Source: http://www.torttalk.com/2012/11/year-end-article-look-at-2012s-trends.html
Timestamp: 2019-04-18 21:21:10+00:00

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In this first of a two-part column, I delve into the top civil litigation decisions and trends of 2012. This first column will review the developments in the auto law arena and will be followed by a second column analyzing the important cases and trends in general civil litigation matters.
A look back over the past year reveals many significant changes in the law along with further anticipated developments to come in the near future. But, first, a review of the past year's notable changes in the auto law context.
Without a doubt, the most talked-about auto law opinion to come down over the past year was the Pennsylvania Superior Court's September 28 decision in the case of Smith v. Rohrbaugh, No. 91 MDA 2010, 2012 Pa. Super. 208 (Pa.Super. Sept. 28, 2012 Stevens, P.J., Bender, J., Panella, J., Donohue, J., Allen, J., Mundy, J., Olsen, J., Ott, J., and Wecht, J.) (Opinion by Ott, J.), in which that court took the rare step of reversing one of its notable earlier holdings.
In Smith v. Rohrbaugh, the Superior Court held that its previous decision in the case of Pusl v. Means, 982 A.2d 550 (Pa.Super. 2009), was wrongly decided and therefore overruled.
In Pusl, the Superior Court held that, where a plaintiff first obtained an underinsured (UIM) benefits recovery in a motor vehicle accident case from his or her own automobile insurance company, the defendant tortfeasor in the third-party liability lawsuit was entitled to a credit against the verdict up to the UIM amounts already received by the plaintiff.
The rationale behind this ruling was to prevent a double recovery by the plaintiff in violation of Pennsylvania's Motor Vehicle Financial Responsibility Law.
When the prior Pusl decision came down in 2009, it caused quite a stir and many litigators on both sides of the bar questioned the validity of the decision. As the auto litigation bar was anxiously awaiting a review of the Pusl case by the Pennsylvania Supreme Court, that court surprised many by denying allocatur, thereby leaving the Superior Court's decision as the rule of the land.
In the recent Smith v. Rohrbaugh case, the trial court applied a Pusl UIM credit against a jury's verdict entered against the tortfeasor defendant driver.
The plaintiff objected to this credit and appealed.
On appeal, the Superior Court in Smith noted that Pusl had been based, in part, upon the Superior Court's prior decision in the case of Tannenbaum v. Nationwide Ins., 919 A.2d 267 (Pa.Super. 2007), which pertained to the recovery of first-party benefits. However, the Superior Court decision in Tannenbaum had since been overruled by the Pennsylvania Supreme Court. Thus, a rationale underpinning the Superior Court's separate ruling in Pusl was eradicated.
In Smith, the Superior Court stated that the court in Pusl had correctly decided that a section of the Motor Vehicle Financial Responsibility Law, i.e., 75 Pa.C.S.A. Section 1722, prevented a double recovery of first-party benefits in motor vehicle accident matters. The court noted that UIM benefits are generally and colloquially considered to be first-party benefits because they come from the first-party carrier.
However, the Smith court found that the Pusl decision incorrectly equated UIM benefits with the type of first-party benefits that are specifically defined in the MVFRL by the legislature. Based upon a finding that the reasoning in Pusl was incorrect, it was held in Smith that the Pusl court had also incorrectly concluded that the Section 1722 prohibition against a double recovery of first-party benefits applied to UIM payments. The court found that to rule otherwise would represent an impermissible rewriting of the MVFRL.
As such, the Pusl credit no longer exists and it appears that a plaintiff may now, if desired, secure UIM benefits prior to proceeding on a claim against the third-party tortfeasor on the liability side.
It remains to be seen whether this case will be appealed up to the Pennsylvania Supreme Court and, if so, whether that court will grant allocatur to hear the appeal this time.
