Jones v. Erie Ins. Exch.

318 A.3d 960

John JONES and Tanya Jones, Appellants

v.ERIE INSURANCE EXCHANGE

No. 690 WDA 2020

Superior Court of Pennsylvania.

Argued August 3, 2022

Filed July 3, 2024

Appeal from the Judgment Entered June 30, 2020, In the Court of Common Pleas of Erie County, Civil Division, at 11527-2019, Stephanie A. Domitrovich, J.

Craig R. F. Murphey, Erie, for appellants.

Glen Shikunov, Philadelphia, for appellee.

BEFORE: STABILE, J., MURRAY, J., and McLAUGHLIN, J.

OPINION BY MURRAY, J.:

In this underinsured motorist (UIM) automobile insurance action, John Jones and Tanya Jones (Appellants) appeal from the judgment entered against them and in favor of Erie Insurance Exchange (Erie), following the trial court’s grant of Erie’s motion for judgment on the pleadings. At issue is whether the "regular use" contractual exclusion, contained in Appellants’ personal automobile insurance policy issued by Erie (Policy), violates Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL).¹ This case returns to us on remand, following the Pennsylvania Supreme Court’s decision in Jones v. Erie Ins. Exch., 2024 WL 1733705, 253 WAL 2022 (Pa. 2024) (per curiam) (Jones II). The Jones II Court granted Erie’s petition for allowance of appeal of this panel’s prior decision in Jones v. Erie Ins. Exch., 282 A.3d 1139 (Pa. Super. 2022) (Jones I).² The Supreme Court vacated Jones I and remanded the matter to this Court "for further proceedings consistent with Rush [II.]" Jones II; see also generally Rush II. Consistent with Jones II and Rush II, we affirm.

A detailed factual history is unnecessary to address the legal issue presented on remand. Briefly,

[t]his case stems from a motor vehicle accident wherein [a]ppellant John Jones [(Jones)] was operating his employer’s, Time Warner Cable’s, bucket truck when he became involved in a motor vehicle accident with a third party driver. [ ] Jones suffered various injuries due to this accident. The third party driver’s insurer paid to [Appellants] the $100,000.00 maximum allowed under the third party driver’s [automobile insurance] policy. However, Appellants subsequently filed a supplemental claim for … [UIM] coverage with [Erie], their own personal automobile insurer[, claiming their injuries and damages exceeded the third party driver’s coverage limit]. [Erie] denied Appellants’ UIM claimpursuant to the "regularly used, nonowned vehicle exclusion" [(regular use exclusion)³] contained in Appellants’ [P]olicy because .. Jones was operating his employer’s vehicle, for which Appellants had not purchased insurance.

Trial Court Opinion, 9/11/20, at 1-2 (footnote added); see also id. at 2 ("The material facts … are not in dispute," including that Jones regularly used the vehicle for work).

On August 30, 2019, Appellants filed a complaint against Erie asserting one count of breach of contract. Erie filed an answer, new matter, and counterclaim on October 4, 2019. Erie filed its motion for judgment on the pleadings on February 3, 2020, claiming "pursuant to Pennsylvania law …, [Appellants’ UIM] claim is barred by the ‘regular use’ exclusion." Motion for Judgment on the Pleadings, 3/3/20, ¶ 29. Appellants filed a response, arguing the regular use exclusion was unenforceable as being contrary to the MVFRL and public policy. See generally Brief in Opposition, 3/2/20.

After a hearing, by order and opinion entered June 17, 2020, the trial court granted Erie’s motion for judgment on the pleadings. Judgment was entered in Erie’s favor on June 30, 2020. Appellants timely filed a notice of appeal. Appellants and the trial court complied with Pa.R.A.P. 1925.

In its Rule 1925(a) opinion, the trial court rejected Appellants’ claims and determined it properly granted judgment on the pleadings, reasoning in relevant part:

In Pennsylvania, the "regularly used, non-owned vehicle exclusion" has been held by the [Pennsylvania] Supreme Court to be valid and enforceable under the MVFRL and public policy. See Burstein v. Prudential Property and Cas. Ins. Co. , 809 A.2d 204 (Pa. 2002); Williams v. Geico Government Employees Ins. Co. , 32 A.3d 1195 (Pa. 2011)[.]

Trial Court Opinion, 9/11/20, at 6.⁴

Following proceedings not relevant to this appeal, this panel issued our opinion in Jones I on September 7, 2022. See generally Jones I, 282 A.3d 1139. As mentioned above, in reversing the grant of Erie’s motion for judgment on the pleadings, we concluded Rush I was controlling.⁵ Id. at 1145; see also id. at 1143-45 (discussing Rush I, and the parties’ respective arguments concerning Rush I and MVFRL Section 1731).

