Sutherland, T. v. Erie Insurance Exchange ( 2021 )

J-A11034-21
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
THOMAS L. SUTHERLAND AND : No. 1113 WDA 2020
LUCINDA S. SUTHERLAND :
Appeal from the Order Dated May 22, 2020
In the Court of Common Pleas of Lawrence County Civil Division at
No(s): 10437 of 2019, C.A.
BEFORE: McLAUGHLIN, J., KING, J., and McCAFFERY, J.
MEMORANDUM BY McCAFFERY, J.: FILED: July 7, 2021
Appellant, Erie Insurance Exchange (Erie), takes this interlocutory
appeal by permission1 from the order entered in the Lawrence County Court
of Common Pleas, denying Erie’s motion for judgment on the pleadings. Erie
avers the trial court erred in: (1) concluding Eichelman v. Nationwide Ins.
Co., 711 A.2d 1006 (Pa. 1998), was effectively abrogated by Gallagher v.
Geico Indem. Co., 201 A.3d 131 (Pa. 2019); and (2) applying Gallagher to
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1 See 42 Pa.C.S. § 702(b) (“When a court . . . shall be of the opinion that [an
interlocutory order] involves a controlling question of law as to which there is
substantial ground for difference of opinion and that an immediate appeal from
the order may materially advance the ultimate termination of the matter, it
shall so state in such order. The appellate court may thereupon, in its
discretion, permit an appeal to be taken from such interlocutory order.”);
Pa.R.A.P. 312 (“An appeal from an interlocutory order may be taken by
permission pursuant to Chapter 13 (interlocutory appeals by permission).”).
J-A11034-21
conclude the “household exclusion” clause, in Erie’s insurance policy with
Appellees, contravened Section 1738 of Motor Vehicle Financial Responsibility
Law2 (MVFRL) and was thus not enforceable. We conclude these issues are
governed by this Court’s recent decision in Erie Ins. Exch. v. Mione, ___
A.3d ___, 2021 WL 1847751 (Pa. Super. May 10, 2021) (Mione), and reverse.
I. Facts & Procedural History
The trial court aptly summarized the underlying facts, which were not in
dispute, and the relevant procedural history:
On May 27, 2017, [Appellee Thomas] was injured while
operating his 2017 Indian Scout 60 motorcycle when he was
struck by an underinsured motorist . . . in Wilmington Township,
Mercer County[. Thomas’] motorcycle was insured through a
policy issued by Progressive Insurance Company (hereinafter
“Progressive”). He waived underinsured motorist [(UIM)3]
coverage for all vehicles insured [in the Progressive]
policy.
[Both Appellees] also maintained an insurance policy issued
by [Erie], which provided coverage for a 2000 Toyota Tundra and
a 2012 Ford Escape. [Appellees] purchased [UIM] coverage
through the Erie . . . policy with limits of $100,000 per person and
$300,000 per accident. [Appellees] did not execute a waiver
of stacking[4] for that insurance policy and paid premiums
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2 75 Pa.C.S. §§ 1701-1799.7.
3 “UIM coverage is triggered when a . . . tortfeaser . . . injures or damages an
insured and the tortfeasor lacks sufficient insurance coverage to compensate
the insured in full.” Mione, 2021 WL 1847751 at *1 n.3.
4 “The basic concept of stacking is the ability to add the coverages available
from different vehicles and/or different policies to provide a greater amount
of coverage available under any one vehicle or policy.” Mione, 2021 WL
1847751 at *1-2 n.7 (citation omitted).
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consistent with obtaining stacked coverage. However, the
policy contained a household exclusion, which [stated] that
[the] insurance does not apply to the following:
4. damages sustained by “anyone we protect” while:
a. “occupying” or being struck by a “motor vehicle”
owned or leased by “you” or a “relative,” but not insured
for Uninsured or underinsured Motorists Coverage under
this policy . . . [.]
[Appellee Thomas] requested [Erie to] pay UIM benefits for
the injuries sustained in the motorcycle accident pursuant to [the
Erie] automobile policy, which [Erie] rejected by letter dated June
23, 2017, stating the household exclusion applied.
On March 27, 2019, [Appellees] requested [Erie] reconsider
its denial of UIM coverage based upon the Pennsylvania Supreme
Court’s [then recent] decision in Gallagher[, 201 A.3d 131. Erie]
refused to approve [Appellees’] claim as it assumed the position
[Appellees] were not entitled to UIM coverage concerning the
motorcycle.
On April 29, 2019, [Erie] initiated this case by filing an Action
for Declaratory Judgment[,] seeking enforcement of the
household vehicle exclusion and [Appellees’] election to reject
underinsured motorist benefits. [Appellees filed] an Answer and
crossclaims . . . on June 21, 2019[, for, inter alia,5] Declaratory
Relief-Underinsured Motorist Benefits, . . . Bad Faith pursuant to
42 Pa.C.S.A. § 8371, . . . and breach of contract.
[Erie] filed Preliminary Objections to [Appellees’]
Crossclaims . . . and oral argument on that matter was held on
October 28, 2019.
