Kline, B. v. Travelers Personal Security Ins. Co. ( 2019 )

J-A20035-19
2019 Pa. Super. 343
BRADLEY E. KLINE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
v. :
:
:
TRAVELERS PERSONAL SECURITY :
INSURANCE COMPANY :
:
Appellant : No. 104 MDA 2019
Appeal from the Order Entered December 18, 2018
In the Court of Common Pleas of York County
Civil Division at No(s): 2015-SU-003883-89
BRADLEY E. KLINE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
TRAVELERS PERSONAL SECURITY :
INSURANCE COMPANY :
:
Appellee : No. 164 MDA 2019
Appeal from the Order Entered December 18, 2018
In the Court of Common Pleas of York County
Civil Division at No(s): 2015-SU-003883-89
BEFORE: GANTMAN, P.J.E., McLAUGHLIN, J., and FORD ELLIOTT, P.J.E.
OPINION BY GANTMAN, P.J.E.: FILED NOVEMBER 18, 2019
Appellant/Cross-Appellee, Bradley E. Kline, and Appellee/Cross-
Appellant, Travelers Personal Security Insurance Company (“Travelers”),
appeal from the order entered in the York County Court of Common Pleas, in
this declaratory judgment action, that granted partial summary judgment in
favor of Appellant/Cross-Appellee Kline, granted in part and denied in part
J-A20035-19
Travelers’ cross-motion for summary judgment, and entered final judgment
against Travelers in the amount of $100,000.00, plus interests and costs. For
the following reasons, we vacate and remand with instructions.
In its opinion, the trial court sets forth the relevant facts of this appeal
as follows:
[Appellant/Cross-Appellee Kline] brought this action as a
result of the injuries he sustained while operating his motor
vehicle. This action concerns an issue related to an
automobile insurance policy entered into between
[Appellant/Cross-Appellee Kline] and [Travelers], and an
issue related to an automobile insurance policy entered into
between [Appellant/Cross-Appellee Kline]’s mother and
[Travelers]. The first issue is before this [c]ourt on both
[parties’] Cross Motions for Summary Judgment. It
concerns a dispute as to whether [Appellant/Cross-Appellee
Kline] is entitled to stack underinsured motorist benefits
where [Travelers] did not issue new rejection of stacking
waiver forms upon [Appellant/Cross-Appellee Kline] adding
two vehicles to his insurance policy. The second issue is
before this [c]ourt on [Travelers’] Motion for Summary
Judgment. It concerns whether [Appellant/Cross-Appellee
Kline] is entitled to stacked benefits under the insurance
policy entered into between his mother and [Travelers]. The
following facts were stipulated by the parties:
[Appellant/Cross-Appellee Kline] applied for an automobile
insurance policy (“the Policy”) with [Travelers] in August of
2002. At the time, [Appellant/Cross-Appellee Kline]
selected uninsured motorist benefits (“UM”) and
underinsured motorist benefits (“UIM”) in the amount of
$50,000 each person/$100,000 each accident.
[Appellant/Cross-Appellee Kline] rejected stacked UIM
coverage by signing a rejection of stacking waiver form.
[Appellant/Cross-Appellee Kline’s] Policy covered one
vehicle at its inception, a 1999 Pontiac Grand Prix. The 1999
Pontiac Grand Prix was later replaced by a 2002 Pontiac
Firebird.
On or about June 6, 2007, [Appellant/Cross-Appellee Kline]
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added a 2001 Pontiac Montana to the Policy. By doing so,
[Appellant/Cross-Appellee Kline] increased the number of
covered vehicles from one to two. [Appellant/Cross-
Appellee Kline] notified his insurance agent and an amended
Automobile Policy Declaration sheet was issued reflecting
the addition to the vehicle to the Policy. [Travelers] did not
present [Appellant/Cross-Appellee Kline] with a new
stacking rejection form when the 2001 Pontiac Montana was
added to the Policy. The 2001 Pontiac Montana was later
replaced by a 2008 Chevrolet Uplander.
On or about August 11, 2011, [Appellant/Cross-Appellee
Kline] added a 2003 Pontiac Vibe to the Policy. By doing
so, [Appellant/Cross-Appellee Kline] increased the number
of covered vehicles from two to three. [Appellant/Cross-
Appellee Kline] notified his insurance agent and an amended
Automobile Policy Declarations sheet was issued reflecting
the addition of the vehicle to the Policy. [Travelers] did not
present [Appellant/Cross-Appellee Kline] with a new
stacking rejection form when the 2003 Pontiac Vibe was
added to the Policy.
The Automobile Policy Declarations sheets reflected non-
stacked UM and UIM coverage benefits of $50,000 each
person/$100,000 each accident from the date of
[Appellant/Cross-Appellee Kline’s] Policy’s inception to the
date of the subject motor vehicle accident.
