Allstate Prop. & Cas. Ins. Co. v. Squires

• Decision Date: 26 January 2012
• Docket Number: No. 11–1664.,11–1664.
• Citation: 667 F.3d 388
• Parties: ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY v. Larry G. SQUIRES, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

667 F.3d 388

ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY

v.Larry G. SQUIRES, Appellant.

No. 11–1664.

United States Court of Appeals, Third Circuit.

Argued Dec. 15, 2011.Filed: Jan. 26, 2012.

R. Sean O'Connell (argued), James A. Godwin, Robb Leonard Mulvihill, LLP, Pittsburgh, PA, for Appellee.

Edward A. Shenderovich (argued), Shenderovich, Shenderovich & Fishman, Pittsburgh, PA, for Appellant.

Before: SLOVITER, VANASKIE, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

After Larry Squires was injured in a motor vehicle accident, his automobile insurer Allstate Property and Casualty Insurance Company (“Allstate”) filed an action in the District Court seeking a declaratory judgment that it was not obligated to pay uninsured motorist (“UM”) benefits to Squires under his policy. Subsequently, in response to Allstate's motion, the Court granted it a judgment on the pleadings on March 2, 2011, as it held that Squires's injuries did not “arise out of ownership, maintenance or use of an uninsured auto” as his policy required for Allstate to be liable to him for UM benefits. For the following reasons, we will reverse.

II. FACTS AND PROCEDURAL HISTORY

On October 20, 2008, Squires was driving his pickup truck on State Highway 51 in Beaver County, Pennsylvania when he was injured after swerving to avoid an approximately two-foot square cardboard box lying in the middle of his lane. The parties to this action are uncertain as to how the box came to be left on the road but, for purposes of its motion in the District Court, Allstate stipulated that an unidentified vehicle dropped the box.¹ Following the accident, Allstate, after rejecting Squires's claim for UM benefits, filed this action and Squires responded with counterclaims for breach of contract and insurance bad faith under 42 Pa. Cons.Stat. Ann. § 8371 (West 2007). ² Allstate then moved for judgment on the pleadings and for dismissal of the counterclaims.

Squires's policy provides, in relevant part:

[W]e [Allstate] will pay damages to an insured person [Squires] for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured auto. Bodily injury must be caused by accident and arise out of the ownership, maintenance, or use of an uninsured auto.

App. at 44. The policy's language tracks the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”), which requires that insurers offer UM benefits in motor vehicle liability insurance policies.³ The MVFRL provides for “uninsured motorist coverage” as follows:

Uninsured motorist coverage shall provide protection for 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 uninsured motor vehicles.75 Pa. Cons.Stat. Ann. § 1731(b) (West 2006). The MVFRL defines “uninsured motor vehicle” to include, inter alia:

An unidentified motor vehicle that causes an accident resulting in injury provided the accident is reported to the police or proper governmental authority and the claimant notifies his insurer within 30 days, or as soon as practicable thereafter, that the claimant or his legal representative has a legal action arising out of the accident.

Id. § 1702.

Although Squires's insurance policy—unlike the MVFRL—does not include unidentified motor vehicles in its definition of “uninsured auto,” see app. at 45, Allstate did not dispute—and the District Court, quite reasonably in view of section 1702, assumed—that the unidentified vehicle was an “uninsured motor vehicle” for purposes of the Court's coverage analysis.⁴ Accordingly, the sole issue that the Court decided was “whether an accident caused by a box which fell from an uninsured motor vehicle can be attributed, as a matter of law, to the ‘ownership, maintenance or use’ of an automobile.” App. at 5. The Court answered this question in the negative, concluding that there is UM coverage for policies containing the “arising out of” language only when a vehicle—and not some other object such as the box—was “the instrumentality causing ... the [a]ccident.” App. at 11. Accordingly, on March 2, 2011, the Court granted Allstate's motion for judgment on the pleadings, denied its motion to dismiss the counterclaims as moot, and dismissed Squires's counterclaims as moot. Squires timely appealed.

III. JURISDICTION AND STANDARD OF REVIEW

The District Court had diversity of citizenship subject matter jurisdiction under 28 U.S.C. § 1332.⁵ We have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over the District Court's grant of Allstate's motion for judgment on the pleadings under Fed.R.Civ.P. 12(c). See Ehrheart v. Verizon Wireless, 609 F.3d 590, 593 n. 2 (3d Cir.2010). A court will grant a motion for judgment on the pleadings if the movant establishes that “there are no issues of material fact, and that he is entitled to judgment as a matter of law.” Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 220 (3d Cir.2005) (citing Soc'y Hill Civic Ass'n v. Harris, 632 F.2d 1045, 1054 (3d Cir.1980)). In considering a motion for judgment on the pleadings, 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. See Allah v. Al–Hafeez, 226 F.3d 247, 249 (3d Cir.2000).

