Northampton County Judge Finds Regular Use Exclusion Invalid

A split of authority is developing on the issue of whether the Regular Use Exclusion is a valid exclusion that comports with Pennsylvania's Motor Vehicle Financial Responsibility Law (MVFRL).

In the case of Rush v. Erie Insurance Exchange, No. C-48-CV--2919-01979 (C.P. Northampt. Co. June 29, 2020 Baratta, J.), Judge Stephen G. Baratta of the Northampton County Court of Common Pleas granted partial summary judgment to the injured party Plaintiffs after finding that Erie's Regular Use Exclusion violated the MVFRL.

According to the Opinion, the Plaintiff was a police officer who was injured while driving a police vehicle that was regularly available for his use at work.  With regards to this matter, the Plaintiff was seeking UIM coverage under his personal automobile insurance policy.  The Plaintiff had not executed any UIM coverage or stacking waivers. The carrier that issued that policy denied coverage in reliance upon the Regular Use Exclusion contained in the personal policy.  A declaratory judgment action was filed and the parties eventually filed cross-motions for summary judgment.

The Court found that the Regular Use Exclusion at issue violated the MVFRL in two respects.  First, the court in Rush referred to the Pennsylvania Supreme Court's Household Exclusion decision in Gallagher v. Geico and found that the Regular Use Exclusion in this case was invalid as a "disguised waiver" of UIM coverage when the MVFRL requires the carrier to secure written waivers of such coverage from the insured during the application process or otherwise.

Secondly, under a rationale previously set forth in Slupski v. Nationwide Mut. Ins. Co.801 Fed. Appx. 850 (3d Cir. 2002), the court in Rush found that, because the Plaintiff was entitled to liability/medical coverage of $250,000 for his injuries from the accident, the Regular Use Exclusion was also found to violate 75 Pa.C.S.A. Section 1734, which mandated the carrier to provide UIM coverage equal to the bodily injury coverage available absent a written waiver secured from the insured.

Anyone wishing to review this decision may click this LINK.

With this decision, there is now arising a split of court decisions on the validity of the Regular Use Exclusion in the post-Gallagher v. Geico era.  To view other recent decisions on the validity of the Regular Use Exclusion you can always go to the Tort Talk Blog at www.TortTalk.com, scroll down the right hand side to the "Labels" section and then scroll down alphabetically until you get to the Label of "Regular Use Exclusion" and click on that to see all of the Tort Talk posts on that topic.  Here is a quick LINK to that Label.

I thank Attorney Paul Oven of the Moosic, PA office of the Dougherty, Leventhal & Price law firm for bringing this case to my attention.  I send thanks to Attorney Scott Cooper of the Harrisburg, PA law firm of Schmidt Kramer for providing a copy of the decision.

Pennsylvania Superior Court Upholds Exclusion of Coverage for Resident Non-Family Members Not Listed On Auto Policy

In the case of Safe Auto Insurance v. Oriental-Guillermo, 2017 Pa. Super. 297 (Pa. Super. Sept. 18, 2017) (Dubow, J., Solano, J., and Ford Elliot, P.J.E) (Majority Op. by Dubow, J.) (Dissenting Op. by Ford Elliot, P.J.E.), the Pennsylvania Superior Court ruled that a automobile insurance policy issued by Safe Auto that excluded coverage for non-family members who live with the vehicle owner but who were not specifically included under the policy is enforceable under Pennsylvania’s Motor Vehicle Financial Responsibility Law.  

The panel essentially ruled that the policy was consistent with the MVFRL because that statute places the burden of making sure a driver is insured on the vehicle owner, and not upon the insurance companies.

The court rejected the Plaintiff’s argument that Safe Auto’s provision violated the mandate of the MVFRL of having an owner ensure that all drivers are covered by insurance.   The court noted that the MVFRL does not require a shifting of the burden to the insurance companies to discover the identities of resident, non-family member insureds who may have access to an insured’s vehicle.  

 

Rather, the court felt that that burden was more appropriately placed in the hands of the insured.  

 

 

The Majority Opinion written by Judge Dubow can be viewed HERE.

The Dissenting Opinion by Judge Ford Elliott can be viewed HERE.


Source: Article “Superior Court Rules Unlisted Resident Driver Exclusion is Okay” by Max Mitchell. The Legal Intelligencer (September 22, 2017).  

