Opinion
Civil Action No. 03-4055.
June 23, 2004
MEMORANDUM
Presently before this court are the parties' cross-motions for summary judgment. Oral argument was held on the motions on May 6, 2004. For the following reasons, Plaintiff's Motion for Summary Judgment will be granted and Defendant's Motion will be denied.
I. Factual and Procedural Background
Plaintiff Vanessa Wilson commenced this Declaratory Judgment action against Defendants Reliance Insurance Co./Pennsylvania Property and Casualty Insurance Guarantee Association (hereinafter referred to as "Reliance" and "PPCIGA" respectively) and Mobile Dredging and Pumping Co. (hereinafter referred to as "Mobile") to determine the res judicata effect of a default judgment entered by the Superior Court of the State of Delaware in and for New Castle County.
This litigation began when Dwayne Gardner, an employee of Mobile offered Plaintiff a ride in a Mobile vehicle on October 7, 1999. The pick up truck, insured by Reliance, was forced off the road in Wilmington, Delaware by a phantom vehicle. Defendants claim the vehicle in which Plaintiff was riding was stolen from Mobile, but Plaintiff maintains that Mr. Gardner had continuous permitted access to the vehicle. Plaintiff allegedly sustained serious injuries but was not at the time of the occurrence an owner of a registered motor vehicle nor did she live in a household with a vehicle. Plaintiff filed a request for arbitration to obtain as an insured under the Mobile policy first party medical benefits. In arbitration, she was awarded uncontested medical and wage benefits when Reliance failed to make an appearance. Not having received payment of the award, she filed a Summons and Complaint in the Superior Court of the State of Delaware. Reliance never entered an appearance nor answered the Complaint; therefore, default judgment was entered on the arbitration award September 12, 2000. Also, Plaintiff filed a separate lawsuit in the State of Delaware for personal injuries against Mobile that is currently pending in that court. Reliance was declared insolvent on October 3, 2001 and PPCIGA statutorily acquired all of Reliance's rights and incurred all of Reliance's duties and obligations. Reliance was paying Plaintiff's wage and medical benefits when the company filed for receivership.
Ms. Wilson filed another action in the Superior Court of Delaware on September 26, 2000 to obtain uninsured motorist benefits as a result of the October 7, 1999 accident. On April 12, 2001, PPCIGA filed an answer to the Complaint raising for the first time affirmative defenses. Plaintiff then decided to request arbitration in Delaware County, Pennsylvania where the vehicle was registered, and filed the current declaratory judgment action. According to the Complaint, Plaintiff seeks a declaration that:
1. At all times relevant hereto PPCIGA is responsible for coverage for Reliance Insurance Company;
2. The Court Order of September 12, 2002 by the Honorable John E. Badiarz, Jr., of the Superior Court of the State of Delaware in and for New Castle County provides first party coverage benefits to Vanessa Wilson and Reliance and its successor PPCIGA are estopped from raising any defenses with regards to coverage under the doctrine of res judicata, and Vanessa Wilson is hereby declared an insured under the policy with regards to her claim for uninsured motorist benefits;
3. The failure of Reliance and PPCIGA to disclaim coverage estoppes Reliance and its successor PPCIGA from asserting that no coverage can be provided;
4. The defendants are hereby required to submit the plaintiffs claim for uninsured motorist benefits onto an arbitration panel pursuant to the policy of insurance that was in effect with Reliance Insurance Company and Mobile Dredging and Pumping Company on the date of the motor vehicle accident.
(Compl. at 4.)
Both parties filed motions for summary judgment.
II. Standard of Review
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment has the initial burden of showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552 (1986). Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts to the nonmoving party to go beyond the mere pleadings and present evidence through affidavits, depositions, or admissions on file to show that there is a genuine issue for trial. See id. 477 U.S. at 324, 106 S.Ct. at 2553. A genuine issue is one in which the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 (1986). The court must draw all reasonable inferences in the light most favorable to the nonmovant. See American Flint Glass Workers, AFL-CIO v. Beaumont Glass Company, 62 F.3d 574, 578 (3d Cir. 1995). However, a party opposing summary judgment must do more than just rest upon mere allegations, general denials or vague statements.Trap Rock Indus. Inc. v. Local 825, 982 F.2d 884, 890 (3d Cir. 1992).
