692 A.2d 161 | Pa. Super. Ct. | 1997
Lead Opinion
United Services Automobile Association (“USAA”) appeals from the order entered by the Allegheny County Court of Common Pleas on April 24,1995. We reverse.
On February 22, 1990, Virginia resident Robert Balog’s 1989 Oldsmobile was stolen in Pittsburgh. Mr. Balog was a Virginia resident and the car was registered in Virginia, insured under a policy purchased from USAA and issued under the laws of Virginia. On February 23, 1990, appellee Randall Shears, Jr. was struck by the car. His injuries were severe and resulted in the amputation of his leg.
Appellee did not own a car, nor was he an insured under any other auto policy. He was eligible under the Assigned Claims Plan of Title 75,
USAA then filed a declaratory judgment action in Allegheny County, arguing it had no liability, contractual or otherwise, because appellee was not an insured person under the policy, and the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) did not require non-residents to maintain coverage for uninsured motorist benefits when operating a vehicle in Pennsylvania. After appellee filed his answer, both parties moved for judgment on the pleadings.
The Honorable Maurice Louik did not rule on appellee’s motion, but denied USAA’s motion, announcing that USAA had a duty to provide coverage under its policy co-extensive with Pennsylvania law, and that the breach of USAA’s duty to provide this coverage was a tort. The order denying USAA’s motion for judgment on the pleadings was interlocutory, and the holding that recognized a new tort was not appealable. Thereafter, appellee filed a motion to compel arbitration of his uninsured motorist claim. The motion was assigned to the Honorable Robert Horgos. Judge Horgos ordered the matter be submitted to arbitration, and it is this order from which USAA appeals.
Although USAA presents five issues for our review, there are in essence only two: whether the order compelling arbitration is appealable, and whether the order is correct.
Pennsylvania Rule of Appellate Procedure 313 provides as follows:
(a) An appeal may be taken as of right from a collateral order of an administrative agency or lower court.
(b) A collateral order is an order separable from and collateral to the main cause of action where the right involved is too important to be denied review and the question presented is such that if review is postponed until final judgment in the case, the claim will be irreparably lost.
Pa.R.A.P. 313; see Pugar v. Greco, 483 Pa. 68, 394 A.2d 542 (1978).
Rule 813 clearly makes the ruling appeal-able even though it is interlocutory. Without question, the order to compel arbitration is collateral to the main cause of action — the declaratory judgment action, which technically is still open since no final judgment was entered. Clearly, the question of whether a court may order an out-of-state insurer to submit to arbitration on a newly-created tort is an important one. Finally, going forward with the arbitration will result in the loss of appellate review, which means that USAA’s claim under the declaratory judgment action will be irreparably lost. Therefore, we find the order compelling arbitration is appeal-able.
The next question is whether the trial court was correct in requiring USAA to submit to arbitration. USAA issued a policy that contains no arbitration clause for uninsured motorist claims and does not define an uninsured pedestrian as an uninsured motorist. In accordance with Virginia law, appellee is not covered under the policy issued by USAA.
In its order compelling arbitration, the trial court stated it was bound by the opinion of Judge Louik, who determined that, while USAA had no contractual obligation to appellee, a cause of action “sounding in tort” existed under the theory that USAA had a duty beyond the contractual one, which it had breached. Judge Louik stated that a Pennsylvania policy written pursuant to the MVFRL would extend coverage to a pedestrian like appellee and that, therefore, an insurer would have a contractual duty to provide benefits to him. He continued:
However, the question is whether the statute creates a cause of action in tort. That is, does the statute supercede the terms of a validly executed policy for insurance? Certainly the statute governs the underwriting of a policy. Does the statute, however, impose post-liability where, as here, the policy is a valid foreign policy yet the statute requires the meeting of an additional burden?
The Court can certainly impose [an] additional burden on an insurer when the public policy of its jurisdiction dictates so. Therein lies the importance of the MVFRL. For whether the statute requires the extension of uninsured motorist benefits is not the key factor here. Rather, the presence of the statute and its requirements indicates public policy. It is most evident that the drafters of the statute sought to protect the pedestrians walking on their streets. This Court, then, must afford that same protection to its citizens. While a Court cannot create a contractual burden, the Court can, and must, uphold strong public policy evidenced by statute by creating a common law cause of action sounding in tort.
