2007 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 7-16-2007 

# H a sp el v . S t ate F arm M

utl Aut o 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 . 06-3716

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_2007

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 2007 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 " H aspel v . S t at e F arm M

utl Aut o " (2007). 2007 D e cisio n s . P ape r 760. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2007/760T h e H o n o ra b le S y lv ia H . R a m b o , U n ited S tate s D istric t Ju d g e f o r th e M id d le * D i s tr i ctof Penns y l vani a, s i t t i ng bydes i gnat i on. NOT 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. 06- 3716

____________ KEN NETH HA SP EL; VI CK I VI NC ENT, C o- A dm i ni s tr at or s of the Est at e of M i chae l J . H as pel , D ece as ed

A p p e llan ts v. S T AT E F AR M M UT UAL AUT OM OB I L E I NS UR ANC E CO M P ANY

____________ 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 ( D . C . N o. 05- cv- 01503) D i s tr i ctJ udge: H onor abl e Thom as M . H ar di m an

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

M ay18, 2007 B e f o re : F IS H E R a n d R O T H , C i r cui tJudges , a n d RA M BO , D is tr i ct Judge . * ( Fi l ed: J ul y16, 2007)

____________ OPI NI ON O F THE COURT

____________A p p ell an ts’ b ri ef stat es th at H asp el died o n O ctob er 7 , 2 0 0 1 , w h il e A p p ell ee ’s 1 br i ef a nd the D i s tr i ctC our t ’ s O ct ober2, 2006 m emora ndum s t at e thatH as pel di ed on O ct ober13, 2001. 2 R A M B O , D is tr i ct

Judge . A ppel l ant s , K enneth H as pel and V i cki V i ncent , co- admi ni s tr at or s of the es t at e of M i chael J . H aspel , app eal the D i stri ctC ou rt ’s dis m i ssal of thei r com plai nt agai nst A p p e llee S tate F a rm M u tu a l A u to m o b ile In su ra n c e C o m p a n y , fo r f a ilu re to sta te a c laim upon w hi ch r el i ef c an be gr ant ed. A ppel l ant s as s ertthatthe i ns ur ed’ s es t at e w as ent i t l ed t o s t ack unde r i ns ur ed mot or i s t( U I M ) benef i t s of $200, 000 fr om one i ns ur ance pol i cy o n to $ 1 0 0 ,0 0 0 in U IM b e n e f its th a t S tate F a rm h a d a lre a d yp a id o n a n o th e r p o licy . S tate Far m m ai nt ai ns thats t acki ng of bene fi t s i s pr ecl uded bec aus e the i ns ur ed w ai ved s t acki ng o n th e c o n tro lli n g p o licy , w h ich a lso c o n tain s a h o u se h o ld e x c lu sio n p ro v isio n th a t cle a rly a n d u n a m b ig u o u slye x c lu d e s th e in su re d f ro m c o v e ra g e . T h e u n d e rly in g f a c ts p re se n t a ques t i on r egar di ng w hetherthe s t acki ng w ai verw as a know i ng w ai verof i nt er - pol i cy s t acki ng. H ow ever , beca us e w e fi nd thatthe hous ehol d excl us i on pr ecl udes cover age h e r e , we wi l l a f

f i r m. I. I n Oc t o b e r2 0 0 1 , M i c h a e l J . Ha s p e l wa s k i l l e d wh i l e r i d i n g h i s mo t o r c y c l e . At 1 the t i m e of hi s death, H as pel had tw o i ns ur ance pol i ci es underw r i t t en bySt at e Farm . O ne pol i cyi ns ur ed the mot or cy cl e he ha d been r i di ng w hen he di ed ( m ot or cy cl e pol i cy ) . T he o th e r p o licyc o v e re d tw o o th e r v e h icle s, a F o rd R a n g e r a n d a T o y o ta M R 2 (a u to m o b ileT he D i s tr i ctC our topi ni on cont ai ns the aut om obi l e pol i cyhous ehol d excl us i on 2 l a n g u a g e , wh i c h s t a t e s : “ T HE RE I S NO C OVE RA GE F OR BO DI L Y I NJ UR Y T O AN IN S U R E D U N D E R C O V E R A G E W 3 [(u n insu red / un d erinsu red m o tori st co v era g e)]: W hi l e occ upy i ng a mot orvehi cl e ow ned byy ou, y ours pous e, oranyr el at i ve i f i ti s not in s u re d f o r c o v e ra g e u n d e r t h is p o lic y .” 3 p o li cy ). F o ll o w ing lega l acti o n , H asp el’s estate reco v ere d $ 1 0 0 , 0 0 0 fro m the to rt fe aso r, a s w e ll a s $ 1 0 0 ,0 0 0 , th e m a x im u m U IM b e n e f it a v a ila b le , u n d e r t h e m o to rc y c le p o lic y . St at e Farm s ubs equent l ydeni ed the es t at e’ s cl ai m for$200, 000 i n U I M benef i t s undert he aut om obi l e pol i cy( the t ot al of the $100, 000 m axi m um U I M benef i tavai l abl e foreac h of th e tw o v e h icle s in su re d ), as se rtin g th a t H a sp e l h a d re jec ted sta c k in g o f

