UIM Denial Triggers Statute of Limitations (PA)

The Pennsylvania Supreme Court has recently decided that, when it comes to an uninsured motorist claim, the statute of limitations only begins to run upon an alleged breach of a contractual duty.  In Erie Insurance Exchange v. Bristol, a commercial automobile insurer brought declaratory judgment action seeking determination that an uninsured motorist claim filed by an injured employee of the insured was barred by the statute of limitations.

This lawsuit was initiated when Michael Bristol  reported a hit-and-run accident that occurred within the scope of his employment on July 22, 2005.  Bristol was employed by RCC, Inc. as a lineman, and RCC, Inc. was insured through Erie Insurance Exchange.  This policy contained an Uninsured/Underinsured Motorist Coverage Endorsement, which provided coverage of $500,000.00 per accident.  The Endorsement also included an arbitration clause which provided for binding resolution of liability disputes and the amount of damages under the Endorsement, reserving other disputes, including the applicability of any statute of limitations, to the courts.

On June 19, 2007, Bristol sent a letter to Erie regarding his claim.  On July 9, 2007, Erie reserved its rights.  Each party selected arbitrators and Erie obtained a statement under oath from Bristol.  Mire than seven years post accident, in September 2012, the parties exchanged correspondence surrounding Bristol’s unrelated incarceration and the qualified delay this would cause.  On May 29, 2013, Erie filed an action for declaratory judgment stating that Bristol’s claim was now barred by the statute of limitations.  Specifically, Erie claimed that the statute of limitations began to run on the date of the accident when Bristol was unable to identify the vehicle involved in the hit-in-run, thereby qualifying it as an uninsured motorist claim.  Bristol’s position was that Erie’s reservation of rights and agreement to arbitrate precluded application of the statute of limitations because there was no contractual requirement to file a court action.

The Pennsylvania Superior Court held that, for purposes of uninsured motorist claims, the statute of limitation begins to run when a claimant injured in an automobile accident initially learns that the other driver is uninsured.  The Pennsylvania Supreme Court disagreed and found that this conclusion was not based in the pertinent statutory text, prevailing statute of limitations doctrine, or significant public policy concerns.

The Pennsylvania Supreme Court relied on the general rule for computing periods of limitation under Section 5502 of the Judicial Code.  That rule states that “the statute of limitations begins to run at the time when a complete cause or right of action accrues or arises, and only at such a time, that is, as soon as the right to institute and maintain a suit arises, or when there is a demand capable of present enforcement.”  Therefore, the statute of limitations would begin to run when the insurer is alleged to have breached its duty under the insurance contract.

Additionally, the Pennsylvania Supreme Court looked to public policy issues to determine if this circumstance required a special rule for determining when the statute of limitations begins in uninsured motorist cases.  The Court concluded that although uninsured motorist coverage serves the purpose of protecting innocent victims from uninsured motorists, that purpose does not rise to the level of a public policy overriding every other consideration of statutory construction.  Additionally, the Court noted that any concerns about an insured delaying submission of a claim or an insurer delaying action on a claim do not justify departing from breach of contract principles attendant to triggering the statute of limitations.    The Court concluded that the proper circumstance to begin the running of the limitation period is an alleged breach of the insurance contract, which will be occasioned by a denial of a claim or the refusal to arbitrate.

Thanks to Zhanna Dubinsky for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.


Unlisted Driver on Policy is an Uninsured Driver (PA)

An auto insured has responsibility to disclose the identities of resident, non-family members who have access to the insured’s vehicle. If the insured fails to do so, it is at his own risk.

The question of whether a co-habitating  girlfriend was covered by her boyfriend’s insurer arose in the case of Safe Auto Insurance Company v. Rene Oriental-Guillermo.  The girlfriend, Rachel Dixon, and another driver were involved in a two-car accident in Allentown, Pennsylvania. A passenger in Dixon’s car, Priscilla Jimenez, filed a personal injury lawsuit against Dixon, Dixon’s boyfriend( the owner of the car that Dixon was driving), and the driver of the other car involved in the accident.

The car that Dixon was driving was insured by Safe Auto Insurance Company (“Safe Auto”). The Safe Auto policy had an Unlisted Resident Driver Exclusion, which specifically excluded from coverage those individuals who lived with the Policyholder, but were not related to the Policyholder and whom the Policyholder did not specifically list on the Policy. Although Dixon and the owner lived together, the policy did not list Dixon as a driver. Safe Auto denied coverage to Dixon for the accident.

