                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-1-2004

Corley v. Infinity Leader Ins
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-4508




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                                                                  NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT
                                  ____________

                                        NO. 03-4508
                                       ____________

                                   SABRINA CORLEY,

                                                             Appellant
                                             v.

 INFINITY LEADER INSURANCE COM PANY, INC., d/b/a Tico Insurance Company

                                       ____________

                     On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                              (D.C. Civil No. 03-cv-00523)
                         District Judge: Hon. Gary L. Lancaster
                                     ____________

                     Submitted Pursuant to Third Circuit LAR 34.1(a)
                                   October 26, 2004

       BEFORE: NYGAARD, AMBRO and VAN ANTWERPEN, Circuit Judges

                                 (Filed November 1, 2004)
                                           ___

                                         OPINION
                                       ____________

VAN ANTWERPEN, Circuit Judge

       Sabrina Corley (“Mrs. Corley”) brought suit against Infinity Leader Insurance

(“Infinity”) seeking specific performance under the underinsured motorist coverage of a

policy issued by Infinity and claiming that Infinity acted in bad faith when it refused to
arbitrate the dispute over whether she was covered by said insurance policy. The District

Court granted Infinity’s motion to dismiss for failure to state a claim upon which relief

could be granted. Mrs. Corley now argues four issues: (1) the District Court

impermissibly reformed her complaint so as to bar her recovery; (2) the District Court

failed to construe the contract between her and Infinity properly; (3) the doctrine of

reasonable expectation supports her claim for relief; and (4) the District Court incorrectly

found there was no evidence of bad faith on the part of Infinity. For the reasons below,

we now affirm the order of the District Court.




                             I. Factual and Procedural History

       We shall briefly review the essential facts of this case. On October 24, 2001, Mrs.

Corley was injured on a Honda motorcycle operated by her husband when an automobile

turned in front of the motorcycle. She recovered the monetary policy limits from both the

insurer of the automobile and the insurer covering her husband’s operation of the

motorcycle. As her damages far exceeded the amount recovered from these two policies,

Mrs. Corley submitted a claim to Infinity for underinsured motorist coverage pursuant to

a commercial lines policy issued to her husband. This policy lists only a 1969 Chevy C-

50 dump truck as a “covered auto.” Infinity denied Mrs. Corley’s claim on the grounds

that the motorcycle involved in the accident was not described in the policy issued to her

husband. Mrs. Corley insisted she was covered under this policy and requested



                                             2
arbitration; this request was refused by Infinity.

       Thereafter, Mrs. Corley instituted the instant action. Infinity filed a motion to

dismiss pursuant to Fed. R. Civ. P. 12(b)(6), which was granted by the District Court.

This appeal of that order followed.




                                   II. Standard of Review

       The District Court had jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

We now exercise jurisdiction over this appeal of a final district court order under 28

U.S.C. § 1291. We review Rule 12(b)(6) dismissals de novo, and we must accept all

well-pleaded allegations as true and draw all reasonable inferences from them in favor of

Mrs. Corley. See, e.g., Anthony v. Council, 316 F.3d 412, 416 (3d Cir. 2003).




                                       III. Discussion

     The Insurance Policy in Question was Not Implicated By Corley’s Accident

       The main issue to be resolved is whether Mrs. Corley is covered by the commercial

lines policy issued to her husband by Infinity. 1 She contends that the District Court erred



 We briefly note that Corley’s claim that the District Court impermissibly reformed her
complaint so as to bar her recovery is without merit. Corley makes much of the fact that
Infinity, in its motion to dismiss, stated that the policy declarations do not support a claim
for relief, while the District Court cited provisions of the policy’s underinsursed motorist
endorsement to support its decision to dismiss. This interchange of phrases is irrelevant
since, as we explain below, both the policy and the accompanying endorsement clearly
do not provide Corley with the relief she seeks.
                                              3
when it determined her claim fell outside the terms of the insurance policy issued by

Infinity. Under Pennsylvania law, we must read this policy as a whole, and construe it

according to its plain meaning. See Frog. Switch & Mfg. Co. v. Travelers Ins. Co., 193

F.3d. 742, 746 (3d. Cir. 1999). As long as we may fairly read an insurance contract

without ambiguity, the construction of such a policy is a matter of law. See Trustees of

the University of Pennsylvania v. Lexington Insurance Co., 815 F.2d 890, 896 (3d. Cir.