U IM b e n e f

its underthatpol i cyand thatthe pol i cycont ai ned a hous ehol d excl us i on pr ovi s i on. 2 A p p e l l a n t s f

i l e d s u i ti n th e C o u r to f C o m m o n P l e a s o f

W a s h i n g t o n C o u n ty, Penns y l vani a, on O ct ober7, 2005. A ppel l ee r emoved t he ca s e t o the U ni t ed St at es D i s tr i ctC our tforthe W es t ern D i s tr i ctof Penns y l vani a and f i l ed a Rul e 12( b) ( 6) m ot i on t o d i sm i ss the co m plai nt forfai l ure t o st at e a cl ai m . T he D i stri ctC ou rtst ay ed the case pendi ng the Penns y l vani a Supr eme C our t ’ s deci s i on i n C r al ey v . Stat e Farm F i r e and C as ual t y C o. , 895 A . 2d 530 ( Pa. 2006) , w hi ch w as deci ded on A pr i l 21, 2006. T he D i s tr i ctC our ts ubs equent l yr eques t ed addi t i onal br i efi ng, and or al ar gum ent , w hi ch t ook pl ace on J ul y19, 2006. O n J ul y19, 2006, the D i s tr i ctC our ti s s ued an or dergr ant i ng S ta te F a rm ’s m o tio n to d is m is s f o r t h e re a s o n s s ta te d o n th e re c o rd d u ri n g o ra l a rg u m e n t. A ppel l ant s ’ t i m el yappea l of the D i s tr i ctC our t ’ s fi nal or derdi s m i s s i ng the compl ai nt fol l ow ed.W e not e thatthe D i s tr i ctC our tquot ed the “no s etof fa ct s ” l anguage of C onl ey v . 3 G i bs on , 355 U . S. 41, 45- 46 ( 1957) , w hen i ts etfor th i t s l egal s t andar d forr evi ew i ng a m ot i on t o di s m i s s . Si m i l ar l y , ourpr i oropi ni ons have r egul ar l yci t ed C onl ey ’ s “no s etof fac t s ” l anguage . H ow ever , the Supr eme C our t , i n i t s r ece ntdeci s i on i n T w o m b ly , e x p re ss lysta ted th a t C onl ey s houl d notbe i nt erpr et ed as “the mi ni m um s t andar d of adequa t e pl eadi ng t o govern a compl ai nt ’ s s ur vi val . ” 127 S. C t . at1969. E ven i f the D i s tr i ctC our tr eac hed i t s concl us i on bas ed on w hatw e now under s t and t o be an i m pr oper l ynarr ow i nt erpr et at i on of C onl ey , w e con cl ud e t hat s uch err or i s harm l ess beca us e w e fi nd thatthe fa ct s al l eged he r e ar e not“s ugges t i ve of i l l egal conduct ” eve n vi ew ed i n l i ghtof T

w o m b ly ’s c la ri f

ic a tio n o f

th e m o tio n to d is m is s s ta n d a rd . I d. at1969 n. 8. 4 II. T he D i s tr i ctC our thad di ver s i tyj ur i s di ct i on overA ppel l ant s ’ br eac h of contr act c l a i m p u r s u a n tt o 2 8 U. S . C. § 1 3 3 2 . W e h a v e j u r i s d i c t i o n o v e rAp p e l l a n t s ’ a p p e a l f r o m a fi nal or derof di s m i s s al under28 U . S. C . § 1291. W e exe r ci s e pl enaryr evi ew overa di s tr i ctcourt ’ s gr antof a mot i on t o di s m i s s for fai l ur e t o s t at e a c l ai m underFeder al R ul e of Ci vi l Pr ocedur e 12( b) ( 6) . O urs t andar d of r evi ew i s the s ame as thatappl i ed bythe D i s tr i ctC our t . W e ar e r equi r ed t o acc eptas t rue a ll fa c tu a l alle g a tio n s in th e c o m p lain t an d d ra w a ll i n f e re n c e s f ro m th e f a c ts a lleg e d in th e lig h t m o s t f