As analyzed in my recent article, "Hurricane Koken Turns To Sea," (Pennsylvania Law Weekly, September 18), Pennsylvania auto law jurisprudence also currently appears poised to provide much-needed appellate guidance in another area. It is anticipated that the appellate courts will soon have a chance to weigh in on a variety of novel post-Koken issues that litigators and judges have struggled with over the past few years.
It has now been nearly seven years since the automobile accident litigation landscape was forever changed by the monumental Pennsylvania Supreme Court decision in the case of Insurance Federation of Pennsylvania v. Commonwealth, Department of Insurance (Koken), 889 A.2d 550 (Pa. 2005).
In that decision, the state Supreme Court held that automobile insurance carriers were not required to include arbitration clauses in their policies for the resolution of underinsured and uninsured motorist claims. Most carriers rid their policies of arbitration clauses, thereby requiring UIM claims, for the first time, to proceed through the court system like any other matter. This gave rise to a wide variety of difficult, novel post-Koken issues at the pleadings, discovery and trial stages.
To date, other than the issue of proper venue, the appellate courts have not had an opportunity to squarely address any novel post-Koken issue of note. Among the most troubling of those issues are the questions of consolidation versus severance of UIM and third-party claims under a single caption, the order of allowable discovery when bad-faith allegations are asserted, requests for the bifurcation of the trial of third-party and UIM claims, and the permissibility of references to "insurance" at trial.
A number of these novel post-Koken cases are now getting through to jury verdicts and are beginning to climb the appellate ladder, where a poised Superior Court awaits a chance to tackle this fast-approaching onslaught of issues.
As noted, one of the main post-Koken issues the trial courts across the state have struggled to address involves the proper handling of the mentioning of "insurance," or the identification of the insurance carrier defendant at trial.
A recent post-Koken trial order in this regard was issued by Luzerne County Court of Common Pleas Judge Michael T. Vough in the case of Borthwick v. Webb, No. 2735-Civil-2010 (C.P. Luz. Co. Sept. 7, 2012 Vough, J.). In that post-Koken matter, the case was set to proceed to trial against both the tortfeasor defendant driver and the UIM carrier.
The UIM carrier filed a motion with the court requesting that the case proceed with the trial as a tort action and allowing GEICO to be a silent defendant and precluding all evidence of insurance during the course of the trial.
In response, Vough took a middle position and ruled that the "plaintiff is limited to informing the jury that he had an underinsured policy with defendant GEICO Insurance Co. There shall be no other evidence presented to the jury regarding insurance." Vough otherwise ordered that GEICO was to appear in the case as a named defendant and an active participant.
This very issue is coming before the Pennsylvania Superior Court in the separate Allegheny County case entitled Stepanovich v. McGraw and State Farm Ins., GD 10-16523 (C.P. Allegh. Co. July 31, 2012 O'Reilly, J.).
Judge Timothy P. O'Reilly addressed issues raised in a motion for a new trial following a post-Koken combined trial of the third party and the UIM claims. According to reports on this matter, the insurance company defendant fully participated in the trial, but was not identified to the jury.
O'Reilly's order granted a new trial to the plaintiffs in light of the failure to identify the UIM carrier at the trial. O'Reilly held, in part, that it was a denial of due process not to identify the insurance company at a post-Koken trial.
The Stepanovich case is now pending before the Pennsylvania Superior Court and is one to watch. This case represents one of the first opportunities that a Pennsylvania appellate court will have to squarely address this important, recurring issue from post-Koken cases. Auto law litigators hope that many other cases will also follow up the appellate ladder in the near future to clarify and streamline the many novel issues of contention.
The appellate courts of Pennsylvania did provide guidance on a number of recurring coverage issues over the past year.
In its recent decision in the case of Jones v. Unitrin Auto and Home Insurance, No. 397 W.D.A. 2011 (Pa. Super. Feb. 6, 2012 Musmanno, Alan and Mundy J.J.), (Opinion by Mundy, J.) (Alan J. dissenting), the Superior Court held that insurance carriers must strictly comply with the mandates for the form utilized for an insured's rejection of UIM benefits during an application for automobile insurance.