[Erie] filed its Answer and New Matter to [Appellees’]
Counterclaims on December 11, 2019.
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5 Appellees also presented a counterclaim of a violation of the Unfair Trade
Practices and Consumer Protection Law, 73 P.S. §§ 201-1 to 201-9.3, but
subsequently agreed to dismiss this count. Trial Ct. Op., 5/22/20, at 3.
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Subsequently, [Erie] filed the current motion for Judgment on
the Pleadings on March 3, 2020, contending [Appellees] are not
entitled to underinsured motorist coverage under the Erie policy
based upon the . . . decision in Eichelman[, 711 A.2d 1006.]
Conversely, [Appellees continue to] argue they are entitled to
underinsured motorist coverage as household exclusions have
been determined to be unenforceable as those clauses violate the
Motor Vehicle Financial Responsibility Law (hereinafter “MVFRL”)
pursuant to . . . Gallagher . . . .
Trial Ct. Op. at 1-3 (paragraph breaks added).
On May 22, 2020, the trial court entered the underlying order denying
Erie’s motion for judgment on the pleadings. In so ruling, the court rejected
Erie’s reliance on Eichelman, concluding it was “no longer controlling
precedent . . . following the Supreme Court’s decision in Gallagher.” Trial
Ct. Op. at 17. The court reasoned that Gallagher held “household exclusions
violate the MVFRL and are unenforceable.” Id. at 16.
On July 13, 2020, Erie filed a motion, requesting the trial court certify
its May 22nd order as an appealable interlocutory order. The trial docket does
not indicate any court action on this motion. Nevertheless, on August 12,
2020, Erie filed with this Court a petition for permission to appeal from the
May 22nd order, which was granted on October 22, 2020.6 See 42 Pa.C.S.
§ 702(b); Pa.R.A.P. 312.
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6 In a December 2, 2020, order, the trial court stated it would not request a
Pa.R.A.P. 1925(b) statement of errors complained of on appeal.
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For ease of review, before addressing Erie’s arguments on appeal, we
review the Eichelman and Gallagher decisions, and the trial court’s opinion.
II. Summary of 1998 Eichelman Opinion
In Eichelman, the plaintiff, Eichelman, insured his motorcycle with
Aegis Security Insurance Company; in this policy, he expressly waived UIM
coverage. Eichelman, 711 A.2d at 1007. Eichelman lived with his mother
and her husband, who each had an insurance policy, on their respective
vehicles, with the defendant, Nationwide Insurance Company (Nationwide).
Id. at 1007 & n.3. Both Nationwide policies “provided underinsured motorist
coverage for the named insured and any relative who resided with the named
insured.”7 Id. at 1007. However, the Nationwide policies also included a
household exclusion clause, which stated that UIM coverage did not apply to:
. . . Bodily injury suffered while occupying a motor vehicle owned
by you or a relative not insured for Underinsured Motorists
coverage under this policy; nor to bodily injury from being hit by
any such motor vehicle.
Id.
Eichelman “was injured when his motorcycle was struck by a pick-up
truck . . . negligently operated by another individual.” Eichelman, 711 A.2d
at 1007. Eichelman received payment from the other driver’s automobile
insurance policy, then made a claim for UIM coverage under his mother’s and
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7 Nationwide did not dispute that the driver qualified as a “relative” under the
policies. Eichelman, 711 A.2d at 1007.
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her husband’s Nationwide policies. Id. Nationwide denied the claim pursuant
to the “household exclusion” clauses in both policies. Id.
Eichelman filed “a complaint requesting a declaratory judgment that he
was entitled to [UIM] benefits under the two [Nationwide] policies . . . and
further asserting that the ‘household exclusion’ clause is against public policy.”
Eichelman, 711 A.2d at 1007. Ultimately, the trial court granted summary
judgment in favor of Eichelman. Id. The Pennsylvania Superior Court
reversed, concluding the household exclusion was valid. Id. at 1008.
The Pennsylvania Supreme Court granted review on the question of
whether a person who has voluntarily elected to forego
underinsured motorist coverage on his own vehicle is
precluded from recovering underinsured motorist benefits
from separate automobile insurance policies issued to family
members with whom he resides as a result of a “household
exclusion” clause excluding underinsured motorist coverage for
bodily injury suffered while occupying a motor vehicle not insured
for underinsured motorist coverage.
Eichelman, 711 A.2d at 1006-07 (emphasis added).
