author: COTTONE, S.J.,

text:
    Brewer v. Geisinger Clinic Inc.
    C.P. of Lackawanna County,
    no. 98 Civil 733.

      Jill Miller, for plaintiffs.

      Kenwyn M. Dougherty, John Durkin, Thomas Foley Jr. and Mark Perry, for defendants.

      March 31, 2000
   COTTONE, S.J.,

This court is called upon to address a number of issues raised by various defendants via preliminary objections. The defendant, Geisinger Health Plan, has raised several objections to the complaint. First, it asserts that the plaintiffs’ cause of action against it relates to an employee benefit plan and is, therefore, preempted under section 514(a) of ERISA, 29 U.S.C. § 1144(a). This defendant also alleges that the plaintiff-husband cannot raise a claim for lack of informed consent; that the plaintiffs’ claim for punitive damages and allegations of gross, reckless and wanton conduct should be stricken; and that the claims for corporate negligence against a medical group or practice is not recognized in Pennsylvania.

The preliminary objections filed by the defendants, Geisinger Clinic, Penn State Geisinger Health Systems Inc., Jay Redan M.D., Clarence Mast M.D. and Gehred Wetzel D.O., allege that the theory of corporate negligence as it relates to them is not recognized as a valid claim in Pennsylvania; that the plaintiffs failed to state a cause of action for punitive damages; lack of specificity; and questioned whether a claim for informed consent may be raised by plaintiff-husband.

The plaintiffs aver that plaintiff-wife, Theresa Brewer, was referred by Dr. Mast, her treating physician, to Dr. Wetzel. The complaint alleges that Mrs. Brewer had been treated by Dr. Mast for approximately three years for problems with her menstrual cycle. Dr. Wetzel recommended that Mrs. Brewer have a total abdominal hysterectomy with removal of both fallopian tubes and ovaries. This surgery was ultimately performed by Drs. Wetzel and Mast at Tyler Memorial Hospital in May of 1997.

Shortly after her surgery, the plaintiff-wife began to experience elevated temperatures, alternating diarrhea and constipation, weakness, nausea and abdominal pain. She was readmitted to the hospital a few days later when it was discovered that she had a leak consistent with colon rectal perforation, a large abscess and partial dehiscence (splitting open) of the cervical and vagina cuff. Dr. Redan performed a colostomy and an appendectomy to treat these problems.

The plaintiffs instituted suit alleging, inter alia, that the defendants were negligent in administering and providing health care treatment for plaintiff-wife. The claim against the clinic is based upon corporate negligence.

This court must first determine whether, under the facts alleged, the Employee Retirement Income Security Act of 1974,29 U.S.C. §1001 et seq., is applicable and, thus, preempts the state tort claims against the plan. This court notes that it is undisputed that Mrs. Brewer’s medical insurance was provided to her by her employer.

ERISA is a federal statute designed to uniformly regulate employee benefit plans. In order to implement a uniform application of said plans, Congress included section 514(a), 29 U.S.C. § 1144(a), which preempts a state law when that law “relates to any employee benefits plan.” An employee benefit plan is defined as an employee welfare benefit plan. 29 U.S.C. §1002(3). Section 1002(1) further identifies what an employee welfare benefit plan is. It is any plan, fund or program established or maintained by an employer or by an employee organization that is maintained for the purpose of providing its participants or their beneficiaries medical, surgical, or hospital care benefits in the event of sickness, accident, disability, death or unemployment. 29 U.S.C. §1002(1).

To date, the United States Supreme Court has not directly addressed the issue of whether negligence claims against a health maintenance organization relate to an ERISA plan. The Pennsylvania Supreme Court, however, has addressed this issue in Pappas v. Asbel, 555 Pa. 342, 724 A.2d 889 (1998).

The Pappas court, after reviewing the line of cases involving ERISA preemption claims, noted that the preemption provision of ERISA, 29 U.S.C. § 1144(a), was formerly given a “broad sense of meaning.” The court commented that these earlier cases generally concluded that the state laws being reviewed had some “connection with” or “reference to” ERISA and were, therefore, preempted.

The Pappas court observed that in 1995 in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995), the U.S. Supreme Court admitted that after several years of attempting to interpret the preemption language of ERISA, the text was “unhelpful.” 555 Pa. at 348, 724 A.2d at 892. The Pappas court concluded that although the U.S. Supreme Court decisions from the 1980s and 1990s hold that “the preemption provision is to be read broadly, Travelers and its [line of cases] have thrown the expansive holdings of those earlier cases into question.” 555 Pa. at 350, 724 A.2d at 893. (footnote omitted) The court concluded that, based on Travelers and its progeny, negligence claims against HMOs are not related to an ERISA plan. It observed that “[a]s noted by Travelers, Congress did not intend to preempt state laws which govern the provision of safe medical care. . . . Furthermore, we believe that negligence laws have ‘only a tenuous, remote, or peripheral connection with [ERISA] covered plans, as in the cases with many laws of general applicability,’. . . and therefore are not preempted.” 555 Pa. at 351, 724 A.2d at 893-94 (citing Travelers, supra at 661, 115 S.Ct. at 1680, 131 L.Ed.2d at 708-709).

This court does not believe that the plaintiffs’ averments relative to financial or other disincentives, the requirement and/or encouragement of participating physicians to attend to an inordinate number of patients brings the instant action within the purview of ERISA. Their complaint clearly pertains to the quality of care provided to plaintiff-wife and the negligent rendering of said care and not to the administration of an employee benefit plan. As such, this court does not believe that ERISA preempts their claim. The defendant plan’s preliminary objection based upon this issue is accordingly denied.

Next, all defendants object to the inclusion of a claim for punitive damages.

“Punitive damages may be awarded for conduct that is outrageous because of the defendant’s evil motive or his reckless indifference to the rights of others. In assessing punitive damages, the trier of fact can properly consider the character of the defendant’s act, the nature and extent of the harm to the plaintiff that the defendant caused or intended to cause and the wealth of the defendant.” Restatement (Second) of Torts §908(2).

The Restatement’s definition of punitive damages has been adopted in Pennsylvania in Feld v. Merriam, 506 Pa. 383, 485 A.2d 742 (1984).

In order for punitive damages to be imposed, the nature of the tort-feasor’s act, together with his motive, the relationship between the parties along with any other related facts should be considered. Martin v. Johns-Manville Corp., 508 Pa. 154, 494 A.2d 1088 (1985). Imposition of punitive damages is appropriate only where the conduct complained of is especially egregious and is not to be awarded where the misconduct constitutes ordinary negligence such as inadvertence, mistake and errors of judgment. Martin, 508 Pa. at 170, 494 A.2d at 1096-97. Punitive damages are awarded only for outrageous conduct, that is, for acts done with a bad motive or with a reckless indifference to the interest of others. Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355 (1963).

This court believes that the plaintiffs have pled sufficient facts to bring their complaint within the ambit of punitive damages. The plaintiffs’ averments contained in paragraphs 19 through 25 could be considered a reckless disregard of the plaintiff-wife’s safety. The defendants’ preliminary objections to dismiss the punitive damage count are, consequently, denied.

Several of the defendants object to the plaintiff-husband’s, Mark Brewer’s, informed consent claim. These objecting defendants assert that Mr. Brewer’s claim based upon lack of informed consent is not derivative of his wife’s action and is, thus, barred.

Our courts have defined consortium as a spouse’s right to be secure in his or her relationship. Hopkins v. Blanco, 224 Pa. Super. 116, 302 A.2d 855 (1973). “For an injury to the wife, either intentionally or negligently caused, which deprives her of the ability to perform services, or lessens that ability, the husband may maintain an action for the loss of service[s]....” Kelley v. Mayberry Township, 154 Pa. 440, 447, 26 A. 595, 597 (1893). It is an action derivative of the injured spouse’s claim. Manzitti v. Amsler, 379 Pa. Super. 454, 457, 550 A.2d 537, 538 (1988).

In the matter sub judice, Mr. Brewer claims loss of consortium and avers in Count VIII that his loss arose due to lack of informed consent.

As a general rule, a physician must obtain informed consent from a patient prior to performing a surgical or operative procedure. Sinclair v. Block, 534 Pa. 563, 633 A.2d 1137 (1993). The rationale articulated by our courts for requiring informed consent for surgical or operative procedures is that such a procedure performed without a patient’s consent constitutes a technical assault or battery because he or she is typically unconscious and unable to object. Morgan v. MacPhail, 550 Pa. 202, 704 A.2d 617 (1997).

The objecting defendants have cited no authority precluding a spouse’s claim for loss of consortium based upon lack of informed consent to a surgical procedure. Morgan v. MacPhail, supra, relied upon by these defendants in support of their position, is not controlling. In Morgan, our Supreme Court refused to extend the informed consent doctrine to nonsurgical and nonoperative procedures based upon lack of consent. In the instant action, there was a surgical procedure performed on plaintiff-wife to which the plaintiffs assert lack of informed consent.

Assuming arguendo that the plaintiffs prevail in this action and the jury concludes that the objecting defendants failed to provide them with sufficient knowledge and information upon which they could have made an informed consent, the jury should be allowed to determine whether Mr. Brewer has suffered a loss of consortium as a result of this failure. The preliminary objection requesting that Mr. Brewer’s derivative claim based upon informed consent claim be stricken is denied.

All of the defendants have objected to the plaintiffs’ corporate negligence claim. The plaintiffs aver that the clinic is a corporation which is a part of the Penn State Geisinger System Inc. They allege that this defendant regularly conducts business through its various health care facilities including approximately 30 community hospitals. The plaintiffs contend that the clinic is liable to them to uphold the proper standard of care to ensure Mrs. Brewer’s safety and well-being while a patient of this system.