(Trial Court Opinion, Louik, J., 1/28/94, at 3).
The crux of this position is that although USAA’s policy is contractually sound and legally valid both here and in Virginia, public policy dictates that out-of-state insurers who insure out-of-state drivers driving out-of-state-registered vehicles into Pennsylvania have a duty to provide the same types of protection to Pennsylvania residents as the MVFRL dictates. Accordingly, if out-of-state insurers breach this duty, they are subject to a cause of action in tort. We disagree.
All agree that USAA’s policy was valid under Virginia law and, as appellee was not
Appellee contends that the out-of-state endorsement contained in the policy issued by USAA entitles him to uninsured motorist coverage. The endorsement provides:
If, under the provisions of the motor vehicle financial responsibility law or the motor vehicle compulsory insurance law or any similar law of any state or province, a nonresident is required to maintain insurance with respect to the operation or use of a motor vehicle in such state or province and such insurance requirements are greater than the insurance provided by the policy, the limits of the company’s liability and the kinds of coverage afforded by the policy shall be as set forth in such law, in lieu of the insurance otherwise provided by the policy, but only to the extent required by such law and only with respect to the operation or use of a motor vehicle in such state or province; provided that the insurance under this provision shall be reduced to the extent that there is other valid and collectible insurance under this or any other motor vehicle insurance policy. In no event shall any person be entitled to receive duplicate payments for the same elements of loss.
Appellee’s reliance on this provision is misplaced. Nowhere in the MVFRL is there any provision requiring a non-resident to have greater uninsured motorist benefits on his vehicle when he comes into the Commonwealth, nor is there any MVFRL provision requiring a non-resident to conform to the uninsured motorist provisions of the Commonwealth. Insurance Co. of Pennsylvania v. Hampton, 441 Pa.Super. 382, 657 A.2d 976, alloc. denied, 542 Pa. 647, 666 A.2d 1056 (1995).
Appellee contends that the MVFRL demands that uninsured pedestrians be considered insured for purposes of the Assigned Claims Act. This too is misplaced.
A recent decision of this court offers guidance. In Frazier v. State Farm Mutual Ins. Co., 445 Pa.Super. 218, 665 A.2d 1 (1995), this court held that Frazier, an uninsured pedestrian who was struck by a stolen vehicle, was not eligible for uninsured motorist benefits from the owner’s insurer. State Farm had contended that Frazier did not meet the definition of a person eligible to receive those benefits under the policy. However, an arbitration hearing found' for Frazier on her claim for benefits, and a non-jury trial followed. The trial court upheld the arbitration finding and opined that even though the plain language of the policy precluded Frazier from receiving benefits, the court nonetheless felt mandated to award her benefits, based on our holding in Ector v. Motorists Ins. Cos., 391 Pa.Super. 458, 571 A.2d 457 (1990).
Ector was an uninsured pedestrian who was struck by an insured vehicle that had been stolen by an uninsured driver. The insurer denied Ector’s claims for uninsured motorists benefits. On appeal, this court agreed with Ector that Prudential Property and Casualty Ins. Co. v. Falligan, 335 Pa.Super. 195, 484 A.2d 88 (1984) was controlling and entitled him to benefits. In Falligan, we upheld the recovery of uninsured motorist benefits by an uninsured pedestrian who was injured by an insured auto driven by the insured’s son without permission. Falligan, however, was decided at a time when automobile insurance policies issued in Pennsylvania were governed by the No-Fault Act, since repealed and replaced by the MVFRL. The Falligan court relied on the articulated purpose of the No-Fault Act to provide “maximum feasible restoration,” which required insurers to provide uninsured motorist benefits to uninsured injured persons.
