                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-26-2005

State Farm Mutl Auto v. Vollrath
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-2937




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                                                   NOT PRECEDENTIAL

         UNITED STATES COURT OF APPEALS
              FOR THE THIRD CIRCUIT
                   ____________

                        No. 04-2937
                       ____________

             STATE FARM MUTUAL
        AUTOMOBILE INSURANCE COMPANY

                             v.

       P. DANIEL VOLLRATH, Individually and as
    Executor of the Estate of Virginia Vollrath, Deceased

 MOUNTAIN LAUREL ASSURANCE (Intervenor in D.C.)

                   Mountain Laurel Assurance,

                              Appellant
                       ____________

      On Appeal from the United States District Court
          for the Eastern District of Pennsylvania
                  (D.C. No. 02-cv-01257)
       District Judge: Honorable Legrome D. Davis
                       ____________

        Submitted Under Third Circuit LAR 34.1(a)
                     May 12, 2005

Before: SLOVITER, FISHER and ALDISERT, Circuit Judges.

                   (Filed: May 26, 2005)
                       ____________

                OPINION OF THE COURT
                     ____________
FISHER, Circuit Judge.

       Appellant Mountain Laurel Assurance Company (“Mountain Laurel”) appeals

from the District Court’s judgment in favor of State Farm Mutual Automobile Insurance

Company (“State Farm”) in an action filed by State Farm against P. Daniel Vollrath

seeking a declaratory judgment that Mr. Vollrath was only entitled to uninsured or

underinsured motorist coverage (“UM/UIM coverage”) in the amount of $15,000 per

person and $30,000 per accident under his State Farm-issued automobile policy

(“Policy”). Mountain Laurel, the insurance carrier for Mr. Vollrath’s motor home,

provides UM/UIM coverage to Mr. Vollrath on an excess basis, after State Farm’s

UM/UIM limits are exhausted, and due to its potential obligation, participated in the trial

below as a defendant-intervenor. Mountain Laurel is the sole appellant in this matter.

We affirm the District Court’s judgment in favor of State Farm.

                      I. Standard of Review and Governing Law

       This Court exercises plenary review over the District Court’s prediction of

Pennsylvania law. Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d Cir. 2000)

(citing Companie des Bauxites de Guinee v. Ins. Co. of N. Am., 724 F.2d 369, 371-72 (3d

Cir. 1983)). “In predicting how the highest court of the state would resolve the issue, we

must consider ‘relevant state precedents, analogous decisions, considered dicta, scholarly

works, and any other reliable data tending convincingly to show how the highest court in

the state would decide the issue at hand.’” Id. (quoting McKenna v. Ortho Pharm. Corp.,



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622 F.2d 657, 663 (3d Cir. 1980)). We also review the District Court’s factual findings

for clear error. Tudor Dev. Group, Inc. v. United States Fid. & Guar. Co., 968 F.2d 357,

359 (3d Cir. 1992).

       Under Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”),

insurance companies must provide UM/UIM coverage in amounts equal to bodily injury

liability coverage except where the named insured requests in writing coverage in

amounts less than the limits of liability for bodily injury. See 75 P A. C ONS. S TAT. A NN.

§§ 1731 and 1734 (1996) (effective Oct. 1, 1984). To that end, the MVFRL provides that

“[i]t shall be presumed that the insured has been advised of the benefits and limits

available under this chapter provided the following notice . . . is given to the applicant at

the time of application for original coverage or at the time of the first renewal after

October 1, 1984 . . . .” 75 P A. C ONS. S TAT. A NN. § 1791 (1996) (effective Oct. 1, 1984).

Section 1791 additionally provides the precise language to be included in this notice:

       Insurance companies operating in the Commonwealth of Pennsylvania are
       required by law to make available for purchase the following benefits for
       you, your spouse or other relatives or minors in your custody or in the
       custody of your relatives, residing in your household, occupants of your
       motor vehicle or persons struck by your motor vehicle:

       ....

       (6) Uninsured, underinsured and bodily injury coverage up to at least
       $100,000 because of injury to one person in any one accident and up to at
       least $300,000 because of injury to two or more persons in any one accident
       . . . . [A]n insured may elect to purchase lower benefit levels than those
       enumerated above. Your signature on this notice or your payment of any
       renewal premiums evidences your actual knowledge and understanding of

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       the availability of these benefits and limits as well as the benefits and limits
       you have selected.

Id.

       Thus, in order to show that an insured validly reduced UM/UIM benefits, an

insurance company must show that: (i) the insured had notice of his rights under the

MVFRL; and (ii) the insured voluntarily requested in writing that the limits of his

UM/UIM coverage be lowered. Jiongo v. Nationwide Ins. Co., 1998 WL 381706, at *6

(E.D. Pa. July 8, 1998), aff’d, 203 F.3d 817 (3d Cir. 1999); Dang v. State Farm Mut.

