Friday, January 27, 2012

Third Circuit Swerves the Other Way in Debris-in-the-Road Case

On January 26, 2012, the Third Circuit Court of Appeals issued an interesting uninsured (UM) motorists benefits decision in the debris-in-the-road case of Allstate v. Squires, No. 11-1664 (3d Cir. Jan. 26, 2011 Sloviter, Vanaskie, and Greenberg, J.J.)(Opinion by Greenberg, J.).

I previously put up a Tort Talk post on the District Court's decision in this matter last year denying coverage under the facts presented.  That post can be viewed here.  Now the Third Circuit has reversed in favor of a finding of potential coverage under the facts presented.

In Squires, the injured party insured was driving his pickup truck when he allegedly swerved to avoid a cardboard box lying in the middle of his lane.

Significantly, Allstate stipulated in this matter that an unidentified vehicle dropped the box.  Allstate rejected the injured party's claim for uninsured motorist benefits and sought a declaratory judgment. The insured responded with counterclaims for breach of contract and insurance bad faith under 42 Pa. Cons. Stat. § 8371.

At the trial court level, the District Court had entered judgment for Allstate, finding that the injuries did not "arise out of ownership, maintenance or use of an uninsured auto."

Now with this decision, the Third Circuit has reversed, rejecting the main argument by Allstate that the harm was caused by the box in the road and not by any vehicle as required to support a UM claim under the insurance policy language and Pennsylvania law.  The Third Circuit relied, in part, on the notion that physical contact with an uninsured vehicle is not required for an accident to "arise out of" the use of an uninsured vehicle.

The Court ultimately held that, accepting for purposes of appeal the stipulated facts that the debris was placed on the road by an unidentified vehicle, the Court found that the accident arose out of the maintenance and use of a motor vehicle such that there was a sufficient causal connection to support a finding of potential coverage for the claims presented.  The Third Circuit stated its belief that the Pennsylvania Supreme Court would rule in the same fashion if presented with the same case.

It is noted that this decision in Allstate v. Squires by the Third Circuit is contrary to a number of trial court decisions recently issued on the same issue, none of which was noted in this Opinion.  Summaries of those trial court opinions can be found here, here, and here.

Perhaps a significant difference between the Third Circuit's decision in Allstate v. Squires and those other trial court decisions on debris-in-the-road cases is that it does not appear that there was any stipulation in any of the trial court decisions that the debris on the road had indeed come from a vehicle.  Rather, in those cases, the injured party was without any evidence to establish how the debris came to be on the road.

The Third Circuit's decision  Allstate v. Squires also has an interesting tidbit in footnote 11 of the opinion in which footnote the Court confirmed that it was not deciding or taking any position on any aspect of the Plaintiff's bad faith claim against Allstate for its denial of coverage.  Interestingly, the Court went on to state in that footnote:

"We note, however, that our experience in addressing Pennsylvania insurance coverage disputes has demonstrated that insureds tend to bring bad faith claims when insurers reject their claims even though there are legitimate disputes over whether the claims are covered."

Anyone wishing to read the Third Circuit's Opinion in Allstate v. Squires can click on this Link.

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