Erie Insurance Exch. v. Mione, A.

J-A01005-21
2021 PA Super 91ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
ALBERT MIONE AND LISA MIONE :
:
Appellants : No. 1450 EDA 2020
Appeal from the Order Entered June 26, 2020
In the Court of Common Pleas of Lehigh County Civil Division at No(s):
No. 2019-C-2395
BEFORE: BENDER, P.J.E., OLSON, J., and STRASSBURGER, J.*
OPINION BY BENDER, P.J.E.: FILED: May 10, 2021
Appellants, Albert Mione and Lisa Mione, appeal from the trial court’s
June 26, 2020 order granting Appellee’s, Erie Insurance Exchange
(hereinafter, “Erie”), motion for judgment on the pleadings, and denying
Appellants’ motion for judgment on the pleadings. After careful review, we
affirm.1
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
1 On December 14, 2020, Erie filed a motion to quash and/or strike Appellants’
reply brief, arguing that Appellants filed their reply brief five days late and
improperly restated arguments already raised in their initial brief. See
Pa.R.A.P. 2185(a)(1) (“A party may serve and file a reply brief permitted by
these rules within 14 days after service of the preceding brief but, except for
good cause shown, a reply brief must be served and filed so as to be received
at least three days before argument.”); Pa.R.A.P. 2113(a) (providing that “the
appellant may file a brief in reply to matters raised by [the] appellee’s brief …
and not previously addressed in [the] appellant’s brief”). Appellants
responded that their reply brief was inadvertently filed late because Erie had
(Footnote Continued Next Page)
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The trial court summarized the underlying facts, procedural history, and
arguments of the parties as follows:2
This case arises out of a dispute over whether … [Appellants] are
entitled to underinsured motorist ([“]UIM[”]) benefits for a motor
vehicle accident on July 21, 2018[,] under two policies issued by
[Erie].[3] On July 21, 2018, while operating his 2008 Suzuki
GS500F motorcycle, Albert was involved in a motor vehicle
accident with a third-party, Cory Huff. At that time, Albert, Lisa,
and Angela S. Mione … resided together.[4] Albert recovered the
applicable policy limits from the tort liability insurer for Cory Huff
____________________________________________
filed its brief five days early, and Appellants had neglected to change the due
date of their reply brief on their calendar. Appellants further asserted that
their reply brief simply responded to points made by Erie and elaborated upon
their original arguments. Upon review, we decline to quash or strike
Appellants’ reply brief based on the relatively minor defects complained about
by Erie, as they do not hinder our review and do not seem to have caused
prejudice to Erie in any way. See Pa.R.A.P. 2101 (“Briefs and reproduced
records shall conform in all material respects with the requirements of these
rules as nearly as the circumstances of the particular case will admit,
otherwise they may be suppressed, and, if the defects are in the brief or
reproduced record of the appellant and are substantial, the appeal or other
matter may be quashed or dismissed.”) (emphasis added).
2 In the future, we respectfully ask the trial court to please not provide the
background and rationale for its decision in lengthy, single-spaced footnotes
to its order. See Pa.R.A.P. 1925(a) Opinion, 8/28/20, at 3 (“The reasons for
this [c]ourt’s decision were sufficiently set forth in footnotes one and two of
the June 26, 2020 [o]rder, and we incorporate them herein, as if fully set
forth.”). Using lengthy, single-spaced footnotes makes it very difficult for us
to read.
3“[Uninsured motorist coverage (UM)] applies when an insured suffers injury
or damage caused by a third-party tortfeasor who is uninsured, whereas UIM
coverage is triggered when a third-party tortfeaser [sic] injures or damages
an insured and the tortfeasor lacks sufficient insurance coverage to
compensate the insured in full.” Gallagher v. GEICO Indem. Co., 201 A.3d
131, 132 n.1 (Pa. 2019).
4 Lisa is Albert’s wife, and Angela is Albert’s daughter. See Appellants’ Motion
for Judgment on the Pleadings, 1/8/20, at ¶ 4.