The question presented in this case involved whether inclusion of additional language by the UIM carrier on its UIM rejection form contained in the insured's application, over and above the mandated language, failed to specifically comply with the statutory requirements and therefore rendered the rejection void. Specific requirements for the language of a rejection of underinsured motorist benefits form are set forth under 75 Pa. C.S. §1731.
According to the court in Jones, the carrier's UIM rejection form included all of the language mandated by §1731(c), (c.1).
However, the form also included an additional sentence that was not in the statutory form.
With no case law on point, the Jones court analyzed other decisions surrounding this issue, such as decisions addressing a carrier's omission of certain words from the required form, American Intern. Ins. v. Vaxmonsky, 916 A.2d 1106 (Pa. Super. 2006), and the Pennsylvania Supreme Court decision regarding whether the mandated form had to appear alone on a single page (it does not), Winslow-Quattlebaum v. Maryland Ins. Group, 752 A.2d 878 (Pa. Super. 2000).
Noting that the other prior analogous decisions have required that the subject form "specifically comply" with the requirements of §1731(c), the Superior Court in this Jones case found that by adding a sentence to the form between the required language and the signature line, the Unitrin UIM rejection form did not "specifically comply" with §1731(c) as required by §1731 (c.1) and was, therefore, void.
It is noted that U.S. District Senior Judge Edmund V. Ludwig of the Eastern District of Pennsylvania relied upon Jones in ruling in Robinson v. Travelers Indemnity Co. of America, 2012 WL 677007 (E.D. Pa. Feb. 29, 2012), that the addition of even a single word to the mandated language rendered the rejection form void. In Robinson, the carrier had changed the waiver by simply adding the word "motorists" into the phrase "underinsured coverage" in the mandated language.
Thus, there can be no question that strict compliance with the statutory mandates for UM/UIM rejection forms is required.
According to another appellate decision handed down in 2012, there is also no question that UIM carriers remain entitled to a credit in the amount of the tortfeasor's liability limits.
The case of Irving v. Progressive Specialty Ins., No. 11-7594, 2012 WL 2912309 (E.D.Pa. July 17, 2012 McLaughlin), represents the latest in the long line of Pennsylvania court decisions upholding exhaustion clauses in the UIM portion of insurance policies as entitling the UIM carrier to a credit for the liability limits of the tortfeasor(s) in motor vehicle accident matters.
Ever since at least the 1995 case of Boyle v. Erie Ins., 656 A.2d 941 (Pa.Super. 1995), the rule in Pennsylvania has been that, in order to pursue a UIM claim, the plaintiff need not fully exhaust the tortfeasor's liability limits but must instead give the UIM carrier a credit for the full amount of the available liability limits.
In Irving, the plaintiff sued the driver of the vehicle that struck his vehicle and also sued another driver who had allegedly "waved" the first defendant to proceed. The plaintiff settled his claim with the first defendant who struck his vehicle. That settlement was for $15,000.
The plaintiff put Progressive Insurance on notice of a UIM claim. At that time, the remaining third-party litigation was still pending against the defendant who had allegedly waved the first defendant to proceed. Progressive asserted that it was entitled to a credit in the amount of the $15,000 limits of the first tortfeasor as well as the $300,000 in liability limits covering the waving defendant. The plaintiff disagreed and filed this declaratory judgment action.
The Irving court provided a nice summary of the line of Pennsylvania state and federal decisions upholding exhaustion clauses. After reviewing the language of the exhaustion clause at issue in this matter, the court ruled that Progressive was indeed entitled to a credit in the amount of both defendants' liability limits, i.e., $315,000 as opposed to only $15,000.