Section J of the Policy (“Section J”) states, in pertinent part:
“Your covered auto” means:
1. Any vehicle shown in the Declarations.
2. Any of the following types of vehicles on the
date you become the owner:
a. a private passenger auto; or
b. a pickup or van.
This provision (J.2) applies only if:
a. you acquire the vehicle during the
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policy period;
b. you ask us to insure it within 30 days
after you become the owner; and
c. with respect to a pickup or van, no
other insurance policy provides coverage
for that vehicle.
If the vehicle you acquire replaces one shown in
the Declarations, it will have the same coverage
as the vehicle it replaced. You must ask us to
insure a replacement vehicle within 30 days only
if:
a. you wish to add or continue Damage to
Your Auto Coverages; or
b. it is a pickup or van used in any
“business” other than farming or
ranching.
If the vehicle you acquire is in addition to any
shown in the Declarations, it will have the
broadest coverage we now provide for any
vehicle shown in the Declarations.
([Declaratory Judgment Complaint, Exhibit “B”; R.R. at 30a-
31a]). All three of the vehicles covered at the time of the
motor vehicle accident constituted “covered autos” as
defined by Section J.
On September 18, 2012, [Appellant/Cross-Appellee Kline]
was involved in a motor vehicle accident while operating the
2003 Pontiac Vibe. [He] asserted a UIM claim under the
Policy as a result of the injuries he sustained. [Travelers]
tendered the non-stacked UIM coverage limits of $50,000.
Miriam Kline is the mother of [Appellant/Cross-Appellee
Kline]. At all relevant times, Miriam Kline insured a
Chevrolet Cruze with [Travelers] under a different policy. At
the time of the motor vehicle accident, Miriam Kline had
stacked UIM coverage on her policy in the amount of
$100,000 each person/$300,000 each accident.
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[Appellant/Cross-Appellee Kline] resided with Miriam Kline
at all relevant times.
(Trial Court Opinion, filed December 18, 2018, at 2-4) (internal citations to
record, some internal quotations omitted, some emphasis added). Ms. Kline’s
policy contained a “household vehicle exclusion” that reads in pertinent part:
B. We do not provide [UM] or [UIM] Coverage for bodily
injury sustained:
* * *
2. By a “family member”:
a. Who owns an auto while “occupying”,
or when struck by, any motor vehicle
owned by you or any “family member”
which is not insured for this coverage
under this policy. …
(Declaratory Judgment Complaint, Exhibit “J”). Ms. Kline’s policy defines
“family member,” in relevant part, as “a person related to you by blood…who
is a resident of your household. This includes a ward or foster child.” (Id.).
Procedurally,
[Appellant/Cross-Appellee Kline] filed this [declaratory
judgment] action in the York County Court of Common Pleas
on November 23, 2015. On December 22, 2015, [Travelers]
filed a timely Notice of Removal pursuant to 28 U.S.C. §§
1141 and 1146(b). The case was removed to the United
States District Court for the Middle District of Pennsylvania.
[Appellant/Cross-Appellee Kline] subsequently filed a
Motion to Remand the case. On May 1[0], 2016, the District
Court granted [Appellant/Cross-Appellee Kline]’s motion
and remanded the case to this [c]ourt.
The parties filed a Joint Stipulation of Facts on February 16,
2018. On October 1, 2018, [Appellant/Cross-Appellee
Kline] and [Travelers] filed Cross Motions for Summary
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Judgment and Briefs in support thereof. …
(Trial Court Opinion, at 4-5). In his motion, Appellant/Cross-Appellee Kline
sought summary judgment on his claim for stacked UIM benefits under his
Policy. Travelers sought summary judgment in its favor and against
Appellant/Cross-Appellee Kline’s claims for stacked UIM benefits under the
“continuous, non-finite, after-acquired vehicle provision” in his Policy. (See
Travelers’ Motion for Summary Judgment, 10/1/18, at 7 ¶35; R.R. at 167b.)
Travelers also requested a declaration from the court that Appellant/Cross-
Appellee Kline was not entitled to UIM benefits under Ms. Kline’s policy with
Travelers, under the household exclusion provision in her policy, which
operates to preclude coverage to Appellant/Cross-Appellee Kline.
On December 18, 2018, the court entered an order that: (1) granted
partial summary judgment in favor of Appellant/Cross-Appellee Kline on his
claim for stacked UIM benefits under his Policy; (2) denied in part summary
judgment for Travelers, finding Travelers must provide Appellant/Cross-
Appellee Kline stacked UIM benefits under his Policy but granted summary
judgment in part finding Travelers did not have to provide Appellant/Cross-
Appellee Kline stacked UIM under Ms. Kline’s policy, due to the “household
vehicle” exclusion provision in her policy; and (3) entered judgment in favor
Appellant/Cross-Appellee Kline and against Travelers in the amount of
$100,000.00, which represented the remainder of the maximum available
stacked UIM coverage under Appellant/Cross-Appellee Kline’s policy only, plus
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interest and costs.