In following Falligan, the Ector court noted that the MVFRL did not contain any language analogous to the “maximum feasible restoration” language found in the No-Fault Act. Nevertheless, the court felt that the MVFRL should be liberally construed
In Frazier, however, we noted that an en banc panel of this court had limited Ector’s scope, holding that the “maximum feasible restoration” principle no longer exists in Pennsylvania law. In Jeffrey v. Erie Ins. Exchange, 423 Pa.Super. 483, 621 A.2d 635 (1993) (en banc), alloc. denied, 537 Pa. 651, 644 A.2d 736 (1994), we disagreed “with any implication in Ector that our responsibility to ‘liberally construe’ the ... MVFRL is as broad a judicial mandate to effectuate coverage as was the ‘maximum feasible restoration’ principle in the now defunct No-Fault Act.” Frazier, 445 Pa.Super. at 221, 665 A.2d at 3 (quoting Jeffrey, 423 Pa.Super. at 495 n. 5, 621 A.2d at 641 n. 5). In reversing the trial court in Frazier, we held that since the language of the policy in Frazier made it clear that Frazier did not fit the eligibility criteria for recovery of uninsured motorist benefits, she could not overcome that deficiency by relying on outdated theory.
The policy at issue in Frazier was issued under the laws of Pennsylvania on a car registered in Pennsylvania and involved in an accident in Pennsylvania. The clear language of the policy precluded Frazier from receiving uninsured motorist benefits, and this court declined to allow her to recover. In the instant case, equally clear language of a policy issued under the laws of Virginia on a car registered in Virginia that was involved in an accident in Pennsylvania precludes an uninsured pedestrian from receiving uninsured motorist benefits. While appellee would like us to ignore Frazier and find otherwise, we decline to do so. See Pempkowski v. State Farm Mutual Auto. Ins. Co., 451 Pa.Super. 61, 678 A.2d 398 (1996) (applying and following Frazier).
There is absolutely no basis upon which USAA may be required to submit to arbitration on the policy it issued; the plain language of the policy does not include appel-lee in its definition of an insured motorist.
The only way appellee could arbitrate his claim was if the court created a cause of action for him. The trial court obliged. We, however, decline to recognize the trial court’s ill-defined cause of action, however well-intentioned. While the trial court imposed upon USAA a duty to define an uninsured pedestrian as an insured for purposes of the MVFRL, no such duty exists either statutorily or at common law. The policy issued by USAA contained provisions for uninsured motorists in compliance with the laws of Virginia and Pennsylvania. USAA has no further obligation to provide uninsured motorist coverage to appellee, and, therefore, USAA is not required to submit this claim to arbitration. Accordingly, we reverse the order of the trial court.
Order reversed.
. 75 Pa.C.S. §§ 1751-1757; Act of February 12, 1984, P.L. 26, No. 11, § 3.
. Under 75 Pa.C.S. § 1754 of the Assigned Claims Plan, the maximum benefit available to appellee was $15,000, which included the $5,000 maximum medical benefit.
. The Virginia Insurance Code requires that uninsured motorist provisions be included in any motor vehicle insurance policy issued or delivered in Virginia, and defines "insured” as
[t]he named insured, and while resident of the same household, the spouse of the named insured, and relatives of either, while in a motor vehicle or otherwise, and any person who uses the motor vehicle to which the policy applies, with the express or implied consent of the named insured, and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above.
Va.Code Ann. § 38.2-2206.
. The policy’s language nevertheless complies with Pennsylvania law because it covers a pedestrian, provided he or she is a named insured, or a spouse or resident-relative of either the named insured or a spouse of the named insured.
Dissenting Opinion
dissenting:
Because I find that the order appealed from, compelling arbitration in accordance with the rules of the American Arbitration Association, is interlocutory in nature, and that United Services Automobile Association (USAA) has failed to comply with the Rules of Appellate Procedure for perfecting an appeal from an interlocutory order, I must respectfully dissent.
