Geico—15 Minutes Could Save You 15% or More on Car Insurance (PA)

On January 23, 2019, the Pennsylvania Supreme Court overturned numerous published decisions consisting of decades of precedent deciding that the “household vehicle exclusion” found in many auto policies. The Gallagher v. Geico Indemnity Company decision shows how the Court reasoned that the “household vehicle exclusion” conflicted with the UM/UIM stacking provision codified in the Pennsylvania Motor Vehicle Financial Responsibility Law (“PMVFRL”).

Gallagher was driving his motorcycle when the driver of a truck ran a stop sign. The truck crashed into Gallagher and he sustained serious injuries as a result. Importantly, Gallagher had two separate Geico auto policies. The first policy insured only the motorcycle and provided $50,000 in UIM coverage. The second Geico policy provided coverage for two of Gallagher’s other vehicles. It contained limits of $100,000 UIM coverage for each vehicle. In their analysis, the Court relied on the fact that Gallagher did not sign a specific waiver form to reject stacking. Instead, Gallagher actually paid higher premiums for stacked UIM coverage under the second Geico policy. Gallagher eventually settled the claim against the truck driver. However, he did not receive sufficient funds with respect to the serious nature of his injuries. Consequently, Gallagher sought $250,000 in UIM coverage from Geico.

Geico tendered its entire UIM policy limit of $50,000 pursuant to its first motorcycle policy but denied coverage with respect to its second auto policy as it contained a “household vehicle exclusion.” Geico filed a MSJ, citing applicable precedent which argued that Courts consistently enforce the exclusion. Upon application to the Supreme Court of Pennsylvania, Gallagher argued that the household vehicle exclusion acted as a de facto waiver of stacking – which, pursuant to the PMVFRL, required a specific waiver form to be enforceable. Gallagher further argued – and the Court emphasized – that he specifically paid additional premiums for stacked coverage. The Court agreed that the household vehicle exclusion was a de facto waiver of stacking and thus violated provisions of the PMVFRL.

However, the Court did provide several other statements that appear to be glimpses of possible trends with respect to the “household vehicle exclusion”. First, Geico provided all relevant policies. The Court did admit this may change insurance underwriting practices. However, it emphasized here that Geico possessed all information regarding his insurance policies and collected higher premiums from him for stacked coverage.  Second, the Court, in a footnote, argued that any insurer could likewise be on notice of multiple policies, even from different carriers. The Court stated “[f]or example, when multiple policies or insurers are involved, an insurer can require disclosure of all household vehicles and policies as part of its application process.” Ostensibly, while the Court states multiple times that this case is unique as Geico provided all policies, this footnote is an ominous sign of changes to come.

Thanks to Matthew Care for his contribution to this post.

A Matter Of Factual Causation (PA)

In Mariana Koziar v. Neal T. Rayner and Andrea Rayner, the Pennsylvania Superior Court ruled that a plaintiff needed to establish factual causation, even when the defendant was found negligent and the plaintiff produced uncontroverted evidence of injury.

The plaintiff in this case, a house cleaner, slipped and fell as she exited a client’s garage door.  She severely injured her left ankle, requiring surgery, and subsequently sued the client/homeowners, alleging that the “lip” of the garage door was negligently constructed, and the driveway pavement was negligently maintained.  During trial, the jury heard differing accounts of how the accident occurred from the plaintiff herself.  At the trial’s conclusion, the jury returned a verdict in favor of the homeowners, finding that while they were negligent, their negligence was not the factual cause of the plaintiff’s injuries.

After the jury was discharged, the plaintiff filed a motion for a new trial, arguing the verdict was against the weight of the evidence.  The trial court granted the motion, and the homeowners appealed.  On appeal the plaintiff argued that when a jury finds a defendant negligent and concedes the existence of an injury, the jury is not permitted to find that the defendant’s negligence was not a substantial factor in bringing about the plaintiff’s injury.  The Superior Court rejected this argument, noting that Pennsylvania defines factual causation in the but for sense, and reversed the trial court’s order for a new trial.  The court concluded that while the jury could have found that the homeowners were negligent in any of the descriptions of the accident, it ultimately determined that the plaintiff had been negligent, herself.  The fact that there was uncontroverted evidence of an injury did not relieve the plaintiff of the burden to show factual causation.

Thus, this case illustrates the continued need of the plaintiff to carry his or her burden in order to prevail in an action.