Travelers timely filed a notice of appeal on January 16, 2019. The court
ordered Travelers on January 17, 2019, to file a concise statement of errors
complained of on appeal per Pa.R.A.P. 1925(b). On January 29, 2019,
Appellant/Cross-Appellee Kline timely filed a notice of cross-appeal. The court
ordered Appellant/Cross-Appellee Kline on January 31, 2019, to file a Rule
1925(b) statement. Travelers and Appellant/Cross-Appellee Kline timely filed
their Rule 1925(b) statements on February 6, 2019, and February 15, 2019,
respectively. This Court consolidated the parties’ appeals sua sponte on
February 13, 2019. On March 5, 2019, the parties filed in this Court a joint
application to amend the briefing schedule, which this Court granted on March
19, 2019, and declared Appellant/Cross-Appellee Kline as Appellant/Cross-
Appellee in this appeal.
At No. 164 MDA 2019, Appellant/Cross-Appellee Kline raises the
following issue for our review:
DID THE COURT ERR IN RULING [APPELLANT/CROSS-
APPELLEE KLINE] WAS NOT ENTITLED TO UIM BENEFITS,
INCLUDING STACKED BENEFITS, UNDER HIS MOTHER’S
INSURANCE POLICY WHERE THE SUPREME COURT HAS
RULED THE HOUSEHOLD EXCLUSION TO BE INVALID AND
CONTRARY TO PENNSYLVANIA LAW, AND WHERE
TRAVELERS FAILED TO OBTAIN THE REQUIRED STACKING
REJECTION FORMS FROM APPELLANT[/CROSS-APPELLEE
KLINE]?
(Appellant/Cross-Appellee Kline’s Brief at 8).
At No. 104 MDA 2019, Travelers raises two issues for our review:
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DID THE TRIAL COURT ERR WHEN IT GRANTED
[APPELLANT/CROSS-APPELLEE] KLINE’S PARTIAL MOTION
FOR SUMMARY JUDGMENT, AND DENIED, IN PART,
TRAVELERS’ MOTION FOR SUMMARY JUDGMENT, RULED
THAT [APPELLANT/CROSS-APPELLEE] KLINE IS ENTITLED
TO STACKED UIM BENEFITS UNDER HIS TRAVELERS
POLICY, AND ENTERED JUDGMENT IN FAVOR OF
[APPELLANT/CROSS-APPELLEE] KLINE AND AGAINST
TRAVELERS IN THE AMOUNT OF $100,000, WHERE
[APPELLANT/CROSS-APPELLEE] KLINE SIGNED A VALID
STACKING REJECTION FORM AT THE INCEPTION OF HIS
TRAVELERS POLICY, AND WHERE VEHICLES WERE
SUBSEQUENTLY REPLACED AND ADDED TO [HIS]
TRAVELERS POLICY PURSUANT TO THE POLICY’S
CONTINUOUS AFTER-ACQUIRED VEHICLE CLAUSE?
DID THE TRIAL COURT PROPERLY GRANT TRAVELERS’
MOTION FOR SUMMARY JUDGMENT, IN PART, WHERE THE
HOUSEHOLD VEHICLE EXCLUSION IN MIRIAM KLINE’S
TRAVELERS POLICY IS VALID, ENFORCEABLE, AND
DIRECTLY APPLIES TO THE FACTS OF THIS CASE, AND
WHERE GALLAGHER V. GEICO [INDEMNITY COMPANY,
___ PA. ___, 201 A.3D 131 (2019)] DOES NOT APPLY?
(Travelers’ Brief at 3).
For disposition purposes, we initially address Travelers’ issue one, where
Travelers argues Appellant/Cross-Appellee Kline is not entitled to stacked UIM
benefits under his Policy. Travelers submits Appellant/Cross-Appellee Kline’s
addition of the 2001 Pontiac Montana and later the 2003 Pontiac Vibe to his
Policy did not constitute a “purchase of coverage” triggering the need for new
stacking waivers. Instead, Travelers maintains the after-acquired vehicle
clause of that Policy automatically extended existing continuous coverage to
the new vehicles. Travelers avers Section 1738 of the Pennsylvania Motor
Vehicle Financial Responsibility Law, 75 Pa.C.S.A. §§ 1701-1799.7 (“MVFRL”),
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does not require Travelers to issue new stacking waiver forms to
Appellant/Cross-Appellee Kline each time he added another vehicle to his
Policy. Travelers claims the trial court incorrectly relied on Newhook v. Erie
Insurance Exchange, No. 1917 EDA 2017, unpublished memorandum
(Pa.Super. filed April 25, 2018), which is a non-precedential decision.
