Petty, T. v. Federated Mutual Insurance
152 A.3d 1020
| Pa. Super. Ct. | 2016Background
- On Sept. 1, 2012, appellants were injured as passengers in a vehicle owned by McQuillen; they recovered the tortfeasor’s policy limits and then sought underinsured motorist (UIM) benefits from Federated (insurer for McQuillen).
- Federated denied UIM coverage, citing a signed rejection/waiver form McQuillen executed that largely tracked the statutory text for rejecting UIM under 75 Pa.C.S. § 1731(c).
- Appellants sued for declaratory judgment arguing the rejection form deviated from the statutorily prescribed form (formatting and minor wording changes) and therefore was void, leaving UIM coverage intact.
- Federated moved for judgment on the pleadings; the trial court granted Federated’s motion and denied appellants’ cross-motion, finding the deviations were hyper-technical and did not render the waiver invalid.
- Appellants appealed; the Superior Court reviewed whether the waiver “specifically comply[ed]” with § 1731 and whether the trial court erred by applying contract principles or by conducting a substantive rather than a strict-verbatim comparison.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Federated’s rejection form complied with § 1731(c) despite minor deviations (e.g., "Option 2," "coverage" vs "protection," pluralization, boxed text) | Any deviation from statutory form makes the rejection void; strict/verbatim compliance required | The form contains the verbatim statutory body text; formatting/label differences are inconsequential and do not defeat specific compliance | Waiver specifically complied with § 1731(c); deviations were immaterial and waiver valid |
| Whether the court erred by conducting substantive analysis instead of requiring absolute form identity | Court should treat any deviation as fatal without substantive inquiry | Court may assess whether deviations cause confusion or defeat informed consent | Court correctly analyzed deviations substantively and found no confusion or uninformed waiver |
| Whether using contract/intent principles to interpret § 1731 was improper | Trial court improperly applied contract principles (intent of parties) to statutory form requirement | Reference to parties’ intent is consistent with statutory construction and avoids absurd results | Reference to intent was appropriate and did not render the analysis erroneous |
| Whether appellants (non-named insureds) have a cognizable UIM claim when named insured validly waived UIM | Appellants argue waiver should be void so they can claim UIM benefits | Because McQuillen (named insured) validly waived UIM, non-named insureds cannot create coverage where none exists | Alternate basis affirmed: appellants, not named insureds, have no cognizable UIM claim once waiver is valid |
Key Cases Cited
- John T. Gallaher Timber Transfer v. Hamilton, 932 A.2d 963 (Pa. Super. 2007) (standards for judgment on the pleadings)
- C.B. v. J.B., 65 A.3d 946 (Pa. Super. 2013) (statutory interpretation should avoid absurd results)
- Liberty Mut. Ins. Co. v. Domtar Paper Co., 77 A.3d 1282 (Pa. Super. 2013) (appellate court may affirm on any valid record basis)
- Egan v. USI Mid-Atlantic, Inc., 92 A.3d 1 (Pa. Super. 2014) (third-party beneficiary principles apply to UM/UIM coverage disputes)