The Court cited the legislative intent behind the MVFRL:
The repeal of the No-Fault Motor Vehicle Insurance Act,
40 P.S. § 1009.101, and the simultaneous enactment of
the MVFRL, reflected a legislative “concern for the
spiralling consumer cost of automobile insurance and
resultant increase in the number of uninsured motorists
driving on public highways.”
The purpose behind underinsured motorist coverage is to protect
the insured from the risk that a negligent driver of another vehicle
will cause injury to the insured and will have inadequate insurance
coverage to compensate the insured for his injuries.
Eichelman, 711 A.2d at 1008-09 (citations omitted).
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Pertinently, the Eichelman Court concluded the household exclusion
clause, in that case, was consistent with the legislative intent behind the
MVFRL. Eichelman, 711 A.2d at 1010. In support, it provided the following
reasoning: the purpose of UIM coverage, “protecting innocent victims from
underinsured motorists who cannot adequately compensate” them, does not
“overrid[e] every other consideration of contract construction.” Id. To this
end, Eichelman voluntarily chose not to purchase UIM coverage in return for
reduced insurance premiums, and furthermore, he admitted “he was not
aware that his mother and her husband had insurance policies which could
have possibly covered him.” Id. It was “not readily apparent that
[Nationwide] knew of [Eichelman’s] existence when it issued the two
insurance policies” to his mother and her husband, nor that his mother and
her husband intended to provide UIM coverage to Eichelman. Id.
Furthermore, enforcing the household exclusion clause “will have the effect of
holding [Eichelman] to his voluntary choice.” Id. at 1010.
The Court held:
[A] person who has voluntarily elected not to carry
underinsured motorist coverage on his own vehicle is not
entitled to recover underinsured motorist benefits from separate
insurance policies issued to family members with whom he resides
where clear and unambiguous “household exclusion” language
explicitly precludes underinsured motorist coverage for bodily
injury suffered while occupying a motor vehicle not insured for
underinsured motorist coverage.
Id. at 1010 (emphasis added).
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III. Summary of 2019 Gallagher Opinion
Twenty years after Eichelman, the Pennsylvania Supreme Court issued
a decision in Gallagher. In that case, the plaintiff Gallagher was operating
his motorcycle when another driver “failed to stop his pickup truck at a stop
sign[, collided] with Gallagher’s motorcycle” and caused Gallagher severe
injuries. Gallagher, 201 A.3d at 132. At the time of the accident, Gallagher
had two insurance policies with GEICO — one for his motorcycle, with $50,000
UIM coverage, and the second for his two automobiles, with $100,000 UIM
coverage for each vehicle. Id. at 132-33. “Gallagher opted and paid for
stacked UM and UIM coverage when purchasing both policies.” Id. at 133.
Gallagher subsequently “filed claims with GEICO seeking stacked UIM
benefits under both of his GEICO policies.” Gallagher, 201 A.3d at 133.
GEICO paid him the
policy limits of UIM coverage available under the Motorcycle
Policy, [but] denied his claim for stacked UIM benefits under the
Automobile Policy. GEICO based its decision on a household
vehicle exclusion found in an amendment to the Automobile
Policy[, which stated:] “This coverage does not apply to bodily
injury while occupying or from being struck by a vehicle owned or
leased by you or a relative that is not insured for Underinsured
Motorists Coverage under this policy.” Because Gallagher suffered
bodily injury while occupying his motorcycle, which was not
insured under the Automobile Policy, GEICO took the position that
the household vehicle exclusion precluded Gallagher from
receiving stacked UIM coverage pursuant to that policy.
Id. (record citations omitted).
Gallagher commenced suit, claiming “that, because he purchased
stacked UIM coverage as part of the Automobile Policy, GEICO is required to
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provide that coverage.” Gallagher, 201 A.3d at 133. Ultimately, the trial
court granted summary judgment in favor of GEICO, and on appeal, the
Superior Court affirmed. Id. at 135.
The Pennsylvania Supreme Court accepted review on the question of
“whether a ‘household vehicle exclusion’ contained in a motor vehicle
insurance policy violates Section 1738 of the [MVFRL,] because the exclusion
impermissibly acts as a de facto waiver of stacked” UIM motorist coverage.
Gallagher, 201 A.3d at 132. The Court summarized the provisions of Section
1738:
Subsection 1738(a) unambiguously states that the limits of
coverage for each vehicle owned by an insured “shall be the sum
of the limits for each motor vehicle as to which the injured person
is an insured.” 75 Pa.C.S. § 1738(a). This provision specifically
applies “[w]hen more than one vehicle is insured under one or
more policies” providing for UM[8]/UIM coverage. Id. In other
words, stacked UM/UIM coverage is the default coverage available
to every insured and provides stacked coverage on all vehicles
and all policies.
Under the MVFRL, insureds can choose to waive stacked
coverage. [75 Pa.C.S.] § 1738(b). If an insured decides to waive
stacked coverage, then the insured’s premiums must be reduced
to reflect the different cost of coverage. [75 Pa.C.S.] § 1738(c).
