U.S. Underwriters Ins. Co. v. Liberty Mut. Ins. Co.

Decision Date22 April 1996
Docket NumberNo. 95-1558,95-1558
Citation80 F.3d 90
PartiesU.S. UNDERWRITERS INSURANCE CO.; Maryland Casualty Company v. LIBERTY MUTUAL INSURANCE COMPANY; Perloff Brothers, Inc. a/k/a Perloff, Inc., Liberty Mutual Insurance Company and their insured, Perloff Brothers, Inc., Appellants.
CourtU.S. Court of Appeals — Third Circuit

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil Action No. 93-cv-05015).

Bernard E. Jude Quinn (argued), German, Gallagher & Murtagh, Philadelphia, PA, for Appellee U.S. Underwriters Ins.

Christopher P. Seerveld (argued), Post & Schell, Philadelphia, PA, for Appellee Maryland Casualty.

Andrew B. Klaber, (argued), Weber, Goldstein, Greenberg & Gallagher, Philadelphia, PA, for Appellants.

Before SLOVITER, Chief Judge, ROTH and SAROKIN, Circuit Judges.


ROTH, Circuit Judge:

In this diversity action, we must determine whether the Supreme Court of Pennsylvania would consider certain conduct as falling within the definition of "use or maintenance of a motor vehicle," as defined by the Pennsylvania Motor Vehicle Financial Responsibility Law's ban on subrogation for certain types of insurance benefits, 75 Pa.C.S.A. § 1720. We predict that the Supreme Court of Pennsylvania would conclude that a driver who slips on grease from a nearby kitchen when he steps on the ground while alighting from a car is not engaged in use or maintenance of a motor vehicle. We will therefore reverse the decision of the district court.


The district court disposed of this case on motion for summary judgment. We have jurisdiction over the appeal from the district court's final order pursuant to 28 U.S.C. § 1291. Subject matter jurisdiction rests on 28 U.S.C. § 1332. We exercise plenary review over the district court's order, both as an appeal from grant of summary judgment, Petruzzi's IGA Supermarkets v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 554, 126 L.Ed.2d 455 (1993), and because the dispute requires only an interpretation of law, Matter of Resyn Corp., 945 F.2d 1279, 1280 (3d Cir.1991).


The parties agree on the relevant facts. On November 27, 1987, Robert Hilpl parked his car in the parking lot of the St. Johns Neumann Nursing Home. Hilpl was employed as a bid manager for Perloff Brothers, Inc., and had arrived at the nursing home to meet with representatives of Woods Management Services, a company that operated the nursing home's kitchen. Woods Management was a prospective customer of Perloff Brothers, and Hilpl intended to present the Woods representatives with calendars, planning guides, and other business-related paperwork.

After parking his car and turning off the engine, Hilpl began to exit the vehicle. He placed his left foot on the ground and started to stand up, pushing off with his right foot from inside the vehicle. In the process, Hilpl slipped on a pool of grease or similar substance that had coated a section of the parking lot. He fell, striking his back on the sill of the car door. At oral argument, the parties appeared to concede that the grease emanated from the nursing home's kitchen.

Hilpl's employer, Perloff Brothers, accepted responsibility for the injury, treating it as a work-related incident covered by the Pennsylvania Workers' Compensation Act, 77 P.S. §§ 1-1602. Liberty Mutual Insurance Company ("Liberty Mutual"), the workers' compensation carrier for Perloff, provided Hilpl with lost wage benefits and medical benefits. As of June 30, 1993, benefits totaled $285,875.82. At the time of oral argument, benefits exceeded $400,000.

In addition to receiving benefits, Hilpl brought a third party action in the Philadelphia Court of Common Pleas, seeking damages for the injuries he sustained in the accident. Hilpl sued Woods Management, Neumann Nursing Home, and the nursing home's parent organization, the Archdiocese of Philadelphia. Pursuant to 77 P.S. § 671, Liberty Mutual acquired a subrogation lien on the proceeds of this action by operation of law.

On June 30, 1993, the Common Pleas action was settled for $800,000. As part of the settlement, U.S. Underwriters Insurance Co., the insurer of the nursing home, and Maryland Casualty Co., the insurer of Woods Management, (hereinafter, collectively, "the Tort Liability Insurers") agreed to assume responsibility for all amounts that had accrued on Liberty Mutual's subrogation lien on or before the settlement date.

On October 1, 1993, the Tort Liability Insurers filed a declaratory judgment action in the U.S. District Court for the Eastern District of Pennsylvania seeking to invalidate the subrogation lien pursuant to 75 Pa.C.S.A. § 1720. Section 1720 bars a compensation insurer's right of subrogation to recover workers' compensation benefits from an insured's third-party tort recovery if the insured's injuries arose from the maintenance or use of a motor vehicle. The parties filed cross motions for summary judgment, and on June 8, 1995, the district court entered judgment for plaintiffs. Liberty Mutual appealed.