Jimenez challenged the Unlisted Resident Driver Exclusion’s applicability on a few grounds, but most notably, on the grounds that the exclusion itself violates the public policy of the Commonwealth of Pennsylvania set forth in the Motor Vehicle Financial Responsibility Law (“MVFRL”). Jimenez argued that the Unlisted Resident Driver Exclusion contravenes the MVFRL’s mandate that an owner of a motor vehicle ensure that all drivers of his vehicle are covered by insurance; for this reason, Safe Auto should cover the accident.

The Pennsylvania Superior Court rejected this argument, instead, ruling that the Unlisted Resident Driver Exclusion places the obligation solely on the owner of a vehicle, and not the insurance company, to ensure that anyone who drives the owner’s car has insurance.

While the MVFRL does aim to ensure that all drivers are covered, the court concluded that there was no indication in the MVFRL that the burden of ensuring coverage must fall on the insurance company. In fact, the insured is in the best position to monitor whether members of his household who intend to drive are listed on his policy. Summarily, the court stated that “there is no provision in the MVFRL that indicates that the Legislature, when it enacted the MVFRL, intended to shift the risk to insurance companies to insure individuals who live with the insured, but are not related to the insured.” It’s simply not the insurance company’s burden.

Thanks to Sathima Jones for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.

Who’s Behind the Wheel? Unlisted Resident Driver Exclusion Applies (PA)

On September 18, 2017, the Superior Court of Pennsylvania affirmed summary judgement in favor of Safe Auto Insurance Company (“Safe Auto”) in Safe Auto v Oriental Guillermo.  The case stems from a two-car motor vehicle accident in Allentown, Pennsylvania on April 29, 2013.  Rachel Dixon  was driving a car that her boyfriend, Rene Oriental-Guillermo (“Oriental-Guillermo”) owned, and Priscila Jimenez was a passenger in the other vehicle.  Guillermo insured his car through Safe Auto, which had an Unlisted Resident Driver Exclusion, which excluded from coverage those individuals who lived with Oriental-Guillermo, but were not related to him and whom he did not specifically list on the policy.  Here, Dixon lived with Oriental-Guillermo, but was not related to him and was not listed as a driver on his policy.

On May 13, 2015, Safe Auto filed a declaratory judgment action to enforce the Exclusion, and Safe Auto’s a motion for summary judgement was granted by the trial court.  The trial court enforced the Exclusion and held that Safe Auto had no duty to defend or indemnify Dixon.  Priscila Jimenez and Luis Jimenez timely appealed arguing that: (1) the Exclusion does not apply to the facts of the case; and (2) the Exclusion is unenforceable because it violates the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. 7501 et seq. (“MVFRL”) and public policy of the Commonwealth of Pennsylvania.

The court held that the policy language was unambiguous, and further stated that there is no dispute that Dixon lived with Oriental-Guillermo, is unrelated to him, and he did not list her as an additional driver on the policy.  Thus, the trial court properly found that the exclusion applied and Safe Auto was not obligated to defend Dixon.

Next, the court considered whether the Exclusion violated the public policy expressed in the MVFRL.  Appellants specifically argued that the Exclusion contravenes the MVFRL’s requirement that an owner of a motor vehicle ensure that all drivers of his vehicle are covered by insurance.  The court held that this argument supports the trial courts interpretation of the exception because it places the onus on the owner of the vehicle to ensure that everyone who drives his car have insurance.  There is no provision in the MVFRL that suggests the legislature intended to shift the risk to insurance companies to insure unidentified individuals who live with the insured, but are not related to the insured.

Finally, the court held that the Exclusion does not violate public policy.  Appellants argued that the Exclusion is contrary to the MVFRL by analogizing it to a Named Driver Only Exclusion.  This type of policy allows a policyholder to exclude certain individuals from his or her policy.  But the court ruled that the legislature placed the burden on the insured to make sure that individuals who drive the insured’s vehicle have insurance — the insurance company does not bear that burden.  Thus, the court affirmed the trial court ruling and concluded that Safe Auto was entitled to Summary Judgment. Thanks to Garrett Gittler for his contribution to this post.  Please email Brian Gibbons with any questions.

Police Report and Settlement Check Inadmissible in Auto Case (NJ)

Police reports are often important evidence in car accident cases, and the admissibility of such a report was a key issue in a recent case in New Jersey, Almonte v. Ulloa Tineo,  The defendant was driving through an intersection with a green light when he was struck by another vehicle on his passenger side, which drove through a red light. The impact caused defendant’s car to strike two other vehicles, including plaintiff’s parked car.

