Nationwide Mut. Ins. Co. v. Harris

• Decision Date: 12 May 2003
• Citation: 826 A.2d 880
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Clyda HARRIS.
• Court: Pennsylvania Superior Court

826 A.2d 880

NATIONWIDE MUTUAL INSURANCE COMPANY, Appellant, v. Clyda HARRIS.

Superior Court of Pennsylvania.

Argued November 19, 2002.

Filed May 12, 2003.

Reargument Denied July 18, 2003.

Peter B. Skeel, Pittsburgh, for appellant.

William M. Radcliffe, Uniontown, for appellee.

BEFORE: FORD ELLIOTT, ORIE MELVIN, and GRACI, JJ.

OPINION BY FORD ELLIOTT, J.:

¶ 1 In this appeal, we are asked to decide whether the trial court erred when it granted summary judgment to Clyda Harris ("insured") and denied summary judgment to Nationwide Mutual Insurance Company ("insurer"). We are constrained to vacate the summary judgment entered in favor of insured and grant summary judgment in favor of insurer based on our supreme court's recent decisions in Prudential Property & Cas. Ins. Co. v. Colbert, 572 Pa. 82, 813 A.2d 747 (2002); Burstein v. Prudential Property and Casualty Insurance Co., 570 Pa. 177, 809 A.2d 204 (2002); and this court's recent decisions in Rudloff v. Nationwide Mutual Insurance Co., 806 A.2d 1270 (Pa.Super.2002) (en banc), appeal denied, 572 Pa. 758, 818 A.2d 505 (2003); and Old Guard Ins. Co. v. Houck, 801 A.2d 559 (Pa.Super.2002), appeal denied, 572 Pa. 82, 818 A.2d 505 (2003). A brief statement of the facts, which are not in dispute, follows.

¶ 2 On October 19, 1998, while driving her Volkswagen Jetta, insured was involved in an automobile accident with Timothy Foreman. Insured settled with Foreman's liability carrier for the limits of liability under his policy. Insured then filed a claim with her insurance carrier, Allstate, for UIM benefits under her insurance policy on the Jetta, and Allstate tendered the full amount of those benefits. Allstate also tendered the limits of UIM coverage under a policy insured's brother purchased on his car because insured resided in the same household as brother. Finally, insured, who also resided with her mother, sought UIM coverage under her mother's policy with insurer. Insurer denied coverage, however, based upon a "household" exclusion in the underinsured motorists section of the policy. That exclusion follows:

COVERAGE EXCLUSIONS

This coverage does not apply to:

4. Bodily injury suffered while occupying a motor vehicle owned by you or a relative but not insured for Underinsured Motorists coverage under this policy; nor to bodily injury from being hit by any such motor vehicle.

....

Insurer's brief in support of motion for summary judgment, 7/23/01, R. at 16, Exhibit A.

¶ 3 Insurer then filed a declaratory judgment action, followed by a motion for summary judgment, and insured filed a cross-motion for summary judgment. By order entered December 6, 2001, the trial court, the Honorable John F. Wagner, Jr., denied insurer's motion and granted insured's motion, finding that the exclusion at issue is void as against "the MVFRL's intent behind underinsured motorist benefits[, which] is to protect innocent victims from underinsured motorists who cannot adequately compensate their victims for their injuries." (Trial court opinion, 12/6/01 at 10-11.) Insurer filed this timely appeal, in which it raises the following issues:

I. Whether the clear and unambiguous language of the provisions contained in the Nationwide Policy excludes [insured] from obtaining underinsured motorist coverage.

II. Whether the `Household Exclusion' is contrary to public policy as applied to the facts of this case.

Appellant's brief at 4.

¶ 4 "Summary judgment may be granted only in those cases in which the record clearly shows that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Harleysville Ins. Companies v. Aetna Cas. and Surety Ins. Co., 568 Pa. 255, 258, 795 A.2d 383, 385 (2002), citing P.J.S. v. Penn. State Ethics Comm'n, 555 Pa. 149, 153, 723 A.2d 174, 176 (1999). "Interpretation of an insurance policy is a question of law that a court may resolve on a motion for summary judgment." Id., citing Harstead v. Diamond State Ins. Co., 555 Pa. 159, 162-163, 723 A.2d 179, 180 (1999). "A reviewing court may disturb the granting of summary judgment by the trial court only where there has been a clear abuse of discretion or an error of law." Id. (citation omitted). "As this case raises an error of law, our review is plenary." Id., citing Phillips v. A-Best Products Co., 542 Pa. 124, 130, 665 A.2d 1167, 1170 (1995).

