Coverage - Central Analysis Bureau

Koch v. Progressive Direct Ins. Co.

Superior Court of Pennsylvania

August 4, 2022, Decided; August 4, 2022, Filed

No. 1302 MDA 2021

Reporter

2022 Pa. Super. LEXIS 327 *; 2022 PA Super 131

BRYAN D. KOCH, EXECUTOR OF THE ESTATE OF RHEA LYNN KOCH, DECEASED, AND BRYAN D. KOCH, IN HIS OWN RIGHT v. PROGRESSIVE DIRECT INSURANCE COMPANY, Appellant

Prior History: [*1] Appeal from the Order Entered September 14, 2021 In the Court of Common Pleas of Berks County Civil Division at No(s): 19-2281.

Koch v. Progressive Direct Ins. Co., 2020 U.S. Dist. LEXIS 59, 2020 WL 33628 (E.D. Pa., Jan. 2, 2020)

Core Terms

coverage, insured, trial court, benefits, waive, underinsured motorist coverage, conversation, motorcycle, limits, delivery, summary judgment motion, summary judgment, underinsured motorist, declaring, uninsured, parties, uninsured motorist coverage, time of an accident, court’s decision, renewal

Case Summary

Overview

HOLDINGS: [1]-Because the trial court’s order granting summary judgment declared that the insured was entitled to $200,000 of underinsured motorist (UIM) benefits available under the policy, the order was final and appealable as there was no legal theory upon which the insurer could prevail, and because the order resolved the insured’s breach of contract action for all practical purposes, the appeal was properly before the appellate court; [2]-The trial court erred in declaring that the insured was entitled to UIM benefits because based on precedent and the language of 75 Pa.C.S. § 1731, the UIM rejection form signed by the insured at the delivery of the policy in 2004 remained valid such that the insured was not entitled to UIM coverage at the time of the accident.

Outcome

Order reversed. Case remanded for judgment to be entered in favor of the insurer direct on all issues. Jurisdiction relinquished.

LexisNexis® Headnotes

Civil Procedure > Appeals > Appellate Jurisdiction

Governments > Courts > Authority to Adjudicate

HN1 Appeals, Appellate Jurisdiction

Before reaching the merits of the arguments, the appellate court must determine whether the appeal is properly before it, as the appealability of an order directly implicates the jurisdiction of the court asked to review the order. As such, the appellate court has the power to inquire at any time, sua sponte, whether an order is appealable.

Civil Procedure > Appeals > Appellate Jurisdiction > Final Judgment Rule

Civil Procedure > Appeals > Appellate Jurisdiction > Interlocutory Orders

HN2 Appellate Jurisdiction, Final Judgment Rule

It is well-established that in the Commonwealth of Pennsylvania, an appeal may only be taken from: (1) a final order or one certified by the trial court as final; (2) an interlocutory order as of right; (3) an interlocutory order by permission; or (4) a collateral order.

Civil Procedure > Appeals > Appellate Jurisdiction > Final Judgment Rule

HN3 Appellate Jurisdiction, Final Judgment Rule

The rules of appellate procedure provide that parties have the right to file an appeal from a final order, which is defined as any order that: (1) disposes of all claims and of all parties; (2) is expressly defined as a final order by statute; or (3) is entered as a final order pursuant to subdivision (c) of this rule. Pa.R.A.P. 341(a), (b)(1)-(3). An appeal may also be taken from an order that is made final or appealable by statute or general rule, even though the order does not dispose of all claims and of all parties. Pa.R.A.P. 311(a)(8).

Civil Procedure > … > Declaratory Judgments > State Declaratory Judgments > Appellate Review

Civil Procedure > Appeals > Appellate Jurisdiction > Final Judgment Rule

Civil Procedure > Appeals > Appellate Jurisdiction > Interlocutory Orders

HN4 State Declaratory Judgments, Appellate Review

The Pennsylvania Supreme Court has set forth the following two-part test to apply when determining whether an order declaring the rights of parties is final and appealable: (1) what is the effect of the lower court’s decision on the scope of the litigation; and (2) what practical effect does the court’s decision have on the ultimate outcome of the case. If the order in question merely narrows the scope of the litigation and does not resolve the entirety of the parties’ eligibility for declaratory relief, then the order is interlocutory and not immediately appealable.

Insurance Law > … > Coverage > Uninsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Owned Vehicles

HN5 Uninsured Motorists, Mandatory Coverage

Section 1731 of the Motor Vehicle Code requires insurers upon the delivery or issuance of a motor vehicle insurance policy to offer the insured uninsured and underinsured motorist coverage.

Business & Corporate Compliance > … > Insurance Company Operations > Policy Forms Regulation > Standard Forms & Provisions

Insurance Law > … > Coverage > Uninsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

HN6[] Policy Forms Regulation, Standard Forms & Provisions

Although the purchase of uninsured motorist (UI) and underinsured motorist (UIM) coverages is optional, 75 Pa.C.S. § 1731 provides that the insured must be provided with specific information to explain the separate purposes of UI/UIM coverage and must sign written rejection forms with certain stated language in prominent type and location in order to knowingly and voluntarily reject each type of coverage. § 1731(b)-(c). The insured must sign and date separate forms to reject UI and UIM coverage. 75 Pa.C.S. § 1731(b)-(c).

