Goll v. Insurance Co. of North America , 417 Pa. Super. 46 ( 1992 )

MONTEMURO, Judge:

This consolidated appeal lies from an Order granting the motion for summary judgment of appellee, Insurance Company of North America (INA). Appellants, all representatives of the estates of individuals killed in motor vehicle accidents,¹ brought this class action suit² on behalf of themselves and others seeking to recover work loss benefits under the now repealed No-fault Motor Vehicle Insurance Act (No-fault Act), 40 P.S. §§ 1009.101-.701 (repealed 1984). The trial court found their action to be barred by the applicable statute of limitations and granted appellee’s motion for summary judgement.

On appeal, appellants advance several theories in support of their contention that the instant action is not time barred. These theories are as follows: (1) the limitation period was suspended by the pendency of an earlier class action suit;³ and, (2) the statute of limitations was tolled by appellee’s breach of its fiduciary duty to advise claimants of the scope of available benefits.⁴ Upon review of these issues, we vacate the trial court’s order in part, affirm in part, and remand for further action consistent with this opinion.

The standard to be applied in reviewing a grant of summary judgment has recently been reiterated by our supreme court in Marks v. Tasman, 527 Pa. 132, 589 A.2d 205 (1991). Specifically,

[sjummary judgment is properly granted where ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ Pa.R.C.P. 1035(b). An entry of summary judgment may be granted only in cases where the right is clear and free from doubt. Musser v. Vilsmeier Auction Co., 522 Pa. 367, 369, 562 A.2d 279, 280 (1989). The moving party has the burden of proving the nonexistence of any genuine issue of material fact. Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 202-204, 412 A.2d 466, 468-69 (1979). The record must be viewed in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Davis v. Pennzoil Co., 438 Pa. 194, 264 A.2d 597 (1970).

Id., 527 Pa. at 134-35, 589 A.2d 205, 206. Instantly, appellants argue that the grant of summary judgement is contrary to our supreme court’s decision in Dercoli v. Pennsylvania Nat’l. Mut. Ins. Co., 520 Pa. 471, 554 A.2d 906 (1989), and this court’s recent decision in Miller v. Keystone Ins. Co., 402 Pa.Super. 213, 586 A.2d 936 (1991), appeal granted, 528 Pa. 631, 598 A.2d 284 (1991).

Dercoli arose from an automobile accident where the husband/insured fell asleep at the wheel and crashed into a tractor-trailer. As a result of the accident, the husband perished and his wife suffered severe injuries. Mrs. Dercoli filed a claim with her husband’s insurers relying solely on the insurers’ agents to recover the benefits due to her under the policies. While receiving these benefits, our supreme court abolished the defense of interspousal immunity which had prevented Mrs. Dercoli from recovering for the personal injuries negligently inflicted by her husband.⁵ Some four years later, Mrs. Dercoli learned that this bar to recovery had been lifted and she brought suit against her husband’s insurers alleging that they had breached their duty of good faith and fair dealing by failing to advise her of this change in the law. Our supreme court agreed holding that when an insurer “undertakes to advise and counsel the insured in the insured’s claim for benefits, [the duty of the insurance company to deal with its insureds fairly and in good faith requires the insurer] to inform the insured of all benefits and coverage that may be available and of any potential adverse interest pertaining to the insurer’s liability under the applicable policy.” Dercoli, 520 Pa. at 478, 554 A.2d at 909.⁶

In Miller, supra, which was handed down after the trial court had disposed of the instant case, the appellant brought suit to recover postmortem work loss benefits for the estate of her deceased son. The insurance company moved for summary judgement contending that the suit was barred by the limitations on actions set forth in the No-fault Act. The trial court agreed and granted the insurer’s motion.

On appeal, Mrs. Miller argued that the insurer had breached the duty of good faith and fair dealing enunciated in Dercoli, thereby tolling the statute of limitations. A panel of this court agreed finding that by breaching this duty, the insurer’s actions had tolled the limitations periods set forth in section 1009.106(c)(1) of the No-fault Act.

In reaching this decision, our court analyzed Dercoli and found that an insurer’s actions will toll the relevant statute of limitations when the following three factors coalesce: 1) the insurer assumes responsibility for processing its insureds’ claims; 2) the insurer knows that the insured is relying exclusively on its advice and counsel; and, 3) the insurer knows that its insured has a potential claim for additional benefits. Miller, 402 Pa.Super. at 223, 586 A.2d at 941. Each prong is a question of fact for resolution by the trier of fact. Id., 402 Pa.Superior Ct. at 224-26, 586 A.2d at 941-42.

