Nationwide Mutual Fire Insurance v. Quinn ( 2005 )


Menu:
  •                                                                                                                            Opinions of the United
    2005 Decisions                                                                                                             States Court of Appeals
    for the Third Circuit
    6-7-2005
    Nationwide Mutl Fire v. Quinn
    Precedential or Non-Precedential: Non-Precedential
    Docket No. 04-2320
    Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2005
    Recommended Citation
    "Nationwide Mutl Fire v. Quinn" (2005). 2005 Decisions. Paper 1060.
    http://digitalcommons.law.villanova.edu/thirdcircuit_2005/1060
    This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
    University School of Law Digital Repository. It has been accepted for inclusion in 2005 Decisions by an authorized administrator of Villanova
    University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
    NOT PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    __________
    No. 04-2320
    __________
    NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
    Appellee
    v.
    MICHAEL P. QUINN,
    Esquire as Administrator of the Estate of Howard Plotnick, Deceased,
    Appellant
    __________
    On Appeal from the United States District Court
    For the Eastern District of Pennsylvania
    (D.C. No. 03-cv-2239)
    District Judge: Honorable Thomas N. O’Neill, Jr.
    __________
    Submitted Under Third Circuit L.A.R. 34.1(a)
    May 27, 2005
    ___________
    Before: SCIRICA, Chief Judge, ALITO and GARTH, Circuit Judges
    (Opinion Filed: June 7, 2005)
    __________
    OPINION
    __________
    Garth, Circuit Judge:
    Nationwide Mutual Fire Insurance Company (“Nationwide”) filed suit in the
    United States District Court for the Eastern District of Pennsylvania for a declaratory
    judgment, seeking to determine its obligation, if any, to pay uninsured motorist benefits to
    the Estate of Howard Plotnick, deceased, under his business auto policy. The District
    Court entered summary judgment in favor of Nationwide, holding that the policy’s
    “household exclusion” clause precludes coverage. We will affirm.
    I.
    Because we write only for the benefit of the parties, we will recount only those
    matters essential to our limited discussion. In May 1979, Nationwide issued Howard
    Plotnick, the decedent, a business auto policy that provided uninsured motorist coverage
    with a benefit limit of $300,000.1 The Nationwide policy provided coverage for two
    business vehicles owned and operated by Mr. Plotnick: a 1985 Ford Van and a 1982 Ford
    Van. At the time in question, there also existed, in full force and effect, a separate policy
    of insurance issued by Allstate Insurance Company (“Allstate”) to Howard Plotnick,
    1
    The Uninsured Motorist Coverage endorsement, appended to the policy issued by
    Nationwide, provided, in pertinent part:
    We will pay all sums, an “insured” is legally entitled to recover as compensatory damages
    from the owner or driver of an “uninsured motor vehicle.” The damages must result from
    “bodily injury” sustained by the “insured” caused by an “accident.” The owners or
    driver’s liability for these damages must result from the ownership, maintenance or use of
    an “uninsured motor vehicle.”
    Complaint ¶ 14 (citing Pennsylvania Uninsured Motorist Coverage-Stacked).
    2
    individually, providing coverage to a third personal vehicle – a 1988 Honda Accord. The
    Allstate policy provided $100,000 in stacked uninsured motorist benefits.
    On February 17, 2002, while driving his 1988 Honda Accord, Howard Plotnick
    suffered fatal injuries in an accident with an uninsured vehicle. Soon thereafter, the
    Estate of Howard Plotnick made a claim upon Allstate for recovery of uninsured motorist
    benefits. Following receipt of the claim, Allstate tendered and paid the $100,000 limit of
    uninsured motorist coverage to the Estate of Howard Plotnick. In addition, Michael P.
    Quinn, Esq., the duly appointed Administrator of the Estate of Howard Plotnick and the
    Appellant in this matter, filed a Notice of Claim upon Nationwide for recovery of
    additional uninsured motorist benefits under the aforesaid business auto policy. The
    Estate essentially claimed that, although Mr. Plotnick was operating a vehicle not listed
    on the business auto policy, he was nonetheless acting in the course and scope of his
    business at the time of the accident, thus triggering coverage under the business auto
    policy.