Auto. Ins. Co., 1996 WL 421942, * at 3 (E.D. Pa. July 19, 1996), aff’d, 111 F.3d 126 (3d

Cir. 1997); see also Nationwide Ins. Co. v. Resseguie, 980 F.2d 226, 232-33 (3d Cir.

1992) (finding actual knowledge of rights under MVFRL insufficient without written

waiver). Notice is presumptively established where the insured signs the notice provided

by the insurer pursuant to § 1791. See Shipe v. Allstate Ins. Co., 791 F. Supp. 109, 111

(M.D. Pa. 1992) (“An insurer’s signature on the notice establishes a conclusive

presumption that he has actual knowledge of the coverage available to him under the

MVFRL.”); Prudential Prop. & Cas. Ins. Co. v. Pendleton, 858 F.2d 930, 936 (3d Cir.

1988) (“[W]e find the presumption of waiver to be a conclusive presumption once it is

proven that the insured voluntarily signed the waiver.”). In the absence of a signed

notice, the insurer bears the burden of proving that the insured knowingly and

intelligently waived in writing the coverage available under the MVFRL. Shipe, 791 F.

Supp. at 111.

                                              4
                                       II. Discussion

       The factual background of this action, which is lengthy and complicated, was

thoroughly discussed by the District Court and is known to the parties. Accordingly, we

will focus in this opinion on the rationale for our decision.

       The sole issue in this case is whether Mr. Vollrath validly waived his right to

UM/UIM coverage equal to his bodily injury coverage. The District Court concluded that

Mr. Vollrath validly waived this statutory right, because he had notice as to the limits and

coverage available to him and he requested in writing that his UM/UIM coverage be

lowered. This Court agrees.

       First, Mr. Vollrath received notice of his rights relating to coverage and limits

under the MVFRL. In December 1984, State Farm mailed a “Premium Notice” to Mr.

Vollrath, which noted the change in law requiring it to make available UM/UIM coverage

in amounts equal to bodily injury coverage and Mr. Vollrath’s option to purchase lower

coverage consistent with his previous limits of $15,000 per person and $30,000 per

accident. In addition, the Premium Notice included an insert, which contained the

“Important Notice” required under § 1791, and an explanatory booklet advising Mr.

Vollrath of his rights to have UM/UIM limits equal to his bodily injury limits under the

MVFRL. Mr. Vollrath denies receiving these materials, however, the District Court

found his testimony “unpersuasive and unconvincing.” Moreover, State Farm need not

produce the actual signed § 1791 form to prove that one was sent to Mr. Vollrath, but



                                              5
must only show that it has a general procedure for mailings and that he would have been

on the mailing list for such forms. Clifford v. Prudential Prop. & Cas. Ins. Co., 2001 WL

1076582, at *4 (M.D. Pa. Aug. 28, 2001). The District Court found State Farm’s

testimony regarding its mailing procedures in place in 1984, which ensured that its

Pennsylvania policy holders received this mailing, to be “persuasive and compelling.”

Accordingly, because compliance with § 1791 establishes a conclusive presumption that

the insured had actual notice of the coverage available to him under the MVFRL, the

notice requirement for waiver of the higher UM/UIM benefits is satisfied.

      Mr. Vollrath also requested in writing lower coverage limits of $15,000 per person

and $30,000 per accident, satisfying the second requirement of a valid waiver. First, Mr.

Vollrath continued to pay his premiums by check on a semi-annual basis from February 7,

1985 until January 3, 2002, in an amount consistent with the $15,000 per person and

$30,000 per accident coverage level. See Buffetta, 230 F.3d at 639-41 (concluding that

payment of lower premium amounts every six months for three years before accident

demonstrated knowledge and acquiescence in selection of lower coverage); State Farm

Mut. Auto. Ins. Co. v. Gillespie, 342 F. Supp. 2d 317, 322-23 (E.D. Pa. 2004) (finding

payment of reduced premiums for nearly sixteen years sufficient to show he “elect[ed] in

writing the lower limits of UIM coverage”). Additionally, Mr. Vollrath signed a “Notice

to Named Insureds” on June 8, 1990, stating that he “wanted to retain [his] current

stacking underinsured Motor Vehicle Coverage W with limits of $15,000/$30,000 at a



                                            6
premium of $13.” See Breuninger v. Pennland Ins. Co., 675 A.2d 353, 357 (Pa. Super.

Ct. 1996) (finding coverage selection form signed by insured sufficient to satisfy writing

requirement).

       Because Mr. Vollrath received notice of his rights under the MVFRL and elected

for lower coverage levels in writing, this Court finds that he validly waived his right to

UM/UIM coverage equal to his bodily injury coverage. For these reasons, we will affirm

the District Court’s judgment in favor of State Farm.




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