Grudkowski v. Foremost Ins. Co.

• Decision Date: 05 March 2013
• Docket Number: CIVIL ACTION NO. 3:CV-12-1847
• Parties: ARLENE GRUDKOWSKI, Individually and on behalf of a Class of Similarly Situated Persons, Plaintiff, v. FOREMOST INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

ARLENE GRUDKOWSKI, Individually and on behalf of a Class of Similarly Situated Persons, Plaintiff,

v.FOREMOST INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 3:CV-12-1847

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

Dated: March 5, 2013

(JUDGE CAPUTO)

MEMORANDUM

Presently before the Court is Defendant Foremost Insurance Company's ("Foremost") Motion to Dismiss the First Amended Class Action Complaint (Doc. 17) filed by Arlene Grudkowski ("Grudkowski") on behalf of herself and a class of similarly situated individuals. Grudkowski alleges that she purchased automobile insurance for her antique and classic vehicles from Foremost which purports to provide stacked uninsured and underinsured motorist coverages. In actuality, however, Grudkowski contends that the policies only provide unstacked coverages. As a result, Grudkowski claims that Foremost breached the terms of the parties' insurance contracts, violated Pennsylvania's Unfair Trade Practices and Consumer Protection Law, was unjustly enriched, and violated Pennsylvania's bad faith statute. Foremost has moved to dismiss all claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because Grudkowski has failed to state a claim upon which relief can be granted, the motion to dismiss will be granted and the First Amended Class Action Complaint will be dismissed.

I. Background

The facts as alleged in the First Amended Class Action Complaint are as follows:

Beginning in January 2007, Foremost issued a Modified Auto Collectors Program Auto Policy Classic (the "Classic Policy") to Grudkowski providing coverage for a 1991 BMW318i. (First Am. Compl., ¶ 5.) The Classic Policy provided $300,000.00 in combined single limit stacked uninsured motorist coverage. (Id. at ¶ 7.) The Classic Policy also provided $300,000.00 in combined single limit stacked underinsured motorist coverage. (Id. at ¶ 8.)

Additionally, beginning in April 2007, Foremost issued an Antique and Classic Auto Policy (the "Antique Policy") to Grudkowski providing coverage for a 1972 Mercedes 280 SEL. (Id. at ¶ 9.) The Antique Policy provided $300,000.00 in combined single limit stacked uninsured motorist coverage, as well as $300,000.00 in combined single limit stacked underinsured motorist coverage. (Id. at ¶¶ 11-12.)

In addition to the Classic and Antique Policies, Grudkowski maintained a personal auto policy issued by the Erie Insurance Exchange for the personal vehicles in her household other than the antique and classic autos. (Id. at ¶ 13.)

Under the Pennsylvania Motor Vehicle Financial Responsibility Law (the "MVFRL"), 75 Pa. Cons. Stat. Ann. §§ 1701, et seq., insureds may waive stacking of uninsured and underinsured motorist coverages. (Id. at ¶¶ 14-15.) Stacking, which may be either intra-policy or inter-policy, is the cumulation of coverages under auto policies in order to make available a greater pool of recovery of uninsured and underinsured motorist benefits. (Id. at ¶¶ 16-19.) The MVFRL presumes that stacking applies unless insureds waive stacking by executing a stacking waiver containing the language provided in 75 Pa. Cons. Stat. Ann. § 1738(d). (Id. at ¶ 20.)

Grudkowski and all persons who purchased stacked uninsured and/or underinsured motorist coverages from Foremost under classic and/or antique policies were provided with written waivers. Yet, none of these individuals executed the forms necessary to reject stacked coverages. (Id. at ¶¶ 24-25.) Grudkowski, and all persons similarly situated, relied on Foremost's representation that they would receive stacked uninsured and underinsured coverages so long as the waivers were not signed. (Id. at ¶ 27.)

Under the Classic Policy, Grudkowski elected stacked uninsured and underinsured motorist coverages. (Id. at ¶¶ 28, 30.) All premiums were paid for such coverages. (Id. at ¶¶ 29, 31.) As only one vehicle was insured under the Classic Policy, the only stacking benefit available was inter-policy stacking. (Id. at ¶ 36.)

Grudkowski also elected stacked uninsured and underinsured motorist coverages under the Antique Policy. (Id. at ¶¶ 32, 34.) Grudkowski paid all premiums for such coverages. (Id. at ¶¶ 33, 35.) The only stacking benefit available under the Antique Policy was inter-policy stacking because Grudkowski insured only one vehicle under the policy. (Id. at ¶ 37.)