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. [75 Pa.C.S.] § 1738(d). 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.
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8 “UM” refers to “uninsured motorist.”
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Gallagher, 201 A.3d at 137.
The Gallagher Court held the household vehicle exclusion, in the
automobile policy, violated the MVFRL and was not enforceable. Gallagher,
201 A.3d at 138. The Court reasoned, inter alia, that it was undisputed that
“Gallagher did not sign the statutorily-prescribed UIM stacking waiver form for
either of his GEICO policies.” Id. at 137. The Court determined the household
vehicle exclusion
is inconsistent with the unambiguous requirements Section 1738
of the MVFRL under the facts of this case insomuch as it acts
as a de facto waiver of stacked UIM coverage provided for in the
MVFRL, despite the indisputable reality that Gallagher did not sign
the statutorily-prescribed UIM coverage waiver form. Instead,
Gallagher decided to purchase stacked UM/UIM coverage
under both of his policies, and he paid GEICO premiums
commensurate with that decision. He simply never chose to
waive formally stacking as is plainly required by the MVFRL.
Id. at 138 (emphases added).
IV. Trial Court Opinion
We now set forth the trial court’s rationale for concluding the household
exclusion clause in this case was not enforceable, and thus denying Erie’s
motion for judgment on the pleadings. The court first summarized the
holdings of Eichelman and Gallagher. Trial Ct. Op. at 7-11. The court also
considered three federal Eastern District of Pennsylvania decisions, which
applied Pennsylvania law and Gallagher and concluded the household
exclusion clauses, in those cases, were not enforceable: Smith v.
Nationwide Mut. Ins. Co., 392 F.Supp.3d 540 (E.D.Pa. 2019); Donovan v.
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State Farm Mut. Auto. Ins. Co., 392 F.Supp.3d 545 (E.D.Pa. 2019); and
Stockdale v. Allstate Fire & Casualty Ins. Co., 441 F.Supp.3d (E.D.Pa.
2020). Trial Ct. Op. at 11-16.
The trial court then reasoned:
[Erie’s] reliance upon Eichelman in this matter is misplaced as
the Supreme Court’s ruling in Gallagher is controlling. The
Gallagher Court clearly held household exclusions violate the
MVFRL and are unenforceable. Moreover, the Courts, as stated in
Smith, Donovan, and Stockdale, have consistently permitted
the recovery of stacked UIM benefits even though a household
exclusion existed on each of those policies. This case is even more
compelling than the aforementioned cases as [Appellee Thomas]
was a named insured on both policies while the other cases
included stacked coverage for a member of the named insured’s
household
Trial Ct. Op. at 16. The court acknowledged Gallagher “did not expressly
overrule or modify Eichelman as Eichelman did not address whether the
household exclusion acts as a de facto waiver of stacked UIM coverage, in
violation of the MVFRL. Eichelman solely addressed whether the household
exclusion violated public policy, concluding that it did not.” Id. at 17.
Nevertheless, the court considered, if it “were to accept [Erie’s] position,
enforcing the household exclusion would be tantamount to a de facto waiver
of the stacked UIM coverage provided for in the Erie Policy,” and thus the
exclusion was not enforceable. Id.
V. Erie’s Argument
On appeal, Erie presents one issue for our review:
Whether [A]ppellees are precluded from recovering uninsured and
underinsured motorist benefits under a household policy that
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insured vehicles not involved in the accident when underinsured
motorist coverage was rejected on the policy that insured the
vehicle in operation at the time of the accident?
Erie’s Brief at 4.
Erie first avers the trial court erred in concluding Eichelman did not
govern the issue of whether Appellees were entitled to UIM benefits under
their Erie insurance policy. Erie reiterates the holding in Eichelman, “that a
person who voluntarily rejects UIM coverage on their own vehicle is not then
entitled to recover UIM benefits form separate household policies . . . where
the vehicle exclusion explicitly precludes UIM coverage.” Erie’s Brief at 11.
Erie then maintains, as “acknowledged by the trial court,” that Eichelman
has not been overruled or abrogated. Id. at 12.
Erie then avers “the trial court incorrectly applied the ruling in
Gallagher to this case per both the [MVFRL] and Eichelman.” Erie’s Brief at
14. Erie reasons that Gallagher, as well as the federal district decisions cited
by the trial court, are factually distinguishable from the instant matter:
“Crucially in none of those cases did the insured reject UIM coverage on the
vehicle that was in operation at the time of the accident.” Id. at 15. Erie
reasons that in contrast, here Appellees “had no UIM coverage to ‘stack’ onto
the Erie policy and as a result a de facto waiver of stacked coverage would
not occur if the household vehicle exclusion was enforced.” Id. at 14. Erie
emphasizes, “The Supreme Court’s concern in Gallagher that the household
vehicle exclusion would operate as a de facto waiver of stacking is not at issue
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in this case because there can be no stacking on to a policy where UIM
coverage has been rejected.” Id. at 17
In support, Erie relies on a Western District Court of Pennsylvania
opinion, Dunleavy v. Mid-Century Ins. Co., 460 F.Supp.3d 602 (W.D.Pa.
