Opinion
CIVIL ACTION NO. 19-2144-KSM
01-29-2021
LM GENERAL INSURANCE CO., Plaintiff-Counterclaim Defendant, v. SHARON LEBRUN and ED LEBRUN, Defendants-Counterclaim Plaintiffs.
MEMORANDUM Marston, J.
Presently before the Court is the third motion related to this Court's July 1, 2020 Order on Plaintiff-Counterclaim Defendant LM General's Motion to Dismiss. Defendant-Counterclaim Plaintiffs Sharon and Ed LeBrun have moved for reconsideration of our December 30, 2020 Order, in which we granted in part LM General's motion to certify our July 1, 2020 Order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). (Doc. No. 54.) For the reasons discussed below, we grant the motion.
I. Factual Background and Procedural History
This insurance coverage dispute arises from an August 2016 motor vehicle accident in which Mr. LeBrun was struck by a motorist and severely injured while riding his motorcycle. (Doc. No. 5 at ¶¶ 13-16.) At the time of the accident, Sharon and Ed LeBrun had two insurance policies—a motorcycle policy issued by State Farm Mutual Automobile Insurance Company, and a personal auto policy issued by LM General that covered multiple vehicles but did not cover the motorcycle. (Id. at ¶¶ 20-23, 29, 51, 53.)
After the accident, the LeBruns sought to recover stacked underinsured motorist ("UIM") benefits under the LM General policy, but LM General denied the claim. (Id. at ¶¶ 31-34, 36; see also Doc. Nos. 5-2, 5-4.) First, LM General concluded that the household exclusion barred the LeBruns from recovering benefits under the policy, since Mr. LeBrun was injured while riding a motorcycle that he owned but that was not insured under the LM General policy. (See Doc. Nos. 5-2, 5-4.) Second, LM General determined that the LeBruns were not entitled to stacked UIM coverage because Mrs. LeBrun signed a Rejection of Stacked Underinsured Coverage Limits form and Mr. and Mrs. LeBrun each signed a form stating that they were aware that their "selections appl[ied] throughout the policy period regardless of any change such as the replacement or addition of vehicles or drivers" and "applie[d] to all future renewals or reinstatements of [the] policy." (Doc. No. 5-2 at pp. 4-5, 7, 9; Doc. No. 5 at ¶ 45; Doc. No. 2-2.) However, when the LeBruns added a fourth vehicle, a 2015 GMC Sierra, LM General did not require the LeBruns to sign a new stacking waiver form but instead issued an Amended Declarations Page. (Doc. No. 5 at ¶¶ 51, 53-55, 141.)
"'Stacking' refers to the practice of combining the insurance coverage of individual vehicles to increase the amount of total coverage available to an insured." Gallagher v. GEICO Indem. Co., 201 A.3d 131, 132 n.1 (Pa. 2019).
The household exclusion states:
We do not provide Uninsured Motorists Coverage for "bodily injury" sustained: (1) By an "insured," as defined in this endorsement, while using, "occupying," or when struck by, any motor vehicle owned by you or a "family member," which is not insured for Uninsured Motorist Coverage under this policy.(Doc. No. 2-1 at p. 18 ("Uninsured Motorists Coverage - Pennsylvania (Non-Stacked)"); see also Doc. No. 5 at ¶ 70; accord Doc. No. 2-1 at p. 11 (Part C - Uninsured Motorists Coverage, Exclusions, Part A).)
The statutorily mandated waiver form states:
By signing this waiver, I am rejecting stacked limits of Underinsured Motorists Coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of 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.(See Doc. No. 5 at ¶ 45; Doc. No. 5-2 at p. 9; Doc. No. 2-2.)
The parties could not resolve the insurance dispute amongst themselves, and as a result, LM General initiated this lawsuit on May 17, 2019, seeking a declaratory judgment that the household exclusion precludes coverage for the LeBruns' claim arising from the 2016 accident and that the stacking waiver form remained valid and in effect at the time of the accident. (Doc. No. 1 at p. 13.)