Thanks to Robert Turchick for his contribution to this post.  Please email"> Colleen E.  Hayes with any questions.

Eastern District of Pennsylvania Grants Casualty Insurer’s Motion for Summary Judgment, Finding No Duty to Indemnify (PA)

In Myers v. GEICO Casualty Insurance Co.., the Eastern District of Pennsylvania Court granted Summary Judgment in favor of a casualty insurance company, holding that it acted properly because the driver of the vehicle was not an insured under its policy.  In brief, Chapman and Bond had attended an event together and after entering the event venue, Chapman asked for the keys to Bond’s vehicle because she needed to retrieve something. Upon arriving to the vehicle, Chapman noticed a parking spot closer to the event venue and proceeded to move Bond’s car to the closer spot without obtaining permission from Bond. While moving the vehicle, Chapman was involved in a collision with Myers. Jasmine Tucker, Bond’s girlfriend, was the named insured on the GEICO Policy, while Bond was listed as an additional driver. Chapman was not named under the Policy in any capacity. Myers sued Chapman, Tucker and Bond alleging negligence. GEICO did not defend Chapman, determining that she was not covered under the Policy because she operated the vehicle without permission.

In determining whether Chapman was an insured under the policy, the Court looked to the terms of the Policy. The Policy stated the insurer would “pay damages which an insured becomes legally obligated to pay” because of injury or damages from the use or ownership of an “owned auto.” Under the policy, an “insured” included “any . . . person using the auto with your permission.” The omnibus clause of an automobile insurance policy designated an insured as “any person using the insured vehicle with the permission of the owner, the permission necessary to elevate the user to the status of an additional insured may be express or implied.”  The court determined that implied permission could be established through a relationship or conduct surrounding the incident that demonstrated both parties acquiesced.  In finding that Chapman was not an insured under the policy, the Court considered the lack of express consent and the fact that Chapman had never driven Bond’s car previously. The Court rejected Chapman’s argument that Bond’s conduct of giving Chapman the keys amounted to consent.

This opinion demonstrates that it is possible for individuals not named on an automobile insurance policy to be deemed “insured” if there is consent to operate the vehicle, whether express or implied. However, in order to establish implied consent, the court will look to all the factors surrounding the incident to determine the presence of mutual acquiescence.

Thanks to Rachel Thompson for her contribution to this post.  Please email ">Colleen E.  Hayes with any questions.

Improper Service: No Harm, No Foul (PA)

A Pennsylvania Court determined that a plaintiff’s good faith attempts to effectuate service tolled the statute of limitations.

In Mandarano v Plink, the Pennsylvania Court of Common Pleas in Lackawanna County heard an interesting case regarding a failure to comply with the Pennsylvania service statute.  In Mandarano, the Plaintiff commenced a premises-liability action one day before the statute of limitations expired by serving the President of the Defendant company via a detective agency.  Under Pa.R.C.P. 400(a), original service in Pennsylvania is only to be effectuated by a Sheriff.  As a result, the Defendant filed preliminary objections seeking that the complaint be dismissed for failure to comply with Pa.R.C.P. 400(a).  The Defendant argued the statute of limitations is tolled only if the plaintiff makes a good faith effort to effectuate service of process on the opposing party, which he argued did not occur. Plaintiff countered, stating that Pa.R.C.P. 126 enables a court to “disregard any error or defect of procedure which does not affect the substantial rights of the parties.”

In analyzing the situation, the Court first relayed the standard for evaluating untimely service.  To warrant the dismissal of an action based upon the untimely service of original process, the record must reflect that either (1) plaintiff demonstrated an intent to stall the judicial machinery by delaying the proper service of process, or (2) the defendant was prejudiced by plaintiff’s failure to comply with the procedural rules governing service.  The type of prejudice required to warrant a dismissal based upon improper service of process involves a “substantial diminution of the defendant’s ability to present factual information in the event of trial which has been brought about by plaintiff’s delay” in the proper service of original process. The Court found no evidence of any prejudice nor that the plaintiff intentionally acted in a manner that was designed to stall the judicial process.  Moreover, since the Defendant’s officer was furnished with timely notice of the filing of this suit, the Court found that the purpose of the statute of limitations was satisfied.

This case poses an interesting situation, where the specific requirements of a statute were not met, but where the Plaintiff’s action complied with the spirit and purpose of the statute.  Most states contain statutes and regulations allowing Courts to disregard any defect of procedure that does not prejudice another party.  The Defendant could not provide any evidence that he was prejudiced, and the Plaintiff was allowed to proceed in his lawsuit.  There was no-harm, and, thus, the Court found no-foul.

