Upper Level UIM Carrier Entitled to Credit for Liability Limits and First-Level UIM Limits

In the case of State Farm Mut. Auto. Ins. Co. v. Griffiths, No. C.A. 20-202 Erie (W.D. Pa. Aug. 23, 2022 Baxter, J.), the court granted the Plaintiff insurance company’s Motion for Summary Judgment. In this case, the injured party was seeking underinsured motorist benefits after settling with both the third party tortfeasors.

The court found that the non-duplication provision found in the liability policy that covered one of the tortfeasor drivers was unenforceable as against public policy.

The court additionally found that the UIM insurance carrier was entitled to a credit in the full amount of the available policy limits against any UIM benefits to which the injured party might be entitled to pursue under the UIM policies at issue.

In its decision, the court noted that Boyle v. Erie Ins. Co., 656 A.2d 941 (Pa. Super. 1995), governed the amount of the bodily injury credit a UIM carrier was entitled to claim when an injured party settles a liability claim against the tortfeasor.  That decision holds that a UIM carrier is entitled to a credit in the full amount of the liability limits.

The court also noted that a secondary UIM carrier is entitled to a credit of not only the liability limits but also for the full amount of the UIM limits of the primary UIM carrier regardless of the terms of an underlying settlement.

As such, the court found that the UIM insurance company in this matter was entitled to a credit of the third party liability limits and the first level UIM limits.

Anyone wishing to review a copy of this decision may click this LINK.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (Sept. 8, 2022).

Berks County Court Addresses UIM Credits for Non-Auto Liability Policies

In the case of Adams v. GEICO, No. 15 - 18880 (C.P. Berks Co. Aug. 7, 2017 Fudeman, J.), the Berks County Court of Common Pleas addressed issues pertaining to offsets and credits due in a UIM matter.

By way of background, the Plaintiff was working as part of a construction crew on a road project when a motorist ran over his foot.

The Plaintiff sued the driver and Traffic Control Services/Flagger Force on his third party claims, and GEICO on his UIM claim.

The Plaintiff settled his claim against the tortfeasor driver for her $100,000 liability limits.  He settled his claim against Traffic Control Services/Flagger Force for $75,000 of that company's $2 million dollar limits.

The UIM carrier asserted that any payout of UIM limits should be offset by the amount of $2.1 million dollars, the combined amount of liability coverage possessed by both tortfeasors.  The carrier asserted that, assuming that the Plaintiff's damages were below that credit, the carrier should be entitled to summary judgment.

The Plaintiff asserted that the carrier was not entitled to any set-off relative to the payment made by the flagging company's liability carrier.

The court initially rejected the Plaintiff's contention that, under the MVFRL, only motor vehicle liability policies should be considered in calculating to credits due to a UIM carrier.  In that regard, the court pointed to the case of D'Adamo v. Erie Ins., 4 A.3d 1090, 1098 (Pa. Super. 2010), in which that court held that an umbrella policy could be factored into the credit due even though it was not an auto liability policy.

The court also rejected the Plaintiff's contention that set-offs in the UIM context are void as against public policy.

Under these rulings the court held that the UIM carrier was entitled to a credit of the $100,000 paid by the driver and the $75,000 paid by the flagger company's carrier so as to prevent any double recovery by the Plaintiff for the same damages.

Under the particular UIM policy language at issue in this case, the court went on to reject the carrier's assertion that it was entitled to a credit of the flagging company's $2 million dollars in liability limits.  The applicable clause in the GEICO UIM policy at issue in this case provided that the UIM payments paid under the policy would be "reduced by all amounts...paid by or for all persons or organizations liable for the injury."

The court noted that the policy did not contain the typical exhaustion clause which typically enables a UIM carrier to claim a credit for the liability limits of all tortfeasors involved.

As such, the court ruled in this case that the UIM carrier was only entitled to a credit or offset in the amount of the sum of the payments by the tortfeasors, not the amount of their liability limits contained in their respective policies.

In the end, the carrier's motion for summary judgment was denied under the above analysis and given that the Plaintiff's entitlement to UIM benefits had not yet been determined.

Anyone wishing to review a copy of this case may click this LINK.

