Summary
holding that Vollrath validly waived coverage where insurer mailed Vollrath the "Important Notice Form" and Vollrath's testimony that he did not receive it was "unpersuasive and unconvincing"
Summary of this case from Kidd v. State Farm Mut. Auto. Ins. Co.Opinion
Civil Action No. 02-1257.
June 28, 2004
MEMORANDUM AND ORDER
In this declaratory judgment action, Plaintiff State Farm Mutual Automobile Insurance Company seeks a declaration that the limit of underinsured motorist coverage under the automobile insurance policy it issued to Defendant P. Daniel Vollrath is $15,000 per person and $30,000 per accident, rather than $100,000 per person and $300,000 per accident under Pennsylvania's Motor Vehicle Financial Responsibility Law, 75 Pa. Const. Stat. Ann. §§ 1701 et seq., because he validly waived his statutory right to higher coverage limits. After a non-jury trial, the Court makes the following:
FINDINGS OF FACT
1. Plaintiff State Farm Mutual Automobile Insurance Company ("State Farm") is a corporation organized and existing under the laws of the State of Illinois with its principal place of business in that State.
2. Defendant P. Daniel Vollrath ("Vollrath"), individually and as the Executor of the Estate of Virginia Vollrath, is a citizen of the Commonwealth of Pennsylvania. At one point in the early 1970s, he was a New York Life Insurance agent. Trial Transcript ("Trial Tr.") at 124, 152. He is currently the Chief Building Inspector for the Township of Abington, Pennsylvania. Id. 152, 161-62.
3. Mountain Laurel Assurance Company ("Mountain Laurel") is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania with its principal place of business in the State of Ohio.
Vollrath also purchased an automobile insurance policy from Mountain Laurel (the "Mountain Laurel Policy"). Upon exhaustion of State Farm's coverage the Mountain Laurel Policy provides excess UIM coverage up to $100,000 per person and $300,000 per accident.
4. In 1977, Vollrath purchased automobile insurance policy no. 3222-785-B01-38K (the "Policy") from State Farm, through the Burton T. Ritchie Insurance Agency, Inc. Plaintiff's Exhibit ("Pl.'s Ex.") 4; Trial Tr. at 117-18. The Policy was for a six-month period, renewable on February 1 and August 1. Trial Tr. at 21-22. The Policy continued in effect from February 1, 1977, until January 3, 2002, through appropriate renewals by Vollrath.Id. at 24-25.
5. The Policy provided substantial bodily injury limits in the amount of $100,000 per person and $300,000 per accident, and uninsured motorist ("UIM") coverage in the amount of $15,000 per person and $30,000 per accident. Pl.'s Ex. 4; Trial Tr. at 17-18, 118-19.
6. In 1984, the Pennsylvania General Assembly enacted the Motor Vehicle Financial Responsibility Law (the "MVFRL"), 75 Pa. Cons. Stat. Ann. §§ 1701 et seq. As enacted, the
MVFRL provided in pertinent part:
§ 1731. Availability, scope and amount or coverage
§ 1791. Notice of available benefits and limits
(a) General rule. — No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverages are provided therein or supplemental thereto in amounts equal to the bodily injury liability coverage except as provided in section 1734. . . .
§ 1734. Request for lower or higher limits of coverage
A named insured may request in writing the issuance of coverages under section 1731 . . . in amounts less than the limits of liability for bodily injury. . . . If the named insured has selected uninsured and underinsured motorist coverage in connection with a policy previously issued to him by the same insurer under section 1731, the coverages offered need not be provided in excess of the limits of liability previously issued for uninsured and underinsured motorist coverage unless the named insured requests in writing higher limits of liability for those coverages.
It shall be presumed that the insured has been advised of the benefits and limits available under this chapter provided the following notice in bold print of at least ten-point type is given to the applicant at the time of application for original coverage or at the time of the first renewal after October 1, 1984, and no other notice or rejection shall be required:
IMPORTANT NOTICE
Insurance companies operating in the Commonwealth of Pennsylvania are required by law to make available for purchase the following benefits for you, your spouse or other relatives or minors in your custody or in the custody of your relatives, residing in your household, occupants or your motor vehicle or persons struck by your motor vehicle: . . .
(6) Uninsured, underinsured and bodily injury coverage up to at least $100,000 because of injury to one person in any one accident and up to at least $300,000 because of injury to two or more persons in any one accident. . . . [A]n insured may elect to purchase lower benefit levels than those enumerated above. Your signature on this notice or your payment of any renewal premium evidences your actual knowledge and understanding of the availability of these benefits and limits as well as the benefits and limits you have selected.75 Pa. Cons. Stat. Ann. §§ 1701, 1734, 1791.
