Erie Insurance v. Colebank, L. ( 2022 )

J-A08037-22
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
ERIE INSURANCE EXCHANGE : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
LLOYD COLEBANK, JANET COLEBANK :
AND ERIC COLEBANK :
: No. 1244 WDA 2021
Appellants :
Appeal from the Order Entered September 22, 2021
In the Court of Common Pleas of Fayette County Civil Division at No(s):
1817 of 2019 GD,
2384 of 2019 GD
BEFORE: BENDER, P.J.E., LAZARUS, J., and McCAFFERY, J.
MEMORANDUM BY McCAFFERY, J.: FILED: APRIL 20, 2022
Lloyd, Janet, and Eric Colebank (collectively, Appellants) appeal from
the September 22, 2021, order entered in the Fayette County Court of
Common Pleas, granting the motion for judgment on the pleadings filed by
Erie Insurance Exchange (Erie) in this declaratory judgment action. The crux
of Appellants’ argument is that the trial court erred when it relied upon the
policy provisions of a separate insurance policy, issued by a separate
insurance carrier, to determine whether coverage was owed by Erie. Based
on the following, we affirm.
The underlying facts, which were stipulated by the parties, are as
follows. Lloyd and Janet are husband and wife, and Eric is their 27-year-old
son, who resides with them in Fayette County. Stipulation of Parties, 2/17/21,
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at ¶ 15. On February 2019, Eric was driving his 2016 Jeep Wrangler SUV,
which he owned, southbound on Brownsville Road, Jefferson Township,
Fayette County, Pennsylvania. Id. at ¶ 6. At the same time, the tortfeasor,
Wilbert Brown, was operating his vehicle northbound on the same road when
he lost control of his vehicle, crossed the center line, and collided with Eric’s
vehicle. Id. at ¶ 7. As a result of the accident, Eric suffered numerous
personal injuries, which required several surgeries. Id. at ¶ 8. Eric filed a
personal injury claim against Brown, who was insured by Allstate Insurance
under a policy that provided $25,000.00 in bodily injury liability coverage. Id.
at ¶¶ 9-10. On behalf of Brown, Allstate tendered the $25,000.00 liability
limits to Eric. Id. at ¶ 11. Eric, through his counsel, advised Erie of the
Allstate tender, and Erie waived subrogation and consented to the settlement
with Allstate. Id. at ¶ 12. The parties agree that the injuries and damages
suffered by Eric as a result of the underlying accident exceeded the
$25,000.00 policy limits. Id. at ¶ 14.
At the time of the accident, Eric’s Jeep was insured under a policy issued
to Eric by State Farm (the State Farm Policy).1 Id. at ¶ 16. Eric specifically
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1 The State Farm Policy also insured one other vehicle that Eric owned.
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rejected underinsured motorist (UIM) coverage2 under his State Farm Policy.
Id. at ¶ 17.
Eric subsequently submitted a claim for UIM coverage to Erie under an
insurance policy issued to Lloyd and Janet, that provided for, inter alia, UIM
benefits in specifically defined circumstances (the Erie Policy). 3 Id. at ¶ 18.
The Erie Policy insured two vehicles, neither of which was involved in the
accident at issue or owned by Eric. Id. at ¶ 19. The Erie Policy provides for
$100,000.00 of UIM with stacking and two vehicles, for a total of $200,000.00
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2 UIM coverage “is triggered when a third-party tortfeaser [sic] injures or
damages an insured and the tortfeasor lacks sufficient insurance coverage to
compensate the insured in full.” Gallagher v. GEICO Indem. Co., 201 A.3d
131, 132 n.1 (Pa. 2019). See also Erie Ins. Exch. v. Mione, 253 A.3d 754,
768 n.3 (Pa. Super. 2021), appeal granted, __ A.3d __, 2021 WL 5576704(Pa. Nov. 30, 2021).
3 Eric sought relief pursuant to Gallagher. In Gallagher, as will be discussed
in more detail below, the Pennsylvania Supreme Court held that the household
vehicle exclusion, contained in the insurance policy, violated the Pennsylvania
Motor Vehicle Financial Responsibility Act (MVFRL), 75 Pa.C.S. §§ 1701-
1799.7, because the exclusion impermissibly acted as a de facto waiver of
stacked UIM motorist coverage, and therefore, was not enforceable.
Gallagher, 201 A.3d at 137-38.
“The basic concept of stacking is the ability to add the coverages
available from different vehicles and/or different policies to provide a greater
amount of coverage available under any one vehicle or policy.” Erie Ins.
Exch. v. Petrie, 242 A.3d 915, 917 n.2 (Pa. Super. 2020) (citation omitted).
“There are two types of stacking, intra-policy and inter-policy. Intra-policy
stacking is when more than one vehicle is insured under a single policy of
insurance. Inter-policy stacking . . . is the addition of coverages for vehicles
insured under different policies of insurance.” Id. (citation omitted; emphasis
omitted). See also Mione, 253 A.3d at 757 n.7.
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in UIM benefits. Id. at ¶ 20. Erie collected premiums from Lloyd and Janet
for UIM and stacked UIM benefits under their policy. Id. at ¶ 26.
