Source: http://www.torttalk.com/2010/01/year-end-review-article-on-important.html
Timestamp: 2019-04-20 11:07:13+00:00

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Editor's note: Last of two parts.
If 2009 is any indicator, it will remain a challenging task to stay on top of automobile litigation law and, at times, difficult to predict how the courts will rule on the myriad of issues continually arising in the novel area of post-Koken cases.
For the uninitiated, the state Supreme Court's landmark decision in Insurance Federation of Pennsylvania v. Koken, 801 A.2d at 624 (Pa. 2005), changed the realm of auto insurance litigation by ending the requirement that claims over uninsured/underinsured motorist coverage be resolved through arbitration.
In 2009, post-Koken automobile accident cases continued to move slowly through the system as both plaintiff's counsel and defense counsel cautiously maneuvered through the uncharted waters presented by these novel cases.
One early issue that appeared to be solidified last year by decisions out of Allegheny County and Lackawanna County was that UM/UIM claims can proceed in a consolidated fashion under one lawsuit with the claim against the third-party tortfeasor under Pa.R.C.P. 213, given that both claims arise out of the same occurrence.
The established trend of trial courts allowing for the consolidation of third-party claims and UIM claims largely continued in 2009 with a number of additional trial court decisions.
In Pike County, Judge Gregory H. Chelak issued an opinion in Jannone v. McCooey and State Farm, 2009 WL 2418862 (C.P. Pike April 1, 2009), denying the tortfeasor's preliminary objection to the joinder of a third-party claim and a UIM claim under one caption. Chelak also ruled, in dicta, that evidence of insurance could potentially come into evidence during the later trial of that matter for limited purposes.
In Serulneck v. Kilian and Allstate, 2008-Civil-285 (C.P. Lehigh April 7, 2009), Judge Carol K. McGinley denied the tortfeasor defendant's motion to sever the claims against him from the UIM claims that were filed by the plaintiff under one caption.
Judge C. Gus Kwidis of the Beaver County Court of Common Pleas followed suit in Six v. Phillips and Nationwide Ins. Co., 2009 WL 2418861 (C.P. Beaver June 30, 2009), with his decision denying the preliminary objection by the tortfeasor to the joinder of a third-party claim and a UIM claim in one lawsuit. Similar to Chelak's ruling in Jannone, Kwidis also stated, in dicta, that evidence of insurance may come into evidence at trial for limited purposes.
Judge Thomas Burke of the Luzerne County Court of Common Pleas ruled in Glushefski v. Sadowski and Erie Ins. Exchange, 1189-Civil-2009 (C.P. Luzerne July 24, 2009), that the preliminary objection filed by a tortfeasor defendant seeking to sever a third party claim from a consolidated UIM claim should be overruled.
In the case of Gingrich v. Esurance and Graci, No. 08795 CV 2009 (C.P. Dauphin Nov. 2, 2009), the third party tortfeasor filed preliminary objections to a complaint that joined the third party and the UIM causes of action under one caption. Dauphin County Judge Todd Hoover issued a one-line order denying the preliminary objections on Nov. 2, thereby allowing the claims to proceed in a consolidated fashion.
It appears that an overriding factor in essentially all of the above decisions was that the consolidation of these claims would further the interests of judicial economy by promoting streamlined, as opposed to piecemeal, litigation.
However, more recently, in an opinion and order issued in Baptiste v. Strobel and State Farm, A.D. 09-11444 (C.P. Butler Nov. 5, 2009), Judge Marilyn J. Horan revealed there is room for disagreement on the consolidation issue.
Horan rejected the judicial economy argument as being outweighed by the undue prejudice to the tortfeasor given the possible introduction of UIM insurance issues in these combined cases. Horan therefore granted the misjoinder of causes of action preliminary objection filed by State Farm, the UIM carrier. Horan not only ruled that the UIM claim was to be severed from the third party claim, but also ruled that the UIM claim should be stayed pending the resolution of the underlying negligence claim.
To date, there have not been any appellate court opinions on this consolidation issue. It is unlikely that any such appellate decisions will be forthcoming in the near future as these issues are not readily appealable at such early stages of the litigation. As such, Pennsylvania litigators will have to continue to rely upon the various trial court opinions, and the reasoning contained therein, to advocate their positions.
The Superior Court issued an opinion upholding Liberty Mutual Insurance Group's forum selection clause in the post-Koken case of O'Hara v. The First Liberty Ins. Corp., PICS Case No. 09-1884 (Pa. Super. Nov. 9, 2009) Kelly, J. (9 pages).
In this case, Delaware County plaintiffs were injured in a Delaware County accident but filed suit in Philadelphia County for breach of contract and loss of consortium after Liberty denied their UIM claim.
Liberty Mutual's policy had a forum selection clause mandating that, if suit were filed by the insured, the suit "must be brought in a court of competent jurisdiction in the county and state of your legal domicile at the time of the accident." Accordingly, Liberty Mutual filed preliminary objections asserting improper venue.
