Court Opinion

ID: 9387974
Source: CourtListenerOpinion
Date Created: 2023-04-19 15:08:06.690209+00
Date Added: 2024-06-11T17:18:16.616422
License: Public Domain

[J-63-2022]
                    IN THE SUPREME COURT OF PENNSYLVANIA
                                MIDDLE DISTRICT

       TODD, C.J., DONOHUE, DOUGHERTY, WECHT, MUNDY, BROBSON, JJ.

    ROBERT FRANKS AND KELLY A.                  :   No. 42 MAP 2022
    FRANKS, H/W,                                :
                                                :   Appeal from the Order of the
                     Appellants                 :   Superior Court dated September 24,
                                                :   2021 at No. 2784 EDA 2019
                                                :   Affirming the Order of the Bucks
               v.                               :   County Court of Common Pleas,
                                                :   Civil Division, dated September 4,
                                                :   2019 at No. 2018-03954.
    STATE FARM MUTUAL AUTOMOBILE                :
    INSURANCE COMPANY,                          :   ARGUED: November 29, 2022
                                                :
                     Appellee                   :

                                        OPINION

JUSTICE MUNDY                                                 DECIDED: April 19, 2023
        In this appeal by permission, we address whether the Superior Court erred as a

matter of law by holding that removal of a vehicle from a multiple motor vehicle insurance

policy, in which stacked coverage 1 had previously been waived, does not require a

1 “The concept of stacking relates to the ability to add coverages from other vehicles
and/or different policies to provide a greater amount of coverage available under any one
vehicle or policy.” Everhart v. PMA Ins. Group, 938 A.2d 301, 302 (Pa. 2007).
renewed express waiver of stacked coverage pursuant to Section 1738(c) of the Motor

Vehicle Financial Responsibility Law (“MVFRL”). 2,    3

         The facts of the case are not disputed and were stipulated to before the Court of

Common Pleas and Superior Court.            We summarize them as follows.        Appellants,

husband and wife, Robert Franks and Kelly Franks sought automobile insurance from

Appellee, State Farm Mutual Automobile Insurance Company in 2013 for their two

vehicles, a 2002 Nissan Xterra and a 1999 Ford Taurus.                 Appellants included

underinsured motorist coverage (“UIM”) in their policy but completed a form rejecting

stacked UIM coverage in compliance with Section 1738(d)(2) of the MVFRL. Absent such

waiver, stacked coverage would be the default. The resultant policy was issued with

unstacked UIM coverage of $100,000 per person and $300,000 per accident limits.

Appellants added an additional vehicle, a 2012 Nissan Altima, to the policy effective

January 22, 2014. A new form rejecting stacked UIM coverage was completed and

signed by Robert Franks, as first named in the policy, 4 at that time. Thereafter, Appellants

requested the 1999 Ford Taurus be removed from the policy effective July 23, 2014.

Upon removal, the policy continued without any change to the coverage or premiums

relative to the remaining vehicles. Appellants did receive a credit of $15.06 for the eleven

days of unused premium attributable to the removed vehicle and the total ongoing six-

2   75 Pa.C.S. §§ 1701-1799.
3   Specifically, the question accepted for review is as follows:
Did the en banc panel of the Superior Court err in ruling that Respondent was not required
to obtain a new uninsured/underinsured stacking waiver from Petitioners pursuant to 75
Pa.C.S. § 1738(c) of the [MVFRL] when Petitioners deleted an automobile from their
automobile insurance policy, and necessarily holding therefore that Petitioners are not
entitled to a total of $200,000 in stacked underinsured motorist coverage?
Franks v. State Farm Mut. Auto. Ins. Co., 275 A.3d 489 (Pa. 2022) (per curiam).
4   See 75 Pa.C.S. § 1738(d).