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Notice Requirements

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Notice Requirements

HN7 Underinsured Motorists, Mandatory Coverage

75 Pa.C.S. § 1731 provides that the insured will not be deemed to have waived uninsured motorist (UI) and/or underinsured motorist (UIM) coverage if the insurer fails to produce a valid rejection form. Further, in cases where the insured has rejected UI and/or UIM coverage, § 1731 also requires insurers to notify the insured on all policy renewals in prominent type that the policy does not provide protection against uninsured and underinsured motorists. § 1731(b)-(c).

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

HN8 Underinsured Motorists, Mandatory Coverage

In interpreting 75 Pa.C.S. § 1731, the court has held that an insured’s affirmative decision to waive underinsured motorist coverage is presumed to be in effect throughout the lifetime of that policy until affirmatively changed by the insured.

Insurance Law > … > Coverage > Uninsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Rejection of Coverage

Insurance Law > … > Coverage > Uninsured Motorists > Notice Requirements

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

HN9 Uninsured Motorists, Mandatory Coverage

The language of 75 Pa.C.S. § 1731 specifically provides that any individual who completes valid waiver forms rejecting uninsured motorist and/or underinsured motorist protection under § 1731(b)-(c) is precluded from claiming liability of any person based upon inadequate information. § 1731(c.1).

Insurance Law > … > Coverage > Underinsured Motorists > Mandatory Coverage

Insurance Law > … > Coverage > Underinsured Motorists > Rejection of Coverage

HN10 Underinsured Motorists, Mandatory Coverage

An insured’s decision to waive underinsured motorist coverage will remain in effect throughout the lifetime of that policy until affirmatively changed by the insured.

Judges: BEFORE: BENDER, P.J.E., STABILE, J., and STEVENS, P.J.E.^* OPINION BY STEVENS, P.J.E.

Opinion by: STEVENS

Opinion

OPINION BY STEVENS, P.J.E.:

Progressive Direct Insurance Company (“Progressive Direct”) appeals the order entered by the Court of Common Pleas of Berks County denying its motion for summary judgment and granting the cross motion for summary judgment filed by Appellee Bryan D. Koch, in his capacity as Executor of the Estate of Rhea Lynn Koch and in his own right. After careful review, we reverse the trial court’s order.

On June 7, 2015, Bryan Koch (“Koch”) was driving his 2013 Harley Davidson motorcycle while his wife, Rhea Lynn Koch (“Mrs. Koch”) was riding with him as a passenger. Their motorcycle was struck by a 1997 Ford Explorer driven by Sean Eyrick, who was later determined to be driving under the influence of alcohol when the accident occurred. Mrs. Koch was killed in the accident and Koch suffered injuries that required the amputation of his left leg above his knee.

The parties do not dispute that Eyrick was solely at fault for causing the accident. Ultimately, Koch [*2] decided to settle the claims against Eyrich for his available policy limits of $15,000.00 for each plaintiff.¹ The damages that Koch sustained from the accident in relation to the fatal injuries of his wife, Rhea Koch, and the injuries he sustained in his own right exceeded the liability coverage of Eyrich, who was an underinsured motorist (UIM).

At the time of the accident, Koch’s motorcycle had been insured by Progressive Direct under a policy which provided bodily injury coverage of $100,000 each person and $300,000 each accident. Koch presented a demand to Progressive Direct for bodily injury and UIM benefits. Progressive Direct refused to pay the requested UIM benefits based on its allegation that Koch had signed a waiver form rejecting UIM coverage.²

On September 9, 2019, Koch filed this breach of contract action, individually and as executor of the Estate, asserting that Progressive Direct had breached the insurance policy by failing to properly and timely evaluate the claim and pay the insured’s UIM policy limits. Koch claimed that he as an individual and the Estate were each entitled to available UIM benefits in the amount of $100,000.00.

While the complaint sounded in breach [*3] of contract, Koch specifically requested that the trial court make “a determination of the availability of UIM coverage to [the Kochs] under the Progressive Direct Insurance Company policy covering the motorcycle [Koch] was operating” at the time of the June 7, 2015 accident. Complaint, at ¶ 19.

On February 25, 2021, Progressive Direct filed a motion for summary judgment, alleging Koch had originally rejected UIM coverage in the inception of a policy held by Progressive Halcyon Insurance Co. that was issued in February 2004 for Koch’s 2002 Honda motorcycle. While Progressive Halcyon changed its name to Progressive Direct on June 9, 2006, Koch maintained a policy with this company for various motorcycles. Progressive Direct argued that Koch’s rejection of UIM coverage in 2004 was still effective and carried forward through the addition and deletion of different motorcycles to the policy as Koch never affirmatively changed this designation rejecting UIM coverage.

On March 29, 2021, Koch filed a cross motion for summary judgment, seeking an order declaring that UIM coverage is available under Koch’s Progressive Direct policy in the amount of $200,000.00. Cross-Motion for Summary Judgment, [*4] at 2. In support of this motion, Koch presented evidence of a telephonic conversation he had with a representative of Progressive Direct, on or about August 20, 2014, nine months before the accident, during which he sought to purchase additional coverage for his 2013 Harley Davidson motorcycle. The relevant portions of that conversation were as follows:

[Koch:] uh, I just had a, a friend who was in a bad accident years ago, and he told me, you know, a lot of times on the coverage you’ve got basic coverage, but it doesn’t really cover a whole lot in terms of hospital, and maybe other things. What, uh, even at the 1,500 where I’m at, what, are there things I should be adding to that policy to, uh, not just to insure the bike, but if you were ever hospitalized for an extended period of time, things like that?