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and then sought to recover benefits from Erie Auto Policy
#Q031507213 issued to Albert and Lisa[,] and Erie Auto Policy
#Q093013593 issued to Angela [(collectively referred to herein as
“Erie Auto Policies”)]. Neither Erie Auto Policy #Q031507213[,]
nor Erie Auto Policy #Q093013593[,] listed the 2008 Suzuki
GS500F motorcycle as a covered vehicle. Instead, the 2008
Suzuki GS500F motorcycle was insured under Progressive
Insurance Company Policy #27195650 ([“]Progressive Motorcycle
Policy[”]).[5]
***
On November 6, 2019, Erie filed its Amended Complaint-
Declaratory Judgment. On November 26, 2019, [Appellants] filed
Defendant[s], Albert Mione and Lisa Mione’s Answer to Complaint
with New Matter, and Counterclaim for Declaratory Judgment. On
December 4, 2019, Erie filed its Reply to New Matter and
Counterclaim for Declaratory Judgment of Defendants, Albert
Mione and Lisa Mione. The pleadings are closed. On December
13, 2019, Erie filed its Motion of Plaintiff, Erie Insurance Exchange,
for Judgment on the Pleadings. On January 8, 2020, [Appellants]
filed Defendants, Albert Mione and Lisa Mione’s Motion for
Judgment on the Pleadings and Defendants, Albert Mione and Lisa
Mione’s, Answer to Motion for Judgment on the Pleadings of
Plaintiff, Erie Insurance Exchange. On January 21, 2020, Erie filed
Plaintiff, Erie Insurance Exchange’s, Opposition to Motion for
Judgment on the Pleadings of Defendants. Thereafter, in late
January 2020, [Appellants] filed a [r]eply [b]rief, a
[s]upplemental [b]rief, and a [p]ost-[a]rgument [b]rief. On
March 26, 2020, Erie also filed a [p]ost-[a]rgument [b]rief.
In its Motion, Erie contends that [Appellants] are precluded from
recovering UIM benefits under Erie Auto Policy #Q031507213[,]
and Erie Auto Policy #Q093013593[,] because Albert’s 2008
Suzuki GS500F motorcycle is not listed as a covered vehicle on
either Erie Auto Policy[,] and both Erie Auto Policies contain a
“household exclusion” that bars [Appellants] from recovering UIM
benefits for injuries arising out of operation of a non-listed
____________________________________________
5Albert had rejected UIM coverage under the Progressive Motorcycle Policy.
See Appellants’ Brief at 4; Erie’s Brief at 5.
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miscellaneous vehicle.[6] Erie further contends that the Supreme
Court of Pennsylvania’s decision in Gallagher[, cited supra at
note 3 and discussed further infra,] is inapplicable in this case
because the decision in Gallagher involved a situation where the
“household exclusion” acted to prevent recovery of stacked UIM
benefits even though the plaintiff had paid for stacked UIM
coverage on his motorcycle policy and his auto policy, whereas
here, Albert did not pay for stacked UIM coverage on his
Progressive Motorcycle Policy, but Albert, Lisa, and Angela did pay
for stacked UIM coverage on both Erie Auto Policies at issue.[7]
Erie contends that this case is governed by the Supreme Court of
Pennsylvania’s decision in Eichelman v. Nationwide Ins. Co.,
711 A.2d 1006 (Pa. 199[8]), where the plaintiff did not pay for
UIM coverage on his motorcycle policy and [the] Supreme Court
held that the “household exclusion” prevented him from
recovering UIM benefits under auto policies issued to members of
his household.
In response and in their Motion, [Appellants] contend that[,]
although the 2008 Suzuki GS500F motorcycle was not listed on
either Erie Auto Policy, Erie knew about its presence in the
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6 The household exclusion in the Erie Auto Policies states:
This insurance does not apply to:
5. 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.
See Erie’s Amended Complaint, 11/6/19, at Exhibit C (UM/UIM Coverage
Endorsement at 3) (emphasis in original). The definition of “miscellaneous
vehicle” in the Erie Auto Policies includes motorcycles. Id. (Auto Insurance
Policy at 2).
7 “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.” Erie Ins. Exch. v.
Petrie, 242 A.3d 915, 917 n.2 (Pa. Super. 2020) (citation omitted). “There
are two types of stacking, intra-policy and inter-policy. Intra-policy stacking
is when more than one vehicle is insured under a single policy of insurance.
Inter-policy stacking … is the addition of coverages for vehicles insured under
different policies of insurance.” Id. (citation omitted; emphasis in original).
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household. [Appellants] further contend that it is against public
policy and the Motor Vehicle Financial Responsibility Law
([“]MVFRL[”]), 75 Pa.C.S.[] § 1701 et seq., for Erie to completely
exclude motorcycles from coverage. [Appellants] contend that
the “household exclusion” contained in both Erie Auto Policies is
void. [Appellants] further contend that Albert’s rejection of UIM
coverage on his Progressive Motorcycle Policy does not prevent
access to the UIM coverage available under both Erie Auto Policies.