                                        [J-63-2022] - 2
month premium was about $250 less than with three vehicles.        The next change to the

policy occurred on March 26, 2015, when Appellants replaced their 2002 Nissan Xterra

with a 2013 Nissan Frontier. No additional form rejecting stacked UIM coverage was

offered or sought to be completed on the occasion of the removal of the Ford Taurus from

the policy or thereafter and the ongoing premiums paid by Appellants reflected the lower

rate for non-stacked UIM overage on two vehicles. 5

         On August 11, 2016, Robert Franks sustained injuries while operating the 2013

Nissan Frontier in an accident caused by the negligence of the operator (“tortfeasor”) of

the other vehicle involved. The tortfeasor had insufficient liability coverage under his

insurance to cover the injuries and damages sustained by Appellants.            Appellants

therefore initiated a claim for UIM benefits under their policy with State Farm. The parties

espoused opposing positions relative to the policy’s UIM coverage limits. Appellants

claimed a $200,000 limit because the absence of a valid waiver of stacked UIM coverage

following the removal of the 1999 Ford Taurus resulted in the default stacked coverage

mandated by § 1738(a). State Farm claimed the policy afforded a $100,000 limit because

the removal of a vehicle from a multi vehicle policy, without more, did not alter the status

of the prior waiver nor trigger a need to execute a new waiver under § 1738(c). 6

5 Appellants recognize that the Superior Court previously determined that, without more,
a substitution of a vehicle covered under a multiple vehicle policy does not constitute a
purchase or require an opportunity to revisit a prior stacking waiver made by an insured.
Appellant’s Brief at 11 (citing, Shipp v. Phoenix Ins. Co., 51 A.3d 219 (Pa.Super. 2012)).
Appellants do not advance any argument challenging that determination, although as
discussed infra, Appellants argue language employed in Shipp does support their position
relative to the removal of a vehicle from coverage under a multiple vehicle policy.
6   Section 1738 provides in full as follows.
            (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
(continued…)

                                        [J-63-2022] - 3
           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.

           (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. –

                 (1) The named insured shall be informed that he may
                 exercise the waiver of the stacked limits of uninsured
                 motorist coverage by signing the following written
                 rejection form:
                 UNINSURED COVERAGE LIMITS
                 By signing this waiver, I am rejecting stacked limits of
                 uninsured 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.
                 ____________________________
                 Signature of First Named Insured
                 ____________________________
                 Date

                 (2) The named insured shall be informed that he may
                 exercise the waiver of the stacked limits of
(continued…)

                                  [J-63-2022] - 4
      The parties submitted cross claims for declaratory judgment to the trial court. After

a nonjury trial on stipulated facts held August 27, 2019, the court issued an order on

August 30, 2019, in favor of State Farm, ruling that the $100,000 limit applied. On

subsequent appeal a panel of the Superior Court reversed, but the court accepted State

Farm’s application for reargument to the court en banc. In a divided decision the en banc

panel affirmed the trial court. Franks v. State Farm Mut. Auto. Ins. Co., 263 A.3d 1169

(Pa. Super. 2021) (en banc). The Superior Court viewed the presented matter as one of

first impression involving an issue of statutory construction. Id. at 1171-72. The court

noted that precedent interpreting § 1738 has dealt with addition of vehicles to a policy,

increase of UIM/UM coverage, or substitution of vehicles under an existing multi-vehicle

                     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.
                     ____________________________
                     Signature of First Named Insured
                     ____________________________
                     Date

             (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.

                                     [J-63-2022] - 5
policy. The court explained the core cases stem from “the Sackett Trilogy” of cases. 7

Subsequent cases in which the Superior Court interpreted the Sackett case holdings did

not involve a removal of a vehicle from the policy with no change to the remaining

coverage and premiums. Id. at 1174 (citing Shipp, supra; Pergolese v. Standard Fire Ins.

Co., 162 A.3d 481 (Pa. Super. 2017); Toner v. The Travelers Home & Marine Ins. Co.,

93 A.3d 872 (Pa. Super. 2014); Bumbarger v. Peerless Indem. Ins. Co., 93 A.3d 872 (Pa.

Super. 2014)).