The Classic and Antique Policies contain the following provision with regard to recovery of inter-policy stacked uninsured motorist benefits:

OTHER INSURANCE

If there is other applicable insurance available under more than one policy or provision of coverage that is similar to the insurance provided under this endorsement:

The following priorities of recovery apply:

First The Uninsured Motorists Coverage applicable to the vehicle the "insured" was "occupying" at the time of the "accident."

Second The policy affording Uninsured Motorists Coverage to the "insured" as a named insured or family member.

If two or more policies have equal priority, the insurer against whom the claim is first made shall process and pay the claim as if wholly responsible for all insurers with equal priority. The insurer is thereafter entitled to recover contribution pro rata from any other insurer for the benefits paid and the costs of processing the claim.

If we are the insurer against whom the claim is first made, we will pay, subject to the limit of liability shown in the Schedule or in the Declarations for Uninsured Motorists Coverage, after we and all other contributing insurers agree:

1. Whether the "insured" is legally entitled to recover damages from the owner or operator of an "uninsured motor vehicle", and

2. As to the amount of damages.

(Id. at ¶¶ 39, 43.)

The policies contain a similar provision with respect to recovery of inter-policy stacked underinsured motorist benefits:

OTHER INSURANCE

If there is other applicable insurance available under more than one policy or provision of coverage that is similar to the insurance provided under this endorsement:

The following priorities of recovery apply:

First The Underinsured Motorists Coverage applicable to the vehicle the "insured" was "occupying" at the time of the "accident."

Second The policy affording Underinsured Motorists Coverage to the "insured" as a named insured or family member.

If two or more policies have equal priority, the insurer against whom the claim is first made shall process and pay the claim as if wholly responsible for all insurers with equal priority. The insurer is thereafter entitled to recover contribution pro rata from any other insurer for the benefits paid and the costs of processing the claim.

If we are the insurer against whom the claim is first made, we will pay, subject to the limit of liability shown in the Schedule or in the Declarations for Underinsured Motorists Coverage, after we and all other contributing insurers agree:

1. Whether the "insured" is legally entitled to recover damages from the owner or operator of an "uninsured motor vehicle", and

2. As to the amount of damages.

(Id. at ¶¶ 40, 44.)

Despite these provisions which purport to provide inter-policy stacking benefits, the Classic Policy and Antique Policy contain specific provisions which limit, and essentially eliminate, inter-policy stacking. (Id. at ¶ 48.) With respect to uninsured motorists benefits, the policies state:

INSURING AGREEMENT

A. We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motorist vehicle" because of "bodily injury":

1. Sustained by an "insured"; and

2. Caused by an accident.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motorist vehicle"

. . .

B. "Insured" as used in this endorsement means:

1. You, any "family member" and any other person "occupying" "your covered auto". . . .

(Id. at ¶¶ 49, 51.) As to underinsured motorist benefits, the policies provide:

INSURING AGREEMENT

A. We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "underinsured motorist vehicle" because of "bodily injury":

1. Sustained by an "insured"; and

2. Caused by an accident.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "underinsured motorist vehicle"

. . .

B. "Insured" as used in this endorsement means:

1. You, any "family member" and any other person "occupying" "your covered auto". . . .

(Id. at ¶¶ 50, 52.)

Based on these provisions, in order to recover uninsured or underinsured benefits under either the Classic Policy or Antique Policy, Grudkowski, her husband, and her daughter must be occupants of the auto insured under the policy. (Id. at ¶¶ 53-54.) Since they must be occupants of the insured auto, there can never be any inter-policy stacking benefits available under the Classic Policy or Antique Policy. (Id. at ¶¶ 55-56.)

The definition of "insured" under the policies renders the promise of stacked uninsured and underinsured benefits illusory, despite the representation that the policies conferred such benefits. (Id. at ¶¶ 59-62.) As a result, the policies covering only one vehicle purport to confer a coverage benefit "which the policies do not, in fact, provide." (Id. at ¶ 61.)Grudkowski was deprived of the benefits of stacked coverages, leaving her with an inferior and less valuable insurance policy than was represented as being provided. (Id. at ¶¶ 63-65.)

As a result, Grudkowski commenced this action on behalf of herself and similarly situated individuals asserting claims for breach of contract (Count I), violation of the Unfair Trade Practices and Consumer Protection Law (Count II), unjust enrichment (Count III), and statutory bad faith (Count IV). Foremost, on November 9, 2012, moved to dismiss the First Amended Class Action Complaint in its entirety. As the period for briefing has expired, and following argument on the motion on February 21, 2013, the ...