Superior Court Rejects Arguments that Insurer’s Entitlement to UIM Credit is Self-Executing
In a recent decision, the Pennsylvania Superior Court in Tachony v. LM Gen. Ins. Co., No. 1902 EDA 2023, 2024 WL 3042206 (Pa. Super. 2024), affirmed an order denying the Appellant’s Motion to mark an arbitration judgement satisfied and/or mold the arbitration award, finding that an insurer’s entitlement to a “UIMcredit” was not “self-executing” in Pennsylvania and that the Appellant’s motion was not timely filed.
In Tachony, the plaintiffs, Angelika Tachony and Tatsiana Filitovich, were involved in a motor vehicle accident and settled the tort case against the third-party tortfeasor involved in the subject accident. Thereafter, the Plaintiff made a claim for underinsured motorist benefits (“UIM”) against their own insurer and proceeded to compulsory arbitration. The UIM insurer advised that it would waive their subrogation rights and take a $25,000 “UIM credit” against each of the two Plaintiff’s clams, representing the policy limits available to the tortfeasor at the time of settlement. After the UIM case proceeded to compulsory arbitration, the arbitrators returned an award of $31,000 for one Plaintiff and $12,000 for the other. No appeal of the arbitration award was filed within thirty (30) days allowed under the Pennsylvania Rules of Civil Procedure.
Following the finalization of the arbitration award, the insurer argued that it was entitled to the $25,000 UIM credit thereby absolving it from any obligations to one of the Plaintiff’s and limiting its obligations to $6,000 for the other Plaintiff. The Plaintiff argued that the insurer is liable for the entire award as finalized on the dockets. Due to the dispute, seventy-seven days after the arbitrators issued the award, the insurer filed a motion to mark the judgment as satisfied or to otherwise mold the award, arguing that the prior third-party settlement amount should offset its UIM obligations as a matter of law. The core dispute was whether the UIM credit the insurer was entitled to was “self-executing,” and thereby was not required to be raised as a defense during the arbitration.
The Superior Court affirmed the denial of the insurer’s motion. The Court found that the insurer could not unilaterally reduce its payout obligations based on the external settlement as a matter of law and that the UIM credit was not “self-executing,” and instead had to be raised during the arbitration. Because the arbitration award was finalized against the insurer, no reduction as a matter of law was warranted. The Court further held that the motion was untimely, the trial court did not have jurisdiction to hear the motion and that the insurer had ample opportunity to raise its arguments during the arbitration process and immediately after the award was issued. By waiting too long to file the motion, the insurer failed to adhere to the procedural requirements, leading the trial court to deny the motion on the grounds of untimeliness.
The Superior Court’s decision emphasizes the importance of adhering to procedural deadlines in legal proceedings. It serves as a reminder that parties must act promptly to preserve their rights and avoid potential procedural bars to their claims.
The Tachony decision can be found here.
For additional questions, please contact Leilani Brown, Esq., Glen Shikunov, Esq., and/or Scott Tredwell, Esq.
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