       Appellants argued that language in the Shipp case equated “purchase” as used in

section 1738(c) with “change.” Shipp involved a substitution of vehicles under a policy,

which the court held did not constitute a new purchase under section 1738. The Shipp
court went on to state that the key element in preceding cases “pertains only to the

UM/UIM policy coverage, whether it has changed, and whether a new waiver of stacked

coverage is required.” Id. (quoting Shipp, supra at 224 (adding emphasis)). The majority

deemed Appellants’ reading of the language to be overexpansive as Shipp’s essential

holding was that the substitution of vehicles under a policy did not constitute a purchase

as no additional coverage was acquired. It deemed the quoted language as dicta and to

the extent it lent itself to Appellants’ interpretation it was disapproved. Id. at 1175.

       While the question presented was one of first impression, the majority found this

Court’s decision in Barnard v. Travelers Home & Marine Insurance Co., 216 A.3d 1045

(Pa. 2019)8 instructive. Therein, this Court held that the section was not ambiguous and

7 Sackett v. Nationwide Mut. Ins. Co., 919 A.2d 194 (Pa. 2007) (holding that a plain-
language reading of “purchase” under section 1738(c) includes the addition of a new
vehicle to an existing multi-vehicle policy) (Sackett I); Sackett v. Nationwide Mut. Ins. Co.,
940 A.2d 329 (Pa. 2007) (clarifying that Sackett I applied to addition of a vehicle where
the policy itself made the existing coverage finite) (Sackett II); Sackett v. Nationwide Mut.
Ins. Co., 4 A.3d 637 (Pa. Super. 2010) (finding the policy at issue did contain a “finite”
clause requiring new stacking waiver forms to be presented to insureds) (Sackett III).
8Barnard was accepted for review by this Court upon a certified question of law from the
United States Third Circuit Court of Appeals.

                                       [J-63-2022] - 6
that according to the rules of statutory construction, the term “purchase” should be

afforded its standard dictionary meaning as “[t]he act or an instance of buying.” Franks,

263 A.3d at 1174 (quoting Barnard, 216 A.3d at 1051, quoting Black’s Law Dictionary

(11th ed. 2019)). Thus, the Superior Court explained:

              The [Barnard] Court then observed that, “[i]n common usage,
              ‘to buy’ means to acquire or obtain something from paying for
              it.” Accordingly, the Court concluded that “the term ‘purchase’
              requires two things: (1) the acquisition of something; and (2)
              payment. ... In order to satisfy the first, the insured must obtain
              something that she does not already possess.”

Id., quoting Barnard, supra at 1051, 1053 (adding emphasis). The intermediate court

concluded that the removal of a vehicle from coverage under a multi-vehicle policy where

appropriate credits were made, and the remaining coverage and premiums continued

unchanged, did not meet this plain meaning of a purchase. Id. at 1176.

       Three judges on the panel dissented. In their view, a liberal construction in favor

of affording coverage for the insured is warranted “in close or doubtful cases.” Id. at 1175

(McCaffery, J., dissenting) (citing Jones v. Unitrin Auto & Home Ins. Co., 40 A.3d 125

(Pa. Super. 2012); AAA Mid-Atl. Ins. Co. v. Ryan, 84 A.3d 626 (Pa. 2014)). Applying that

liberal construction, the dissent would hold that by removing a vehicle from coverage an

insured does acquire something not previously possessed, to wit, coverage on fewer

vehicles. Id. at 1177.

       Before this Court the parties’ arguments largely parallel their positions expressed

before the trial court and Superior Court panels. They agree the question presented by

this appeal involves an issue of statutory construction. Appellants’ Brief at 10; Appellee’s

Brief at 9-10.   In support of their respective positions the parties forward competing

interpretations of this Court’s decision in Barnard which dealt with the meaning of

“purchase” in § 1738 in circumstances where an insured under an existing multiple vehicle

policy acquires additional UIM coverage.

                                       [J-63-2022] - 7
         Appellants argue that under section 1738(c) of the MVFRL, the term “purchasing”

UIM coverage includes circumstances when an insured removes a vehicle from an

existing multi-vehicle policy because it changes the potential UIM coverage from that

offered under the original policy and because the amount of premiums for that coverage

also changes.      Reviewing the same caselaw expounded upon by the Superior Court,

Appellants urge the interpretation espoused by the dissenting judges.