III. Discussion
Plaintiff contends she is entitled to summary judgment based upon the theories of collateral estoppel, res judicata, and the full faith and credit clause. She argues the order dated September 12, 2000 of the Superior Court of the State of Delaware in and for New Castle County granting Plaintiff default judgment precludes the re-litigation of issues averred in the Complaint including Vanessa Wilson's standing as an insured under the policy and the authorization of the employee to operate the vehicle. Defendants claim the PPCIGA is not bound by the default judgment. As such, Defendants contend in their motion for summary judgment that they may argue here in the current action for Uninsured Motorist ("UM") coverage that Plaintiff is not an insured pursuant to the Reliance policy because the vehicle was not being operated with permissive use as is required by the language of the policy.
The first question before this court is a determination of PPCIGA's status as a successor in interest to Reliance in deciding the effect of the Delaware default judgment on the current Pennsylvania cause of action. The stated purpose of the PPCIGA, created by the Pennsylvania Property and Casualty Insurance Guaranty Association Act of December 18, 1992, is to "provide a means for the payment of covered claims under certain property and casualty insurance policies, to avoid excessive delay in the payment of such claims and to avoid financial loss to claimants or policyholders as a result of the insolvency of an insurer." 40 P.S. § 991.1801(1). Section 1803(b)(2) deems the association as successor in interest by stating the association is "the insurer to the extent of its obligation on the covered claims" having all the "rights, duties and obligations of the insolvent insurer as if that insurer had not become insolvent." In addition, Section 1819 of the Act establishes the association's right to apply to have default judgments set aside by the court that made the judgment.
"As to any covered claims arising from a judgment under any decision, verdict or finding based on the default of the insolvent insurer or its failure to defend an insured, the association, either on its own behalf or on behalf of such insured, may apply to have such judgment, order, decision, verdict or finding set aside by the same court that made such judgment, order, decision, verdict, or finding and shall be permitted to defend against such claim on the merits." 40 P.S. § 991.1819(b)
Having determined PPCIGA's status, we essentially have been asked by Plaintiff to declare that the Delaware Court's judgment binds Reliance and its successor in interest, PPCIGA. As a valid judgment, it would establish that Plaintiff is an insured under the policy with all the benefits as such. In arguing against such validation, Defendant contends that the Order of Liquidation and the PPCIGA Act do not limit PPCIGA's ability to challenge only judgments that are entered against an insolvent insurer after it became insolvent. PPCIGA argues it should therefore have the opportunity to defend the instant case on the merits. We agree in part that the Act does not preclude the PPCIGA from applying to have the judgment set aside or opened, but it is not automatically guaranteed success in such an action. In Hall v. MPH Transportation, the court held PPCIGA (referred to there as PIGA) did not have an automatic right to open a default judgment entered prior to being placed into rehabilitation because PPCIGA must "assume all of Reliance's rights and duties `as if that insurer had not become insolvent.'"See Hall v. MPH Transportation Inc., 58 Pa. D. C. 4th 482, 501 (2002). The Act gives PPCIGA no greater rights than those conferred to Reliance. The injured party's only limitations to recovery are PPCIGA's own limitation of liability set forth in the statute. See Hall, 58 Pa D. C. 4th at 494.
PPCIGA relies on an unpublished opinion as support for this argument. See Feldstein v. Rhawnhurst Café, 531 A.2d 530 (Pa.Super. 1987).
In the current action, not only was the Order entered prior to rehabilitation, but also Reliance began making payments to Plaintiff pursuant to that judgment. Most importantly, Defendants made no effort to re-open the default judgment in the Delaware Court. At the time of the judgment, Reliance had a chance to litigate the issue whether Plaintiff was an insured. PPCIGA stepped into Reliance's shoes when Reliance became insolvent, not only binding PPCIGA to the judgment, but also giving PPCIGA the right, as reliance had, to open the judgment. Neither Reliance, nor PPCIGA, attempted to do so in the Delaware Court.
We do not decide whether PPCIGA is time-barred from opening the judgment now.
We find the judgment remains as a binding judgment and establishes all the elements necessary to make the judgment valid for the Plaintiff to be entitled to an award of benefits. We must give full faith and credit to a valid judgment of the Delaware Court. Necessary to that judgment was a finding by the Delaware Court that Plaintiff was an insured. As an insured, she can seek Uninsured Motorist Benefits because she was injured by an unidentified driver, who by virtue of his lack of identification is considered uninsured. We recognize that Defendant has the right to apply to have the judgment set aside, but it remains valid until the Delaware court either strikes or opens the judgment and Defendant has not even so applied. Accordingly, Plaintiff is entitled to summary judgment on its motion and Defendant's motion must be denied.
An appropriate order follows.