[Progressive Direct representative:] Definitely. So, um, I’m not licensed in the state of Pennsylvania, but I can kinda go over what coverages that we offer in your state.

Recorded Conversation of Koch and Progressive Direct representative, lines 94-99.

The conversation continued on to include the following discussion:

[Progressive Direct representative:] You also don’t have uninsured [*5] motorist coverage. That’s for if, you know, if somebody else causes an accident, and injures you or your bike, they would pay for all your injuries and damages. But if they are not responsible and they don’t have insurance, then you …

[Koch:] You’re stuck.

[Progressive Direct representative:] … you’re stuck with, um, everything on your own. Unless you have the uninsured motorist coverage here.

[Koch:] M’kay.

[Progressive Direct representative:] So you do have that option. So it’s like you’re kinda paying for somebody else not to be responsible.

[Koch:] Yeah.

[Progressive Direct representative:] But you’re protecting yourself.

[Koch:] Yeah.

Recorded Conversation of Koch and Progressive Direct representative, lines 128-145.

At the conclusion of this conversation, Koch added uninsured motorist (UM) coverage to his policy in the amount of $100,000 each person and $300,000 per accident. The Progressive Direct representative never discussed the availability of underinsured motorist (UIM) coverage.

On September 14, 2021, the trial court entered an order granting summary judgment in favor of Koch and denied Progressive‘s motion for summary judgment. The trial court found the Progressive Direct representative [*6] “misled [Koch] and created an incongruous uninsured motorist coverage and underinsured motorist coverage selection process” when she discussed UM protection but failed to advise Appellant of the option of UIM coverage in response to his inquiry about purchasing additional coverage. Trial Court Opinion (T.C.O.), 9/14/21, at 4.

As a result, the trial court concluded that Appellant had not made a “knowing waiver” of UIM coverage and found the Rejection of UIM form that Koch signed in 2004 during the inception of the policy was void pursuant to the Motor Vehicle Financial Responsibility Law (MVFRL). Further, the trial court determined that there is a total of $200,000.00 of available UIM coverage under Koch’s policy in place at the time of the accident. This timely appeal followed.

Progressive Direct raises the following claims for our review on appeal:

1. Whether a rejection of underinsured motorist coverage made at the delivery of the policy remains valid until affirmatively changed by the insured.

2. Whether the telephone conversation between the Progressive representative and [Koch], discussing different coverages, created a duty on behalf of Progressive to advise [Koch] about underinsured [*7] motorist coverage.

3. Whether the trial court erred in finding that the Progressive representative’s failure to offer underinsured motorist coverage to [Koch] required reformation of the policy to allow for underinsured motorist coverage?

Progressive‘s Brief, at 6.

HN1 Before reaching the merits of these arguments, we must determine whether this appeal is properly before this Court, as the “appealability of an order directly implicates the jurisdiction of the court asked to review the order.” Schmitt v. State Farm Mut. Auto. Ins. Co., 245 A.3d 678, 681 (Pa.Super. 2021) (quoting Knopick v. Boyle, 2018 PA Super 140, 189 A.3d 432, 436 (Pa.Super. 2018) (internal citation omitted)). As such, “this Court has the power to inquire at any time, sua sponte, whether an order is appealable.” Knopick, 189 A.3d at 436 (quoting In re Estate of Considine v. Wachovia Bank, 2009 PA Super 21, 966 A.2d 1148, 1151 (Pa.Super. 2009)).

HN2 It is well-established that “[i]n this Commonwealth, an appeal may only be taken from: 1) a final order or one certified by the trial court as final; 2) an interlocutory order as of right; 3) an interlocutory order by permission; or 4) a collateral order.” Estate of Considine, 966 A.2d at 1151.

HN3 Our rules of appellate procedure provide that parties have the right to file an appeal from a final order, which is defined as any order that: “(1) disposes of all claims and of all parties; (2) is expressly defined as a final order by statute; or (3) is entered as a final order pursuant to subdivision (c) of [*8] this rule.” Pa.R.A.P. 341(a), (b)(1)-(3). An appeal may also be taken from “an order that is made final or appealable by statute or general rule, even though the order does not dispose of all claims and of all parties.” Pa.R.A.P. 311(a)(8).

Section 7532 of the Declaratory Judgments Act states, in pertinent part:

[c]ourts of record, within their respective jurisdictions, shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. … The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.

42 Pa.C.S.A. § 7532.

As noted above, Progressive Direct appealed the trial court’s order which granted Koch’s motion for summary judgment and declared that the UIM form produced by Progressive Direct was void under the MVFRL and that there was $200,000.00 of UIM benefits available to Koch under his Progressive Direct policy. While Koch’s complaint sounded in breach of contract, he had requested that the trial court make an express determination on whether UIM coverage was available under the Progressive Direct policy. Both parties requested this determination in their motions for summary judgment.

HN4 Our Supreme Court [*9] recently set forth the following two-part test to apply when determining whether an order declaring the rights of parties is final and appealable:

(1) what is the effect of the lower court’s decision on the scope of the litigation; and (2) what practical effect does the court’s decision have on the ultimate outcome of the case. … If the order in question merely narrows the scope of the litigation and does not resolve the entirety of the parties’ eligibility for declaratory relief, then the order is interlocutory and not immediately appealable.