At trial, plaintiff testified that she did not witness the accident. However, she sought to introduce a police report into evidence where the responding police officer attributed fault for the accident to the defendant. The police report’s narrative included information from an unidentified witness. Over defendant’s objection, the trial court admitted the police report into evidence under the business records and public records hearsay exceptions. The trial court also admitted a letter and check sent to plaintiff from defendant’s insurer, which offered the property damage policy limits because it had determined that defendant’s car was responsible for the accident. Relying only on the police report and the insurer’s settlement offer, the trial court entered a judgment in favor of plaintiff.

On appeal, the Appellate Division reversed the trial court’s judgment because the documents were inadmissible to prove defendant’s negligence. Although police reports are typically admissible under the business record and public record hearsay exceptions, the trial court failed to scrutinize the hearsay statements contained within the police  report.  Specifically, the police report narrative was not based on the police officer’s observations but came from an unidentified witness.

In addition, relying on NJRE 408, which provides that settlement offers and negotiations cannot be used to establish liability, the Appellate Division held that the insurer’s settlement offer was inadmissible. Although the settlement check could be considered for the purposes of adjusting damages, it could not be used to determine defendant’s liability.

Thanks to Ken Eng for his contribution to this post and please write to Mike Bono for more information.

Rear-End Hit Not Necessarily Negligence (NY)

A rear end hit normally spells liability, but in that rarest of rare cases, a plaintiff just might not be entitled to summary judgment on this issue.

The plaintiff, in Greenidge v. UPS, was a passenger in a car rear ended by a UPS truck.  The UPS driver testified that the vehicle the plaintiff was in entered his lane suddenly and then braked suddenly, leaving the him with no time to react.  The lower court granted the plaintiff’s summary judgment motion, finding that a rear-end collision establishes a prima facie case of negligence. 

 The Second Department reversed the lower court’s decision because the testimony regarding the sudden lane change created triable issues of fact.  The court further noted that, even though the parties agreed that the vehicle the plaintiff was in was stopped when it was hit in the rear, the evidence of the sudden lane change and abrupt stop, called into question UPS’ negligence.

Thanks to Georgia Coats for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.

Insured’s Word of Cash Payment for Policy Premium Not Good Enough (NJ)

In Wayne Savage v. Progressive Insurance, the plaintiff, Wayne Savage, found out firsthand the value of keeping a receipt. On 12/10/13, Mr. Savage went to Rallye Motors to purchase insurance for his car.  He spoke with a gentleman identified as A.T.  A.T. contacted Progressive, which provided a quote for Mr. Savage in the amount of $2700 to be paid in installments after an initial payment of $593.  Mr. Savage then gave A.T. $593 in cash with the remaining payments to be withdrawn from Mr. Savage’s bank account electronically.  Mr. Savage subsequently received a “welcome package” from Progressive in the mail.  The package contained an application for insurance.  The application stated that the policy term was 12/10/13 to 6/10/14 with a total premium of $2967 to be paid in five installments.  The application also provided that this first payment would be made with funds transferred from Mr. Savage’s bank account.  Mr. Savage read only the first page of the mailing and did not follow through with authorization for the direct funds transfer.

On 1/8/14, Mr. Savage was involved in a car accident.  The police officer that responded to the accident contacted Progressive to ensure that Mr. Savage had coverage.  The officer was informed that Mr. Savage did not have coverage, and the officer subsequently issued Mr. Savage a ticket.  Mr. Savage then filed suit against Progressive under the Consumer Fraud Act based on Progressive’s alleged wrongful rescission of an automobile policy.  Following a bench trial, a verdict was rendered in favor of Progressive.  On appeal Mr. Savage argued that the trial court erred because (1) he made his initial payment to Progressive and (2) Progressive failed to cancel his policy in accordance with N.J.S.A. 17:29C-10.

In regard to his first issue, Mr. Savage argued that his payment to A.T. and his receipt of the “welcome package” was verification that he paid the first installment and had a valid policy.  The court rejected these arguments because Mr. Savage provided no evidence besides his own testimony that he made the payment to A.T as he had not retained his payment receipt.  Second, Mr. Savage admitted that he only read the first page of the “welcome package” and did not read the remaining pages that explicitly stated that the first payment would be transferred from his bank account. On the other hand, Progressive provided testimony that it did not accept cash payments.  Progressive tried to transfer the funds electronically but the transfer was declined by Mr. Savage’s bank.

In turning to Mr. Savage’s last issue, the court held as an initial matter that N.J.S.A. 17:29C-10 did not apply because the issue was one for recession rather than cancellation of a policy.  Thus, the court held that an insurer is within its right to declare a policy void from inception if the initial payment is never received.  However, the court nonetheless stated that had this been a cancellation of a policy, Progressive would have still been incompliance with N.J.S.A. 17:29C-10, which provides in pertinent part that:

“No written notice of cancellation or of intention not to renew sent by an insurer to an insured in accordance with the provisions of an automobile insurance policy shall be effective unless… at the time of the mailing of said notice, by regular mail, the insurer has obtained from the Post Office Department a date stamped proof of mailing showing the name and address of the insured and the insurer has retained a duplicate copy of the mailed notice which is certified to be a true copy.”

