Court Opinion

ID: 4119234
Source: CourtListenerOpinion
Date Created: 2017-01-27 20:13:57.939164+00
Date Added: 2024-06-11T14:46:26.905058
License: Public Domain

J-A29022-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

BRIAN GALLAGHER                               IN THE SUPERIOR COURT OF
                                                    PENNSYLVANIA
                        Appellant

                   v.

GEICO INDEMNITY COMPANY

                        Appellee                   No. 352 WDA 2016

             Appeal from the Order Entered February 18, 2016
          In the Court of Common Pleas of Westmoreland County
                   Civil Division at No(s): 5561 of 2014

BEFORE: DUBOW, J., MOULTON, J., and MUSMANNO, J.

MEMORANDUM BY MOULTON, J.:                      FILED JANUARY 27, 2017

     Brian Gallagher appeals from the February 18, 2016 order of the

Westmoreland County Court of Common Pleas granting GEICO Indemnity

Company’s motion for summary judgment. We affirm.

     This appeal involves the interplay between an insurance policy’s

household vehicle exclusion and the Motor Vehicle Financial Responsibility

Law (“MVFRL”), 75 Pa.C.S. §§ 1701-1799.7.           The household vehicle

exclusion, which prohibits inter-policy stacking of coverage and appears to

be a common insurance policy provision, has the practical effect of limiting

the availability of stacked coverage in situations where one insurance

company insures all of an insured’s vehicles but on two or more policies.

The legal issue is whether this policy provision, which limits stacking even
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though the insured paid for stacking and did not expressly waive it, violates

section 1738 of the MVFRL.1

       In this case, Gallagher elected and paid for stacked coverage on two

GEICO insurance policies, one for his motorcycle and one for his two

automobiles.      The decision to write two separate policies, rather than one

policy covering all three vehicles, was GEICO’s. In August 2012, Gallagher

was involved in an accident while operating his motorcycle.          GEICO paid

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       1
           Section 1738 of the MVFRL provides in relevant part:

            (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 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.

75 Pa.C.S. § 1738(a)-(c).

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$50,000 of underinsured motorist (“UIM”) coverage under the motorcycle

policy. Gallagher then submitted a claim for additional UIM benefits under

the automobile policy, which GEICO denied under the household vehicle

exclusion.   The exclusion stated:   “This coverage does not apply to bodily

injury while occupying or from being struck by a vehicle owned or leased by

you or a relative that is not insured for [UIM] [c]overage under the policy.”

      In granting GEICO’s summary judgment motion, the trial court

concluded that this Court’s decision in Government Employees Insurance

Co. v. Ayers, 955 A.2d 1025 (Pa.Super. 2008), affirmed by an equally

divided court, 18 A.3d 1093 (Pa. 2011), was controlling.      In Ayers, Jesse

Ayers insured two motorcycles with GEICO under one policy and two trucks

under another policy.    955 A.2d at 1027.      The truck policy contained a

household vehicle exclusion, which stated: “This coverage does not apply to

bodily injury while occupying or from being struck by a vehicle owned or

leased by you or a relative that is not insured for [UIM] [c]overage under

this policy.” Id. (quoting policy). Ayers was injured while operating one of

his motorcycles. GEICO paid the UIM limit under the motorcycle policy but

denied additional coverage under the truck policy due to the household

vehicle exclusion. On appeal, a divided panel of this Court held:

         [G]iven the facts underlying Ayers’ first accident, the clear
         and unambiguous language of the household vehicle
         exclusion at issue in this case precluded Ayers from
         stacking the UIM coverage contained in his trucks’ policy
         on top of the UIM coverage contained in his motorcycles’
         policy. The exclusion is not contrary to the MVFRL or any
         other discernable public policy.

