The opinion of the court was delivered by: Schiller, J.
Defendants claimed underinsured motorist ("UIM") benefits following an automobile accident. Nationwide Mutual Insurance Company ("Nationwide") seeks a declaratory judgment determining: (1) the credit Nationwide may apply to Defendants' claims as a result of Defendants' settlement with third-party tortfeasors; and (2) whether Defendant Robin Zerr may collect stacked benefits under her relatives' policies. The parties' cross-motions for summary judgment are presently before the Court. For the following reasons, the Court will grant Defendants' motion with respect to Zerr's stacking claim. The motions will otherwise be denied.
Robert Marriott was driving his motorhome on August 4, 2004 when it collided with a Freightliner tractor-trailer. (See Pl.'s Answer to Mot. for Summ. J. [Pl.'s Facts] ¶ 5.) Gloria Marriott and Robin Zerr were passengers in the motorhome. (See id.) The crash injured all three of the motorhome's occupants. (See Compl. ¶ 11.)
Rajinder Singh was driving the Freightliner for his employer, Simran Trucking. (Pl.'s Facts ¶ 5.) Simran Trucking also owned the truck. (Id.) The Freightliner was hauling cargo for the Kephart Trucking Company ("Kephart") at the time of the accident. (See Pl.'s Br. in Supp. of Mot. for Partial Summ. J. Re: Credit Issues [Pl.'s Credit Br.] 11; see also Defs.' Answer to Mot. for Partial Summ. J. Re: Credit Issues [Defs.' Credit Facts] ¶ 31.)
Defendants brought tort claims against Singh, Simran Trucking and Kephart (collectively, "the Tort Defendants"). (Pl.'s Facts ¶ 11.) With Nationwide's consent, Defendants settled this action, for $1,400,000. (Id. ¶ 12.) The Tort Defendants' insurers contributed to the settlement.
Simran Trucking maintained a $1,000,000 liability policy with the Progressive Northern Insurance Company ("Progressive"). (Id. ¶¶ 6-7.) Progressive's contribution to the settlement was $750,000. (Id. ¶ 15.) Kephart had $1,000,000 in liability coverage under a policy issued by the Lincoln General Insurance Company ("Lincoln General"). (Id. ¶¶ 8-9.) Lincoln General contributed $650,000 to the settlement. (Id. ¶ 16.) Progressive also paid $17,695.27 toward Defendants' property damage claims. (Id. ¶ 10.)
A. The Settlement Credit Dispute
Defendants then sought UIM benefits from Nationwide. (See Defs.' Credit Facts ¶ 21.) Pursuant to Defendants' Nationwide UIM policies, Nationwide only agreed to pay damages in excess of bodily injury liability coverage, bonds or insurance in effect for the underinsured motor vehicle at issue. (See, e.g., Pl.'s Mot. for Partial Summ. J. Re: Credit Issues Ex. A2, Nationwide Policy 5837C686153 issued to Robin Zerr UL1.)Nationwide would not entertain UIM claims "until the limits of all other auto insurance and bonds that apply have been exhausted." (Id. at UL4.)
Nationwide asserts that the settlement created a $1,982,304.73 credit toward its coverage obligations. It arrived at this figure by adding the liability limits of Simran Trucking's Progressive policy and Kephart's Lincoln General policy, then subtracting the amount Progressive paid toward Defendants' property damage claims. (Pl.'s Facts ¶¶ 20-21.) Nationwide contends that the Freightliner had $2,000,000 in available coverage which had to be exhausted before Defendants' damages triggered the company's obligation to provide UIM benefits. (See id.)
Lincoln General disputed its coverage obligations in the underlying action against the Tort Defendants. (Defs.' Credit Facts ¶ 9.) Kephart had previously hired Singh to haul cargo pursuant to an owner-operator contract in August of 2001. (Id. Ex. 7, Owner-operator contract.) The contract apportioned the parties' responsibility to maintain liability insurance. (Id. at 5-6.) Singh elected to pay Kephart an additional ten dollars per week in exchange for a reduced deductible per liability claim. (Id. at 12.) Singh and Kephart periodically renewed this contract between 2001 and 2004. (See id. Ex. 8, Contract renewals.) The final renewal in the record extended the agreement for six months from January 29, 2004. (Id. at 24.)
In May of 2004, Singh formed Simran Trucking as a Pennsylvania corporation. (Id. Ex. 5, Pennsylvania business entity filing history for Simran Trucking Corporation [Simran filing history].) Defendants assert Kephart contracted with Simran Trucking - not with Singh - to haul the cargo on board the Freightliner at the time of the accident. (Defs.' Mot. for Summ. J. ¶ 29.) Simran Trucking, however, did not obtain Department of Transportation authorization to operate as a carrier until November of 2004, three months after the Freightliner collided with Defendants' motorhome. (Defs.' Credit Facts Ex. 6, Federal Motor Carrier Safety Administration Authority History for Simran Trucking [Simran DOT records].) Kephart also placed the Freightliner on a "drop list" between July and August of 2004, indicating that it intended to remove the truck from its subcontractor fleet. (Id. Ex. 9, Kephart Subcontractor Add/Delete Tractor Listing.) Lincoln General's obligations as Kephart's insurer were not litigated in the underlying action against the Tort Defendants. (Defs.' Credit Facts ¶ 9.) The parties introduced no evidence memorializing the relationship, if any, between Kephart and Simran Trucking.
The parties do not dispute that Nationwide is entitled to a credit of $982,305.73 with respect to Simran Trucking's Progressive policy; $1,000,000 in available coverage less the amount Progressive paid for property damage. (See Defs.' Br. in Resp. to Pl.'s Mot. for Partial Summ. J. Re: Credit Issues [Defs.' Credit Resp.] 2.) However Defendants, assert that Nationwide may apply only the $650,000 Lincoln General actually paid into the settlement toward Nationwide's UIM exposure because the Lincoln General coverage did not extend to the ...