The MVFRL was amended in 1990 to permit an insured to reject UIM coverage altogether. See 75 Pa. Cons. Stat. Ann. §§ 1731, 1734 (West 1996 Supp.). Deleted from § 1791 was the requirement that the "Important Notice" be given at the time of the first renewal after October 1, 1984," and added to that Section was the requirement that the "Important Notice" include the following statements: (1) "If you have any questions or you do not understand all of the various options available to you, contact your agent or company;" and (2) "If you do not understand any of the provisions contained in this notice, contact your agent or company before you sign." Id. § 1791.
7. At the end of December 1984, State Farm mailed to Vollrath a Premium Notice. The following language appeared at the bottom of the Premium Notice:
DUE TO A LAW CHANGE . . . UNINSURED MOTOR VEHICLE COVERAGE U HAS BEEN REPLACED WITH NEW UNINSURED AND UNDERINSURED MOTOR VEHICLE COVERAGE U WITH LIMITS TO EQUAL YOUR BODILY INJURY LIABILITY LIMITS. IF YOU WANT THESE COVERAGE LIMITS, PAY THE AMOUNT DUE.
IF YOU WANT COVERAGE U WITH YOUR PREVIOUS COVERAGE U LIMITS OF $15,000/$30,000, PAY [THIS LOWER AMOUNT].
Pl.'s Ex. 6 (emphasis in original). The Premium Notice also directed Vollrath to "SEE INSERT ABOUT NEW LAW." Id. (emphasis in original).
8. The "INSERT" referenced in the Premium Notice included an "Important Notice" and a booklet entitled "Important Information about Changes in Your Car Insurance" (the "Explanatory Booklet"). The "Important Notice" was a verbatim copy of the notice required under § 1791. Pl.'s Ex. 7. The "Explanatory Booklet" advised Vollrath of his right to have UIM limits equal to his bodily injury limits under the MVFRL. Pl.'s Ex. 8. Specifically, the Explanatory Booklet provided in pertinent part:
Uninsured Motor Vehicle and Underinsured Motor Vehicle coverage — Coverage U
Like the Previous Uninsured Motor Vehicle Coverage (Coverage U) the new Uninsured Motor Vehicle and Underinsured Motor Vehicle Coverage (Coverage U protects you and your passengers in the event of bodily injuries sustained in an accident for which an uninsured driver is legally liable. The new coverage U also provides protection against underinsured motor vehicles. Here's how the underinsured protection works: If the other driver is at fault for the accident and the damages owed for injuries to you and your passengers exceed the amount received from that driver's insurance company, Coverage U can apply for those excess damages up to the limits you choose.
Additional Coverage U changes:
Effective with this renewal, we've replaced your old Coverage U or coverage U1 with the new Uninsured Motor Vehicle and Underinsured Motor Vehicle, Coverage U.
The law also requires that the new Coverage U be provided in an amount equal to your Bodily Injury Liability limits. Effective with this renewal, we've made any necessary adjustments.
However, you have the option to carry lower available Coverage U limits. You can find additional instructions for doing this on the enclosed Premium Notice.
* * * * * * *
Please see the enclosed notice for instructions on changing your various Coverage limits. If you'd like to add any other coverages or if you have any questions about these changes, please contact your agent.
Pl.'s Ex. 8.
9. On February 7, 1985, Vollrath paid the amount due for his previous UIM coverage limits of $15,000 per person and $30,000 per accident. Pl.'s Ex. 14; Trial Tr. 24-28, 169-70.
10. Vollrath continued to elect and pay for UIM coverage limits of $15,000 per person and $30,000 per accident. From February 7, 1985 to January 3, 2002, the amount Vollrath remitted by check corresponded to the premium renewal required to purchase UIM coverage limits in the amount of $15,000 per person and $30,000 per accident. Pl.'s Ex. 23; Trial Tr. at 24, 26, 75-76. For example, Vollrath wrote checks on February 1, 1996 and August 4, 1996, in an amount ($368.40) consistent with UIM coverage limits of $15,000 per person and $30,000 per accident. Id. In addition, on June 8, 1990, Vollrath signed a "Notice to Named Insureds," stating that he "wanted to retain [his] current stacking underinsured Motor Vehicle Coverage W with limits of $15,000/$30,000 at a premium of $13." Pl. Ex. 19.