I send thanks to Attorney Joseph Hudock of the Pittsburgh law firm of Summers, McDonnell, Hudock, Guthrie & Rauch, P.C. for bringing this case to my attention.

Order of Applying Comparative Negligence Percentage Followed By Liability Credit in Post-Koken Auto Verdict

In the case of Pusey v. Allstate Insurance Company, PICS Case No. 15-1258 (C.P. Delaware Co. May 21, 2015 Green, J.), the Court addressed the proper procedure for applying credits and comparative negligence in an underinsured motorist trial.

According to a summary of the Opinion, this matter arose out an incident during which a minor was struck by a vehicle while the minor was riding his bicycle.

Prior to trial, the tortfeasor’s carrier tendered its $25,000.00 policy limits to the Plaintiff. The Plaintiff then brought suit against the UIM carrier for underinsured motorist coverage.

After a trial, the jury awarded the Plaintiff $58,600.00. However, the jury also attributed 41% of the negligence to the minor Plaintiff.

When a dispute arose over how to apply the credit for the tortfeasor’s limits and the comparative negligence percentage, the court ruled that the comparative negligence percentage should be applied first, and then followed by the application of the credit owed from the tortfeasor’s liability limits.

This matter was apparently going up on appeal as it appeared that the trial court’s opinion was a Rule 1925 Opinion. Anyone wishing to review a copy of this decision may contact the Instant Case Service of the Pennsylvania Law Weekly at 1-800-276-7427 and pay a small fee.

Source: "Digest of Recent Opinions," Pennsylvania Law Weekly (August 18, 2015).

Third Circuit Affirms Summary Judgment for UIM Carrier Due to Lack of Evidence That Tortfeasor Was "Underinsured" (DECISION IS "NOT PRECEDENTIAL")

Tort Talkers may recall that I previously reported on the Pennsylvania Eastern District Federal Court decision of Gallagher v. Ohio Casualty Insurance Company HERE in which the federal trial court ruled that a Plaintiff was barred from pursuing a UIM claim after participating in a non-binding mediation that resulted in a settlement of the third party claim at an amount less than the third party tortfeasor's liability limits.

UPDATE

On January 29, 2015, the Third Circuit Court of Appeals issued its "Not Precedential" decision in the case with the citation being Gallagher v. Ohio Casualty Ins. Co., No. 14-2687 (3d Cir. Jan. 29, 2015 Hardiman, Scirica, and Barry, Circuit Judges)(Op. by Barry, Circuit Judge).

The Opinion notes that the decision in this case by the Third Circuit is not an opinion of the full court and, pursuant to I.O.P. 5.7, "does not constitute binding precedent."

The third party tortfeasor was covered by a liability policy with $100,000 in liability limits.

In the third party matter, the Plaintiff agreed to a "private, non-binding arbitration" at which the arbitrator evaluated the case as having a value of $41,715.  The Plaintiff initially rejected that assessment, but later agreed to settle the third party matter for that exact same amount.

Thereafter, when the Plaintiff filed suit against the UIM carrier, the UIM carrier eventually filed a motion for summary judgment arguing collateral estoppel. 

The trial court rejected the collateral estoppel argument but found that the UIM carrier was entitled to summary judgment given the lack of evidence produced by the Plaintiff to show that the tortfeasor defendant was underinsured.  In other words, the Plaintiff failed to present evidence that her damages met or exceeded the amount of the tortfeasor's liability limits.

The Third Circuit rejected the Plaintiff's assertion that the trial court concluded that the Plaintiff was not entitled to UIM benefits because she accepted a settlement less than the liability limits--the Third Circuit found this assertion to be a mischaracterization of the trial court's reasoning.

Rather, the Third Circuit agreed with the trial court's actual finding and reasoning that the Plaintiff had failed to produce any evidence that the third party tortfeasor was "underinsured" so as to support the Plaintiff's effort to pursue UIM benefits in this matter after having settled with the tortfeasor at an amount substantially less than the available liability limits.

The court noted that the Plaintiff's allegations of "serious" or "permanent" injuries as well as economic damages, without more, only amounted to "unsupported allegations in the pleadings" which, as a matter of law, were insufficient to establish any genuine issue of material fact.  Accordingly, the UIM carrier's summary judgment motion was granted.