On July 7, 2019, Sharon and Ed LeBrun, on behalf of themselves and a class of similarly situated persons, asserted counterclaims for breach of contract and declaratory judgment against LM General. (Doc. No. 5.) The LeBruns sought to recover the stacked UIM benefits allegedly due to them under their insurance policy, as well as declaratory judgments that their claims for recovery of UIM benefits are not barred by the household exclusion and that they are entitled to stacked UIM coverage. (Id. at ¶¶ 5, 6, 180-202.)
A. Motion to Dismiss
On September 6, 2019, LM General moved to dismiss the LeBruns' counterclaims. (Doc. Nos. 12-2, 20.) On July 1, 2020, we granted in part and denied in part LM General's motion. (Doc. Nos. 35, 36.) We concluded that the LeBruns' declaratory judgment claims were duplicative of the breach of contract claim and dismissed the declaratory counts. (Id.) We also granted LM General's motion to dismiss with respect to putative class members' claims that were barred by the statute of limitations, and dismissed putative class members' uninsured motorist ("UM") claims. (Id.)
The LeBruns moved for reconsideration of this part of the Order, arguing that reinstatement of the declaratory judgment claims was necessary to prevent manifest injustice. (Doc. No. 41.) We denied the LeBruns' motion on December 23, 2020. (Doc. Nos. 50, 51.)
However, we denied the remainder of LM General's motion. (Id.) First, we rejected LM General's contention that, at the motion to dismiss stage, the LeBruns are precluded from recovering stacked UIM benefits as a matter of law because Mrs. LeBrun signed a waiver form. (Doc. No. 35 at pp. 6-11.) After reviewing the relevant statutes and case law (see id. at pp. 6-9), we concluded that the manner in which the LeBruns' fourth vehicle, the 2015 GMC Sierra, was added to their existing policy is crucial to the determination of the need for a new stacking waiver, and explained that the first step in the analysis, as set forth by the Pennsylvania Superior Court in Bumbarger v. Peerless Indemnity Insurance Co., 93 A.3d 872, 873-74, 878-79 (Pa. Super. Ct. 2014) (en banc), requires a factual determination. (Id. at p. 11.) Accordingly, we deferred ruling on this issue until summary judgment. (Id.)
Next, we concluded that it was premature to determine whether the LeBruns "knowingly waived" inter-policy stacking by signing the statutorily mandated waiver form. (Id. at pp. 11-15.) We explained that there was a dearth of case law on this subject and that the Pennsylvania Supreme Court conducted a fact-specific inquiry as to whether the insured's waiver was knowing in the seminal stacking decision, Craley v. State Farm Fire & Casualty Co., 895 A.2d 530, 533 (Pa. 2006). (Id. at p. 15.) As such, we declined to decide the issue on a motion to dismiss, before the opportunity for fact discovery. (Id.)
Inter-policy stacking refers to "the stacking of limits available on two or more separate policies," such as the LM General personal auto policy and the State Farm motorcycle policy in this case. Craley v. State Farm Fire & Cas. Co., 895 A.2d 530, 533 (Pa. 2006). Intra-policy stacking "entail[s] the stacking of limits applicable to more than one vehicle insured under a single policy." Id.
Third, we declined to find, at this early stage in the litigation, that the household exclusion bars the LeBruns from recovering UIM benefits as a matter of law. (Id. at pp. 15-19.) We explained that, for Gallagher v. GEICO Indemnity Co. to apply, this Court would first need to find that the LeBruns did not waive inter-policy stacking. (Id. at pp. 15-16.) We also noted that courts have been inclined to interpret Gallagher broadly. (Id. at pp. 17-18.) As such, we concluded that to the extent the LeBruns did not waive inter-policy stacking, the case law indicates that Gallagher may apply, and at the motion to dismiss stage, we were not inclined to interpret Gallagher's holding narrowly. (Id. at p. 19.)