a v o ra b le to th e p la in tif

f. W or ldcom , I

nc. v. G r aphnet

, I nc. , 343 F. 3d 651, 65 3 (3d C i r. 20 03 ). In consi deri ng w hetherthe co m plai nt s urvi ves a m oti on t o d i sm i ss, w e r evi ew w hetheri t“cont ai n[s ] ei therdi r ectori nfer ent i al al l egat i ons r es pect i ng al l t he m aterial elem en ts ne ce ssaryto su stai n rec o v eryu n d er s o me vi abl e l egal theory . ” B e ll A tl. C o rp . v. T

w o m b ly , – U . S. –, 127 S. C t . 1955, 1969 ( 2007) ( quot i ng C arC ar r i ers , I nc. v. For d Mot orC o. , 7 4 5 F . 2 d 1 1 0 1 , 1 1 0 6 (7th C ir . 1 9 8 4 ). 35 III . T he D i s tr i ctC our tr el i ed pr i m ar i l yon C r al ey in co n clud ing that b o th H asp el’s w ai verof s t acki ng i n t he aut om obi l e pol i cyand the hous ehol d excl us i on pr ovi s i on i n t he a u to m o b ile p o licyb a rre d re c o v e ryo f a n yb e n e f

its. A lth o u g h w e a g re e th a t C r al ey pr ovi des thatPenns y l vani a l aw perm i t s w ai ver s of i nt er - pol i cys t acki ng, w e ques t i on w h ethe r C r al ey supp ort s the co nclusi on that H aspel ’s autom ob i l e po l i cycon t ai ns a k n o w in g w a iv e r o f

in ter -p o licysta c k in g . H o w e v e r, b e c a u se w e a g re e th a t th e h o u se h o ld excl us i on i n t he aut om obi l e pol i cydi ct at es the r es ul tr eac hed i n the D i s tr i ctC our t , and w i l l aff i r m on thatbas i s , w e nee d notdeci de the i nt er - pol i cys t acki ng w ai verques t i on. S tac k in g o f

U IM b e n e f

its a n d w a iv e r o f

th e sa m e a re p ro v id e d f o r b yP e n n sy lv a n ia s t atut e. Sect i on 1738 of the Penns y l vani a M ot orV ehi cl e Fi nanci al R es pons i bi l i tyL aw (M V F R L ) s t at es: ( a) L i m i tforeac h vehi cl e. –W hen more than one ve hi cl e i s i ns ur ed under on e or m ore poli ci es provi ding un i nsured o r underi nsured m otor i st c o v e ra g e , the sta ted lim it fo r u n in su re d o r u n d e rin su re d c o v e ra g e sh a ll appl ys epar at el yt o eac h vehi cl e s o i ns ur ed. T he l i m i t s of cove r ages a v a ilab le u n d e r th is s u b c h a p ter f o r a n in su re d sh a ll b e th e su m o f th e lim its foreac h m ot orvehi cl e as t o w hi ch the i nj ur ed per s on i s an i ns ur ed. ( b) W ai ver . –N otw i ths t andi ng the pr ovi s i ons of s ubs ect i on ( a) , a named i ns ur ed mayw ai ve cove r age pr ovi di ng s t acki ng of uni ns ur ed or under i ns ur ed cove r ages i n w hi ch ca s e the l i m i t s of cove r age unde rthe p o licyf o r a n in su re d sh a ll b e th e sta ted lim its f o r th e m o to r v e h icle a s to w hi ch the i nj ur ed per s on i s an i ns ur ed. 75 Pa. C ons . St at . A nn. § 1738.6

I n C r al ey , w h ich in v o lved sim il ar f ac ts, Jay n ea n n C raley ’s estate co ll ec ted U IM b e n e f its p ro v id e d f

o r in h e r p o licy , w h ich w a s th e p o licyth a t co v e re d th e v e h icle in v o lv e d in th e a c c id e n t. C r al ey , 8 9 5 A .2 d a t 5 3 3 . T h e e sta te th e n so u g h t U IM b e n e f its undera s epar at e pol i cyhel d byJ ayneann’ s hus band, R andal l , w hi ch cove r ed a di ffe r ent v e h ic le . I

d. T h e P e n n s yl v a n i a S u p r e m e C o u r ts t a t e d th a tth e t e r m s o f R a n d a l l ’ s p o l i c y, the pol i cyunderw hi ch the bene fi t s ati s s ue w er e s ought , det erm i ned w hetherand w hat b e n e f its w e re a v a ila b le . I