[Appellants] contend that Albert did not purchase separate UIM
coverage on the Progressive Motorcycle Policy because of the
“abundant” UIM coverage purchased under the Erie Auto Policies
and that it is inequitable to penalize [Appellants] simply because
Albert did not purchase “additional” UIM coverage for his
motorcycle. [Appellants] further rely on the proposition that
“stacked” UIM coverage is the default coverage available on every
insurance policy and that the Eichelman decision has been
implicitly overruled.
In response, Erie contends that Eichelman is still good law
because Eichelman and Gallagher addressed the household
exclusion under two factually different circumstances. Erie
contends that Eichelman upheld the “household exclusion” where
“an insured owned and operated a vehicle on which he or she
rejected UM/UIM benefits entirely, yet made a claim for such
benefits under a household UM/UIM policy which did not insure
the occupied vehicle.” Erie further contends that Gallagher is
distinguishable because it involved “stacking” and here, there is
no policy for [Appellants] to “stack” Erie UIM benefits on because
Albert rejected UIM coverage on his Progressive Motorcycle Policy.
Erie further contends that entering judgment in its favor still
affords [Appellants] 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.”
Trial Court Order (“TCO”), 6/26/20, at 1 n.1, 2 n.2 (internal citations omitted).
The trial court granted Erie’s motion for judgment on the pleadings,
declaring that Appellants are precluded from recovering UIM benefits under
the Erie Auto Policies, and denied Appellants’ competing request for judgment
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on the pleadings. In doing so, the trial court determined that, as a matter of
law, Appellants “are precluded from recovering UIM benefits under Erie Auto
Policy #Q031507213 issued to Albert and Lisa[,] and Erie Auto Policy
#Q093013593 issued to Angela[,] because Albert rejected UIM benefits on his
Progressive Motorcycle Policy, which means that there is no underlying policy
to ‘stack’ the Erie Auto Policy benefits onto.” Id. at 2 n.2. In addition, the
trial court found Gallagher to be factually distinguishable from Appellants’
situation and instead ascertained that “the facts in this case are nearly
identical to the facts in Eichelman, where the Supreme Court of Pennsylvania
enforced the household exclusion because the insured was operating a vehicle
covered by an insurance policy that did not provide UIM coverage.” See id.
Appellants filed a timely notice of appeal from the trial court’s order.
The trial court subsequently directed Appellants to file a concise statement of
errors complained of on appeal pursuant to Pa.R.A.P. 1925(b), and they timely
did so.
Presently, Appellants raise the following issue for our review:
Did the trial court err in entering judgment in favor of … Erie …
whereby it: (1) held that the household exclusions in the Erie Auto
Policies barred the [UIM] claims of Albert…; (2) concluded that the
decision of the Pennsylvania Supreme Court in Gallagher … was
not applicable; and (3) based its decision on elections and waivers
under the [Progressive] Motorcycle Policy, in direct contravention
of the methodology adopted by the Supreme Court of
Pennsylvania for the evaluation of contractual [UIM] claims, rather
than focusing on the terms and provisions of the [Erie] Auto
Policy, alone?
Appellants’ Brief at 2 (some capitalization omitted).
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Initially, we note our standard of review for judgment on the pleadings:
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 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.
Rourke v. Pennsylvania Nat. Mut. Cas. Ins. Co., 116 A.3d 87, 91 (Pa.
Super. 2015) (citation omitted). “Additionally, we note that interpretation of
an insurance policy presents a pure question of law, over which our standard
of review is de novo.” Id. (citation omitted).
The crux of Appellants’ argument on appeal is that the trial court erred
in determining that the household exclusions in the Erie Auto Policies barred
Appellants’ UIM claims given our Supreme Court’s decision in Gallagher.
Though Appellants concede that, “[o]n its face, the [household] exclusion
eliminates coverage for Albert … while operating his motorcycle[,]” see
Appellants’ Brief at 19, they insist that Gallagher invalidated household
exclusions in Pennsylvania, and that Gallagher’s rationale applies to the
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issues in this case. See id. at 6. In addition, Appellants say that the trial
court “failed to employ the methodology adopted by the Supreme Court of
Pennsylvania for the evaluation of contractual [UIM] claims” because “[i]n
evaluating [UIM] claims, the policies under which claims are being made — in
this case the [Erie] Auto Policies — alone, are to be considered.” Id. at 7.
