J-A29022-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BRIAN GALLAGHER IN THE SUPERIOR COURT OF PENNSYLVANIA Appellant
v.
GEICO INDEMNITY COMPANY
Appellee No. 352 WDA 2016
Appeal from the Order Entered February 18, 2016 In the Court of Common Pleas of Westmoreland County Civil Division at No(s): 5561 of 2014
BEFORE: DUBOW, J., MOULTON, J., and MUSMANNO, J.
MEMORANDUM BY MOULTON, J.: FILED JANUARY 27, 2017
Brian Gallagher appeals from the February 18, 2016 order of the
Westmoreland County Court of Common Pleas granting GEICO Indemnity
Company’s motion for summary judgment. We affirm.
This appeal involves the interplay between an insurance policy’s
household vehicle exclusion and the Motor Vehicle Financial Responsibility
Law (“MVFRL”), 75 Pa.C.S. §§ 1701-1799.7. The household vehicle
exclusion, which prohibits inter-policy stacking of coverage and appears to
be a common insurance policy provision, has the practical effect of limiting
the availability of stacked coverage in situations where one insurance
company insures all of an insured’s vehicles but on two or more policies.
The legal issue is whether this policy provision, which limits stacking even J-A29022-16
though the insured paid for stacking and did not expressly waive it, violates
section 1738 of the MVFRL.1
In this case, Gallagher elected and paid for stacked coverage on two
GEICO insurance policies, one for his motorcycle and one for his two
automobiles. The decision to write two separate policies, rather than one
policy covering all three vehicles, was GEICO’s. In August 2012, Gallagher
was involved in an accident while operating his motorcycle. GEICO paid
____________________________________________
1 Section 1738 of the MVFRL provides in relevant part:
(a) Limit for each vehicle.—When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.
(b) Waiver.—Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.
(c) More than one vehicle.—Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.
75 Pa.C.S. § 1738(a)-(c).
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$50,000 of underinsured motorist (“UIM”) coverage under the motorcycle
policy. Gallagher then submitted a claim for additional UIM benefits under
the automobile policy, which GEICO denied under the household vehicle
exclusion. The exclusion stated: “This coverage does not apply to bodily
injury while occupying or from being struck by a vehicle owned or leased by
you or a relative that is not insured for [UIM] [c]overage under the policy.”
In granting GEICO’s summary judgment motion, the trial court
concluded that this Court’s decision in Government Employees Insurance
Co. v. Ayers, 955 A.2d 1025 (Pa.Super. 2008), affirmed by an equally
divided court, 18 A.3d 1093 (Pa. 2011), was controlling. In Ayers, Jesse
Ayers insured two motorcycles with GEICO under one policy and two trucks
under another policy. 955 A.2d at 1027. The truck policy contained a
household vehicle exclusion, which stated: “This coverage does not apply to
bodily injury while occupying or from being struck by a vehicle owned or
leased by you or a relative that is not insured for [UIM] [c]overage under
this policy.” Id. (quoting policy). Ayers was injured while operating one of
his motorcycles. GEICO paid the UIM limit under the motorcycle policy but
denied additional coverage under the truck policy due to the household
vehicle exclusion. On appeal, a divided panel of this Court held:
[G]iven the facts underlying Ayers’ first accident, the clear and unambiguous language of the household vehicle exclusion at issue in this case precluded Ayers from stacking the UIM coverage contained in his trucks’ policy on top of the UIM coverage contained in his motorcycles’ policy. The exclusion is not contrary to the MVFRL or any other discernable public policy.
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955 A.2d at 1030.2
Following this Court’s decision, Ayers did not seek reargument but filed
a timely petition for allowance of appeal with the Pennsylvania Supreme
Court. The Supreme Court granted the petition and heard argument. On
April 28, 2011, an equally divided Supreme Court affirmed our Court’s
decision without an opinion. See Gov’t Emps. Ins. Co. v. Ayers, 18 A.3d
1093 (Pa. 2011). Justice Saylor, however, wrote a brief statement in
support of affirmance, in which he disapproved of GEICO’s practice of using
separate policies to subvert inter-policy stacking but agreed with this Court
“that the writing of separate policies, and enforcement of the household
exclusion, is justified relative to motorcycle insurance coverage.” Id. at
1094.
