Wednesday, September 1, 2021

Magistrate Judge Mehalchick of Federal Middle District Court Tackles Inter and Intra-Policy UIM Stacking Issues


In the case of Blizman v. The Travelers Home and Marine Ins. Co., No. 3:19-CV-01539 (M.D. Pa. Aug. 30, 2021 Mehalchick, M.J.), United States Federal Middle District Court Magistrate Judge Karoline Mehalchick issued a Memorandum Opinion in which she decided multiple Motions for Summary Judgment in a UIM stacking insurance coverage action.

Judge Mehalchick’s Opinion is written with notable clarity, which cannot always be counted on in stacking decisions.

In Blizman, the Plaintiffs sought a judicial declaration that the Defendant’s insurance policy should provide stacked underinsured motorist coverage for the injuries sustained by the decedent in a motor vehicle accident.

Judge Mehalchick previously reviewed the same issues in this case at the Motion to Dismiss stage of this case. The Tort Talk entry, which contains a Link to that decision, can be viewed HERE.

In her latest decision in the Blizman case, Judge Mehalchick granted the Plaintiff’s Motion for Summary Judgment and found that the Plaintiff was entitled to pursue both inter and intra-policy stacked UIM benefits under the insurance policy in question.

According to the Opinion, the Plaintiff purchased car insurance from the Defendant in March of 2008 on three (3) vehicles that they owned. The Defendant carrier obtained a waiver of stacked limits for UIM coverage at that time. Also contained in the policy was a household vehicle exclusion, which excluded coverage for bodily injuries sustained by any person while occupying a motor vehicle owned by the injured party or any family member which was not insured under the Defendant’s policy.

The policy at issue was amended in January of 2009 to add a fourth vehicle. The Plaintiff was not provided a new opportunity to reject stacked coverage. The declaration sheet issued at that point continued to reflect non-stacked UIM coverage.

In a “change” to the policy that occurred effective December 5, 2009, a vehicle was removed from the policy, resulting in three (3) vehicles remaining under the policy. The Defendant carrier did not obtain a new rejection form following the removal of that fourth vehicle.

The Plaintiff also asserted that, in a renewal of the policy dated September 5, 2014, a vehicle was removed which resulted in two (2) vehicles remaining under the policy. It was noted that the Defendant did not obtain any new rejection form following that change as well.

Ten (10) years later, the subject accident occurred in June of 2019 when the decedent suffered fatal injuries while driving a scooter.

The tortfeasor’s vehicle was insured by yet another carrier for bodily injury limits of up to $25,000.00. The scooter was insured by a Progressive Insurance policy with UIM coverage of up to $25,000.00.

At the time of the collision, the policy issued by Travelers, the Defendant carrier in this matter, provided for $100,000.00 in unstacked UIM coverage for each of the Plaintiff’s two (2) covered vehicles. The Plaintiff pursued UIM benefits under the policy and brought this declaratory judgment action seeking a judicial declaration that the Plaintiff was entitled to stacked UIM coverage under the case presented.

According to the Opinion, the tortfeasor tendered its limits as did the UIM carrier for the policy covering the scooter which the decedent was operating at the time of the accident.

The Plaintiffs requested Travelers to acknowledge and pay the policy’s UIM coverage. Thereafter, this declaratory judgment action was filed when the dispute arose between the parties with respect to the coverage.

The court reviewed the issue under arguments involving inter-policy stacking and intra-policy stacking.

Judge Mehalchick noted that the Pennsylvania Supreme Court recently clarified that stacking waivers, such as the one at issue in this case, are inapplicable to inter-policy stacking when multiple vehicles are insured under the policy containing the waiver. The court cited to the very recent Pennsylvania Supreme Court decision in Donovon v. State Farm Mut. Auto. Ins. Co., ___ A.3d ___, 2021 WL 3628706 (Pa. Aug. 17, 2021).

Judge Mehalchick noted that, under the Donovon case, the language of the statutory waiver only applies to intra-policy stacking issues, that is, efforts to secure stacking on multiple vehicles listed within a single policy. The court followed the Donovon rule that the language of the statutory waiver form did not apply to inter-policy stacking in terms of an attempt by a Plaintiff to stack coverages under separate policies of insurance.  As such, the court granted the Plaintiff’s Motion for Summary Judgment and found that the Plaintiff was entitled to inter-policy stacking under the policy at issue.

The Court in Blizman went on to address whether the waiver executed by the Plaintiffs back in 2008 was otherwise still valid as of the time of the subject accident with respect to stacking.  The Court found that the waiver was not still valid.

In this regard, Judge Mehalchick generally noted that, under 75 Pa. C.S.A. §1738(a) there is a presumption under the law that UIM coverage is to be stacked in Pennsylvania. However, the law provides that a named insured may waive coverage providing stacking of UM or UIM benefits by executing a stacking waiver in the language prescribed under 75 Pa. C.S.A. §1738(d).

In this matter, the Defendant pointed to a stacking waiver that was secured back in 2008 and asserted that that waiver remained valid as of the date of the accident in 2019 even though there were changes to the policy in the interim.

Federal Magistrate Judge Karoline Mehalchick
M.D. Pa.