1987). Furthermore, a provision is ambiguous only if reasonable people could, in the

context of the entire policy, fairly ascribe differing meanings to it . See Frog. Switch &

Mfg. Co. v. Travelers Ins. Co., 193 F.3d. at 746 (emphasis added).

       Upon review of the policy in question, we find no ambiguity that would allow Mrs.

Corley to distort the coverage provided by the policy in question to furnish her with

underinsured motorist coverage for this particular accident. Without belaboring the point,

the policy declaration for the commercial lines policy issued to Mrs. Corley’s husband

makes reference to only one vehicle, namely the 1969 Chevy dump truck. All forms of

coverage purchased under this policy apply only to that vehicle, as a specifically

described auto under the plan.2 As we see it, there is no ambiguity as to which vehicles

this policy was intended to cover. Infinity provides for nine different varieties of




 The policy declaration indicates which vehicles are insured under each coverage plan
through the use of numerals defined on the fourth page of the policy; the numeral ‘7,’
which follows every type of coverage purchased by Corley’s husband, restricts all
coverage only to vehicles specifically described by the policy.

                                              4
coverage under this policy: “Any Auto,” followed by a sliding scale of eight, gradually

more particularized classifications of vehicles to be covered.3 We are aided by the

contractual interpretation maxim expressio unius est exclusio alterius (“to include one is

to exclude the others”) in reaching our conclusion: the existence of the “Any Auto”

classification compels a finding that the choice of one classification excludes all others

that are of greater quantum. As such, the choice by Mrs. Corley’s husband to cover only

the specifically referenced vehicle prevents finding, as she contends, that the language of

the policy supports a finding of coverage for injuries sustained on any vehicle owned by

her family. There is no ambiguity here–Mrs. Corley’s motorcycle accident does not

implicate this policy’s underinsured motorist coverage.

       Mrs. Corley points to the underinsured motorist endorsement modifying the policy

in question as support for her claim for recovery. Specifically, she cites subparagraph

A.1. which reads, in relevant part,

       We will pay all sums the ‘insured’ is legally entitled to recover as damages
       from the owner or driver of an ‘underinsured motor vehicle.’ The damages
       must result from ‘bodily injury’ sustained by the ‘insured’ caused by an
       ‘accident.’
If we were to consider the language of this subparagraph in a vacuum, as suggested by

Mrs. Corley, one could construe the endorsement’s promise to pay “all sums” as


 The sliding descriptions of coverage is: “Any Auto,” “Owned Autos Only,” “Owned
Private Passenger Autos Only,” “Owned Autos Other Than Private Passenger Autos
Only,” “Owned Autos Subject To No-Fault,” “Owned Autos Subject To A Compulsory
Uninsured Motorists Law,” “Specifically Described Autos,” “Hired Autos Only,” and
“Nonowned Autos Only.”

                                              5
providing the relief she demands. However, upon considering the endorsement and

policy as a whole, as we must, the interpretation suggested by Mrs. Corley becomes

untenable. The introduction to the endorsement reads: “For a covered ‘auto’...this

endorsement modifies insurance provided under the [] Business Auto Coverage

form”(emphasis added). As the District Court found, the plain language of the

endorsement modifies the policy with regard to any vehicle covered by the policy. In her

brief, Mrs. Corley focuses exclusively on the law governing exemptions of risk from an

insurance policy, without indicating why the motorcycle, as an undesignated vehicle,

should be included under the policy’s coverage. To construe the endorsement to radically

extend, sub silentio, the original vehicle coverage from one 1969 Chevy dump truck to all

vehicles acquired by Mrs. Corley’s husband (even if not disclosed to Infinity) defies the

clear language of the policy.