In Gallagher, the plaintiff had two GEICO insurance policies—one for his motorcycle (the motorcycle policy), and one for his cars (the automobile policy). 201 A.3d at 132-33. The plaintiff opted for and paid for stacked UM and UIM coverage when purchasing both policies. The Pennsylvania Supreme Court held that that the household exclusion, which was "buried in an amendment" to the automobile policy, violated Pennsylvania's Motor Vehicle Financial Responsibility Law because it impermissibly acted as a de facto waiver of stacked UM and UIM coverages.
B. Motion for Interlocutory Appeal
On July 22, 2020, LM General filed a Motion to Certify the Court's July 1, 2020 Memorandum and Order Regarding LM General's Motion to Dismiss for Interlocutory Appeal Pursuant to 28 U.S.C. § 1292(b) and to Stay Discovery and Other Pretrial Proceedings. (Doc. No. 44.) In challenging our partial denial of its Motion to Dismiss, LM General argued that two questions should be certified to the Third Circuit:
(1) whether an UIM coverage stacking waiver signed by an insured remains enforceable when the insured later adds a newly acquired vehicle to the policy that contains a "continuous" newly acquired vehicle provision, notwithstanding that the insurer issued updated declarations; and(Doc. No. 44 at p. 1.) The LeBruns opposed the motion, contending that it was premature to resolve the stacking and household exclusion issues at this point, particularly as issues relating to the household exclusion may be affected or resolved by the Pennsylvania Supreme Court's decision in another matter, and that an immediate appeal would not advance the litigation. (Doc. No. 46.)
(2) whether a household vehicle exclusion is enforceable as a matter of law when the named insured signed the statutorily mandated stacking waiver form because that form waives both inter- and intra-policy stacking.
On December 30, 2020, we granted in part LM's motion. (Doc. Nos. 52, 53.) We noted that under § 1292(b), a district court may certify an order for interlocutory appeal if (1) the order involves a controlling question of law, as to which (2) there is substantial ground for difference of opinion, and (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation. (Doc. No. 52 at p. 6 (citing 28 U.S.C. § 1292(b)).)
We first considered whether the stacking and waiver issues presented a controlling question of law. (Id. at pp. 7-11.) We explained that we had previously evaluated whether the LeBruns' fourth vehicle was added via an endorsement or continuous or finite after-acquired vehicle clause to determine whether LM General was required to obtain a new stacking waiver. (Id. at p. 8.) We pointed out that in our July 1 opinion, we had observed that "a divide amongst the case law appears to have emerged," such that courts—when faced with similar sets of facts—"vary in their determinations of whether vehicles are added to policies via an endorsement, a continuous after-acquired vehicle clause, or a finite after-acquired vehicle clause and thus whether insurers are required to obtain new stacking waivers." (Id. (citing Doc. No. 35 at p. 8) (noting that in the Bumbarger line of cases, the Pennsylvania Superior Court found that the vehicles were added by endorsement and the insurers were required to obtain new forms, but in the Seiple line of cases, federal courts in the Third Circuit found that the vehicles were added by continuous after-acquired clauses and that insurers were not required to obtain new waiver forms).)
Bumbarger v. Peerless Indem. Ins. Co., 93 A.3d 872, 873-74, 878-79 (Pa. Super. Ct. 2014) (en banc); Pergolese v. Standard Fire Ins. Co., 162 A.3d 481, 490 (Pa. Super. Ct. 2017); Newhook v. Erie Ins. Exch., No. 1917 EDA 2017, 2018 WL 1939814, at *4 (Pa. Super. Ct. Apr. 25, 2018); Kline v. Travelers Pers. Sec. Ins. Co., 223 A.3d 677, 688 (Pa. Super. Ct. 2019).