2020). In that case, a husband and wife were riding a motorcycle when they
were struck by an automobile and suffered injuries. Dunleavy, 460
F.Supp.3d at 606. The motorcycle was insured by a policy from Progressive,
under which the husband had rejected UIM coverage. Id. The couple
separately had an automobile policy with Mid-Century Insurance Company
(Mid-Century), which covered two vehicles, but not the motorcycle. Id. This
automobile policy included “a household vehicle exclusion, which states that
underinsured motorist coverage does not apply ‘[t]o bodily injury sustained
by you or any family member while occupying or when struck by any motor
vehicle owned by you or any family member which is not insured for this
coverage under any similar form.’” Id. (record citation omitted). The couple
argued “that under Gallagher, Mid-Century can’t use the household vehicle
exclusion to deny them the benefit of stacking their underinsured motorist
benefits in the Mid-Century policy.” Id. at 607. “Mid-Century counter[ed]
that Gallagher is inapplicable because this isn’t a stacking case at all[,]”
because the couple had “no underinsured motorist coverage [under the
Progressive motorcycle policy] with which to stack their Mid-Century policy.”
Id. The district court agreed with Mid-Century. Id. at 608-10. Furthermore,
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the court cited the Eastern District of Pennsylvania decisions in Stockdale
and Smith for the proposition that “[f]or Gallagher to apply, then, there must
be underinsured motorist coverage in the first place.” Id. at 608-09. See
also id. at 610, citing Stockdale, 441 F.Supp.3d at 105 (“Gallagher did not
overrule Eichelman because the two cases ‘are not in conflict.’”).
We determine this issue is governed by Mione and agree with Erie’s
analysis.
VI. Summary of 2021 Mione Opinion
After the parties filed the instant briefs, this Court issued an opinion in
Mione. Erie filed a post-submission communication in this Court,
acknowledging Mione, as well as the recently issued opinion in Erie Ins.
Exch. v. King, 246 A.3d 332 (Pa. Super. 2021) (discussed infra). Erie was
likewise a party in Mione, and the two cases present similar facts and
procedural postures.
Mione was operating his motorcycle when he was involved in a motor
vehicle accident. Mione, 2021 WL 1847751 at *1-2. Mione insured the
motorcycle with a policy from Progressive, in which he did not pay for stacked
UIM coverage. Id. at *1. Mione lived with his wife, Lisa, and his daughter,
Angela. Id. at *1-2 & n.4. Mione and Lisa had an auto policy with Erie, and
separately Angela had a policy with Erie. Id. at *1-2. Neither of these Erie
policies listed the motorcycle as a covered vehicle. Id. However, Mione, Lisa,
and Angela paid for stacked UIM coverage on the Erie policies. Id.
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Erie filed a declaratory judgment action, arguing Mione was precluded
from recovering UIM benefits under the two Erie policies because: (1) the
motorcycle was not listed as a covered vehicle under either Erie policy; and
(2) both Erie policies contained a household exclusion clause that barred Mione
“from recovering UIM benefits for injuries arising out of operation of a non-
listed miscellaneous vehicle.[ ]” Mione, 2021 WL 1847751 at *1-2. Erie
claimed the issue was governed by Eichelman, in which the plaintiff did not
pay for UIM coverage on his motorcycle. Id. at *2. Furthermore, Erie
contended, Eichelman was “still good law because Eichelman and
Gallagher addressed . . . two factually different circumstances.” Id. at *3.
Erie then asserted Gallagher was not applicable, as the insured in that case
had paid for stacked UIM coverage on both his motorcycle and auto policies,
whereas Mione did not pay for stacked UIM coverage on his Progressive
motorcycle policy. Id. Finally, Erie
contend[ed] that entering judgment in its favor still affords [Mione
and Lisa] the benefit of the insurance they paid for because they
“chose to pay reduced premiums by not insuring the subject
motorcycle under either of the Erie [Auto P]olicies, and chose to
pay a further reduced premium by rejecting UM/UIM coverage
outright on the policy of insurance which listed the motorcycle.”
Id.
The trial court agreed with Erie that Eichelman governed the issue and
that Gallagher was factually distinguishable. Mione, 2021 WL 1847751 at
*3. The court reasoned that Mione had “rejected UIM benefits on his
Progressive Motorcycle Policy, which means that there is no underlying policy
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to ‘stack’ the Erie Auto Policy benefits onto.” Id. at *3. The court thus granted
Erie’s motion for judgment on the pleadings. Id.