This controversy is easily located within the landscape of Pennsylvania law. It takes place at the intersection of the Pennsylvania Workers' Compensation Act, 77 P.S. §§ 1-1602, and the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. §§ 1701-1798. Hilpl and his injury are clearly subject to the provisions of Workers' Compensation Act. Section 319 of that act grants a workers' compensation insurer subrogation rights to an employee's recovery from a third party tortfeasor. Section 1720 of the Financial Responsibility Law limits that right, barring subrogation where an employee's injury arose out of the maintenance or use of a motor vehicle. 1

The current dispute turns on the meaning of "maintenance or use of a motor vehicle" as defined by § 1720. The Tort Liability Insurers contend, and the district court agreed, that Hilpl's actions in exiting his car fell within the scope of maintenance or use. Liberty Mutual argues otherwise, claiming that Hilpl's injury did not manifest the degree of causal connection to the vehicle required by the Pennsylvania courts.

The answer to this question is obviously controlled by state law. We therefore begin with the relevant statute. Unfortunately, none of the terms in the phrase "arising out of the maintenance or use of a motor vehicle" are among those defined in 75 Pa.C.S.A. § 1702, the list of statutory definitions for the Financial Responsibility Law. The terms are also absent from the general definition section for the Vehicle Code. 75 Pa.C.S.A. § 102. There is therefore no controlling statutory provision for this case. 2

Absent controlling statutory authority, we turn to the decisions of the highest state tribunal to answer a question of state law. The Pennsylvania Supreme Court, however, has not ruled on the terms of this provision.

When a state's highest court has not spoken on a subject, we must attempt to predict how that tribunal would rule. Kowalsky v. Long Beach Township, 72 F.3d 385, 387 (3d Cir.1995). In making such determinations, we give due deference to the decisions of lower Pennsylvania courts. Winterberg v. Transp. Ins. Co., 72 F.3d 318, 322 (3d Cir.1995). The rulings of intermediate appellate courts must be accorded significant weight and should not be disregarded absent a persuasive indication that the highest state court would rule otherwise. City of Philadelphia v. Lead Indus. Ass'n, Inc., 994 F.2d 112, 123 (3d Cir.1993); Rolick v. Collins Pine Co., 925 F.2d 661, 664 (3d Cir.1991). In the current case, existing decisions of Pennsylvania's intermediate appellate court provide ample guidance for us to resolve this dispute.

We begin with Lucas-Raso v. American Mfrs. Ins. Co., 441 Pa.Super. 161, 657 A.2d 1 (1995), appeal denied, 542 Pa. 654, 668 A.2d 1119 (1995), a recent case in which the meaning of "maintenance and use" under the Financial Responsibility Law was squarely before the Pennsylvania Superior Court. The court surveyed the relevant Pennsylvania case law, placing particular reliance on the adoption in Alvarino v. Allstate Ins. Co., 370 Pa.Super. 563, 537 A.2d 18, 20 (1988), of an interpretation of "arising out of ownership, maintenance or use" announced by the Pennsylvania Supreme Court in Manufacturers Casualty Ins. Co. v. Goodville Mut. Casualty Co., 403 Pa. 603, 170 A.2d 571 (1961). In Manufacturers, the Supreme Court had held: "Arising out of 'means causally connected with, not proximately caused by.' 'But for' causation, i.e., a cause and result relationship is enough to satisfy this [requirement]." Id., 170 A.2d at 573. Alvarino applied this definition to § 1720.

The Lucas-Raso court then stressed the importance of the causation element. First, the causation inquiry serves the legislature's purpose in passing motor vehicle insurance legislation, namely "to compensate losses directly resulting from motoring accidents and to leave injuries tangential to driving to other systems of compensation." Id., 657 A.2d at 3 (citing Prudential Property & Casualty Ins. Co. v. McDaniel, 342 Pa.Super. 557, 493 A.2d 731 (1985)). Even more importantly, causation ensures that injuries suffered by a victim arise from the use of the motor vehicle itself. Id. In other words, "[t]here must be a link between the injury and the motor vehicle before compensation will be awarded." Id., 657 A.2d at 4.

The court next applied these principles to the facts of the case. In Lucas-Raso, the plaintiff had been injured when walking around the back of her car to reach the driver's side. The plaintiff alleged that despite her physical position outside the vehicle, she was nevertheless an occupant of the car. The court considered this claim, noting that "it is not disputed that 'maintenance and use' is presumed if occupancy can be shown." Id. The Superior Court ultimately...

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