“Corporate negligence is a doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital. This theory of liability creates a nondelegable duty which the hospital owes directly to a patient. Therefore, an injured party does not have to rely on and establish the negligence of a third party.” Thompson v. Nason Hospital, 527 Pa. 330, 339, 591 A.2d 703, 707 (1991).

Our courts have identified four areas of corporate liability: “(1) a [requirement] to use reasonable care in the maintenance of safe and adequate facilities and equipment . . .; (2) a [requirement] to select and retain only competent physicians ...; (3) a [requirement] to oversee all persons who practice medicine within its walls as to patient care . . .; and (4) a duty to [develop], adopt and enforce adequate rules and policies to ensure quality care for the patients . . . .” Thompson, supra at 339-40, 591 A.2d at 707. (citations omitted)

Although our appellate courts have extended corporate liability to hospitals and HMOs, they have not, as yet, been confronted with whether it should be extended to clinics. Recently, in Dibble v. Penn State Geisinger Clinic Inc., 42 D.&C.4th 225 (Lacka. Cty. 1999), the Honorable Carmen Minora of this court was confronted with the identical issue. After an examination of the appellate courts’ rationale for applying corporate liability to hospitals and HMOs, Judge Minora concluded that despite a clinic’s involvment in the delivery of health care to a patient, it “cannot be considered a comprehensive health care center such as a hospital, nor can it be construed to play a central role in the ‘total health care of its subscribers.’” Id. at 233 (quoting Shannon v. McNulty, 718 A.2d 828, 835 (Pa. Super. 1998)). Judge Minora held that since a clinic is only a gateway for further referrals into the health care delivery system, that is, it is a primary care facility and is not a comprehensive medical care facility, he declined to extend the theory of corporate liability to clinics.

This court, although not required, adopts our honorable colleague’s analysis of corporate liability as it relates to clinics. Consequently, the objecting defendants’ demurrer to Count IX of the complaint is granted and Count IX is dismissed.

The clinic, Penn State, Dr. Redan and Dr. Wetzel also argue that various counts of the complaint contain vague and/or unspecific conclusory allegations of negligence directed towards them. They complain that the term “failing to interpret other medical data” without any further specific identification of what “other medical data” means is used throughout the pleading. They also contend that the complaint is insufficient because it fails to identify the rules, regulations or protocols the defendants failed to follow; that the complaint fails to identify who or in what way the personnel were unqualified; and that the plaintiffs failed to identify which tests were not performed due to financial incentives.

This court, after reviewing the complaint in its totality, finds that these averments are sufficiently specific to enable the defendants to defend. The lack of information complained of by these defendants can be addressed via discovery. This preliminary objection is, therefore, denied.

ORDER

And now, March 31, 2000, it is hereby ordered and decreed that the defendants’ preliminary objections concerning ERISA preemption, punitive damages, lack of informed consent by plaintiff-husband, lack of specificity are denied. It is further ordered and decreed that the defendants’ preliminary objections concerning corporate negligence are granted.

      . Incorrectly referred to and designated in the caption as Geisinger Clinic Inc. d/b/a Geisinger Medical Group.

      . Dr. Mast has since been dismissed from this case with prejudice by stipulation and order of court dated May 6, 1999.

      . There is an ERISA/HMO negligence case currently pending before the Supreme Court.


source: Caselaw Access Project

author: FRIEDMAN, J.,

license: Public Domain

text:
    Jaworski v. Orton, Joyce & Dunlavey P.C.
    C.P. of Allegheny County,
    no. GD 97-15662.

      Christina Hurnyak, for plaintiffs.

      Joseph S.D. Christoff II, for defendants Dunlavey.

      William K. Herrington, for defendants Bloom, Rosenberg, Kirschner, and Margolis Edelstein.
    February 8, 2000
   FRIEDMAN, J.,

The instant case is a many-layered one involving allegations of breach of contract and fraud by clients against two sets of lawyers. A count for legal malpractice has not been asserted.

On June 8, 1981, plaintiff husband was injured in a one-car accident allegedly caused by PennDOT’s failure to maintain the road in question resulting in water accumulating which caused plaintiff’s car to hydroplane.

In late 1981 or early 1982, plaintiffs hired defendant Michael Dunlavey to sue the Commonwealth for its negligence. Mr. Dunlavey filed a writ of summons on June 3,1983. The tort action against the Commonwealth was dismissed 10 years later, on November 3, 1993, in response to a motion for non pros. Plaintiffs allege that Mr. Dunlavey fraudulently concealed his failure to pursue the case, instead leading them to believe he was trying to settle it while preparing to try it.

On April 5,1995, plaintiffs hired defendant Bloom to sue defendant Dunlavey for malpractice.

No action against any of the Dunlavey defendants was ever filed by defendant Bloom. Instead, plaintiffs’ third set of attorneys filed the instant lawsuit against the Dunlavey defendants and against defendant Bloom and his law firms, Rosenberg, Kirschner, PA. and Margolis Edelstein. The Bloom defendants have not filed a motion for summary judgment. The motion for summary judgment of the Dunlavey defendants is directed at the two counts against them: Count I for breach of contract, and Count II for fraud.

Dealing with Count II first, the two-year statute oflimitation applies. The question would be when the statute began to run. The allegations of Mr. Dunlavey’s fraudulent concealment of his alleged negligent handling of the case are sufficient to extend the statute of limitations for malpractice to begin as of the date they had reason to know that defendant Dunlavey’s representations about the status of the case were untrue. However, these allegations do not give rise to a separate cause of action. The elements of fraud include the requirement that the plaintiffs must have relied on the fraudulent misrepresentations to their detriment. Here, the “detriment” was caused by the alleged malpractice; the only additional “detriment” attributable to the fraudulent concealment would have been the bar of the statute of limitations. Since the law extends the limitations period to the date plaintiffs knew or should have known of the fraudulent concealment, no additional “detriment” was suffered. Furthermore, the remedy for this count of fraud has already been received by plaintiffs: they had the right to sue the Dunlavey defendants for legal malpractice for two years from the time they learned of it. Alternatively, even if the fraud count is assumed to be viable, it was untimely filed [on September 30, 1997,] more than two years after April 5, 1995 and is therefore time-barred.

Unfortunately for plaintiffs, they did not take advantage of the extended time period, a fact they appear to concede by not having included a count for professional negligence in the instant complaint. However, the attempt to avoid the two-year statute of limitations by filing the breach of contract claim at Count I is of no avail. It is well-settled that a breach of contract claim will not lie where the averments (or the proofs) show professional negligence is the appropriate action.

Here, plaintiffs try to bolster their contract action by saying that they specifically instructed Mr. Dunlavey to “either settle the case or prepare it for trial.” His failure to do either is the alleged breach of contract. However, that is not the kind of specific instruction that creates a contract claim. The professional relationship between plaintiffs and Mr. Dunlavey is what created the duty to either settle the case or prepare it for trial. There is nothing in this case to distinguish it from the myriad of cases that say the breach of this kind of duty gives rise to a negligence action only.

The motion of the Dunlavey defendants for summary judgment must be granted as to plaintiffs’ claims only without prejudice to the right of the Bloom defendants to pursue their cross-claims for indemnification or contribution.

ORDER

And now, to-wit, February 8, 2000, it is hereby ordered that the Dunlavey defendants’ motion for summary judgment is granted, without prejudice to the right of the remaining defendants to pursue their cross-claims for indemnification or contribution.

      . The other “Dunlavey” defendants would be vicariously liable for his conduct. If the claim against Mr. Dunlavey fails, plaintiffs’ claims against them would also be dismissed from the case.

      . Judge Wettick has already ruled that the latest date for the commencement of the limitations period for any of the causes of action [against the Dunlavey defendants] is April 5, 1995.


author: NEALON, J.,

text:
    Calabrese v. Colonial Insurance Co.

      C.P. of Lackawanna County,
    no. 99-CV-5961.

      James J. O’Connor, for plaintiff.

      Scott J. Tredwell, for defendant.
    March 3, 2000
   NEALON, J.,

Plaintiff, David James Calabrese, has filed a motion to compel his automobile insurer, defendant, Colonial Insurance Company of California t/d/b/a Colonial Insurance Company of Wisconsin, a member of the Nationwide Insurance Enterprise, to submit to underinsured motorist arbitration and, in response, Colonial has requested a declaratory judgment that Calabrese affirmatively rejected UIM coverage under75Pa.C.S. §1731(c.l). Since Colonial placed the form for rejection of UIM protection on the same page as the waiver election for stacked UIM coverage limits, Colonial did not secure a valid rejection of UIM protection under section 1731(c.l) and Calabrese is, therefore, entitled to UIM coverage such that his motion to compel arbitration will be granted.

I. FACTUAL BACKGROUND

On April 10, 1997, Calabrese purchased an automobile insurance policy from Colonial which insured Calabrese and afforded coverage for his 1988 Chevrolet Cavalier for the period from April 10, 1997 through October 10, 1997. The policy in question provided Calabrese with certain coverages including liability insurance limits of $15,000 per person and $30,000/acci-dent. At the time that he obtained his Colonial policy, Calabrese executed the following single paged document which ostensibly contained written rejections of UIM coverage and stacked UIM limits:

“Pennsylvania Underinsured Motorist Coverage Option Forms
“Rejection Of Underinsured Motorist Protection UIM 1
“By signing this waiver, I am rejecting underinsured motorist coverage under this policy, for myself and all relatives residing in my household. Underinsured coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.
“/s/David J. Calabrese
“(Signature of named insured)
“Policy number 377089673 Date 4-10-97
“Agent /s/D J. Granahan County Lacka
“Rejection Of Stacked Underinsured Coverage Limits UIM2
“By signing this waiver, I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.
“(Signature of named insured)
“Policy number 377089673 Date
“Agent_County_”

(See motion to compel underinsured motorist arbitration, exhibit A.)

