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O'Brien v. Government Employees Insurance Co.

filed: January 5, 1967.

ROBERT P. O'BRIEN, APPELLANT
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY



Forman, Freedman and Seitz, Circuit Judges.

Author: Forman

FORMAN, Circuit Judge.

This is an appeal from a decision of the United States District Court for the Eastern District of Pennsylvania, granting judgment on the pleadings against the appellant, Robert P. O'Brien, in an action on an insurance contract issued by the appellee, Government Employees Insurance Company. Jurisdiction exists by reason of diversity of citizenship. As is conceded by the parties, the law of Virginia governs this case.

The allegations of the appellant's complaint, accepted as fact for purposes of this appeal, show that on June 19, 1964, while stationed with the United States Navy in San Juan, Puerto Rico, the appellant was struck by an uninsured automobile driven by one Thomas Colon-Fantuzzi, a resident of Puerto Rico, who is not a party to this litigation. As a result of the accident, the appellant suffered serious permanent bodily injury.

At the time of the accident the appellant was insured by the appellee under a family automobile policy issued to the appellant while he was in Virginia. This policy contained an endorsement, required by the Virginia Uninsured Motorist Act,*fn1 (hereinafter the Act) wherein the appellee agreed inter alia :

"To pay, in accordance with Section 38.1-381 of the Code of Virginia . . . all sums which the Insured . . . shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile . . . because of . . . bodily injury . . . sustained by the Insured . . . caused by accident and arising out of the ownership, maintenance, or use of such uninsured automobile up to $15,000."

After the appellee refused appellant's demand for payment under the endorsement, this action was instituted by the appellant, who had become a Pennsylvania resident subsequent to release from active naval duty. The appellee answered, denying liability on the ground that the appellant failed to establish his legal entitlement to damages from the uninsured motorist in that he had not instituted an action and secured judgment against the motorist, this being a condition precedent to recovery under the policy. On motion by the appellee, the District Court, accepting the argument that under Virginia law a judgment against the motorist was a prerequisite to recovery, granted judgment on the pleadings against the appellant pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.*fn2

The appellee argues that the phrase "legally entitled" in both the endorsement and the statute*fn3 clearly denotes the establishment of a judgment in a separate action against the uninsured motorist. The appellant's construction is that this phrase requires merely that the burden of showing the liability of the uninsured motorist be met by appropriate proof in an action directly against the insurer. The phrase is insufficiently precise to compel either conclusion. Rather, we view the problem as one of deducing the purport of the language from the overall recovery mechanism prescribed by the Act. Consequently we can now dispose of two of the appellant's arguments. The first submission is that since the disputants are parties to a contract, it must be assumed that the appellant can sue his insurer directly unless the statute clearly bars such action. Assuming arguendo the correctness of this proposition,*fn4 it does not reach the problem of whether a necessary element of the insurance company's contractual liability, subsumed by the phrase "legally entitled," is a judgment against the uninsured motorist. The second argument is that since the statute specifies that nothing may be required of the insured except the establishment of legal liability,*fn5 it follows that there is no warrant to compel him to seek a separate judgment against the motorist when he can offer appropriate proof of legal liability in a direct action against the insurer. Again, however, the argument assumes the very question before us -- viz., what constitutes the establishment of legal liability.

The Virginia Uninsured Motorist Act, pertinent parts of which are set out in the margin,*fn6 does not in terms either require or make unnecessary a judgment against the uninsured motorist. Counsel have not cited, nor have we been able to find any Virginia decision dispositive of this point. However, the Act sets forth two separate procedures for bringing an action against an uninsured motorist depending upon whether his identity is known or unknown.

If the motorist is known, any insured intending to rely upon the endorsement must, "if any action is instituted against the owner or operator of an uninsured motor vehicle," serve process upon the insurer "as though such insurance company were a party defendant." The insurance company then has a right to defend the action in the name of the defendant or in its own name, but shall not interfere with the known defendant's right to employ counsel and take appropriate action in his own behalf.*fn7

If, however, the motorist is unknown, he is deemed uninsured,*fn8 and the insured may institute suit against him as "John Doe," serving process by delivering a copy of the motion for judgment or other pleadings to the clerk of the court in which the action is brought and by serving such papers on the insurer. The insurer has the right to file pleadings and defend the action in the name of John Doe.*fn9 Should the owner or operator of the vehicle causing the injury become known, he may be joined in the action against John Doe.*fn10

The existence of detailed provisions regulating suit by an insured against a known uninsured motorist indicates at the minimum that the Virginia legislature envisioned such a suit as part of the recovery mechanism. Moreover, had a direct action against the insurer been thought to be available, the most obvious situation for its application would have been the case where the motorist was unknown. Yet, for this occurrence the Virginia legislature created a John Doe procedure to simulate, as closely as circumstances will permit, a suit against a known motorist.*fn11 The failure of the legislature to employ the much simpler procedure of a direct suit against the insurer negatives its availability. While the appellant argues that the suit against the known motorist or "John Doe" is optional because of certain "if" and "may" language in the statute,*fn12 we think the District Court was clearly right in stating that such a reading would reduce the prescriptive provisions to mere surplusage:

"If the plaintiff already had the right to sue the insurance company directly, this court can think of no reason why the General Assembly of Virginia would have enacted the alternative procedure allowing the plaintiff to proceed against a fictional person. It would be especially absurd here where it is an avenue that is more cumbersome than making the insurance company the actual defendant."*fn13

The District Court also reasoned that the purpose of the John Doe procedure was to prevent the jury from being informed of the existence of insurance coverage so as to avoid prejudgment on the question of liability, and ...


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