The Erie Policy contained the following household exclusion clause in its
UIM endorsement:
EXCLUSIONS – What We Do Not Cover
This insurance does not apply to
* * *
4. damages sustained by “anyone we protect” while:
a. “occupying” or being struck by a “motor vehicle” owned or
leased by “you” or a “relative,” but not insured for Uninsured or
Underinsured Motorists Coverage under this policy. This exclusion
does not apply when “anyone we protect” is “occupying” or
struck by a “motor vehicle” owned or leased by “you” or a
“relative” that is insured for the Uninsured or Underinsured
Motorists Coverage under any other Erie Insurance Group policy;
or
b. “occupying” or being struck by a “motor vehicle” owned or
leased by “you” or a “relative,” but not insured for Uninsured or
Underinsured Motorists Coverage under this policy.
Exclusions 4.a. applies only when the STACKED option is selected.
Exclusion 4.b. applies only when the UNSTACKED option is
selected.
Response in Opposition to Plaintiff, Erie Insurance Exchange’s Motion for
Judgment on the Pleadings, 7/23/21, at Exhibit 2, Erie Insurance Auto
Insurance Policy, Uninsured/Underinsured Motorists Coverage Endorsement –
Pennsylvania at 2-3 (emphasis and italics in original).
Eric also submitted a claim for UIM coverage to the Agency Insurance
Company individually and t/d/b/a/ AIC and/or Agency Insurance Company of
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Maryland (the Agency) pursuant to a policy issued to Lloyd that provided for,
among other coverages, UIM benefits under specifically defined circumstances
(the Agency Policy). See Stipulation of Parties at ¶ 21. The Agency Policy
insured a motorcycle that was not involved in the underlying accident and was
not owned by Eric. Id. at ¶ 22. The Agency Policy provided for $100,000.00
of UIM coverage. Id. at ¶ 23. Lloyd signed a stacking waiver, thereby
rejecting stacked limits of UIM coverage under the policy for himself and
members of his household. Id. at ¶ 24. The Agency collected premiums from
Lloyd for UIM benefits under his policy. Id. at ¶ 27. The Agency policy also
contained an exclusionary provision concerning UIM coverage. Id. at ¶ 31.
Eric is considered a “resident relative” within the meaning of the Erie
and Agency insurance policies. Id. at ¶ 25. Both insurance companies were
aware that Eric resided with his parents. Id. at ¶¶ 28-29.
In August 2019, Erie instituted a declaratory judgment action against
Appellants, seeking a determination that it had no duty to provide UIM
coverage to Eric with respect to the February 2019 accident. In response,
Appellants filed an answer, new matter, and counterclaims seeking a
determination that Erie does have the duty to tender UIM coverage to Eric.
Erie filed a reply to Appellants’ new matter and answer and new matter to
Appellants’ counterclaims.
Appellants also filed a declaratory judgment action against the Agency
seeking a determination that the Agency has a duty to tender UIM coverage
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to Eric. The Agency filed an answer and new matter also requesting a
determination that it had no duty to provide Eric with UIM coverage.
In February 2020, Appellants filed a motion to consolidate both matters
concerning Erie and the Agency pursuant to Pa.R.C.P. 213. On March 10,
2020, the court granted their motion and consolidated the two cases.
On July 9, 2021, Erie filed a motion for judgment on the pleadings,
alleging that: (1) Eric was operating a vehicle owned by him and insured
under a different automobile insurance policy (the State Farm Policy) at the
time of the underlying accident; (2) Eric knowingly and voluntarily rejected
UM4/UIM coverage under the State Farm Policy, which insured the Jeep he
was driving when the accident occurred; and therefore, (3) Erie did not owe a
duty to tender UIM benefits to Eric under the Erie Policy issued to Lloyd and
Janet pursuant to applicable Pennsylvania law and the Erie Policy exclusion
provision. See Erie’s Brief in Support of Motion for Judgment on the Pleadings,
7/9/21, at 6 (unpaginated). Erie further averred that Gallagher was not
controlling because Eric rejected UIM coverage under the State Farm Policy
and therefore, stacking was not at issue. See id.
Appellants filed a response in opposition to Erie’s motion for judgment
on the pleadings. They argued: (1) Eric was entitled to UIM benefits because
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4“UM” refers to “uninsured motorist.” “UM coverage applies when an insured
suffers injury or damage caused by a third-party tortfeasor who is
uninsured[.]” Gallagher, 201 A.3d at 132 n.1.
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he was injured by an underinsured motorist and stacked UIM benefits were
purchased under the Erie Policy for Lloyd and Janet as well as their resident
relatives, including Eric; (2) Erie’s attempt to denying Eric’s claim, which was
based upon his rejection of UIM benefits under a separate policy of insurance,
was improper under Pennsylvania law as only the policy provisions pertaining
to the policy from which coverage was sought were relevant; and (3) the
household vehicle exclusion upon which Erie relied was contrary to the MVFRL,
and therefore, was void and unenforceable. See Appellants’ Response in
Opposition to Plaintiff, Erie Insurance Exchange’s Motion for Judgment on the
Pleadings, 7/23/21, at ¶ 19.