Public Road Not Part of "Insured Location" Under Homeowner's Policy

In his recent decision in the case of O’Brien v. Ohio Casualty Insurance Company, No. 2002-CV-6690 (C.P. Lacka. Co. Oct. 14, 2015 Minora, J.), Judge Carmen D. Minora of the Lackawanna County Court of Common Pleas denied a Plaintiff’s Motion for Post-Trial Relief following a bench trial on a declaratory judgment action involving an insurance coverage issue under a homeowner’s policy. 
The Plaintiff was at a graduation party at the homeowner’s residence. During the party, the injured party Plaintiff was operating an ATV owned by the homeowner’s son when the injured party Plaintiff crashed after hitting loose gravel, striking a tree and a telephone pole and coming to rest on the property of a different residence.

The homeowner’s insurance company for the Defendant homeowner denied coverage under policy provisions indicating that liability coverage did not apply to bodily injury arising out of the entrustment by an insured of a motor vehicle or any other motorized land conveyance to any person. The policy language also provided that this exclusion did not apply to a motorized land conveyance designed for recreational use off public roads, which was not subject to motor vehicle registration, and which was owned by an insured and on an insured location.

Judge Minora had previously denied summary judgment on the issues presented in this case.  A summary of that decision may be viewed in a prior Tort Talk blog post HERE. 

After a bench trial in the declaratory judgment action, Judge Minora issued a Memorandum and Order holding that the location of the ATV accident could not meet the policy definition of an "insured location" under the policy of insurance.

Accordingly, the court found that the homeowners lacked insurance coverage and that the homeowner’s insurance carrier was not required to either defend or indemnify the homeowner’s under that policy of insurance.

Thereafter, the injured party Plaintiff filed a Motion for Post-Trial Relief. In his most recent Opinion in this case, Judge Minora revisited the issues and reaffirmed his decision that coverage need not be afforded under the policy at issue. In so ruling, Judge Minora reiterated his finding, based upon Pennsylvania appellate law, that the definition of "insured location" is not broad enough to include the public roadway involved in the subject accident. 
Anyone wishing to review Judge Minora's October, 2015 Opinion in O'Brien may click this LINK.


UPDATE:  Judge Minora's decision was affirmed on appeal by the Pennsylvania Superior Court in a non-precedential memorandum decision issued on October 25, 2016.

Judge Burke of Luzerne County Finds No Homeowner's Coverage for Insured Who Injured Cops Arresting Him During Domestic Dispute

And then there's the other side of LOVE that can give rise to litigation.......

In his recent decision in the case of Nationwide Mutual Fire Ins. Co. v. Norton, No. 6557 of 2013 (C.P. Luz. Co. Oct. 24, 2014 Burke, P.J.), Judge Thomas F. Burke, Jr. granted Nationwide’s Motion for Summary Judgment in a declaratory judgment action on the issue of coverage under a homeowner’s policy.  

Judge Thomas F. Burke, Jr.
Luzerne County

Judge Burke framed the issue before him as involving a question of whether, under the subject Nationwide Insurance policy covering the real estate and residents own by Christopher and Rose Norton, Nationwide has a duty to defend or indemnify them for injuries sustained by police officers while arresting Christopher Norton on the property due to an alleged domestic dispute.  

After a review of the policy language at issue and the relevant case law, Judge Burke ruled that Nationwide did not have a duty to defend or indemnify the insured Defendants in the underlying claim pursued by the injured police officers.  

According to the Opinion, the police officers had responded to a call placed by Norton’s wife with regards to a potential domestic dispute.  During the course of responding to the call, the police officers were injured while arresting Christopher Norton.  

The subject Nationwide policy had an Intentional Acts Exclusion as well as a Criminal Acts Exclusion.

The Criminal Acts Exclusion expressly provided that the Exclusion applied regardless of whether the insured was actually charged with, or convicted of, a crime.  

Judge Burke set forth the relevant case law for coverage declaratory judgment actions which requires that the allegations of the underlying Complaint be reviewed against the language of the insurance contract.  Moreover, where the language of the insurance contract is clear and unambiguous, the court is required to give effect to that language. 

The records before the court confirmed that the insured, Christopher Norton, was arrested, charged criminally, and pled guilty to several counts of simple assault and a single count of resisting arrest.   It was equally clear to the court that the insured  had admitted to acting with a mens rea of conduct other than negligence when he committed these criminal acts by virtue of his guilty plea to the criminal charges.  

Judge Burke also ruled that the alleged injuries sustained by the police officers were indeed a result of the insured’s criminal acts as opposed to any negligent personal acts or negligence arising out of the ownership, maintenance, or use of the real or personal property covered by the policy.  