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955 A.2d at 1030.2

        Following this Court’s decision, Ayers did not seek reargument but filed

a timely petition for allowance of appeal with the Pennsylvania Supreme

Court. The Supreme Court granted the petition and heard argument. On

April 28, 2011, an equally divided Supreme Court affirmed our Court’s

decision without an opinion. See Gov’t Emps. Ins. Co. v. Ayers, 18 A.3d

1093 (Pa. 2011).         Justice Saylor, however, wrote a brief statement in

support of affirmance, in which he disapproved of GEICO’s practice of using

separate policies to subvert inter-policy stacking but agreed with this Court

“that the writing of separate policies, and enforcement of the household

exclusion, is justified relative to motorcycle insurance coverage.”      Id. at

1094.

        Before affirming Ayers by an equally divided court, the Pennsylvania

Supreme Court addressed the inter-policy stacking issue in Erie Insurance

Exchange v. Baker, 972 A.2d 507 (Pa.             2009),3 which involved policy

language almost identical to the policy language in Ayers and this case.4 In
____________________________________________

        2
        Judge Musmanno wrote a dissenting statement in Ayers, in which he
concluded that “the application of the household exclusion where an insured
had not waived and received an attendant reduction in premiums acts as an
unknowing waiver of stacking coverage that deprives an insured of the
benefits for which he or she paid.” 955 A.2d at 1030.
        3
       Baker was decided after this Court’s decision in Ayers but before
the Supreme Court affirmed Ayers by an equally divided Court.
        4
      The household vehicle exclusion in Baker provided: “This insurance
does not apply to . . . damages sustained by anyone we protect while
(Footnote Continued Next Page)

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Baker, Eugene Baker had insured three automobiles with Erie Insurance

Exchange and one motorcycle with Universal Underwriters Insurance

Company.      972 A.2d at 508-09.            Baker was injured while operating his

motorcycle, and Universal paid Baker its UIM limits.           Id. at 509.    When

Baker sought additional UIM benefits from Erie, Erie denied coverage under

the household vehicle exclusion. Id.

      On appeal, our Supreme Court rejected Baker’s claim that the

household vehicle exclusion was effectively a “disguised waiver” of stacking

that violated the MVFRL’s waiver requirements. Id. at 510-11. The opinion

announcing the judgment of the Court, joined by three justices, stated:

          [W]e conclude that application of the household exclusion
          in this case does not involve “stacking” at all. We hold
          instead that the Erie policy exclusion is a valid and
          unambiguous preclusion of coverage of unknown risks, and
          it was properly applied to the circumstances of this case.

Id. at 511 (Greenspan, J., joined by Castille, C.J., and Eakin, J.).         Justice

Saylor, who concurred separately, supplied the fourth vote in support of the

Court’s holding that the household vehicle exclusion was valid and, thus,

Baker was not entitled to UIM coverage under the Erie policy.           See id. at

514-15 (Saylor, J., concurring).          Three justices dissented, concluding that

“the ‘household exclusion’ operates as a waiver of stacking, and thus

contradicts and undermines the very specific statutory provisions set forth in
                       _______________________
(Footnote Continued)

occupying or being struck by a motor vehicle owned by you or a relative, but
not insured for Uninsured or [UIM] [c]overage under this policy.” 972 A.2d
at 509 (quoting policy).

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the [MVFRL].”      Id. at 515 (Baer, J., dissenting, joined by Todd and

McCaffery, JJ.).

      Accordingly, we conclude that we are bound by this Court’s decision in

Ayers because the relevant policy language and underlying facts in Ayers

and this case are almost identical.    We are also bound by Baker, which

involved nearly identical policy language, even though the policies in Baker

were issued by two different insurance companies. We recognize, however,

that the inter-policy stacking issue in all three cases is both important and

closely contested. As noted above, the Supreme Court was evenly split 3-3

in Ayers, and Baker did not produce a majority opinion.           Given the

significance of this legal issue and the divided nature of the Supreme Court

in both Ayers and Baker, Gallagher may wish to petition the Pennsylvania

Supreme Court for allowance of appeal.

      Order affirmed.

      Judge Dubow joins in this memorandum.

      Judge Musmanno files a concurring statement in which Judge Dubow

and Judge Moulton join.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 1/27/2017
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