Erie Insurance Exchange v. Matthews, J.

• Court: Superior Court of Pennsylvania
• Decided: January 25, 2023
• Docket: 534 EDA 2022
• Status: Unpublished

Opinion

J-A24019-22

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF : PENNSYLVANIA Appellant : : : v. : : : JASON MATTHEWS AND ION : No. 534 EDA 2022 CONSTRUCTION INC :

Appeal from the Order Entered September 13, 2021 In the Court of Common Pleas of Bucks County Civil Division at No(s): 2019-05936

BEFORE: PANELLA, P.J., BENDER, P.J.E., and SULLIVAN, J.

MEMORANDUM BY PANELLA, P.J.: FILED JANUARY 25, 2023

Erie Insurance Exchange appeals from the order denying its motion for

summary judgment against Jason Matthews and Ion Construction Inc. Erie

contends that the change in company name from Ion Construction LLC to Ion

Construction, Inc. on an insurance policy does not create a second policy,

requiring the need for a new form rejecting underinsured motorist (“UIM”)

coverage. We reverse and direct that summary judgment be entered in favor

of Erie.

On February 9, 2015, Alexander Matthews obtained an insurance policy

from Erie for a 2003 Chevrolet Avalanche. The named insured on the policy

was listed as “Ion Construction LLC.” Alexander was the vice president, and

his father, Jason Matthews, was the president of Ion Construction LLC. J-A24019-22

Relevantly, on behalf of Ion Construction LLC, Alexander rejected UIM and

uninsured motorist (“UM”) coverage.

Ion Construction LLC subsequently changed its name to Ion

Construction, Inc. Alexander was listed as the sole owner and corporate officer

of Ion Construction, Inc., and Jason was listed as an officer. In February 2016,

Erie issued an amended declarations page reflecting the name change of the

company from Ion Construction LLC to Ion Construction, Inc., and renewed

the policy without any coverage changes.

On April 15, 2017, Jason was driving the 2003 Chevrolet Avalanche in

Philadelphia, when he was rear ended and allegedly sustained injuries to his

neck and back. Subsequently, Jason made a claim for UIM coverage from Erie

under the policy. Erie denied the claim, noting that there was no UIM coverage

included in the policy, and that between the date of issuance and the date of

the subject accident that gave rise to this litigation, there were no paid

premiums for UIM benefits. In response, Jason argued that he is entitled to

UIM coverage because no agent or officer of Ion Construction, Inc. rejected

UIM coverage after formation of the corporation. To that end, Jason claims

that Erie was required to obtain a newly signed UIM rejection form after the

policy was amended to reflect the name change.

Erie filed a complaint for declaratory judgment, followed by an amended

complaint, seeking a determination that no UIM benefits are available under

the policy. After the parties conducted discovery, which included depositions

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of Jason and Alexander, Erie filed a motion for summary judgment. The trial

court denied the motion, finding that when Ion Construction LLC changed its

name to Ion Construction, Inc., and Erie changed the name on the policy, a

second policy was created which did not include a proper UIM rejection form,

and, therefore, there is a genuine issue of material fact as to whether the UIM

coverage was waived. The trial court also denied summary judgment because

depositions of any persons affiliated with Erie had not been conducted.

Erie filed an application to amend the order to include the language to

certify the order for interlocutory appeal. The trial court failed to act on the

application, and it was deemed denied as a matter of law. Erie filed a petition

for review with this Court, which granted the petition and certified this case

for interlocutory appeal.

On appeal, Erie raises the following questions for our review:

1. Whether the trial court erred in denying [Erie’s] motion for summary judgment by finding that a 75 Pa.C.S. § 1731 statutorily prescribed uninsured/underinsured rejection waiver obtained on a commercial insurance policy at inception did not validly reject uninsured/underinsured benefits for the life of the policy solely by virtue of the named insured entity on the policy changing its corporate structure and/or name subsequent to waiver execution?