Shortly thereafter, Calabrese was issued a declarations page, financial responsibility identification card, and 28-page “Pennsylvania automobile policy” by Colonial. Although the declarations page indicates that Calabrese had rejected UM/UIM coverage, it also contains a “0430” notation under the heading for “endorsements.” (See plaintiff’s brief, exhibit B, p. 2.) The policy that was delivered to Calabrese by Colonial includes general provisions pertaining to Calabrese’s coverages which are amended by a subsequent section of the policy entitled “Pennsylvania amendatory endorsement (0430)” that inserts additional language governing the limits of UIM coverage, the authority of arbitrators and the identification of those issues which must be “decided by a court of law.” (Id., pp. 21-22.) The supplemental UIM provisions set forth in the C1430 endorsement section expressly state:

“Determination whether an insured person is legally entitled to recover damages or the amount of damages shall be made by agreement between the insured person and us. If no agreement is reached, the decision will be made by arbitration. However, the following questions will be decided by a court of law:
“(a) questions between the injured party and us regarding whether the injured party is an insured person under this coverage; or
“(b) the limits of such coverage; or
“(c) questions regarding:
“(i) stacking;
“(ii) waivers;
“(in) residency; and
“(iv) statute of limitations.” (Id., p. 22.)

On August 19, 1997, Calabrese was involved in an automobile accident with William James, as a result of which James’ liability insurer, Nationwide Insurance Company agreed to settle Calabrese’s third party claim by tendering $49,000 of its $50,000 policy limits. Before settling his tort claim with the liability insurance carrier, Calabrese secured Colonial’s written consent to settle with Nationwide on November 18, 1999. (See plaintiff’s brief, exhibit D.) Calabrese then demanded UIM benefits from Colonial and presumably agreed to provide Colonial with a credit or offset for the full amount of James’ liability limits in accordance with Boyle v. Erie Insurance Co., 441 Pa. Super. 103, 656 A.2d 941 (1995), alloc. denied, 542 Pa. 655, 668 A.2d 1120 (1995). See e.g., Overfield v. Ohio Casualty Insurance. Co., 39 D.&C.4th 548, 559-69 (Lacka. Cty. 1998).

After Colonial declined to honor Calabrese’s request for UIM benefits, Calabrese filed a motion to compel UIM arbitration on November 29, 1999, and obtained a rule to show cause which was made returnable by December 20, 1999. On that date, Colonial submitted its answer to Calabrese’s motion and contemporaneously filed a counterclaim seeking a declaratory judgment that Calabrese had affirmatively waived his right to UIM protection from Colonial. An evidentiary hearing was conducted on February 29,2000, at the conclusion of which this matter was submitted for a decision.

II. DISCUSSION

(A) Scope of Review

Calabrese requests an order compelling the parties to submit to UIM arbitration and directing Colonial to select its designated arbitrator within a certain time period. When one party to an agreement seeks to compel another to proceed with arbitration, judicial inquiry is limited to determining (1) if a valid agreement to arbitrate exists between the parties and, if so, (2) whether the dispute involved is within the scope of the arbitration provision. Midomo Co. Inc. v. Presbyterian Housing Development Co., 739 A.2d 180, 186 (Pa. Super. 1999); Moses Taylor Hospital v. GSGSB, no. 96-CV-608, Nealon, J. at p. 5 (Lacka. Cty. January 21, 2000). Agreements to arbitrate are governed by contract law. Emlenton Area Municipal Authority v. Miles, 378 Pa. Super. 303, 307, 548 A.2d 623, 625 (1988), alloc. denied, 522 Pa. 613, 563 A.2d 498 (1989), and if a valid arbitration agreement exists between the parties and the claim at issue is within the scope of the agreement, the controversy must be submitted to arbitration. Smith v. Cumberland Group Ltd., 455 Pa. Super. 276, 284, 687 A.2d 1167, 1171 (1997); Moses Taylor Hospital, supra at p. 6.

In the absence of any policy language limiting their authority, arbitrators have traditionally enjoyed considerable power in deciding UM/UIM issues. Brennan v. General Accident Fire and Life Assurance Corporation Ltd., 524 Pa. 542, 549, 574 A.2d 580, 583 (1990) (“[tjhere is no limit to the jurisdiction of the arbitrators over what issues may be submitted and in fact the policy declares that all disputes between the insurance company and the insured will be arbitrated”); Hoerst v. Prudential Property and Casualty Insurance Co., 425 Pa. Super. 143, 146, 624 A.2d 187, 188-89 (1993) (“[o]ur Supreme Court has held that there is no limit to the jurisdiction of the arbitrators on issues submitted”). Therefore, unless the insurance policy expressly deprives the arbitrators of the ability to determine coverage issues, arbitrators generally determine whether an insured has effectively waived or reduced UM/UIM protection. See e.g., Schultz v. Aetna Casualty and Surety Co., 443 Pa. Super. 659, 663 A.2d 166 (1995) (arbitrators decide the validity of an election of lower UM/UIM limits under 75 Pa.C.S. §1734). However, the UM/UIM insurance policy may restrict the authority of the arbitrators and thereby reserve certain issues for a court of law. McAlister v. Sentry Insurance Co., 958 F.2d 550, 554 (3d Cir. 1992) (questions concerning extent of coverage are for the arbitrators unless the policy language explicitly excludes such issues from the scope of arbitration). See also, Ronca, J.R.; Sloane, L.A.; Lutz, D.L.; Shollenberger, T.A.; and Mundy, J.F., Pennsylvania Motor Vehicle Insurance: An Analysis of the Financial Responsibility Law, §7.3, p. 128 (2d ed. 1998) (the general rule is that arbitrators have jurisdiction to decide most matters unless confined by the insurance policy). As a consequence, arbitrators may not consider bad faith claims predicated upon 42 Pa.C.S. §8371, Nealy v. State Farm Mutual Automobile Insurance Co., 695 A.2d 790, 794 (Pa. Super. 1997), nor can arbitration proceedings be compelled in the absence of an arbitration clause in the policy. McFarley v. American Independent Insurance Co., 444 Pa. Super. 191, 195, 663 A.2d 738, 741 (1995) (“the procedure to be followed in enforcement of uninsured motorist benefits, absent an actual contract containing an arbitration clause,... is the filing of a complaint in assumpsit”).

In the case at bar, Colonial may only be compelled to submit to UIM arbitration if Calabrese qualifies for UIM benefits under the policy, and his entitlement to UIM coverage is contingent upon the validity of his rejection of UIM protection. The Calabrese-Colonial policy clearly states that questions regarding UM/UIM waivers are to “be decided by a court of law.” Thus, the court must determine the threshold issue of whether Calabrese effectively rejected UIM protection under 75 Pa.C.S. §1731(c.l).

(B) Validity of UIM Rejection

The Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §1701 et seq., originally made UMAJIM coverages mandatory in Pennsylvania. The MVFRL was amended in 1990 to make UMAJIM protection optional provided that the insured was furnished with certain notices and information regarding the availability of such coverages and thereafter executed written rejections of UMAJIM protection. Ronca et al.; Pennsylvania Motor Vehicle Insurance, §§5.1, 5.5, at pp. 91-93, 99. To ensure that a policyholder makes an intelligent election, sections 1731(b) and (c) of the MVFRL prescribe specific language which must be utilized by insurers to effectuate a valid waiver by an insured of UMAJIM coverages. In furtherance of that goal, the statute provides:

“(c.1) Form of waiver. — Insurers shall print the rejection forms required by subsections (b) and (c) on separate sheets in prominent type and location. . . . Any rejection form that does not specifically comply with this section is void. If the insurer fails to produce a valid rejection form, uninsured or underinsured coverage, or both, as the case may be, under that policy shall be equal to the bodily injury liability limits. . . .” 75 Pa.C.S. §1731(c.1). (emphasis added)

The appellate courts of Pennsylvania have strictly enforced the waiver requirements set forth in section 1731(c.l). In Lucas v. Progressive Casualty Insurance Co., 451 Pa. Super. 492, 680 A.2d 873 (1996), alloc. denied, 548 Pa. 619, 693 A.2d 589 (1997), the trial court concluded that the insured had affirmatively rejected UM and UIM protection even though the written waivers of UM and UIM coverages were printed on the same sheet of paper. In reversing the lower court and finding as a matter of law that the insured was entitled to UM/UIM coverage due to the placement of both rejection forms on a single paper, the Superior Court held that “[t]he consequence of [the insurer’s] failure to provide valid rejection forms, though severe in the present case where it is clear from the record that [the insureds] knowingly waived their underinsured coverage, is expressly mandated by section 1731(c.l)...Id. at 499, 680 A.2d at 877. Similarly, in National Union Fire Insurance Co. v. Irex Corp., 713 A.2d 1145 (Pa. Super. 1998), the court again observed that “Section 1731 requires an insurer to use exact language and adhere to very specific technical rules in order to have an insured successfully reject UM coverage,” and determined that a rejection of UM/UIM coverage was invalid since the insurer did not employ the precise language required by section 1731, and the insured did not execute separate documents for rejecting UM and UIM protection. Id. at 1149-50.

At least two courts have had an occasion to address the effectiveness of a waiver which places the rejection forms for UIM coverage and stacking of UIM limits on the same page. In Estate of Franks v. Allstate Insurance Co., 895 F. Supp. 77 (M.D. Pa. 1995), “rejection of underinsured motorist protection” and “rejection of stacked underinsured motorist protection” appeared on a single sheet of paper and the insurer had obtained the approval of the Pennsylvania Insurance Department for the inclusion of both rejections on one form. Id. at 79-80. Finding that the waiver was valid under section 1731 (c. 1), the federal district court reasoned that although the rejection of UM coverage and UIM protection may not be printed on the same page, the waiver of UIM protection and stacked UIM coverage limits could be positioned on the same document. Id. at 81.