Travelers also complains Appellant/Cross-Appellee Kline is not entitled
to an actual award of $100,000.00 in “monetary damages,” as he did not
request any money damages in his declaratory judgment complaint; and the
parties’ cross-motions for summary judgment did not address specific
damages, just the “entitlement” to UIM coverage. Travelers concludes this
Court should reverse the trial court’s order to the extent it grants
Appellant/Cross-Appellee Kline summary judgment on his claim for stacked
UIM benefits under his Policy. Travelers also concludes we must reverse the
court’s order directing Travelers to pay Appellant/Cross-Appellee Kline
$100,000.00 plus interest and costs of suit. For the following reasons, we
disagree with Travelers on its coverage issue but agree with Travelers on its
money damages complaint.
“In reviewing a declaratory judgment action, we are limited to
determining whether the trial court clearly abused its discretion or committed
an error of law.” Murphy v. Martini, 884 A.2d 262, 265 (Pa.Super. 2005)
(quoting Bianchi v. Bianchi, 859 A.2d 511, 515 (Pa.Super. 2004)).
Declaratory judgment actions follow the practice and
procedure of an action in equity. Consequently, we will
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review the decision of the lower court as we would a decree
in equity and set aside the factual conclusions of that court
only where they are not supported by adequate evidence.
The application of the law, however, is always subject to our
review.
Murphy, supra at 265 (quoting White v. Keystone Ins. Co., 775 A.2d 812,
813 (Pa.Super. 2001)). A court sitting in equity “may grant any appropriate
relief that conforms to the case made by the pleadings although it is not
exactly the relief which has been asked for by the special prayer…. Under the
prayer for general relief, the plaintiffs are entitled to such relief as is agreeable
to the case made in the bill, though different from the specific relief prayed
for.” Omicron Systems, Inc. v. Weiner, 860 A.2d 554, 567 (Pa.Super.
2004) (quoting Meth v. Meth, 360 Pa. 623, 626, 62 A.2d 848, 849 (1949)).
Although “‘[a]n equity court may...grant broader relief than that specifically
requested when there is a prayer for general relief[,]…that relief must be
consistent with and agreeable to the case pleaded and proven.’” Thomas A.
Robinson Family Limited Partnership v. Bioni, 178 A.3d 839, 851,
(Pa.Super. 2017), appeal denied, ___ Pa. ___, 194 A.3d 560 (2018) (quoting
Karpieniak v. Lowe, 747 A.2d 928, 931 (Pa.Super. 2000) (vacating decree
that granted relief which was neither requested in complaint nor proved at
trial)).
“Generally, the trial court will resolve a declaratory judgment action
involving an insurance coverage dispute on summary judgment.” Kiely on
Behalf of Feinstein v. Philadelphia Contributionship Insurance
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Company, 206 A.3d 1140, 1145 (Pa.Super. 2019) (citing Donegal Mut. Ins.
Co. v. Baumhammers, 595 Pa. 147, 938 A.2d 286 (2007) (reiterating that
interpretation of insurance contract on coverage issues is generally performed
by court)). Our standard of review of an order granting summary judgment
requires us to determine whether the trial court abused its discretion or
committed an error of law. Mee v. Safeco Ins. Co. of America, 908 A.2d
344, 347 (Pa.Super. 2006).
Judicial discretion requires action in conformity with law on
facts and circumstances before the trial court after hearing
and consideration. Consequently, the court abuses its
discretion if, in resolving the issue for decision, it misapplies
the law or exercises its discretion in a manner lacking
reason. Similarly, the trial court abuses its discretion if it
does not follow legal procedure.
Miller v. Sacred Heart Hospital, 753 A.2d 829, 832 (Pa.Super. 2000)
(internal citations and quotation marks omitted). Our scope of review is
plenary. Pappas v. Asbel, 564 Pa. 407, 418, 768 A.2d 1089, 1095 (2001),
cert. denied, 536 U.S. 938, 122 S. Ct. 2618, 153 L. Ed. 2d 802 (2002).
[W]e apply the same standard as the trial court, reviewing
all the evidence of record to determine whether there exists
a genuine issue of material fact. We view the record in the
light most favorable to the non-moving party, and all doubts
as to the existence of a genuine issue of material fact must
be resolved against the moving party. Only where there is
no genuine issue as to any material fact and it is clear that
the moving party is entitled to a judgment as a matter of
law will summary judgment be entered. All doubts as to the
existence of a genuine issue of a material fact must be
resolved against the moving party.
Motions for summary judgment necessarily and directly
implicate the plaintiff’s proof of the elements of [a] cause of
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action. Summary judgment is proper if, after the
completion of discovery relevant to the motion, including
the production of expert reports, an adverse party who will
bear the burden of proof at trial has failed to produce
evidence of facts essential to the cause of action or defense
which in a jury trial would require the issues to be submitted
to a jury. In other words, whenever there is no genuine
issue of any material fact as to a necessary element of the
cause of action or defense, which could be established by
additional discovery or expert report and the moving party
is entitled to judgment as a matter of law, summary
judgment is appropriate. Thus, a record that supports
summary judgment either (1) shows the material facts are
undisputed or (2) contains insufficient evidence of facts to
make out a prima facie cause of action or defense.