2. Whether the trial court erred in denying [Erie’s] motion for summary judgment by finding that a change to the named insured entity’s corporate structure created a de facto “new” insurance policy that in turn required a second set of statutorily prescribed uninsured/underinsured rejection waivers to comply with the requirements of 75 Pa.C.S. § 1731?

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Appellant’s Brief at 4.1

Summary judgment is appropriate only in those cases where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Under our Rules of Civil Procedure, a record that supports summary judgment will either (1) show the material facts are undisputed or (2) contain insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the jury. When considering a motion for summary judgment, the trial court must take all facts of record and reasonable inferences therefrom in a light most favorable to the non-moving party and must resolve all doubts as to the existence of a genuine issue of material fact against the moving party. Thus, the trial court may only grant summary judgment where the right to such judgment is clear and free from all doubt.

Smith v. A.O. Smith Corp., 270 A.3d 1185, 1191-92 (Pa. Super. 2022)

(citations, brackets, quotation marks, and paragraph breaks omitted). “[T]he

issue as to whether there are no genuine issues as to any material fact

presents a question of law, and therefore, on that question our standard of

review is de novo. This means we need not defer to the determinations made

by the trial court.” Id. at 1192 (citation and brackets omitted).

We will address Erie’s arguments together. Erie contends that the trial

court erred as a matter of law by denying its motion for summary judgment.

See Appellant’s Brief at 43. Noting that 75 Pa.C.S.A. § 1731 governs the

rejection of UM/UIM benefits for personal and commercial policies, Erie asserts

that UIM rejection waivers remain valid for the life of the policy unless

____________________________________________

1 Neither Jason nor Ion Construction, Inc. has filed a brief in this case.

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affirmatively changed. See id. at 11-21; see also id. at 20-21, 33-34

(alleging that if a valid “Important Notice Form” is secured, as here, alongside

a UIM/UM rejection waiver, the insured is presumed to know the benefits and

limits available under the policy and no other notice or rejection is required).

Erie maintains that the trial court’s decision is not supported by case law or

the statutory language, noting that once the policy includes a UM/UIM

rejection waiver, the named insured must request a change in UM/UIM

coverage on the policy, even if a new vehicle or a new named insured is added

to the policy. See id. at 25-32.

Erie claims that the change in the corporate name from “Ion

Construction LLC” to “Ion Construction, Inc.” did not trigger a responsibility to

obtain a second UIM rejection waiver, emphasizing that the change in name

did not create a new corporation, and did not create a new policy or have any

bearing the validity of the initial UIM rejection, which was still enforceable.

See id. at 11, 21, 25-26, 28, 32-39; see also id. at 35-39 (noting that policy

number, coverage, and premiums remained the same on the policy). Erie

highlights that during their deposition, Alexander and Jason admitted that Ion

Construction, Inc. was formed for tax purposes; the Ion Construction name

was kept because of the familiarity to its client base; and the incorporated

company did the same work as the LLC. See id. at 22-25; see also id. 33-

34 (arguing that Ion Construction, Inc. was wholly owned by the same person,

Alexander, who executed the UIM rejection waiver when the company was

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known as Ion Construction, LLC, and therefore had an actual understanding

and notice of the rejection of such benefits). Erie maintains that there is no

continuing obligation on the insurance company to obtain new UM/UIM

rejection forms when the name on the policy changes. See id. at 30. Finally,

Erie argues that further depositions were unnecessary because the sole issue

was one of a legal nature and could be resolved with the policy and the

depositions already conducted, as this Court must resolve whether the UIM

rejection form complies with Section 1731. See id. at 39-43.

It is well settled in this Commonwealth that in interpreting an automobile insurance policy, a court must view the policy in its entirety, giving effect to all of its provisions. An insurance policy must be read as a whole, and not in discrete units. The interpretation of an insurance policy presents a pure question of law, over which our standard of review is de novo.

Hartford Fire Ins. Co. v. Davis, 275 A.3d 507, 511-12 (Pa. Super. 2022)

(citations, quotation marks, and brackets omitted).