               When the logic of the Shipp holding is applied to the situation
               in the instant case, it is clear that a new stacking waiver was
               required under Section 1738(c) of the MVFRL because
               Plaintiffs changed the number of vehicles covered by the
               Policy when they deleted their third vehicle. The vehicle
               removal/deletion altered the potential stacked UM/UIM
               coverage that was available.
Appellants’ Brief at 18-19 (emphasis original). Appellants also cite Pergolese v. Standard

Fire Ins. Co., 162 A.3d 481 (Pa. Super. 2017), in which the Superior Court held that when

an insured removes a vehicle from coverage under a multi-vehicle policy and, at a distinct

later time (forty-four days in that case, which included a new separate declaration page

and premium adjustments with both the removal and the later addition), adds a vehicle,

that addition is not a replacement, thus requiring a new waiver of stacking form.

Appellants note in the stipulated facts of this case, the removal of a vehicle also generated
a new declaration page reflecting the reduced number of covered vehicles and the

reduced premium. Finally, Appellants argue our holding in Barnard rejected the notion

that under the plain language of section 1738(c) “purchase” was limited to “initial

purchase.” Id. at 20. Appellants argue the import of our holding in Barnard applies when

there is a “new, aggregate amount of coverage.” Id. at 21 (quoting Barnard, 216 A.3d at

1052).

         Along the lines of the Superior Court majority opinion, State Farm contends

removal of a vehicle from a multi-vehicle policy, where the coverages and charges on the

remaining vehicles is unchanged, does not constitute a purchase under the plain meaning

                                      [J-63-2022] - 8
of the language of section 1738(c). State Farm argues the plain meaning of “purchase”

requires some acquisition in exchange for payment. By removing a vehicle from coverage

of the policy, Appellants acquired nothing they did not already have at the same cost.

State Farm argues Appellants misstate the holding of Barnard, which State Farm

contends applied to the insureds in that case acquiring new increased coverage they did

not have prior to the addition of a vehicle. State Farm notes all of the cases cited by

Appellants, as noted by the Superior Court Majority when it acknowledged it faced an

issue of first impression, dealt with when an insured secured additional coverage under

an existing multi-vehicle policy. Brief for Appellee at 26-28. Nothing in those cases

addressed the effect of removing a vehicle from a policy. The stipulated facts in this case

make clear that the “deletion of the 1999 Ford Taurus from the policy did not change any

of the coverages” on the remaining vehicles “or the premiums charge” for their coverage.

Id. at 29 (quoting R. 104a.-105a.)

        As recognized by the parties and the courts below, the question presented involves

a question of law involving the interpretation of section 1738(c). 9              After careful

consideration, we conclude the Superior Court did not err in affirming the trial court’s order

9“The  proper interpretation of a statute is a question of law; thus, our standard of review
is de novo and our scope of review, to the extent necessary to resolve the legal question,
is plenary.” Borough of Heidelberg v. W.C.A.B. (Selva), 928 A.2d 1006, 1009 (Pa. 2007).
The Statutory Construction Act, 1 Pa.C.S. §§ 1501 et seq., guides our interpretation of
legislative intent.

              “The object of all interpretation and construction of statutes is
              to ascertain and effectuate the intention of the General
              Assembly....” 1 Pa.C.S. § 1921(a). In this regard, when “the
              words of a statute are clear and free from all ambiguity, the
              letter of it is not to be disregarded under the pretext of
              pursuing its spirit.” 1 Pa.C.S. § 1921(b). When the words of
              a statute are not explicit, however, the General Assembly’s
              intent is to be ascertained by considering matters other than
              the statutory language. 1 Pa.C.S. § 1921(c)

Everhart v. PMA Ins. Group, 938 A.2d 301, 304 (Pa. 2007).