Pennsylvania Manufacturers’ Assoc. Ins. Co. v. Johnson Matthey, Inc., 647 Pa. 85, 188 A.3d 396 (2018).

In Schmitt, this Court quashed as interlocutory State Farm’s appeal from the trial court’s order which resolved the plaintiff’s declaratory judgment claims and determined that the plaintiff’s insurance policy entitled him to UIM benefits. This Court found that the appeal was improper upon summary judgment on the issue of coverage as the trial court had not yet resolved the claims seeking to determine the plaintiff’s claims related to damages. Schmitt, 245 A.3d at 686.

This case, however, is distinguishable as the trial court determined in its order that $200,000.00 of UIM benefits are available under Koch’s policy with Progressive Direct as defined by the policy limits. In [*10] response to this Court’s rule to show cause as to why this appeal should not be quashed, Progressive Direct agreed to stipulate that Koch would be entitled to the maximum UIM coverage of $100,000 each for the Estate and Koch individually if this Court affirmed the trial court’s decision with respect to coverage. Progressive Direct also points out that any award or judgment in excess of the UIM coverage limits would be molded to the available UIM coverage. See Marlette v. State Farm, 618 Pa. 617, 57 A.3d 1224 (Pa.Super. 2012).

As the trial court’s order granting summary judgment declared that Koch was entitled to $200,000.00 of UIM benefits available under the Progressive Direct Policy, we may characterize the order as final and appealable as there is no legal theory upon which Progressive Direct could prevail. Since the order resolved Koch’s breach of contract action for all practical purposes,³ we conclude that this appeal is properly before this Court.

On the merits of this appeal, Progressive Direct argues that the trial court erred in finding that Koch was entitled to UIM coverage under the Progressive Direct policy and that the Underinsured Motorist Protection (UIM) form produced by Progressive Direct is void pursuant to the MVFRL.

Specifically, [*11] Progressive Direct claims that the trial court essentially determined that Progressive Direct should have required Koch to sign a new Rejection of UIM coverage form in light of the conversation that Koch had with the Progressive Direct representative on August 20, 2014. Progressive Direct asserts that the original rejection form that Koch had signed waiving UIM coverage at the initial delivery of the policy in 2004 remained valid at the time of the accident.

In response, Koch argues that the rejection form he signed in 2004 cannot serve as the basis for a valid denial of UIM coverage under his Progressive Direct Policy. Koch asserts that when he contacted the Progressive Direct representative in 2014, stated his desire to purchase additional coverage, and added UM coverage, he affirmatively changed his previous rejection of UM/UIM protection made at the time of the delivery of the policy.

Koch faults the Progressive representative for failing to advise him about the availability of UIM coverage when he specifically asked what coverage was available. Koch alleges that, had the Progressive Direct representative discussed the differences between UI and UIM coverage, Koch would have purchased [*12] both UI and UIM coverage.

As an initial matter, we note that to the extent that the trial court found the Progressive Direct representative “misled” Koch when she advised him about the availability of uninsured motorist coverage but did not discuss the option of underinsured motorist protection, Koch’s complaint does not seek to find Progressive Direct liable on a tort theory of misrepresentation, but rather is based on a claim of breach of contract. In addition, Koch does not allege that the Progressive Direct representative was negligent or established a fiduciary relationship with him during his inquiry for increased insurance coverage. Accordingly, our review must be limited to whether summary judgment was appropriate in the context of Koch’s breach of contract claim.

HN5 Section 1731 of the Motor Vehicle Code requires insurers upon the delivery or issuance of a motor vehicle insurance policy to offer the insured uninsured and underinsured motorist coverage. This section specifically provides that “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 [*13] uninsured motorist and underinsured motorist coverages are offered therein or supplemental thereto in amounts as provided in section 1734 (relating to request for lower limits of coverage).” 75 Pa.C.S.A. § 1731(a)-(c).

HN6 Although the purchase of uninsured motorist and underinsured motorist coverages is optional, Section 1731 provides that the insured must be provided with specific information to explain the separate purposes of UI/UIM coverage and must sign written rejection forms with certain stated language in prominent type and location in order to knowingly and voluntarily reject each type of coverage. 75 Pa.C.S.A. § 1731(b)-(c). The insured must sign and date separate forms to reject UI and UIM coverage. 75 Pa.C.S.A. § 1731(b)-(c).

HN7 In light of these requirements, Section 1731 provides that the insured will not be deemed to have waived UI and/or UIM coverage if the insurer fails to produce a valid rejection form. Further, in cases where the insured has rejected UI and/or UIM coverage, Section 1731 also requires insurers to notify the insured on all policy renewals in prominent type that the policy “does not provide protection against uninsured and underinsured motorists.” 75 Pa.C.S.A. § 1731(b)-(c).