The court held oral argument regarding the matter on September 21,
2021. Following the argument, the court entered an order granting Erie’s
motion. The court also entered judgment in favor of Erie and against
Appellants, stating that Erie had no obligation to tender UIM benefits under
its policy to Eric in relation to his car accident. See Order, 9/21/21, at 2
(unpaginated). Lastly, the court stated: “[It] has applied the persuasive
reasoning set forth in Erie Insurance Exchange v. Sutherland, [1113 WDA
2020, 2021 WL 2827321 (Pa. Super. July 7, 2021) (unpub. memo),] and finds
that Donovan v. State Farm [Mutual Automobile Insurance Company,
256 A.3d 1145 (Pa. 2021),] is distinguishable from the facts of this case since
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the insured did not waive or reject underinsured motorist benefits as [Eric]
Colebank did here.” Order at 2. Appellants filed this timely appeal.5
Preliminary, we note the September 21st order and Appellants’ notice
of appeal include the two captions and trial court docket numbers – relating
to Erie and the Agency as the cases were consolidated. On November 22,
2021, this Court issued a rule to show cause (RTSC) order since the notice of
appeal did not comply with Commonwealth v. Walker, 185 A.3d 969, 977
(Pa. 2018) (requiring “that when a single order resolves issues arising on more
than one lower court docket, separate notices of appeal must be filed.”),
overruled in part, Commonwealth v. Young, 265 A.3d 462 (Pa. 2021)
(reaffirming that Pa.R.A.P. 341 requires separate notices of appeal when
single order resolves issues under more than one docket, but holding Pa.R.A.P.
902 permits appellate court to consider appellant’s request to remediate error
when notice of appeal is timely filed). The RTSC order did note the
Pennsylvania Supreme Court has held that filing one notice of appeal from a
single order entered at the lead docket for “consolidated civil matters where
all record information necessary to adjudication of the appeal exists, and
which involves identical parties, claims and issues, does not run afoul of
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5 The court directed Appellants to file a Pa.R.A.P. 1925(b) concise statement
of errors complained of on appeal. Appellants timely complied. The court
issued a statement in lieu of Pa.R.A.P. 1925(a) opinion, stating it would rely
on the reasoning set forth in its September 21, 2021, order.
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Walker, Rule 341, or its Official Note.” Always Busy Consulting, LLC v.
Babford & Co., Inc., 247 A. 3d 1033, 1043-44 (Pa. 2021). Appellants
responded on December 1, 2021, arguing that the September 21st order only
impacted the case involving Erie and not the Agency. Regarding the case
involving the Agency, Appellants asserted the case was settled and
discontinued during the pendency of this appeal. See Praecipe to Settle and
Discontinue, 11/24/21 (Docket No. 2384 of 2019 GD). Appellants further
argued, inter alia, that, because the September 21st order, only resolved
issues involving Erie, Walker was inapplicable.6 The RTSC order was
discharged on December 8, 2021, and the issue was referred to the merits
panel. Based on the information before us, including the settlement and
discontinuance of the Agency suit, Appellants’ single notice of appeal does not
preclude this Court’s appellate jurisdiction, and we now turn to the merits of
their claims.
Appellants raise the following two claims on appeal:
1. Whether a rejection of underinsured motorist benefits under a
separate policy of insurance can be considered and/or relied
upon when determining whether underinsured motorist
benefits are available under the policy under which coverage is
being sought[?]
2. Whether an insurance carrier can enforce the household
exclusion in an automobile insurance policy to preclude
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6 Additionally, on November 4, 2021, Appellants sent correspondence to this
Court, stating that pursuant to Pa.R.A.P. 908, they believed the Agency and
its related parties have no interest in the outcome of this appeal.
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underinsured motorist benefits to an injured insured when it is
undisputed that the insurance policy at issue provides stacked
underinsured motorist benefits[?]
Appellants’ Brief at 5.
“Our standard of review over a decision sustaining a judgment on the
pleadings requires us to determine whether, on the facts averred, the law
makes recovery impossible.” Cagey v. Commonwealth, 179 A.3d 458, 463
(Pa. 2018). The Pennsylvania Supreme Court has explained:
the same principles apply to a judgment on the pleadings as apply
to a preliminary objection in the nature of a demurrer:
All material facts set forth in the complaint as well as all
inferences reasonably deducible therefrom are admitted as
true for the purpose of this review. The question presented
by the demurrer is whether on the facts averred the law
says with certainty that no recovery is possible. Where a
doubt exists as to whether a demurrer should be sustained,
this doubt should be resolved in favor of overruling it.
Id. at 463 n.2 (citations omitted).
Based on the nature of Appellants’ arguments, we will address them
together. Appellants first alleges that the court erred when it granted Erie’s
motion for judgment on the pleadings because it relied upon a provision from
Eric’s State Farm policy under which coverage is not being sought to determine
Erie’s obligations under the Erie Policy. Appellants’ Brief at 17. Appellants
state that pursuant to Craley v. State Farm Fire & Casualty Co., 895 A.2d
530 (Pa. 2006), and Donovan, supra, the only policy relevant to the matter
at issue is the Erie Policy. See Appellants’ Brief at 18 - 19. They contend that
under the terms of the Erie Policy, “Erie promised to pay UIM benefits to the
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named insureds and their resident relatives if they were injured by an
underinsured motorist up to the amount of UIM coverage purchased.”
Appellants’ Brief at 21. Appellants aver that “Eric fits squarely in the definition
of ‘anyone we protect’ under the Erie Policy[,]” Lloyd and Janet purchased
stacked UIM benefits in the total amount of $200,000, Eric exhausted all the
applicable insurance coverage available prior to the Erie Policy, and therefore,
under the policy’s terms, Erie was obligated to provide Eric with UIM benefits
for the 2019 accident. See id. at 21-22. Appellants contend that Erie’s
attempt to rely on Eric’s rejection of UIM benefits under the State Farm Policy
to deny coverage “defies the fundamental tenets of contract law and is
inconsistent with Pennsylvania law.” Id. at 22.