Mione appealed, and this Court affirmed. The panel first
“acknowledge[d] that this area of the law is not particularly clear and
straightforward.” Mione, 2021 WL 1847751 at *5. The Court thus examined
Eichelman, Gallagher, as well as the following decisions issued post-
Gallagher.
In Erie Ins. Exch. v. Petrie, 242 A.3d 915 (Pa. Super. 2020), “an
underinsured driver struck and killed Petrie’s husband while he was riding his
motorcycle.” Mione, 2021 WL 1847751 at *7. At the time of the accident,
Petrie and her husband had an insurance policy, through Foremost Insurance
(Foremost), on the motorcycle, which provided UIM coverage. Petrie then
sought UIM benefits under an Erie policy, which named Petrie and her husband
as the insureds,
which covered four other vehicles and had UIM coverage limits for
bodily injury of “$100,000 per person/$300,000 per accident-
Unstacked.” The Erie policy also included a household exclusion,
which stated that “[t]his insurance does not apply to . . . damages
sustained by ‘anyone we protect’ while ‘occupying’ or being struck
by a ‘miscellaneous vehicle’ owned or leased by ‘you’ or a
‘relative,’ but not insured for Uninsured or Underinsured Motorists
Coverage under this policy.”
Id. Ultimately, the “trial court granted Erie’s motion for judgment on the
pleadings, determining that there was no UIM coverage available to Petrie for
the motorcycle accident under the Erie policy[.]” Id. at *8.
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On appeal, the Petrie Court reversed, “first ascertain[ing] that the Erie
policy’s stacking waiver, which Petrie’s husband had signed, did not explicitly
provide for inter-policy stacking, so he had not knowingly waived it.” Mione,
2021 WL 1847751 at *8. The Court then rejected Erie’s argument that
Gallagher did not apply because, unlike in Gallagher, Petrie’s two policies
were from different companies and did not purchase stacking in either policy.
Id. The Court reasoned the facts that Petrie “did not purchase stacking or the
polices are from two different companies is irrelevant because Section 1738
requires a knowing waiver of stacking from whom the insurance is being
obtained — in this case, Erie.” Id. The Court then applied Gallagher and
reversed the grant of judgment on the pleadings. Id.The Mione panel next considered King, which was decided on February
5, 2021. Mione, 2021 WL 1847751 at *8.
In that case, an uninsured driver struck King’s truck while he was
driving in it with his paramour’s niece, with whom King and his
paramour resided. King owned the truck, but it was insured under
a commercial policy issued to “Night Train Express, Inc.[,]” and it
did not name King, or the niece, as insureds. [This commercial
policy included UIM coverage.] King and his paramour additionally
shared an Erie policy for a personal vehicle. After King and the
niece exhausted the UM benefits available under the truck’s
commercial policy, they made a UM claim under the Erie policy,
which contained a household exclusion and an executed stacking
waiver. Erie subsequently filed a declaratory judgment action,
arguing that coverage was barred due to the household exclusion
and/or King’s execution of the stacking waiver, and the trial court
granted its motion for judgment on the pleadings.
On appeal, this Court initially determined that King’s
execution of a stacking waiver is “irrelevant” because King and the
niece cannot “‘stack’ benefits they receive from Erie with benefits
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they received from [the truck’s commercial policy], where [they]
are not ‘insureds’ under the [truck’s commercial] policy.” . . .
Id. at *9 (citation omitted). The King Court then reasoned:
[B]ecause [King and the niece] were not “insureds” under the
[truck’s commercial] policy, there is no UM coverage on which to
“stack” the Erie policy. Thus, the holding in Gallagher — that a
household exclusion cannot circumvent the clear requirements of
a rejection of stacking set forth in Section 1738 — is not directly
applicable here.
Id. (citation omitted).
After considering the above cases, the Mione panel stated:
Gallagher does not seem to invalidate household exclusions in all
cases, despite [Mione’s] suggestions to the contrary.[ ] Instead,
Gallagher has been interpreted by this Court to hold that a
household exclusion cannot be used to evade Section 1738’s
explicit requirements for waiving stacking. Thus, the next
question for us to decide is whether stacking and Section 1738
are implicated in this case, which would trigger applying the rule
set forth in Gallagher.