In the instant case, the record supports the trial court’s finding that Koch signed a valid rejection of UI/UIM coverage form on February [*14] 14, 2004, upon the initial delivery of the Progressive Halcyon policy for his 2002 Honda motorcycle. Although Progressive Halcyon changed its company name to Progressive Direct in 2006, the trial court determined that Progressive Direct had shown that its name change did not result in the creation of a new company and that Koch’s policy remained the same throughout the years.⁴

In addition, Progressive Direct presented evidence that it had consistently sent Koch policy renewals which stated that Koch had rejected UIM coverage. After Koch had contacted Progressive Direct on August 20, 2014, increased his coverage, and purchased UI insurance, Progressive Direct sent Koch a policy renewal on January 3, 2015, which stated that the policy now included uninsured motorist coverage in the amount of $100,000 each person and $300,000 each accident and listed the corresponding premium for this coverage. Renewal Declarations Page, 1/3/15, at 2. This policy renewal listed the “underinsured motorist bodily injury” coverage as “rejected.” Id. These coverage selections were in place at the time of the accident at issue that subsequently occurred on June 7, 2015.

The issue before this Court is whether [*15] the trial court erred in finding that the conversation on August 20, 2014 between Koch and the Progressive Direct representative created a duty or a legal obligation for the representative to offer Koch UIM coverage, notify him about UIM coverage, or to obtain a new UIM rejection form where this coverage had been previously waived in a valid rejection form. The trial court found that when Koch had contacted Progressive Direct and sought more information about obtaining additional coverage, Koch made it “obvious” that he no longer wanted to reject the coverage that he had previously declined. T.C.O., 11/18/21, at 5.

HN8 In interpreting Section 1731, this Court has held that an insured’s affirmative decision to waive UIM coverage is presumed to be in effect throughout the lifetime of that policy until “affirmatively changed” by the insured. Smith v. Hartford Ins. Co., 2004 PA Super 145, 849 A.2d 277, 281 (Pa.Super. 2004).

HN9 In addition, the language of Section 1731 specifically provides that any individual who completes valid waiver forms rejecting UI and/or UIM protection under Sections 1731(b)-(c) is “precluded from claiming liability of any person based upon inadequate information.” 75 Pa.C.S.A. § 1731(c.1). Further, Section 1791 of the MVFRL provides that

[i]t shall be presumed that the insured has been advised of the benefits and limits available under this [*16] 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, and no other notice or rejection shall be required.”

75 Pa.C.S.A. § 1791 (emphasis added).

In Smith, the first named insured (Smith) initially executed a valid waiver of UIM coverage in a policy with Hartford Insurance that covered Smith and his wife (Mrs. Smith). Smith subsequently raised the policy’s liability coverage, but did not change his UIM rejection. When Mrs. Smith was injured in an accident caused by an underinsured driver, she sought UIM benefits under the policy. The trial court found sua sponte that, by increasing the policy limits, the insured purchased a “new” policy, which then required Hartford Insurance to supply the Smiths with a new UIM rejection form.

On appeal, this Court found there was no basis for the trial court’s decision in the statute or in case law, but instead reiterated that the General Assembly stated in Section 1791 that once the insured has applied for the original coverage and been informed of the benefits and limits available, “no other notice or rejection shall be required.” Smith, 849 A.2d at 280 (quoting 75 Pa.C.S.A. § 1791). Accordingly, this Court found that the trial [*17] court erred when it found that Smith was entitled to a new UIM rejection form when the Smiths increased the liability coverage on their existing policy.

Similarly, in this case, Koch executed a valid waiver of UI and UIM benefits upon the delivery of the original policy in February 2004. Pursuant to Section 1791, there is a presumption that Koch was advised of the benefits and limits available under his policy at the time of his application for coverage. Thus, when Koch contacted Progressive Direct on August 20, 2014 and indicated that he wished to obtain more coverage on the existing policy, the Progressive Direct representative was not required to give Koch additional notice of a particular benefit or to obtain another UIM rejection form.

We find the trial court’s citation to Barnard v. Travelers Home and Marine Insurance Co., 654 Pa. 604, 216 A.3d 1045 (2019) is not applicable to the instant case. In Barnard, our Supreme Court determined that, pursuant to a different statutory provision (Section 1738 of the MVFRL), the insured’s decision to increase the UIM coverage limits on her two vehicles covered in her policy was a “purchase” that entitled the insured to an opportunity to waive stacking of the new sum of UIM coverage. The Supreme Court held that where an insured increases the UIM coverage [*18] limit for multiple vehicles under an existing policy, the insured must execute a new rejection form to knowingly and voluntarily waive stacking of the new, aggregate amount of UIM coverage.

However, the result in Barnard was required by the plain language of Section 1738, which specifically provides that “[e]ach named insured purchasing uninsured or underinsured motorist coverage … shall be provided the opportunity to waive the stacked limits of coverage.” 75 Pa.C.S.A. § 1738 (emphasis added).

Notably, the issue in this case does not pertain to stacking of UI or UIM coverage, but the insured’s complete waiver of UI and UIM coverage. The relevant statutory provision in this case (Section 1731), which applies to circumstances in which UIM coverage has been wholly waived, does not contain the same “purchase” requirement as set forth in Section 1738 or contain any language entitling the insured to another opportunity to waive UI or UIM coverage. Thus, there is no statutory basis for the trial court’s speculation that Koch’s “purchase” of UI coverage at the recommendation of the Progressive Direct representative entitled Koch to an opportunity to affirmatively reject the purchase of UIM coverage.