The trial court sustained the preliminary objections and transferred the case to Delaware County. Affirming this decision on appeal, the Superior Court found the clause to be clear and unambiguous and summarily rejected the plaintiffs' public policy arguments.
The Pennsylvania Superior Court handed down a monumental UIM decision in the case of Pusl v. Means, 2009 WL 3065089 (Pa. Super. Sept. 23, 2009).
In the opinion written by Judge Zoran A. Popovich, the Superior Court held that where a plaintiff first obtains a UIM recovery prior to the conclusion of her suit against the third-party defendant tortfeasor, the third-party defendant is entitled to have any verdict entered against him reduced by a credit or set-off in the amount of the UIM benefits previously secured by the plaintiff.
More specifically, the plaintiff in Pusl had recovered $75,000 in UIM policy limits under his own automobile insurance policy from State Farm in a settlement prior to the completion of the trial against the tortfeasor defendant.
At the later trial against the defendant tortfeasor, the jury entered a verdict in favor of the plaintiff in the amount of $100,000. In post-trial motions, the defense requested a molding of the verdict to $25,000 after the application of a credit or set-off of the $75,000 in UIM benefits previously received by the plaintiff. The trial court granted the defendant's request and, on appeal, the Superior Court affirmed.
In so ruling, the Superior Court weighed two conflicting public policies: the recognized public policy against double recoveries by plaintiffs; and the policy that a tortfeasor should be liable for the all of damages caused as a result of his negligence.
The court in Pusl noted that the first public policy, against double recoveries, was essentially codified in 75 Pa.C.S.A. Section 1722, "Preclusion of recovering required benefits." The court noted that Section 1722 "was obviously designed" to refer to first party benefits under the Motor Vehicle Financial Responsibility Law and to prevent a double recovery of those benefits.
The plaintiff's UIM benefits were found to "fall within Section 1722's first-party benefits because the UIM benefit was paid to her from her personal insurance policy with State Farm."
Therefore, according to the Pusl court, the plaintiff's receipt of both the full jury award from the defendants and the pre-trial UIM settlement with State Farm would constitute a "double recovery" that the MVFRL was specifically designed to prevent.
The court disagreed with the plaintiff's argument, in part, that the reduction of the verdict amount violated the second noted public policy requiring a tortfeasor defendant to pay for all of the damages he or she caused. The court reasoned that the tortfeasor's liability was not lessened or reduced by the offset at all, because State Farm, as the carrier that paid out the UIM benefits, still had the right to pursue a subrogation claim against the defendant and thereby require that defendant to pay back the $75,000 in UIM benefits. Thus, according to this opinion, the second public policy was not violated by the molding of the verdict.
The plaintiff in Pusl has since petitioned the Pennsylvania Supreme Court to accept an appeal and the defendant has filed an opposition to that petition. To date, the Supreme Court has not indicated whether it will hear the issue.
In the case of Carra-Cielski v. Scrimalli, PICS Case No. 09-1650, 2006-C-2735 (C.P. Lackawanna Aug. 18, 2009), Lackawanna County Court of Common Pleas Judge Carmen Minora seemed to expand the ambit of a negligent entrustment claim.
In his opinion, Minora acknowledged that the state Supreme Court has limited the theory of negligent entrustment to specific and narrow situations where the owner of a vehicle knew or should have known that, when permission was given to the driver, the driver was not in a condition to operate the vehicle.
However, Minora appeared to expand that rule of law under the facts of this case by allowing the claim of negligent entrustment to continue beyond the summary judgment stage on the grounds that defendant-driver was the grandson of the defendant-owner and was known to have a history, over two years leading up to the accident, of engaging in repeated incidents of underage drinking.
It was also noted that, on at least one occasion prior to the subject accident, the defendant-driver had even been found to have been drinking and driving the subject vehicle.
As such, Minora ruled that the repeated conduct of the defendant-driver arguably demanded greater vigilance, supervision and control by the defendant-owner over the vehicle that he owned. Accordingly, the court felt that a jury could conclude that the defendant-owner knew or should have known that the defendant-driver "could become incompetent to drive his motor vehicle."
The court found that the defendant-owner's willful blindness to his grandson's repeated illegal activities meant that the plaintiff could possibly prove to a jury the necessary elements constituting the cause of action of negligent entrustment. As such, the court felt that it was premature to dismiss that cause of action at that summary judgment stage of the case.
The state Supreme Court granted a petition for allowance of appeal from the Commonwealth Court decision in Heller v. Pennsylvania League of Cities and Municipalities, 950 A.2d 362 (Pa.Cmwlth. 2008), to address the issue of whether the court should find improper an exclusion in the defendant's policy that provided that any person receiving workers' compensation benefits was ineligible to receive UIM/UM motorist benefits for the same incident.
