2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 10-4-2005 

# Nat ion wide M utl Ins v . Dunn P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 04-3032

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2005

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2005 D e c i sion s b y an authori z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion " Nat ion wide M utl In s v . Dunn" (2005). 2005 D e cisio n s . P ape r 453. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2005/453NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

__________ N o. 04- 3032

__________ NAT I ONWI DE M UT UAL I NS UR ANC E CO M P ANY

v. A L B E R T A M . D U N N a n d P A U L E . D U N N , A p p e llan ts

__________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt F o r th e W e ste rn D istric t o f P e n n sy lv a n ia ( C i v. A . N o. 02- 1774) D i stri ctJudg e: H on orabl e W i l l i am L . S t and i sh

__________ Subm i t t ed U nderT hi r d C i r cui tL . A . R . 34. 1( a)

Sept ember27, 2005

___________ B efor e: R E N D E L L , FU E N T E S and G A R T H , C i r cui tJ udges

( O pi ni on Fi l ed: O ct ober4, 2005)

__________ OP I NI ON

__________G arth, C i r cui tJ udge:

N at i onw i de M utual I ns ur ance C om pany( “N at i onw i de”) fi l ed s ui ti n the U ni t ed S tate s D istric t C o u rt f

o r th e W e ste rn D istric t o f P e n n sy lv a n ia f

o r a d e c lar a to ryju d g m e n t, s eeki ng t o det erm i ne i t s obl i gat i on, i f any , t o payunder i ns ur ed mot or i s tbenef i t s t o Paul D unn undera per s onal aut o pol i cyi n the name of hi s w i fe, A l bert a D unn. T he D i s tr i ct C o u rten tered su m m aryjud g m en t i n fa v o r of N ati o n w ide, ho lding that the p o li cy ’s “hous ehol d excl us i on” cl aus e di d notvi ol at e publ i c pol i cy , and ther efor e N at i onw i de p r o p e r l yr e f

u s e d t o p r o v i d e c o v e r a g e . W e wi l l a f f i r m. I. B eca us e w e w r i t e s ol el yforthe bene fi tof the part i es , w e w i l l onl ybr i efl yr ecount the r el evantfac t s her ei n. O n M ar ch 16, 1998, w hi l e the D unns w er e pas s enger s i n a v e h i c l e o w n e d a n d o p e r a t e d b y t h e i rd a u g h t e r , K e l l y D u n n , th e c a rw a s s tru c k b y a vehi cl e oper at ed byD ebr a Lee Sol ar czyk. M r . D unn s us t ai ned bodi l yi nj ur i es i n the a c c id e n t. T he vehi cl e oper at ed byM s . Sol ar czyk w as i ns ur ed undera pol i cyi s s ued by T r avel er s Pr opertyand C as ual tyI ns ur ance C om pany( “Tra vel er s ”) . T r avel er s pai d the D unns and thei rdaught erthe maxi m um l i abi l i tycover age unde rthe pol i cyt o r es ol ve thei rcl ai m s agai ns tM s . Sol ar czyk. T hereaft er, M r. D un n sou gh t , and recei ved , the li m i t s of t he u nd eri nsured m otor i st cover age pr ovi ded byE r i e I ns ur ance G r oup pur s uantt o a pol i cyof aut om obi l e i ns ur ance i s s ued t o K el l yD unn.1 It is un dispute d th at Mr . D unn w a s in jure d whil ea

pa sseng e r in a

c ar o wn e d b y

a re lativ e , h is d a u ght e r Ke l l y, an d

th ath e r v e h i c l ew a s n o ti n s ur e d

un d e r th eN at i o nw i d ep o l i c y. M r . D unn then pr es ent ed a c l ai m forunder i ns ur ed mot or i s tbenef i t s t o N at i onw i de pur s uantt o a per s onal aut o pol i cyi s s ued t o M r s . D unn forthei rcar , a 1997 B ui ck C e n tu ry. T h a t p o lic yw a s in f u ll f o rc e a n d e f

f e c t a s o f th e d a te o f

th e a c c id e n t. N at i on w i de d enied the clai m for ben efi t s based o n a “h ou sehold exclusi on ” cl ause c o n tain e d in th e u n d e rin su re d m o to rist c o v e ra g e e n d o rse m e n t. T h a t cla u se p ro v id e d , in p e rtin e n t p a rt: CO VE RA GE E XC L US I ONS T hi s cover age doe s notappl yt o:

