Monday, December 16, 2019

Judge Norton of Columbia County Breathes Life Back Into Household Exclusion

In Nationwide Property and Casualty Insurance v. Ryman, No. 673-CV-2019 (C.P. Col Co. Nov. 27, 2019 Norton, J.), the court in the Columbia County Court of Common Pleas ruled that the Pennsylvania Supreme Court’s landmark ruling from earlier this year in Gallagher v. Geico which purportedly eradicated the Household Exclusion, should not be read so broadly. 

Rather, Judge Norton of Columbia County ruled that the Supreme Court’s decision in Gallagher only served to bar insurers from using the Household Exclusion to block stacked underinsured motorist coverage where stacked coverage had been purchased, and that the eradication of the Household Exclusion did not apply in situations where stacking was voluntarily waived by the insureds.

In this matter, Nationwide filed a declaratory judgment action on the issue of coverage. The defendant insureds filed a motion for judgment on the pleadings, pointed to Gallagher, and argued that the Household Exclusion was dead.

The Court in Nationwide v. Ryman denied the insureds’ motion and held that the insureds’ interpretation of Gallagher was overly broad. Judge Norton wrote that “[t]he most fair interpretation of Gallagher is to read it in the context of its facts and in view of all of the language used by the Supreme Court, especially in [the Pennsylvania Supreme Court] citing the importance of the fact that the plaintiff selected and paid for the right to stack benefits under both policies” in the Gallagher case.

In the Nationwide v. Ryman case the court found that there was still an issue of fact to be decided on whether insureds had indeed waived stacking in the inter-policy context, i.e. the stacking to two separate policies as opposed to stacking of coverages on multiple vehicles all covered within one policy (intra-policy stacking).

Judge Norton noted that, if it were determined that stacking had not been purchased by the insureds, then the Gallagher v. GEICO case might not even apply and the case would fall under the Craley v. State Farm line of cases under which the Household Exclusion could carry the day in support of a denial of coverage.

Judg Norton noted that Craley v. State Farm, stood for the proposition that, “where there has been a valid waiver of stacking UIM benefits as to both policies, inter-policy stacking may be legitimately prohibited in a motor vehicle insurance policy.”

In the end, the insureds’ argument that the Household Exclusion was eradicated across the board by the Pennsylvania Supreme Court was rejected and the insured’s motion for judgment on the pleadings was denied. The case was allowed to proceed forward for the initial determination over whether the insureds had rejected stacking under the policies at issue.

Anyone wishing to review this decision may click this LINK

I send thanks to Attorney John A. Anastasia of The Mayers Firm, LLC in Plymouth Meeting, PA for bringing this case to my attention.

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