Thus, they aver that “[t]he elections and coverages made under any other
policy, e.g.[,] the [Progressive] Motorcycle Policy, are irrelevant to the
analysis. The [t]rial [c]ourt erred in focusing upon the [Progressive]
Motorcycle Policy, thereby engaging in a faulty analysis leading to an
erroneous conclusion.” Id. Furthermore, by focusing on the Progressive
Motorcycle Policy, Appellants say that the trial court “failed to consider the
unambiguous policy language of the [Erie] Auto Policies. [It] wrote into the
[Erie] Auto Policies provisions that simply do not exist. The [t]rial [c]ourt
reasoned that stacking conclusively requires coverage under the [Progressive]
Motorcycle Policy. The [Erie] Auto Policies impose no such requirement.” Id.
at 17.
At the outset of our review, we acknowledge that this area of the law is
not particularly clear and straightforward. Therefore, we take a close look at
Eichelman, Gallagher, and the cases decided since Gallagher.
To begin, we turn our attention to Eichelman. As mentioned by the
trial court supra, Eichelman was injured when his motorcycle was struck by
an underinsured driver. Eichelman, 711 A.2d at 1007. Eichelman’s
motorcycle policy did not provide UIM coverage because he had expressly
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waived it. Id. Eichelman then made claims for UIM coverage under two
insurance policies maintained by members of his household, which were
denied based on household exclusions in those policies. Id. Eichelman
subsequently sought a declaratory judgment that he was entitled to benefits
under those two policies and that the household exclusions in those policies
— which barred UIM coverage for injuries suffered while occupying a vehicle
owned by the insured or a relative but not insured for UIM coverage under
those particular policies — were invalid on the basis of public policy. Id. at
1007, 1008. On review, our Supreme Court concluded that Eichelman could
not recover under those two policies, holding that “a person who has
voluntarily elected not to carry [UIM] coverage on his own vehicle is not
entitled to recover [UIM] benefits from separate insurance policies issued to
family members with whom he resides where clear and unambiguous
‘household exclusion’ language explicitly precludes [UIM] coverage for bodily
injury suffered while occupying a motor vehicle not insured for [UIM]
coverage.” Id. at 1010. In reaching that determination, our Supreme Court
weighed that “giving effect to the ‘household exclusion’ in this case furthers
the legislative policy behind [UIM] coverage in the MVFRL since it will have
the effect of holding [Eichelman] to his voluntary choice.” Id. It also voiced
concerns that, “[i]f [Eichelman’s] position were accepted, it would allow an
entire family living in a single household with numerous automobiles to obtain
[UIM] coverage for each family member through a single insurance policy on
one of the automobiles in the household.” Id. It observed that, “[i]f this
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result were allowed, it would most likely result in higher insurance premiums
on all insureds (even those without family members living at their residence)
since insurers would be required to factor expanded coverage cost into rates
charged for [UIM] coverage.” Id.
Subsequently, in Gallagher, Gallagher— who suffered injuries when an
underinsured motorist hit him while he was riding his motorcycle — had
stacked UIM benefits under both his motorcycle policy and his auto policy.
Gallagher, 201 A.3d at 132-33. Gallagher had purchased the two policies
from GEICO Indemnity Company. Id. GEICO paid Gallagher the policy limits
available under his motorcycle policy, but it denied his claim for stacked UIM
benefits under his auto policy based on the household exclusion contained in
that policy. Id. at 133. After litigation ensued to determine whether UIM
coverage was available for Gallagher’s motorcycle accident under his auto
policy, our Supreme Court ascertained that the household exclusion contained
in the auto policy violated Section 1738 of the MVFRL “because the exclusion
impermissibly acts as a de facto waiver of stacked [UM] and [UIM] coverages.”
Id. at 132 (footnote omitted). Section 1738 addresses the stacking of UM
and UIM benefits, along with how to waive such coverage, specifically
providing, in relevant part, that:
(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.
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(b) Waiver.--Notwithstanding the provisions of subsection (a), a
named insured may waive coverage providing stacking of
uninsured or underinsured coverages 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.
(d) Forms.--
***
(2) The named insured shall be informed that he may
exercise the waiver of the stacked limits of underinsured
motorist coverage by signing the following written rejection
form:
UNDERINSURED COVERAGE LIMITS
By signing this waiver, I am rejecting stacked limits of
underinsured motorist coverage under the policy for myself
and members of my household under which the limits of
coverage available would be the sum of limits for each motor
vehicle insured under the policy. Instead, the limits of
coverage that I am purchasing shall be reduced to the limits
stated in the policy. I knowingly and voluntarily reject the
stacked limits of coverage. I understand that my premiums
will be reduced if I reject this coverage.
***
(e) Signature and date.--The forms described in subsection (d)
must be signed by the first named insured and dated to be valid.
Any rejection form that does not comply with this section is void.
