INSURANCE LAW

Uninsured/Underinsured Motorist Coverage • Waiver of Policy • Fraud • Motor Vehicle Financial Responsibility Law

Egan v. USI Mid-Atlantic, Inc., PICS Case No. 14-0495 (Pa. Super April 2, 2014) Bender, J. (45 pages).

Where the statute requiring written rejection of UM/UIM coverage was silent regarding its applicability to commercial fleet policies, the court held the applicability of the statute in respect to existing case law upholding UM/UIM benefits under commercial fleet policies. Where the trial court properly instructed the jury on the law of UM/UIM coverage, on the requirement of fair disclosure of all material facts in a contractual relationship based on an insurance policy, and on the reliance element of a fraud claim, the trial court’s denial of a motion for new trial was proper. Where plaintiffs alleged both contract and intentional tort claims, a trial on punitive damages was proper. Where the evidence supported the jury’s finding of the defendant’s breach of the covenant of good faith and fair dealing, intentional interference with contractual relations, fraud, delay, and emotional distress, denial of JNOV was proper. Affirmed.

Appellant USI Mid-Atlantic, Inc. appealed from the judgment against it and in favor of appellees Michael and Jill Egan, stemming from claims of breach of the covenant of good faith and fair dealing, intentional interference with contractual rights, and fraud arising when appellees, police officers employed with the Bristol Township Police Department, appellant’s insured, were injured while on duty by an uninsured motorist. Bristol Township had previously failed to execute a waiver form for uninsured/underinsured motorist coverage. When appellees’ attorneys requested the waiver forms, appellant sent a signed, backdated form, and intentionally decided not to inform appellees that the forms were backdated.

The court first considered whether §1701 of the Motor Vehicle Financial Responsibility Law required written rejection of UM/UIM coverage for commercial fleet policies. The court found that, although prior case law had rejected a written waiver requirement for stacked UM/UIM coverage due to the law’s rejection of stacked coverage entirely, prior case law had supported unstacked coverage for commercial fleet policies; accordingly, the court held that the written waiver requirement applied to commercial fleet policies.

The court rejected appellants’ argument that they were entitled to a new trial on the basis of error in the jury instructions. The court found that the trial court had properly explained the law on UM/UIM coverage, and that erroneous instructions on stacked coverage presented no harm, as the waiver at issue included both regular and stacked coverage on the same document.

The court also found that, although the trial court did not instruct the jury on the need for a finding of a duty for a fraud claim, it did instruct the jury that it needed to find a contractual relationship for the intentional interference claim, which the jury did find, and that because an insurance policy creates an inherent duty to disclose all material facts, the jury necessarily had to have found the existence of a duty. The court found that the jury was also properly instructed as to the reliance element of the fraud claim.

The court also found that a trial on punitive damages was proper, as appellees pleaded intentional tort claims that would give rise to a right to punitive damages.