The Commonwealth Court, in a decision authored by Judge James Gardner Colins, held that the policy's exclusion of UIM benefits where workers' compensation benefits were available to the claimant was not void as against public policy. It remains to be seen how the Supreme Court will decide this important issue.
The state Supreme Court issued its decision June 22 in Erie Insurance v. Baker, 2009 WL 1741756 (Pa. 2009). In a 4-3 decision, the court again upheld a UIM carrier's "household exclusion."
The case involved an injured party who was operating his motorcycle, which was insured for UIM coverage by Universal Underwriters at the time of the 1999 accident. The injured party initially settled with the third party tortfeasor and secured the limits of the Universal Underwriter's UIM coverage that covered his own motorcycle.
The injured party then sought to stack UIM coverage from a policy he had with Erie Insurance that covered his other three vehicles, but not the motorcycle he was riding at the time of the accident. That Erie Insurance policy had stacking affiliated with the available UIM coverage on the other three vehicles.
After receiving the claim for UIM benefits from the motorcyclist, Erie filed a declaratory judgment action asserting that it did not owe UIM benefits to the injured party in light of the "household exclusion" in its policy. This exclusion essentially provided that there was no UIM coverage available to the injured party under the Erie policy for incidents in which the insured was injured while occupying another motor vehicle owned by the insured, but not covered under the Erie policy.
The injured party attempted a "novel" argument to the Supreme Court -- that the household exclusion violated Section 1738 of the Motor Vehicle Financial Responsibility Law, pertaining to "stacking of uninsured and underinsured benefits and option to waive," in that the exclusion prevented the injured party from stacking his Erie UIM benefits when he elected and paid for such stacked UIM benefits.
The majority in the Pennsylvania Supreme Court decision -- Justices Jane Cutler Greenspan, J. Michael Eakin and Thomas G. Saylor and Chief Justice Ronald D. Castille -- held that the exclusion was a valid and unambiguous preclusion of coverage for risks that Erie had not accounted for when it determined the premium to be paid by the injured party.
Simply put, Erie was not required to pay out UIM benefits for a vehicle that was not covered under the Erie policy. The court also noted that the "application of the household exclusion in this case does not involve 'stacking' at all."
As such, Baker is yet another example of the Supreme Court upholding the validity of the "household exclusion" in automobile insurance policies. This policy exclusion has been upheld by the Supreme Court as valid and enforceable time and time again in cases including Prudential Prop. & Cas. Ins. Co. v. Colbert, 813 A.2d 747 (Pa. 2002); Eichelman v.. Nationwide Ins. Co., 711 A.2d 1006 (Pa. 1998). In Paylor v. Hartford Ins. Co., 640 A.2d 1234 (Pa.1994) the court upheld a similar "family car exclusion."
In June, the Superior Court reversed a decision by Judge Harold A. Thomson Jr. of the Pike County Court of Common Pleas that allowed for limited use of the seat belt defense in Gaudio v. Ford Motor Co., PICS Case 09-0927 (June 1, 2009) Donohue, J.; Fitzgerald, S.J., dissenting (61 pages). Although this case is a products liability case alleging a defective airbag system, it is reviewed here given that this decision, if upheld, could have had a far reaching effect on automobile accident litigation.
By way of background, the Seat Belt Statute, 75 Pa.C.S. § 4581, precludes any reference in a civil claim to the fact that the injured party was not using a seatbelt at the time of an accident.
Gaudio involved a decedent found in a ditch after a presumably single car motor vehicle accident. The air bag was deployed and the decedent was not wearing a seatbelt. It was alleged by the plaintiffs that the decedent was killed by a defective air bag system.
At trial, Thomson allowed the defense to introduce evidence that the decedent was not wearing a seat belt. Such evidence was offered by the defense not for the purpose of showing that the decedent was contributorily negligent, but rather, as part of the effort in this products liability case to show that the air bag system was not defective.
However, Thomson's decision was overruled by the Superior Court in a 2-1 decision. Despite a strong dissent by Judge James J. Fitzgerald, adopting the trial court's reasoning, the majority chose to uphold the seemingly airtight statutory prohibition against the use of the seatbelt defense in civil litigation matters, much to the relief of the plaintiffs bar across Pennsylvania.
Going into 2010, it appears that the issues in the novel post-Koken cases will remain a concern for litigators across the state. How the trial courts will handle the various post-Koken issues in the absence of appellate guidance remains to be seen. Presumably, as they have done to date, the trial courts will attempt to utilize the doctrine of stare decisis and rule on the issues in a fashion similar to what has been done in other similarly consolidated matters.
This article originally appeared in the January 4, 2010 edition of the Pennsylvania Law Weekly, a statewide legal news publication.(c) 2009 Incisive Media US Properties, LLC. Further duplication without permission is prohibited. All rights reserved. Please contact the author for permission to reprint or duplicate.

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