75 Pa.C.S. § 1738(a)-(e).
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In concluding that the household exclusion violated Section 1738, our
Supreme Court reasoned:
Here, it is undisputed that: (1) … the tortfeasor who caused the
accident … was underinsured; (2) Gallagher did not sign the
statutorily-prescribed UIM stacking waiver form for either of his
GEICO policies; and (3) he would have received the UIM coverage
that he bought and paid for under both of his GEICO policies
pursuant to Subsection 1738(a) of the MVFRL, save for the
“household vehicle exclusion” found in an amendment to the
[a]utomobile [p]olicy for which no explicit, formal
acknowledgement was provided. … [T]his exclusion provides as
follows: “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.”
This policy provision, buried in an amendment, is inconsistent with
the unambiguous requirements [of] 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.
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. In fact, this case is a prime example of why
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household vehicle exclusions should not and cannot operate as a
pretext to avoid stacking.
Often in these cases, an insurer contends that it should not have
to provide stacked coverage when an insured purchases UM/UIM
coverage on his motorcycle in Policy A, and then purchases
UM/UIM coverage on passenger cars in Policy B. The obvious
argument is that the insurer of the passenger cars is unaware of
the potentiality of stacking between the car policy and the
motorcycle policy. Here, however, GEICO was aware of this
reality, as it sold both of the policies to Gallagher and collected
premiums for stacked coverage from him. To the extent that
GEICO’s premium would be higher on an automobile policy
because of stacking with a motorcycle policy, all GEICO has to do
is quote and collect a higher premium. 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.6
6 We recognize that this decision may disrupt the insurance
industry’s current practices; however, we are confident that
the industry can and will employ its considerable resources
to minimize the impact of our holding. For example, when
multiple policies or insurers are involved, an insurer can
require disclosure of all household vehicles and policies as
part of its application process.
For all of these reasons, we hold that the household vehicle
exclusion violates the MVFRL; therefore, these exclusions are
unenforceable as a matter of law.7, 8
7Additionally, 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.
8 As in every case, we are deciding the discrete issue before
the Court and holding that the household vehicle exclusion
is unenforceable because it violates the MVFRL. Unlike the
Dissent, we offer no opinion or comment on the
enforceability of any other exclusion to UM or UIM coverage
or to coverage in general, including exclusions relating to
racing and other inherently dangerous activities. If, at some
later date, the Court is presented with issues regarding the
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validity of other UM or UIM exclusions, then we will address
them at that time. Our focus here is narrow, regardless of
the Dissent’s lament to the contrary.
Gallagher, 201 A.3d at 137-38 (internal citations omitted).8
Following Gallagher, this Court decided Petrie, cited supra at note 7.
In that case, an underinsured driver struck and killed Petrie’s husband while
he was riding his motorcycle. Petrie, 242 A.3d at 917. At the time of the
accident, Petrie and her husband had purchased and were named insureds on
two insurance policies through Erie and Foremost Insurance. Id. The
Foremost policy, which insured the motorcycle, provided $25,000 in UIM
coverage. Id. Petrie successfully claimed UIM benefits from Foremost. Id.
Petrie then sought UIM benefits from the Erie policy, which covered four other
vehicles and had UIM coverage limits for bodily injury of “$100,000 per
person/$300,000 per accident-Unstacked.” Id. (emphasis added). 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. at 918 (citation omitted).
____________________________________________
8 We note that the Majority Opinion in Gallagher makes no mention of
Eichelman. Moreover, since Gallagher, our High Court has discussed
Eichelman to support the proposition that “there is a balance to be struck
between [the] goal [of cost containment] and the remedial purpose of the
MVFRL.” Safe Auto Ins. Co. v. Oriental-Guillermo, 214 A.3d 1257, 1266
(Pa. 2019).
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After 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, Petrie appealed. Upon review, this
Court first ascertained 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. See id. at 918-21. This Court then considered
whether the Erie policy’s household exclusion nevertheless precluded
coverage. After discussing Gallagher, this Court explained that:
Erie argues that Gallagher does not apply because it was a
“narrow”6 decision limited to its facts of that case that are not
present here. They contend that, unlike in Gallagher, the policies
here were from two different companies and the [d]ecedent did
not purchase stacking in either policy. However, if it wanted the
holding in Gallagher to be that narrow, our Supreme Court would
have simply held that where you had two different stacked policies
from the same insurance company, absent an express waiver
conforming to Section 1738, the household exclusion provision did
not prevent stacking because the insured paid for stacking in both
policies.