It is reiterated that the Third Circuit marked its decision as "Not Precedential."  Anyone wishing to review a copy of the Third Circuit's Opinion may contact me at dancummins@comcast.net.

The trial court Opinion in Gallagher may be viewed at this LINK.  The related Court Order can be viewed HERE.


To review Tort Talk blog posts on cases that do apply the application of the Collateral Estoppel Doctrine in the context of Post-Koken third party liability/UIM auto accident cases, click this LINK.


Source of image: www.commons.wikimedia.org

Updates, Trends and Thoughts Regarding Pennsylvania Civil Litigation Law by

Northeastern Pennsylvania Insurance Defense Attorney, Daniel E. Cummins

Pennsylvania Supreme Court Rules That UIM Offset Clause Entitles UIM Carrier to Offset Amount of All Damages Recovered by Plaintiff From All Parties Sued

In its January 21, 2014 Opinion in the UIM offset case of AAA Mid-Atlantic Ins. Co. v. Ryan, No. 12 MAP 2013 (Pa. 2014)(Opinion by Todd, J.), the Pennsylvania Supreme Court addressed the issue of whether, under a UIM policy of insurance, the amount of the insured injured party's recovery may be offset by the amount of all damages paid in satisfaction of the underlying judgment, or by only the amount of compensation paid under the auto insurance policy of the underinsured third party tortfeasor defendant who caused the accident.

By way of further background, the injured party plaintiff filed a third party lawsuit against the defendant tortfeasor driver, along with a separate lawsuit against the City of Philadelphia and PennDOT asserting a defective design of a roadway.

The case against PennDOT was dismissed prior to trial by agreement. 

The third party tortfeasor driver settled by tendering his $25,000 liability limits.

The remaining case against the City of Philadelphia proceeded to an arbitration in which the arbitrator awarded the Plaintiff a gross award of $500,000 but apportioned liability among the parties as 50% against the defendant tortfeasor driver, 35% against the injured party plaintiff, and 15% against the City.

Taking away 35% apportioned to the injured party plaintiff from the gross award entered resulted in a net award of $325,000.

Pursuant to the doctrine of joint and several liability which applied in this matter, the City paid the plaintiff $300,000 and, as noted, the defendant driver paid his $25,000 liability limits.  Thus, the plaintiff was paid the full amount awarded.

Thereafter, the injured party plaintiff turned to her own auto insurance carrier, AAA Mid-Atlantic Insurance Company for UIM coverage.

The UIM carrier denied coverage under its "Limit of Liability" clause which provided, in pertinent part, that "[t]he limit of liability shall be reduced [] by all sums paid because of the "bodily injury" by or on behalf of persons or organizations who may be legally responsible."

The "Limit of Liability" clause further provided that "[n]o one will be entitled to receive duplicate payments for the same elements of loss."

After a UIM arbitration panel awarded the injured party plaintiff a UIM recovery that only considered the defendant tortfeasor driver's liability limits in terms of any offset, the UIM carrier litigated the issue up the appellate ladder to the Pennsylvania Supreme Court. 

Throughout the appeal process, the conflicting public policy interests of (1) cost containment and (2) compensating those injured by a tortfeasor who lacks adequate coverage, were hotly debated.

As noted, by the time the case reached the Pennsylvania Supreme Court, that Court framed the question presented as involving whether a UIM recovery may be offset against all damages paid in satisfaction of an underlying third party judgment, or may such a UIM recovery only be offset by the amount paid out under the defendant tortfeasor driver's automobile liability insurance policy.

After thoroughly analyzing the variety of cogent arguments raised on both sides of the issue, the Pennsylvania Supreme Court in the case of AAA Mid-Atlantic Ins. Co. v. Ryan ruled that the "Limit of Liability" clause in the UIM policy did not violate the public policy of affording compensation to parties injured by underinsured drivers since, under the facts of this case, the injured party was fully compensated for his injuries by receiving the entire amount of damages awarded by the underlying third party arbitration panel through payments by the defendant tortfeasor driver and the City of Philadelphia.