11. At around the same time he renewed the Policy for the first time after the enactment of the MVFRL, Vollrath applied for an automobile policy to insure a Ford Coachman motor home (the "Motor Home Policy"). Pl.'s Ex. 13; Trial Tr. at 44, 146-47. When applying for the Motor Home Policy, Vollrath acknowledged that he had been given the opportunity to purchase UIM coverage up to his bodily injury limits, and selected UIM coverage limits in the amount of $15,000 per person and $30,000 per accident in lieu of the higher limits offered to him. Pl.'s Ex. 14; Trial Tr. 45-46, 166-68.
12. On September 24, 1996, the vehicle in which Vollrath and his wife, Virginia, were riding was involved in an automobile accident with an underinsured motorist (the "Accident"). Mrs. Vollrath was seriously injured. Vollrath sued the underinsured motorist, and ultimately settled the lawsuit for $100,000.
DISCUSSION
The sole question before the Court is whether Vollrath validly waived his right to UIM coverage equal to his bodily injury coverage. To prove a valid waiver under § 1734, State Farm must demonstrate that (1) Vollrath had notice of his rights under the MVFRL and (2) he requested in writing lower limits of UIM coverage. See Jiongo v. Nationwide Ins. Co., Civ. A. No. 97-2437, 1998 WL 381706, at *6 (E.D. Pa. July 8, 1998); Dang v. State Farm Mut. Auto. Ins. Co., Civ. A. No. 96-411, 1996 WL 421942, at *3 (E.D. Pa. July 19, 1996), aff'd, 111 F.3d 126 (3d Cir. 1997)
State Farm does not have a copy of the Premium Notice, "Important Notice," or Explanatory Booklet it sent to Vollrath in 1984. Trial Tr. at 154-55. Vollrath denies receiving these materials. Trial Tr. 154-55. When asked how he knew he never received them, Vollrath testified that they "[did not] look familiar to him." Id. The Court finds this testimony unpersuasive and unconvincing.
State Farm, however, does not have to produce a signed § 1791 form in order to establish that one was sent to Vollrath. See Clifford v. Prudential Prop. and Cas. Ins. Co., No. 399-CV-1788, 2001 WL 1076582, at *4 (M.D. Pa. Aug. 28, 2001) ("An insurance company does not have to produce a signed § 1791 form in order to establish that one was sent to the insured."). Rather, State Farm must simply demonstrate that it "had a general procedure . . . in 1984 to provide the `Important Notice' to its customers." See Id. at *5; see also Nationwide Ins. Co. v. Tantorno, Civ. A. No. 90-4639, 1991 WL 24921, at *1 (E.D. Pa. Feb. 19, 1991) ("[T]he fact of mailing establishes a presumption of receipt in due course" even where, as here, the insured has no recollection of ever having received such a notice."). An insurer complies with the "Important Notice" requirement of § 1791 when it has a general procedure mailing out the forms and the insured would have been on the mailing list for such forms. See Clifford, 2001 WL 1076582, at *5.
State Farm had a procedure in place in 1984 to ensure that its Pennsylvania policyholders, such as Vollrath, received the Premium Notice mailing at the time of their first semi-annual policy renewal premium payment after the MVFRL's enactment. State Farm's mail center used an eight-station Model A660 Bell Howell Electronic Inserting Machine (the "EIM" or "Machine") to prepare the mailing. Pl.'s Ex. 1, 38, 41, Trail Tr. at 81-86, 103. If the "Important Notice" or the Explanatory Booklet was not properly inserted, the EIM's sensors would recognize the error and immediately stop the Machine. Trial Tr. at 95-96, 105, 112. A red light would alert the EIM operators to the problem and its location. Id. The mail center also matched the daily count of Premium Notices and inserts to the count on the EIM's postage meter. Trial Tr. 107, 112. If the counts did not match, EIM operators would open by hand all of the potentially affected premium renewal packages and resolve the discrepancy. Id. State Farm's testimony as to the operation of the Electronic Inserting Machine and the procedural safeguards employed by the EIM operators was persuasive and compelling.
Because State Farm had a reliable and trustworthy procedure for mailing out the Premium Notice, together with the "Important Notice" and the Explanatory Booklet, and Vollrath would have been on the mailing list for such forms, the Court concludes that State Farm complied with § 1791's "Important Notice" requirement. If the insurer strictly complies with § 1791, "there is a conclusive presumption that the insured has actual knowledge of the coverage available to her under the MVFRL." Breuninger v. Pennland Ins. Co., 450 Pa. Super. 149, 157, 675 A.2d 353, 357 (1996); see also Motorists Ins. Co. v. Emig, 444 Pa. Super. 524, 529-30, 664 A.2d 559, 562 (1995) (holding that a conclusive presumption of notice is established upon receipt of the "Important Notice"). Accordingly, the Court further concludes that Vollrath had notice of his right to higher UIM coverage under the MVFRL.