Progressive produced evidence that it mailed a recession notice to Mr. Savage on 12/16/13 and that it also retained a duplicate copy. Therefore, it satisfied the requirements of N.J.S.A. 17:29C-10.

Thanks to Marcus Washington for his contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.

Emergency Doctrine Not Enough to Save Mechanic from Liability in Motor Vehicle Accident (NY)

In D’Augustino v. Bryan Auto Parts Inc., 2017 Slip Op 05708 (2d Dept. 2017), defendant Boyle parked his car on a street near Bryan Auto Parts to obtain a New York State Inspection. Prior to conducting the inspection, defendant Rattray, a mechanic working for Bryan Auto Parts, drove Boyle’s car, intending to move it in to the garage for the inspection.

On the way from where Boyle parked the car into the garage, Rattray came upon an intersection where he was to stop at a stop sign. At that time, plaintiffs, who had the right of way through the intersection and no stop sign, were travelling through when the Boyle vehicle struck the plaintiffs in the side in the middle of the intersection. Rattray claimed that he attempted to stop but that despite his efforts the brakes were not working and he could not get the car to stop before hitting plaintiffs.

The lower Court granted the mechanic’s motion for summary judgment wherein they claimed that they were free from negligence under the “emergency doctrine.”  The defendants claimed that they had no knowledge that the brakes were broken and that Boyle did not tell them that there were issues with the brakes when he dropped off the vehicle.

The Appellate Division reversed the lower court finding that the shop and mechanic failed to show that there are no questions of fact as to whether an emergency actually occurred and as to whether Rattray acted reasonably under the circumstances to attempt to avoid the accident.  There was no corroboration of the brake failure, and in fact, defendant Rattray apparently repaired the brakes shortly after the accident.

The above decision reinforces how difficult it is for a defendant in New York, even one who did not own or maintain the vehicle, to obtain summary judgment in their favor in motor vehicle accidents, especially where the plaintiffs had the right of way.  Thanks to Dana Purcaro for her contribution to this post.  Please email Brian Gibbons with any questions.

Permissive Operator Cannot Bestow Owner’s Permission to Another Operator (PA)

On June 26, 2017, the Superior Court of Pennsylvania affirmed an order granting summary judgment to State Farm Mutual Automobile Insurance Company (“State Farm”) in State Farm v. Fuller et al. in a declaratory judgment action it filed against Paul Fuller (“Fuller”), Mark Czyzyk, Michele Czyzyk and Rose Nealon (“Nealon”).  The underlying lawsuit was filed by Nealon against Fuller and the Czyzyks after Nealon was involved in a car accident with Fuller when she was a passenger in the car with him.  Nealon alleged that Fuller was under the influence of drugs and alcohol at the time of the accident and that the Czyzyks negligently entrusted him with their vehicle.

The trial court granted State Farm’s summary judgment motion on the basis that Fuller was driving the car without permission and that the vehicle was only insured under Michele Czyzyk.  Nealon appealed on several issues, one of them being that jurisdiction is improper because State Farm was seeking an invalid advisory opinion from the court with its declaratory judgment action.  The Superior Court, upon review, disagreed with Nealon and found that because Nealon sought indemnification and there was a possibility that State Farm would have to provide a defense in an action that its policy was applicable to the litigation and that is was not a mere advisory opinion being sought but an adjudication of a controversy.

Nealon also raised the issue that the Czyzyks knowingly entrusted the car to Fuller.  The record indicated that only Michele Czyzyk was the car’s owner and the named insured on State Farm’s policy.  She gave permission to her brother, Mark Czyzyk, to run short errands with the car.  There was no evidence that she gave her brother permission to lend the car out to other people, including Fuller.  Under the State Farm policy, Fuller would be covered if he was a permissive user of the vehicle.  Permission requires a showing on behalf of the named insured/owner that warrants a connection and consent to the use.  Here the court found that the record was devoid of an issue of fact as to whether Michele Czyzyk permitted Fuller to use the car.  It did find that she did permit her brother to use the car for errands but did not permit him to lend the car out then.  Because of this, the court affirmed the summary judgment motion in favor of State Farm.