Ultimately, Judge Burke ruled that the allegations of the Plaintiff’s Complaint failed to invoke the personal liability coverage provisions of the policy and also fell under the liability exclusions listed elsewhere within the policy.  

As such, the court granted the Motion for Summary Judgment filed by the carrier and ruled that Nationwide was not legally obligated to defend or indemnify Defendant, Christopher Norton, in the underlying action arising out of the insured's criminal assaults that resulted in injuries to police officer(s) during a domestic abuse situation that occurred in the insured's home.  


Anyone desiring a copy of this Opinion, which contains a thorough recitation of the duty to defend/indemnify analysis for insurance coverage actions under a homeowner’s policy, may contact me at dancummins@comcast.net. 

 

Pennsylvania Supreme Court Declines Opportunity to Address Household Exclusion Case

By Order only, the Pennsylvania Supreme Court has denied a Petition for Allowance of Appeal in the case of Swarner v. Mutual Benefit Group, No. 793 MAL 2013 (Pa. Feb. 19, 2014).

Tort Talkers may recall that, at the Superior Court level, the court in Swarner  reviewed the Household Exclusion in an automobile insurance policy in the context of an application of the Utica Mutual factors as to whether or not an injured party was “occupying” a vehicle at the time of the accident.
For more details, here's the LINK the Tort Talk blog post on the Superior Court's decision in Swarner.  The blog post contains a link to that Opinion.

I send thanks to Steve Mahan, Esq., Law Clerk at Handler, Henning & Rosenberg, LLP for bringing this case to my attention.  Attorney Matthew S. Crosby of that office handled the Swarner case.

Summary Judgment Denied in Legal Malpractice Claim in Context of Real Estate Transaction

Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas recently denied a motion for summary judgment legal malpractice and insurance policy and exclusions questions in the context of a real estate transaction and related title insurance in the Brogan case which has provided fodder on other related issues as previously summarized here on Tort Talk.

In this latest decision out of the case, Judge Nealon denied the defendant's motions for summary judgment on the grounds that genuine issues of material fact and credibility issues existed to allow the case to proceed to the jury.

Should you be facing issues in the context of legal malpractice claims and/or questions of exclusions under a title insurance policy, this Opinion provides a current status of the applicable law of Pennsylvania on these topics.  Judge Nealon's latest decision in Brogan can be viewed HERE.

Third Circuit Addresses Auto Business Exclusion

In its recent decision in the case of Liberty Mutual vs. Sweeney, No. 11-4074 (3d Cir. Aug. 2, 2012), the Third Circuit Court of Appeals reversed judgment in favor of an insurer after finding that the auto business exclusion barring coverage for injuries sustained while using a non-owned motor vehicle in any kind of auto business did not apply to injuries sustained while the injured party was using a vehicle of another business for the purpose of running a personal errand, and even though the errand involved delivering a rental vehicle to a customer.  

 

The auto business exclusion in the case read, as follows:  "We will not pay for bodily injury sustained while using a non-owned motor vehicle in any kind of auto business.  Examples of auto businesses are: selling, repairing, servicing, storing, or parking motor vehicles."

 

The Sweeney case appears to address the rarely invoked auto business exclusion and may be a good case to review if you come across that issue. The opinion can be viewed online HERE.

 

Source:  “Court Summaries,” Pennsylvania Bar News (September 3, 2012) by Timothy L. Clawges.    

Named Driver Only Automobile Insurance Policy Upheld by Pennsylvania Eastern District Federal Court

In an apparent case of first impression, Judge Schiller of the Eastern District Federal Court ruled in his June 4, 2012 slip opinion in the case of Infinity Ins. v. Gonzalez, 2012 WL 1994772 (E.D. Pa. June 4, 2012 Schiller, J.), that the terms of a "Named Driver Only" automobile insurance policy would be upheld.  The court therefore held that Infinity Insurance need not provide coverage in an underlying motor vehicle accident litigation as a result.

In Infinity Ins. v. Gonzalez, Infinity contended its declaratory judgment action that its policy terms were clear and unambiguous and served to preclude coverage when the insured automobile was being operated by anyone other than the named insured.

The court noted that the policy endorsement clearly identified the policy as a “Named Driver Only” policy.  The policy also stated in bold language that the policy provides coverage only for drivers listed on the policy.

The court in this case also found that the language in the policy and endorsement was clear and unambiguous in restricting coverage only to drivers who are listed in the insurance policy. The court noted that the insured only listed herself in her application for insurance, and that the insured was the only listed insured driver in the policy and endorsement. The court additionally noted that the insured was clearly aware of the restriction, because in her application for insurance, insured selected an option whereby she received a discount on her premiums in exchange for a policy that denied coverage for unlisted drivers.