In addition to there being no violation of the public policy noted under the circumstances presented in this case, the Pennsylvania Supreme Court also noted that the application of the "Limit of Liability" clause also upheld the long-standing rule against allowing a plaintiff a "double recovery" for the same injuries.

Stated otherwise, as the injured party plaintiff was found to have been fully compensated for her injuries in this matter, the underlying purposes of Pennsylvania's Motor Vehicle Financial Responsibility Law would not be furthered by allowing for an additional recovery against the UIM carrier for the same injuries claimed.

Anyone wishing to review the Pennsylvania Supreme Court's decision in the case of AAA Mid-Atlantic Ins. Co. v. Ryan may click this LINK.

Source of Image: www.strategies360.com

Another Court Holds That UIM Carrier Need Not File Motion To Mold to To Secure Credit Against UIM Award

Earlier this week I reported on the case of Sabella v. Nationwide Mut. Ins. Co., No. 1:12-CV-00582 (M.D. Pa. Aug. 14, 2012 Rambo, J.), in which Federal Middle District Court Judge Sylvia Rambo held that a UIM carrier need not file a Motion to Mold an Arbitration Award in order to have that award reduced by the amount of the credit due in the form of the tortfeasor's liability limits.

Since reporting on the Sabella case, I was advised of the decision of Mercer County Court of Common Pleas Judge Robert G. Yeatts in the same regard in the case of Whiting v. Erie Ins. Group, No. 2012-721 (C.P. Mercer Co. August 6, 2012 Yeatts, J.).

In Whiting, Judge Yeatts reduced a $70,000 UIM arbitration award by the amount of the tortfeasor's $50,000 liability limits over the objection by the Plaintiff that the UIM carrier had failed to file a motion or petition to mold the award. 

The court noted that the Plaintiffs had not provided any legal authority in support of their position that a motion or petition to mold after the entry of a UIM arbitration award was required.  Rather, the court agreed with the carrier's argument that the molding of the award was self-executing under the terms of the policy and/or an application of Pennsylvania law confirming that the UIM carrier was entitled to the credit.

The Whiting v. Erie Ins. case is on its way up to the Superior Court for review.  Anyone wishing to read the Whiting case may click this LINK

Anyone wishing to review the Sabella case on the same topic may click this LINK

I send thanks to Attorney William C. Wagner of the Erie law firm of Marnen Mioduszewski Bordonaro Wagner & Sinnott, LLC, the prevailing defense attorney in Whiting, for providing me with a copy of that decision.

UIM Carrier Need Not File Motion to Mold To Obtain Credit Due Under Exhaustion Clause

In her recent decision of Sabella v. Nationwide Mut. Ins. Co., No. 1:12-CV-00582 (M.D. Pa. Aug. 14, 2012 Rambo, J.), Judge Sylvia Rambo of the Pennsylvania Federal Middle District Court granted Defendant Nationwide’s F.R.C.P. 12(b)(6) Motion to Dismiss for failure to state a claim in a matter in which the Plaintiff filed a Complaint setting forth claims for declaratory judgment, bad faith, and breach of contract, arising out of Nationwide’s alleged failure to pay UIM benefits to the Plaintiff in accordance with the terms of the insurance policy.  

In this matter, the UIM action between the parties had previously proceeded through arbitration pursuant to the terms of the policy.  At the arbitration, the panel of arbitrators unanimously found the valuation of damages to be $100,000.00.   In its award, the arbitrators stated that “[t]his amount has not been molded by the arbitrators and does not reflect what may have happened in the third-party action.”  

The Court in this matter noted that it was undisputed that the policy limit for the tortfeasor’s liability coverage was $300,000.00. 

Following the arbitrator’s decision, Nationwide did not move to mold the award.   The parties in this matter were in agreement that, if Nationwide had done so, by operation of law, Nationwide would have been entitled to a credit in the amount of the tortfeasor’s liability coverage, which, as noted, was $300,000.00.  This credit would have reduced the $100,000.00 UIM award to $0.  