Several years later, the Superior Court of Pennsylvania considered the same issue in Winslow-Quattlebaum v. Maryland Casualty Co., 723 A.2d 681 (Pa. Super. 1998), alloc. granted, 742 A.2d 172 (Pa. 1999), where the waiver form executed by the insured likewise contained “Rejection of underinsured motorist protection” and “Rejection of stacked underinsured coverage limits” on the same sheet of paper. In expressly declining to follow Estate of Franks and holding that the rejection of UIM coverage was void under section 1731(c.1), the Winslow-Quattlebaum court concluded:

“The statute clearly mandates that rejection of uninsured motorist coverage and underinsured motorist coverage be on a separate sheet. Lucas, supra. The statute expressly states that a rejection form that does not specifically comply with its mandates is void. Herein, it is not disputed that the rejection of underinsured motorist benefits was not on a separate piece of paper. Instead, it had other rejection language on it. If there is other language on a piece of paper, we simply cannot see how the document could comply specifically with the statutory language requiring the rejection to be on a separate sheet.
“The legislature obviously intended that an insured consider separately the weighty decision of whether to reject underinsured motorist coverage. The importance of the rejection is undermined when the paper contained other information and certainly, other rejection language.” Id. at 684. (emphasis in original) Compare Nationwide Mutual Insurance Co. v. Monteith, 1997 WL 87280, *4 (E.D. Pa. 1997) (UM rejection form not void since it appeared on the same paper as the UM coverage authorization and UM coverage limits forms).

Instantly, the wording of Colonial’s UIM rejection is a verbatim recitation of the language required by section 1731. However, not unlike the waiver in Winslow-Quattlebaum, the rejection of UIM protection that was executed by Calabrese was contained on the same piece of paper as the rejection form for stacked UIM coverage limits. Colonial notes that in contrast to the insured in Winslow-Quattlebaum, Calabrese merely signed the rejection form for UIM protection and did not execute the rejection of stacked UIM coverage limits. That distinction is insignificant since there would be no need for Calabrese to execute the rejection of stacked UIM coverage inasmuch as he only insured a single vehicle and would not be entitled to stack UM and UIM limits even if he had selected those coverages.

The plain language of 75 Pa.C.S. §1731(c.1) clearly states that the rejection forms for UM protection under section 1731 (b) and UIM coverage under section 1731 (c) must be printed on separate sheets and that the failure to do so will result in the policy being reformed to afford UM/UIM protection in an amount equal to the liability limits. Section 1731(c.1) does not expressly state that the waiver of UIM protection under section 1731(c) cannot be contained on the same page as the rejection of stacked UIM coverage limits under 75 Pa.C.S. §1738. Nevertheless, Winslow-Quattlebaum distinctly holds that the inclusion of section 1731(c) and section 1738 rejections on the same document renders the waiver of UIM coverage void under section 1731(c.1).

The validity of Calabrese’s waiver of UIM protection is further compounded by Colonial’s inclusion of the C1430 endorsement on the declarations page, which endorsement operates to incorporate supplemental provisions governing UIM coverage and the authority of arbitrators. If Calabrese had effectively waived UIM coverage, he would not have the ability to arbitrate a UIM claim and the “Pennsylvania amendatory endorsement (0430)” would be unnecessary. The inclusion of that endorsement could arguably lead an insured to believe that [s]he is entitled to UIM protection and arbitration.

Colonial posits that any decision in this case should be deferred pending a ruling by the Supreme Court of Pennsylvania in Winslow-Quattlebaum. While it is true that allocatur has been granted in Winslow-Quattlebaum, Colonial has not articulated any compelling reason for delaying the disposition of this matter any further. See McClung v. Breneman, 700 A.2d 495, 496 n.3 (Pa. Super. 1997) (declining to postpone consideration of an automobile insurance issue and noting that a prior decision by the Superior Court which has not been overturned remains binding precedent, even though the Supreme Court has granted allocatur in connection with that decision); Sorber v. American Motorists Insurance Co., 451 Pa. Super. 507, 510, 680 A.2d 881, 882 (1996) (as long as a Superior Court decision has not been overturned by the Supreme Court, it constitutes binding precedent even though a petition for allowance of appeal is pending). Furthermore, a state trial court is bound to follow the ruling of a Pennsylvania appellate court on matters of state law, notwithstanding the fact that a federal district court may have reached a contrary conclusion. See e.g., Martin v. Hale Products Inc., 699 A.2d 1283, 1287 (Pa. Super. 1997) (“[although it may not be unreasonable to cite one or two federal decisions and explain why it would be appropriate for the Superior Court to apply the rationale adopted by a federal court, the better course is to cite controlling Pennsylvania decisions”); Dominick v. Statesman Insurance Co., 692 A.2d 188, 191 (Pa. Super. 1997) (reversing a trial court decision which “erroneously relied on” a federal court ruling rather than a state appellate ruling).

Based upon the Superior Court pronouncement in Winslow-Quattlebaum, the rejection of UIM coverage by Calabrese was ineffective under 75 Pa.C.S. §1731(c.l) since the waiver of UIM protection under section 1731 and the rejection of stacking of UIM benefits under section 1738 appeared on the same sheet of paper. 75 Pa.C.S. § 173 l(c. 1) distinctly states that “[a]ny rejection form that does not specifically comply with this section is void,” and in contradistinction to other provisions of the MVFRL, section 1731(c.l) furnishes a specific remedy for an invalid rejection by mandating that the insured be provided UIM coverage “equal to the bodily injury liability limits” of the policy. Compare Salazar v. Allstate Insurance Co., 549 Pa. 658, 670, 702 A.2d 1038, 1044 (1997) (although the insurer failed to comply with the UM notice requirements in 75 Pa.C.S. §1791.1, the legislature failed to provide any statutory remedy for such noncompliance).

Consequently, an order will be entered declaring Calabrese’s rejection form to be void and reforming the Colonial policy to provide UIM coverage of $15,000. Such a conclusion is consistent with the MVFRL’s object of affording injured claimants the greatest possible UM/UIM coverage. See Lucas, supra at 499, 680 A.2d at 877; Motorists Insurance Co. v. Emig, 444 Pa. Super. 524, 538, 664 A.2d 559, 566 (1995); Overfield, 39 D.&C.4th at 564. Additionally, in light of the judicial declaration that Calabrese is entitled to UIM protection from Colonial, the motion to compel Colonial to submit to UIM arbitration will likewise be granted.

ORDER

And now, March 3, 2000, upon consideration of the motion to compel underinsured motorist arbitration filed by plaintiff, David James Calabrese, and the counterclaim for declaratory judgment relief filed by defendant, Colonial Insurance Company, and based upon the reasoning set forth in the foregoing memorandum, it is hereby ordered and decreed that:

(1) The “Rejection of underinsured motorist protection” form executed by the plaintiff on April 10,1997, is void under 75 Pa.C.S. §1731(c.l);

(2) The automobile insurance policy that the plaintiff purchased from the defendant which afforded coverage for the period from April 10, 1997 through October 10, 1997, is reformed to provide underinsured motorist coverage of $15,000; and

(3) The motion to compel defendant to submit to underinsured motorist arbitration is granted and the defendant is ordered to submit to underinsured motorist arbitration with the plaintiff pursuant to the provisions of the Pennsylvania Arbitration Act of 1927.

      . The Colonial policy provides that UIM “[arbitration shall be conducted in accordance with the provisions of the Pennsylvania Arbitration Act of 1927.” (Id., p. 11.) Although the 1927 Act, 5 P.S. §161 et seq., was repealed and replaced by the Pennsylvania Uniform Arbitration Act of 1980, 42 Pa.C.S. §7301 et seq., the 1927 Act may still apply if the policy clearly states that arbitration is to be conducted under the 1927 Act. MGA Insurance Co. v. Bakos, 699 A.2d 751, 753 n.4 (Pa. Super. 1997); Overfield v. Ohio Casualty Insurance Co., 39 D.&C.4th 548, 557 (Lacka. Cty. 1998).


author: KLEINFELTER, J.,

text:
    Joyner Sports Medicine Institute Inc. v. Stejbach

      C.P. of Dauphin County,
    no. 5627 Equity.

      Ronald M. Katzman and Steven E. Grubb, for plaintiff.

      James J. West, for defendant.
    November 30, 1999
   KLEINFELTER, J.,

This matter is before the court on a motion for preliminary injunction filed by Joyner Sports Medicine Institute Inc. on August 11,1999. The defendants, David Stejbach and Karen Buzzard, are former employees of Joyner. Beginning May 15, 1996, Stejbach was employed as a physical therapist and site administrator at Joyner’s East Stroudsburg facility. Buzzard was hired on September 4, 1997, as an occupational therapist at the same location.

Following a hearing on August 23, 1999, this court entered an order which preliminarily enjoined Stejbach and Buzzard “from violating the provisions of their employment contracts by accepting any employment with Pocono Orthopedic Consultants,” a competing organization located directly across the street from Joyner’s office in East Stroudsburg. The court also ordered a hearing on a permanent injunction which was scheduled and heard on September 8, 1999.

There is little dispute regarding the underlying facts. As a condition of employment with Joyner, both Stejbach and Buzzard entered into an employment contract which contained the following provision:

“(11) Noncompetition prohibition: For the duration of employee’s employment, and for a period of two years following the termination of employee’s employment, employee shall not, directly or indirectly, as an employee, agent, independent contractor, consultant, owner, stockholder, partner, officer, director or otherwise, enter into or in any manner take part in any business or perform any services in direct competition with the business of the employer, within a 10 mile radius of the assigned center.” Employment agreement: Joyner/Stejbach, p. 4.

