Dunleavy v. Mid-Century Ins. Co.

460 F.Supp.3d 602

William L. DUNLEAVY, IV and Erin E. Francis, Plaintiffs/Counterclaim Defendants,

v.MID-CENTURY INSURANCE COMPANY, Defendant/Counterclaim Plaintiff.

2:19-cv-1304

United States District Court, W.D. Pennsylvania.

Signed May 19, 2020

Kevin S. Burger, Peter D. Friday, Steven G. Petramale, Friday & Cox LLC, Pittsburgh, PA, for Plaintiffs/Counterclaim Defendants.

Patricia A. Monahan, Marshall, Dennehey, Warner, Coleman & Goggin, Pittsburgh, PA, for Defendant/Counterclaim Plaintiff.

OPINION

J. Nicholas Ranjan, United States District Judge

This is a dispute over whether Plaintiffs/Counterclaim Defendants William Dunleavy, IV and Erin Francis are entitled to underinsured motorist coverage from Defendant/Counterclaim Plaintiff Mid-Century Insurance Company for a motorcycle accident that occurred in 2015. Mid-Century denied coverage under the "household vehicle exclusion" in the automobile insurance policy it issued to Plaintiffs.

Plaintiffs contend that Mid-Century's denial was improper under the Pennsylvania Supreme Court's decision in Gallagher v. GEICO Indemnity Co. , 650 Pa. 600, 201 A.3d 131 (2019). In that case, the court held that household vehicle exclusions could not be used to work as de facto waivers of stacked underinsured motorist coverage. Id. at 138.

Mid-Century, on the other hand, argues Gallagher is irrelevant because the holding was narrow, and this case doesn't involve stacking. Mid-Century points out, and Plaintiffs concede, that Mr. Dunleavy waived underinsured motorist coverage for his motorcycle, which was covered by a separate policy issued by a separate insurer. Thus, according to Mid-Century, Plaintiffs aren't trying to stack the Mid-Century policy on anything. Rather, Plaintiffs are trying to use the Mid-Century to establish underinsured motorist coverage in the first instance. Mid-Century argues that under the unambiguous terms of the policy, Mid-Century does not cover Plaintiffs for such a loss.

For the reasons below, the Court agrees with Mid-Century and finds that there is no underinsured motorist coverage here. And because Mid-Century properly denied coverage, Plaintiffs’ tag-along claims for bad faith and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Stat. Ann. § 201-1, et seq. , also fail.

The Court will therefore grant Mid-Century's motion for judgment on the pleadings and enter judgment in its favor on all counts in Plaintiffs’ complaint and on Mid-Century's counterclaim.

BACKGROUND

Mr. Dunleavy and Ms. Francis are married. [ECF 17, ¶ 2]. On August 12, 2015, Mr. Dunleavy was operating a motorcycle with Ms. Francis riding as his passenger when an automobile driven by Kimberly Baker struck Mr. Dunleavy's motorcycle. [ECF 1-1, ¶ 10]. The collision left Plaintiffs seriously injured. [Id. at ¶¶ 12-13].

Ms. Baker was insured. [Id. at ¶ 14]. Her policy contained a liability limit of $100,000 per accident that her insurer paid in full to Plaintiffs. [Id. ]. Plaintiffs contend that Ms. Baker's insurance limits did not provide enough coverage to compensate Plaintiffs for their injuries and the other damage they sustained. [Id. ]. Plaintiffs now seek underinsured motorist coverage under their Mid-Century automobile policy.

Mid-Century issued Plaintiffs an automobile policy, No. 19571-34-76, that was effective from August 5, 2015 to March 25, 2016. [ECF 6, p. 11, ¶ 5]. That policy has a household vehicle exclusion, which states that underinsured motorist coverage does not apply "[t]o bodily injury sustained by you or any family member while occupying or when struck by any motor vehicle owned by you or any family member which is not insured for this coverage under any similar form." [ECF 6-1, MCIC-0015]. The only insured vehicles under the Mid-Century Policy were a Jeep Liberty and Chevrolet Traverse. [Id. at MCIC-004]. Mr. Dunleavy's motorcycle was not a covered vehicle. [Id. ].

Mr. Dunleavy's motorcycle was separately insured through Progressive. [ECF 20, ¶ 8; ECF 24, ¶ 8]. Mr. Dunleavy rejected underinsured motorist coverage on his Progressive policy. [Id. ].

Following the accident, Mid-Century issued a coverage disclaimer informing Plaintiffs that they were not entitled to underinsured motorist coverage because "the vehicle [they] were occupying is owned by [them], [they] did not list it on [their] Mid-Century policy, and [they] did not elect Uninsured/Underinsured Motorist Coverage on the policy through Progressive[.]" [ECF 6-2, p. 4].

