Court Opinion

ID: 4587416
Source: CourtListenerOpinion
Date Created: 2020-11-18 18:08:05.124547+00
Date Added: 2024-06-11T13:49:55.138555
License: Public Domain

J-A23037-20

                                  2020 Pa. Super. 268

    ERIE INSURANCE EXCHANGE                    :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    JANICE PETRIE, INDIVIDUALLY AND            :
    IN HER CAPACITY AS THE                     :
    EXECUTRIX OF THE ESTATE OF                 :   No. 261 EDA 2020
    SCOTT PETRIE, DECEASED AND                 :
    ESTATE OF SCOTT PETRIE,                    :
    DECEASED BY AND THROUGH ITS                :
    EXECUTRIX, JANICE PETRIE AND               :
    BRANDON PETRIE, INDIVIDUALLY               :
    AND MEGAN PETRIE RAMIREX,                  :
    INDIVIDUALLY AND KIRA BETH                 :
    PETRIE, INDIVIDUALLY                       :
                                               :
                       Appellants

                Appeal from the Order Entered January 2, 2020
     In the Court of Common Pleas of Bucks County Civil Division at No(s):
                                 2019-04245

BEFORE: KUNSELMAN, J., NICHOLS, J., and PELLEGRINI, J.*

OPINION BY PELLEGRINI, J.:                          FILED NOVEMBER 18, 2020

        Janice Petrie (Petrie), individually and in her capacity as the Executrix

of the Estate of Scott Petrie, Deceased, et.al, appeals from the order entered

in the Court of Common Pleas of Bucks County (trial court) granting the

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-A23037-20

motion for judgment on the pleadings filed by Erie Insurance Exchange (Erie)1

holding that there was no right to aggregate or “stack” the limits of coverage

for underinsured motorists (UIM) of two separate policies, i.e. “inter-policy

stacking” under the terms of the automobile insurance policy in effect with

Erie.2 We reverse the trial court and remand.

                                               I.

                                               A.

        On October 16, 2016, Decedent, while operating a Yamaha motorcycle,

was struck and killed by a truck operated by an underinsured driver. Decedent

was survived by Petrie and their three children, all of whom are parties in this

case.

        At the time of the accident, Decedent and Petrie had purchased and

were named insureds on two motor vehicle insurance policies through Erie and

Foremost Insurance (Foremost). The Foremost policy provided $25,000.00 in

____________________________________________

1 The Pennsylvania Association for Justice has filed an amicus curiae brief in
support of Petrie’s appeal. Various insurance lawyers’ associations filed an
amicus curiae brief in support of Erie.

2 “The basic concept of stacking is the ability to add the coverages available
from different vehicles and/or different policies to provide a greater amount
of coverage available under any one vehicle or policy.” McGovern v. Erie
Ins. Grp., 796 A.2d 343, 344 (Pa. Super. 2002). There are two types of
stacking, intra-policy and inter-policy. Intra-policy stacking is when more
than one vehicle is insured under a single policy of insurance. Inter-policy
stacking, which is at issue in the instant case, is the addition of coverages for
vehicles insured under different policies of insurance. See id.

                                           -2-
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UIM coverage and Decedent’s motorcycle was insured by that company.

Petrie made a successful claim for UIM benefits from Foremost.

        Petrie then submitted a claim for UIM benefits under the Erie policy. The

Erie policy covered four vehicles and UIM coverage limits for bodily injury of

“$100,000 per person/$300,000 per accident-Unstacked.” (Erie Automobile

Policy, at 2).

                                               B.

        The stacking waiver included in the Erie policy pursuant to Section 1738

of the Motor Vehicle Financial Responsibility Law (MVFRL), which governs

stacking of UM/UIM benefits in automobile insurance policies, states in

conformity with that section:3

____________________________________________

3   Section 1738 provides:

        (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

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       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
____________________________________________

       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.—

                                       *       *   *

             (2) The named insured shall be informed that he may
       exercise the waiver of the stacked limits of 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 and 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(a)-(e).

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       purchasing shall be reduced to the limits stated in the policy. I
       knowingly and voluntarily reject the stacked limits of coverage. I
       understand my premiums will be reduced if I reject this coverage.

(Erie Underinsured Coverage Limits Waiver, signed by Decedent on 9/29/16)

(emphases added).

       Furthermore, the Erie policy contains a household exclusion as part of

the Uninsured/Underinsured Motorists Coverage Endorsement that reads:4

             If Underinsured Motorists Coverage is indicated on the
       “Declarations”, “we” will pay damages for bodily injury that the
       law entitles “anyone we protect” or the legal representative of
       “anyone we protect” to recover from the owner or operator of an
       “underinsured motor vehicle.” . . .