Buzzard’s agreement differs from Stejbach’s in only the duration provision which, in her case, is for a period of one year.

By all accounts, the employment relationship went smoothly until on or about March 6-9,1998, when all of Joyner’s employees were suddenly advised that the firm of Nova Care Inc. had acquired 100 percent of the stock of Joyner. Although the Joyner name continued to be presented to the public, it was immediately clear to the employees of Joyner that they had a new employer. Within weeks of the acquisition, all employees were summoned to conferences at various locations where a Nova Care employee explained a new benefits package. Each employee was required to sign an acknowledgement that they had attended the meeting and that they had received a copy of the “Nova Care (Outpatient Division) Employee Handbook.”

Both Stejbach and Buzzard testified that the new benefits package represented a substantial loss over their arrangement with Joyner. The changes affected vacation time, a 40IK retirement plan and educational benefits. Of greatest significance to Stejbach was Nova Care’s advisory that he would no longer receive merit-based salary increases (as he had under Joyner); and, moreover, that his present salary was “capped.”

As further evidence of a change of employers, paychecks were now issued by Nova Care Employee Services Inc., another wholly owned subsidiary of Nova Care Inc. Wages paid after the acquisition were reflected on a W-2 form issued by Nova Care Employee Services Inc. (as “employer”), while those paid prior to the acquisition were separated on a W-2 showing Joyner as “employer.”

Apparently dissatisfied with his new employment status, Stejbach tendered his resignation on July 10, 1999. He advised his regional director of operations that he would be joining Pocono Orthopedics, a group of physicians in East Stroudsburg who planned to open a physical therapy component to their practice. Stejbach’s last day of work at Joyner-Nova Care was August 10, 1999. Buzzard gave Nova Care a one-month notice at about the same time and indicated that she, too, would be going to work for Pocono Orthopedics.

We begin our legal discussion by noting that none of the defendants contest the underlying validity of their employment agreement or the reasonableness of its terms. The agreements are supported by adequate consideration and, given the nature of the employer’s business, were reasonably necessary for their protection. See Sidco Paper Company v. Aaron, 465 Pa. 586, 351 A.2d 250 (1976). For a restrictive covenant to be enforceable, it must be “reasonable in time, reasonable in geographic extent, and reasonably necessary to protect the employer without imposing an undue hardship on the employee.” Peripheral Dynamics Inc. v. Holdsworth, 254 Pa. Super. 310, 316, 385 A.2d 1354, 1359 (1978). The spatial (10 miles) and temporal (one year — Buzzard; two years — Stejbach) limitations would appear to be reasonably necessary in this case. Accordingly, we are satisfied that, given no change in employment relationship, Joyner would be clearly within their rights to enforce the restrictive covenants in these employment contracts.

We are faced, however, with the issue of the effect of the purchase of Joyner by Nova Care Inc. in March of 1998. Joyner argues that the outcome of this case hinges upon the difference between a stock acquisition and an asset purchase agreement. Joyner argues that, after the purchase of its stock by Nova Care, Joyner remained a viable corporate entity, only with different shareholders. As such, Joyner contends that there was no need to transfer individual assets, rights, or liabilities as there would have been in an acquisition through the purchase of assets.

“Thus, the parties need not prepare the deeds, bills of sale, and other instruments under which assets are assigned and liabilities assumed in the asset transaction. The only transfers involved are exchanges by the selling shareholders of their shares for the stock or other consideration given by the acquiring corporation.” Corporate Acquisitions and Mergers, Section 5 A.04(2)(a) (Matthew Bender & Co. Inc., 1998).

In accordance with the foregoing, Joyner argues that all employee contracts were acquired by Nova Care and that no assignment was necessary. Drawing an analogy to a unionized work force, Joyner argues that buyers in a stock transfer or sale are normally bound by the sellers’ contract with the union, while buyers in an asset purchase are not, citing Walters, Katherine E., Other Labor and Employment Issues in Buying and Selling a Business, 116 (Christopher M. Chicconi et al., Eds. Pennsylvania Bar Institute 1997).

Stejbach and Buzzard argue, on the other hand, that their situation is controlled by All-Pak Inc. v. Johnston, 694 A.2d 347 (Pa. Super. 1997). In All-Pak, the employee, Johnston, entered into an employment contract with All-Pak Inc. at the time he began his employment. The contract contained a restrictive covenant not to compete post-employment. Thereafter, All-Pak Inc. entered into an “asset sale agreement” with an investment group, TotalPak Inc. Total-Pak purchased all of the assets of All-Pak Inc., and changed its name to All-Pak Inc. Johnston continued his employment with the new All-Pak Inc., until his employment was terminated. Thereafter, he became employed by a competitor of All-Pak Inc. The new All-Pak Inc. filed suit seeking equitable and legal relief.

The Superior Court framed the issue: “[W]hether an employment contract that includes a restrictive covenant can be assigned from one employer to another without obtaining the consent of the employee.” All-Pak Inc., 694 A.2d at 350. After reviewing the general principles governing the enforceability of restrictive covenants in employment contracts, the court observed that “no Pennsylvania appellate court has ruled whether a restrictive covenant in an employment contract can be assigned by the employer.” Id. at 351. (footnote omitted) Judge Schiller went on to state:

“Strong policy considerations underlie the conclusion that restrictive covenants are not assignable. Given that restrictive covenants have been held to impose a restraint on an employee’s right to earn a livelihood, they should be construed narrowly; and, absent an explicit assign-ability provision, courts should be hesitant to read one into the contract. Moreover, the employer, as drafter of the employment contract, is already in the best position to include an assignment clause within the terms of the employment contract. Similarly, a successor employer is free to negotiate new employment contracts with the employees, as the record reveals new All-Pak did with several employees, or secure the employee’s consent to have the prior employment contract remain in effect.” Id. at 351. (footnotes omitted)

In All-Pak, as in the case before us, the employment contract contained no assignment clause and neither the new or former employer attempted to obtain one. Thus, there was no express or implied consent to the assignment. Green’s Dairy Inc. v. Chilcoat, 89 D.&C. 351 (York 1954); cf. Jack, Tratenberg Inc. v. Komoroff, 87 D.&C. 1 (Phila. 1951).

All-Pak next considered how those factors attending an employee’s termination might affect the enforceability of a restrictive covenant; e.g. did the employee quit voluntarily, was he discharged for poor performance, or was he fired without cause. Insulation Corp. of America v. Brobston, 446 Pa. Super. 520, 667 A.2d 729 (1995).

We believe that All-Pak is controlling in the case at bar. True, as Joyner strenuously argues, All-Pak involved an asset purchase agreement as opposed to a stock purchase. However, we view this as a distinction without a difference. The point of focus should not be on the relationship between the old employer and the new employer, but rather as between the employee and the new employer. The strong policy considerations referred to in All-Pak recognize that the employment relationship is a personal matter between an employee and the company who hired him and for whom he chose to work. Unless an employee explicitly agreed to an assignability provision, an employer may not treat him as some chattel to be conveyed, like a filing cabinet, to a successor firm. In the case at bar, the employment contract drafted by Joyner is devoid of any assignability provision.

We are also compelled to note that in All-Pak the plaintiff was the successor firm, i.e., the “new” All-Pak Inc., which sought to enforce the restrictive covenant. In the case at bar, it is Joyner that seeks to enforce the covenant, not its successor, Nova Care. Thus, the assign-ability of the contract is technically not at issue here. It is Joyner, the original employer, that has brought this action.

It necessarily follows that we must then ask, what is the present employer-employee relationship between Joyner and Stejbach/Buzzard? Upon our review of the evidence, we are satisfied that any employment relationship between these parties was effectively terminated on or about March 9,1998, the date of the acquisition. While Joyner may continue to exist as a coiporation, it is only a shell. The change in paychecks and W-2s are clear evidence that Joyner is no longer the employer of Stejbach/Buzzard. Moreover, Nova Care unilaterally altered the compensation package for these employees.

We conclude as a matter of law that, as of the acquisition date, Stejbach and Buzzard were no longer employees of Joyner and that they were effectively terminated. Although terminated from Joyner, and although the contract was not assigned to Nova Care, Stejbach and Buzzard were still obligated to Joyner under the non-competition prohibition of their contracts. Under the contract terms, this provision survives the termination of employment for any reason. That is to say, this clause’s viability is not dependent on whether the employee was terminated with or without cause or left voluntarily. Thus, in the case of Stejbach, the noncompete clause is effective for two years, i.e., from March 9, 1998, to March 9, 2000. As for Buzzard, who had only a one-year limitation, the restriction was operative only from March 9, 1998, to March 9, 1999. As of this date, then, Buzzard is no longer bound by the noncompetition prohibition.

What remains as to Stejbach is an application of the review required by Insulation Corp. of America v. Brobston, supra. In that case, our Superior Court determined that, regardless of the reasonableness of the time and space restrictions, where an employer fires an employee for failing to perform, “it is unreasonable as a matter of law to permit the employer to retain unfettered control over that which it has effectively discarded as worthless to its legitimate business interests.” Insulation Corp. of America, 446 Pa. Super. at 532, 667 A.2d at 735. (footnote omitted)

In our case, although the termination was accomplished unilaterally by the Joyner-Nova Care acquisition, Stejbach was given continued employment. Stejbach continued in that new employment until tendering his resignation on July 10,1999. As to Stejbach, we find his noncompetition prohibition to be in effect, from March 9, 1998 through March 9, 2000, and enforceable.