       Finally, we conclude that construing the insurance policy in this fashion does not

run afoul of any public policy interest of the Commonwealth of Pennsylvania. In fact,

such a construction advances Pennsylvania’s policy of controlling insurance costs. See

generally Burnstein v. Prudential Pro. & Cas. Ins. Co., 809 A.2d 204 (Pa. 2002)

(rejecting the proposition that underinsured motorist coverage is inherently personal, and

hence not portable); see also Prudential Pro. & Cas. Ins. Co. v. Colbert, 813 A.2d 747

(Pa. 2002) (rejecting insurance policy interpretation that would allow “insureds to collect

[underinsured motorist] benefits...even if the insureds never disclose any of the other


                                             6
household vehicles to the insurers”); Nationwide Mut. Ins. Co. v. Riley, 352 F.3d 804, 810

(3d. Cir. 2003) (refusing to force an insurance carrier to provide underinsured motorist

coverage where the existence of another vehicle was not disclosed by insured). Our

decision today to affirm the denial of Mrs. Corley’s claim promotes Pennsylvania’s goal

of keeping insurance costs at reasonable levels. To allow Mrs. Corley and insureds like

her to recover on insurance claims for vehicles that are not disclosed to an insurer (who

then cannot charge the appropriate premiums) would force insuers to increase the cost of

insurance for all customers to cover the risk that such cloaked vehicles might one day

appear.

       We recognize that Mrs. Corley has suffered a great deal from this accident.

However, for reasons stated above, she may not recover from Infinity. We therefore find

that the District Court properly dismissed her claim.




             Corley Has Waived Her Reasonable Expectation Argument

       Mrs. Corley also argues on appeal that the doctrine of reasonable expectation

supports her claim for relief. However, because this is the first occasion that this

argument has been made (despite the many briefs filed with the District Court by both

Corley and Infinity), it has been waived. See Gass v. V.I. Telephone Corp., 311 F.3d 237,

246 (3d. Cir. 2002).



                                              7
       Even assuming, arguendo, that this argument had not been waived, it cannot

revive Mrs. Corley’s claim. “A risk that comes naturally within the terms of a policy is

not deemed to be excluded unless the intent of the parties to exclude it appears clearly, so

that it cannot be misconstrued.” Couch on Insurance, 22:31 (3d ed. 1998). As we have

stated above, the plain language of the insurance policy in question clearly limits

coverage to damages arising from the operation of those vehicles specifically described,

in this case the 1969 Chevy dump truck. As such, the risk that Mrs. Corley would be

injured on another, undisclosed vehicle is not one that could come naturally from the

terms of that policy. It would simply have been unreasonable for Mrs. Corley to have

believed that, because her husband had purchased underinsured motorist coverage only

for his dump truck, she would be covered by that policy for an accident arising from

riding as a passenger on his Honda motorcycle, insured under a different policy with a

different insurance company.




                           Infinity Has Not Acted In Bad Faith

       Mrs. Corley also claims that Infinity’s refusal to arbitrate this dispute constitutes

bad faith. According to the policy’s arbitration clause, arbitration is not required unless

there is a disagreement as to (1) whether the insured is legally entitled to recover damages

from an owner of an underinsured vehicle, or (2) the amount of damages. Here, the

litigants are disputing neither fault nor amount of damages. Cf. State Farm Mut. Ins. Co.

                                              8
v. Coviello, 233 F.3d 710 , 717 (3d Cir. 2000). What is in dispute is whether Mrs.

Corley’s injuries from the motorcycle accident are covered by the dump truck policy. The

dispute therefore falls outside of the arbitration clause. As such, the District Court’s

dismissal of this claim was proper.




       We affirm the judgment of the District Court below.




                                              9