The Miller court found that the first of these prongs, along with the duty of good faith and fair dealing, to be implicit in the provisions of the No-fault Act, an argument adopted by the appellants herein. As to the second requirement, the court in Miller found it critical that the claimant be without legal representation, as is true of all save one of the named appellants in the instant case. And finally, the third prong is satisfied when, during the pendency of a claim, the insurer either knows that its insured is entitled to additional benefits or is aware that its insured could be entitled to additional benefits. See also Arnold v. Logue, 405 Pa.Super. 422, 426-27, 592 A.2d 735, 736 (1991) (claim must be cognizable under the law at the time that it is made).

When the Dercoli/Miller three-prong test is applied to the facts of the instant case, the provisions of the No-fault Act impose a responsibility on INA to pay to its claimants all benefits they are entitled to receive under the act. Miller, 402 Pa.Super. at 224-25, 586 A.2d at 941-42. As to the second prong, the record shows that all appellants, except the Estate of Michael and Margaret Marino, were unrepresented by counsel when they made their claims for No-fault benefits. Accordingly, the second prong of the test is satisfied as to all appellants except the Marino Estate. Therefore, the only question remaining is when INA knew that appellants had a potential claim for work loss benefits.

Appellants argue that INA was aware of the potential for recovery of such benefits when our supreme court decided the companion cases of Allstate Ins. Co. v. Heffner and Pontius v. United States Fidelity and Guar. Co., 491 Pa. 447, 421 A.2d 629 (1980) and therefore was obligated to inform their claimants of the ongoing litigation concerning an estate’s right to recover postmortem work loss benefits. Appellee disagrees arguing that until this court resolved the issue of an estate’s entitlement to such benefits in Freeze v. Donegal Mut. Ins. Co., 301 Pa.Super. 344, 447 A.2d 999 (1982), aff'd, 504 Pa. 218, 470 A.2d 958 (1983), it did not have an obligation to inform its claimants that the possibility existed that they could become entitled to work loss benefits. Appellee’s argument cannot prevail in light of the Dercoli and Miller decisions.

In Dercoli, our supreme court stated that when an insurer assumes the responsibility of advising its insured in recovery of benefits, “the insurer has a duty to inform the insured of all benefits and coverage that may be available and of any adverse interest pertaining to the insurer’s liability under the applicable policy.” Id., 520 Pa. at 478, 554 A.2d at 909 (emphasis added). Thus, it is apparent that INA had a duty to inform its insureds not only of the benefits available to them, but also of any appellate litigation, that it was aware of, which could impose additional liability on INA.⁷

Although appellee acknowledges the import of our decision in Miller, it nevertheless asserts that Miller is inapposite to the instant appeal because there the issue was whether an insurer’s breach of the duty owed to its insureds tolled the statute of limitations, whereas the issue here is whether breach of the same duty can toll a statute of repose. INA argues that a statute of repose cannot be tolled for any reason; thus, appellants’ claims have been lost forever.

Section 1009.106(c)(1) provides that:

[when] no-fault benefits have not been paid for loss arising otherwise than from death, an action therefor may be commenced not later than two years after the victim knows, or in the existence of reasonable diligence should have known, that the loss was caused by the accident, or not later than four years after the accident, whichever is earlier. If no-fault benefits have been paid for loss arising otherwise than from death, an action for further benefits, other than survivor’s benefits, by either the same or another claimant; may be commenced not later than two years after the last payment of benefits.

This provision is both a statute of limitations and a statute of repose. A claimant is provided with a two year period to initiate an action which begins to run from the time that the claimant knew or should have known that a loss was incurred. This is a statute of limitations.

Section 1009.106(c)(1) then goes on to provide that in any event, an action must be instituted not later than four years after the accident. This portion is a statute of repose,⁸ Zubris v. Pa. Assigned Claims Plan, 321 Pa.Super. 83, 87, 467 A.2d 1139, 1141 (1983); Bond v. Gallen, 292 Pa.Super. 207, 215, 437 A.2d 7, 11 (1981), intended to extinguish an insurer’s liability to its insureds, see Catanzaro v. Wasco Products, Inc., 339 Pa.Super. 481, 489 A.2d 262 (1985) (statute of repose contained in 42 Pa.C.S.A. § 5536 abolishes any cause of action not brought within the mandated period); Fetterhoff v. Fetterhoff, 354 Pa.Super. 438, 512 A.2d 30 (1986), alloc. denied, 514 Pa. 624, 522 A.2d 50 (1987) (with a statute of repose, liability is extinguished upon passage of the statutory period). This “ ‘impose[s] on some plaintiffs the hardship of having a claim extinguished before it even exists----’” Luzadder v. Despatch Oven Co., 834 F.2d 355, 358 (3d Cir.1987), cert. denied, 485 U.S. 1035, 108 S.Ct. 1595, 99 L.Ed.2d 909 (1988) (quoting W. Keeton, Prosser and Keeton on Torts § 30, p. 168 (5th Edition 1984)).