Moreover, Appellants note that UIM benefits are optional under the
MVFRL, but if an insured purchases UIM coverage, they should get the benefit
for which they paid. See Appellants’ Brief at 22, citing Gallagher, supra.
Likewise, relying on Nationwide v. Schneider, 960 A.2d 442 (Pa. 2008),
they state that the MVFRL “does not require that UIM benefits be afforded or
exhausted under a policy at one level of priority in order to recover UIM
benefits from a policy on a lower or different level of priority.” Appellant’s
Brief at 23.
In their second argument, Appellants challenge the household exclusion
provision in the Erie Policy because they assert that it is void and
unenforceable, and Erie may not use it to avoid providing the stacked UIM
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benefits that were purchased under the Erie Policy. See Appellants’ Brief at
27. Appellants note that in rendering its decision on Erie’s motion for
judgment on the pleadings, the court improperly relied on Erie Insurance
Exchange v. Sutherland, 260 A.3d 115, 2021 WL 2827321 (Pa. Super. July
7, 2021) (unpublished memorandum). See Appellants’ Brief at 27-31. As will
be discussed below, the Sutherland decision relied on Eichelman v.
Nationwide Ins. Co., 711 A.2d 1006 (Pa. 1998), and Mione, supra.
Appellants contend there are “fatal flaws” in Eichelman, Mione, and
Sutherland, stating: (1) “the [c]ourts in those cases relied upon provisions
of insurance policies that were not at issue, which was improper;” and (2) “the
rationale behind the decisions presume a requirement under the [ ] MVFRL
that UIM coverage exist on a host vehicle in order to obtain coverage at a
different level of priority, which does not exist and is contrary to the holding
in Schneider. . . .” Appellants’ Brief at 32. Appellants also state that
Eichelman, supra, was decided before Craley, supra, was issued, and it
“did not address the validity of the household vehicle exclusion in the context
of the [ ] MVFRL.” Appellants’ Brief at 32-33. Appellants then point to
Gallagher, supra, stating that in that decision, the Supreme Court did
address the validity of the household exclusion in terms of the MVFRL and
found that the provision was contrary to the statute and not enforceable. See
Appellants’ Brief at 33. Appellants rely on the adage taken from Gallagher
that an insured should receive the coverage for which they paid. See id. at
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35-36. They reiterate their earlier argument that Lloyd and Janet purchased
stacked UIM benefits under the Erie Policy, and therefore, Eric should qualify
as an insured under the policy due to the unenforceable household exclusion
provision. See id. at 36-37.
Based on the nature of this appeal, it is necessary to explain the relevant
legal history concerning UIM coverage and the household exclusion. First, we
will examine Eichelman and Gallagher and their progeny. Then, we will turn
to the applicability of Craley and Donovan.
In Eichelman, the plaintiff insured his motorcycle under a certain
insurance policy, but he expressly waived UIM coverage. Eichelman, 711
A.2d at 1007. The plaintiff resided with his mother and her husband, who
each had an insurance policy, on their respective vehicles, with the defendant,
Nationwide Insurance Company (Nationwide). Id. at 1007 n.3. Both
Nationwide policies “provided underinsured motorist coverage for the named
insured and any relative who resided with the named insured.”7 Id. at 1007.
However, the Nationwide policies also included a household exclusion clause,
which was similar to the one in the instant case.
While operating his motorcycle, the plaintiff was injured during an
accident. Eichelman, 711 A.2d at 1007. The plaintiff tried make a claim for
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7 Nationwide did not dispute that the plaintiff qualified as a “relative” under
the policies. Eichelman, 711 A.2d at 1007.
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UIM coverage under the Nationwide policies. Id. Nationwide denied the claim
pursuant to the “household exclusion” clauses in both policies. Id. The
plaintiff then filed a declaratory judgment action against Nationwide, seeking
entitlement to UIM benefits under the two policies. Id. The trial court granted
summary judgment in favor in the plaintiff. Id. On appeal, a panel of this
Court reversed, concluding the household exclusion was valid. Id. at 1008.
The Eichelman Court concluded the household exclusion clause at issue
was consistent with the legislative intent behind the MVFRL. Eichelman, 711
A.2d at 1010. In support, it provided the following rationale: the purpose of
UIM coverage, “protecting innocent victims from underinsured motorists who
cannot adequately compensate” them, does not “overrid[e] every other
consideration of contract construction.” Id. To this end, the Court pointed
out the plaintiff voluntarily chose not to purchase UIM coverage in return for
reduced insurance premiums on his policy, and furthermore, he admitted “he
was not aware that his mother and her husband had insurance policies which
could have possibly covered him.” Id. Moreover, the Court noted it was “not
readily apparent that [Nationwide] knew of [the plaintiff’s] existence when it
issued the two insurance policies” to his mother and her husband, nor that his
mother and her husband intended to provide UIM coverage to the plaintiff.
Id. The Court opined, “[G]iving effect to the ‘household exclusion’ in this case
furthers the legislative policy behind underinsured motorist coverage in the
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MVFRL since it will have the effect of holding appellant to his voluntary choice.”
Id. at 1010.
The Court then held:
[A] person who has voluntarily elected not to carry underinsured
motorist coverage on his own vehicle is not entitled to recover
underinsured motorist benefits from separate insurance policies
issued to family members with whom he resides where clear and
unambiguous “household exclusion” language explicitly precludes
underinsured motorist coverage for bodily injury suffered while
occupying a motor vehicle not insured for underinsured motorist
coverage.
Id. at 1010.