See Seiple v. Progressive N. Ins. Co., 954 F. Supp. 2d 352, 353, 360 (E.D. Pa. 2013), aff'd, 568 F. App'x 183 (3d Cir. 2014); Powell v. Allstate Prop. & Cas. Ins. Co., Civil Action No. 13-5721, 2014 WL 3573139, at *8-9 (E.D. Pa. July 21, 2014); Mitchell v. Progressive Preferred Ins. Co., Civil Action No. 3:14-0384, 2015 WL 5762927, at *3 (M.D. Pa. Sept. 29, 2015); Kuhns v. Travelers Home & Marine Ins. Co., 760 F. App'x 129, 132-33 (3d Cir. 2019).
We also noted that although the Bumbarger court stated that the first step of the analysis required a "factual determination," we are not bound by the Pennsylvania Superior Court, and that the Seiple court decided the issue on a motion to dismiss, as a matter of law. (Id. at pp. 9-10.)
We ultimately concluded that this issue involves a controlling question of law because "it is serious to the conduct of the litigation, either practically or legally." (Id. at p. 10.) We reasoned that this is so because whether the LeBruns are entitled to relief depends at least in part on how the vehicle was added and whether LM General was required to obtain a new stacking waiver—in other words, if LM General was required to obtain a new waiver, then the issue of whether the LeBruns waived inter-policy stacking when Mrs. LeBrun signed the old form is rendered moot. (Id.)
Second, we determined that substantial grounds for difference of opinion exist for whether the LeBruns' fourth vehicle was added via a continuous or finite after-acquired vehicle clause or an endorsement and thus whether LM General was required to obtain a new stacking waiver for two reasons. (Id. at pp. 11-12.) First, there is conflicting case law (i.e., the Bumbarger and Seiple lines of cases) and second, the Pennsylvania Supreme Court has not yet ruled on the issue, so there is a lack of binding precedent. (Id. at p. 12.)
Finally, we determined that a ruling on this issue would materially advance the termination of this litigation because this matter is at an early stage of litigation (pre-discovery), and a ruling on such a pivotal issue would enable the parties to complete discovery more quickly or at less expense. (Id. at pp. 13-15.)
As such, we granted LM General's motion to certify the following question to the Third Circuit: whether an UIM coverage stacking waiver signed by an insured remains enforceable when the insured later adds a newly acquired vehicle to the policy that contains a "continuous" newly acquired vehicle provision, notwithstanding that the insurer issued updated declarations. (See Doc. No. 53 (Dec. 30, 2020 Order).)
C. The Instant Motion
On January 4, 2021, the LeBruns filed a motion to reconsider, arguing that the "December 30, 2020 Order erroneously concludes that the newly acquired vehicle provision in the LM General Insurance Company Policy is 'continuous,' a determination which must be made in the course of the litigation and which was not decided in the December 30, 2020 Memorandum Opinion of the Court," or in the July 1, 2020 Memorandum on LM General's motion to dismiss. (Doc. No. 54 at ¶ 3; see also id. at ¶¶ 5-6.) As such, the LeBruns contend that the question certified to the Third Circuit "puts the rabbit before the hat," in that it essentially answers the question being certified. (Id. at ¶ 9.) The LeBruns then propose that the December 30, 2020 Order be amended as follows:
The following controlling question of law is CERTIFIED to the United States Court of Appeals for the Third Circuit: Whether an underinsured motorist (UIM) coverage stacking waiver signed by an insured remains enforceable when the insured later adds a newly acquired vehicle to the policy.(Id. at ¶ 12.)
LM General opposes the LeBruns' motion and argues that it should be denied because: (1) the LeBruns failed to comply with Local Civil Rule 7.1(c), (2) the LeBruns failed to raise this argument earlier, and (3) an amendment would be inefficient and wasteful. (Doc. No. 56.)
II. Legal Standard
Before altering or amending a prior decision, the Third Circuit requires the moving party to show "(1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the motion []; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999).