Upon appellate review, we are not bound by the trial court’s
conclusions of law, but may reach our own conclusions.
Chenot v. A.P. Green Services, Inc., 895 A.2d 55, 61 (Pa.Super. 2006)
(internal citations and quotation marks omitted).
Section 1738 of the MVFRL governs stacking of UM/UIM benefits in
automobile insurance policies and the option to waive stacking, and provides
in pertinent part:
§ 1738. Stacking of uninsured and underinsured
benefits and option to waive
(a) Limit for each vehicle.—When more than one
vehicle is insured under one or more policies providing
uninsured or underinsured motorist coverage, the stated
limit for uninsured or underinsured coverage shall apply
separately to each vehicle so insured. The limits of
coverages available under this subchapter for an insured
shall be the sum of the limits for each motor vehicle as to
which the injured person is an insured.
(b) Waiver.—Notwithstanding the provisions of
subsection (a), a named insured may waive coverage
providing stacking of uninsured or underinsured coverages
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in which case the limits of coverage available under the
policy for an insured shall be the stated limits for the motor
vehicle as to which the injured person is an insured.
(c) More than one vehicle.—Each named insured
purchasing uninsured or underinsured motorist coverage for
more than one vehicle under a policy shall be provided the
opportunity to waive the stacked limits of coverage and
instead purchase coverage as described in subsection (b).
The premiums for an insured who exercises such waiver
shall be reduced to reflect the different cost of such
coverage.
75 Pa.C.S.A. § 1738(a)-(c). Under Section 1738, “stacked UM/UIM coverage
is the default coverage available to every insured and provides stacked
coverage on all vehicles and all policies.” Gallagher v. GEICO Indemnity
Company, ___ Pa. ___, ___, 201 A.3d 131, 137 (2019).
Under the MVFRL, insureds can choose to waive stacked
coverage. If an insured decides to waive stacked coverage,
then the insured’s premiums must be reduced to reflect the
different cost of coverage. Importantly, the MVFRL makes
clear that to effectuate a waiver of UM/UIM coverage, an
insurer must provide the insured with a statutorily-
prescribed waiver form, which the named insured must sign
if he wishes to reject the default provision of stacked
coverage. This waiver provision has the salutary effect of
providing insureds with detailed notice and knowledge of
their rights to UM/UIM coverage absent such formal waiver.
Id. (internal citations omitted).
[A]n insurance company must offer an insured the
opportunity to waive stacking of UIM coverage limits
whenever [he] purchases UIM coverage “for more than one
vehicle under a policy.” [75 Pa.C.S.A.] § 1738(c). If an
insurance company does not obtain a stacking waiver at that
time, the amount of UIM coverage available to an insured is
“the sum of the limits for each motor vehicle as to which the
injured person is an insured.” [75 Pa.C.S.A. §] 1738(a).
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Barnard v. Travelers Home and Marine Insurance Company, ___ Pa.
___, ___, 216 A.3d 1045, 1051 (2019).
[U]nder a plain meaning analysis of Subsection 1738(c), an
insured purchases UIM coverage when [he] pays to acquire
UIM coverage “for more than one vehicle under a policy.”
75 Pa.C.S.[A.] § 1738(c). [N]othing in Subsection 1738(c)
limits the term “purchase” to an insured’s initial purchase of
an insurance policy. Rather, the subsection requires the
execution of a new stacking waiver any time an insured pays
to obtain UIM coverage for multiple vehicles, regardless of
whether this acquisition occurs when an individual initially
applies for insurance, or when [he] subsequently pays to
obtain additional UIM coverage.
Id. at ___, 216 A.3d at 1051-52.
This Court has held an insurer must offer an insured the opportunity to
execute a new waiver of stacked UM/UIM coverage when the insured adds
another automobile to an existing policy. Pergolese v. Standard Fire
Insurance Co., 162 A.3d 481, 490 (Pa.Super. 2017), appeal denied, 643 Pa.
113, 172 A.2d 590 (2017). The addition of another vehicle to an existing
policy constitutes a purchase under Section 1738(c). Id. (explaining: addition
of vehicle, which is not replacement vehicle, to insurance policy constitutes
“purchase” for Section 1738 purposes and requires execution of new UM/UIM
stacking waiver). Accord Bumbarger v. Peerless Indem. Ins. Co., 93 A.3d
872, 879 (Pa.Super. 2014) (en banc) (stating: addition of vehicle to existing
insurance policy compels new execution of valid UM/UIM stacking waiver;
even if after-acquired automobile clause applied, new stacking waiver would
still be required for addition of vehicle to policy, where after-acquired
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automobile clause in policy makes clear distinction between “the burden
placed on an insured to ‘add-on’ a vehicle versus ‘replace’ a vehicle under an
existing insurance policy. While the former requires notice to the insurer, the
latter does not as the policy extends coverage automatically for replacement
vehicles”). An insurer’s failure to provide an insured with a new UM/UIM
stacking waiver form when required statutorily entitles the insured to the
default of stacked UM/UIM benefits under the policy. Id. at 879; Pergolese,
supra at 491.