The issue then becomes whether Pennsylvania law provides for the tolling of a statute of repose. Although our research of Pennsylvania law has failed to uncover a definitive answer to this question, we have found case law from other jurisdictions helpful in resolving this issue.

In Lasoya v. Sunay, 193 Ga.App. 814, 389 S.E.2d 339 (1989), the plaintiff brought a medical malpractice claim alleging that she had been rendered sterile because the defendant had negligently performed a biopsy on her left fallopian tube. The defendant moved for summary judgement contending that the plaintiff’s action was barred by the applicable statute of limitations.⁹ The motion was granted and the plaintiff took an appeal to the Georgia Court of Appeals.

On appeal, the plaintiff argued that although she had failed to file an action until six years after her surgery, her failure to bring suit was due to the defendant’s misrepresentation as to the cause of her sterility. Before addressing the merits of the plaintiff’s claim, the Georgia Court of Appeals noted that although the plaintiff’s action was preeluded by the five year statute of repose, a statute of repose does not relieve a defendant from liability when the defendant has concealed the injuries from the plaintiff. The Lasoya court then affirmed the grant of summary judgement finding that there was nothing in the record to indicate that the defendant had fraudulently misrepresented the cause of the plaintiffs sterility.

A different result was reached by the Ohio Supreme Court in Shover v. Cordis Corp., 61 Ohio St.3d 213, 574 N.E.2d 457 (1991), reh’g denied, 62 Ohio St.3d 1410, 577 N.E.2d 362 (1991). Shover involved a case where an individual died a year after receiving a pacemaker manufactured by the defendant. Four years later, the decedent’s son read a newspaper article concerning a recall of pacemakers manufactured by the defendant and the defendant’s plea of guilty to charges that it had concealed defects in its pacemakers. Suspecting there was a connection between his mother’s death and the defective pacemakers, the plaintiff retained counsel and brought suit against the Cordis Corporation.

Cordis moved to dismiss the claim asserting that the plaintiff’s wrongful death claim was barred by the two year statute of limitations.¹⁰ The trial court agreed and the action was dismissed. The plaintiff appealed the dismissal arguing that fraud will toll the applicable statute of limitations. The Ohio Supreme Court disagreed holding that the legislature intended for wrongful death actions to be brought within two years of death regardless of when the cause of death was discovered. Therefore, the limitations period could not be tolled because of the defendant’s fraud. However, the Shover court did note that although the plaintiff’s wrongful death claim was time barred, he could bring an action for common law fraud because the limítations period for this cause of action does not begin to run until discovery of the fraud.

Although we find the Shover decision to be sound, we decline to adopt its reasoning. We do not believe that an insurer should be able to avoid its obligation to its insureds by resorting to fraudulent conduct. Accordingly, we hold that an insurers breach of its duty of good faith and fair dealing will toll the limitations periods set out at section 1009.106(c) of the No-fault Act. Therefore, we vacate that portion of the trial court’s opinion which grants summary judgement against appellants Goll, Stancliff, Gar-done, Munro, Geiger, and Wells.¹¹ Now, the only question that remains is whether there is an alternate theory which will toll the limitations period applicable to the claim of the Marino Estate.

Appellants argue that the filing of Cunningham, a class action suit seeking postmortem work loss benefits brought by the parents of a woman killed in an automobile accident, served to toll the statute of limitations as to themselves. However, the timeliness of Cunningham itself depended upon a prior case, Nye v. Erie Ins. Exch., 504 Pa. 3, 470 A.2d 98 (1983).¹² The appellants contend that the statute of limitations has been tolled as to them under the normal rule that “upon the filing of a class action, the statute of limitations is normally tolled for all putative members in the class.” Cunningham, 515 Pa. at 489, 530 A.2d at 408. However, in Nye no representative of the class with standing to sue had been found, and the case was dismissed. The Cunninghams therefore had no valid pending action upon which to base the tolling of the statute; the tolling effect was negated, and the Cunninghams’ action was itself time barred. The trial court herein found that because the Cunninghams’ suit was out of time, their case offered no relief from the effects of the statute herein.