Thanks to Malik Pickett for his contribution to this post. Please email ">Colleen  E. Hayes with any questions.

Insurer Burned by Duty to Defend Following Gasoline Fire (PA)

The Pennsylvania Superior Court recently reversed a trial court’s granting of summary judgment in favor of an insurer in a declaratory judgment action and ruled that coverage was owed to an insured following a fire at a vehicle dismantling facility in Harrisburg.  In Tuscarora Wayne Ins. Co. v. Hebron, Inc., 2018 PA Super 270; No. 1591 MDA 2017, the court ruled in favor of the insured, Hebron, following Hebron’s appeal of summary judgment.

The underlying declaratory judgment action involved Hebron, a named insured on a commercial liability policy issued by TWIC.  Hebron dismantles and strips vehicles of their parts at a facility in Harrisburg, PA.  In May 2014, a fire broke out at Hebron’s facility when an employee was attempting to add fuel to a company truck that hauled broken down vehicles to Hebron’s plant, causing damage to Hebron’s facility.  The TWIC policy included an endorsement that excluded coverage for designated ongoing operations, including “vehicle dismantling.”  “Vehicle dismantling” was not defined in the policy.  TWIC filed a DJ action seeking a determination that coverage.  TWIC moved for summary judgment based on the exclusion, which Hebron opposed and also filed its own motion for summary judgment contenting that the plain language of the exclusion did not relieve TWIC of its coverage obligation.  The trial court granted TWIC’s motion for summary judgment and declared that defense and indemnity were not owed based on the “vehicle dismantling” exclusion because the refueling of a truck used to transport vehicles to Hebron’s facility to be dismantled was “incidental to the vehicle dismantling business.”  Hebron appealed and argued that the trial court committed errors of law in awarding summary judgment in favor of TWIC.

In its opinion regarding Hebron’s appeal, the court noted that, in Pennsylvania, courts will give effect to the plain language of a contract if the policy’s language is clear and unambiguous.  If, however, the language of the policy is ambiguous, the provisions must be construed in favor of the insured against the insurer and when an insurer bases a denial of coverage on a policy exclusion, the insurer bears the burden of establishing the exclusion’s application.  The Superior Court, viewing the facts in the light most favorable to Hebron (the non-moving party), also opined that the fire was not caused by the vehicle dismantling process itself, but rather it arose as a result of a faulty extension cord connected to a pump that sparked while Hebron’s own vehicle was being refueled.  Hebron was not actually dismantling a vehicle at the time of the fire and the dismantling process had already ended for the day, therefore the refueling of the truck was not “incidental to the vehicle dismantling business.”

Thus, the Superior Court concluded that the trial court had committed an error of law and reversed the granting of TWIC’s motion for summary judgment.  The Superior Court went even further and also concluded that, because fire did not occur in the course of the vehicle dismantling process, the exclusion did not apply, and Hebron was entitled to defense and indemnity under the policy.  The court then granted Hebron’s motion for summary judgment declaring that TWIC was required to defend and indemnify Hebron under the policy.

This case illustrates the importance of clearly and unambiguously defining operative terms in commercial liability policies in order to avoid potentially adverse interpretations of exclusion language.  Moreover, we suspect Hebron retained a solid cause and origin expert to make the cause of the fire clear to the Court, and prompt coverage.   Excellent foresight.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

Insurer Attempts to “Sack” Coverage of Trademark Suit based on “Financial Quarterback” Term (PA)

Erie Insurance Exchange filed a complaint Monday alleging that it has no duty to defend or indemnify a financial planning company facing claims in federal court for willfully infringing a rival’s marketing slogan trademarks. According to Erie, their policy explicitly precludes coverage for claims of infringement of copyright, patent, trademark or trade secret. Jalinski Advisory Group, Inc. has been marketing itself as “the financial quarterback” since 2009, and it formally registered “financial quarterback” as a trademark in April 2010.

However, Franklin Retirement, Erie’s insured, started to brand itself as “your financial quarterback,” which Jalinski alleges is indirect violation of the trademarks. Erie agreed to represent Franklin under a reservation of its rights; however, Erie ultimately denied coverage.  Now, Erie seeks a Pennsylvania state judge to free it from providing coverage.