Instantly, the trial court addressed Appellant/Cross-Appellee Kline’s
claim for stacked UIM coverage under his Policy, in part, as follows:
In this case, [Appellant/Cross-Appellee Kline] acquired an
insurance policy with [Travelers] on August 9, 2002. The
Policy covered one vehicle at its inception, a 1999 Pontiac
Grand Prix. [Appellant/Cross-Appellee Kline] signed a
rejection of stacking waiver form the same day. In 2007,
[Appellant/Cross-Appellee Kline] added a 2001 Pontiac
Montana to the Policy, at which time an amended
declaration sheet was issued. [Appellant/Cross-Appellee
Kline] was not presented with a new stacking rejection form.
Approximately four years later, [Appellant/Cross-Appellee
Kline] added a 2003 Pontiac Vibe to the Policy, at which time
an amended declaration sheet was issued. Again,
[Appellant/Cross-Appellee Kline] was not presented with a
new stacking rejection form.
…[T]his [c]ourt is inclined to follow the Superior Court’s
most recent binding decision, Pergolese, as closely as
possible. This inclination is buttressed by…the direction of
the Superior Court’s non-precedential opinion in Newhook.
… As such, the appropriate starting point for our analysis is
the two-pronged inquiry employed by the Bumbarger
Court. Specifically, we must consider (1) how
[Appellant/Cross-Appellee Kline’s] new vehicles were added
onto the Policy (i.e., via endorsements or an after-acquired
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vehicle clause); and (2) the specific language of Section J
as it relates to this issue.
Here, as in Bumbarger…and Pergolese, [Appellant/Cross-
Appellee Kline] notified [Travelers] each time he acquired
an additional vehicle. [Travelers] subsequently generated
amended declaration sheets in conjunction with
[Appellant/Cross-Appellee Kline]’s notification. On both
occasions, [Appellant/Cross-Appellee Kline]’s premium
increased to reflect the additional vehicles. … Based on the
foregoing, it appears that [Appellant/Cross-Appellee Kline]’s
vehicles were added to the Policy via endorsements and
were covered by the general terms of the Policy as opposed
to the after-acquired vehicle clause. …
… Based on the holdings in Bumbarger and Pergolese,
we therefore conclude that [Appellant/Cross-Appellee
Kline]’s vehicles were covered by the general terms of the
Policy and not the after-acquired vehicle clause. Based on
[Appellant/Cross-Appellee Kline]’s premium increasing at
the time the vehicles were added to the Policy, we further
hold that [Appellant/Cross-Appellee Kline] made
“purchases” for purposes of [Section] 1738. In reaching
these conclusions, we are under no obligation to determine
whether the language of Section J constitutes finite or
continuous coverage. See Pergolese, supra. Accordingly,
[Travelers], as a matter of law, failed its obligation to obtain
new stacking waiver from [Appellant/Cross-Appellee Kline]
at the time the 2001 Pontiac Montana and the 2003 Pontiac
Vibe were added to the Policy.
(Trial Court Opinion at 20-22). The record supports the court’s rationale. See
Chenot, supra. The trial court correctly determined Appellant/Cross-
Appellee Kline is entitled to pursue stacked UIM benefits under his Policy. See
Bumbarger, supra; Pergolese, supra.
Moreover, contrary to Travelers’ perception, the trial court did not rely
on Newhook as dispositive precedent. Rather, the court looked to Newhook
only for guidance on how this Court was applying established law. Instead,
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the trial court correctly relied upon the most recent, binding decisions
applicable to Appellant/Cross-Appellee Kline’s claim for stacked UM/UIM
benefits under his Policy.1 See Commonwealth v. Martin, 205 A.3d 1247
(Pa.Super. 2019) (stating courts are bound by existing precedent and continue
to follow controlling precedent unless that precedent is overturned by our
Supreme Court).
Nevertheless, Appellant/Cross-Appellee Kline’s declaratory judgment
complaint included no request for a specific award of money damages or
general prayer for relief. See Omicron Systems, Inc., supra. Additionally,
the parties’ cross-motions for summary judgment addressed only
Appellant/Cross-Appellee Kline’s potential for stacked UIM benefits under his
Policy and his mother’s policy. The parties neither requested nor proved a
specific amount of damages actually due to Appellant/Cross-Appellee Kline.
