AAA Mid-Atlantic Insurance v. Ryan
624 Pa. 93
| Pa. | 2014Background
- Ryans seek UIM recovery under AAA policy after underinsured tortfeasor injuries.
- 2003 accident: Mary Ryan injured in Philadelphia; claims against Eckel and City/PennDOT; PennDOT claim dismissed.
- Arbitration: Eckel settles for policy limit of $25,000; liability split: Eckel 50%, Ryan 35%, City 15%; damages awarded $500,000 minus 35% ($175,000) = $325,000.
- City pays $300,000; Eckel’s insurer pays $25,000; remaining litigation pursued AAA claim.
- AAA’s Limit of Liability clause reduced by all sums due to responsible parties, including duplicates and sums paid for the same damages.
- Arbitration decisions: MVFRL §1722 and all sources of recovery debated; Superior Court voided the policy clauses; court of appeals reversed, holding offset may apply to all damages from all tortfeasors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May UIM recovery be offset by damages paid to all tortfeasors? | Ryan argues offset includes all sources under §1722. | AAA argues offset limited to sums under policy and statutory framework. | Offset permitted for all damages from tortfeasors. |
| Does MVFRL §1722 override the policy's Limit of Liability? | Ryans rely on exhaustive list under §1722; design defect award not listed but applicable through UIM. | AAA contends §1722 dictates offsets and is not overridden by contract when consistent with public policy. | MVFRL §1722 does not preclude the policy's offset and public policy; no conflict found. |
| Does the policy’s Limit of Liability conflict with public policy of MVFRL? | Ryans claim conflict creates windfall; public policy favors coverage, not double recovery avoidance. | AAA argues policy language frustrates MVFRL and cost containment. | No conflict; policy does not violate MVFRL public policy; no windfall invalidation. |
| Is there a double recovery prohibition governing this case? | Double recovery doctrine applies to prevent duplicative awards; indemnity should prevent overcompensation. | AAA contends subrogation and policy offsets avoid double recovery; but here no policy conflict. | Double recovery prohibited; but here full compensation from City/Eckel means no additional recovery would be allowed; relation to MVFRL clarified. |
Key Cases Cited
- Allwein v. Donegal Mut. Ins. Co., 448 Pa. Super. 364 (Pa. Super. 1996) (MVFRL excess vs. gap coverage; impact on offset analysis)
- Tannenbaum v. Nationwide Ins. Co., 992 A.2d 859 (Pa. 2010) (exhaustive list notion of §1722; limits on offsets)
- Jones v. Nationwide Prop. and Cas. Ins. Co., 32 A.3d 1261 (Pa. 2011) (made whole and subrogation doctrines; double recovery principles)
- Eichelman v. Nationwide Ins. Co., 711 A.2d 1006 (Pa. 1998) (public policy of UIM to protect injured victims)
- Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180 (Pa. 2008) (limitations on offsets where policy conflicts with statute)
- D Adamo v. Erie Ins. Exch., 1091 A.3d 1090 (Pa. Super. 2010) (double recovery and damages principles in PA case law)
- Brown v. City of Pittsburgh, 186 A.2d 399 (Pa. 1962) (older double recovery doctrine principles)