IV. DISCUSSION

The parties agree that Pennsylvania law governs our interpretation of Squires's policy and thus the extent to which it provides coverage, and therefore we apply Pennsylvania law on this appeal. Under Pennsylvania law,

the interpretation of a contract of insurance is a matter of law for the courts to decide. In interpreting an insurance contract, we must ascertain the intent of the parties as manifested by the language of the written agreement. When the policy language is clear and unambiguous, we will give effect to the language of the contract.

Paylor v. Hartford Ins. Co. , 640 A.2d 1234, 1235 (Pa.1994). However, where the policy language is ambiguous, it “is to be construed in favor of the insured and against the insurer, the drafter of the agreement.” Dorohovich v. W. Am. Ins. Co. , 589 A.2d 252, 256 (Pa.Super.Ct.1991). In an insurance policy, “[w]ords of common usage ... are to be construed in their natural, plain, and ordinary sense ... and we may inform our understanding of these terms by considering their dictionary definitions.” Madison Constr. Co. v. Harleysville Mut. Ins. Co. , 735 A.2d 100, 108 (Pa.1999) (citations omitted).

As the District Court recognized, the sole question in this case is whether under the policy and Pennsylvania law Squires's accident should be regarded as having “[arisen] out of ownership, maintenance, or use of an uninsured auto.” We note that to the extent “the state's highest court has not addressed the precise question presented, we must predict how [that] court would resolve the issue.” Wayne Moving & Storage of N.J., Inc. v. Sch. Dist. of Phila., 625 F.3d 148, 154 (3d Cir.2010) (alterations and citations omitted). In doing so,

we must look to decisions of state intermediate appellate courts, of federal courts interpreting that state's law, and of other state supreme courts that have addressed the issue, as well as to analogous decisions, considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in the state would decide the issue at hand.

Meyer v. CUNA Mut. Ins. Soc'y, 648 F.3d 154, 164 (3d Cir.2011) (internal quotation marks and citations omitted). “Although not dispositive, decisions of state intermediate appellate courts should be accorded significant weight in the absence of an indication that the highest state court would rule otherwise.” Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 n. 15 (3d Cir.1996). Although Pennsylvania's intermediate appellate courts have not addressed a factual scenario similar to that presented here, their decisions provide significant guidance for us in answering the question that we address.⁶

We start, however, with the Pennsylvania Supreme Court case of Manufacturers Casualty Insurance Co. v. Goodville Mutual Casualty Co., 403 Pa. 603, 170 A.2d 571 (1961), in which that court held that “[c]onstrued strictly against the insurer, ‘arising out of’ [in an insurance policy] means causally connected with, not proximately caused by. ‘But for’ causation, i.e. a cause and result relationship, is enough to satisfy this provision of the policy.” Id. at 573. This formulation of “arising out of” is now well-settled in Pennsylvania, and has been applied in various insurance law settings, both when interpreting insurance policies and assessing issues arising by operation of statutes, even though some of the cases applying the formulation do not cite Goodville. See, e.g., Tuscarora Wayne Mut. Ins. Co. v. Kadlubosky, 889 A.2d 557, 563 (Pa.Super.Ct.2005) (assessing a commercial general liability insurance policy); Roman Mosaic & Tile v. Aetna Cas. and Sur. Co., 704 A.2d 665, 669 (Pa.Super.Ct.1997) (same); Smith v. United Servs. Auto. Ass'n, 392 Pa.Super. 248, 572 A.2d 785, 787 (1990) (applying the Goodville formulation to an uninsured motorist policy provision); Erie Ins. Exch. v. Eisenhuth, 305 Pa.Super. 571, 451 A.2d 1024, 1025 (1982) (no-fault automobile insurance policy). Accordingly, Squires at this time only need have alleged adequately that the unidentified vehicle's use was a but-for cause of his injuries.⁷

In making our analysis we are aware that Pennsylvania intermediate appellate courts quite broadly have indicated that if injuries are caused by “an instrumentality or external force other than the motor vehicle itself,” the vehicle will not be regarded as having contributed to the cause of the injuries pursuant to the “arising out of” language. See Lucas–Raso v. Am. Mfrs. Ins. Co., 441 Pa.Super. 161, 657 A.2d 1, 3 (1995)...