HN10 Instead, this case is controlled by the holding of Smith [*19] which provides that an insured’s decision to waive UIM coverage will remain in effect throughout the lifetime of that policy until affirmatively changed by the insured. Smith, supra. See also Sackett v. Nationwide Mut. Ins. Co. (Sackett I), 591 Pa. 416, 423, 919 A.2d 194, 198 (2007) (reaffirming the decision in Smith which was “required by the relevant statutory language of Sections 1731 and 1791“).⁵

Based on this precedent and the language of Section 1731, we conclude that the UIM rejection form signed by Koch at the delivery of the policy in 2004 remained valid such that Koch was not entitled to UIM coverage at the time of the accident. Accordingly, we reverse the trial court’s decision to grant Koch’s motion for summary judgment and deny Progressive Direct’s motion for summary judgment.

Order reversed. Case remanded for judgment to be entered in favor of Progressive Direct on all issues. Jurisdiction relinquished.

Judgment Entered.

Date: 8/04/2022

End of Document

^*Former Justice specially assigned to the Superior Court.

¹Eyrick was charged with homicide by vehicle while driving under the influence and other related charges in connection with this accident.

²We note the Kochs had separate policies with Erie Insurance Co. (“Erie”) for their household automobiles. Before the instant action was filed, Erie filed a declaratory judgment action seeking a determination that UIM coverage was not available under the Erie automobile policy for the accident at issue in this case because the Koch had rejected UIM coverage under the Progressive Direct motorcycle policy. On June 17, 2020, the trial court consolidated the Erie litigation with this case for the purposes of discovery and trial.

However, we note that complete consolidation of the Erie and Progressive Direct litigation did not occur because the actions lack complete identity of parties or claims. See Malanchuk v. Tsimura, 635 Pa. 488, 497, 137 A.3d 1283, 1288 (2016) (finding that “complete consolidation (or merger or fusion of actions) does not occur absent a complete identity of parties and claims; separate actions lacking such overlap retain their separate identities and require distinct judgments”).

³The only issue left for the trial court to resolve is the amount of delay damages, which could not be made until the parties’ action had been resolved.

⁴See Breuninger v. Pennland Insurance Company, 450 Pa. Super. 149, 675 A.2d 353 (Pa.Super. 1996) (holding that the transfer of a motor vehicle insurance policy from one company to another does not necessarily constitute a “new” policy).

⁵Sackett I was modified on reargument on other grounds in Sackett v. Nationwide Mut. Ins. Co. 596 Pa. 11, 940 A.2d 329 (2007) (Sackett II).

Alesevic v. Gordon

Court of Appeals of Michigan

June 30, 2022, Decided

No. 358507

Reporter

2022 Mich. App. LEXIS 3815 *; 2022 WL 2380704

HARIS ALESEVIC, Plaintiff, v RUSSELL GORDON, CITY OF DETROIT, and WAYNE COUNTY, Defendants, and PROGRESSIVE MICHIGAN INSURANCE COMPANY, Defendant-Appellant, and ACCEPTANCE INDEMNITY INSURANCE COMPANY, Defendant-Appellee.

Notice: THIS IS AN UNPUBLISHED OPINION. IN ACCORDANCE WITH MICHIGAN COURT OF APPEALS RULES, UNPUBLISHED OPINIONS ARE NOT PRECEDENTIALLY BINDING UNDER THE RULES OF STARE DECISIS.

Prior History: [*1] Wayne Circuit Court. LC No. 19-011275-NI.

Alesevic v. Gordon, 2020 Mich. App. LEXIS 8515 (Mich. Ct. App., Dec. 17, 2020)

Core Terms

coverage, endorsement, benefits, insurance policy, insured, tractor, no-fault, modified, named insured, motorcycle, summary disposition, mandatory coverage, injuries, policies

Counsel: For HARIS ALESEVIC, Plaintiff – Appellee: KEITH M BANKA.

For RUSSELL GORDON, Defendant: KRISTI E SOLON.

For DETROIT CITY OF, Defendant: MARY BETH COBBS.

For WAYNE COUNTY, Defendant: JASON H HARRISON SR.

For PROGRESSIVE MICHIGAN INSURANCE COMPANY, Defendant – Appellant: JEREMIAH L FANSLAU.

Judges: Before: MARKEY, P.J., and SHAPIRO and PATEL, JJ.

Opinion

Per Curiam.

Defendant, Progressive Michigan Insurance Company (Progressive), appeals by right a stipulated order dismissing claims by plaintiff against Progressive. Progressive is challenging the trial court’s earlier order that granted summary disposition in favor of defendant, Acceptance Indemnity Insurance Company (Acceptance). We affirm.

Plaintiff was a passenger in a car being driven by defendant, Russell Gordon. The vehicle either hit a dip in the road, or Gordon attempted to avoid a dip in the road, which caused the car to swerve and ultimately crash through a fence and strike a parking-lot pole. Plaintiff suffered a variety of injuries. At the time of the accident, plaintiff and Gordon had automobile insurance policies through Progressive, and plaintiff owned a 2007 Volvo tractor that could be used to haul semitrailers [*2] hitched to the tractor. Plaintiff had a non-trucking insurance policy with Acceptance that covered the tractor. Such non-trucking insurance policies are generally known as “bobtail” policies, insuring the tractor and driver of the rig when the tractor is operated absent a semitrailer or cargo. See Besic v Citizens Ins Co of the Midwest, 290 Mich App 19, 22 n 1; 800 NW2d 93 (2010). We discuss in our analysis below the pertinent language in the Acceptance insurance policy.