As our Supreme Court explained,

[i]n [Rush I], the Superior Court observed that Section 1731 of the MVFRL governs the scope of UIM coverage in Pennsylvania. [Rush I, 265 A.3d] at 796 (citing 75 Pa.C.S. § 1731). Specifically, it highlighted that Section 1731(c) provides that "absent a rejection of coverage, insurers shall provide UIM coverage that ‘protect[s] persons who suffer injury arising out of the maintenance or use of a motor vehicle and are legally entitled to recover damages therefor from owners or operators of underinsured motor vehicles.’ " Id. (citing 75 Pa.C.S. § 1731(c)). Based upon this language, the Superior Court concluded that Section 1731(c) "mandates" insurers to provide coverage when the insured: (1) suffers injuries arising out of the maintenance or use of a motor vehicle, (2) is legally entitled to recover damages from the at-fault underinsured driver; and (3) has not rejected UIM benefits by signing a valid rejection form. Id. at 796-97.

The [Rush I] Court further emphasized that Section 1731 defines the scope of UIM coverage broadly, as such coverage is required whenever an insured suffers injuries "arising out of the … use of a motor vehicle." Id. at 797 (quoting 75 Pa.C.S. § 1731(c)) (emphasis in original) (internal quotations omitted). According to the court, Section 1731 considers neither the owner of the vehicle nor the frequency with which the insured uses it. Id. The Superior Court concluded that the "regular use" exclusion conflicts with the broad language of Section 1731(c)’s coverage mandate because it limits "the scope of UIM coverage required by Section 1731 by precluding coverage if an insured is injured while using a motor vehicle that the insured regularly uses but does not own." Id.

Rush II, 308 A.3d at 783-84 (footnote omitted).

In Rush II, the Supreme Court overruled Rush I, stating, "the Superior Court’s conclusion that the regular use exclusion violates the language of the MVFRL is erroneous." Id. at 802 (internal quotation marks omitted). The Rush II Court determined that prior Supreme Court precedent (i.e., Burstein and Williams)⁶ "control[s] the outcome of this appeal." Rush II, 308 A.3d at 791; see also id. at 791-795, 796-800 (exhaustively analyzing Burstein and Williams).

There is no doubt that this Court held in both Burstein and Williams that the regular use exclusion is permissible under the MVFRL, and that the interpretation has persisted for two decades without a legislative response.

Id. at 795 (internal quotation marks omitted; emphasis added); see also Burstein, 809 A.2d at 208-10; Williams, 32 A.3d at 1206.

The Rush II Court opined,

[i]f the MVFRL does not require that UIM coverage follow the insured in all circumstances, then the MVFRL cannot be read to prohibit exclusions from UIM coverage. Consequently, the insurance contract controls the scope of UIM coverage and the regular use exclusion is enforceable.

Rush II, 308 A.3d at 801 (internal quotation marks omitted).

The Rush II Court concluded,

because we find that Burstein and Williams resolved the issue presented in this appeal, we continue to hold that the regular use exclusion is a permissible limitation of UIM coverage under the MVFRL. With decades of reliance by insureds and insurers, and no justification to allow this Court to depart from decades of established law, we maintain our course unless and until the General Assembly or the Insurance Department acts in a way that would suggest we do otherwise.

Id. at 802 (footnote and internal quotation marks omitted; emphasis added).

Following Rush II, our Supreme Court decided Jones II on April 23, 2024. The Jones II Court vacated this Court’s decision in Jones I, and remanded the matter "for further proceedings consistent with Rush [II.]" Jones II, 2024 WL 1733705.

In their appellate brief,⁷ Appellants present three issues:

A. Whether the "regular use" exclusion may not be enforced because to do so would conflict with this Court’s decision in Rush [I]?

B. Whether the "regular use" exclusion may not be enforced because it operates to limit the scope of underinsured motorist coverage required by the MVFRL?

C. Whether the "regular use" exclusion is unenforceable because it is contrary to public policy articulated in the MVFRL?

Appellants’ Brief at 3-4 (citation and some capitalization modified).

[1–3] We simultaneously address Appellants’ related issues. In applying Rush II, and addressing the pure question of law before us, our scope of review is plenary and our standard of review is de novo. Rush II, 308 A.3d at 789-90 (citing Generette v. Donegal Mutual Insurance Company, 598 Pa. 505, 957 A.2d 1180, 1189 (2008)). Moreover, a "motion for judgment on the pleadings will be granted where, on the facts averred, the law says with certainty that no recovery is possible." Ins. Fedn. of Pa., Inc. v. Commonwealth, 601 Pa. 20, 970 A.2d 1108, 1114 (2009) (citation omitted).

The Supreme Court’s holding in Rush II is clear. Rush II unambiguously held regular use exclusions do not violate the MVFRL, constitute "a permissible limitation of UIM coverage," and comport with prior Supreme Court precedent. Rush II, 308 A.3d at 802; see also id. ("[W]e are bound by our prior decisions in Burstein and Williams in upholding the ‘regular use’ exclusion as a permissible limitation of UIM coverage."). Equally clear is the Supreme Court’s directive in Jones II, requiring this Court to apply ...