Even if Vollrath did not receive the Important Notice, courts have declined to revise policies to set UIM coverage at limits to equal to bodily injury limits because the MVFRL provides no remedy of reformation for a violation of § 1791.See Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 641-42 (3d Cir. 2000) ("Even where defendant insurance companies have violated the policy notice requirements of the Pennsylvania MVFRL, the Pennsylvania Supreme Court has declined to provide a remedy for the insured by, for example, construing the policy against the insurer. Instead, the court has adhered strictly to the statutory language, and where no remedy is provided, it has refused to create one.") (citing Salazar v. Allstate Ins. Co., 549 Pa. 658, 702 A.2d 1038, 1044 (Pa. 1997) and Donnelly v. Bauer, 553 Pa. 596, 720 A.2d 447, 454 (Pa. 1998)); Nationwide Mut. Ins. Co. v. Murphy, Civ. A. No. 98-1692, 1998 WL 964212, at *5 (E.D. Pa. Nov. 3, 1998) (finding that even if no § 1791 notice was provided, plaintiff is not entitled to reformation of his policy); Clifford, 2001 WL 1076582, at *8 (denying plaintiff's request for reformation of the policy because the MVFRL provides no remedy for violations of § 1791); Nationwide Mutual Ins. Co. v. Heintz, 804 A.2d 1209, 1219-20 (Pa.Super. 2002) (same),appeal denied, 572 Pa. 758, 818 A.2d 505 (Pa. Mar. 14, 2003).
The Court now turns to whether Vollrath requested in writing lower limits of UIM coverage. Vollrath remitted semi-annual checks for the lower amount to State Farm. Pl.'s Ex. 23; Trial Tr. at 24, 26, 75-76. Vollrath also signed a "Notice to Named Insureds," stating that he "wanted to retain [his] current stacking underinsured Motor Vehicle Coverage W with limits of $15,000/$30,000 at a premium of $13." Pl. Ex. 19. The MVFRL is silent as what type of "writing" is required under § 1734, though the requirement seems only to be that the writing reflect the insured's choice for lower coverage. See Jiongo, 1998 WL 381706, at *6-*7. Courts have held that an insured requests lower UIM limits in writing when, like Vollrath, he or she has (1) remitted checks to the insurer for the lower amount or (2) signed a form electing to retain lower UIM coverage limits. See Dang, 1996 WL 421942, *3 ("Assuming arguendo the check did not operate as a waiver under §§ 1734 and 1791, a form signed by the insured on August 26, 1990, stating that he wanted to retain his `current' UI/UIM coverage `with limits of $15,000/$30,000' did."); see also Buffetta, 230 F.3d at 640-41 (finding that the payment of renewal premiums evidences actual knowledge and understanding of the availability of these benefits and limits); Clifford, 2001 WL 1076582, *7 ("The continued payment of premiums here by [the insured] demonstrates actual knowledge and understanding of the availability of benefits."); Kline v. Old Guard Ins. Co., 820 A.2d 783, 787 (Pa.Super. 2003) (same). Accordingly, the Court finds that Vollrath requested in writing UIM coverage limits of $15,000 per person and $30,000 per accident.
CONCLUSION
In sum, the Court concludes that: (1) In December 1984, State Farm mailed to Vollrath the "Important Notice," as required under § 1791 of the MVFRL, informing him of his statutory right to UIM coverage limits equal to his bodily injury limits of $100,000 per person and $300,000 per accident under the Policy; (2) Vollrath nevertheless requested in writing UIM coverage limits in the amount of $15,000 per person and $30,000 per accident; (3) even if State Farm failed to provide Vollrath with § 1791 notice, the Court would not reform the Policy; and (4) on the date of the Accident, Vollrath was only entitled to UIM coverage from State Farm in the amount of $15,000 per person and $30,000 per accident.
Judgment will therefore be entered in favor of State Farm. An appropriate order follows.
ORDER
AND NOW, this 28th day of June, 2004, it is hereby ORDERED that:1. It is ADJUDGED AND DECLARED that automobile insurance policy no. 3222-785-B01-38K issued by Plaintiff State Farm Mutual Automobile Insurance Company to Defendant P. Daniel Vollrath, in effect at the time of Mr. Vollrath's accident on September 24, 1996, provided underinsured motorist coverage in the amount of $15,000 per person and $30,000 per occurrence.
2. Judgment is entered in favor of Plaintiff State Farm Mutual Automobile Insurance Company and against Defendant P. Daniel Vollrath, individually and as Executor of the Estate of Virginia Vollrath, and Intervenor-Defendant Mountain Laurel Assurance Company.
3. The Clerk is directed to statistically close this matter.