This court has repeatedly held that an appeal from an order compelling arbitration is not a final order. See State Farm Fire and Casualty Co. v. Craley, 450 Pa.Super. 205, 207, 675 A.2d 732, 734 (1996) (an order denying insurer’s declaratory judgment action, sustaining insured’s preliminary objections, and compelling arbitration is not final; rather, it is interlocutory because the parties are forced into, not out of, court). See also
Without citation to authority, however, USAA argues, and the majority agrees, that there is no right of appeal from an arbitration award under the rules of the American Arbitration Association. (USAA’s brief at 8-9; majority opinion at 3.) Hence, USAA argues that the order compelling arbitration is final. (USAA’s brief at 10.) Nevertheless, my own research reveals that it has long been the law of Pennsylvania that arbitration pursuant to the rules of the American Arbitration Association is governed by the common law of arbitration. Zook v. Allstate Insurance Co., 349 Pa.Super. 328, 334-35, 503 A.2d 24, 27 (1986); Runewicz v. Keystone Insurance Co., 476 Pa. 456, 459-60, 383 A.2d 189, 191 (1978); Press v. Maryland Casualty Co., 227 Pa.Super. 537, 539-40, 324 A.2d 403, 404 (1974). In Brennan, supra, the court set forth the scope of review of common law arbitration, noting that “[judicial review of common law arbitration is very narrow. A court may not vacate or modify an award ‘unless it is clearly shown that a party was denied a hearing or that fraud, misconduct, corruption or other irregularity caused the rendition of an unjust, inequitable or unconscionable award.’ ” Brennan, supra at 291, 453 A.2d at 357, quoting 42 Pa.C.S.A. § 7341.
Another panel of this court noted that “ ‘Irregularity' refers not to the award itself, but to the process used in arriving at the award.” Hade v. Nationwide Insurance Co., 349 Pa.Super. 541, 546, 503 A.2d 980, 983 (1986), affirmed, 519 Pa. 227, 546 A.2d 615 (1988), overruled on other grounds, Ostroffv. Keystone Insurance Co., 357 Pa.Super. 109, 515 A.2d 584 (1986) (en banc). As the Hade court further observed, “Admittedly, a finding that the panel [of arbitrators] considered an issue beyond the scope of the arbitration clause would support a modification of the award on appeal.” Hade, supra at 546, 503
USAA instantly may therefore be able to challenge the arbitrators’ jurisdiction after an award is entered, on the basis that there was no arbitration agreement, hence no “scope” at all. As the Brennan court observed:
Although a party such as appellant may in some sense be out of court, that is true only temporarily. The controversy is not concluded, and we see no compelling need for immediate appellate review. If the arbitration is permitted to proceed, the party initially objecting to arbitration may win. The party would then no longer be aggrieved and no appeal would be required. At worst, the party will have been required to participate in an unnecessary arbitration, but that is no different than the situation where a party is required to go to trial after a court erroneously refuses to sustain a demurrer to a complaint.
Id. at 292-93, 453 A.2d at 358.
I recognize that the trial court’s order compelling arbitration was erroneous as a matter of law, relying as it did upon 31 Pa.Code 63.2(8). See McFarley v. American Independent Insurance Co., 444 Pa.Super. 191, 192-95, 663 A.2d 738, 739-40 (1995) (holding that arbitration is a matter of contract, and absent an agreement between the parties to arbitrate a particular issue, the parties cannot be compelled to arbitrate that issue; further holding that in the absence of a statutory requirement, arbitration may not be required by regulation, and citing specifically 31 Pa.Code 63.2(8)). See also Hiller v. Allstate Insurance Co., 300 Pa.Super. 149, n. 1, 446 A.2d 273, 274 n. 1 (1982) (statute that requires uninsured motorist coverage does not require arbitration, and court has held that in the absence of a statutory requirement, arbitration may not be required by regulation, such as 31 Pa.Code § 63.2), citing Ellison v. Safeguard Mutual Insurance Co., 209 Pa.Super. 492, 229 A.2d 482 (1967). Nevertheless, we cannot confer jurisdiction upon ourselves in order to redress any such error.
The order from which USAA takes its appeal is interlocutory. See cases cited supra. See also majority opinion at 162. “Under Pennsylvania law, an appeal may be taken from an interlocutory order as of right (Pa.R.A.P. 311), by permission (Pa.R.A.P. 313, 1301 et seq.), or from a collateral order (Pa.R.A.P. 313).” Miller v. Steinbach, 452 Pa.Super. 194, 681 A.2d 775, 777 (1996). Ride 311 lists those instances in which an appeal may be taken as of right, specifically noting that appeals from orders enumerated at 42 Pa.C.SA. § 7320 (including orders denying an application to compel arbitration) are not suspended by the Rule. Pa.RA..P. 311, Note, ¶ (a)(7), 42 Pa.C.SA.