6 The contention that the decision is narrow comes from
footnote 8 in the opinion where it states, “[o]ur focus here
is narrow.” Gallagher, supra at 138 n.8. However, that
phrase was written to explain that the majority’s opinion did
not endanger other, non-household coverage exclusions
such as “exclusions related to racing and other inherently
dangerous activities” and does not narrow the scope of its
holding as to the household exclusion. Id.
Instead of that narrow holding, our Supreme Court issued a broad
holding that the household exclusion provision cannot be used to
skirt the express requirement under Section 1738 that an insurer
must receive an insured’s written acknowledgement that he
knowingly decided to waive stacked UM/UIM coverage. That
holding is not limited to the facts set forth in Gallagher, but one
that finds that the exclusion is inconsistent with the requirements
of Section 1738 of knowing waiver — a holding that is applicable
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to all policies for automobile insurance. Moreover, just because
[the d]ecedent 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.
Accordingly, because Gallagher found the household exclusion
provision inconsistent with Section 1738 of the MVFRL
requirement that insureds knowingly waive stacked coverage, and
… the present stacking waiver provision was not sufficient for an
insured to make a knowing decision to waive stacked coverage,
the trial court’s grant of judgment on the pleadings is reversed
and the matter is remanded to the trial court.
Petrie, 242 A.3d at 922 (internal citation and footnote omitted).
After Petrie, this Court again confronted Gallagher in Erie Ins. Exch.
v. King, 246 A.3d 332 (Pa. Super. 2021).9 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. Id. at 333-34. 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. Id. at 334. King
and his paramour additionally shared an Erie policy for a personal vehicle. Id.
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. Id. 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
____________________________________________
9 We note that the decision in King was issued after the parties had already
filed their briefs in this case, and neither party mentions King in their briefing
to this Court.
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waiver, and the trial court granted its motion for judgment on the pleadings.
Id. at 334-35.
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 they received from [the truck’s
commercial policy], where [they] are not ‘insureds’ under the [truck’s
commercial] policy.” Id. at 339 (citations omitted). This Court then
addressed their argument that the household exclusion also did not bar
coverage, explaining:
Section 1731 [of the MVFRL] (governing rejection of UM
coverage), provides the sole manner in which a person may reject
UM coverage.[10] [King and the niece] maintain that any deviation
from the rejection form set forth in Section 1731 requires an
insurance company to provide UM coverage even where an
insured did not pay for such coverage. [King and the niece] insist
that under Gallagher, the household exclusion cannot be used as
a de facto rejection of UM benefits where Section 1731 provides
the exclusive means for a rejection of UM benefits to occur. [King
and the niece] emphasize that premiums were paid to Erie for UM
coverage, and Erie should not be able to deprive its insureds of
the benefit of that which was purchased. Specifically, [King and
the niece] contend: “If under Gallagher, the household vehicle
exclusion is an invalid means to waive the stacking of [UM]
coverage, it should certainly be an invalid means to reject [UM]
coverage. There is no reason to draw a distinction.”
King, 246 A.3d at 339-40 (internal citation and footnote omitted).
____________________________________________
10 In short, Section 1731 mandates that UM/UIM coverage be offered to
insureds and explains that insureds may reject such coverage by signing a
specific written rejection form. 75 Pa.C.S. § 1731. Further, Section 1731(c.1)
states that “[a]ny rejection form that does not specifically comply with this
section is void. If the insurer fails to produce a valid rejection form, uninsured
or underinsured coverage, or both, as the case may be, under that policy shall
be equal to the bodily injury liability limits.” 75 Pa.C.S. § 1731(c.1).
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This Court rejected this argument, deeming it undeveloped and holding
that “Gallagher does not bar applicability of the household exclusion in this
case.” Id. at 343. We noted that:
[W]e have already decided that stacking under Section 1738 is
not implicated under these facts, where [King and the niece] were
guest passengers and not “insureds” under the [commercial]
policy covering the [truck] involved in this accident. We
reiterate that because [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. at 341 (internal citations omitted; emphasis added). Furthermore, in
doing so, the King Court distinguished Petrie, recognizing that,
in Petrie, … this Court interpreted Gallagher as a “broad holding
that the household exclusion provision cannot be used to skirt the
express requirement under Section 1738 that an insurer must
receive an insured’s written acknowledgment that he knowingly
decided to waive stacked UM/UIM coverage” and stated that
Gallagher “is not limited to [its] facts…, but one that finds that
the [household] exclusion is inconsistent with the requirements of
Section 1738 of knowing waiver — a holding that is applicable to
all policies for automobile insurance.” Petrie, supra at 922
(explaining that just because [the] insured did not purchase
stacking, or that policies are from two different companies is
irrelevant because Section 1738 requires knowing waiver of
stacking from whom insurance is being obtained). Although this
Court interpreted Gallagher broadly as applied to Section
1738, this Court did not consider or decide Gallagher’s
applicability with respect to Section 1731. See id.
