Panel of Pennsylvania Superior Court Judges Gives Gallagher v. GEICO Wide Effect

The debate on the effect of the Pennsylvania Supreme Court's decision in Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019), continues on.

This question was most recently addressed by a panel of Pennsylvania Superior Court Judges in the case of Erie Insurance Exchange v. Petrie, No. 261 EDA 2020 (Pa. Super. Nov. 18, 2020 Pellegrini, J., Nichols, J., Kunselman, J.)(Op. By Kunselman, J.).

In Petrie, the Pennsylvania Superior Court held that the carrier improperly denied a UIM claim of an insured who had rejected stacking on two separate policies with two different companies and, in so ruling, credited Gallagher v. GEICO with widespread effect.

According to the Opinion, the Plaintiff was fatally injured in an accident while he was riding a motorcycle.

Relative to the UIM claims, the Plaintiff had recovered UIM benefits under a policy issued to him by Foremost Insurance for the motorcycle. At the time the Plaintiff also had another policy in the household with Erie Insurance that covered four other vehicles in the household, unstacked.

In addition to Erie having secured a rejection of stacking from the insured, the Erie policy also contained a Household Exclusion. The Household Exclusion relieved Erie of having to provide UIM benefits relative to any accident was insured in while in another vehicle of the household that was not insured by Erie Insurance.

Erie asserted that the executed rejection of stacking precluded the Plaintiff’s efforts at inter-policy stacking between the Erie policies and the Foremost policy that covered the motorcycle.

Erie filed this Declaratory Judgment action and filed a motion for judgment on the pleadings. The trial court granted the motion and the Plaintiff appealed. As noted, with its decision the Superior Court reversed and remanded the case for further proceedings. 

The Pennsylvania Superior Court found that the waiver of inter-policy stacking was ineffective under Craley v. State Farm Fire & Cas. Co., 895 A.2d 530 (Pa. 2006). More specifically, the Superior Court, relying upon a footnote in Craley which the carrier in this matter asserted was dicta, agreed with the Plaintiff that the waiver form did not clearly put the insured on notice that he was waiving inter-policy stacking at the time he purchased insurance. The Plaintiff had argued in this matter that the waiver form only referenced a “policy” and not “policies” and that the Plaintiff was, therefore, not put on clear notice that the waiver of stacking would also apply to policies issued by other companies. 

The Superior Court also ruled that the Pennsylvania Supreme Court’s decision in Gallagher v. GEICO which invalidated the household exclusion is not limited to its facts. The Superior Court in this Petrie case also held that the Household Exclusion was invalid as a de facto waiver of stacked coverage when Pennsylvania law required that carriers secure written waivers or rejections of stacked coverage from its insureds. As such, the Superior Court judges weighing in on this case took the view that Gallagher v. GEICO was not limited to its facts which involved the same carrier issuing both policies at issue in that case.

In footnote 7 in this Petrie decision, the Pennsylvania Superior Court noted that the Pennsylvania Supreme Court is addressing the Craley issue in the case of Donovan v. State Farm but that the Superior Court was required to decide this Petrie case based upon the law at present. 

In the end, the Superior Court reversed the trial court’s granting of a motion for judgment on the pleadings in favor of the carrier and remanded the case for further proceedings.

Anyone wishing to review this case, may click this LINK.