III. Discussion
Even though the LeBruns continue to flout the Court's rules in their motion to reconsider, which we address below, we will grant their motion. We will do so because we did not decide in our prior Memorandum that the LeBruns' fourth vehicle was added by a continuous after-acquired vehicle clause, and we agree that the language of the certified question in our Order, which we adopted from LM General's motion, misconstrues our holding.
Despite having been admonished for their deficiencies in bringing their last motion to reconsider in our December 23, 2020 Memorandum (see Doc. No. 50), the LeBruns do not appear to have taken the Court's instruction to be more careful in their briefing to heart. Again, the LeBruns failed to cite any case law to support their motion for reconsideration (see Doc. No. 54), in violation of Local Civil Rule 7.1(c). (See Doc. No. 50 at pp. 6-7 (collecting cases).) In addition, the LeBruns did not include the standard of review in their motion for reconsideration and failed to allege any of the three appropriate grounds for reconsideration. (See generally Doc. No. 54.) See, e.g., Griffin-El v. Beard, Civil Action No. 06-2719, 2009 WL 678700, at *4 (E.D. Pa. Mar. 16, 2009) (denying motion for reconsideration where the motion failed "to allege a change in intervening law and [did] not contend that there [was] newly discovered evidence nor that the Court must correct a clear error of law or fact or prevent manifest injustice"). Finally, the LeBruns could have avoided the need for more motion practice had they proposed alterations to the question LM General raised for certification in their initial opposition to LM General's Motion to Certify, or had they argued that the proposed question misconstrued our ruling from the July 1, 2020 Memorandum. But the LeBruns failed to do so. (See Doc. No. 46 (merely arguing that the Court should deny LM General's motion because it failed to satisfy the criterion of § 1292(b)).)
Nonetheless, we find it necessary to alter our prior Order because, as the LeBruns rightly note, we did not hold that the LeBruns' fourth vehicle was added via a continuous after-acquired vehicle clause. Rather, in our analyses on whether this presents a controlling question of law and whether substantial grounds for difference of opinion exist, we expressly recognized that there is a clear divide in the case law on how vehicles are added to policies, whether by endorsement or finite or continuous after-acquired vehicle clauses. (See Doc. No. 52 at pp. 9-10, 12 (discussing the Bumbarger and Seiple lines of cases and their varying holdings).) Because the language in the Order arguably misstates this holding, we will revise the question certified.
The LeBruns propose that the Order be rephrased as follows:
The following controlling question of law is CERTIFIED to the United States Court of Appeals for the Third Circuit: Whether an underinsured motorist (UIM) coverage stacking waiver signed by an insured remains enforceable when the insured later adds a newly acquired vehicle to the policy.(Doc. No. 54-1 at p. 1.)
However, we think that this proposed change omits two crucial components that played a part in our determination that this question should be certified to the Third Circuit. First, it omits the fact that the policy does contain an after-acquired vehicle clause, though the questions remain as to (a) whether it is continuous or finite, and (b) whether the fourth vehicle was added to pursuant to that clause. Second, it omits the fact that LM General issued an amended declarations page, something that courts have considered when opining on this issue. (See Doc. No. 35 at pp. 8-9; see also Doc. No. 52 at p. 8 n.8; id. at p. 9 n.9.)
As such, although we will grant the LeBruns' motion to reconsider, we do not adopt their suggested phrasing. Rather, we shall amend the Order as follows:
The following controlling question of law is CERTIFIED to the United States Court of Appeals for the Third Circuit: Whether an underinsured motorist ("UIM") coverage stacking waiver signed by an insured remains enforceable when the insured later adds a newly acquired vehicle to the policy, the policy contains an after-acquired vehicle clause, and the insurer issues an amended declarations page.
IV. Conclusion
For the foregoing reasons, we grant the LeBruns' motion for reconsideration.
An appropriate order follows.