Id. at 342 n.8 (emphasis in original). Based on the foregoing, this Court
affirmed the trial court’s order granting Erie’s motion for judgment on the
pleadings.
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In light of the above-stated case law, Gallagher does not seem to
invalidate household exclusions in all cases, despite Appellants’ suggestions
to the contrary.11 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.
Appellants contend that the rationale of Gallagher applies because the
Erie Auto Policies “provided stacked coverage, the factual predicate for the
application of Gallagher.” Appellants’ Brief at 21. They argue that “[t]he
household exclusion eliminated the stacking benefit provided by the policy
without any knowing waiver by the named insured. Thus, the Gallagher
decision applies in this case.” Id.
Erie, on the other hand, says that stacking, Section 1738 — and
consequently Gallagher — are irrelevant to this matter. Instead, Erie
maintains that Eichelman applies. It contends:
Eichelman, like this case, doesn’t involve two UIM policies being
stacked. Eichelman, like this case, involves no coverage on the
host vehicle at all. Eichelman, like this case, only involves
coverage on household policies. Thus, there is no host-vehicle
UIM policy “to stack” on top of. As a consequence, “stacking” is
not at issue and [Section] 1738 is not relevant or applicable to
____________________________________________
11 See Appellants’ Brief at 9 (“The Supreme Court invalidated household
exclusions in Gallagher….”); id. at 11 (“In Gallagher…, the Supreme Court
invalidated household exclusions in auto policies in Pennsylvania.”); id. at 19
(“In Gallagher…, the Supreme Court found that household exclusions in
automobile policies in Pennsylvania are invalid and unenforceable.”).
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this case at all. This is precisely the reason why Eichelman never
cited [Section] 1738, and Gallagher never cited Eichelman.
Erie’s Brief at 19 (footnote omitted).
Additionally, Erie directs our attention to Dunleavy v. Mid-Century
Ins. Co., 460 F.Supp.3d 602 (W.D. Pa. 2020), which it claims has identical
facts and arguments as the case sub judice. Erie’s Brief at 22-23.12 In
Dunleavy, a husband and wife were riding a motorcycle when they were
struck by an underinsured driver, leaving them seriously injured. Id. at 605-
06. The motorcycle was insured through Progressive, and the husband had
rejected UIM coverage under that policy. Id. at 606. Additionally, the couple
had a separate auto policy from Mid-Century Insurance Company that insured
two other vehicles, but not the motorcycle. Id. The couple did not sign the
statutorily prescribed waiver form to reject stacking in the Mid-Century policy.
Id. at 607. The Mid-Century policy also had a household exclusion, which
stated that UIM 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. at 606 (citation omitted). When the couple
sought UIM coverage under the Mid-Century policy, Mid-Century told them
they were not entitled to UIM coverage because “the [motorcycle] [they] were
____________________________________________
12 “While we recognize that federal district court cases are not binding on this
[C]ourt, Pennsylvania appellate courts may utilize the analysis in those cases
to the extent we find them persuasive.” Umbelina v. Adams, 34 A.3d 151,
159 n.2 (Pa. Super. 2011) (citations omitted). We also are mindful that
Dunleavy was decided before this Court issued its opinions in Petrie and
King.
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occupying is owned by [them], [they] did not list it on [their] Mid-Century
policy, and [they] did not elect Uninsured/Underinsured Motorist Coverage on
the policy through Progressive[.]” Id. (citation omitted; some brackets
added). After our Supreme Court decided Gallagher, the couple sued Mid-
Century, alleging, inter alia, that Mid-Century’s reliance on the household
exclusion to deny UIM coverage violated the new rule of law established by
Gallagher. Id. Mid-Century subsequently filed a counterclaim for
declaratory judgment regarding the appropriateness of its denial decision, and
later a motion for judgment on the pleadings. Id.Before the district court, the couple argued that, “under Gallagher, Mid-
Century can’t use the household vehicle exclusion to deny them the benefit of
stacking their [UIM] benefits in the Mid-Century policy[,]” and that “the only
way they could be validly denied the benefit of stacking their [UIM] coverage
is if they signed a statutorily prescribed waiver form, which they never did.”
Id. at 607. In response, Mid-Century contended that “Gallagher is
inapplicable because this isn’t a stacking case at all[,]” and asserted that the
couple has “no [UIM] coverage with which to stack their Mid-Century policy.”
