Case Bulletin – PA Superior Court Addresses Minor Deviations to UIM Waiver Form
On December 14, 2016, the Pennsylvania Superior Court (the “Court”) issued its decision in Petty v. Federated Mutual Insurance Co., 2016 WL 7234016 (Pa. Super. 2016), holding: (1) the deviations from the statutory form for waiving underinsured motorist (“UIM”) coverage and the actual form used by the insurer were inconsequential niggles that had no impact on the form’s validity; and (2) the trial court did not improperly consider contract principles when interpreting the statute when it made a passing reference to the “intent of the parties.”
In this case, Tina Petty, Tatiana Smith, Roshina Glover, Tashara Hancock, and Taryn Fowler (collectively “appellants”) were involved a motor vehicle accident on September 1, 2012, while passengers in a vehicle owned by McQuillen Chevrolet-Buick-Pontiac-GMC Truck, Inc. (“McQuillen”). While in McQuillen’s vehicle, appellants were struck by a vehicle operated by Kelley Cooley; Ms. Cooley’s insurer resolved the matter for her policy limits. Appellants then sought UIM coverage under McQuillen’s automobile policy. McQuillen’s insurer, Federated Mutual Insurance Company (“Federated”), denied coverage stating that McQuillen had rejected coverage by executing a UIM waiver form. Appellants then filed a declaratory judgment action seeking UIM benefits under McQuillen’s policy. Appellants argued that the form executed by McQuillen failed to comply with the statutory requirements of Pa. C.S. § 1731(c), and, as such, the waiver form was invalid and UIM coverage had not been waived by McQuillen. Appellants and Federated filed motions for judgment on the pleadings. Subsequently, the trial court denied appellants’ motion and granted Federated’s motion.
Appellants appealed the trial court’s decision, essentially raising two issues for the Court to address: (1) whether the deviations in Federated’s UIM waiver form failed to satisfy the statutory requirements of waiving UIM coverage, thereby rendering the waiver void; and (2) whether the trial court erred when it considered principles of contract law when interpreting the statutory requirements under Pa. C.S. § 1731(c) and (c.1).
The Court began its analysis by noting that its standard of review is whether the trial court committed an error of law, or whether a jury trial was warranted under the facts. The Court then looked to the statutory provisions at issue here, specifically the UIM waiver form requirements under Pa. C.S. § 1731(c.1), and compared the statutory form with that used by Federated and executed by McQuillen. In its comparison, the Court stated that the Federated waiver form contains a verbatim recitation of the language used in the statute. At issue in this appeal were the deviations from the statutory form, which included: (1) adding the phrase “Option 2” to the heading; (2) replacing the term “protection” with “coverage” in the heading; (3) adding an “s” to the end of the word “motorist”; and (4) changing the proximal relation of the statutory language and “boxing” a portion of the form.
In considering appellants’ argument, the Court noted that when it reviews statutory requirements it is not to interpret a statute in a manner that leads to an absurd result. The Court then noted the trial court’s analysis of the points raised by appellants and agreed with the trial court’s assessment that the differences cited by the appellants are hyper-technical and do not cause confusion or result in an uninformed waiver of UIM coverage. Furthermore, the Court agreed with the trial’s court rationale that allowing a third party, who is not a party to an insurance contract, to use minor deviations in a waiver form to defeat the intentions of the contracting parties “does not promote justice and violates a fundamental tenet of contract law-that the intent of the parties controls.”
The Court stated that the deviations cited by appellants were “inconsequential niggles” which had no impact on the validity of the UIM waiver form. The Court found that the trial court’s reference to contract principles (i.e., the intent of the parties) was consistent with fundamental tenets of statutory construction. The Court also found that there was no error of law, and there were no facts presented which warranted a jury trial. Additionally, in a footnote, the Court stated that it had an alternative basis to affirm the trial court’s ruling; appellants have no legally cognizable claim for UIM benefits because they are not named insureds on the policy at issue. Accordingly, the trial court’s judgment was affirmed.