Appellants argue that because the facts of Cunningham are very narrow, it fails to provide support for the position taken by the trial court. They contend that “the Supreme court held in Cunningham that the only circumstance under which a class action lawsuit does not toll the statute of limitations from the time of its filing is where the representative lacks standing to sue and where such lack is clear in the pleadings.” (Appellant’s Brief at 49). The corollary to this theorem is that since the Cunninghams themselves did not lack standing, their case, regardless of outcome, tolled the statute as to appellants. We do not agree.

A class action is defined as “any action brought by or against parties as representatives of a class until the court by order refuses to certify it as such or revokes a prior certification under these rules.” Pa.R.C.P. 1701(a). As the explanatory comment points out, this definition is important in determining whether the commencement of a class action tolls the statute of limitations as to putative members of the class. This definition carries into effect the decision of the United States Supreme Court in American Pipe and Const. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), reh’g denied, 415 U.S. 952, 94 S.Ct. 1477, 39 L.Ed.2d 568 (1974), which held that commencement of a class action suspends the applicable statute of limitations during the interim period beginning at the commencement of the action and ending upon a court’s refusal to certify the class.

It is important to note that in American Pipe, the Supreme Court held that “the filing of a timely class action complaint commences that action for all members of the class as subsequently defined.” Id. at 550, 94 S.Ct. at 764 (emphasis added). It is therefore apparent that the filing of an untimely class action does not commence the action for the yet to be identified members of the class. Accordingly, we affirm the decision of the trial court which held that the filing of an untimely complaint does not suspend the statute of limitations for the unidentified class members. Thus, the claim of the Marino Estate is time barred under section 1009.106(c)(1) of the No-fault Act.

In summary, the grant of summary judgement is vacated as to appellants Goll, Stancliff, Gardone, Munro, Geiger, and Wells. The order is affirmed as to appellant Marino. Case remanded for action consistent with this decision. Jurisdiction relinquished.

WIEAND, J., files a concurring and dissenting opinion.

1 . The decedents were either insureds of INA or had their claims assigned to INA pursuant to the No-fault Act assigned claims plan, 40 P.S. § 1009.108.

2 . The record shows that the class has yet to be certified.

3 . Cunningham v. Insurance Co. of N. Am., 515 Pa. 486, 530 A.2d 407 (1987) , cert. denied, 484 U.S. 1008, 108 S.Ct. 704, 98 L.Ed.2d 655 (1988).

4 . INA has filed a cross appeal wherein it contends that if the trial court permitted intervenors, Wells, Marino and Geiger, to assert claims as survivors of the deceased insureds, the trial court has committed reversible error. Our review of the record indicates that the trial court granted the petitions to intervene filed by these individuals in their capacity as administrator/trix of the insureds’ estates. Therefore, the respective estates are party to this action, not the individual survivors of the deceased. Accordingly, INA’s cross appeal does not present an issue for our review. See supra note 3.

5 . Hack v. Hack, 495 Pa. 300, 433 A.2d 859 (1981).

6 . The trial court herein distinguished Dercoli by finding no suggestion that INA had assumed any such duty of counselling. (T.C.O. at 10).

7 . In Miller, we found that an internal memorandum written by an employee of the insurer was at least some evidence that the insurer was aware that the law governing recovery of work loss benefits was changing.

8 . We are of the opinion that the requirement that "an action for additional benefits be commenced not later than two years after the last payment of benefits," as written, is also a statute of repose. 40 P.S. § 1009.106(c)(1).

9 . The statute of limitations relevant to the Lasoya claim permits a medical malpractice action to be filed within two years of the resulting death or injury; however, in no event, may an action for medical malpractice be brought more that five years after the date on which the negligent or wrongful act occurred. Ga.Code Ann. § 9-3-71.

10 . Ohio Rev.Code Ann. § 2125.02(D). Section 2125.02(D) provides that an action for wrongful death shall be commenced within two years after the decedent’s death. Although the court refers to this section as a statute of limitations, it is actually a statute of repose because a defendant’s liability ends upon passage of the two year period.

11 . Appellee argues that it owes a lesser duty to a claimant under the assigned claims plan, 40 P.S. § 1009.108, as opposed to the duty owed to one of its insureds. We fail to find any merit to this argument. Accordingly, we find that the duty of good faith and fair dealing applies equally to all claimants under the No-fault Act.

12 . Thirty-one defendant insurance companies were involved in Nye, of which one was INA, the defendant in Cunningham. However, the plaintiff in Nye was insured only by Erie.