See Thomas A. Robinson Family Limited Partnership, supra. Thus, the
trial court exceeded its authority when it entered a money judgment in favor
of Appellant/Cross-Appellee Kline and against Travelers in the specific amount
of $100,000.00, plus interest and costs. See Murphy, supra. The
cumulative amount of stacked UIM benefits possible under Appellant/Cross-
Appellee Kline’s policy was $150,000.00. See 75 Pa.C.S.A. § 1738(a);
____________________________________________
1 We reject outright both parties’ recommendations that federal court
decisions are binding on this Court. See Eckman v. Erie Ins. Exchange, 21
A.3d 1203, 1207 (Pa.Super. 2011) (reiterating this Court is not bound by
federal court decisions, other than U.S. Supreme Court).
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Barnard, supra. In light of the $50,000.00 Travelers already tendered to
Appellant/Cross-Appellee Kline, when he first made a claim for UIM benefits
under his Policy, an additional $100,000.00 in stacked UIM benefits remains
available to him under his Policy, if and when he pleads and proves his
damages. Accordingly, we affirm the court’s December 18, 2018 decision in
favor of Appellant/Cross-Appellee Kline regarding his right to stacked UIM
coverage under his Policy but vacate the judgment for money damages.
In his issue on appeal, Appellant/Cross-Appellee Kline argues he is also
entitled to stacked UIM benefits under his mother’s automobile insurance
policy, despite the household vehicle exclusion clause contained in her policy.
Appellant/Cross-Appellee Kline asserts the Pennsylvania Supreme Court in
Gallagher recently held household vehicle exclusions in automobile insurance
policies violate the MVFRL and are unenforceable as a matter of law.
Appellant/Cross-Appellee Kline maintains Travelers failed to obtain the
necessary stacking waivers from him, while the household exclusion provision
in his mother’s separate policy acted as a de facto waiver of stacking in her
policy, even though she had elected stacked UIM coverage on her policy.
Appellant/Cross-Appellee Kline concludes this Court should vacate the trial
court’s order to the extent it granted summary judgment in favor of Travelers
on Appellant/Cross-Appellee Kline’s claim for stacked UIM benefits under his
mother’s automobile insurance policy. In response, Travelers contends
Gallagher should not apply retroactively to the court’s decision on Ms. Kline’s
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policy. We agree with Appellant/Cross-Appellee Kline’s position and disagree
with Travelers’ contention.
Regarding retroactive application of a recent development in the law:
The general rule in Pennsylvania is that appellate courts
apply the law in effect at the time of appellate review. This
means that we adhere to the principle that a party whose
case is pending on direct appeal is entitled to the benefit of
changes in law which occur[] before the judgment becomes
final. However, this general rule is not applied rotely.
Whether a judicial decision should apply retroactively is a
matter of judicial discretion to be decided on a case-by-case
basis. To determine whether a decision should have
retroactive effect, a court should first determine whether the
decision announced a new rule of law. If the decision
announced a new rule, the court should then consider
whether: (1) retroactive effect will further or hinder the
purpose of the new rule; (2) the parties will be unfairly
prejudiced because they relied on the old rule; and (3)
giving the new rule retroactive effect will detrimentally
affect the administration of justice.
Passarello v. Grumbine, 624 Pa. 564, 601-02, 87 A.3d 285, 307 (2014)
(internal citations and quotation marks omitted).
Courts have recognized four approaches to determining
what “retroactive effect” a decision should be given. Each
approach varies in scope and touches an increasingly wider
set of cases.
One approach is to give the new rule purely
prospective effect so that it is not even applied to the
parties in the case in which the new rule is announced.
Another approach is to limit retroactive application to
the case in which it is announced. A third choice is to
apply the new rule to the case in which it is announced
and to all cases pending at the time the new rule is
announced. A fourth approach is to give the new rule
fully retroactive effect. Under this fourth choice, the
new rule is applied to the case in which it is
announced, to all cases pending at the time the new
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rule is announced, and to cases which are final at the
time the new rule is announced.
Pennsylvania follows the third approach. Therefore, when a
case is given “retroactive” application in this
Commonwealth, it only affects future cases and cases that
are pending at the time the new rule is announced.
Moreover, of those pending cases, only cases that have
preserved the issue decided in the new case will benefit from
the new rule. Accordingly, a decision in one case will not
affect preceding cases fully disposed of at the time the new
rule is announced. Judicial discretion in this area is guided
by consideration of the following three factors:
(1) the purpose to be served by the new rule, (2) the
extent of the reliance on the old rule, and (3) the
effect on the administration of justice by the
retroactive application of the new rule.