Although the court had "serious reservations" about upholding an insurance policy that makes it easier for uninsured motorists to drive on Pennsylvania roads, the court also recognized that "there was no clear indication of Pennsylvania law to justify the invalidation of this insurance policy based on that public policy." Op. at p. 4.  Since no party specifically raised any public policy argument for the court to consider, Judge Schiller elected to apply the clear and unambiguous language of the policy.

Anyone desiring a copy of this Opinion in the case of Infinity Ins. v. Gonzalez may contact me at dancummins@comcast.net.

Judge Mazzoni of Lackawanna County Upholds Criminal Acts Exclusion in Homeowner's Policy

In the case of Donegal Mutual Ins. Co. v. Lochner, Lees, et. al., No. 2008-CIV-6100 (Lacka. Co. March 15, 2011, Mazzoni, J.), Judge Robert A. Mazzoni of the Lackawanna County Court of Common Pleas upheld a criminal acts exclusion found in a Donegal Mutual Insurance Company homeowner’s insurance policy as clearly and unambiguously precluding coverage in this matter.

In this declaratory judgment action on a coverage issue, the underlying lawsuit involved a wrongful death and survival action for the fatal injuries of the decedent, allegedly caused by the son of the Donegal Insurance insureds. The decedent and the son had been involved in a physical altercation which resulted in fatal injuries to the decedent. When the decedent's estate sued the son and other Defendants, coverage was sought by the Defendants under the parent’s homeowner’s insurance policy with Donegal.

In agreeing with Donegal that coverage was indeed precluded by the criminal acts exclusion under the policy, the Court pointed to the fact that the son had pled guilty to involuntary manslaughter.

Anyone desiring a copy of this decision of Donegal v. Lochner may contact me at dancummins@comcast.net.

Pennsylvania Supreme Court Grants Allocatur in a "Regular Use" Case

On November 18, 2009, the Pennsylvania Supreme Court issued an Order in the case of Williams v. GEICO, 2009 WL 3850443, 147 WAL 2009 (Pa. 2009) agreeing to address the following issue:

"Whether, under the MVFRL and our decision in Burstein v. Prudential Property & Cas. Ins. Co., 809 A.2d 204 (Pa. 2002), the “regular-use” exclusion to underinsured motorist coverage in an automobile insurance policy is valid where the insured is a police officer, who has sustained bodily injury in the course of performing his duties while driving a police vehicle, for which vehicle he could not have obtained underinsured motorist coverage."

In this case, the Lawrence County Court of Common Pleas granted GEICO's motion for summary judgment and denied the injured party's motion to compel arbitration. The Superior Court affirmed without an opinion.

Property Insurance Coverage Case

In the case of Green Street Associates v. Erie Insurance Exchange, PICS No. 09-1737 (Phila. Co. 2009), a Philadelphia County Court of Common Pleas Judge Howland W. Abramson, after a two day bench trial, rejected four policy exclusions relied upon by Erie and ruled that Erie was required to provide coverage for water damage caused to a commercial building by a dislodged PVC pipe.

The facts revealed that a tenant in the building heard a loud bang and, upon investigating, found the pipe dislodged from the roof drain it was connected to. Rainwater pouring into the building from the roof. Evidence showed that .19 inches of rain fell over the 18 hours prior to the event but there was no rain falling during the 7 hours leading up to the event.

Erie insured the premises under an "Ultrasure Policy." The carrier sent out a forensic engineering expert to investigate on two occasions. He noticed rusting of the pipe and Erie initially denied coverage because the loss was caused by a drain fastener rusting away and, therefore, the loss was deemed to fall under the wear and tear exclusion. Erie also initially relied upon the rain exclusion.

By the time of trial, Erie also asserted that the loss fell under surface water exclusion and the deterioration exclusion as well.

Judge Abramson ruled that Erie failed to sustain its burden of proving the applicability of any of these exclusions. The rain exclusion and surface water exclusions were found inapplicable because it was not raining at the time of the loss. The remaining exclusions were also found inapplicable because, according to the Judge, there was no credible evidence that the stain on the pipe that became dislodged was rust as alleged and there was no credible evidence to show that the pipe became dislodged due to the rust or other wear and tear.

Anyone desiring a copy of this case may secure one from the Legal Intelligencer by calling 1-800-276-PICS, giving the PICS Case Number noted above, and paying a small fee.

I thank Attorney Gerry Connor of the Scranton, PA office of Margolis Edelstein for bringing this case to my attention.