d. Si m i l ar l y , her e, St at e Farm has pai d the maxi m um amount of U I M benef

i t s avai l abl e underthe mot or cy cl e pol i cyand A ppel l ant s now s eek t o s t ack the U IM b en ef

it s p rov ided fo r i n the a u tom o b il e p o li cy . A cc o rdin g ly , as a thresh o ld m att er, C r al ey di ct at es thatthe t erm s of the aut om obi l e pol i cydet erm i ne w hetherand w hat benef i t s m aybe ava i l abl e. W i th r es pectt o t he i nt er - pol i cys t acki ng i s s ue, i n C r al ey , R andal l ’ s pol i cyi ncl uded a w a iv e r t h a t r e

je c te d U IM b e n e f

its in e x c h a n g e f

o r a re d u c e d p o lic yp re m iu m . I d. at 5 3 3 -3 4 . T h e P e n n sy lv a n ia S u p re m e C o u rt d e ter m in e d th a t th e sta c k in g w a iv e r in R a n d a ll C r al ey ’ s pol i cypr ecl uded U I M cover age, aft erexpr es s l yr ej ect i ng “the pr emi s e that Sect i on 1738 does notperm i ti nt er - pol i cys t acki ng w ai ver . ” I d. at536. H ow ever , the C r al ey courtal s o concl uded that§ 1738 r equi r es “s om e form of know i ng w ai ver[t o] o c c u r” a s a p re -r e q u is ite to e n f o rc e m e n t o f

a n in te r- p o lic ys ta c k in g w a iv e r. I d. at 54 1 . It r eas oned thatthe w ai veri n R andal l C r al ey ’ s pol i cyw as val i d and enf or cea bl e bec aus e the pol i cycover ed onl yone vehi cl e; thus , R andal l “coul d nothave thoughthe w as r ece i vi ng aT he hous ehol d excl us i on i n C r al ey sta ted th a t “[ t]h e re is n o c o v e ra g e f o r b o d ily 4 in ju ryto a n in su re d u n d e r C o v e ra g e U 3 [ (u n in su re d m o to rist c o v e ra g e )]: (1 ) W h ile occupy i ng a mot orvehi cl e ow ned byy ou, y ours pous e, oranyr el at i ve i f i ti s noti ns ur ed forthi s cover age unde rthi s pol i cy . ” 895 A . 2d at534. 7 r educe d pr emi um forw ai vi ng i ntr a- pol i cys t acki ng beca us e ther e coul d be no i ntr a- pol i cy s t acki ng w i th onl yone vehi cl e on ‘ the pol i cy . ’ ” I d. a t5 4 2 . Th e P e n n s y l v a n i a S u p r e me C our texpl i ci t l ynot ed thatw hen a pol i cycover s m ul t i pl e vehi cl es , l i ke the i ns t ant aut om obi l e pol i cy , i tr ai s es ques t i ons r egar di ng w hethera s t acki ng w ai verw oul d be k n o w in g w ith re s p e c t to in te r- p o lic ys ta c k in g . I d. a t 5 4 2 n . 1 8 . A c c o rd in g ly , alth o u g h it i s cl earthatw ai ver s of i nt er - pol i cys t acki ng ar e perm i s s i bl e, i ti s notcl earon the fa ct s of this case w h ethe r th e a u tom o b il e p o li cyco n tai n s a v ali d an d en fo rce ab le w aive r ofinterpol i cys t acki ng. W e nee d notans w erthi s ques t i on, how ever , beca us e the hous ehol d excl us i on provides a suffi ci ent l egal basi s for di sm i ssi ng the co m plai nt. T he D i stri ctC ou rtal so l ooked t o C r al ey to d e ter m in e th a t th e h o u se h o ld e x c lu sio n p re c lu d e d c o v e ra g e . R a n d a ll C ra le y ’s p o lic yc o n ta in e d a h o u s e h o ld e x c lu s io n , i d. at533- 34, thatw as vi r tual l yi dent i cal t o the one c ont ai ned i n t he i ns t antaut om obi l e pol i cy . H ow ever , the foc us of the D i s tr i ct 4 C o u rt’s d e c isio n in th is re g a rd f o c u se d m a in lyo n th e d e c isio n o f th e P e n n sy lv a n ia S u p e ri o r C o u rt , Stat e Farm F i r e & C as . C o. v. C r al ey , 8 4 4 A .2 d 5 7 3 (P a . S u p e r. C t.T he Penns y l vani a Supr eme C our tdecl i ned t o addr es s the enf or cea bi l i tyof the 5 hous ehol d excl us i on cl aus e i n i t s deci s i on, al though i tnot ed thati thad pr evi ous l yfound s u c h e x c lu s io n s to b e e n f o rc e a b le . See C r al ey , 8 9 5 A . 2 d at 53 1 -32 . T h e S u p erior C o u rt had agr eed w i th t he tr i al court ’ s fi ndi ng thati nt er - pol i cys t acki ng w ai verw as i nval i d, but re v e rse d th e trial c o u rt’s d e c isio n th a t th e h o u se h o ld e x c lu sio n w a s v o id a s c o n tra ryto p u b lic p o lic y . C r al ey , 844 A . 2d at573- 74. T he Penns y l vani a Supr eme C our tr ever s ed the S u p erior C o u rt ’s st ac k ing w aive r ruli n g , b u t did n o t distu rb th e S u p erior C o u rt ’s h o u s e h o ld e x c lu s io n ru lin g . C r al ey , 895 A . 2d at532. I taff i r m ed the dec i s i on t o r emand to th e tr ia l c o u rt f

