Thursday, February 24, 2022

Federal Court Follows Rush Decision And Finds Regular Use Exclusion Unenforceable

In the Federal Court case of Johnson v. Progressive Adv. Ins Co., No. 2:21-CV-01916-AJS (E.D. Pa. Feb. 23, 2022 Schwab, J.), the Court denied a carrier’s motion to dismiss a Plaintiff’s UIM claim in which the carrier was attempting to rely upon the Regular Use Exclusion.

According to the Opinion, the Plaintiff was in a motor vehicle accident and secured the minimal policy limits available under the tortfeasor’s policy.

At the time of the accident, the Plaintiff lived with her sister, was a regular user of her sister’s vehicle, and was driving her sister’s vehicle at the time of the accident. The Plaintiff sought UIM coverage under the policy that covered her sister’s vehicle. The Plaintiff asserted that she was a resident relative in relationship to her sister.

The UIM carrier denied coverage to the Plaintiff under the regular use exclusion.

After the issuance of the Pennsylvania Superior Court’s decision in Rush v. Erie Ins. Exchange, 256 A.3d 794 (Pa. Super. 2021), in which that court held that regular use exclusions were not enforceable because they run counter to Pennsylvania’s Motor Vehicle Financial Responsibility Law, the Plaintiff reiterated the request for UIM coverage.

The Defendant carrier denied the UIM claim again and the Plaintiff filed this lawsuit.

In its decision in this Johnson case, the Federal Court noted that the Rush decision had been appealed to the Pennsylvania Supreme Court but that the Pennsylvania Supreme Court had not yet indicated if it would be accepting that appeal for review.

In this Federal Court matter, the carrier attempted to argue that the regular use exclusion was still valid even though the Superior Court invalidated it in Rush. The insurance company attempted to cite to the Pennsylvania Supreme Court Opinion in Williams v. Geico Govt. Emp. Ins. Co., 32 A.3d 1195 (Pa. 2011).

The District Court in Johnson decided not to follow the Williams decision and found that the Williams decision was only a public policy based decision and not statutorily based decision as the more recent Rush decision was relative to the MVFRL.

The Court in Johnson accepted the Plaintiff’s argument that the regular use exclusion runs afoul of Section 1731 of the MVFRL, 75 Pa.C.S.A. Section 1731.  As such, the District Court denied the carrier’s motion to dismiss without prejudice to the carrier’s right to re-raise the matter should the Pennsylvania Supreme Court take up the issue and reverse the Superior Court decision in Rush.

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

I send thanks to Attorney Scott Cooper of the Harrisburg, PA law office of Schmidt Kramer for bringing this case to my attention. I also send thanks to Attorney Brad D. Trust of the Pittsburgh office of Edgar Snyder & Associates, LLC for bringing this case to my attention.

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