                                       [J-63-2022] - 9
granting State Farm’s declaratory judgment action and determining that the removal of a

vehicle from coverage under the policy, while not disturbing the remaining coverage, did

not constitute a “purchase” under section 1738(c) triggering any renewed requirement to

offer or acquire an express waiver of previously waived stacked UIM coverage. As we

explained in Barnard, the language employed by the Legislature in section 1738 is not

inherently ambiguous nor does it reflect an ambiguity in context with other aspects of the

MVFRL. Barnard, 216 A.3d at 1052. Accordingly, we employed the plain meaning of

“purchasing” to determine when an insurer must offer an opportunity to waive stacking on

approved forms.       Further, “purchase” pertains to UIM/UM coverage rather than the

underlying policy itself. Id.

       The problem with the approach of Appellants and the dissenting judges in the

Superior Court en banc panel is that they depart from the plain meaning of the language

employed by the legislature to reach a result in closer alignment with what they deem to

be the underlying purpose of the provisions at issue. As noted above, the dissenting

judges urged a liberal interpretation of the statutory language in aid of the perceived

purpose of the MVFRL to favor coverage. To that end they equate the term “purchase”

as used in section 1738(c) with any change of coverage. Appellants express concern

that a removal of a vehicle from a policy may alter the economic considerations the

insured considered in initially waiving stacking, making it now more affordable to keep

stacked coverage. See Appellant’s Brief at 21 (“This was a new purchase of coverage

that cost a different amount than the prior purchase of coverage …”). As a separate

matter, the Superior Court dissent expressed the interpretation that “purchase”

encompasses any “change,” “complies with our stated policy of construing the statute

‘liberally in favor of the insured.’” Franks, 263 A.3d at 1177 (McCaffery, J., dissenting)

(citation omitted).

                                     [J-63-2022] - 10
       In pursuing these purported policy aims, however, neither Appellants nor the

dissenting judges express how the use of the phrase “[e]ach named insured purchasing

uninsured or underinsured motorist coverage for more than one vehicle under a policy

…,” as used in section 1738(c), is ambiguous so as to trigger alternate interpretive

considerations.   See 1 Pa.C.S. § 1921(b) (directing that when the statutory text is

unambiguous, its letter is not to be disregarded to pursue its spirit). Under the stipulated

facts it is clear that when Appellants removed one vehicle from coverage under the policy,

the conditions and costs of coverage on the remaining vehicles remained unchanged.

The fact that Appellants’ potential financial considerations in initially waiving stacked

coverage may now differ does not convert the removal into a “purchase” under the plain

meaning of that term adopted in Barnard. We recognized in Barnard that application of

a statute’s plain unambiguous meaning may have policy implications, but that absent

ambiguity, such concerns are best addressed to the Legislature and cannot justify

disregarding a statute’s plain meaning. See generally Program Admin. Svcs. v. Dauphin

Cty. Gen. Auth., 928 A.2d 1013, 1017-18 (Pa. 2007) (observing it is the General

Assembly’s function to set public policy and the courts’ role to enforce that policy subject

to constitutional limitations). As we stated in that matter: “We recognize the concerns of

Travelers and its amici that our holding will have a negative impact on the insurance

industry. However, invocations of, and arguments about, public policy cannot override the

plain language of Subsection 1738(c), nor can they contravene the plain meaning of the

term ‘purchase.’” Barnard, 216 A.3d at 1054 (Pa. 2019). 10

10 We note that former Chief Justice Saylor dissented in Barnard. In his view, the term
“purchase” as used by the Legislature in the statute had acquired a specialized industry
meaning that was more restrictive than the balance of the members of this Court viewed
the term. Barnard, 216 A.3d at 1054-55 (Pa. 2019) (in dissent). Thus, even the
dissenting view in Barnard would afford Appellants no relief.

                                     [J-63-2022] - 11
      Today we hold that the logic of Barnard in construing “purchase” in accord with its

plain meaning does not justify Appellants’ expansive interpretation equating the term with

any “change.” The removal of a vehicle from coverage under a multi-vehicle policy under

conditions that do not alter the pre-existing coverage or costs relative to the remaining

vehicles is not a purchase requiring a renewed express waiver per section 1738(c).

      We affirm.

   Chief Justice Todd and Justices Donohue, Dougherty, Wecht and Brobson join the
opinion.

                                    [J-63-2022] - 12