With regard to trademark litigation, it’s all about the litigation fees, since defense of trademark infringement is very fact-specific, time-consuming, and expensive.  (Dennis Wade’s “This and That” from January 4, 2019 also focused on trademark litigation, and the ensuing expense.)

Does use of the term “Your Financial Quarterback” constitute copyright infringement?   The only certainty is that the answer to the question will be expensive.   Thanks to Melisa Buchowiec for her contribution to this post.  Please email Brian Gibbons with any questions.

Cost-Effective ADR — Brought About by a Not-So Cost-Effective Appeal (PA)

On January 4, 2019, the Superior Court of Pennsylvania vacated a May 23, 2017 ruling in the Court of Common Pleas of Fayette County that overruled the preliminary objections of Golden Gate National Senior Care, LLC.  Those preliminary objections sought to compel arbitration.

At the trial court level, Golden Gate sought to enforce a compulsory ADR agreement signed by Mildred Snyder’s husband, Donald Snyder, upon Mrs. Snyder’s admission to the Golden Gate National Senior Care facility in 2006.  However, the trial court overruled their preliminary objections arguing there was no meeting of the minds as to the ADR agreement, Mr. Snyder lacked the authority to execute the agreement, and the agreement lacked consideration and was unconscionable.

The Superior Court quickly determined that lower court abused its discretion in overruling Golden Gate’s preliminary objections.  However, the Court first had to determine if it had authority to hear appeal of the interlocutory order.  In Pennsylvania, an appeal may be taken from a court order denying an application to compel arbitration made under 42 Pa.C.S.A. 7304.  The Pa. Supreme Court in Taylor v. Extendicare Health Facilities, Inc., 147 A.3d 490 (Pa. 2016) heard an appeal regarding the enforceability of an ADR provision similar to the provision in the present case.  Therefore, the Court ruled it could move forward with reviewing the interlocutory order.

Once the court overcame that procedural hurdle, the court quickly disposed of the arguments that the trial court made in declining to enforce the ADR provision as the lower court failed to provide sufficient justification for its actions.

Although Golden Gate prevailed on appeal, their frustration at the added expense of motion and appellate practice would be understandable, in light of the clear binding ADR language in the agreement.  Thanks to Garrett Gitler for his contribution to this post.  Please email Brian Gibbons with any questions.

Landowner Not Liable for Slip and Fall During Active Weather Event (PA)

In Beauford v. Second Nature Landscaping and Construction, Inc., the plaintiff claimed that he slipped and fell in March of 2015 outside an apartment building owned by Definitive Properties, LLC (“Definitive”).  At that time, Definitive had contracted with Second Nature Landscaping and Construction, Inc. (“Second Nature”) to provide snow removal services.  The contract required Second Nature to automatically respond within 24 hours when the snow reached a certain depth.  On the day of the accident, it began raining around 2:00 PM.  That day, the temperature remained above freezing and at 10:30 PM, the time of the plaintiff’s alleged fall, the temperature was between 44 and 46 degrees Fahrenheit.  According to the plaintiff, he slipped and fell on an ice puddle that formed sometime between 11 AM and 10:30 PM.  Plaintiff filed suit against both Second Nature and Definitive seeking damages for his personal injuries.

Both defendants filed for summary judgment, which was granted, and plaintiff appealed.  The court relied on the hills and ridges doctrine in Pennsylvania, which states that a plaintiff must show snow and ice accumulated on the sidewalk in ridges or elevations of such size and character so as to unreasonably obstruct travel and constitute a danger to pedestrians.  The Court further stated that the only duty of the property owner is to act within a reasonable time after notice to remove the snow and ice when it is in a dangerous condition.

The Court found that although there was no factual dispute that the plaintiff slipped and fell on a purported ice puddle during an active weather event, i.e. at a time when generally slippery conditions prevailed in the community.  Finding that under Pennsylvania law, a landowner has no obligation to correct conditions until a reasonable time after a winter storm has ended, there was no obligation at that time by either Definitive or Second Nature to remove snow and/or ice at that time.  Therefore, defendants’ summary judgment motions were granted.

Thanks to Alexandra Perry for her contribution to this post.

State Farm Must Defend Cyberbully Accused of Instigating Suicide (PA)

While attending a Pennsylvania High School, Zach Trimbur repeatedly harassed his female classmate, both in person and online.  In a tragic turn, the classmate committed suicide. The classmate’s parents filed a suit in Pennsylvania state court, bringing claims of negligence and wrongful death and survival against Trimbur.