Several years later, in 2019, the Pennsylvania Supreme Court issued its decision in Gallagher . Based on that decision, Plaintiffs sued Mid-Century, alleging breach of contract, bad-faith insurance practices, and violations of the UTPCPL. [ECF 1-1]. Plaintiffs’ core allegation is that Mid-Century's reliance on the household vehicle exclusion to deny underinsured motorist coverage violates the new rule of law established by Gallagher .

In response, Mid-Century filed a counterclaim for declaratory judgment, seeking a declaration regarding the appropriateness of its denial decision. [ECF 6]. After the pleadings closed, Mid-Century moved for judgment on the pleadings. [ECF 20]. That motion is now ready for disposition.

LEGAL STANDARD

"The standard for deciding a motion for judgment on the pleadings filed pursuant to Federal Rule of Civil Procedure 12(c) is not materially different from the standard for deciding a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6)." Kaite v. Altoona Student Transp., Inc. , 296 F. Supp. 3d 736, 739 (W.D. Pa. 2017) (Gibson, J.) (cleaned up). The only difference is that "a Rule 12(b) motion is filed before a ‘responsive pleading’ is filed," while "a Rule 12(c) motion may be filed ‘after the pleadings are closed.’ " Id. (cleaned up). "A court presented with a motion for judgment on the pleadings must consider the plaintiff's complaint, the defendant's answer, and any written instruments or exhibits attached to the pleadings." Id. (cleaned up).

To survive a motion to dismiss, a complaint must provide more than labels and conclusions. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A "formulaic recitation of the elements of a cause of action will not do." Id. (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

"Factual allegations must be enough to raise a right to relief above the speculative level" and "sufficient to state a claim for relief that is plausible on its face." Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (cleaned up).

Because the Court analyzes a motion for judgment on the pleadings under the same standard as a motion to dismiss, "a court must accept all of the allegations in the pleadings of the party against whom the motion is addressed as true and draw all reasonable inferences in favor of the non-moving party." Zimmerman v. Corbett , 873 F.3d 414, 417-18 (3d Cir. 2017) (citation omitted).

DISCUSSION & ANALYSIS

I. Mid-Century's policy does not provide underinsured motorist coverage to Plaintiffs.

Plaintiffs do not dispute that the Mid-Century policy contains a household vehicle exclusion. [ECF 20, ¶ 18; ECF 24, ¶ 18]. The Court must "ascertain the intent" of that exclusion by looking to the "terms used in the written insurance policy." 401 Fourth St., Inc. v. Inv'rs Ins. Grp. , 583 Pa. 445, 879 A.2d 166, 171 (Pa. 2005). The plain meaning is that underinsured motorist coverage does not apply to vehicles owned by Plaintiffs that Mid-Century did not otherwise cover under the policy. [ECF 6-1]. Mid-Century did not cover the motorcycle Plaintiffs were riding at the time of the accident. See [id. ]. Thus, if the household vehicle exclusion is enforceable, Mid-Century was right to deny coverage.

Plaintiffs argue, however, that under Gallagher , Mid-Century can't use the household vehicle exclusion to deny them the benefit of stacking their underinsured motorist benefits in the Mid-Century policy. [ECF 25, pp. 4-6]. According to Plaintiffs, the Pennsylvania Supreme Court held that using the exclusion in such a way violates the Pennsylvania Motor Vehicle Financial Responsibility Law ("MVFRL"), 75 Pa. Cons. Stat. Ann. §§ 1701, et seq. Plaintiffs believe the only way they could be validly denied the benefit of stacking their underinsured motorist coverage is if they signed a statutorily prescribed waiver form, which they never did. [ECF 25, p. 5].

Mid-Century counters that Gallagher is inapplicable because this isn't a stacking case at all. According to Mid-Century, "Plaintiffs have no underinsured motorist coverage with which to stack their Mid-Century policy." [ECF 26, p. 3]. Thus, Mid-Century argues that the central issue is determining whether underinsured motorist coverage exists in the first place under its policy. [Id. at p. 1]. Mid-Century contends that applying the household vehicle exclusion, it's clear that such coverage does not exist.

Mid-Century is correct on both counts. This case doesn't involve stacking, and Plaintiffs did not purchase underinsured motorist coverage for their motorcycle from Mid-Century.

A. This case doesn't involve stacking and so Gallagher is inapplicable.

The Court's analysis of whether Gallagher invalidates Mid-Century's use of the household vehicle exclusion to deny coverage begins with the MVFRL.

"Section 1738 of the MVFRL governs the stacking of underinsured motorists benefits as well as the waiver of such stacking."

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