Three recent decisions from the Eastern District of Pennsylvania have applied the Pennsylvania Supreme Court’s opinion Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019) retroactively. On January 23, 2019, Gallagher invalidated the household exclusion finding it violated the Pennsylvania Motor Vehicle Financial Responsibility Act. The household exclusion acted as a bar to insureds seeking to stack other uninsured motorist and underinsured motorist policies purchased by resident relatives. A number of cases examined whether the decision applies retroactively to claims in existence prior to January 23, 2019, and if so, how far back.
In Stockdale v. Allstate, 19-845 (E.D. Pa. June 17, 2019), the insurer argued that Gallagher was procedural or in the alternative, announced a new rule of law and applies to case brought after the Gallagher decision was announced. The claimant sought to represent a class of similarly situated claimants to apply Gallagher to claims going back to 1990. The claimant argued that that the change was substantive and did not announce a new rule of law. In Stockdale, the claimant resided with her parents and had secured her own Allstate policy with underinsured motorist benefits of $25,000.00. Her parents had a separate policy with stacked coverages of $100,000, stacked x 3 vehicles. Ms. Stockdale was seriously injured while a passenger in her vehicle which only had $25,000 in UIM coverage and sought to recover the $300,000 in UIM benefits under her parent’s policy. Judge Beetlestone examined prior plurality decisions discussed in Gallagher and predicted the Pennsylvania Supreme Court would apply Gallagher prospectively and retroactively. As to the putative class, the court noted that under Pennsylvania law, these claims were subject to a four year statute of limitations and barred claims which accrued prior to January 2, 2015.
In Smith v. Nationwide, 19-1217 (E.D. Pa. June 24, 2019), Judge Baylson addressed similar issues raised by an individual injured while riding a motorcycle he insured through State Farm who also sought class certification. He, too, lived with parents who had stacked UIM coverage and sought to recover additional benefits under a separate Nationwide policy issued to his parents which did not list the motorcycle as a covered vehicle. Defendant argued Gallagher was distinguishable in that Gallagher involved two separate policies with the same insurer and Smith involved two policies issued by different carriers. Nationwide also noted that the cases were distinguishable because the risks of operating a motorcycle are much different than operating a car, and this risk was not factored into the Nationwide auto policy’s rates. The Court examined the decision of Judge Kearney of the Eastern District Butta v. GEICO, 19-675, 2019 WL 1756019 (E.D. Pa. April 19, 2019) denying a Motion to Dismiss pending discovery, and essentially followed suit denying the Motion to Dismiss of Nationwide as premature.
Most recently, in Donovan v. State Farm, 17-3940 (E.D. Pa. 2019) Judge McHugh addressed whether a resident relative could recover UIM benefits under his mother’s policy which insured 2 other vehicles with UIM benefits of $50,000. Both policies were issued by State Farm and had stacking waivers. Ultimately, the Court found that the waivers were insufficient to waive inter policy stacking and allowed the son to recover stacked UIM benefits of $100,000 under his mother’s policy. The District Court focused much attention on Gallagher and the Supreme Court’s 2006 decision in Craley v. State Farm, 895 A. 2d 530 (Pa. 2006) and noted that in Craley a stacking waiver was executed on a one vehicle policy suggesting that this related to inter-policy stacking (stacking between policies rather than intra-policy stacking (stacking the limits for vehicles covered under one policy). The District Court pointed out that a stacking waiver which clearly waived inter-policy stacking could have been requested through a regulatory rule change or other means, but found the current waiver did not apply to vehicles insured under other policies. Moreover, the court examined Gallagher and which invalidated the household exclusion as violative of the MVFRL. Further, the court examined the stacking waiver relative to his mother’s State Farm policy and found it inapplicable to vehicles which were not covered under the policy based on the State Farm policy. In analyzing this issue, the court noted that the statutory stacking waiver rejected stacked limits “under this policy” and did not include the language “or the policies”. Arguably the additional language could not be added without statutory or regulatory reform, but the District Court noted there were remedies to seek same.
As noted above, ultimately, the District Court allowed plaintiff to recover stacked UIM benefits under his mother’s policy even though both he and his mother had both waived stacked benefits. Although decision of District Judges are not binding on other District Judges, it appears that this District Judge is of the opinion that legislative or regulatory reform is required to effectuate and approve stacking forms which will comply with Gallagher. Indeed, given the sweeping impact of Gallagher it is anticipated that legislative and regulatory reforms will be sought to clarify and confirm the issues herein going forward.