    Nationwide denied the claim for benefits, contending, inter alia, that the business
    auto policy contained a “household exclusion” clause which under the facts barred any
    recovery of uninsured motorist benefits. That clause provided, in pertinent part:
    C.     Exclusions
    This insurance does not apply to any of the following:
    4.     “Bodily injury” sustained by:
    3
    a.     You while “occupying” or when struck by any vehicle owned
    by you that is not a covered “auto” for uninsured motorist
    coverage under this coverage form.
    As noted, Plotnick’s Honda was not a covered vehicle under the Nationwide policy.
    Nationwide then instituted the present action for declaratory and injunctive relief,
    specifically seeking judgment that there is no coverage under its policy. Upon cross-
    motions for summary judgment, the District Court entered judgment in favor of
    Nationwide, finding that the “household exclusion” provision is valid and enforceable
    and thus preclusive of coverage. This timely appeal followed.
    II.
    The District Court had subject matter jurisdiction over this diversity action
    pursuant to 
    28 U.S.C. § 1332
    (a), and we have jurisdiction pursuant to 
    28 U.S.C. § 1291
    .
    We exercise plenary review over the grant of a motion for summary judgment.
    Nationwide Mut. Ins. Co. v. Riley, 
    352 F.3d 804
    , 806 n.3 (3d Cir. 2003) (citing Omnipoint
    Communications Enters., L.P. v. Newtown Township, 
    219 F.3d 240
    , 242 (3d Cir. 2000)).
    Summary judgment is appropriate where “there is no genuine issue as to any material fact
    and [] the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
    “We review the facts in the light most favorable to the party against whom summary
    judgment was entered.” Coolspring Stone Supply, Inc. v. American States Life Ins. Co.,
    
    10 F.3d 144
    , 146 (3d Cir. 1993).
    4
    III.
    This appeal requires us determine, not for the first time, whether a “household
    exclusion” clause in an automobile insurance policy is void, as the Estate claims, as
    contrary to Pennsylvania public policy, which is embodied in the Commonwealth’s Motor
    Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S. §§ 1701-1799.7.2 We have
    previously traced the development of Pennsylvania law on this question, culminating in
    the Pennsylvania Supreme Court’s decision in Prudential Property and Cas. Ins. Co. v.
    Colbert, 
    572 Pa. 82
     (2002). See Riley, 
    352 F.3d at 807-10
    . We therefore find it
    unnecessary to do so here, except to note that the public policy behind the MVFRL is to
    control the rising costs of insurance. See Colbert, 572 Pa. at 94.
    Under the test set out by the Pennsylvania Supreme Court in Colbert, the critical
    inquiry focuses on whether the insured, absent the exclusion, would receive benefits far in
    excess of the amount of paid coverage, which would result if the insurer were required to
    underwrite unknown risks. Id. While we recognize that the validity of an insurance
    exclusion clause is dependent upon the precise factual circumstances presented in each
    case, see id. at 90-91, we find nothing in the facts of this case to support the conclusion
    that the exclusion provision is invalid. The only possible distinction between this case
    and Colbert is that Mr. Plotnick, the decedent, owned both relevant insurance policies,
    i.e., Allstate’s and Nationwide’s. In Colbert, by contrast, the claimant sought to recover
    2
    Both parties agree that Pennsylvania law governs this action.
    5
    additional uninsured motorist benefits under his parents’ insurance policy. Id. at 93-94.
    As we discuss below, however, this factual distinction does not compel a different result.
    Mr. Plotnick did not pay Nationwide to insure his personal vehicle. As such, the
    “household exclusion” clause, which is clear and unambiguous, excluded that vehicle
    from coverage under the business auto policy. There is no indication in the record that
    Nationwide had knowledge that Mr. Plotnick utilized the 1988 Honda Accord for
    business purposes. To void the exclusion clause here, then, would compel Nationwide to
    “underwrite unknown risks that the insured[] neither disclosed nor paid to insure.” Id. at
    94.