* * * 6 . B o d il yinjurysu ff ere d w h il e o cc u p y ing a m o tor v eh icl e o w n ed b yy o u o r a re lativ e b u t n o t in su re d f o r U n d e rin su re d M o to rists C o v e ra g e u n d e r th is p o lic y ; n o r t o b o d ily in

ju ry f ro m b e in g h it b ya n ys u c h m o to r v e h ic le . 1 N at i onw i de then i ns t i tut ed the pr es entact i on fordecl ar at oryr el i ef, s eeki ng j u d g me n tth a tth e r e wa s n o c o v e r a g e u n d e ri t s p o l i c y . I n f u r th e r a n c e o f

i t s c l a i m, N at i onw i de fi l ed a mot i on fors um m aryj udgm enton the gr ound thati tw as notobl i gat ed t o paybenef

i t s ow i ng t o the “hous ehol d excl us i on” pr ovi s i on. T he D unns cr os s - m oved fors um m aryj udgm ent . T he D i s tr i ctC our tent er ed j udgm enti n favorof N at i onw i de, fi ndi ng thatthe “hous ehol d excl us i on” pr ovi s i on w as val i d and enf or cea bl e and thus pr ecl us i ve of c over age. T hi s t i m el yappea l fol l ow ed. II.2 Both pa rties agreethat Pennsylvania law g overns this ac tion. T he D i s tr i ctC our thad s ubj ectm att erj ur i s di ct i on overthi s di ver s i tyact i on pur s uantt o 28 U . S. C . § 1332( a) , and w e have j ur i s di ct i on pur s uantt o 28 U . S. C . § 1291. W e e x e rc ise p len a ryre v iew o v e r th e g ra n t o f a m o tio n f

o r su m m a ryju d g m e n t. N at i onw i de Mut . I

ns . C o. v. R i l ey , 352 F. 3d 804, 806 n. 3 ( 3d C i r . 2003) ( ci t i ng O m ni poi nt C o m m u n ic a tio n s E n te rs ., L .P . v . N e w to w n T

o w n sh ip , 2 1 9 F .3 d 2 4 0 , 2 4 2 (3 d C ir . 2 0 0 0 )) . Sum m aryj udgm enti s appr opr i at e w her e “ther e i s no genui ne i s s ue as t o anym at er i al fac t a n d [ ] t h e m o v in g p a rt yis e n title d to ju d g m e n t a s a m a tte r o f la w .” F e d . R . C iv . P . 5 6 (c ). “W e re v iew the f

ac ts i n the ligh t m o st fav o rab le t o the p artyag ains t w h o m su m m ary j udgm entw as ent er ed. ” C ool s pr i ng St one Suppl

y, I nc. v. A m er i can Stat es Li f e I ns . C o. , 1 0 F .3 d 1 4 4 , 1 4 6 (3 d C ir . 1 9 9 3 ). III .

T he D unns ’ s i ngul arcont ent i on on appea l i s thatenfor cementof the

“ h o u se h o ld e x c lu sio n ” c lau se c o n tain e d in th e ir N a tio n w id e p o licyv io late s P e n n sy lv a n ia publ i c pol i cy , as i ti s embodi ed i n t he C om m onw eal th’ s M ot orV ehi cl e Fi nanci al R e sp o n sib ili tyL a w (“ M V F R L ” ), 7 5 P a .C .S . § § 1 7 0 1 -1 7 9 9 .7 . T h e ysu p p o rt th e ir 2 pos i t i on pr i nci pal l ybyar gui ng thatthei rcas e i s fac tual l ydi s t i ngui s habl e fr om the num er ous s t at e and f

eder al cas es thathave uphe l d s i m i l arcl aus es beca us e: ( 1) as pol i cyhol der s , theyactual l ypai d pr emi um s forunder i ns ur ed mot or i s t s cover age unde rt he N at i onw i de pol i cyand ( 2) theydi d notow n othervehi cl es noti ns ur ed on the pol i cyfr om w h ic h th e u n d e ri n s u re d b e n e f its w e re s o u g h t.W e h a v e p re v io u slytra c e d th e d e v e lo p m e n t o f P e n n sy lv a n ia la w o n th is ques t i on, cul m i nat i ng i n the Penns y l vani a Supr eme C our t ’ s deci s i on i n P r udent i al P r o p e r ty a n d

C a s . In s . C o . v . C o lb e r t, 5 7 2 P a . 8 2 (2 0 0 2 ). See Ri l ey , 3 5 2 F .3 d a t 8 0 7 -1 0 . W e ther efor e fi nd i tunnece s s aryt o do s o her e, exce ptt o not e thatthe publ i c pol i cy b e h in d th e M V F R L is to c o n tr o l th e ri s in g c o s ts o f in s u ra n c e . See C olbert , 5 7 2 P a . a t 9 4 . A s an i ni t i al m att er , the D unns as s ert i on thatthei rcas e i s fac tual l ydi s t i nctfr om pr i orcas es i s i ncorr ect . I ndeed, s ever al deci s i ons fi ndi ng no publ i c pol i cyvi ol at i on have in v o lv e d situ a tio n s w h e re th e in su re d a c tu a llyp a id f o r th e c o v e ra g e so u g h t, j u st a s in th is c a s e . See, e. g. , B urs t ei n v. P r udent i alP r op. & Cas. I ns . C o. , 5 7 0 P a . 1 7 7 (2 0 0 2 ); O ld G uar d I ns . C o. v. H

ouck , 8 0 1 A .2 d 5 5 9 (P a . S u p e r. 2 0 0 2 ); N at i onw i de Mut . I

ns . C o. v. R i dder , 1 0 5 F . S u p p . 2 d 4 3 4 (E . D . P a.20 0 0 ). F urtherm ore, even i f w e w ere t o find t hat the D un ns’ cas e i s factuall ydis si m i l ar and so n o t b o u n d b yp re c e d e n t, w e w o u ld still co n c lu d e th a t en f o rc e m e n t o f

