State Farm Mut. Auto. Ins. Co. v. Powell

• Decision Date: 01 March 1995
• Docket Number: Civ. A. No. 94-604.
• Citation: 879 F. Supp. 538
• Parties: STATE FARM MUTUAL AUTOMOBILE, INSURANCE COMPANY, Plaintiff, v. Herbert POWELL, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

879 F. Supp. 538

STATE FARM MUTUAL AUTOMOBILE, INSURANCE COMPANY, Plaintiff, v. Herbert POWELL, Defendant.

Civ. A. No. 94-604.

United States District Court, W.D. Pennsylvania.

March 1, 1995.

Summers, Smith & McDonnell, Thomas A. McDonnell, Pittsburgh, PA, for plaintiff.

Dallas W. Hartman, New Castle, PA, for defendant.

OPINION AND ORDER OF COURT

AMBROSE, District Judge.

Plaintiff, State Farm Mutual Automobile Insurance Company ("State Farm"), has filed this declaratory judgment action seeking a determination on whether it is obligated to stack underinsured motorists coverage under certain policies of automobile insurance issued to Defendant Herbert Powell ("Powell"). Pending before the Court are three motions: Cross-Motions for Judgment on the Pleadings filed by both State Farm and Powell, and a Motion for Partial Summary Judgment filed by Powell. For the following reasons, all three motions will be denied.

On May 11, 1991, Powell sustained personal injuries when he was struck by a vehicle owned by Kenneth Wagner. Mr. Wagner was insured by Nationwide Insurance Companies, and the parties agree that Powell has received the $25,000 liability limit available under the terms of Wagner's policy.

Originally both State Farm and Powell agreed that on the date Powell was injured, he was insured under three separate policies of automobile insurance issued by State Farm which covered three vehicles in Powell's household. Each of these policies provided for underinsured motorist ("UIM") coverage in the amount of $50,000 per person and $100,000 per accident. Both parties also originally agreed that Powell had executed a waiver under each separate policy choosing to reject the stacking of limits of UIM coverage and that each of these three waivers were in effect on the date Powell was injured. These waivers of stacked coverage, attached to the original Complaint as Exhibits B, C and D, state as follows:

Underinsured coverage limits.

By signing this waiver, I am rejecting stacked limits of Underinsured Motorist Coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of the limits for each motor vehicle insured under the policy. Instead the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.

Complaint at Exh. B, C and D.

Because Powell elected to waive stacked coverage under each of the policies, State Farm attached a "non-stacking endorsement" to each of Powell's policies. The relevant language in the endorsements dealing with applicable coverage in the event of an underinsured motorist claim is as follows:

If there is other coverage — coverage W3

1. If the insured sustains bodily injury as a pedestrian and other underinsured motor vehicle coverage applies:

(a) The total limits of liability under all such coverages shall not exceed that of the coverage with the highest limit of liability; ...

State Farm argues that the non-stacking waiver executed by Powell as well as the language contained in the non-stacking endorsements precludes Powell from stacking UIM coverage among the three separate insurance policies. Powell, on the other hand, maintains that he did not waive the right to stack coverage among the three separate insurance policies ("inter-policy stacking"), but that he waived only the right to stack coverage of multiple vehicles insured under a single policy of insurance ("intra-policy stacking"). Powell contends that he is therefore entitled to stack UIM coverage under the separate policies in effect at the time he was injured.

The parties agree that this action is governed by the Pennsylvania Motor Vehicle Financial Responsibility Law, as amended by Act 6, 75 Pa.Cons.Stat.Ann. §§ 1701 — 1799.7 (1987 and Supp.1994) ("MVFRL"). One of the primary issues in this action involves the interpretation and application of section 1738 of the MVFRL, which governs the stacking of underinsured motorists benefits as well as the waiver of such stacking. That section provides:

(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.

(b) Waiver. — Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.

(c) More than one vehicle. — Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.

75 Pa. Cons. Stat.Ann. § 1738. Powell contends that the phrase "for more than one vehicle under a policy" in subsection 1738(c) explicitly limits the opportunity to waive stacked coverage to situations where multiple vehicles are insured under a single policy. Because of this limitation, Powell argues, section 1738(c) precludes him from waiving stacked UIM coverage in the present situation, where his three vehicles are insured under multiple policies. Powell further argues that this construction of 1738(c) is consistent with the overall aim of the MVFRL, which is to afford the greatest amount of coverage to the injured claimant. Sturkie v. Erie Insurance Co., 407 Pa.Super. 117, 595 A.2d 152 (1991).

State Farm, on the other hand, argues that when subsection 1738(c) is read in light of the overall language of section 1738, as well as interpreted in light of the legislative intent and public policy considerations behind the Act 6 Amendments to the MVFRL, the waiver provision of § 1738(c) necessarily applies to situations where multiple vehicles are insured under separate policies of insurance issued by the same insurer. We find State Farm's argument more persuasive.

It is a well-settled rule of statutory construction that provisions of a statute are to be read together and construed with reference to the context in which they appear. Consulting Engineers v. Licensure Board, 522 Pa. 204, 208, 560 A.2d 1375, 1377 (1989). There can be no doubt that section 1738(a) allows for stacking of UIM coverage whether multiple vehicles are insured under a single policy or under multiple policies. As to section 1738(b), we disagree with Powell's interpretation that section 1738(b) permits a named insured to waive stacking only under a single policy. Rather, we believe that section 1738(b) establishes that an insured has the option to waive stacked coverage as delineated in section 1738(a), without differentiating between stacking coverage under a single policy or stacking coverage under multiple policies of...