    Perhaps more importantly, Mr. Plotnick purchased uninsured coverage from
    Allstate for the 1988 Honda Accord, the vehicle involved in the fatal accident, and his
    Estate received the maximum amount of uninsured benefits under that policy. Under
    these facts, absent the exclusion, Mr. Plotnick would receive “gratis coverage or, more
    accurately, double coverage.” Id. As the Pennsylvania Supreme Court explained in
    Colbert, “voiding the [household exclusion clause] would empower insureds to collect
    [uninsured motorist benefits] multiplied by the number of insurance policies on which
    they could qualify as an insured, even though they only paid for [uninsured] coverage on
    one policy.” Id. The Pennsylvania Supreme Court consistently has rejected this result as
    contrary to the public policy embedded in the MVFRL. Id.; Burstein v. Prudential
    Property and Casualty Insurance Co., 
    570 Pa. 177
     (2002); Eichelman v. Nationwide Ins.
    6
    Co., 
    551 Pa. 558
     (1998); Paylor v. The Hartford Ins. Co., 
    536 Pa. 583
     (1994); Windrim v.
    Nationwide Ins. Co., 
    537 Pa. 129
     (1994); see also Riley, 
    352 F.3d at
    808- 09 (“In
    subsequent cases, the so-called general rule has morphed into the minority rule, as most
    exclusion clauses have been deemed valid.”); Nationwide Mut. Ins. Co. v. Ridder, 
    105 F. Supp.2d 434
    , 436 (E.D. Pa. 2000) (“While the Pennsylvania Supreme Court has held that
    the enforceability of the exclusion is dependent upon the factual circumstances presented
    in each case, it has been upheld in nearly all of the cases in which it has been
    considered.”).3 We, too, decline to countenance such a result.
    We therefore hold that the “household exclusion” clause in the Nationwide policy
    is consistent with the underlying public policy of the MVFRL and is not void.
    Accordingly, we will affirm the judgment of the District Court.4
    3
    Appellant relies, almost exclusively, on Lastooka v. Aetna Ins. Co., 
    380 Pa. Super. 408
    (Pa. Super. Ct. 1988), for the general proposition that uninsured motorist coverage is transitory in
    nature. The Pennsylvania Superior Court there held that uninsured motorist coverage existed
    despite the fact that the decedent was not occupying a “covered auto” at the time of the accident.
    
    Id. at 410
    . In so holding, the court noted that the policy did not require a named insured to have
    operated a “covered auto” in order to qualify for uninsured motorist benefits. 
    Id. at 411
    . In stark
    contrast to this case, however, Lastooka did not involve an exclusionary clause – the very basis
    upon which Nationwide denied coverage. As such, Appellant’s reliance thereon is unavailing.
    4
    We acknowledge that Appellant raises several additional issues on appeal, at least one
    of which has clearly been waived. Appellant argues that the “Individual Named Insured”
    endorsement constitutes a legal basis for voiding the “household exclusion” clause. Appellant,
    however, admits that this argument was not raised before the District Court. Because we find no
    exceptional circumstances here warranting the review of this issue for the first time on appeal, it
    has been waived. See Gass v. Virgin Islands Tel. Corp., 
    311 F.3d 237
    , 246 (3d Cir. 2002) (“It is
    well established that failure to raise an issue in the district court constitutes a waiver of the
    argument.”).
    Appellant’s remaining contentions, to the extent they have not been waived, simply
    correspond to the alternative grounds upon which Nationwide denied the claim for uninsured
    7
    motorist benefits. Whatever the merits of such contentions, the “household exclusion” clause,
    which the District Court found to be dispositive here, constituted a sufficient and independent
    justification for the denial of coverage. Because we also conclude that the “household exclusion”
    is valid and enforceable, we find it unnecessary to discuss these matters further.