Plaintiff commenced suit against Progressive and Acceptance for underinsured motorist benefits, uninsured motorist benefits, and personal protection insurance (PIP) benefits related to injuries plaintiff sustained in the motor vehicle accident. Plaintiff also filed various claims against the remaining defendants, none of whom are parties to this appeal. The appeal solely entails Progressive and Acceptance and the payment of PIP benefits. The other claims were ultimately resolved or dismissed. Acceptance moved for summary disposition under MCR 2.116(C)(10), arguing that plaintiff’s insurance policy was a bobtail policy that only applied to accidents involving the Volvo tractor. Acceptance further contended that the PIP endorsement associated with the Acceptance policy was not applicable to plaintiff because there [*3] was an exclusion to the endorsement that was implicated because plaintiff is a “named insured” on his Progressive policy. The trial court granted Acceptance’s motion for summary disposition and subsequently denied Progressive’s motion for reconsideration.¹ Eventually, plaintiff and Progressive stipulated to the dismissal of plaintiff’s claims against Progressive, and this appeal followed.

This Court reviews de novo a trial court’s ruling on a motion for summary disposition. Hoffner v Lanctoe, 492 Mich 450, 459; 821 NW2d 88 (2012). Additionally, we review de novo issues concerning the proper interpretation of a contract and the legal effect or application of a contract. Rory v Continental Ins Co, 473 Mich. 457, 464; 703 N.W.2d 23 (2005).

In ascertaining the meaning of a contract such as an insurance policy, this Court gives the words used in the contract their plain and ordinary meaning, as would be apparent to a reader of the instrument. Id. A fundamental tenet of Michigan jurisprudence is that an unambiguous contract is not open to judicial construction and must be enforced as written, thereby respecting the freedom of individuals to arrange their affairs by contract. Id. at 468. In Hunt v Drielick, 496 Mich 366, 372-373; 852 NW2d 562 (2014), our Supreme Court observed:

An insurance policy is similar to any other contractual agreement, and, thus, the court’s role is to determine [*4] what the agreement was and effectuate the intent of the parties. We employ a two-part analysis to determine the parties’ intent. First, it must be determined whether the policy provides coverage to the insured, and, second, the court must ascertain whether that coverage is negated by an exclusion. While it is the insured’s burden to establish that his claim falls within the terms of the policy, the insurer should bear the burden of proving an absence of coverage. Additionally, exclusionary clauses in insurance policies are strictly construed in favor of the insured. . . . However, it is impossible to hold an insurance company liable for a risk it did not assume, and, thus, clear and specific exclusions must be enforced. [Quotation marks, citations, and brackets omitted.]

On appeal, Progressive argues that plaintiff, as an individual, was the named insured under the insurance policy issued by Acceptance. Further, Progressive contends that the PIP endorsement to the Acceptance policy indicated that it would provide PIP benefits to plaintiff consistent with the no-fault act, MCL 500.3101 et seq., if he sustained an injury in an accident that resulted from the use of “an auto” as “an auto,” which language [*5] would encompass Gordon’s vehicle. Thus, according to Progressive, Acceptance and Progressive are in the same order of priority under MCL 500.3114(1), thereby mandating a pro rata split or equitable division under former MCL 500.3115(2) in regard to the payment of PIP benefits.² Acceptance counters that its policy did not provide coverage under the circumstances presented because the accident did not involve the 2007 Volvo tractor. Acceptance additionally argues that a policy exclusion barred PIP coverage because plaintiff was a “named insured” and could collect PIP benefits under his Progressive policy. Accordingly, because there was no coverage, and because, assuming coverage, an exclusion applied, Progressive alone was responsible for the payment of PIP benefits, and the purported issue of priority, equal or otherwise, was irrelevant.

The certificate of insurance for plaintiff’s policy with Acceptance provided that it was part of the insurance agreement and that PIP coverage, among other coverages, would “apply only to the Specified ‘Auto’ or ‘Autos’ below.” (Emphasis added.) And the only auto listed in the certificate of insurance was the “2007 Volvo Tractor.” This language plainly and unambiguously precluded [*6] liability by Acceptance to pay PIP benefits in relation to an accident that did not involve the Volvo tractor even though plaintiff may have suffered injuries in the accident. The Acceptance insurance policy, however, also contained a Michigan PIP endorsement, which Progressive contends overrode the certificate of insurance or broadened the PIP coverage. More specifically, the PIP endorsement provided, in part:

We will pay personal injury protection benefits to or for an “insured” who sustains “bodily injury” caused by an “accident” and resulting from the ownership, maintenance or use of an “auto” as an “auto.” These benefits are subject to the provisions of Chapter 31 of the Michigan Insurance Code. . . . [Emphasis added.]

Progressive, relying on this provision, maintains that plaintiff was the “insured” under the Acceptance policy and that the plain language of the endorsement did not limit its application to any particular vehicle.

Acceptance challenges Progressive’s argument regarding the PIP endorsement, asserting, in part, that the endorsement modified the insurance policy but only with respect to a covered automobile, which, again, was solely the 2007 Volvo tractor. Progressive [*7] argues that Acceptance essentially cherry-picks from the language in the PIP endorsement and does not read the endorsement’s introductory language in its entirety. The PIP endorsement to the Acceptance insurance policy provided, in part:

For a covered “auto” licensed or principally garaged in, or “garage operations” conducted in, Michigan, this endorsement modifies insurance provided under the following:

BUSINESS AUTO COVERAGE FORM

GARAGE COVERAGE FORM

MOTOR CARRIER COVERAGE FORM

TRUCKERS COVERAGE FORM.