Id. (citation and internal quotation marks omitted). Instead, Mid-Century
claimed that the couple was “trying to use the Mid-Century [policy] to
establish [UIM] coverage in the first instance.” Id. at 605. The district court
sided with Mid-Century, reasoning:
When a policyholder buys [UIM] coverage for several vehicles,
within or across policies, the law authorizes the policyholder to
stack the per-vehicle limits of all that coverage that the
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policyholder bought. Gallagher, 201 A.3d at 137. An insurer
cannot insert an exclusion in the policy that effectively prevents
the stacking of limits of covered vehicles by saying there is no
coverage for some of those vehicles. Id. at 138. But this rationale
is predicated on the policyholder buying [UIM] coverage on every
vehicle to stack the benefits. That’s the fundamental idea behind
stacking — the policyholder stacks limits of coverage that he or
she paid for. Id. (“Gallagher decided to purchase stacked UM/UIM
coverage under both of his policies, and he paid GEICO premiums
commensurate with that decision.”). If the vehicle involved in the
accident doesn’t have [UIM] coverage, then the policyholder can’t
stack anything on top of it because the policyholder hasn’t paid
for that privilege.
***
Here, [the couple] concede that [the husband] validly waived
[UIM] coverage on his Progressive policy for the motorcycle. So,
there is no [UIM] coverage on which to “stack” the Mid-Century
policy. Because there is no [UIM] coverage for the motorcycle
under the Progressive policy, [the couple has] not properly framed
the question for this [c]ourt. The question is not whether [the
couple] may stack the Mid-Century policy, but whether [the couple
is] entitled to [UIM] coverage under that policy in the first
instance. For that question, neither Section 1738 nor Gallagher
are relevant.
Dunleavy, 460 F.Supp.3d at 608, 609 (internal citation omitted).
The district court then determined that the couple did not buy UIM
coverage for their motorcycle from Mid-Century, and it addressed the vitality
of Eichelman following Gallagher, opining:
The relevant provision of the MVFRL to this dispute is Section
1731, which generally governs the purchase of [UIM] coverage.
Gallagher does not affect the application of that statute to the
facts here. Rather, it is the Pennsylvania Supreme Court’s
decision in Eichelman … that controls.
***
Gallagher did not overrule Eichelman because the two cases
“are not in conflict.” Indeed, the Pennsylvania Supreme Court has
even cited Eichelman approvingly in a case after Gallagher.
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See … Oriental-Guillermo, [cited supra, note 8]. Thus,
Eichelman remains good law and controls the result here.
As in Eichelman, [the husband] waived [UIM] coverage for his
motorcycle policy. And, as in Eichelman, [the couple is] trying
to obtain [UIM] coverage under a separate policy. That policy,
however, clearly states that [UIM] coverage will 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.” The motorcycle was an “owned” vehicle that
was not insured under the Mid-Century policy. As a result, [the
couple] are not entitled to [UIM] coverage under the Mid-Century
policy.
Id. at 609, 610 (internal citation omitted).
After considering the relevant case law and the arguments of the
parties, we agree with Erie and the trial court that stacking and Section 1738
are not implicated in this case. In Eichelman, King, and Dunleavy, stacking
was either not discussed or determined to be irrelevant because those
individuals who did not have UM/UIM coverage under their host-vehicle
policies did not have the requisite UM/UIM coverage on which to stack other
household policies with UM/UIM benefits. Similarly, here, Albert’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,
Albert is using the Erie Auto Policies to procure UIM coverage in the first place.
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Therefore, this is not a stacking case, and the rationale of Gallagher does not
apply.13, 14
As we have already determined that Gallagher only invalidated
household exclusions in cases where they are used to circumvent Section
1738’s specific requirements for waiving stacking, we cannot agree with
Appellants that Eichelman has been overruled and/or does not control here.
Accordingly, we apply 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. Thus, the household exclusions in the Erie
Auto Policies are enforceable to preclude Appellants from recovering UIM
benefits. No relief is due.
Order affirmed.
Judge Strassburger did not participate in the consideration or decision
of this case.
____________________________________________
13We agree with the trial court’s observation that, “[h]ad Albert 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.” TCO at 2 n.2.
14Because this is not a stacking case, we disagree with Appellants’ arguments
that our review must be limited to the policy under which the claim is being
made, i.e., the Erie Auto Policies, and that the UIM coverage provided by the
Progressive Motorcycle Policy is wholly irrelevant. The Eichelman, King, and
Dunleavy Courts all considered the UM/UIM coverage provided by, and the
named insureds listed in, the host-vehicle policies.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/10/21
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