Judge Mehalchick noted that, every time UM/UIM insurance is purchased by adding a vehicle to an existing policy, a new stacking waiver must be executed. In this regard, the court cited to Sackett v. Nationwide Mut. Ins. Co., 919 A.2d 194, 196-97 (Pa. 2007)(“Sackett I”).

Judge Mehalchick noted that, however, if coverage is extended to a vehicle added to an existing policy through a continuous after-acquired vehicle clause, then a new stacking waiver does not need to be executed even if the insurance premiums are increased. Judge Mehalchick cited to Sackett v. Nationwide Mut. Ins. Co., 940 A.2d 329, 334 (Pa. 2007) (“Sackett II”) in this regard.

The court noted that, therefore, the central issue of this case was whether the vehicle acquired by the Plaintiff in 2009 was added through and after-acquired vehicle clause. If it was, then a newly executed stacking waiver was not necessary and the 2008 waiver was still in effect at the time of the accident in accordance with Sackett II. However, if the vehicle was not subject to the after-acquired vehicle clause, then a new stacking waiver was required under Sacket I and the presumption that UIM coverage should be stacked would be controlling on the case.

In her Opinion, Judge Mehalchick noted that, as of the date of her decision, the Pennsylvania Supreme Court had not yet addressed the application of an after-acquired vehicle clause to a vehicle added to a policy’s declarations page at the time of acquisition.

As such, the court turned to the law last decided by the Pennsylvania Superior Court in the case of Kline v. Travelers Personal Sec. Ins. Co., 223 A.3d 677, 681 (Pa. Super. 2019). In that case, the Pennsylvania Superior Court addressed a situation in which an insured who had signed a stacking waiver form at the inception of his policy subsequently added two (2) vehicles to the existing policy. That insured was not presented with new stacking forms at the time the change was made. Approximately ten (10) years thereafter, the Plaintiff then signed a stacking waiver at the inception of the policy, and after the two (2) vehicles were added to the policy, the Plaintiff was involved in an accident. The Plaintiff then sought to stack the UIM coverage under his policy.

The Pennsylvania Superior Court in Kline affirmed the trial court’s decision that the Plaintiff was entitled to stacked coverage under the facts presented. The trial court in Kline had emphasized that the Plaintiff had notified Travelers each time he acquired an additional vehicle. The insurance company then subsequently generated amended declarations sheets on both occasions and increased the Plaintiff’s premiums to reflect the additional vehicles. As such, the court in Kline found that the Plaintiff’s vehicles were added to the policy via endorsements and were covered by the general terms of the policy as opposed to the after-acquired vehicle clause.

The trial court in Kline had also held that the Plaintiff had made “purchases” for purposes of 75 Pa. C.S.A. §1738 when his premiums were increased as vehicles were added to the policy.

For these reasons, the trial court held that Travelers failed in its obligation to obtain new stacking waivers from the Plaintiff at the time his two (2) vehicles were added to the policy. As noted, the Pennsylvania Superior Court in Kline affirmed the trial court’s conclusion and reasoning.

Judge Mehalchick found that the facts in the Blizman case before her were governed by the Kline decision. The Plaintiffs in this Blizman case and the Kline case both notified the carrier when new vehicles were added to the policy and both Plaintiffs were subjected to increased premiums to reflect the additional vehicles under the policy.

Where, as in Blizman, vehicles were added to the insurance policy through endorsements when the insured notified the carrier at the time the additional vehicle was acquired, an amended declaration sheet was subsequently generated in conjunction with that notification, and were premiums were increased to reflect the additional vehicles, the court found that the vehicles were added to the Plaintiff’s policy under the general terms of the policy and the not the after-acquired vehicle clause.

As such, Judge Mehalchick held for this additional reason that the carrier was obligated to acquire a new executed waiver of stacked UM/UIM coverage limits from the Plaintiff. Given that the carrier had failed to do so, the court ruled in favor of the Plaintiffs.

Lastly, Judge Mehalchick also addressed the applicability of the household vehicle exclusion in the policy. The carrier submitted that the exclusion should operate to preclude the Plaintiff’s claim for UIM benefits. The Defendant asserted that the case of Gallagher v. Geico, 201 A.3d 132 (Pa. 2019) was factually distinguishable.

Judge Mehalchick agreed with the Plaintiff’s argument that the household vehicle exclusion had no bearing on the resolution of this case as the question of the applicability of that exclusion was previously decided by Judge Mehalchick in her Opinion issued earlier in the case with respect to a Motion to Dismiss filed by the carrier. Judge Mehalchick noted that the holding in the prior decision made it clear that, in the absence of a valid stacking waiver such as was found in this case, a household vehicle exclusion could not otherwise serve to prevent stacked UIM coverage.

In this regard, the court again pointed to the ruling in Gallagher that a household vehicle exclusion cannot be used as a de facto waiver of stacked UIM coverage when an insured does not formally waiver stacking through the statutorily-prescribed UIM coverage waiver.

Given that the court found that there was no valid stacking waiver in this case, the carrier’s Motion for Summary Judgment under the household vehicle exclusion was denied.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Joseph Martam of the Property & Liability Resource Bureau (PLRB) for bringing this case to my attention.

Source of image at top: Photo by Lidya Nada on Unsplash.com.

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