Approximately twenty years after Eichelman, the Pennsylvania
Supreme Court rendered its decision in Gallagher. In that case, the plaintiff
was operating his motorcycle when another driver collided with him and
caused the plaintiff severe injuries. Gallagher, 201 A.3d at 132. At the time
of the accident, the plaintiff had two insurance policies with GEICO Indemnity
Company (GEICO) — one for his motorcycle and one for his automobiles. Id.
at 132-33. The plaintiff specifically “opted and paid for stacked UM and UIM
coverage when purchasing both policies.” Id. at 133.
Following the accident, the plaintiff “filed claims with GEICO seeking
stacked UIM benefits under both of his GEICO policies.” Gallagher, 201 A.3d
at 133. GEICO paid him the policy limits of UIM coverage available under the
motorcycle policy but denied his claim for stacked UIM benefits under the
automobile policy. Id. GEICO denied coverage based on the belief that the
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household vehicle exclusion precluded the plaintiff from receiving stacked UIM
coverage pursuant to that policy. Id.
The plaintiff then commenced a lawsuit, claiming he was entitled to
coverage because he purchased stacked UIM coverage as part of the
automobile policy. Gallagher, 201 A.3d at 133. The trial court granted
summary judgment in favor of GEICO, and on appeal, a panel of this Superior
Court affirmed. Id. at 135.
The Pennsylvania Supreme Court accepted review on the question of
“whether a ‘household vehicle exclusion’ contained in a motor vehicle
insurance policy violates Section 1738 of the [MVFRL,] because the exclusion
impermissibly acts as a de facto waiver of stacked” UIM motorist coverage.
Gallagher, 201 A.3d at 132.8
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8 The Court summarized the provisions of Section 1738:
Subsection 1738(a) unambiguously states that the limits of
coverage for each vehicle owned by an insured “shall be the sum
of the limits for each motor vehicle as to which the injured person
is an insured.” 75 Pa.C.S. § 1738(a). This provision specifically
applies “[w]hen more than one vehicle is insured under one or
more policies” providing for UM/UIM coverage. Id. In other
words, stacked UM/UIM coverage is the default coverage available
to every insured and provides stacked coverage on all vehicles
and all policies.
Under the MVFRL, insureds can choose to waive stacked
coverage. [75 Pa.C.S.] § 1738(b). If an insured decides to waive
stacked coverage, then the insured’s premiums must be reduced
to reflect the different cost of coverage. [75 Pa.C.S.] § 1738(c).
Importantly, the MVFRL makes clear that to effectuate a waiver of
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The Gallagher Court held the household vehicle exclusion, in the
automobile policy, violated the MVFRL and was not enforceable. Gallagher,
201 A.3d at 138. The Court reasoned, inter alia, that it was undisputed that
the plaintiff “did not sign the statutorily-prescribed UIM stacking waiver form
for either of his GEICO policies[.]” Id. at 137. The Court determined the
household vehicle exclusion
is inconsistent with the unambiguous requirements Section 1738
of the MVFRL under the facts of this case insomuch as it acts as a
de facto waiver of stacked UIM coverage provided for in the
MVFRL, despite the indisputable reality that [the plaintiff] did not
sign the statutorily-prescribed UIM coverage waiver form.
Instead, [the plaintiff] decided to purchase stacked UM/UIM
coverage under both of his policies, and he paid GEICO premiums
commensurate with that decision. He simply never chose to waive
formally stacking as is plainly required by the MVFRL.
Id. at 138.
Two years after Gallagher, this Court issued Mione. There, the
defendant was operating his motorcycle when he was involved in an accident.
Mione, 253 A.3d at 756. The defendant insured the motorcycle with a policy
from Progressive, in which he did not pay for stacked UIM coverage. Id. at
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UM/UIM coverage, an insurer must provide the insured with a
statutorily-prescribed waiver form, which the named insured must
sign if he wishes to reject the default provision of stacked
coverage. [75 Pa.C.S.] § 1738(d). This waiver provision has the
salutary effect of providing insureds with detailed notice and
knowledge of their rights to UM/UIM coverage absent such formal
waiver.
Gallagher, 201 A.3d at 137.
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756-57. The defendant lived with his wife and his daughter. Id. at 756 n.4.
The husband and wife had an automobile policy with Erie, and the daughter
had her own separate policy with Erie. Id. at 756. Neither of these Erie
policies listed the motorcycle as a covered vehicle. Id. However, the family
paid for stacked UIM coverage on the Erie policies. Id. at 757.
Erie filed a declaratory judgment action, arguing the defendant was
precluded from recovering UIM benefits under the two Erie policies because:
(1) the motorcycle was not listed as a covered vehicle under either Erie policy;
and (2) both Erie policies contained a household exclusion clause that barred
the defendant “from recovering UIM benefits for injuries arising out of
operation of a non-listed miscellaneous vehicle.[ ]” Mione, 253 A.3d at 757.
Erie claimed the issue was governed by Eichelman, in which the plaintiff did
not pay for UIM coverage on his motorcycle. Id. Furthermore, Erie
contended, Eichelman was “still good law because Eichelman and
Gallagher addressed . . . two factually different circumstances.” Id. at 758.
Erie then asserted Gallagher was not applicable, as the insured in that case
had paid for stacked UIM coverage on both his motorcycle and auto policies,
whereas the defendant did not pay for stacked UIM coverage on his
Progressive motorcycle policy. Id.
The trial court agreed with Erie that Eichelman governed the matter,
and that Gallagher was factually distinguishable. Mione, 253 A.3d at 758.