                                       *       *   *

       EXCLUSIONS-What We Do Not Cover

       This insurance does not apply to:

                                       *       *   *

             5. damages sustained by “anyone we protect” while
       “occupying” or being struck by a “miscellaneous vehicle” owned
       or leased by “you” or a “relative,” but not insured for Uninsured
       or Underinsured Motorists Coverage under this policy.

____________________________________________

4 “The household vehicle exclusion is one of several types of exclusionary
clauses included in motor vehicle insurance policies providing uninsured
motorist coverage.” Craley v. State Farm Fire & Cas. Co., 895 A.2d 530,
533 n.1 (Pa. 2006) (citation omitted). “Specifically, the household vehicle
exclusion exempts from uninsured motorist coverage any coverage for bodily
injury sustained while occupying a vehicle owned by the named insured, the
named insured’s spouse, or a resident relative of the named insured, but not
insured under the policy in question.” Id. (citation omitted).

                                           -5-
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(Erie    Automobile   Policy,   Uninsured/Underinsured      Motorists   Coverage

Endorsement, at 2-3).

                                        C.

        In April 2017, Erie issued a letter denying the claim because the above

stacking waiver prevents Petrie from recovering benefits from both Foremost

and Erie, i.e., that provision bars inter-policy stacking. In addition, Erie also

maintained that the household exclusion bars Petrie’s request for UIM benefits

because, at the time of the accident, Decedent was operating a motorcycle he

had insured with a different carrier and not under the Erie policy.

        In June 2019, Erie filed the underlying action seeking a declaratory

judgment providing that there was no UIM coverage available to Petrie in

connection with the October 16, 2016 motor vehicle accident under the Erie

policy. After the pleadings were closed, Erie filed a Motion for Judgment on

the Pleadings. In opposing the motion, Petrie contended that judgment on

the pleadings should not be granted because the stacking waiver relates only

to intra-policy stacking within the Erie policy itself and not to other policies of

insurance and, therefore, does not prevent recovery from both Erie and

Foremost. In addition, Petrie contends that the household vehicle exclusion

was found to be unconstitutional and that although it prevents recovery for a

survival claim, it does not bar a wrongful death claim.

        The trial court granted Erie’s motion for judgment on the pleadings.

After reviewing the applicable case law, the trial court found that the stacking

                                       -6-
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waiver that Decedent signed was sufficient to waive inter-policy stacking. It

did so primarily based on the rubric that insureds should get the coverage for

which they pay and, since Erie had no notice of the second insurance policy

with a different carrier covering, it was unable to quote and collect a higher

premium to account for that coverage commensurate with the risk and, as a

result, Decedent received a lower premium. It did not address the applicability

and viability of the household exclusion provision.          This timely appeal

followed.5 Petrie and the trial court complied with Rule 1925. See Pa.R.A.P.

1925(a)-(b).

____________________________________________

5      The standard to be applied upon review of a motion for judgment
       on the pleadings accepts all well-pleaded allegations of the
       complaint as true. The question presented by the demurrer is
       whether, on the facts averred, the law says with certainty that no
       recovery is possible. Where a doubt exists as to whether a
       demurrer should be sustained, this doubt should be resolved in
       favor of overruling it.

             Entry of judgment on the pleadings is permitted under
       Pa.R.C.P. 1034 which provides for such judgment after the
       pleadings are closed, but within such time as not to delay trial. A
       motion for judgment on the pleadings is similar to a demurrer. It
       may be entered when there are no disputed issues of fact and the
       moving party is entitled to judgment as a matter of law. In
       determining if there is a dispute as to facts, the court must confine
       its consideration to the pleadings and relevant documents. The
       scope of review on an appeal from the grant of judgment on the
       pleadings is plenary. We must determine if the action of the court
       below was based on clear error of law or whether there were facts
       disclosed by the pleadings which should properly go to the jury.

Forbes v. King Shooters Supply, 230 A.3d 1181, 1187 (Pa. Super. 2020)
(case citations omitted).

                                           -7-
J-A23037-20

                                       II.

      On appeal, Petrie contends that the trial court erred in granting Erie’s

motion for judgment on the pleadings because the stacking waiver provision

in the policy is ambiguous as to inter-policy stacking of UIM coverage because

the waiver provision uses the singular word “policy” instead of the plural term

“policies.”   Because she and the Decedent were not given full information

regarding the availability of both intra-policy and inter-policy stacking, neither

could have made a knowing and conscious waiver of coverage. Petrie also

contends that the household exclusion provision is unenforceable because of

our Supreme Court’s decision in Gallagher v. GEICO Indem. Co., 201 A.3d
131 (Pa. 2019).

                                       A.