Accordingly we enter the following:

DECREE NISI

And now, November 30,1999, the preliminary injunction entered by this court on August 23,1999, as to Karen Buzzard is dissolved. As to David Stejbach, the injunction is made permanent through March 9, 2000.

      . Both Stejbach and Buzzard appeared in defense of the motion on August 23, 1999; however, Buzzard did not appear in person or by counsel for the September 8, 1999 proceeding.

      . Actually, the acquisition of Joyner’s stock was by Nova Care Occupational Rehabilitation East Inc., which is a wholly owned subsidiary of Nova Care Inc.

      . We say “technically,” with the full realization that it is in fact Nova Care that seeks to enforce the contract through its wholly owned subsidiary Joyner.

      . Joyner argues that the employment contracts allow the employer to change the benefits from time to time “at employer’s discretion.” This argument overlooks the fact that the benefits were changed by Nova Care and not Joyner.


author: MOTT, J.,

text:
    Vosburg v. Keysaw
    C.P. of Bradford County,
    no. 99CV000075.

      John Kocsis, for plaintiff.

      Richard A. Gray, for defendant.

      December 10, 1999
   MOTT, J.,

Nancy Vosburg, the plaintiff, initiated this action by filing a complaint on March 2, 1999. The complaint concerns an automobile accident which occurred on November 22, 1997. In her complaint, the plaintiff alleges that she suffered various injuries as a result of the defendant’s, Kenneth Keysaw’s, negligent operation of an automobile. The matter is scheduled for trial by jury on January 10, 2000. The plaintiff filed a motion in limine which was argued before the court on September 2, 1999. It is that motion in limine that we address here. The plaintiff has asserted four matters in her motion. They are as follows:

“(1) The defendant should be precluded from introducing evidence that the plaintiff entered the ARD program in the Court of Common Pleas of Bradford County, Pennsylvania as the result of a charge of driving under the influence of alcohol.
“(2) The plaintiff is entitled to plead, prove, and recover the difference between the reasonable value of the health care provider’s charges and the amounts paid as first party benefits under the Motor Vehicle Financial Responsibility Law.
“(3) The plaintiff is entitled to recover from the defendant for the first five days of her disability from work after the accident.
“(4) The defendant should be precluded from introducing evidence concerning the personal relationship between the plaintiff and the defendant after the date of the accident.”

Regarding the first matter asserted by the plaintiff, we note that the defendant stipulated at oral argument, and in his brief, that no evidence should be introduced at trial pertaining to the plaintiff’s entry into the ARD program. Thus, he will be barred from doing so.

We turn now to the second matter, and we find that under the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §1701 et seq., the plaintiff is not entitled to plead, prove, and recover from the defendant the difference between the reasonable value of the health care provider’s charges and the amounts paid as first party benefits by the insurer to the insured (the plaintiff). A provider may not bill the insured directly, but must bill the insurer for a determination of the amount payable. 75 Pa.C.S. § 1797(a). The insured is precluded from recovering from a tort-feasor the amount of benefits paid by the insurer. 75 Pa.C.S. §1722. In addition, the provider is prohibited from collecting from the insured the difference between the provider’s full charge and the amount paid by the insurer. 75 Pa.C.S. § 1797(a). When construing a statute, we must seek to ascertain and effectuate the legislative intent underlying the enactment of the statute. Pittsburgh Neurosurgery Associates v. Danner, 733 A.2d 1279 (Pa. Super. 1999) (citing 1 Pa.C.S. § 1921(a); Bamber v. Lumbermens Mutual Casualty Co., 451 Pa. Super. 548, 553, 680 A.2d 901, 904 (1996)). “There is a presumption that our legislature did not intend any statutory language to exist as mere surplusage.” Id. (citing 1 Pa.C.S. §1921(a); Bamber v. Lumbermens Mutual Casualty Co., 451 Pa. Super. at 554, 680 A.2d at 904). “Whenever possible, courts must construe a statute so as to give effect to every word contained therein.” Id. (citing Berger v. Rinaldi, 438 Pa. Super. 78, 86, 651 A.2d 553, 557 (1994), appeal denied, 544 Pa. 641, 664 A.2d 971 (1995)). “Where the words of a statute are clear and free from ambiguity the legislative intent is to be gleaned from those very words.” Id. “When the language of a statute is clear and unambiguous, any further deliberation as to its meaning is unwarranted.” Commonwealth v. Comella, 735 A.2d 738, 740 (Pa. Commw. 1999) (citing 1 Pa.C.S. § 1921 (b); American Trucking Associations Inc. v. Scheiner, 510 Pa. 430, 509 A.2d 838 (1986), rev’d on other grounds, 483 U.S. 266, 107 S.Ct. 2829, 97 L.Ed. 2d 226 (1987)). Regarding the medical cost containment provisions of 75 Pa.C.S. §1797(a), our Superior Court has stated:

“The intent of the General Assembly in enacting the MVFRL, of which section 1797(a) is a part, was to reduce the rising cost of purchasing motor vehicle insurance. . . . ‘The enactment of the MVFRL reflected the legislature’s concern for the spiraling cost of automobile insurance and the resultant increase in the number of uninsured motorists driving on public highways.’ . . . The primary cost saving mechanism to reduce insurance premiums was the medical cost containment provisions of section 1797 of the Act.” Pittsburgh Neurosurgery Associates v. Danner, supra at 1282. (citations omitted)

Because it is clear from the wording of section 1797(a) that a provider may not bill the insured for the difference between the provider’s full charge and the amount paid by the insurer, and must accept the amount paid by the insurer as full payment for the medical services provided to the insured, the insured owes nothing to the provider. Thus, the insured has suffered no harm resulting from the difference between the charges and the insurer’s payments. Thus, if the plaintiff would be permitted to recover the difference from the defendant she would be gaining a windfall. Id. at 1285. As a result, the plaintiff would be placed in a better position than she would have been had the accident not occurred. Id. As a consequence, the plaintiff is not entitled to plead, prove, or recover the difference between the reasonable value of the health care provider’s charges and the amounts paid as first party benefits by the insurer to the plaintiff.

In addressing the third matter, we find that the plaintiff is entitled to recover from the defendant for her lost income for the first five days she was disabled from working as a result of the accident. The plaintiff recovered first party income loss benefit from her insurer following the five-day waiting period. The plaintiff is precluded from recovering from the defendant the amount of this benefit paid by the insurer. 75 Pa.C.S. § 1722. The plaintiff stated that she was paid by her employer during the first five days of disability from work, because of sick days she had earned. (Deposition of Nancy Vosburg, p. 34.) We find that the plaintiff suffered harm as a result of the first five days of disability from work, in that she was forced to use sick days for those five days of disability, and thus, five less sick days are now available to her. Counsel for the defendant has pointed to no case law which would preclude recovery by the plaintiff for the first five days of disability from work under these circumstances. Also, our research has located no case law which would preclude recovery. Also, section 1722 apparently does not preclude the plaintiff from recovering for those first five days because this matter does not involve the medical cost containment provisions of section 1797(a) as did the second matter.

Concerning the fourth matter, we note that introduction of evidence at trial regarding the post-accident, but pre-complaint, breakdown in the romantic relationship between the plaintiff and the defendant may become relevant at trial. Such evidence may be relevant for impeachment purposes. It may show bias and motivation for the plaintiff in bringing this action, and for any testimony by her regarding the accident and the injuries she alleges resulted from the accident. Pa.R.E. 607. We do not believe that the danger of unfair prejudice, confusion of the issues, or misleading of the jury outweighs the clear relevance this evidence may have for the jury’s assessment of the credibility of the plaintiff. Therefore, we find that evidence of the said breakdown in the parties’ relationship may be relevant, and we will not, in advance, exclude it from the evidence that may be offered at trial. However, the defendant should recognize that the admission of any such evidence will invite fair response to it from the plaintiff.

We recognize that the plaintiff has attempted to assert a fifth matter in her brief in support of her motion in limine. However, the matter was not raised or asserted in the motion itself. Thus, it is not properly before the court. Even if it was, we would not be able to rule upon it at this time. In order for consumption of alcohol to be admissible into evidence, there must be some evidence of intoxication. In the Interest of M.M., 439 Pa. Super. 307, 318, 653 A.2d 1271, 1276 (1995). See Commonwealth v. McGuire, 302 Pa. Super. 226, 232-33, 448 A.2d 609, 613 (1982); In the Interest of M.M., 547 Pa. 237, 243, 690 A.2d 175, 178 (1997). The consumption of alcoholic beverages alone is not probative of a lack of credibility and it may create an unfair impression. Id. We note that while there is indeed evidence contained in the record which demonstrates that the plaintiff consumed alcohol on the evening of the accident, we have not been directed to any evidence which would indicate that the plaintiff was intoxicated. (Deposition of Nancy Vosburg, p. 13.) More importantly, we cannot predict the content of the testimony that might be elicited at trial. Therefore, at this juncture we cannot determine whether such evidence would be admissible.

Accordingly, we enter the following:

ORDER

And now, December 10, 1999, in accord with the memorandum opinion filed this date, the court rules on the plaintiff’s motion in limine as follows:

(1) The defendant is barred from introducing any evidence at trial concerning the plaintiff’s entry into the ARD program.

(2) The plaintiff is not entitled to plead, prove and recover the difference between the reasonable value of her health care provider’s charges for covered medical services rendered, and the amount paid as first party benefits for those services by her insurer under the Motor Vehicle Financial Responsibility Law.

(3) The plaintiff is entitled to recover for her financial losses resulting from her being disabled from working for the first five working days after the accident.

(4) The defendant is not precluded, in advance of trial, from introducing evidence at trial of the personal relationship between the plaintiff and defendant after the accident, assuming such evidence becomes relevant at trial.