Davis ex rel. Davis v. Government Employees Inc. Co., 775 A.2d 871,
874-75 (Pa.Super. 2001), appeal denied, 571 Pa. 706, 812 A.2d 1230 (2002)
(internal citations omitted). Importantly, in this context of retroactivity, our
Supreme Court has made clear:
There can be no change to statutory law when there has
been no amendment by the legislature and no prior decision
by this Court. Only the legislature has the authority to
promulgate legislation. Our role is to interpret statutes as
enacted by the Assembly. We affect legislation when we
affirm, alter, or overrule our prior decisions concerning a
statute or when we declare it null and void, as
unconstitutional. Therefore, when we have not yet
answered a specific question about the meaning of a
statute, our initial interpretation does not announce a
new rule of law. Our first pronouncement on the
substance of a statutory provision is purely a clarification of
an existing law.
Fiore v. White, 562 Pa. 634, 644, 757 A.2d 842, 848 (2000) (emphasis
added). “As such, the [Supreme] Court’s construction of the statute is
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considered a part of the statute from the effective date of the statute and does
not operate in an unlawful retroactive fashion.” Commonwealth v. Infante,
63 A.3d 358, 364 (Pa.Super. 2013). See also Commonwealth v.
Concordia, 97 A.3d 366, 369 (Pa.Super. 2014), appeal denied, 633 Pa. 753,
125 A.3d 775 (2015) (citing Fiore, supra) (stating same).
In Gallagher, our Supreme Court determined household vehicle
exclusions operate as de facto waivers of the stacked UM/UIM coverage and
operate to deprive insureds of the stacked UIM coverage they have purchased
or the default stacked coverage the insureds have not expressly waived.
Gallagher, supra at ___, 201 A.3d at 138. Our Supreme Court explained:
One of the insurance industries’ age-old rubrics in this area
of the law is that an insured should receive the coverage for
which he has paid. Here, GEICO argues against this maxim
by invoking the household vehicle exclusion to deprive
Gallagher of the stacked UIM coverage that he purchased.
This action violates the clear mandates of the waiver
provisions of Section 1738. Indeed, contrary to Section
1738’s explicit requirement that an insurer must receive an
insured’s written acknowledgement that he knowingly
decided to waive UM/UIM coverage, the household vehicle
exclusion strips an insured of default UM/UIM coverage
without requiring an insurer to demonstrate, at a bare
minimum, that the insured was even aware that the
exclusion was part of the insurance policy. This practice
runs contrary to the MVFRL and renders the household
vehicle exclusion invalid and unenforceable. …[H]ousehold
vehicle exclusions should not and cannot operate as a
pretext to avoid stacking.
… There simply is no reason that insurers cannot comply
with the Legislature’s explicit directive to offer stacked
UM/UIM coverage on multiple insurance policies absent a
knowing Section 1738 waiver and still be fairly compensated
for coverages offered and purchased.
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Id. (internal citations omitted) (holding household vehicle exclusion provisions
violate MVFRL and are unenforceable as matter of law; “the Legislature is free
to alter the MVFRL to allow this type of exclusion; however, given the MVFRL’s
conspicuous silence regarding the household vehicle exclusion, we are bound
to follow the plain language of Section 1738”). Id. at ___ n.7, 201 A.3d at
138 n.7. Gallagher represents “the first majority opinion of the Pennsylvania
Supreme Court to address whether a household exclusion ‘acts as a de facto
waiver of stacked [UM/]UIM coverage.’” Butta v. GEICO Casualty
Company, 383 F. Supp. 3d 426, 437 (E.D.Pa. 2019).
Instantly, the Pennsylvania Supreme Court in Gallagher did not
announce a new rule of law. See Fiore, supra. Thus, the Gallagher decision
applies to the present case, which was pending on appeal when our Supreme
Court decided Gallagher. Moreover, the parties argued the enforceability of
the household vehicle exclusion in Ms. Kline’s policy. See Passarello, supra;
Davis ex rel. Davis, supra. Under Gallagher, the household vehicle
exclusion in Ms. Kline’s automobile insurance policy is unenforceable as a
matter of law, where she purchased stacked coverage. See Gallagher,
supra. Therefore, Appellant/Cross-Appellee Kline can make a claim for
additional stacked UIM benefits under Ms. Kline’s policy as well as his own
policy for a combined $200,000.00 ($100,000.00 under Ms. Kline’s policy and
$100,000.00 under his own policy). See 75 Pa.C.S.A. § 1738(a); Barnard,
supra. Accordingly, we reverse the trial court’s December 18, 2018 decision
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to the extent it granted summary judgment in favor of Travelers’ on
Appellant/Cross-Appellee Kline’s claim for entitlement to stacked UIM benefits
under his mother’s separate policy.
Based upon the foregoing, we vacate the December 18, 2018 order in
its entirety and remand for the trial court to enter an amended order granting
summary judgment in favor of Appellant/Cross-Appellee Kline on his right to
claim stacked UIM coverage under his Policy and under Ms. Kline’s separate
automobile insurance policy but without any award of money damages, which
are still to be determined.
Order vacated; case remanded with instructions. Jurisdiction is
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 11/18/2019
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