Mione, 2021 WL 1847751 at *10. Erie argued “that stacking, Section 1738
— and consequently Gallagher — are irrelevant to this matter,” and instead,
that Eichelman applied. Id. Erie posited that in that (Mione) case, like
Eichelman, there was “no host-vehicle UIM policy ‘to stack’ on top of.” Id.Finally, Erie relied on Dunleavy, the Western District of Pennsylvania case
likewise relied upon by Erie in the instant appeal. See id.The Mione panel agreed with Erie and the trial court that stacking and
Section 1738 were not implicated. Mione, 2021 WL 1847751 at *12. The
panel reasoned:
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In Eichelman, King, and Dunleavy, stacking was either not
discussed or determined to be irrelevant because those
individuals . . . did not have UM/UIM coverage under their host-
vehicle policies [and thus] did not have the requisite UM/UIM
coverage on which to stack other household policies with UM/UIM
benefits. Similarly, here, [Mione’s] Progressive Motorcycle Policy
does not have UIM coverage on which to stack the Erie Auto
Policies’ UIM benefits. Instead, like the people in Eichelman and
Dunleavy, [Mione] is using the Erie Auto Policies to procure UIM
coverage in the first place. Therefore, this is not a stacking case,
and the rationale of Gallagher does not apply.
Id. The panel further concluded Eichelman had not been overruled, and
accordingly applied “Eichelman’s principle that a clear and unambiguous
household exclusion is enforceable where the insured was operating a vehicle
at the time of the accident that was covered by a separate policy not providing
the insured with UM/UIM coverage because the insured had voluntarily, and
validly, waived such coverage.” Id. Had Mione “purchased UIM coverage
under his Progressive Motorcycle Policy, this case would fall squarely within
the factual scenario addressed in Gallagher[,] but . . . that is not the situation
before the [c]ourt.” Id. at *12 n.13.
VII. Analysis
Having considered the above authority, we now address Erie’s
arguments on appeal. We note the relevant standard of review:
Entry of judgment on the pleadings is permitted under
Pennsylvania Rule of Civil Procedure 1034, which
provides that “after the pleadings are closed, but within
such time as not to unreasonably delay trial, any party
may move for judgment on the pleadings.” Pa.R.C.P.
1034(a). A motion for judgment on the pleadings is
similar to a demurrer. It may be entered when there are
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no disputed issues of fact and the moving party is entitled
to judgment as a matter of law.
Appellate review of an order granting a motion for
judgment on the pleadings is plenary. The appellate
court will apply the same standard employed by the trial
court. A trial court must confine its consideration to the
pleadings and relevant documents. The court must
accept as true all well[-]pleaded statements of fact,
admissions, and any documents properly attached to the
pleadings presented by the party against whom the
motion is filed, considering only those facts which were
specifically admitted.
We will affirm the grant of such a motion only when the
moving party’s right to succeed is certain and the case is
so free from doubt that the trial would clearly be a
fruitless exercise.
“Additionally, we note that interpretation of an insurance policy
presents a pure question of law, over which our standard of review
is de novo.”
Mione, 2021 WL 1847751 at *4 (some citations omitted).
First, pursuant to Mione, we disagree with the trial court’s conclusion
that Eichelman has been abrogated by Gallagher. See Mione, 2021 WL
1847751 at *12. Furthermore, Eichelman and Gallagher are not
inconsistent, as they address different factual scenarios — saliently, whether
an insured has waived or purchased UIM coverage on a vehicle that is involved
in an accident or other incident. Here, like the insured in Eichelman, Appellee
Thomas did not purchase UIM coverage in his Progressive policy for his
motorcycle. Accordingly, he was not entitled to stacked UIM coverage under
his and Appellee Lucinda’s Erie policy for the automobiles, as there was no
Progressive UIM coverage for the Erie coverage to stack onto. See id. This
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result is consistent with the MVFRL, as Appellee Thomas voluntarily chose not
to purchase UIM coverage in his motorcycle policy, and in return received
reduced insurance premiums. See Eichelman, 711 A.2d at 1010. If Appellee
Thomas had purchased UIM coverage in his Progressive motorcycle policy, as
well as his Erie automobile policy, then Gallagher would apply. However, this
is the not the actual scenario presented.
Accordingly, we conclude the trial court erred in concluding the
household exclusion clause was not enforceable for the reasons stated in its
opinion, and we reverse the order denying Erie’s motion for judgment on the
pleadings.
VIII. 2109 Federal Donovan Opinion
At this juncture, we briefly consider the federal Eastern District of
Pennsylvania Court’s decision in Donovan. This opinion was issued in June
of 2019 and cited by the trial court. See Trial Ct. Op. at 13-14. In Donovan,
the plaintiff was in an accident while riding his motorcycle, which was insured
by a State Farm policy in which he waived stacked UIM coverage. Donovan,
392 F.Supp.3d at 547. Donovan lived with his mother, who had a separate
policy with State Farm for three vehicles. Id. Donovan filed a claim under his
mother’s automobile policy. Id. State Farm, however, denied this claim on
the grounds that both Donovan and his mother waived stacked UIM coverage
in their respective policies. Id. at 548, 550.
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Donovan filed suit in the District Court, seeking a declaration that he
was entitled to UIM benefits under his mother’s policy, or inter-policy
stacking.9. Donovan, 392 F.Supp.3d at 548. The District Court applied
Pennsylvania law “[a]s a federal judge sitting in diversity.” See id. at 552.
