Infinity Select Insurance Co. v. Fleming, T., 2079 EDA 2015

Infinity issued Fleming a personal auto policy effective 7/16/2003; it was cancelled for nonpayment effective 10/4/2013 at 12:01 a.m.
Fleming allegedly struck and fatally injured a pedestrian on 10/4/2013 at ~11:00 p.m., after the stated cancellation time.
On 10/5/2013 at ~2:34 p.m., Fleming (or someone on her behalf) made an online premium payment and indicated no accidents had occurred; Infinity reinstated the policy "without lapse."
Infinity sued for declaratory relief (Feb 2014), alleging the policy lapsed at the time of the accident and it owed no duty to defend or indemnify Fleming; no answer was filed to the complaint.
Infinity moved for summary judgment arguing (1) policy was lapsed at the accident and (2) payment occurred after the accident; the trial court granted summary judgment in part, preserving potential coverage for innocent third parties; Infinity appealed.
The Superior Court affirmed, holding Infinity’s concession that it reinstated the policy without lapse was dispositive as to coverage for innocent third parties and that Infinity’s fraud/rescission argument was waived (and in any event would be constrained by Erie).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether cancellation for nonpayment defeated coverage for the 10/4/2013 accident	Policy had been cancelled before the accident; therefore no coverage	Reinstatement without lapse created coverage in effect at time of accident; innocent third parties are protected	Court: Infinity conceded reinstatement without lapse; policy in effect; coverage must be afforded to innocent third parties
Whether insurer may void the reinstatement due to insured's misrepresentation/fraud	Insurer may rescind/revoke reinstatement because Fleming fraudulently induced it	No fraud was pleaded with particularity; rescission as to innocent third parties barred by Act 78/Erie	Court: Fraud argument waived for lack of pleading; even if proven, Erie restricts rescission as to innocent third parties

Kelly v. Allstate Ins. Co., 138 F. Supp. 2d 657 (E.D. Pa. 2001) (late premium acceptance generally reinstates policy as of payment; lapse typically bars recovery for loss during lapse)
Cooper v. Belt Auto. Indem. Ass’n, 79 Pa. Super. 479 (Pa. Super. 1922) (absent waiver, coverage resumes on payment of overdue premium)
Schifalacqua v. CNA Ins., 567 F.2d 1255 (3d Cir. 1977) (insurer may expressly waive forfeiture for lapse; otherwise acceptance of late payment reinstates from payment date)
Equitable Life Assurance Soc’y v. Klein, 173 A. 188 (Pa. 1934) (life-insurance rescission permitted for fraudulent certification) (distinguished)
Erie Ins. Exch. v. Lake, 671 A.2d 681 (Pa. 1996) (Act 78/68 limits rescission of automobile policies procured by fraud; insurer may rescind as to the fraudster but innocent third parties retain coverage)
Kvaerner Metals Div. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (standards for appellate review of summary judgment)