Section 1731 of the Pennsylvania Motor Vehicle Fiscal Responsibility Law

(“MVFRL”) governs UIM and UM coverage. See 75 Pa.C.S.A. § 1731. The

MVFRL mandates that insurers offer UIM coverage to insureds; nevertheless,

such coverage is optional. See id. § 1731(a) (stating that UIM and UM

coverage must be included in any insurance policy and that the purchase of

such coverage is optional). “Section 1731 provides that the insured must be

provided with specific information to explain the separate purposes of

U[M]/UIM coverage and must sign written rejection forms with certain stated

language in prominent type and location in order to knowingly and voluntarily

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reject each type of coverage.” Koch v. Progressive Direct Ins. Co., 280

A.3d 1060, 1066 (Pa. Super. 2022) (citing 75 Pa.C.S.A. § 1731(b), (c)).

Further, under Section 1731(c), an insured’s “affirmative decision to waive

UIM coverage is presumed to be in effect throughout the lifetime of that policy

until ‘affirmatively changed’ by the insured.” Koch, 280 A.3d at 1067 (citation

omitted); see also 75 Pa.C.S.A. § 1791 (stating that it is presumed “that the

insured has been advised of the benefits and limits available under this

chapter provided the following notice in bold print of at least ten-point type is

given to the applicant at the time of application for original coverage, and no

other notice or rejection shall be required[.]”).

Here, on February 9, 2015, Alexander signed a valid rejection of both

UIM and UM coverage for the 2003 Chevrolet Avalanche on behalf of Ion

Construction LLC. See Rejection of UIM Protection, 2/9/15; see also

Important Notice, 2/9/15 (providing notice to Alexander that he could

purchase UIM coverage). The Erie policy also advised that it contained no

protection for “damages caused by underinsured motorist.” See Policy

(Q020930685), 2/9/15, at 2 (unnumbered). During his deposition, Alexander

confirmed that he had signed the rejection of UIM coverage. See N.T.,

11/18/20, at 29.

Alexander testified that the corporation’s name was changed from Ion

Construction LLC to Ion Construction, Inc. for tax and liability purposes on the

advice of their accountant. See id. at 40; see also N.T., 12/16/20, at 88-89

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(wherein Jason confirmed that the company changed its name for tax

purposes). Alexander confirmed that the company’s work stayed the same

after the name change. See N.T., 11/18/20, at 41. Subsequently, Erie issued

an amended declarations on the policy, reflecting the company’s name

change. See Amended Declaration (#Q020930685), 2/9/16. The amended

declarations did not include any UIM or UM benefits and specifically stated

that there was no change in the premiums. See id. Jason further admitted

that after the name change of the corporation, the policy on the vehicle in

question was not cancelled and they kept paying the premiums. See N.T.,

12/16/20, at 109.

The trial court found that the corporate name change on the policy

constitutes a new policy, which required Erie to obtain a new UIM rejection

form from Ion Construction, Inc. See Trial Court Opinion, 3/30/22, at 5

(finding that two “policies were created, one for Ion Construction, LLC and one

for Ion Construction, Inc. As such, although Ion Construction, LLC was offered

and validly waived UIM coverage, Ion Construction, Inc. was not offered a

rejection of UIM form pursuant to 75 Pa.C.S.[A.] § 1731(c) and could not have

validly waived UIM coverage.”). However, the trial court’s conclusion ignores

the language of section 1791 that states once notice of available coverages

and the rejection of those coverages has been given, that decision carries

forward until affirmatively changed. Indeed, while not expressly addressing

the name change of the insured on a policy, this Court has previously held

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that a new request regarding coverage limits or the adding of a named insured

to a policy does not equate to the creation of a new policy and subsequent

requirement for the insurer to provide new UIM/UM rejection forms. See, e.g.,

Koch, 280 A.3d at 1068-69 (concluding that insured’s execution of valid UIM

benefits upon delivery of the original policy was still in effect despite insured’s