The Court repeatedly noted that Donovan’s waiver of stacked coverage in his
own policy was not relevant: “[I]t is [the mother’s] waiver that has legal
significance; . . . Donovan’s waiver is irrelevant.” Donovan, 392 F.Supp.3d
at 549, citing Craley, 895 A.2d at 533 (“It is [the policy under which the
plaintiff sought UIM benefits] and its exclusions that are relevant to the legal
issues presented in this case.”). See also Donovan, 392 F.Supp.3d at 548
n.2 (“[Donovan] rejected stacked limits for his motorcycle policy, but . . . the
waiver accompanying his policy is irrelevant because he is seeking benefits
under his mother’s policy.”), 552 (“[T]he terms of . . . Donovan’s policy are
irrelevant under Craley[.]”). Ultimately, the District Court applied Gallagher
and concluded Donovan was entitled to the UIM coverage in his mother’s
policy. Id. at 552-53.
The United States Court of Appeals for the Third Circuit filed a petition
for certification of law with the Pennsylvania Supreme Court. Our Supreme
Court granted the petition on July 24, 2020, on the following issues:
____________________________________________
9 “Inter-policy” stacking is the stacking of limits available on two or more
separate policies. Craley v. State Farm Fire & Casualty Co., 895 A.2d 530,
533 (Pa. 2006).
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1. Is a named insured’s signing of the waiver form set out at 75
Pa.C.S. § 1738(d) sufficient to waive inter-policy stacking of
underinsured motorist benefits under [the MVFRL], where the
policy insures more than one vehicle at the time the form is
signed?
2. If the answer to Question 1 is no, is a household vehicle
exclusion contained in a policy in which the named insured did not
validly waive interpolicy stacking enforceable to bar a claim made
by a resident relative who is injured while occupying a vehicle
owned by him and not insured under the policy under which the
claim is made?
3. If the answers to Questions 1 and 2 are no, is the coordination-
of-benefits provision in the Automobile Policy nonetheless
applicable, such that it limits . . . recovery of underinsured
motorist benefits under the policy . . ., or does the lack of a valid
waiver of inter-policy stacking render that provision inapplicable?
Donovan v. State Farm Mut. Auto. Ins. Co., 237 A.3d 395 (Pa. 2020).
Although these discrete issues are not raised in the present appeal, we
note Donovan and Mione differ in the treatment of the motorcycle policy in
each case. Donovan, citing Craley, stated that in determining whether
Donovan was entitled to coverage under his mother’s policy, the terms of
Donovan’s own motorcycle policy were not relevant. Donovan, 392
F.Supp.3d at 548 n.2, 549, 552. The Mione Court, however, specifically
looked to Mione’s motorcycle policy to determine whether he had UM
coverage, in turn to ascertain whether there was any coverage for the other
policies to “stack” onto. Mione, 2021 WL 1847751 at *12. Thus, in Mione,
the terms of the first policy were relevant.
Nevertheless, we further observe this question — whether the terms of
a motorcycle policy are relevant in determining whether a party is entitled to
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coverage under an automobile policy — was not an issue in the Pennsylvania
Supreme Court’s order granting certification of law.
IX. Conclusion
Notwithstanding our discussion of Donovan above, we conclude Mione
governs the factual circumstances and the issue presented. See
Commonwealth v. Ingram, 926 A.2d 470, 476 (Pa. Super. 2007) (Superior
Court opinions are binding precedent, which this Court must follow unless and
until they are overruled by an en banc Superior Court panel or a higher court).
Nevertheless, we note both Mione and Donovan observed the law in
this area is not entirely clear. See Donovan, 392 F.Supp.3d at 549 (“There
is little direct authority on the intricacies of inter-policy stacking under
Pennsylvania law.”); Mione, 2021 WL 1847751 at *5 (“At the outset of our
review, we acknowledge that this area of the law is not particularly clear and
straightforward.”). As stated above, our Supreme Court has granted review
in Donovan, and the plaintiffs in Mione have filed a petition for allowance of
appeal in our Supreme Court. Erie Ins. Exch. v. Mione, 326 MAL 2021 (alloc.
filed June 3, 2021) (Pa. 2021). We suggest the various issues discussed above
may be clarified by the Pennsylvania Supreme Court on review.
For the foregoing reasons, we conclude Eichelman governs the factual
circumstances and the issue presented. Pursuant to Eichelman and Mione,
Appellees are not entitled to UIM benefits under their Erie policy in the case
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sub judice. We thus reverse the trial court’s order denying Erie’s motion for
judgment on the pleadings.
Order reversed. Jurisdiction relinquished.
Judge King joins the Memorandum.
Judge McLaughlin Concurs in the Result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/7/2021
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