      . The plaintiff asserted in her pretrial memorandum that there were five unusual legal issues in this matter. The court directed counsel for the parties to attempt to resolve those issues by agreement, and if they could not do so, the unresolved issues were to be raised by the plaintiff before the court by way of motion. Apparently, all five of the issues remained unresolved.

      . The plaintiff relies upon Moorhead v. Crozer Chester Medical Center, 705 A.2d 452 (Pa. Super. 1997), and Kashner v. Geisinger Clinic, 432 Pa. Super. 361, 638 A.2d 980 (1994). These cases state that a plaintiff in a personal injury action seeking damages from a tortfeasor for the cost of medical services provided to him as a result of the tort-feasor’s wrongdoing is entitled to recover the reasonable value of those medical services, regardless of the fact that the injured party has received reimbursement for those services from a source other than the tort-feasor. Moorhead, supra, 705 A.2d at 454; Kashner, supra at 367, 638 A.2d at 983. Also, the Moorhead court quotes the Restatement (Second) of Torts §924 comment f (1979) which states, “The value of medical services made necessary by the tort can ordinarily be recovered although they have created no liability or expense to [the] injured person....” Moorhead, supra, 705 A.2d at 455. However, Moorhead, involved an action in tort in which a patient sued a hospital for injuries sustained in a fall on hospital premises, and Kashner involved a medical malpractice claim in which the patient sued a physician and clinic for negligence in failure to diagnose acute appendicitis. Neither case involved the application of the medical cost containment provisions of section 1797(a) which properly advance the legislature’s objective of reducing the cost of purchasing motor vehicle insurance for everyone, thus favoring the general public interest in reducing insurance premiums, over an individual’s private interest in making a tort-feasor pay the full reasonable value of medical services. 1 Pa.C.S. §1922(5).

      . 75 Pa.C.S. §1712(2) provides:
      “(2) Income loss benefit. — Includes the following:
      “(I) 80 percent of actual loss of gross income.
      “(ii) Reasonable expenses actually incurred for hiring a substitute to perform self-employment services thereby mitigating loss of gross income or for hiring special help thereby enabling a person to work and mitigate loss of gross income. Income loss does not include loss of expected income for any period following the death of an individual or expenses incurred for services performed following the death of an individual. Income loss shall not commence until five working days have been lost after the date of the accident.”


text:
    Penn Avenue Place Associates v. Century Steel Erectors Inc.
    C.P. of Allegheny County,
    no. GD 98-11026.

      Donald L. Best Jr., for plaintiffs.

      Joseph H. Bucci, for defendants.
    February 10, 2000
   FRIEDMAN, J.,

INTRODUCTION

Plaintiffs have appealed from this court’s order dated November 1,1999, which sustained defendants’ preliminary objections and dismissed plaintiffs’ complaint with prejudice as follows:

“And now, to-wit, November 1,1999, it is hereby ordered that the defendants’ preliminary objections in the nature of demurrer are sustained, except to the extent the plaintiffs are seeking damages for uninsured loss as a result of the fire at issue. This order is without prejudice to the plaintiffs’ ability to file an arbitration action for the same uninsured loss. The captioned complaint is hereby dismissed with prejudice.”

The plaintiffs’ complaint is based on the premise that the law and public policy concerns applicable to tortfeasor indemnification also apply to waiver of subrogation clauses. The court concluded that the mutual waiver of subrogation clause in the instant contract was not void as against public policy. Alternatively, even if somehow such clauses do raise public policy concerns, the one in this case would be enforceable because it meets strict standards for clarity that make even some tort-feasor indemnification clauses enforceable.

It should be noted that counsel for the parties indicated that the insurer was specifically named in the complaint as the real party in interest to bring the ultimate issue of the subrogation rights of the insurer to the immediate attention of the court. While a declaratory judgment action might also have been used to achieve this goal, the choice of action made by the plaintiffs and their insurer would ordinarily be given deference, unless a specific preliminary objection was made, as did not occur here.

FACTUAL BACKGROUND

The action arose from a fire which occurred at a building which was owned by plaintiff Penn Avenue Place Associates L.P. The owner had entered into a contract with defendant P.J. Dick Inc., the general contractor, for the renovation of the building. The general contractor then entered into a subcontract with defendant Century Steel Erectors Inc., the subcontractor, under which it would be responsible for the demolition work associated with the renovation. According to plaintiffs’ complaint, “[o]n or about July 9, 1996, sparks, embers and hot debris from the welding and cutting work performed by Century Steel, its agents, representatives and/or employees, dropped to the roof of [the building] and ignited flammable materials located in the area where such welding and cutting work was taking place.” (Complaint ¶14.) “P.J. Dick, its agents, representatives and/or employees and Century Steel, its agents, representatives and/ or employees were present at the time said sparks, embers and hot debris from the welding and cutting work by Century Steel its agents, servants, and/or employees, fell to the roof and ignited flammable materials located there.” (Complaint ¶15.)

Plaintiffs’ complaint contains counts labeled gross negligence, negligence, negligence per se, and breach of contract against both defendants. The counts for negligence per se were based upon the alleged failures of either or both defendants to comply with City of Pittsburgh Code of Ordinances, section 801.01, and BOCA Code article 21 section F-2100 et seq., which, according to the complaint, required them to “keep a proper fire watch for at least 30 minutes.” (Complaint ¶18.)

The defendants then filed preliminary objections to the complaint. The basis of their preliminary objections was a “Waivers of subrogation” clause which was incorporated in the contract between the owner and the general contractor, and in the subcontract between the general contractor and the subcontractor. Defendants argued in their preliminary objections that, since the complaint alleged that the “real party in interest in this action is Arkwright Mutual Insurance Company, subrogee of [plaintiffs]” (complaint ¶3), the instant action was barred by the waivers of subrogation clause in the contract (exhibit A to the complaint) and should be dismissed.

We agreed with defendants and entered the order appealed from, dismissing the instant complaint with prejudice, but permitting plaintiffs, if necessary, to file a separate arbitration claim for reimbursement of the uninsured portion of the loss. The defendants have not disputed their liability to pay that uninsured amount.

ISSUES RAISED BY PLAINTIFFS

Plaintiffs raise two issues in their statement of matters complained of on appeal. They are summarized below:

(1) That the waiver of subrogation clause is an “exculpatory” clause, against public policy, and should not be enforced by the courts.

(2) Even if the clause is enforceable, the amount of property damage covered by the agreement not to subrogate is limited to the areas of the building defined as “the work” and does not bar subrogation of the claims for damage to the other areas of the building.

DISCUSSION

1. The “Waivers of Subrogation” Clause Is Not Void As Against Public Policy

The “Waivers of subrogation” clause at issue here is contained in “AIA document A201/1987, general conditions of the contract for construction, paragraph 11.3.7.” (Exhibit “A” to defendants’ preliminary objections.) It is incorporated by reference into the contract between the owner and the general contractor at page 8, and into the subcontract between the general contractor and the subcontractor at paragraph 1.4, page 5. (See exhibit “B” to defendants’ preliminary objections.) The clause is fully quoted below:

“11.3.7 Waivers of Subrogation. The owner and contractor waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other, and (2) the architect, architect’s consultants, separate contractors described in article 6, if any, and any of their subcontractors, sub-subcontractors, agents and employees, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this paragraph 11.3 or other property insurance applicable to the work, except such rights as they have to proceeds of such insurance held by the owner as fiduciary. The owner or contractor, as appropriate, shall require of the architect, architect’s consultants, separate contractors described in article 6, if any, and the subcontracts, sub-subcontractors, agents and employees of any of them, by appropriate agreements, written where legally required for validity, similar waivers each in favor of other parties enumerated herein. The policies shall provide such waivers of subrogation by endorsement or otherwise. A waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification, contractual or otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person or entity had an insurable interest in the property damaged.”

In support of their position that defendants may not claim the benefit of this clause, plaintiffs contend that a waiver of subrogation clause is an exculpatory clause upon which the law looks with disfavor. Plaintiffs cite the case Warren City Lines Inc. v. United Refining Co., 220 Pa. Super. 308, 287 A.2d 149 (1971), emphasizing the Superior Court’s statement that

“The widespread use of property and liability insurance does not invalidate the policy argument against contracts transferring responsibility for the violation of public safety measures enacted or authorized by the legislature. If all that were involved was the shifting of ultimate loss from one insurer to another, we would not be concerned with the private transfer of risk by contractual agreement. It is an inescapable fact, however, that the party transferring the risk has no incentive to use reasonable care when it is held harmless for all losses resulting from its own negligence, and its insurer has no incentive to provide the transferor with loss prevention services or inspection. This creates a particularly dangerous situation for the public where (1) the party transferring the risk is better able to prevent loss or reduce the risk associated with loss, or (2) where the party to whom the risk has been transferred does not fully realize the responsibility which it has received.” 220 Pa. Super. at 313-14, 287 A.2d at 151-52. (footnote omitted)

Plaintiffs ignore the fact that Warren City does not involve waivers of subrogation, but instead involves an indemnity clause that is indeed “exculpatory” because it shifts liability for negligence away from the very party who was negligent. However, regarding the very situation now before us, the Superior Court made a telling remark: “If all that were involved was the shifting of ultimate loss from one insurer to another, we would not be concerned with the private transfer of risk by contractual agreement.” 220 Pa. Super. at 313-14, 287 A.2d at 151. In other words, a waiver of subrogation clause, such as the one at issue here, does not invoke public policy concerns because it does not attempt to transfer liability for negligence away from the tort-feasor. Rather, the tort-feasor who obtains insurance coverage to pay claims for which he is liable does not, ipso facto, transfer liability away from himself to the other party to the clause in question. He satisfies his debt to that party. The public policy concerns regarding indemnification for one’s own negligence are therefore not an issue here. Waivers of subrogation are a matter of contract. There has been no contention that the subrogee insurer was unaware of the waivers of subrogation clause at issue. In fact, it was a standard part of a standard contract (AIA) in the construction industry. The inference from the facts of the complaint is that the insurer was aware of the clause and so had an opportunity to adjust its premium accordingly.