“‘An interlocutory appeal may be taken by permission pursuant to Chapter 13 of the Rules of Appellate Procedure.’ ” Miller, supra at 198, 681 A.2d at 777, quoting Patton v. Hanover Insurance Co., 417 Pa.Super. 351, 352-54, 612 A.2d 517, 518 (1992), and citing Pa.R.A.P. 312; Pa.R.A.P. 1301 et seq. To invoke Rule 312, the trial court must certify that the order at issue “involves a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate
Finally, I must disagree with the majority, which found that USAA’s appeal is an appeal from a collateral order, pursuant to Pa. RA.P. 313. A collateral order has been defined as an order “separable from and collateral to the main cause of action ...” Continental Bank, supra at 567, 648 A.2d at 555, quoting Pa.RA.P. 313(b). This court recently had occasion to discuss the collateral order doctrine in Hanson v. Federal Signal Corporation, 451 Pa.Super. 260, 265-67, 679 A.2d 785, 788 (1996). As the Hanson court observed:
The collateral order doctrine is essentially an exception to the final judgment rule. The doctrine emerged in Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528[] (1949), and was adopted by the Pennsylvania Supreme Court in Bell [v. Beneficial Consumer Discount Co., 465 Pa. 225, 348 A.2d 734 (1975) ]. In Pugar v. Greco, 483 Pa. 68, 394 A.2d 542 (1978), our supreme court stated:
In Cohen, the Supreme Court of the United States carved out an exception to the final judgment rule for situations where postponement of appeal until after final judgment might result in irreparable loss of the right asserted.... We applied Cohen in Bell v. Beneficial Consumer Discount Company, 465 Pa. 225, 228, 348 A.2d 734, 735 (1975), where we said:
Whether an order is final and appeal-able cannot necessarily be ascertained from the face of a decree alone, nor simply from the technical effect of the adjudication. The finality of an order is a judicial conclusion which can be reached only after an examination of its ramifications.
Hanson, supra at 787-88, quoting Pugar, supra at 73, 394 A.2d at 545, quoting Bell, supra.
As the Pugar court noted:
Under Cohen, an order is considered final and appealable if (1) it is separable from and collateral to the main cause of action; (2) the right involved is too important to be denied review; and (3) the question presented is such that if review is postponed until final judgment in the case, the claimed right will be irreparably lost.
Pugar, supra at 73, 394 A.2d at 545, citing Cohen, supra, 337 U.S. at 546, 69 S.Ct. at 1225. “However, to qualify under the Cohen exception all three factors must be met.” Fried v. Fried, 509 Pa. 89, 95, 501 A.2d 211, 214 (1985). As our sister court has observed:
The requirements that must be satisfied to permit an appeal under the collateral order doctrine are stringent and must be narrowly construed. Narrow construction of the collateral order doctrine is required to protect the integrity of the fundamental legal principle that only final orders may be appealed. To hold otherwise would al*169 low the collateral order doctrine to swallow up the final order rule...
Watson v. City of Philadelphia, 665 A.2d 1815, 1317 (Pa.Cmwlth.1995).
The majority concludes that “without question,” the order to compel arbitration at issue instantly is collateral to the main cause of action — the declaratory judgment action. (Majority opinion at 162.) It then finds that the question of whether a court may order an out-of-state insurer to submit to arbitration on a newly created tort is an important one, and that going forward with the arbitration will result in a loss of appellate review. (Id. at 162-168.) While I agree that the issue is important, I would not find that appellate review will, even under the narrow scope permitted by § 7341, necessarily be precluded. See Ginther, supra and Hade, supra. Additionally, I cannot agree that the order at issue instantly is collateral to the main cause of action. A brief review of the procedural posture of this case is illustrative.