In this matter, the Plaintiff was seeking a declaration that “the arbitration award is deemed a final judgment in the amount of $100,000.00 in light of the award and in light of Defendant’s failure to mold that award."  The Plaintiff requested damages in the amount of that award.   The Plaintiff’s bad faith and breach of contract claim were derivative to Plaintiff's belief that he was entitled to the arbitration award of $100,000.00.  Nationwide responded by filing the F.R.C.P. 12(b)(6) Motion to Dismiss.  

The District Court held that “A party’s failure to mold under these circumstances does not render the arbitrators’ award final and Nationwide is entitled to a credit of $300,000.00.  Accordingly, the amount of UIM coverage owed by Nationwide is $0.00.”  

In so ruling, Judge Rambo relied upon the case of Bremer v. Prudential Prop. & Cas. Ins. Co., 2004 U.S. Dist. LEXIS 16960 (M.D. Pa. 2004) (a case my partner Tim Foley and I defended and prevailed in).    Judge Rambo relied upon the Bremer case to support her following of the policy of enforcing exhaustion clauses.  

Judge Rambo also noted that her holding in the Sabella case is also consistent with Pennsylvania’s public policy against allowing parties to recover twice for the same injury.  In this regard, Judge Rambo cited, with approval the case of Pusl v. Means, 982 A.2d 550, 555 (Pa. Super. 2009).    Judge Rambo noted that the Court found in Pusl that an “Appellant’s receipt of both the full jury award from [tortfeasors] and the pre-trial UIM settlement from State Farm would constitute ‘double recovery’ that the [Pennsylvania Motor Vehicle Responsibility Law] was specifically designed to prevent.”  Id. at 556.  

Judge Rambo also noted that there was no case, rule, or statute on point which required the Defendant carrier to file a Motion to Mold under these facts.  

Accordingly, the Sabella court held that Nationwide was not required to file a Motion to Mold and was not responsible for any UIM payment to the Claimant under these facts.  

 Anyone desiring a copy of the decision of Sabella v. Nationwide may contact me at dancummins@comcast.net. 

I send thanks to Attorney Paul Oven of the Moosic, Pennsylvania office of Dougherty, Leventhal & Price as well as Attorney James Kilpatrick of Scranton law firm of Munley, Munley & Cartwright for forwarding this case to my attention.   I also send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt, Cramer for his explanatory synopsis of the case presented.  

Credit to UIM Carrier Upheld (Again)

The case of Irving v. Progressive Specialty Ins. Co., No. 11-7594, 2012 WL 2912309 (E.D.Pa. July 17, 2012 McLaughlin) is the latest in the long line of Pennsylvania court decisions upholding exhaustion clauses in the underinsured motorists (UIM) portion of insurance policies as entitling the UIM carrier to a credit for the liability limits of the tortfeasor(s) in motor vehicle accident matters.

Ever since at least the case of Boyle v. Erie Ins. Co., 656 A.2d 941 (Pa.Super. 1995), the rule in Pennsylvania has been that, in order to pursue a UIM claim, the Plaintiff need not fully exhaust the tortfeasor's liability limits but must give the UIM carrier a credit for the full amount of the available liability limits.

In this case the Plaintiff sued the driver of the vehicle that struck his vehicle and also sued another driver who had allegedly "waved" the first defendant to proceed.  The Plaintiff settled his claim with the first defendant who struck his vehicle.  That settlement was for $15,000.

The Plaintiff put Progressive Insurance on notice of a UIM claim.  At that time, the remaining third party litigation was still pending against the defendant who had allegedly "waved" the first defendant to proceed.  Progressive asserted that it was entitled to a credit in the amount of the $15,000 limits of the first tortfeasor as well as the $300,000 in liability limits covering the "waving" defendant.  The Plaintiff disagreed and filed this declaratory judgment action.

The Irving court provided a nice summary of the line of Pennsylvania state and federal decisions upholding exhaustion clauses and, after reviewing the language of the exhaustion clause in this matter, ruled that Progressive was indeed entitled to a credit in the amount of both defendants' liability limits, i.e., $315,000 as opposed to only $15,000.

Here's a LINK to the Opinion in Irving v. Progressive.  Here is a LINK to the Order that goes with the Opinon.

I send thanks to Attorney Bill Mabius of the Pennsylvania Association for Justice for providing me with a copy of this decision.