State Farm brought a declaratory judgment action after Trimbur’s parents asked State Farm to defend and indemnify him against the lawsuit by referring to their home insurance policy that provided personal liability coverage. State Farm’s policy covers the cost of defending against claims arising from “occurrences,” which Pennsylvania state law has defined as accidents.

However, on December 11, 2018, U.S. District Judge Mark Kearney sided with the insured and held that State Farm must pay for Trimbur’s defense. According to Judge Kearney, although Trimbur may have intended to hurt the girl, it is not conclusive that death by suicide was foreseeable from his cyberbullying. Judge Kearney further stated that “the true test of whether an accident occurred comes from when the situation is viewed from the perspective of the insured” and from Trimbur’s perspective, suicide was not foreseeable. Judge Kearney declined to answer whether State Farm must also indemnify Trimbur.  And with the duty to defend being broader than the duty to indemnify, indemnification is certainly on the table.  This question may remain unanswered until the close of discovery.  Thanks to Melisa Buchowiec for her contribution to this post.  Please email Brian Gibbons with any questions.

Philadelphia Too Oppressive for Personal Injury Suit (PA)

The Pennsylvania Superior Court recently affirmed a trial court’s ruling regarding the transfer of venue from Philadelphia County to Somerset County in Pennsylvania.  In Timothy Watson v. Nick J. Capo and National Delivery Systems, Inc., No. 983 EDA 2018 (PA. Super.), Watson sued Capo and Natl. Delivery Systems following a motor vehicle accident that occurred on the PA Turnpike in Somerset County.  Watson was driving a tractor trailer truck with a passenger, Cindy Weaver; and Capo was driving a tractor trailer owned by Natl. Delivery Systems.  Watson sustained various injuries and was taken to an emergency room in Somerset County.  Officers from Pennsylvania State Police, Somerset County investigated the accident scene and authored a report.

Watson commenced a lawsuit in Philadelphia County.  In response, Defendants filed preliminary objections to transfer the venue to Somerset County based on forum non conveniens.  Both Watson and his passenger reside in Maryland, Capo resides in Fayette County, PA; and Natl. Delivery Systems has a principal place of business in Ellicott City, Maryland as well as a Philadelphia Terminal in Philadelphia, PA.  Defendants argued that Philadelphia constituted an oppressive or vexatious forum because the accident occurred in Somerset County, police from Somerset County responded to the scene and drafted the report, Watson was treated at Somerset County Hospital, Somerset County Courthouse is 237 miles away from City Hall in Philadelphia, and the police officers as well as defendants would have to incur significant expenses for travel, lodging and missed work in order to appear in Philadelphia.  In opposition, Watson argued that Philadelphia was an appropriate venue for litigation and also attached an affidavit from Weaver stating that she would be more inconvenienced by having to travel to Somerset County rather than Philadelphia.  The trial court granted Defendants motion to transfer to Somerset County based on forum non conveniens.

On appeal, Watson asserted that the trial court erred and abused its discretion.  The Superior Court articulated the appellate standard of review for an abuse of discretion and stated that the trial court’s ruling must be reasonable in light of the peculiar facts and also that the lower court’s decision must stand if there exists any proper basis for the trial court’s decision to transfer venue.  The court further explained that, determining whether a forum is oppressive requires consideration of the totality of the circumstances and while distance between the two forums and disruption of the parties’ personal and professional lives are part of the equation, no one factor is dispositive.

The Superior Court agreed with the trial court’s determination that Defendants had met their burden of demonstrating that Philadelphia was an oppressive and vexatious forum.  In support of its decision, the Court cited the fact that Somerset County, where the accident took place and where the officers and initial medical treatment facility were located, was over 200 miles from Philadelphia.

In addition, the court noted that neither Watson nor the Defendants were from Philadelphia County, potential witnesses (including Capo and the responding police officers) suffered a greater hardship traveling to Philadelphia as opposed Somerset County, and the sole connection with Philadelphia is the fact that Natl. Delivery Systems occasionally conducted business in Philadelphia.  Thus, the trial court had a proper basis to grant Defendants’ motion to transfer and did not abuse its discretion.  This case illustrates the importance of utilizing the procedural tool of preliminary objections in Pennsylvania civil practice; as Defendants were successfully able to remove the case from the notoriously ‘plaintiff-friendly’ jurisdiction of Philadelphia County to a more conservative forum like Somerset County.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions