[J-23-2025] IN THE SUPREME COURT OF PENNSYLVANIA WESTERN DISTRICT
TODD, C.J., DONOHUE, DOUGHERTY, WECHT, MUNDY, BROBSON, McCAFFERY, JJ.
ERIE INSURANCE EXCHANGE A/S/O : No. 19 WAP 2024 BATES COLLISION, INC. JAMES MYERS, : ANITA MORGAN, LOSSIE AUTO : Appeal from the Order of the SERVICE, AND BENEDICTINE SISTERS : Superior Court entered December OF ERIE, INC., : 21, 2023, at No. 1482 WDA 2021, : Reversing the Judgment of the Appellee : Court of Common Plea of Erie : County entered November 12, 2021, : at No. 12888-18. v. : : ARGUED: April 9, 2025 : UNITED SERVICES AUTOMOBILE : ASSOCIATION, : : Appellant : : : v. : : : BATES COLLISION, INC., : : Appellee :
OPINION
JUSTICE DONOHUE DECIDED: JANUARY 21, 2026 On November 9, 2018, plaintiff, Erie Insurance Exchange (“Erie”), acting as
subrogee of Bates Collision, Inc. (“Bates”), James Myers, Anita Morgan, Lossie Auto
Service and Benedictine Sisters of Erie, Inc. (collectively “insureds”), filed a civil complaint
against defendant, United Services Automobile Association (“USAA”). Erie, seeking
reimbursement for payment of a claim it made to its insureds following a fire, sued USAA because USAA failed to preserve a vehicle Erie believed to be critical evidence and the
true culprit in the fire. We granted review in this case to determine whether Erie as
subrogee of its insureds had any right to recovery against USAA and whether its claim
for “promissory estoppel” was actually a masked cause of action for spoliation of evidence
not recognized in Pennsylvania. Erie Ins. Exch. v. United Serv. Auto. Assn., 322 A.3d
880 (Pa. 2024) (per curiam). Our answer to the first question is dispositive. When acting
as subrogee of its insureds, Erie did not have any right of recovery against USAA. We
therefore reverse the judgment of the Superior Court and reinstate the trial court’s order
entering judgment in favor of USAA.
Facts and Procedural History
On January 22, 2017, a fire occurred at Bates leading to significant damages to
Bates and several vehicles inside the shop. Erie, as the insurer of Bates and the several
vehicles inside the shop, paid its insureds over $1.6 million dollars in damages pursuant
to an Insurance Policy which also specifically envisioned that Erie could seek
reimbursement for its payment.
Erie’s Insurance Policy with Bates provides:
8. OUR RIGHT TO RECOVER FROM OTHERS
After we make a payment under this policy, we will have the right to recover from anyone else held responsible. This right will not apply under Property Protection if you have waived it in writing prior to loss. Any insured is required to transfer this right to us, and do nothing to harm this right. Anyone receiving payment from us and from someone else for the same loss will reimburse us up to our payment. Cross-Motion for Summary Judgment, Exhibit 1-A, Insurance Policy (“Insurance Policy”),
General Policy Conditions, ¶ 8. The Insurance Policy also spells out the insured’s duties
after a loss: 18. YOUR DUTIES AFTER A LOSS
[J-23-2025] - 2 * * * j. Agree to help us enforce any right of recovery against any party liable for “loss” under this policy. This will not apply if you have waived recovery rights in writing prior to a “loss”. Insurance Policy, § X(18)(j). Further,
SECTION XI – DEFINITIONS * * * • “Loss” means direct or accidental loss of or damage to covered property. Id. § XI.
Erie suspected that a 2013 BMW 3 Series, 335i (“BMW”) was to blame for the fire,
and therefore alerted USAA, the BMW’s insurer, and BMW of North America, the BMW’s
manufacturer, of its “potential claim for subrogation” and took steps to inspect and
preserve the evidence. Complaint, 11/9/2018, ¶¶ 6-18. Counsel for Erie wrote to BMW
of North America to say that it had been retained by Erie to investigate the fire, provided
“notice of a potential claim against [BMW of North America] for subrogation[,]” and it
indicated that it “may attempt to recover any amounts it pays for the damages.” Id. Exhibit
A (Letter from Robert Gaul, Esq. to BMW of North America, LLC (Jan. 26, 2017)).
Following a joint inspection of the BMW by representatives of Erie, USAA and
BMW, Erie emailed USAA and USAA’s expert to confirm that USAA took possession of
the BMW and that it would “have it wrapped, secured and preserved for possible future
examination.” Complaint, 11/9/2018, ¶¶ 14-17 (citing Email, 2/23/2017). In the email,
Erie requested information about where the BMW would be stored and restated its
request for preservation, stating “[p]lease make sure the car is preserved in its current
condition and is not in any way altered or disturbed.” Id. USAA responded with the
location and phone number for Insurance Auto Auction (“IAA”), where the BMW was
towed and stored, and explained, “[w]e have requested that the vehicle be wrapped and
[J-23-2025] - 3 preserved for potential investigation.” Id. ¶ 18 (citing Letter, 2/23/2017). Despite these
communications, on March 28, 2017, IAA sold the BMW at a salvage auction.
Upon learning the BMW’s fate, Erie as subrogee of its insureds filed a tort suit
raising one claim of promissory estoppel against USAA in the Court of Common Pleas of
Erie County. Complaint, 11/9/2018. Erie’s intention to proceed as subrogee of its
insureds is apparent from every aspect of the Complaint. The civil cover sheet lists the
lead plaintiff as “Erie Insurance Exchange a/s/o[1] Bates Collison Inc.” and the lead
defendant as USAA. Complaint, 11/9/2018, civil cover sheet. The captions on the notice
to defend and the complaint consistently identify the plaintiff as “Erie Insurance Exchange
a/s/o Bates Collision, Inc., James Myers, Anita Morgan, Lossie Auto Service and
Benedictine Sisters of Erie, Inc.” and the defendant as USAA. Complaint, 11/9/2018. On
the civil cover sheet where the plaintiff must choose the nature of the case i.e., the most
accurate description of its primary case, Erie supplied that it was bringing a tort claim
which did not fall in the listed categories of intentional, malicious prosecution, motor
vehicle, etc. and instead selected “other” and supplied “[s]ubrogation” as the type of claim,
not promissory estoppel. Id., civil cover sheet.2
1 Erie uses “a/s/o” and “as subrogee of” interchangeably throughout its pleadings. Compare Complaint, 11/9/2018, ¶ 1 (“Plaintiff, Erie Insurance Exchange a/s/o Bates Collision, Inc., James Myers, Anita Morgan, Lossie Auto Service and Benedictine Sisters of Erie, Inc. is a reciprocal insurance exchange with members in Pennsylvania and other states which issues policies of insurance in the State of Pennsylvania.”) and Plaintiff’s Response to Defendant’s Cross-Motion for Summary Judgment, 8/16/2021, at 1 (“Plaintiff, Erie Insurance Exchange as subrogee of Bates Collision, Inc., et al., by and through its attorneys…”). 2 Thus, this case is not merely about an inarticulate self-designation. Concurring & Dissenting Op. at 3 (stating that Erie’s self-designation may be inarticulate or misleading to some but is not fatal). Erie’s designation of itself as subrogee and the cause of action as one involving subrogation permeates the litigation. Moreover, we accepted allowance of appeal in this case to decide the predicate issue of whether, as a matter of law, Erie as subrogee of its insureds could recover against USAA in a lawsuit. See infra p. 9. This is the question that we answer in this opinion. The Concurring and Dissenting (continued…)
[J-23-2025] - 4 According to the Complaint, Erie’s investigators determined that the fire originated
from and was caused by the BMW. Id. ¶¶ 6, 12. Erie pled that it insured Bates and
several cars in the shop, id. ¶¶ 5, 8, and that it paid out approximately 1.6 million dollars
in claims, id. ¶ 9. Based on payments made to insureds under the relevant insurance
policy provisions and Pennsylvania law, Erie averred that it “became subrogated to any
and all claims its insureds had against [USAA] or any other party responsible for the
damage.” Id. ¶ 11. The Complaint alleges that USAA failed to preserve the vehicle and
as a result, “Plaintiff cannot pursue its claim against the manufacturer or the owner of the
vehicle or anyone involved in maintaining the vehicle as it was unable to perform an
invasive laboratory examination, testing and/or other investigation necessary to precisely
identify the components inside the BMW which caused the fire.” Id. ¶ 21.
As subrogee, Erie brought one count of promissory estoppel against USAA. Id. It
alleged that due to USAA’s alleged failure “to abide by its verbal and written commitments
and promises, Plaintiff is unable to pursue a claim against the manufacturer of the vehicle,
the owner of the vehicle or anyone else because the vehicle was not preserved.” Id. ¶ 25.
According to the Complaint, “[i]njustice can only be avoided by enforcing the promise and
holding [USAA] responsible for the damages sustained by Plaintiff’s insureds.” Id. ¶ 26.
Finally, “Plaintiff, Erie Insurance Exchange a/s/o Bates Collision, Inc., James Myers,
Benedictine Sisters of Erie, Lossie Auto Service and Anita Morgan” requested judgment
in its favor and against USAA “in the amount of $1,624,217.15 plus interest, costs,
attorney fees and any other relief this Court may deem just and proper.” Id. at 5.
USAA filed an answer to the Complaint denying that the BMW caused the fire.
Answer, 1/8/2019, ¶ 6. USAA maintained that it was the negligence of Erie’s insured,
Opinion does not express any disagreement with our conclusion that Erie as subrogee cannot recover against USAA.
[J-23-2025] - 5 Bates, that caused the fire. Id. ¶ 4. USAA underscored that neither it nor its agents sold
the BMW. Id. ¶ 20. Thereafter USAA and Erie filed cross-motions for summary judgment,
the resolution of which is at the heart of the present decision. USAA maintained that
Erie’s subrogation rights are limited by the Insurance Policy’s provisions: it may only
recover against parties for loss and is limited to “the direct and accidental loss of damage
to covered property.” Cross-Motion for Summary Judgment, 7/6/2021, ¶ 35 (citing
Insurance Policy, §§ X(18)(j), XI). According to USAA, because it did not cause the
property damage for which Erie was contractually obligated to pay its insureds,
subrogation principles do not apply to Erie’s claim. Id. ¶ 36. Moreover, it asserted that
the promissory estoppel claim was a masked cause of action for spoliation of evidence,
a cause of action that does not exist in Pennsylvania. Id. ¶¶ 37-38. For its part, Erie
asked the trial court to follow a California case, Cooper v. State Farm Mutual Automobile
Ins. Co., 177 Cal. App. 4th 876, 902 (Ca. 2009), and recognize the cause of action for
promissory estoppel. Erie’s Memorandum of Law in Support of Motion for Summary
Judgment, 5/5/2021, at 19.
Persuaded by USAA, the trial court viewed Erie’s promissory estoppel cause of
action as the equivalent of a claim for negligent spoliation of evidence and denied relief
because a cause of action for negligent spoliation of evidence does not exist in
Pennsylvania. See Pyeritz v. Commonwealth, 32 A.3d 687, 689 (Pa. 2011) (holding that
no cause of action for negligent spoliation of evidence exists in Pennsylvania). The trial
court emphasized that any promissory estoppel claim by Erie would fail because the
damages alleged were speculative and uncertain. Trial Court Opinion, 11/20/2021, at 15.
In the alternative, the trial court concluded that Erie’s claim, because it was presented as
a subrogation claim, failed as a matter of law. According to the court, subrogation
principles do not apply here because USAA did not cause the property damage for which
[J-23-2025] - 6 Erie was contractually obligated to pay its insureds. Id. at 16. The trial court granted
USAA’s motion for summary judgment and denied Erie’s, and therefore directed the
Prothonotary to enter judgment in favor of USAA and against Erie. Trial Court Order,
11/21/2021.
Erie appealed to the Superior Court. Erie challenged the trial court’s reliance upon
Pyeritz and the trial court’s alternative holding that Erie, “as a subrogation carrier, had no
standing to pursue a claim against [USAA] because [USAA] did not cause the damages
for which Erie was obligated to pay even though [USAA’s] action prevented Erie from
pursuing the entity which caused the damages for which Erie was obligated to pay.” See
Pa.R.A.P. 1925(b) Statement, 12/23/2021. Erie argued that it was acting “as a
subrogating carrier” when it “received the promise that USAA breached” and “[s]ince the
promisee is the named Plaintiff, Erie has standing to pursue this action.” Erie’s
Substituted Superior Court Brief, 3/2/2023, at 42. Thus, Erie admitted that it was pursuing
the claim as subrogee and merely challenged the trial court’s conclusion that it did not
have “standing” as subrogee.
An en banc Superior Court panel reversed the trial court’s order granting summary
judgment in favor of USAA.3 Erie Ins. Exch. v. United Serv. Auto. Ass’n, 307 A.3d 1221
(Pa. Super. 2023) (en banc). After identifying the applicable standard of review for
summary judgment, the Superior Court addressed the arguments regarding the claim of
promissory estoppel. The Superior Court observed that Erie’s complaint contained only
one claim for “promissory estoppel,” a doctrine “invoked to avoid injustice by making
3 Initially, a three-judge panel of the Superior Court affirmed with one judge dissenting, but the Superior Court granted en banc reconsideration and withdrew the prior opinions. The parties submitted substituted briefs and presented oral argument to an en banc panel of the Superior Court. Erie Ins. Exch. v. United Serv. Auto. Ass’n, 1482 WDA 2021, 2023 WL 183160 (Pa. Feb. 9, 2023) (order). At every juncture, USAA urged affirmance of the trial court based upon its findings that Erie, as subrogee, could not maintain a promissory estoppel claim.
[J-23-2025] - 7 enforceable a promise made by one party to the other when the promisee relies on the
promise and therefore changes his own position to his own detriment.” Id. at 1225
(quoting Crouse v. Cyclops Indus., 745 A.2d 606, 610 (Pa. 2000)).4 The court found that
the underlying facts set forth in Erie’s complaint provided for the possible recovery of
damages based upon promissory estoppel, and it rebuked the trial court for relying upon
Pyeritz to dismiss Erie’s complaint. Id. at 1225-26 & n.5. The Superior Court also found
that the trial court erred in opining that Erie’s damages were speculative and uncertain.
Id. at 1226 n.6. Despite USAA’s repeated arguments that Erie, as subrogee of its
insureds, could not pursue a promissory estoppel cause of action,5 the Superior Court did
not address this alternative holding of the trial court.
Judge Olson issued a dissenting opinion, which Judge Kunselman joined. Erie
Ins. Exch., 307 A.3d 1221 (Olson, J., dissenting). In the dissent’s view, the trial court
properly relied upon Pyeritz, which held that Pennsylvania does not recognize a cause of
action of negligent spoliation of evidence as a mechanism to recoup damages.
Id. at 1231. According to the dissent, Pyeritz’s reasoning applied equally to the instant
case, and “[t]he speculative nature of the damages that the [Pyeritz] Court held required
rejection of the cause of action is the same regardless of the theory of liability.” Id. It
rejected Erie’s reliance upon the Cooper case as inconsistent with this Court’s reasoning
in Pyeritz and also highlighted that Erie’s damages were more uncertain and speculative
4 The plaintiff must establish that: “(1) the promisor made a promise that he should have reasonably expected to induce an action or forbearance on the part of the promisee; (2) the promisee actually took action or refrained from taking action in reliance on the promise; and (3) injustice can only be avoided by enforcing the promise.” Erie Ins. Exch., 370 A.3d at 1225 (quoting Crouse, 745 A.3d at 610). 5 USAA’s Superior Court Brief, 6/17/2022, at 46-49; USAA’s Substituted Superior Court Brief, 3/23/2023, at 18, 21-26 (arguing that “[a]s a threshold and dispositive matter, Erie lacked standing, and did not have a subrogation claim against USAA as a matter of law”); Superior Court Oral Argument (en banc), 8/9/2023 (passim).
[J-23-2025] - 8 than those in Cooper. The dissent likewise did not discuss the propriety of the promissory
estoppel action by Erie as subrogee of its insureds.
This Court granted review to address two questions:
a. Was the Superior Court’s decision inconsistent with Pennsylvania law on subrogation, as Erie’s suit against [USAA] as the subrogee of its insureds was limited to their rights to recover from the party responsible for their property loss, and Erie had no right of recovery against [USAA] as a matter of law as it was undisputed that [USAA] did not cause the fire?
b. Did the Superior Court rule inconsistently with this Court’s decision in Pyeritz v. Commonwealth [613 Pa. 80], 32 A.3d 687 (Pa. 2011)[,] by ignoring that Erie’s “promissory estoppel” claim was a masked cause of action for negligent spoliation of evidence not recognized in Pennsylvania, which also posed an issue of substantial public importance, and was its decision also inconsistent with Pennsylvania law on promissory estoppel?
Erie Ins. Exch. v. United Serv. Auto. Assn., 322 A.3d 880 (Pa. 2024) (per curiam)
(reordered for ease of discussion). Our resolution of the first question resolves this
appeal.
USAA accuses the Superior Court of ignoring the threshold subrogation issue
despite it being an independent ground for the trial court’s decision. USAA’s Brief at 36.
According to USAA, there is no doubt that Erie’s claim was a subrogation claim, and Erie
“lacked standing and did not have a subrogation claim or right of recovery against USAA
as a matter of law.” Id. USAA maintains that Erie, as subrogee of its insureds, was limited
to the insureds’ rights to recover from the party responsible for their property loss as set
forth in the Insurance Policy. Because the loss suffered by Erie’s insureds was the loss
of or damage to covered property resulting from the fire, Erie had no right to recovery
[J-23-2025] - 9 against USAA as a matter of law given that it was undisputed that USAA did not cause
the fire. Id. at 37-38.6
In support, USAA cites the Insurance Policy’s provision that an insured’s duty after
loss is to “help [Erie] enforce any right of recovery against any party liable for ‘loss’ under
this policy” and that loss is defined as “direct or accidental loss of or damage to covered
property.” Id. at 38 (quoting Insurance Policy, §§ X(18)(j), XI). USAA insists that its
alleged failure to preserve the BMW after the fire did not cause the loss to the Erie
insureds. Id. USAA maintains that it was not a party liable for loss for whom the insureds
had a “right of recovery” under the Insurance Policy. Therefore, USAA asserts that “Erie’s
insureds, and thus Erie in its subrogation action, had no claim against USAA[.]” Id. at 39.
“[T]he loss alleged by Erie in the [C]omplaint is not the covered ‘loss’ for the Erie insureds
as defined in the [Insurance] Policy for which Erie is subrogee[.]” Id. at 40. In sum, Erie’s
subrogation rights went no further than a direct claim for property loss against the party
liable for the loss.
Erie first addresses USAA’s contention that it lacked standing, insisting that it had
standing based upon the contractual obligation to preserve the evidence between itself
and USAA. Erie’s Brief at 57. In support, it recites fundamental principles of standing,
such as that a plaintiff must demonstrate aggrievement to establish standing. Id. (citing
In re Application of Biester, 409 A.2d 848, 851 (Pa. 1979); In re Hickson, 821 A.2d 1238,
1243 (Pa. 2003)). Erie highlights that “[i]n a promissory estoppel action, the party who
has standing to pursue the claim is the recipient of the breached promise.” Id. (citing
6 We are at a loss to understand the Superior Court’s failure to address this threshold issue. Given the prominence of this issue in the briefs and oral argument, it is difficult to classify the omission as inadvertent. In its rush to determine the merits of an issue of first impression, the intermediate court rendered a published opinion with an inherent flaw. We accepted allowance of appeal to address the propriety of the Superior Court’s presumed but unspoken blessing of a subrogee’s pursuit of the promissory estoppel claim.
[J-23-2025] - 10 Pennsy Supply Inc. v. Am. Ash Recycling Corp., 895 A.2d 595 (Pa. Super. 2006)).7 Erie
accuses USAA of attempting to confuse an otherwise simple issue: “USAA took on a
binding contractual obligation when it made a promise that Erie justifiably relied on to its
detriment. Erie now seeks recovery due to USAA’s breach of that promise.” Id.
Erie attempts to demonstrate that it properly pled its cause of action as a
counterargument to USAA’s assertion that it did not have a claim for promissory estoppel
as subrogee. Id. at 58. In support, Erie states that the rules of civil procedure do not
require a plaintiff “‘to specify the legal theory or theories underlying the complaint. He or
she may merely allege the material facts which form the basis of a cause of action.’” Id.
(quoting Burnside v. Abbott Labs, 505 A.2d 973, 980 (Pa. Super. 1985)). Erie argues that
it met this requirement by pleading promissory estoppel as a theory of recovery. Id. Erie
maintains that other jurisdictions recognize promissory estoppel claims under the same
facts. Id. at 59 (collecting cases).
In further support that it properly pled its claim, Erie contends that its civil cover
sheet listing subrogation as the cause of action is of no moment. Id. at 59 (citing Young
v. Wetzel, 252 A.3d 698, 2021 WL 980254 (Pa. Commw. 2021) (non-precedential)).
According to Erie, it listed “subrogation” as the basis for the action “in an effort to identify
how Erie’s interest in the action came to be and the reasons Erie was aggrieved via
payment of damages resulting from the BMW that would give standing to maintain any
cause of action in the first place.” Id. Erie warns that accepting USAA’s arguments would
“shatter the subrogation industry[.]” Id. at 59-60. It explains that no insurer that retains
evidence actually caused the fire in any reasonable factual scenario. Id. at 60.
7 In addressing the viability of its promissory estoppel claim, i.e., the other issue on which we granted review, Erie cites to Pennsy for another premise: that a promissory estoppel claim may be brought by a third party who justifiably relies on the promise made to the promisee. Erie’s Brief at 13 n.2 (citing Pennsy, 895 A.2d at 606).
[J-23-2025] - 11 Next, Erie writes that “even if the cause of action was characterized as one of
‘subrogation,’ it would not garner a different result” because “[s]ubrogation is not a cause
of action[,]” but instead is an equitable and flexible doctrine. Id. at 60 (citing Arlet v.
Workers’ Comp. Appeal Bd., 270 A.3d 434, 441-42 (Pa. 2022)). Subrogation “is a legal
fiction recognized by the courts and specific statutory provisions which allow an insurance
carrier to step into the shoes of its insured and pursue claims against any responsible
party after it reimburses the insured for damages.” Id. (citing Arlet, 270 A.3d at 442). Erie
cites also to Jacobs v. Northeastern Corp., 206 A.2d 49, 53 (Pa. 1965), as providing that
“‘[t]he right of subrogation is not founded on contract’” but instead is a “‘creature of equity
… enforced solely for the purpose of accomplishing the ends of substantial justice.’” Id.
(quoting Jacobs, 206 A.2d at 53). It also cites this Court’s statement in Gildner v. First
National Bank and Trust Company, 19 A.2d 910, 915 (Pa. 1941), that “‘[t]he doctrine of
subrogation was adopted from the civil law and is based not on contract but on
considerations of equity and good conscience.’” Id. at 61 (quoting Gildner, 19 A.2d at
915). Because the principles underlying subrogation are not overly constrictive, Erie
insists that “[w]hether [it] obtained this promise in its individual capacity, its capacity as
the subrogee, or both, is irrelevant to the validity of the promise or the resulting cause of
action due to its breach.” Id. at 62.8
Erie also disputes USAA’s central contention that the Insurance Policy limits it from
pursuing a promissory estoppel theory, contending that its contractual right of subrogation
is broad enough that it does not limit it from pursuing a promissory estoppel claim. It
argues that “[e]ven if obtained solely as a subrogee of [Bates], the [Insurance] Policy
8 In making this argument, Erie disputes USAA’s insistence that it cannot be acting as subrogee. Erie states that it was “in [its] role, as subrogee” of Bates that it retained counsel and experts to inspect the fire and identify the party responsible; sent out notice to preserve the BMW; and obtained a legally binding promise to preserve the BMW. Erie’s Brief at 61-62.
[J-23-2025] - 12 extends Erie’s contractual right of subrogation to bring an action for damages sustained
by the insured to pursue ‘anyone else held responsible.’” Id. at 62 (quoting Insurance
Policy, General Policy Conditions, ¶ 8). It asserts that this language “does not limit Erie
from pursuing USAA under a promissory estoppel theory.” Id.
Finally, Erie argues that “to the extent USAA’s argument on this issue rests on the
[sic] Erie being labeled as a subrogee of Bates rather than in its own right in the caption
of the complaint, such argument ignores Pennsylvania’s pleading standard that liberally
allow amendment at any time up until trial, particularly where there is a misnomer as to
the name of one of the parties.” Id. at 62-63 (citing Pa.R.C.P. 1033). Erie states that
Pennsylvania courts often allow amendments to the party in interest captioned in the
complaint so long as it does not result in surprise or prejudice. Id. at 63 (citing Piehl v.
City of Philadelphia, 987 A.2d 146 (Pa. 2009); Clark v. Wakefern Food Corp., 910 A.2d
715 (Pa. Super. 2006); Hill v. Ofalt, 85 A.3d 540 (Pa. Super. 2014)). Erie states that
regardless of its labeling in the caption, there would be no prejudice because USAA has
been on notice of Erie’s identity from the inception of the lawsuit. Id.
In reply, USAA reminds the Court that Erie’s suit is brought solely as the subrogee
of its insureds, and it cites to Insurance Company of North America v. Carnahan, 284
A.2d 728, 729 (Pa. 1971), for the proposition that an insurance company’s rights as
subrogee do not rise above those of its insureds. USAA’s Reply Brief at 18-19.9
USAA emphasizes that Erie’s promissory estoppel claim is based on its standing
as the “recipient of the breached promise … [b]ut again, Erie, as subrogee plaintiff, was
9 In a footnote, USAA briefly addresses Pennsy, 895 A.2d 595, which Erie cited for the premises that the recipient of a breached promise has standing to bring a promissory estoppel claim, Erie’s Brief at 57, and that a third party who justifiably relies on a promise made to another may have standing to bring a promissory estoppel claim, id. at 13 n.2. USAA writes that Pennsy is distinguishable and “does not support Erie’s premise that a carrier bringing suit solely as a subrogee for its insureds has standing to bring a claim in its own right.” USAA’s Reply Brief at 20 n.5.
[J-23-2025] - 13 limited to the claims of its insureds against the party responsible for the damage to their
property resulting from the fire, thus had no claim against USAA.” Id. at 20. USAA argues
that Erie as subrogee had “no ability or standing to pursue, in its own right, a separate
claim that USAA allegedly assumed a contractual obligation to indefinitely preserve the
BMW after the fire.” Id. at 20. Similarly, USAA rejects Erie’s argument that it was not
required to identify a cause of action in its complaint but instead could have averred facts
which if proven established a cause of action. Id. at 20-21 (citing Erie’s Brief at 58).
Regardless of the facts alleged, a proper party must bring the cause of action. Id. at 20-
21.
USAA observes that Erie invoked the Insurance Policy to support its ability to
pursue the promissory estoppel claim, but overlooks that the right to recovery “[q]uite
clearly … refers to the insured’s right to recover for their property loss” as is transferred
to Erie under the terms of the policy. Id. (citing Insurance Policy, General Policy
Conditions, ¶ 8). Finally, USAA urges this Court to reject Erie’s suggestion that it should
be permitted to amend the complaint to include Erie as a party. Id. at 24-25. USAA
argues, inter alia, that Erie waived this argument because it failed to request or argue for
amendment in the trial court. Id. at 26.
Analysis
Our case law establishes the basic premise that the doctrine of subrogation aims
“to place the ultimate burden of a debt upon the party primarily responsible for the loss.”
Jones v. Nationwide Property & Cas. Ins. Co., 32 A.3d 1261, 1270 (Pa. 2007); see also
Arlet, 270 A.3d at 441-42 (stating that the doctrine intends to “place the ultimate burden
of a debt on the primarily responsible party”). Black’s Law Dictionary similarly defines
subrogation as, inter alia, “[t]he principle under which an insurer that has paid a loss under
an insurance policy is entitled to all the rights and remedies belonging to the insured
[J-23-2025] - 14 against a third party with respect to any loss covered by the policy.” Subrogation, BLACK’S
LAW DICTIONARY (12th ed. 2024).10 Thus, when the mechanism is operative, the insurer-
subrogee who paid a loss under the insurance policy substitutes itself for the insured and
is entitled to exercise its rights “with respect to any loss covered by the policy.” Id.
Pursuant to the basic premise as expressed in our case law, which reflects general
jurisprudential principles, a subrogee may only recover for the loss it paid and against the
party liable for the loss. A subrogee must first tender payment to the subrogor to satisfy
the debt before its right to subrogation accrues, and the doctrine applies when the debt
sought by the subrogee is the same debt for which it already tendered payment. Wimer
v. Pennsylvania Emps. Benefit Tr. Fund, 939 A.2d 843, 853 (Pa. 2007) (stating that
subrogation applies when an insurer “pays out of his own funds a debt that is primarily
payable from the funds of another.”) (citing Employers Ins. Of Wausau v. Com., Dept. of
Transp., 865 A.2d 825, 833 (Pa. 2005)).
Consistent with these basic principles of subrogation, other courts have recognized
that insurance subrogation rights are limited to the loss covered by the insurance policy
and paid to the insurer. For instance, in Colorado Farm Bureau Mutual Insurance
Company v. CAT Continental, Incorporated, 649 F. Supp. 49 (D. Colo. 1986), Colorado
Farm Bureau insurance company filed a products liability action as the subrogee of its
insured against a manufacturer of a truck that the insured used until it was destroyed by
fire. The insurer subrogee sought imposition of punitive damages in the complaint, but
the defendant manufacturer contended that damages were limited to the amount paid
10 This is the third definition of subrogation. The first and second definitions speak more to the general mechanics of subrogation. According to those definitions subrogation is “[t]he substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor[]” and “[t]he equitable remedy by which such a substitution takes place[.]” Subrogation, BLACK’S LAW DICTIONARY (12th ed. 2024).
[J-23-2025] - 15 under the insurance contract which did not include punitive damages. Id. at 51. The
District Court observed the general rule “‘that an insurer, on paying a loss, is subrogated
in a corresponding amount to the insured’s right of action against any other person
responsible for the loss.’” Id. at 52 (quoting Mohl v. NTC of America, Inc., 564 F.Supp.
401, 403 (D. Colo. 1982)). The District Court then reasoned: Because subrogation does not attach until the insurer has paid its insured, the insurer “is not entitled to be subrogated to rights which are held to enforce payment of other sums which remain unpaid.” United States v. Gisi, 213 F.Supp. 616, 618 (D. Colo. 1962). Thus “a subrogee is entitled to indemnity only to the extent of the money actually paid to discharge the obligation.” Colonial Penn Insurance Co. v. Ford, 172 N.J. Super. 242, 411 A.2d 736, 737 (1979). Id. (internal footnote omitted). In that case, the insurer paid out approximately $118,000
in claims, i.e., the general value of the truck at the time of its destruction and was entitled
to indemnification “only to the extent of that amount.” Id. The District Court granted
summary judgment in favor of the defendant manufacturer with regard to the claims for
punitive damages because the insurer as subrogee may not pursue claims for loss that
are not covered by the insurance policy and payout.
Here, the loss that Erie paid out was for the fire loss damage sustained by its
insureds. Thus, under subrogation principles, Erie could seek to recoup that payout from
the party responsible for the fire loss. Erie brought this suit as subrogee of its insureds,
not in its own right. Erie’s subrogation rights to recovery were limited to the fire damages
for which Erie paid the insureds pursuant to the Insurance Policy.
The Insurance Policy entitles Erie as subrogee to seek recovery from another party
held responsible for the relevant “‘loss’ under th[e] policy”, i.e., “direct or accidental loss
of or damage to covered property.” Insurance Policy, §§ X(18)(j), XI. It could not, as
[J-23-2025] - 16 subrogee, pursue a claim against USAA for preventing it from pursuing its subrogation
claim. This is a loss distinct from the loss caused by the fire.11
Erie insists that the Insurance Policy envisions recovery in subrogation “‘from
anyone else held responsible,’” Erie’s Brief at 62 (quoting Insurance Policy, General
Policy Conditions, ¶ 8), and that this is broad enough to encompass its claim for
promissory estoppel against USAA for its failure to prevent the destruction of the BMW.
This reading demands too much of the General Policy Conditions of the Insurance Policy.
The language of the Insurance Policy must be read in context: the Insurance Policy
envisions “[a]fter [Erie] make[s] a payment under this policy,” that Erie has the right to
recover from anyone else responsible. Policy, General Policy Conditions, ¶ 8 (emphasis
added). Moreover, the same paragraph requires an insured who receives “payment from
[Erie] and from someone else for the same loss” to reimburse Erie up to the payment
made. Id. (emphasis added). Erie’s rights (to reimbursement and to seek recovery)
derive from the loss suffered by the insured and paid by Erie. The reference to “anyone
else held responsible” in the Insurance Policy plainly implies “for the loss” and therefore,
does not contemplate Erie as subrogee seeking recovery from anyone else held
responsible for other torts, such as Erie alleges against USAA at present.
The underlying tort claim for loss that Erie would have pursued against BMW of
North America is separate from the promissory estoppel claim it pursues in the Complaint.
Pursuant to the Complaint, subrogee Erie recognized that it could not pursue its
11 Erie’s attempt to recast its use of the term “subrogation” and “subrogee” as ways to tell the backstory of its complaint is unconvincing. Erie could conduct investigation and demand preservation of evidence because of its right to subrogate against a third party responsible for the loss. It could have, had it developed the evidence, brought a subrogation lawsuit to recover from the entity responsible for the loss. However, what Erie cannot do is pursue a subrogation lawsuit in which it complains that USAA interfered with its ability to exercise its right to subrogate by failing to preserve the evidence necessary to sustain its claim for loss.
[J-23-2025] - 17 underlying tort claim against the manufacturer or the owner of the vehicle or anyone
involved in maintaining the vehicle because it did not have the evidence. Complaint,
11/9/2018, ¶ 21. Erie could not bring the claim for loss as provided for in the Insurance
Policy because it could not support such a claim. Instead, Erie went in a different direction
and, based on the circumstances arising long after the loss, pursued a separate claim for
promissory estoppel based on USAA’s conduct which frustrated Erie’s ability to pursue
the underlying claim for loss. Therefore, the trial court correctly concluded that
“[s]ubrogation principles do not apply to Erie IE’s[12] claim where USAA did not cause the
property damage to which Erie IE was contractually obligated to pay its insureds.” Trial
Court Opinion 11/12/2021, at 1. The Superior Court either assumed without stating that
Erie could pursue a promissory estoppel claim or erred in ignoring this threshold issue
that served as an independent ground for the trial court’s decision. In either case, the
Superior Court decided the merits of the case on a false foundation.
We granted review in this matter to address Erie’s right, as subrogee, to pursue a
promissory estoppel claim against USAA. Our grant of appeal did not encompass Erie’s
belated suggestion that it should be granted leave to amend the Complaint to substitute
itself as plaintiff. Throughout the proceedings before the lower courts, Erie staunchly held
to its position that it was proper to pursue this action as subrogee of its insureds. See,
e.g., Erie’s Cross-Motion for Summary Judgment, 8/16/2021, at 13 (asserting standing as
subrogee); Pa.R.A.P. 1925(b) Statement, 12/18/2021, ¶ 4 (asserting that the trial court
erred in concluding that Erie lacked standing). We pointedly granted review to address
Erie’s ability to bring the promissory estoppel claim as subrogee of its insureds. On the
12 The trial court used “Erie IE” as a shorthand for “Erie Insurance Exchange as Subrogee.” Trial Court Opinion, 11/12/2021 at 1.
[J-23-2025] - 18 record before us, where Erie did not seek to amend the Complaint until briefing before
this Court, we will not address the issue further.
Erie’s arguments in support of its position that it can proceed in this matter as
subrogee are misplaced. For instance, Erie conflates the scope of its subrogation rights
with an issue of standing. There being no question that Erie brought this action as
subrogee, the question of judicial standing would typically be whether the insureds had
standing to bring a complaint against USAA for promissory estoppel, assuming such a
cause of action exists.13 Even if theoretically the insureds could bring a lawsuit for
promissory estoppel as third parties who relied on the promise by USAA to Erie, this was
not alleged by Erie. Erie argues solely that it justifiably relied on the promise made to it
by USAA, and it does not claim any forbearance or conduct undertaken by its insureds
as a result of the promise. See, e.g., Erie’s Brief at 57 (arguing that USAA “made a
promise that Erie justifiably relied on to its detriment”) (emphasis added); id. at 62
(asserting that Erie obtained the legally binding promise). More importantly, Erie’s
subrogation rights under the Insurance Policy are limited to recovering the loss from the
party responsible for that loss, not to stand in the shoes of its insured for any possible
cause of action the insureds might possibly possess. This is not a question of standing.
It is a question of the scope of Erie’s subrogation rights under the Insurance Policy.
Erie also argues that “[t]he promissory estoppel cause of action was properly
pled[;]” that the Pennsylvania Rules of Civil Procedure do not require it to specify the legal
theory underlying the complaint; that a complaint need “‘merely allege the material facts
which form the basis of a cause of action[;]’” and that it need not identify a cause of action
at all. Erie’s Brief at 57-58 (quoting Burnside, 505 A.2d at 980).
13 Given our disposition of the first issue, we do not reach the question of the viability of the cause of action of promissory estoppel in these circumstances.
[J-23-2025] - 19 In defending the adequacy of its pleading of a promissory estoppel cause of action,
Erie attempts to align this case with cases from other jurisdictions where a promissory
estoppel cause of action was recognized. Erie’s Brief at 59. However, in each of the
cases cited, the cause of action was brought not by a subrogee but by the party who
received the promise in their own right. In Phillips v. Owners Insurance Company, No.
2015CV260763, 2016 WL 10570359, at *2 (Ga. Super. Apr. 26, 2016), the insureds sued
the insurance company which had promised them to hold a vehicle in safekeeping but
subsequently broke the promise and released the vehicle thus frustrating the insureds’
products liability claim. Similarly, in Miller v. Allstate Ins. Co., 573 So.2d 24, 25-26 (Fla.
Dist. Ct. App. 1990), the claimant sued the insurance company that sold a vehicle that
the insurance company had promised to preserve for inspection for purposes of the
claimant’s products liability claim against the manufacturer. Likewise in Cooper, the
claimant sued its insurer for failing to preserve a vehicle it had promised to preserve.
Cooper, 177 Cal. App. 4th at 879. This critical distinction—that none of the cases cited
were brought by an insurer as subrogee of the insured—defeats Erie’s analogy.
Moreover, Erie’s error in bringing this lawsuit as subrogee of its insureds is not the
same type of deficiency which was remedied in the cases Erie cites for the premise that
that the Pennsylvania Rules of Civil Procedure have liberal pleading standards. For
instance, the Burnside court was addressing the plaintiff’s duty to “set forth the facts upon
which a cause of action is based,” Burnside, 505 A.2d at 980, not the propriety of the
plaintiff bringing that cause of action. Likewise, the Young case is distinguishable from
the present scenario because there, the Commonwealth Court found that a pro se
prisoner’s mistake in characterizing the cause of action on the civil cover sheet was not
dispositive where he pled the cause of action with greater clarity in the complaint itself.
Young, 2021 WL 980254 at *3. Erie’s identification of its claim as one of subrogation and
[J-23-2025] - 20 itself as subrogee permeated its action: it was not only designated as such on the civil
cover sheet, but also in the caption, in the prefatory paragraphs, in the complaint, and
Erie never denied that it was acting as subrogee pursuing a subrogation claim. Further,
before the Superior Court it challenged the trial court’s ruling that it could not pursue the
claim as its insureds’ subrogee. As such, it cannot align this case with Young, where the
prisoner mistakenly characterized the cause of action on the civil cover sheet.
As to Erie’s assertion that rejecting these claims would shatter the insurance
industry, such argument is untethered to the defect at issue here. We are not foreclosing
a cause of action, but merely finding that Erie incorrectly proceeded on a theory of
subrogation. We express no opinion on the viability of a promissory estoppel claim
brought by an insurance carrier against a party allegedly responsible for foreclosing its
pursuit of subrogation rights as a result of that party’s failure to preserve the evidence
necessary to prove who was responsible for the loss it paid to its insureds. We hold only
that such claim cannot be pursued by Erie as subrogee for the amounts it paid to its
insureds as the result of fire damage to its property.
After careful review, we find that the trial court correctly concluded that Erie’s
subrogation claim fails as a matter of law because its subrogation rights were limited to
recovery against any party liable for the direct or accidental loss or damage to covered
property. USAA did not cause the property damage for which Erie paid its insureds.
Therefore, we vacate the Superior Court’s decision and reinstate the trial court’s order
granting summary judgment to USAA and denying summary judgment to Erie.
Chief Justice Todd and Justices Wecht and Mundy join the opinion.
Justice Brobson files a concurring and dissenting opinion.
Justice Dougherty files a dissenting opinion.
Justice McCaffery did not participate in the consideration or decision of this matter.
[J-23-2025] - 21