¶ 5 As we have already indicated, both our supreme court and this court have very recently addressed the issue insurer raises in this case. According to these recent decisions, while "`other public policies may underlie the MVFRL, the "legislative concern for the spiraling consumer costs of automobile insurance" is its dominant and overarching public policy.'" Rudloff, 806 A.2d at 1273, quoting Burstein, supra at 184 n. 3, 809 A.2d at 208 n. 3, quoting Paylor v. Hartford Ins. Co., 536 Pa. 583, 587, 640 A.2d 1234, 1235 (1994). Thus, we are constrained to find trial court error in entering summary judgment in favor of insured based on a public policy of protecting innocent insureds from underinsured motorists.¹ According to the decisions we have cited, household exclusions such as the one at issue in this case do not violate public policy because they limit the risk an insurer underwrites to operation of the vehicle(s) insured under its policy, or to operation of vehicles members of the household do not own, a slight risk when compared with operating their own vehicles. Rudloff, 806 A.2d at 1275.

¶ 6 Insured argued in its motion for summary judgment, and also argues on appeal, however, that the household exclusion violates public policy because it conflicts with the express language of §§ 1733 and 1738 of the MVFRL, 75 Pa.C.S.A. §§ 1733, 1738. (Appellee's brief at 13-16.) The trial court noted that it did not address insured's argument regarding § 1738, having already found the household exclusion in violation of the intent behind the MVFRL. (Trial court opinion, 12/6/01 at 11.) We find that Rudloff controls the insured's argument regarding § 1733, which held that a household exclusion such as the one at issue here did not violate § 1733, which would be applicable under similar facts if the insured had been driving a friend's car rather than her own. Rudloff, 806 A.2d at 1277.

¶ 7 According to insured, however, no appellate court in Pennsylvania has heretofore addressed whether a household exclusion such as the one at issue in this case directly conflicts with § 1738 of the MVFRL. (Appellee's brief at 14.) That section provides:

§ 1738. Stacking of uninsured and underinsured benefits and option to waive

(a) Limit for each vehicle.—When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.

75 Pa.C.S.A. § 1738(a) (emphasis added). The remaining subsections of § 1738 allow a named insured who has insured more than one motor vehicle under a single policy to waive the stacked limits of coverage, providing that he or she do so in writing and that "[t]he premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage." 75 Pa.C.S.A. § 1738(b), (c), (d), (e); In re Insurance Stacking Litigation ("Stacking Litigation"), 754 A.2d 702, 708 (Pa.Super.2000) (finding that the legislature has circumscribed the class of named insureds to whom notice must be given and who may therefore waive stacking to those who purchased coverage for more than one vehicle under a single policy), appeal denied sub nom. In re Leed, 565 Pa. 673, 775 A.2d 807 (2001).

¶ 8 This court recently interpreted § 1738 in McGovern v. Erie Insurance Group, 796 A.2d 343 (Pa.Super.2002),appeal denied, 570 Pa. 699, 809 A.2d 904 (2002). In McGovern, McGovern resided with his mother, who had purchased insurance on her own vehicle from Erie Insurance Group ("Erie"), including $250,000/500,000 stacked UM/UIM benefits. Id. at 344. McGovern was considered an insured under the Erie policy both under its express terms as a resident relative of the named insured, and pursuant to 75 Pa.C.S.A. § 1702, which defines an insured as, inter alia, a spouse or other relative of the named insured residing in the household of the named insured. 75 Pa.C.S.A. § 1702(2)(i). Id. McGovern owned a motorcycle, which he insured with Progressive Insurance, and an automobile, which he insured with TICO.² While riding his motorcycle, McGovern was seriously injured in an accident. The tortfeasor paid the limits of his or her liability insurance, after which McGovern's insurer, Progressive Insurance, offered $14,675 of the $15,000 UIM coverage available under the Progressive policy. McGovern then sought UIM coverage under his mother's policy with Erie, which tendered an additional $250,000 based on McGovern's status as a resident relative. Id.

¶ 9 Not satisfied, McGovern sought additional coverage from Erie, arguing that he should receive $250,000 for his mother's vehicle, plus $250,000 each for his motorcycle and his automobile, up to the value of the damages he suffered. Id. at 345. The trial court interpreted § 1738 to allow stacking of the $15,000 UIM coverage under the Progressive policy with the $250,000 available under the Erie policy and this court affirmed. Id. In so doing, this court opined:

The statutory language of section 1738 is clear. The total amount of coverage available is the sum of the limits for each motor vehicle as to which the injured person is an insured. Thus, to determine the amount of coverage available in the current situation, one merely needs to add the applicable limits of available UIM coverages. Here, the coverages available are $15,000 from the Progressive policy

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