th e “ h o u se h o ld e x c l u s i o n ” i n th i s c a s e i s n o tv i o l a t i v e o f p u b l i c p o l i c y. T he s t andar d s etbythe Penns y l vani a court s fordet erm i ni ng w hethera contr act p ro v isio n v io late s p u b lic p o licyis v e ryh ig h : It is o n lyw h e n a g iv e n p o licyis s o o b v io u slyf o r o r a g a in st th e p u b lic heal th, s afe ty , m or al s orw el far e thatther e i s a vi r tual unani m i tyof opi ni on in re g a rd to it, th a t a c o u rt m a yc o n stitu te itse lf th e v o ice o f

th e c o m m u n ity in [ d e c la ri n g w h a t is o r i s n o t in a c c o rd w ith p u b lic p o lic y ]. P ayl orv. H

ar t f or d I ns . C o. , 536 Pa. 583, 587 ( 1994) ( quot i ng M am l i n v. G enoe , 340 Pa. 320, 325 ( 1941) . Publ i c pol i cyi s t o “be a s cert ai ned byr efe r ence t o the l aw s andl egal pr ece dent s and notfr om gener al cons i der at i ons of s uppos ed publ i c i nt er es t . ” Id . at

586- 87 ( quot i ng G uar di an Li f e I ns . C o. of

A m er i ca v. Zer ance , 5 0 5 P a . 3 4 5 , 3 5 4 (1 9 8 4 ). W hi l e the Penns y l vani a Supr eme C our thas hel d thatthe enf or cea bi l i tyof "hous ehol d excl us i ons " i s depende nton the fa ct s s urr oundi ng eac h cas e, court s have r out i nel yuphel d them i n t he fa ce of publ i c pol i cychal l enges . S e e , e .g ., P a y lo r, 536 Pa. at 5 9 5 ; E i chelm an v. N

at i onw i de I

ns . C o. , 5 5 1 P a . 5 5 8 , 5 6 7 -6 8 (1 9 9 8 ); s ee al s o R i dder , 105 F .S u p p .2 d a t 4 3 8 ; R i dl ey ex r el . R i dl ey v . Stat e Farm Mut . A ut o. I ns . C o. , 745 A . 2d 7, 14 ( Pa. Super . C t . 1999) . T hos e ca s es compel the conc l us i on thatther e i s no unani m i tyof o p i n i o n th a t“ h o u s e h o l d e x c l u s i o n s ” v i o l a t e p u b l i c p o l i c y. F u rth e rm o re , the D u n n s d o n o t p e rsu a d e th is C o u rt th a t th e e x c lu sio n is s o o b v io u sly contr aryt o the publ i c hea l th, s afe ty , m or al s orw el far e of the peopl e t o w arr antvoi di ng the co ntr act . S pecifi cal l y , w e are not convinced thatthe p oli cyi den t i fi ed b ythe D un ns, thatof “pr ot ect i ng i nnocentvi ct i m s of ac ci dent s ” i s obvi ous l yvi ol at ed byuphol di ng t he

“ h o u s e h o ld e x c lu s io n .” F in a lly , the D istric t C o u rt c o rre c tlyc o n c lu d e d th a t u p h o ld in g th e “ h o u se h o ld e x c lu s io n ” in th is c a s e f u rt h e rs th e le g is la tiv e in te n t b e h in d th e M V F R L , i . e. , cont ai ni ng the spir al i ng cost s of au t om ob i l e i nsurance in Pen nsy l van i a. T aking as true the D un ns’ cl ai m thatM r . D unn i s s eeki ng under i ns ur ed mot or i s tbenef i t s fr om hi s ow n pol i cyfor w h ich h e p a id a p re m iu m , tha t p re m iu m w a s p a id to p ro v id e c o v e ra g e f o r a sp e c if

ic vehi cl e ( a 1997 B ui ck C entury ) t o the exc l us i on of othervehi cl es dr i ven byr el at i ves but noti ns ur ed underthe N at i onw i de pol i cy . “[I ] tw as forthi s cover age thatN at i onw i de and th e d e f e n d a n t co n tra c ted . T o re q u ire N a tio n w id e to p a yu n [ d e r]in su re d m o to rist b e n e f itson i t s pol i c[y ] w oul d be t o eff ect i vel yr equi r e i tt o underw r i t e a r i s k of w hi ch i tl i kel yhad no know l edge a nd forw hi ch i tnei thercontr act ed norw as pai d. ” R i dder , 105 F. Supp. 2d a t 4 3 6 . W e , too , d e c lin e to c o u n ten a n c e su c h a re su lt. W e ther efor e hol d t hatthe “hous ehol d excl us i on” cl aus e i n the N at i onw i de pol i cy is c o n s is te n t w ith th e u n d e rl y in g p u b lic p o lic yo f th e M V F R L a n d is n o t v o id . A c c o rd in g ly , w e w ill a f f irm th e ju d g m e n t o f

th e D istric t C o u rt.