Before affirming Ayers by an equally divided court, the Pennsylvania
Supreme Court addressed the inter-policy stacking issue in Erie Insurance
Exchange v. Baker, 972 A.2d 507 (Pa. 2009),3 which involved policy
language almost identical to the policy language in Ayers and this case.4 In ____________________________________________
2 Judge Musmanno wrote a dissenting statement in Ayers, in which he concluded that “the application of the household exclusion where an insured had not waived and received an attendant reduction in premiums acts as an unknowing waiver of stacking coverage that deprives an insured of the benefits for which he or she paid.” 955 A.2d at 1030. 3 Baker was decided after this Court’s decision in Ayers but before the Supreme Court affirmed Ayers by an equally divided Court. 4 The household vehicle exclusion in Baker provided: “This insurance does not apply to . . . damages sustained by anyone we protect while (Footnote Continued Next Page)
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Baker, Eugene Baker had insured three automobiles with Erie Insurance
Exchange and one motorcycle with Universal Underwriters Insurance
Company. 972 A.2d at 508-09. Baker was injured while operating his
motorcycle, and Universal paid Baker its UIM limits. Id. at 509. When
Baker sought additional UIM benefits from Erie, Erie denied coverage under
the household vehicle exclusion. Id.
On appeal, our Supreme Court rejected Baker’s claim that the
household vehicle exclusion was effectively a “disguised waiver” of stacking
that violated the MVFRL’s waiver requirements. Id. at 510-11. The opinion
announcing the judgment of the Court, joined by three justices, stated:
Free access — add to your briefcase to read the full text and ask questions with AI
J-A29022-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
BRIAN GALLAGHER IN THE SUPERIOR COURT OF PENNSYLVANIA Appellant
v.
GEICO INDEMNITY COMPANY
Appellee No. 352 WDA 2016
Appeal from the Order Entered February 18, 2016 In the Court of Common Pleas of Westmoreland County Civil Division at No(s): 5561 of 2014
BEFORE: DUBOW, J., MOULTON, J., and MUSMANNO, J.
MEMORANDUM BY MOULTON, J.: FILED JANUARY 27, 2017
Brian Gallagher appeals from the February 18, 2016 order of the
Westmoreland County Court of Common Pleas granting GEICO Indemnity
Company’s motion for summary judgment. We affirm.
This appeal involves the interplay between an insurance policy’s
household vehicle exclusion and the Motor Vehicle Financial Responsibility
Law (“MVFRL”), 75 Pa.C.S. §§ 1701-1799.7. The household vehicle
exclusion, which prohibits inter-policy stacking of coverage and appears to
be a common insurance policy provision, has the practical effect of limiting
the availability of stacked coverage in situations where one insurance
company insures all of an insured’s vehicles but on two or more policies.
The legal issue is whether this policy provision, which limits stacking even J-A29022-16
though the insured paid for stacking and did not expressly waive it, violates
section 1738 of the MVFRL.1
In this case, Gallagher elected and paid for stacked coverage on two
GEICO insurance policies, one for his motorcycle and one for his two
automobiles. The decision to write two separate policies, rather than one
policy covering all three vehicles, was GEICO’s. In August 2012, Gallagher
was involved in an accident while operating his motorcycle. GEICO paid
____________________________________________
1 Section 1738 of the MVFRL provides in relevant part:
(a) Limit for each vehicle.—When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.
(b) Waiver.—Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.
(c) More than one vehicle.—Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.
75 Pa.C.S. § 1738(a)-(c).
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$50,000 of underinsured motorist (“UIM”) coverage under the motorcycle
policy. Gallagher then submitted a claim for additional UIM benefits under
the automobile policy, which GEICO denied under the household vehicle
exclusion. The exclusion stated: “This coverage does not apply to bodily
injury while occupying or from being struck by a vehicle owned or leased by
you or a relative that is not insured for [UIM] [c]overage under the policy.”
In granting GEICO’s summary judgment motion, the trial court
concluded that this Court’s decision in Government Employees Insurance
Co. v. Ayers, 955 A.2d 1025 (Pa.Super. 2008), affirmed by an equally
divided court, 18 A.3d 1093 (Pa. 2011), was controlling. In Ayers, Jesse
Ayers insured two motorcycles with GEICO under one policy and two trucks
under another policy. 955 A.2d at 1027. The truck policy contained a
household vehicle exclusion, which stated: “This coverage does not apply to
bodily injury while occupying or from being struck by a vehicle owned or
leased by you or a relative that is not insured for [UIM] [c]overage under
this policy.” Id. (quoting policy). Ayers was injured while operating one of
his motorcycles. GEICO paid the UIM limit under the motorcycle policy but
denied additional coverage under the truck policy due to the household
vehicle exclusion. On appeal, a divided panel of this Court held:
[G]iven the facts underlying Ayers’ first accident, the clear and unambiguous language of the household vehicle exclusion at issue in this case precluded Ayers from stacking the UIM coverage contained in his trucks’ policy on top of the UIM coverage contained in his motorcycles’ policy. The exclusion is not contrary to the MVFRL or any other discernable public policy.