In his Motion to Compel Arbitration, Randall Shears, Jr. (Shears) noted that he demanded arbitration under the rules of the American Arbitration Association on March 4,1991. (Motion to Compel Arbitration, R.R. at 117a, citing Exhibit 2, R.R. at 123a.) By letter dated April 19,1991, USAA denied the claim and refused to submit to arbitration. (R.R. at 125a-126a.) According to the motion to compel, the parties then agreed to submit to a declaratory judgment on stipulated facts. (R.R. at 118a.) This averment was neither admitted nor denied by USAA (See Answer to Motion to Compel Arbitration, R.R. at 134a.) USAA then filed a complaint in declaratory judgment on or about November 4, 1992, to which Shears filed an answer. Both parties then filed motions for judgment on the pleadings. By opinion and order dated January 28, 1994, Judge Louik denied USAA’s motion for judgment on the pleadings, finding that Shears had a cause of action in tort against USAA for uninsured motorist benefits. Judge Louik did not, however, rule on Shears’ motion, which is still pending before that court. USAA neither attempted to file an appeal, nor followed the prerequisites for seeking permission to appeal pursuant to Rule 1311. Over nine months later, on or about September 12, 1994, Shears filed his motion to compel arbitration in which he stated that, “based on the aforesaid order [Judge Louik’s order], [Shears] hereby respectfully requests the Court to grant an Order compelling this matter to arbitration via the American Arbitration Association per [Shears’] demand on March 4, 1991.” (R.R. at 118a.) Thus, the motion to compel arbitration was merely the next procedural step necessary to implement Judge Louik’s opinion and order vis-a-vis the declaratory judgment action. Clearly, therefore, the motion to compel arbitration cannot be considered collateral to the declaratory judgment action, as the majority holds.
Finding Judge Horgos’ order compelling arbitration to be interlocutory, and finding that USAA has failed to take advantage of any opportunity to seek permission to appeal from an interlocutory order, I would quash the instant appeal. I must, therefore, respectfully dissent.
. I agree with the Gardner court’s observation that the Brennan court misread 42 Pa.C.S.A. § 7320 when it stated in dictum that an appeal may be taken from an order compelling statutory arbitration pursuant to 42 Pa.C.S.A. § 7320.
I also note that § 7320, relating to the appeala-bility of court orders, was made applicable to common law arbitration by statute in 1982, except for subsection (a)(4), relating to the appeala-bility of a court order modifying or correcting an award. See 42 Pa.C.S.A. § 7342. As a result, statutory authority now exists to appeal from a court order denying an application to compel common law arbitration, but not from a court order granting such an application to compel. See 42 Pa.C.S.A. § 7320(a)(1).
. I find USAA’s reliance on Cunningham v. Prudential Property & Casualty Insurance Co., 340 Pa.Super. 130, 489 A.2d 875 (1985), misplaced. It is true that the order appealed from in Cunningham compelled arbitration. Nevertheless, the order also sustained Prudential’s demurrer to the Cunninghams' complaint in assumpsit, in which the Cunninghams alleged that they were entitled to be compensated for their personal injuries because the insurer breached the contract of insurance when it failed to appoint an arbitrator pursuant to a clause in the insurance policy mandating statutory arbitration of disputes. Because the Cunninghams were “out of court” on their action in assumpsit, which was distinct from a determination of their entitlement to benefits under the policy, this court held that the order was final, hence appealable.
Instantly, however, the declaratory judgment action brought by USAA merely seeks to determine whether it is Hable for uninsured motorist benefits under the terms of the policy, as construed in relation to applicable state law; no independent cause of action is alleged. Hence, USAA is not "out of court” instantly on an independent cause of action. In fact, based upon Judge Louik’s order, discussed infra, USAA now appears to be “in court” on an additional, tort, theory.
. Rule 311 was amended April 10, 1996, effective April 27, 1996. Because the instant order was entered April 24, 1995, however, the amendments are not applicable to this appeal. Nothing in the amendments would alter the outcome, however.
. I recognize that the Commonwealth Court was viewing the collateral order doctrine from the perspective of the federal courts, which do not view that doctrine as an exception to the final order rule; instead, federal courts, in the interest of achieving a healthy legal system, view the doctrine as a rule that allows a small class of decisions that do not terminate litigation to be treated as final. Watson, supra, 665 A.2d at 1317, citing Digital Equipment Coup. v. Desktop Direct, Inc., 511 U.S. 863, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994).