      Whether the stacking waiver provisions in an insurance policy were

sufficient to waive inter-policy stacking was addressed by our Supreme Court

in Craley v. State Farm Fire & Cas. Co., 895 A.2d 530 (Pa. 2006). Craley

dealt with a single-vehicle insurance policy where the insured had signed a

stacking waiver in conformity with Section 1738(d) of the MVFRL.              While

holding that inter-policy stacking may be waived, it addressed the

requirements for such waiver to be valid:

             The conclusion that inter-policy stacking may be waived
      does not end our analysis. We must determine how it may be
      waived. Subsection (d), which provides the necessary waiver
      form for multiple-vehicle policyholders, indicates that the
      legislature felt it necessary to require insurers to provide insureds
      with specific language in written form to ensure ample notice of

                                      -8-
J-A23037-20

      the benefits to be waived. Moreover, the legislature imposed a
      significant sanction on an insurance company that deviates from
      the form, voiding any “rejection form that does not comply with
      this section.” 75 Pa.C.S. § 1738(e). Given the form required by
      subsection (d), the sanction provided in subsection (e), and the
      imperative language granting stacking to all insureds in
      subsection (a), it is readily apparent that some form of
      knowing waiver must occur before we allow enforcement
      of an inter-policy stacking waiver. As Chief Justice Cappy
      previously has commented, “It is evident that the General
      Assembly sought to ensure that policyholders would be given full
      information regarding availability of stacked coverage before
      deciding whether or not to reject it.” Rupert v. Liberty Mut.
      Ins. Co., 566 Pa. 387, 781 A.2d 132, 135 (2001).
Id. at 540-41 (emphases added).

      It then went on to determine whether that stacking waiver form put the

insured on clear notice that he was waiving inter-policy stacking. Focusing on

the fact that the insured’s policy only covered one vehicle, it held that the

insured had clear notice that he was waiving inter-policy stacking because

when the insured signed the waiver form stating, “I understand that my

premiums will be reduced if I reject this coverage,” he “could not have thought

he was receiving a reduced premium for intra-policy stacking because there

could be no intra-policy stacking with only one vehicle on the policy.” Id. The

court further stressed, “[a]bsent the applicability of intra-policy waiver, the

only interpretation fairly available to insured was that his premium-reducing

waiver applied to inter-policy stacking.” Id.

      However, Craley also highlighted that this same waiver form may not

be valid in the context of multi-vehicle policies covering different automobiles,

which is the case here. The pertinent footnote states:

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      Although we conclude that the waiver in this case was knowing,
      our consideration nonetheless raises questions as to whether the
      waiver would be knowing if [Plaintiff’s] policy had covered more
      than one vehicle. If a named insured insures some cars under
      one policy (“the policy”) and others under a separate policy (“the
      second policy”) and signs the form provided in subsection (d)
      which refers to the waiver of stacking “for each motor vehicle
      insured under the policy,” that named insured reasonably could
      assume that he received a reduced premium for waiver of the
      stacking of the limits regarding the vehicles insured by “the policy”
      with no knowledge that he was waiving stacking of the applicable
      limits of “the policy” to “the second policy,” despite paying
      premiums on both policies. We urge the legislature or the
      Commissioner to clarify whether and how insurers may secure a
      valid waiver in such a case.
Id. at 542 n.18 (emphasis original).

      Erie contends that this footnote represents little more than an

afterthought, i.e. dicta, because it was not essential to the opinion because

facts hypothesized within the footnote were not extant in Craley, and our

Supreme Court was merely exhorting the General Assembly to consider

amending the current requirements of the MVFRL. While the footnote may be

dicta, that does not mean that its reasoning is no less cogent. We agree with

the reasoning in Craley that under the standard Section 1738 stacking waiver

provision, an insured may have “no knowledge that he was waiving stacking

of the applicable limits of ‘the policy’ to ‘the second policy,’” i.e., the insured

would not have “clear notice” that he was waiving inter-policy stacking.

      In this case, under the Erie policy, Petrie and Decedent paid a premium

for $100,000 in UIM coverage in the event an insured under the policy was

injured or killed. While the Petries received a premium reduction by executing

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the waiver, it was possible for them to reasonably attribute this reduction to

their waiver of intra-policy stacking only, as it relates to the four vehicles

covered by the Erie policy.    Further, Erie should have been aware of the

potential defect in the waiver provision in the context of multi-vehicle policies

and, it was free to supplement it or otherwise fulfill its obligation to secure a

knowing waiver of inter-policy stacking. Because the stacking waiver did not

explicitly provide for inter-policy stacking, Decedent could not have made a

knowing decision to do so when he signed the policy.

                                       B.

      Just because the stacking waiver provision was made ineffective by

Craley does not automatically mean that Petrie is entitled to stacking because

the household exclusion provision, if valid, would preclude the inter-policy

stacking sought here. The validity of the household exclusion provision was

addressed recently in Gallagher v. GEICO Indem. Co., 201 A.3d 131 (Pa.

