The Superior Court has upheld a UM/UIM rejection form with minor deviations in the statutory language under 75 Pa.C.S. § 1731.
The Plaintiffs were injured passengers in a vehicle owned by a local car dealer. The car dealer had rejected underinsured motorist coverage (UIM) on the vehicle with their insurance carrier, Defendant Federated Mutual. The Plaintiffs were not parties to the insurance contract. The Plaintiffs argued that the Sec. 1731 waiver form executed to reject the UIM coverage must be invalidated because the form deviated from the requirements of the statute as follows:
(1) adding the phrase “option 2” to the heading of the form;
(2) replacing the term “Protection” with the term “Coverage” in the heading;
(3) adding an “s” to the end of the word “motorist”;
(4) boxing a portion of the form; and
(5) the failure to use prominent type and prominent location in the heading of the rejection form.
The trial court granted judgment on the pleadings in favor of Federated upholding the validity of a UIM waiver. The trial court rejected the argument that the minor deviations invalidated the waiver form. The trial court reviewed and compared the statutory requirements of the UIM waiver form with the waiver that was signed, noting that the waiver contained an otherwise verbatim recitation of the language used in 75 Pa.C.S. § 1731(c). The trial court further noted that in reviewing the application of statutory requirements, courts must not interpret a statute in a manner that leads to an absurd result. The trial court observed that the Plaintiffs did not argue that body of the waiver violated the statutory requirements. The Plaintiffs did not contend the deviations in the form resulted in confusion or an uninformed waiver. In fact, the Plaintiffs further conceded that there was a clear intent to opt out or waive UIM coverage by signing the form.
The trial court determined that the waiver form complied with Section 1731(b) and that the deviations claimed by Plaintiff-passengers were hyper-technical and did not cause any confusion or result in an uninformed waiver. The trial court concluded:
To allow a third party, who is not a party to the insurance contract and paid no premium, to utilize minor deviations in the waiver form to defeat the intent of the contractual parties does not promote justice and violates a fundamental tenet of contract law—that the intent of the parties controls.
On appeal, the Superior Court agreed with the trial court and disagreed with the Plaintiff passengers. The Appellate Court held the trial court was correct to conclude that the waiver form specifically complied with Section 1731(b) and the trial court’s reference to the intent of the contractual parties was consistent with fundamental tenets of statutory construction. The Superior Court also found that the trial court acted properly to avoid the absurd result advocated by Plaintiff-passengers. The Superior Court noted that unrelated third parties should not be allowed to interfere with the clear intentions of two contracting parties. Therefore, the Superior Court concluded that the trial court did not commit an error of law and there were no facts presented which would warrant a jury trial.
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