-3- J-A29022-16
955 A.2d at 1030.2
Following this Court’s decision, Ayers did not seek reargument but filed
a timely petition for allowance of appeal with the Pennsylvania Supreme
Court. The Supreme Court granted the petition and heard argument. On
April 28, 2011, an equally divided Supreme Court affirmed our Court’s
decision without an opinion. See Gov’t Emps. Ins. Co. v. Ayers, 18 A.3d
1093 (Pa. 2011). Justice Saylor, however, wrote a brief statement in
support of affirmance, in which he disapproved of GEICO’s practice of using
separate policies to subvert inter-policy stacking but agreed with this Court
“that the writing of separate policies, and enforcement of the household
exclusion, is justified relative to motorcycle insurance coverage.” Id. at
1094.
Before affirming Ayers by an equally divided court, the Pennsylvania
Supreme Court addressed the inter-policy stacking issue in Erie Insurance
Exchange v. Baker, 972 A.2d 507 (Pa. 2009),3 which involved policy
language almost identical to the policy language in Ayers and this case.4 In ____________________________________________
2 Judge Musmanno wrote a dissenting statement in Ayers, in which he concluded that “the application of the household exclusion where an insured had not waived and received an attendant reduction in premiums acts as an unknowing waiver of stacking coverage that deprives an insured of the benefits for which he or she paid.” 955 A.2d at 1030. 3 Baker was decided after this Court’s decision in Ayers but before the Supreme Court affirmed Ayers by an equally divided Court. 4 The household vehicle exclusion in Baker provided: “This insurance does not apply to . . . damages sustained by anyone we protect while (Footnote Continued Next Page)
-4- J-A29022-16
Baker, Eugene Baker had insured three automobiles with Erie Insurance
Exchange and one motorcycle with Universal Underwriters Insurance
Company. 972 A.2d at 508-09. Baker was injured while operating his
motorcycle, and Universal paid Baker its UIM limits. Id. at 509. When
Baker sought additional UIM benefits from Erie, Erie denied coverage under
the household vehicle exclusion. Id.
On appeal, our Supreme Court rejected Baker’s claim that the
household vehicle exclusion was effectively a “disguised waiver” of stacking
that violated the MVFRL’s waiver requirements. Id. at 510-11. The opinion
announcing the judgment of the Court, joined by three justices, stated:
[W]e conclude that application of the household exclusion in this case does not involve “stacking” at all. We hold instead that the Erie policy exclusion is a valid and unambiguous preclusion of coverage of unknown risks, and it was properly applied to the circumstances of this case.
Id. at 511 (Greenspan, J., joined by Castille, C.J., and Eakin, J.). Justice
Saylor, who concurred separately, supplied the fourth vote in support of the
Court’s holding that the household vehicle exclusion was valid and, thus,
Baker was not entitled to UIM coverage under the Erie policy. See id. at
514-15 (Saylor, J., concurring). Three justices dissented, concluding that
“the ‘household exclusion’ operates as a waiver of stacking, and thus
contradicts and undermines the very specific statutory provisions set forth in _______________________ (Footnote Continued)
occupying or being struck by a motor vehicle owned by you or a relative, but not insured for Uninsured or [UIM] [c]overage under this policy.” 972 A.2d at 509 (quoting policy).
-5- J-A29022-16
the [MVFRL].” Id. at 515 (Baer, J., dissenting, joined by Todd and
McCaffery, JJ.).
Accordingly, we conclude that we are bound by this Court’s decision in
Ayers because the relevant policy language and underlying facts in Ayers
and this case are almost identical. We are also bound by Baker, which
involved nearly identical policy language, even though the policies in Baker
were issued by two different insurance companies. We recognize, however,
that the inter-policy stacking issue in all three cases is both important and
closely contested. As noted above, the Supreme Court was evenly split 3-3
in Ayers, and Baker did not produce a majority opinion. Given the
significance of this legal issue and the divided nature of the Supreme Court
in both Ayers and Baker, Gallagher may wish to petition the Pennsylvania
Supreme Court for allowance of appeal.
Order affirmed.
Judge Dubow joins in this memorandum.
Judge Musmanno files a concurring statement in which Judge Dubow
and Judge Moulton join.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 1/27/2017 -6- J-A29022-16
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