later request for more coverage on the policy); Smith v. Hartford Ins. Co.,

849 A.2d 277, 281 (Pa. Super. 2004) (concluding that insurer was not required

to provide a new UIM rejection form when insured sought to increase the

liability coverage on the existing policy, where he had previously rejected the

UIM benefits at the inception of the policy); Kimball v. Cigna Ins. Co., 660

A.2d 1386, 1388-89 (Pa. Super. 1995) (concluding that daughter was bound

by mother’s prior reduction of benefits when the daughter’s name was added

to the policy, noting that the endorsement amending the policy to add

daughter’s name clearly provided the lower benefits). We see little difference

in being able to change liability limits or adding a named insured and a

corporation’s nominal name change on the policy, and the insurer’s continuing

ability to utilize a prior properly executed UIM coverage rejection form.

Here, Alexander executed a valid rejection of UIM coverage on behalf of

Ion Construction LLC in February 2015. The mere change from Ion

Construction LLC to Ion Construction, Inc. did not create a new entity, nor

does it affect the corporation’s property, rights or liabilities. See Smith, 270

A.3d at 1193 (“There is in effect but one corporation which merely changes

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its form and ordinarily ceases to exist upon the creation of the new corporation

which is its successor.” (citation omitted)); see also 18A Am. Jur. 2d

Corporations § 234 “(An authorized change in the name of a corporation has

no more effect on its identity as a corporation than a change of name of a

natural person has upon his or her identity; the corporation’s identity remains

unchanged. A corporate name change does not make a new corporation but

only gives the corporation a new name.” (footnotes omitted)); 18 C.J.S.

Corporations § 143 (“In general, a change in the corporate name does not

affect the identity, rights, or liabilities of the corporation. … The corporation

continues, as before, responsible in its new name for all debts or other

liabilities which it had previously contracted or incurred.” (footnote omitted)).

Indeed, Alexander admitted that the change from Ion Construction LLC to Ion

Construction, Inc. was done for tax purposes and the new company did the

same work as the old company. See N.T., 11/18/20, at 41; see also 18A Am.

Jur. 2d Corporations § 223 (“A change in a corporation’s name does not

establish a new corporation when the evidence shows that the name change

did not alter the identity of the corporate entity.”).

Moreover, the Amended Declaration, which reflected the changed name

of the insured, included the same insurance policy number and explicitly did

not include UIM or UM benefits. Importantly, after the corporate name change,

Ion Construction, Inc. continued to enjoy the savings on the premiums by

rejecting the UIM coverage and allowing coverage now would be awarding the

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corporation’s inaction in adding such coverage. See Kimball v. Cigna Ins.

Co., 660 A.2d 1386, 1389 (Pa. Super. 1995) (finding a UM/UIM sign-down

form valid where “the plaintiff accepted the policy with the lower limits without

complaint and permitted payment of the lower premium without incident.”).

Significantly, as further support that the policy did not include UM/UIM

benefits at the time of the accident in April 2017, on October 4, 2017, Erie

issued an Amended Disclosure, which indicated that Ion Construction, Inc.,

had added UM/UIM benefits.

Accordingly, once Alexander properly rejected the UIM coverage on

behalf of Ion Construction LLC, it applied to Ion Construction, Inc., despite the

name change on the policy after the rejection form had been executed. See

generally Koch, 280 A.3d at 1066-67 (noting that change in insurance

company’s name did not result in the creation of a new company and the

insured’s policy remained the same); Breuninger v. Pennland Ins. Co., 675

A.2d 353, 358-59 (Pa. Super. 1996) (holding that the transfer of a motor

vehicle insurance policy from one company to another did not constitute a new

policy, as the policy number, coverage, and premium stayed the same

throughout the life of the policy). Therefore, under the facts of this case, the

policy did not include UIM coverage at the time of the accident, and Jason was

not entitled to UIM benefits. Accordingly, we reverse the trial court’s denial of

summary judgment in favor of Erie and remand with direction to enter

summary judgment in favor of Erie on its declaratory judgment claim.

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Order reversed. Case remanded with instructions. Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 1/25/2023

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