2019). Petrie contends that Gallagher makes the household exclusion also

inoperative to waive stacked inter-policy coverage.

      In Gallagher, the insured had two insurance policies with the same

company — one for his motorcycle and one for his cars. The insured opted

for and paid for stacked UM and UIM coverage when purchasing both policies.

While riding his motorcycle, the insured was involved in an accident and was

injured. The insured recovered the full policy limits of UIM coverage available

under the motorcycle policy. However, when the insured filed a claim for UIM

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coverage under the automobile policy, the insurance company denied the

claim because the insured was injured while riding the motorcycle and the

household exclusion provision precluded him from receiving stacked UIM

coverage under that policy.

     In holding that the household exclusion provision did not bar inter-policy

stacking, our Supreme Court first stated that under Subsection 1738(a) of the

MVFRL, stacked UM/UIM coverage is the default coverage available to every

insured and provides stacked coverage on all vehicles and all policies. See
id. It went on to note that:

           Importantly, the MVFRL makes clear that to effectuate a
     waiver of UM/UIM coverage, an insurer must provide the insured
     with a statutorily-prescribed waiver form, which the named
     insured must sign if he wishes to reject the default provision of
     stacked coverage. Id. at § 1738(d). This waiver provision has
     the salutary effect of providing insureds with detailed notice and
     knowledge of their rights to UM/UIM coverage absent such
     formal waiver.
Id. at 137 (emphasis added).     It then found that the household exclusion

provision could not act as a stacking waiver because:

     This [household exclusion] policy provision, buried in an
     amendment, is inconsistent with the unambiguous
     requirements of Section 1738 of the MVFRL under the facts
     of this case insomuch as it acts as a de facto waiver of stacked
     UIM coverage provided for in the MVFRL, despite the indisputable
     reality that [insured] did not sign the statutorily-prescribed UIM
     coverage waiver form. Instead, [insured] decided to purchase
     stacked UM/UIM coverage under both of his policies, and he paid
     [insurers] premiums commensurate with that decision. He simply
     never chose to waive formally stacking as is plainly required by
     the MVFRL.
Id. at 138-39 (emphasis added).

                                   - 12 -
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       Erie argues that Gallagher does not apply because it was a “narrow”6

decision limited to its facts of that case that are not present here.    They

contend that, unlike in Gallagher, the policies here were from two different

companies and the Decedent did not purchase stacking in either policy.

However, if it wanted the holding in Gallagher to be that narrow, our

Supreme Court would have simply held that where you had two different

stacked policies from the same insurance company, absent an express waiver

conforming to Section 1738, the household exclusion provision did not prevent

stacking because the insured paid for stacking in both policies.

       Instead of that narrow holding, our Supreme Court issued a broad

holding that the household exclusion provision cannot be used to skirt the

express requirement under Section 1738 that an insurer must receive an

insured’s written acknowledgement that he knowingly decided to waive

stacked UM/UIM coverage. See id. at 138. That holding is not limited to the

facts set forth in Gallagher, but one that finds that the exclusion is

inconsistent with the requirements of Section 1738 of knowing waiver – a

holding that is applicable to all policies for automobile insurance. Moreover,

just because Decedent did not purchase stacking or the polices are from two

____________________________________________

6 The contention that the decision is narrow comes from footnote 8 in the
opinion where it states, “[o]ur focus here is narrow.” Gallagher, supra at
138 n.8. However, that phrase was written to explain that the majority’s
opinion did not endanger other, non-household coverage exclusions such as
“exclusions related to racing and other inherently dangerous activities” and
does not narrow the scope of its holding as to the household exclusion. Id.

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different companies is irrelevant because Section 1738 requires a knowing

waiver of stacking from whom the insurance is being obtained- in this case,

Erie.

        Accordingly,   because      Gallagher      found   the   household   exclusion

provision inconsistent with Section 1738 of the MVFRL requirement that

insureds knowingly waive stacked coverage, and Craley found the present

stacking waiver provision was not sufficient for an insured to make a knowing

decision to waive stacked coverage, the trial court’s grant of judgment on the

pleadings is reversed and the matter is remanded to the trial court.7

        Order reversed. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/18/2020

____________________________________________

7 We recognize that our Supreme Court recently granted the Petition for
Certification of Question of Law filed by the United States Court of Appeals for
the Third Circuit in Donovan v. State Farm, 2020 WL 4580633 (Pa. filed July
24, 2020), and will address the issue that controls this decision. Specifically,
the Court will consider: “Is a named insured’s signing of the waiver form set
out at 75 Pa.C.S. § 1738(d) sufficient to waive inter-policy stacking of
underinsured motorist benefits under Pennsylvania’s Motor Vehicle Financial
Responsibility Law, where the policy insures more than one vehicle at the time
the form is signed?” However, we are bound to apply the law as it currently
exists.

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