The court reasoned that the defendant had “rejected UIM benefits on his
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Progressive Motorcycle Policy, which means that there is no underlying policy
to ‘stack’ the Erie Auto Policy benefits onto.” Id. The court thus granted Erie’s
motion for judgment on the pleadings. Id.
The defendant appealed, and this Court affirmed. The Mione Court first
“acknowledge[d] that this area of the law is not particularly clear and
straightforward.” Mione, 253 A.3d 760. The Court then examined
Eichelman, Gallagher, as well as the following decisions issued post-
Gallagher: Petrie, supra, and Erie Insurance Exchange v. King, 246
A.3d 332 (Pa. Super. 2021).
In Petrie, as summarized in Mione, “an underinsured driver struck and
killed [the defendant]’s husband while he was riding his motorcycle.” Mione,
253 A.3d at 763 (citation omitted). At the time of the accident, the defendant
and her husband had two insurance policies – one through Foremost Insurance
(Foremost) on the motorcycle, which provided UIM coverage, and the second
through Erie which covered four other vehicles and included unstacked UIM
coverage. Id. The defendant then sought UIM benefits under the Erie policy,
and was denied. Id. The “trial court granted Erie’s motion for judgment on
the pleadings, determining that there was no UIM coverage available to [the
defendant] for the motorcycle accident under the Erie policy[.]” Id.
On appeal, a panel of this Court reversed, “first ascertain[ing] that the
Erie policy’s stacking waiver, which [the defendant’s] husband had signed, did
not explicitly provide for inter-policy stacking, so he had not knowingly waived
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it.” Mione, 253 A.3d at 763. The Petrie Court then rejected Erie’s argument
that Gallagher did not apply because, unlike in Gallagher, the defendant’s
two policies were from different companies and the defendant did not
purchase stacking in either policy. Id. The Court reasoned the fact that the
defendant “did not purchase stacking or the polices are from two different
companies is irrelevant because Section 1738 requires a knowing waiver of
stacking from whom the insurance is being obtained — in this case, Erie.” Id.
at 764. The Court then applied Gallagher and reversed the grant of judgment
on the pleadings. Id.
The Mione panel next considered King, supra. Mione, 253 A.3d at
764. There, an uninsured driver struck the defendant’s truck while he was
driving in it with his paramour’s niece. Id. The defendant owned the truck,
but it was insured under a commercial policy, which did not name the
defendant or the niece as insureds. Id. The commercial policy included UM
coverage. Id. The defendant and his paramour additionally shared an Erie
policy for a personal vehicle. Id. After the defendant and the niece exhausted
the UM benefits available under the truck’s commercial policy, they then made
a UM claim under the Erie policy, which contained a household exclusion and
an executed stacking waiver. Id. Erie subsequently filed a declaratory
judgment action, arguing that coverage was barred due to the household
exclusion and the defendant’s execution of the stacking waiver. Id. The trial
court granted its motion for judgment on the pleadings. Id.
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The King Court “initially determined that [the defendant’s] execution of
a stacking waiver is ‘irrelevant’ because [the defendant] and the niece cannot
‘stack’ benefits they receive from Erie with benefits they received from [the
truck’s commercial policy], where [they] are not ‘insureds’ under the [truck’s
commercial] policy.” Mione, 253 A.3d at 764 (citation omitted). The King
Court then reasoned:
[B]ecause [the defendant and the niece] were not “insureds”
under the [truck’s commercial] policy, there is no UM coverage on
which to “stack” the Erie policy. Thus, the holding in Gallagher
— that a household exclusion cannot circumvent the clear
requirements of a rejection of stacking set forth in Section 1738
— [was] not directly applicable here.
Id. at 765 (citation and emphasis omitted).
After considering the above cases, the Mione Court stated:
Gallagher does not seem to invalidate household exclusions in
all cases, despite [the defendant’s] suggestions to the contrary.
Instead, Gallagher has been interpreted by this Court to hold that
a household exclusion cannot be used to evade Section 1738’s
explicit requirements for waiving stacking. Thus, the next
question [was] whether stacking and Section 1738 are implicated
in this case, which would trigger applying the rule set forth in
Gallagher.
Mione, 253 A.3d at 765-66 (footnote omitted; emphasis in original). Erie
argued “that stacking, Section 1738 — and consequently Gallagher — [were]
irrelevant to this matter,” and instead, that Eichelman applied. Id. at 766.
Erie posited that like Eichelman, there was “no host-vehicle UIM policy ‘to
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stack’ on top of.” Id. Finally, Erie relied on Dunleavy v. Mid-Century Ins.
Co., 460 F.Supp.3d 602 (W.D. Pa. 2020).9 See id.The Mione Court agreed with Erie and the trial court that stacking and
Section 1738 were not implicated. Mione, 253 A.3d at 768. The panel
opined:
In Eichelman, King, and Dunleavy, stacking was either not
discussed or determined to be irrelevant because those individuals
. . . did not have UM/UIM coverage under their host-vehicle
policies [and thus] did not have the requisite UM/UIM coverage on
which to stack other household policies with UM/UIM benefits.
Similarly, here, [the defendant’s motorcycle policy] does not have
UIM coverage on which to stack the Erie Auto Policies’ UIM
benefits. Instead, like the people in Eichelman and Dunleavy,
[the defendant] is using the Erie Auto Policies to procure UIM
____________________________________________
9 The facts and arguments presented in Dunleavy were identical to those in
Mione. See Mione, 253 A.3d at 766; Dunleavy, 460 F. Supp.3d at 605-07.
