsylvania at the time.
19. Schultz began living with his grandparents after the accident because he required full-time assistance due to his injuries. His father did not have the time to provide such assistance. The grandparents, however, could provide such assistance because they are retired.
Discussion
In exercising diversity jurisdiction under 28 U.S.C. § 1332, we must apply the substantive law of Pennsylvania, the state in which we sit. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In Pennsylvania, state courts apply the law of the state in which the insurance policy was delivered. Travelers Indemnification Co. v. Fantozzi By and Through Fantozzi, 825 F.Supp. 80, 84 (E.D.Pa. 1993). The policy in this case was delivered in Pennsylvania, therefore Pennsylvania law applies.
Decisions of the state's lower appellate courts are persuasive and constitute presumptive evidence of state law. Commercial Union Ins. Co. v. Bituminous Casualty Corp., 851 F.2d 98, 100 (3d Cir. 1988). We must, however, follow the law as decided by the highest court of the state. If the highest court of the state has not spoken on the relevant issue, then "federal courts must attribute significant weight to these [lower state court] decisions in the absence of any indication that the highest state court would rule otherwise." Nationwide Mut. Ins. Co. v. Budd-Baldwin, 947 F.2d 1098, 1101 n. 6 (3d Cir. 1991) (quoting Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273-74 (3d Cir. 1985)). The Pennsylvania Supreme Court has not yet construed the terminology used in this policy in defining a "resident." We therefore turn to the state's lower appellate courts for guidance in applying Pennsylvania law.
Construction of the term "resident" in an insurance policy is a matter of law. Budd-Baldwin, 947 F.2d at 1100 (citing Myers v. State Farm Ins. Co., 842 F.2d 705, 708 (3d Cir. 1988)). The question of residency is not an issue of intention, but one of physical fact and presence. Amica Mutual Ins. Co. v. Donegal Mutual Ins. Co., 376 Pa. Super. 109, 545 A.2d 343 (1988). It is necessary to note the distinction between domicile and residency. Domicile is a place where a person has their true and permanent home. It is a place where a person ultimately intends to return when they are absent. Amica Mutual Ins. Co., 376 Pa. Super. at 115. Residency, on the other hand, is a factual place of abode that requires physical presence. Amica Mutual Ins. Co., 376 Pa. Super. at 115. See also Krager v. Foremost Ins. Co., 304 Pa. Super. 390, 450 A.2d 736 (1982) (distinguishing residency from domicile). We need only concern ourselves with residency for this discussion.
Where Schultz intended to reside is of no consequence. Instead, we must only look to his actual physical presence. Schultz did not physically reside with his grandparents or father at the time of the accident. As the fact-finder in this bench trial, we do not find credible Schultz's and his family's statements that he resided with his grandparents at the time of the accident. Schultz stated he lived with his friends in Egg Harbor Township, New Jersey and Allentown, Pennsylvania from March through September 2002 and only visited his grandparents on weekends. (Exhibit P17, Examination of Jason Schultz, pp. 13-14). This is insufficient to establish Schultz's residency at his grandparents' home. Budd-Baldwin, 947 F.2d at 1103 (finding Plaintiff was not a resident of his sister's home even though he stayed there frequently on weekends). The grandparents testified, contrary to Schultz's testimony, their grandson was picked up most mornings from their home for work. Although Schultz's testimony indicates he was living with friends to be closer to work, his grandparents' testimony indicates he was living with them during the same time period. Even if Schultz ultimately intended to move in with his grandparents, his physical residence was elsewhere.
Schultz and his family also testified he had clothing and toiletries at his grandparents' address. The physical presence of one's personal belongings in another's household does not establish the person's residence in that household. The individual's physical presence is required. Amica Mutual Ins. Co., 376 Pa. Super. at 114. Schultz, his grandparents, and his father stated he kept most of his personal belongings and received most of his mail at his grandparents' home. This is insufficient to establish residency.
The words domicile and residency are frequently used in the same context and given synonymous meanings. The word resident, however, as defined in the policy, without additional words of refinement such as permanent, legal, etc., carries the more transient meaning. Amica Mutual Ins. Co., 376 Pa. Super. at 115. The residency requirement in the policy here requires "a person must have been actually residing in [the] household on the date the loss occurred." This language contains no words of refinement, such as "permanent" or "legal," which would suggest a less transitory meaning. We find the language used in the policy specifically limited coverage to those who physically resided in the household at the time of the accident. The definition used does not incorporate an element of intent.
Pennsylvania law clearly states that when terms are defined in a policy, those definitions control. Monti v. Rockwood Ins. Co., 303 Pa. Super. 473, 476, 450 A.2d 24, 25 (1982). Encompass's policy clearly defined the residency requirement to mandate a person's physical presence in the household. We will not torture the policy's language to create ambiguities where none exist. Pacific Indem. Co. v. Linn, 766 F.2d 754, 761 (3d Cir. 1985).
Accordingly, we enter the following:
ORDER
AND NOW, this day of September, 2004, we find Jason Schultz was not a resident of his grandparents' home at the time of the accident and is not covered by their insurance policy. Judgment is entered in favor of Defendant, Encompass Insurance, and against Plaintiff, Jason Schultz.