This is not analogous to indemnification clauses where the indemnitee is the tort-feasor. The public policy against the reimbursement of a tort-feasor for its own negligence is clear. As a consequence, the law will enforce such truly exculpatory clauses only where “the intention to include within the scope of an indemnification contract, a loss due to the indemnitee’s own negligence, [is] expressed in clear and unequivocal language.” Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, 404 Pa. 53, 57, 171 A.2d 185, 187 (1961). See also, Bester v. Essex Crane Rental Corp., 422 Pa. Super. 178, 619 A.2d 304 (1993) and Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1 (1991).

Even if we assume that waiver of subrogation clauses, after all these years of being matters of the “private transfer of risk by contractual agreement,” somehow are now to be viewed as “exculpatory,” the analogy to indemnification that plaintiffs espouse would still permit the enforcement of the instant waiver of subrogation clause. The instant waiver is “expressed in clear and unequivocal language.” It meets the strictest public policy standards applicable to the enforcement of exculpatory tortfeasor indemnification clauses.

2. The “Waivers of Subrogation” Provision Applies to Areas of the Building Not Subject to Renovation, and Plaintiffs Are Precluded From Seeking Damages for Those Areas

Plaintiffs next argue that even if the waiver of subrogation clause applies here, it ought to be limited to the specific areas under renovation, i.e., “the work,” so that plaintiffs may nonetheless seek reimbursement as to damages to other parts of the building that were not under renovation. However, the express wording of the waiver of subrogation clause, provides in pertinent part that “[t]he owner and contractor waive all rights .. .for dam ages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this paragraph 11.3 or other property insurance applicable to the work.” (emphasis added) There is no limit put on “damages caused by fire.” Furthermore, it is well-known that it is the nature of fire to spread.

The subrogation clause precludes plaintiffs from seeking reimbursement as to all damages caused by a fire that began as a result of “the work.”

CONCLUSION

We properly sustained defendants’ preliminary objections and dismissed the complaint with prejudice.

      . In the complaint, plaintiffs plead that “[t]he real party in interest in this action is Arkwright Mutual Insurance Company, subrogee of PAPA and Oxford Development” (¶3), and that “[a]t all times material to this action, Oxford and PAPA were engaged in the business of owning, leasing, and developing and managing commercial real estate.” (¶6.) In the contract attached to the complaint as exhibit “A,” Oxford is named as the construction manager.


author: WETTICK, J.,

text:
    Seubert & Associates Inc. v. Tiani

      C.P. of Allegheny County,
    no. AR99-7673.

      Peter H. Thomson, for plaintiff.

      Wendy L. Williams, for defendant.
    April 27, 2000
   WETTICK, J.,

Defendant’s motion to strike complaint is the subject of this opinion and order of court. The issue raised through this motion is whether the provisions of Pa.R.C.P. 237.1-237.6 are part of the procedure for striking an appeal from a district justice judgment taken by a plaintiff who fails to file a complaint.

Plaintiff instituted this lawsuit against defendant by filing a complaint with District Justice Donald H. Presutti. On November 16, 1999, a judgment was entered in plaintiff’s favor and against defendant in the amount of $1,155.

Plaintiff was apparently not satisfied with the amount of the judgment. Consequently, on December 15, 1999, plaintiff filed a notice of appeal. However, plaintiff did not file a complaint. On January 18, 2000, the appeal was stricken pursuant to a praecipe filed by defendant to strike appeal from a district justice judgment pursuant to Pa.R.C.P.D.J. 1006. On January 26, 2000, plaintiff filed its complaint. Shortly thereafter, defendant filed the motion to strike complaint that is the subject of this litigation.

Obviously, the complaint must be stricken unless the appeal is reinstated. Thus, the issue that the parties are addressing is whether the law permitted the prothonotary to strike the appeal. I will be addressing this issue through defendant’s motion to strike complaint.

Defendant’s contention that the prothonotary properly struck the appeal is based on Pa.R.C.P.D.J. 1004A which provides that an appellant who is the claimant in an action before the district justice shall file a complaint within 20 days after filing the notice of appeal, and on Pa.R.C.P.D.J. 1006, the first sentence of which reads as follows:

“Upon failure of the appellant to comply with Rule 1004A or Rule 1005B, the prothonotary shall, upon praecipe of the appellee, mark the appeal stricken from the record.”

Defendant did not furnish to plaintiff any written notice of his intention to strike the appeal prior to the filing of the praecipe. Plaintiff relies on Pa.R.C.P. 237.1(a)(2), which reads in relevant part as follows:

“No judgment of non pros for failure to file a complaint ... shall be entered by the prothonotary unless the praecipe for entry includes a certification that a written notice of intention to file the praecipe was mailed or delivered
“(i) in the case of a judgment of non pros, after the failure to file a complaint and at least 10 days prior to the date of the filing of the praecipe to the party’s attorney of record or to the party if unrepresented ...

In the present case, plaintiff filed its complaint within 10 days after the appeal was stricken. Consequently, plaintiff also relies on Pa.R.C.P. 237.3(b), which provides that a court shall open a judgment of non pros entered pursuant to Pa.R.C.P. 237.1 if a petition to open this judgment is filed within 10 days, so long as a complaint that states a meritorious cause of action is attached to this petition.

In support of its position that Rules 237. l(2)(i) and 237.3 are part of the procedure governing the striking of a plaintiff’s appeal for failure to file a complaint, plaintiff relies on the note to Rule 237.1(a)(1) which reads as follows:

“When a defendant appeals from a judgment entered in a district justice court, Pa.R.C.P.D.J. 1004(b) authorizes the appellant to file a praecipe for a rule as of course upon the appellee to file a complaint or suffer entry of a judgment of non pros. The entry of the judgment of non pros is governed by Pa.R.C.R 1037(a) and is subject to this rule.”

However, this note refers only to an appeal from a district justice judgment filed by defendant.

Under Pa.R.CR.D.J. 1004B, the notice of appeal from a district justice judgment which the defendant files includes a rule directing the plaintiff to file a complaint within 20 days after service of the rule or suffer entry of a judgment of non pros. Nothing within the Rules of Civil Procedure governing actions and proceedings before district justices refers to any relief to which a defendant is entitled in the event that a complaint is not filed within 20 days. This, instead, is governed by the Rules of Civil Procedure governing proceedings in the common pleas court and case law governing the entry of a judgment of non pros by a common pleas court. It is clear from the note to Rule 237.1 that the entry of a judgment of non pros against the plaintiff and in favor of a defendant who has filed an appeal from a district justice judgment is governed by the same rules that govern the entry of a judgment of non pros against the plaintiff who instituted an action in the common pleas court through the filing of a praecipe for a writ of summons. Thus, where the defendant filed the appeal, a judgment of non pros may not be entered against the plaintiff without the 10-day notice of the intention to obtain a judgment of non pros. Furthermore, a judgment of non pros may be opened pursuant to Rule 237.3 through the filing of a petition within 10 days after the entry of the judgment so long as a complaint stating a meritorious claim is attached to the petition.

Plaintiff contends that the same procedures should apply where the notice of appeal is filed by the plaintiff. Plaintiff argues that even though the note to Rule 237.1(a)(1) refers only to a defendant who appeals from a judgment entered by a district justice court, there is no reason for restricting the note in this fashion.

I reject this argument because plaintiff’s problem is not with an overly restrictive note — it is with Rules 237.1-237.6, which govern only the entry of judgments of non pros and judgments by default. The present case does not involve the entry of either a judgment of non pros or a judgment by default. The relief that defendant obtained was not based on any Rules of Civil Procedure governing common pleas court proceedings or case law governing the entry of a judgment of non pros. The relief, instead, was based on a Rule of Civil Procedure governing district justice proceedings which provides for the striking of the appeal.

The striking of an appeal for failure to file a complaint cannot be equated with the entry of a judgment of non pros for failure to file a complaint. When an appeal is stricken, the district justice judgment becomes a final judgment based on the merits of the parties’ claims and defenses. Consequently, the doctrines of res judicata and collateral estoppel bar any further litigation involving the subject matter of the lawsuit. Burr v. Callwood, 374 Pa. Super. 502, 543 A.2d 583 (1988). The judgment of non pros for failure to file a complaint, on the other hand, is not a judgment on the merits. Consequently, the case law permits the plaintiff to institute a second lawsuit raising the same claims. Haefner v. Sprague, 343 Pa. Super. 342, 494 A.2d 1115 (1985).

In summary, the rules of procedure governing district justice proceedings require the plaintiff who files an appeal to file a complaint within 20 days after the filing of a notice of appeal (Rule 1004A), and it provides the remedy upon failure of the plaintiff to comply: the striking of the appeal which leaves the district justice judgment in full force and effect. These rules are not altered by any of the Rules of Civil Procedure governing common pleas court proceedings, because none of the Rules of Civil Procedure governing common pleas court proceedings address the situation in which a plaintiff who files an appeal from a district justice proceeding fails to comply with Pa.R.C.P.DJ. 1004A.

ORDER

On April 27, 2000, it is hereby ordered that defendant’s motion to strike complaint is granted.

      . I recognize that Pa.R.C.P.D.J. 1006 provides that the court of common pleas may reinstate the appeal upon good cause shown. In the present case, plaintiff has not sought reinstatement on this ground.