The injured parties had two separate insurance policies for their motorcycle
and automobiles. In Dunleavy, the federal district court agreed with the
insurance company that Gallagher was inapplicable, stating:
When a policyholder buys [UIM] coverage for several vehicles,
within or across policies, the law authorizes the policyholder to
stack the per-vehicle limits of all that coverage that the
policyholder bought. An insurer cannot insert an exclusion in the
policy that effectively prevents the stacking of limits of covered
vehicles by saying there is no coverage for some of those vehicles.
[This] rationale is predicated on the policyholder buying [UIM]
coverage on every vehicle to stack the benefits. That’s the
fundamental idea behind stacking — the policyholder stacks limits
of coverage that he or she paid for. If the vehicle involved in the
accident doesn’t have [UIM] coverage, then the policyholder can’t
stack anything on top of it because the policyholder hasn’t paid
for that privilege.
Dunleavy, 460 F.Supp.3d at 608 (citations and emphasis omitted).
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coverage in the first place. Therefore, this is not a stacking case,
and the rationale of Gallagher does not apply.
Id. (footnotes omitted). The panel further concluded Eichelman had not
been overruled and applied “Eichelman’s principle that a clear and
unambiguous household exclusion is enforceable where the insured was
operating a vehicle at the time of the accident that was covered by a separate
policy not providing the insured with UM/UIM coverage because the insured
had voluntarily, and validly, waived such coverage.” Id.10
At this juncture, we note that in the present matter, the trial court found
this Court’s unpublished decision in Sutherland11 was persuasive. See Order
at 2 (unpaginated). There, the defendant was injured while operating his
motorcycle, which was covered by a Progressive policy. Sutherland, 2021
WL 2827321, at *1. He waived all UIM coverage under that policy. The
defendant also had a separate automobile policy with Erie, for which he paid
premiums consistent with obtaining stacked coverage. See id. The policy
also contained a household exclusion clause. See id. The defendant
requested Erie pay UIM benefits for the motorcycle injuries pursuant to the
____________________________________________
10 The panel also stated that had the defendant “purchased UIM coverage
under his Progressive Motorcycle Policy, this case would fall squarely within
the factual scenario addressed in Gallagher[,] but . . . that is not the situation
before the [c]ourt.” Mione, 253 A.3d at 768 n.13.
We point out that the author of the Sutherland decision is the same in this
11
memorandum.
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automobile policy. See id. Erie denied the claim and subsequently filed a
declaratory judgment action. See id. The trial court denied Erie’s motion for
judgment on the pleadings, rejecting Erie’s reliance on Eichelman. See id.
at 2. It found that case was no longer controlling precedent following
Gallagher, and Gallagher held that household exclusions violated the MVFRL
and were unenforceable. See id.
A panel of this Court reversed, opining:
[P]ursuant to Mione, we disagree with the trial court’s conclusion
that Eichelman has been abrogated by Gallagher. Furthermore,
Eichelman and Gallagher are not inconsistent, as they address
different factual scenarios — saliently, whether an insured has
waived or purchased UIM coverage on a vehicle that is involved in
an accident or other incident. Here, like the insured in
Eichelman, [the defendant] did not purchase UIM coverage in his
Progressive policy for his motorcycle. Accordingly, he was not
entitled to stacked UIM coverage under [defendant’s] Erie policy
for the automobiles, as there was no Progressive UIM coverage
for the Erie coverage to stack onto. This result is consistent with
the MVFRL, as [the defendant] voluntarily chose not to purchase
UIM coverage in his motorcycle policy, and in return received
reduced insurance premiums. If [the defendant] had purchased
UIM coverage in his Progressive motorcycle policy, as well as his
Erie automobile policy, then Gallagher would apply. However,
this is the not the actual scenario presented.
Sutherland, 2021 WL 2827321, at *10 (emphasis and citations omitted).12
____________________________________________
12 We acknowledge that Sutherland is an unpublished decision, but it may be
relied upon for its persuasive value. See Pa.R.A.P. 126(b). Therefore, the
trial court did not err in applying its rationale as the case is substantially
similar to the instant matter.
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With the above authority guiding us, we now turn to the present matter.
Contrary to Appellants’ arguments, Eichelman and Mione are, indeed,
dispositive as both cases are substantially similar in facts and procedural
posture to this case. In all three cases, the insured suffered injuries while
operating a vehicle or motorcycle and the individual had explicitly rejected
UIM coverage on that host policy. Likewise, the injured individual sought
coverage from a separate policy that included stacked UIM coverage and a
household exclusion provision. Pursuant to Eichelman and Mione, since Eric
did not purchase UIM coverage for his own policy (the State Farm Policy), he
did not have the requisite UIM coverage on which to stack his parents’
household policies with UIM benefit. Moreover, Gallagher is not applicable
and did not invalidate the household exclusion.13 See Eichelman, 711 A.2d
at 1010; Mione, 253 A.3d at 768. This outcome is consistent with the MVFRL
as Eric voluntarily chose not to purchase UIM coverage in his automobile
policy, and in return received reduced insurance premiums. See Sutherland,
supra. Accordingly, Appellants’ argument fails under Eichelman and Mione.
We now turn to Craley and Donovan. As noted by Appellants, Craley
stands for the principle that “[i]t is [the policy under which the plaintiff sought
____________________________________________
13 Additionally, based on our disposition, Schneider is not applicable because
Eric did not purchase UIM benefits on his own policy and therefore, the level
of priority regarding the benefits is of no consequence. See Schneider,
supra.