With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. [Emphasis added.]

Progressive maintains that the coverage form at issue in this case was the “NON-TRUCKING AUTOMOBILE COVERAGE FORM,” and not any of the coverage forms listed in the PIP endorsement. Therefore, according to Progressive, the emphasized language in the above-quoted passage was implicated, and it effectively expanded PIP coverage to encompass injuries incurred by plaintiff in any auto accident.

We do not agree with Progressive’s construction of the introductory language found in the PIP endorsement. The covered “auto” was the Volvo tractor, so the [*8] PIP endorsement modified insurance in connection with the Volvo tractor, but then only in regard to coverage forms that were not applicable in this case. We note that if one of the coverage forms listed in the PIP endorsement had in fact been applicable, there would perhaps be tension between the “covered auto” language and the “an auto” language in the PIP endorsement. Progressive relies on the sentence in the PIP endorsement that we quoted and emphasized above: “With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement.” But this language was simply referring to the listed coverage forms, inapplicable here, indicating that their provisions continued to govern unless the endorsement modified them. In sum, there was nothing in the PIP endorsement that negated or broadened the language in the certificate of insurance that plainly and unambiguously limited PIP coverage to injuries arising out of accidents involving the Volvo tractor.

Furthermore, assuming that the PIP endorsement was applicable, the endorsement provided for the following exclusion in section C of the endorsement:

We will not pay personal injury protection [*9] benefits for “bodily injury”

* * *

6. To anyone entitled to Michigan no-fault benefits as a Named Insured under another policy. This exclusion does not apply to you or anyone “occupying” a motorcycle.

Plaintiff was a named insured in his Progressive policy. Accordingly, the exclusion identified in the PIP endorsement was implicated and needed to be honored assuming general application of the endorsement in the first place.

Progressive argues that the exclusion was unenforceable because the no-fault act statutorily mandates PIP-benefit coverage in automobile insurance policies. Progressive also claims that there was an exclusion within the exclusion as to “you,” which was a reference to plaintiff, maintaining that “you” did not modify “occupying a motorcycle.” Both of these arguments are unavailing.

In Johnson v USA Underwriters, 328 Mich App 223; 936 NW2d 834 (2019), this Court stated:

The no-fault act . . . does not address, let alone bar, an insurer’s ability to sell optional insurance coverages only. In this case, the USA policy did not provide the mandatory no-fault coverages to Vandeinse. Indeed, USA does not offer mandatory coverages to any customers; it only sells collision and comprehensive policies, which, according to Vandeinse’s insurance agent, [*10] are sometimes bundled with other insurance policies for a reduced cost. Because the no-fault act does not bar this practice, it does not violate Michigan law, and we cannot read into the statute something that is not there.

* * *

The dissent concludes that the no-fault act “implicitly” requires that every insurer provide policies that include the mandatory coverages, and then—and only then—can an insurer “delete” coverages after verification that the insured will not operate the vehicle on a roadway. However, the no-fault act does not state that every insurer must provide mandatory coverages. Instead, MCL 500.3101(1) requires that any insured who intends to drive on a highway must have the mandatory coverages. The no-fault act also allows insurers to delete coverages from policies that have already been issued. The dissent has not identified any statutory provision that requires insurers to provide mandatory coverages when issuing policies to insureds. If that was the Legislature’s intent, it would have included such a provision in the no-fault act.

Accordingly, Acceptance’s non-trucking insurance policy—a bobtail policy³—was not required to provide PIP benefits to plaintiff. And plaintiff had existing [*11] PIP coverage through Progressive, so he was not without such coverage. Therefore, the exclusion in the PIP endorsement was enforceable.

Finally, we reject Progressive’s interpretation of the exclusion within the exclusion, which provides: “This exclusion does not apply to you or anyone ‘occupying’ a motorcycle.” This language plainly and unambiguously provided an exclusion to the exclusion for a motorcycle occupant, whether it be “you” or “anyone” riding on the motorcycle. “[Y]ou” and “anyone” both modify ” ‘occupying’ a motorcycle.’ ” If the language were construed to exclude “you” in general, it would effectively swallow up the exclusion regarding persons entitled to PIP benefits as a named insured under a different insurance policy.

In sum, we conclude that there is no genuine issue of material fact that Progressive was the only party obligated to provide PIP benefits in relation to plaintiff’s injuries; there was no true priority issue. Therefore, we hold that the trial court did not err by granting Acceptance’s motion for summary disposition.

We affirm. Having fully prevailed on appeal, Acceptance may tax costs under MCR 7.219.

/s/ Jane E. Markey

/s/ Douglas B. Shapiro

/s/ Sima G. Patel

End of Document

¹We note that the trial court provided no analysis, reasoning, or explanation whatsoever in either granting the motion for summary disposition and in denying the motion for reconsideration; the court simply granted and denied the motions without saying anything more.

²MCL 500.3114 and MCL 500.3115 were amended pursuant to 2019 PA 21 after the events in this case. The amendment does not affect our analysis, and current MCL 500.3114(8), comparable to former MCL 500.3115(2), now provides for the equal division of PIP-payment obligations with respect to insurers of equal priority.

³This Court approved of such policies in Integral Ins Co v Maersk Container Serv Co, Inc, 206 Mich App 325, 330-332; 520 NW2d 656 (1994).