o r d e c la ra to ry ju d g m e n t in f a v o r o f th e in s u ra n c e c o m p a n y . I d. T he r el evantpol i cyl anguage i n C olbert s t at ed 6 W e w i l l notpayforbodi l yi nj uryt o any one occ upy i ng ors truck bya mot or vehi cl e ow ned orl eas ed byy ou ora hous ehol d r es i dentw hi ch i s not cover ed underthi s pol i cy , ori f the l i abi l i tycover age of thatvehi cl e i s us ed t o p a ya n yp o r t i o n o f

a n i n s u r e d ’ s b o d i l yi n

j u ryl i a b i l i tyc l a i m. 813 A . 2d at751. 8 2004) , w hi ch had f

ol l ow ed hous ehol d excl us i on pr i nci pl es s etfor th i n P r udent i al 5 P ropert y an d C asua l t

y Insurance C o. v. C olbert , 8 1 3 A . 2 d 7 4 7 (P a. 20 0 2 ). “G ener al l ycourt s m us tgi ve pl ai n m eani ng t o a cl earand unambi guous contr act pr ovi s i on unl es s t o do s o w oul d be contr aryt o a cl ear l yexpr es s ed publ i c pol i cy . ” C olbert , 813 A . 2d at750 ( ci t at i ons om i t t ed) . I n C olbert , the P en n sy lvan ia S u p rem e C o u rt cons i der ed a hous ehol d excl us i on pr ovi s i on thatw as s ubs t ant i vel yi dent i cal t o the hous ehol d excl us i on i n t he i ns t antaut om obi l e pol i cy and det erm i ned thatthe exc l us i on 6 w as cl earand unambi guous and notcontr aryt o publ i c pol i cy . 813 A . 2d at755 ( hol di ng, i n s i m i l arci r cumst ance s , thatthe hous ehol d excl us i on of U I M benef i t s w as “cons i s t ent w ith the u n d erly ing p u b li c p o li cyo f th e M V F R L ”). T he hous ehol d excl us i on i n H as pel ’ s aut om obi l e pol i cys quar el yr ej ect s cover age f o r a n a c c id e n t in v o lv in g th e m o to rc y c le , w h ic h w a s c o v e re d u n d e r a d if f e re n t p o lic y .9

M o re o v e r, as w e h a v e sta ted p re v io u sly , w h e n th e v e h icle in v o lv e d in a n a c c id e n t is cover ed undera s epar at e pol i cy , a val i d hous ehol d excl us i on cl aus e “pr ohi bi t s the

‘ s t acki ng’ of uni ns ur ed orunder i ns ur ed cove r age a cr os s m ul t i pl e i ns ur ance pol i ci es . T he cl ai m antm ayr ecove runderthe pol i cycover i ng the occ upi ed vehi cl e, butcannotadd cover age pr ovi ded bythe pol i cycont ai ni ng the exc l us i on. ” N at i onw i de Mut . I

ns . C o. v. H am pt on , 935 F. 2d 578, 587 ( 3d C i r . 1991) . A ccor di ngl y , underPenns y l vani a l aw , t he H a sp e l’s a u to m o b ile p o licyh o u se h o ld e x c lu sio n p re c lu d e s th e sta c k in g o f U IM b e n e f

its so u g h t b yA p p e llan ts. T h e re f o re , w e w ill a f

f irm th e o rd e r o f

th e D istric t C o u rt.