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UIM benefits] and its exclusions that are relevant to the legal issues presented
in this case.” Craley, 895 A.2d at 533.
In Donovan, the plaintiff was in an accident while riding his motorcycle,
which was insured by a State Farm policy in which he waived stacked UIM
coverage. Donovan, 392 F.Supp.3d at 547. The plaintiff lived with his
mother, who had a separate policy with State Farm for three vehicles. Id. He
subsequently filed a claim under his mother’s automobile policy. Id. State
Farm, however, denied this claim on the grounds that both the plaintiff and
his mother waived stacked UIM coverage in their respective policies. Id. at
548, 550.
The plaintiff filed suit in the federal district court, seeking a declaration
that he was entitled to UIM benefits under his mother’s policy, or inter-policy
stacking. Donovan, 392 F.Supp.3d at 548. The Court applied Pennsylvania
law “[a]s a federal judge sitting in diversity.” See id. at 552. The Court
repeatedly noted that the plaintiff’s waiver of stacked coverage in his own
policy was not relevant: “[I]t is [the mother’s] waiver that has legal
significance; [the plaintiff’s] waiver is irrelevant.” Donovan, 392 F.Supp.3d
at 549, citing Craley, 895 A.2d at 533. See also Donovan, 392 F.Supp.3d
at 548 n.2 (“[The plaintiff] rejected stacked limits for his motorcycle policy,
but . . . the waiver accompanying his policy is irrelevant because he is seeking
benefits under his mother’s policy.”). The Court applied Gallagher and
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concluded the plaintiff was entitled to the UIM coverage in his mother’s policy.
Id. at 552-53.
The United States Court of Appeals for the Third Circuit filed a petition
for certification of law with the Pennsylvania Supreme Court. Our Supreme
Court granted the petition on July 24, 2020, on the following issues:
1. Is a named insured’s signing of the waiver form set out at 75
Pa.C.S. § 1738(d) sufficient to waive inter-policy stacking of
underinsured motorist benefits under [the MVFRL], where the
policy insures more than one vehicle at the time the form is
signed?
2. If the answer to Question 1 is no, is a household vehicle
exclusion contained in a policy in which the named insured did not
validly waive interpolicy stacking enforceable to bar a claim made
by a resident relative who is injured while occupying a vehicle
owned by him and not insured under the policy under which the
claim is made?
3. If the answers to Questions 1 and 2 are no, is the coordination-
of-benefits provision in the Automobile Policy nonetheless
applicable, such that it limits . . . recovery of underinsured
motorist benefits under the policy . . ., or does the lack of a valid
waiver of inter-policy stacking render that provision inapplicable?
Donovan v. State Farm Mut. Auto. Ins. Co., 237 A.3d 395 (Pa. 2020).
Although these discrete issues are not raised in the present appeal, we
note Donovan and Mione differ in the treatment of the policy at issue in each
case. Donovan, citing Craley, stated that in determining whether the
plaintiff was entitled to coverage under his mother’s policy, the terms of the
plaintiff’s own policy were not relevant. Donovan, 392 F.Supp.3d at 548 n.2,
549, 552. The Mione Court, however, specifically looked to the defendant’s
motorcycle policy to determine whether he had UIM coverage, in turn to
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ascertain whether there was any coverage for the other policies to “stack”
onto. Mione, 253 A.3d at 768. Thus, in Mione, the terms of the first policy
were relevant.
Notwithstanding our discussion of Donovan above, we conclude Mione
governs the factual circumstances and the issue presented. See
Commonwealth v. Ingram, 926 A.2d 470, 476 (Pa. Super. 2007) (Superior
Court opinions are binding precedent, which this Court must follow unless and
until they are overruled by an en banc Superior Court panel or a higher court)
(citation omitted).
Nevertheless, we note both Mione and Donovan observed the law in
this area is not entirely clear. See Donovan, 392 F.Supp.3d at 549 (“There
is little direct authority on the intricacies of inter-policy stacking under
Pennsylvania law.”); Mione, 253 A.3d at 760 (“At the outset of our review,
we acknowledge that this area of the law is not particularly clear and
straightforward.”). As indicated above, the Pennsylvania Supreme Court has
granted review in Donovan and Mione.14 We suggest the various issues
____________________________________________
14 The Supreme Court granted a petition for allowance of appeal in Mione on
the following issue:
Did the Superior Court err as a matter of law in determining that
the seminal decision of the Court in Gallagher v. Geico, 201 A.3d
131 (Pa. 2019), which invalidated household exclusions in auto
policies in Pennsylvania, did not apply to the underinsured
motorist ("UIM[“]) claims of Albert Mione under his Personal Auto
Policy merely because the policy insuring the motorcycle he was
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discussed above may be clarified by the Pennsylvania Supreme Court on
review.
For the foregoing reasons, we conclude Eichelman governs the factual
circumstances and the issues presented. Pursuant to Eichelman and Mione,
Appellants are not entitled to UIM benefits under their Erie policy in the case
sub judice. Accordingly, we affirm the trial court’s order granting Erie’s motion
for judgment on the pleadings.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/20/2022
____________________________________________
operating at the time of the accident did not provide [UIM]
coverage?
Erie Ins. Exch. v. Mione, __ A.3d __, 2021 WL 5576704 (Pa. Nov. 30, 2021)
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