Over the past year, the Superior Court rebuffed several attempts by the plaintiffs bar to overturn the regular use exclusion, which upholds the all-American principle that "you can't get something for nothing." The regular use exclusion typically comes into play where an injured party is injured in an accident while operating a vehicle that was not covered under the insurance policy that the injured party has made a claim against. The exclusion basically works to prevent an insurance company from being subjected to an additional risk of coverage for a vehicle for which the insurance company did not receive a premium or intend to insure.
Earlier this year, the Superior Court also upheld a non-owned, regularly used vehicles exclusion in its nonprecedential decision in the case of Erie Insurance v. Soroka, No. 1086 M.D.A. 2011 (Pa. Super. March 8, 2012 Gantman, Allen, and Mundy, J.J.) (Memorandum by Mundy, J.).
In its September 25 decision in the case of Adamitis v. Erie Insurance Exchange, No. 893 EDA 2010 (Pa. Super. Sept. 25, 2012 Stevens, P.J., Lazarus, J. and Colville, J.) (Opinion by Stevens, P.J.), the Superior Court revisited the regular use exclusion issue and again affirmed the validity and enforceability of that exclusion in an underinsured motorist coverage benefits case involving alleged injuries sustained by the claimant while driving at work.
By way of background, this matter arises out of a motor vehicle accident that occurred when the injured party was working as a bus driver. While working in the course and scope of his employment, the plaintiff was involved in a motor vehicle accident with an allegedly underinsured motorist.
After resolving his third-party liability claims against the tortfeasor defendant, the injured party sought UIM coverage under his own personal automobile policy with Erie Insurance.
Under the regular use exclusion clause, it was provided that Erie need not provide UM/UIM coverage "for bodily injury to you or a resident arising from the use of a 'non-owned motor vehicle or a non-owned miscellaneous vehicle which is regularly used by you or a resident, but not insured for uninsured or underinsured motorists coverage under the policy.'"
Based upon the evidence presented, the trial court found that the claimant did indeed receive the notice of the addition of the regular use exclusion to the Erie policy. This finding was affirmed on appeal and, after applying the language of the regular use exclusion to the facts of the case, the Superior Court also upheld the trial court's decision in favor of Erie Insurance. In so ruling, the appellate court additionally rejected public policy arguments offered up against the validity of the exclusion.
In its more recent October 18 decision in the case of Rother v. Erie Insurance Exchange, No. 1770 MDA 2011, 2012 Pa. Super. 228 (Pa. Super. Oct. 18, 2012 Bowes, Ott, and Straussburger, JJ.) (Opinion by Bowes, J.), the Superior Court again upheld the validity of the regularly used, non-owned vehicle exclusion. The more central question in the Rother case was the parameters of the test to determine if the use of a vehicle was "regular."
In Rother, the claimant was injured in a motor vehicle accident at which time the plaintiff resided with his mother. The vehicle in which the claimant was located at the time of the accident was separately owned by his father, who resided elsewhere. The father restricted the claimant's use of this vehicle only for work or emergency purposes. The claimant had only begun to drive the vehicle to and from work a short period of time before the subject accident occurred.
The injured party secured a recovery from the tortfeasor and then sought UIM coverage under his mother's automobile insurance policy with Erie Insurance as a resident relative insured under that policy. Erie denied coverage pursuant to the regular use exclusion in the policy.
The essential question in this case was whether the plaintiff was "regularly" using the subject vehicle in a way contemplated by the exclusion. The Pennsylvania Superior Court thoroughly reviewed the law pertaining to the test for regular use, i.e., "whether the use is regular or habitual," and found that the use of the vehicle was indeed regular under the facts of this case.
The Superior Court noted that the claimant did routinely and habitually use the vehicle within the scope of his father's permission to go to and from work four days per week. Despite the use being restricted, the court still found this type of use to be regular within the meaning of the exclusion.
The court in Rother further stated that the application of the regular use exclusion to these facts did not violate any public policy grounds. To the contrary, the court found that the regular use exclusion has been repeatedly upheld on policy grounds, as that exclusion generally promotes the cost-containment policy under the MVFRL.

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