This case demonstrates the importance of fully assessing coverage issues in tandem with conventional defense litigation.  By analyzing the consequences of coverage, one can possibly limit potential risk and exposure on a claim.  In addition, a final declaratory judgment and order from a court can provide clarity on an issue and allow a clearer analysis of a lawsuit and potential liability since now one will know the extent to which a policy will apply to the instant action.

This analysis is not unexpected.  In New York, there have been literally thousands of instances where the police would pull over a rental car, and find that the driver is not the person who actually rented the car.  Under such circumstances, the operator is “unauthorized” (by Enterprise, for example) to use the car — and is then subject to arrest.  The point is, only the owner/lessee has the ability bestow permission to an operator.  That permission does not “pass through” to additional operators.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

Deemer Statute Inapplicable to Out-of-State Pedestrians (NJ)

New Jersey’s Deemer Statute, N.J.S.A. 17:28-1.4, applies to out-of-state drivers who are injured in accidents in New Jersey.  Under the Deemer Statute, if you are an out-of-state resident and you are hurt in an accident in New Jersey, you will be subject to New Jersey’s restrictive limitation on lawsuit or “verbal threshold” if your insurance company is licensed to transact business in New Jersey.  The verbal threshold places limitations on the right to recovery for injuries sustained in a motor vehicle accident.

In Leggette v. GEICO, plaintiff, a Virginia resident, was struck by a N.J. licensed driver as she crossed a street in Princeton. The trial court granted defendant’s summary judgment dismissal of her declaratory judgment complaint against GEICO. Plaintiff appealed the trial court’s decision, seeking PIP benefits pursuant to the Deemer Statute, since her Virginia policy was deemed to provide standard PIP coverage while her vehicle was in this state. The trial judge concluded that the Deemer Statute was inapplicable.

Plaintiff drove her Virginia registered vehicle insured by GEICO to Princeton University to visit her daughter. Plaintiff parked her vehicle and was walking across the street when she was struck by an automobile. Plaintiff settled her claims against the driver of the automobile, and then initiated a declaratory judgment action against defendant GEICO for PIP coverage to satisfy the $113,825.47 in medical bills.  Plaintiff argued that GEICO was authorized to conduct business in New Jersey and was therefore legally obligated under the Deemer Statute to provide minimum standard automobile insurance policy PIP benefits.

Defendant GEICO refuted this interpretation, arguing that plaintiff, a pedestrian, was not using or operating her vehicle at the time of the accident and so coverage required by the Deemer Statute was not triggered.  Defendant argued that a nexus between the out-of-state automobile and the accident is necessary.

The Appellate Court agreed with GEICO, since the Deemer Statute specified the terms “occupying…or using” an automobile in the context of eligibility for PIP benefits.  Here, plaintiff parked her car, locked the doors, walked away, exited the parking lot, and was crossing a street when she was struck by a vehicle. At the time she sustained her injuries, her “use” of her vehicle had ended. As such, the Deemer Statute was not triggered and the Appellate Court affirmed the trial court’s decision.  Thanks to Steve Kim for his contribution to this post.  Please email Brian Gibbons with any questions.

Burden on Defendant to Establish Collateral Source (NY)

Under New York law, collateral offsets are an important tool in limiting damages and preventing plaintiffs from receiving duplicative recovery in a personal injury case. But a recent decision underscored the fact that the defendant is the party who carries the burden of establishing, to a reasonable certainty, that the plaintiff will receive collateral source payments. In McKnight v. NYCTA, the Second Department addresses the burden of proof necessary for a defendant to obtain a collateral source off-set.

Plaintiff Rosemary McKnight was injured when a bus she was riding to school was involved in a motor vehicle accident. She obtained a judgment in her favor, which included $190,000 for past medical expenses, $80,000 for past lost earnings, and $400,000 for future lost earnings. The defense sought to have these awards off-set under CPLR 4545, on the basis that the plaintiff was already receiving both social security benefits and workers’ compensation benefits from a 2002 work-related accident.

The defense provided testimony from the plaintiff and documentary evidence showing that the plaintiff was receiving $205 a week in workers’ compensation benefits. The Court found that evidence sufficient to grant a collateral offset, and the plaintiff’s awards of past and future lost wages were reduced in kind.

However, the defense provided no documentary evidence from the Social Security Administration regarding the amount or duration of plaintiff’s social security benefits. The defense did offer testimony from the plaintiff indicating that she received monthly benefits, but that testimony was inconsistent as to the amounts received. The court found this proffer of evidence insufficient, and found that the defense failed to establish with a reasonable degree of certainty that plaintiff was receiving social security benefits; therefore, no collateral source offset was granted.

Thanks to John Collins for his contribution to this post and please write to Mike Bono for more information.