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Seiple v. Progressive Northern Ins. Co.

United States District Court, Third Circuit

July 10, 2013




Plaintiff Alfred Seiple brings suit against Defendant Progressive Northern Insurance Company (“Progressive”) on his own behalf and on behalf of a purported class, claiming that Progressive wrongfully denied him stacked uninsured/underinsured motorist benefits. Although he explicitly waived stacked coverage—and paid accordingly reduced premiums—when he originally bought his motorcycle insurance policy, Sieple claims that Progressive was required to provide him with a new opportunity to waive stacked benefits each time he added a new motorcycle to the policy. Progressive argues that the motorcycles were added to the insurance policy via its after-acquired-vehicle clause; as a result, the state statutory requirement that insurance companies provide a new opportunity to waive stacked insurance with each “purchase” of a new vehicle was not triggered. On that basis, Progressive moves to dismiss the entire complaint. For the reasons explained below, I will grant Progressive’s motion.


The present action arises from a motor vehicle accident that occurred on May 13, 2012. At the time of the accident, Seiple was covered by a motorcycle insurance policy that he had originally purchased from Progressive in December 2009. At that point, Seiple waived stacked UM coverage. In November 2010, Seiple added a second motorcycle to the policy. Progressive did not ask him to sign a waiver of stacking, nor did he sign such a waiver. The policy was renewed for another year in December 2010. Six months later, in June 2011, Seiple added a third motorcycle to the policy, once again without being asked to sign a waiver of stacking. In August 2011, the second motorcycle was removed from the policy and replaced with a new motorcycle; once again, Seiple was not asked by Progressive to sign a new waiver of stacking. In December, the policy was renewed for another year, through December 2012. When the accident at issue occurred in March 2012, Seiple was covered under the policy, which at that point covered three motorcycles. With each additional motorcycle, Progressive issued Seiple a revised declarations page, listing the motorcycles covered under the policy.

After the accident, Progressive agreed to provide $50, 000 / $100, 000 in underinsured motorist (“UM”) coverage under the policy.[2] Seiple claims that the amount is insufficient to cover his injuries, and asserts that he is entitled to stacked underinsured motorist coverage, the sum total of UM coverage on each motorcycle, which would total $300, 000. Seiple argues that because Progressive failed to offer him an opportunity to waive stacked benefits with each addition of a new motorcycle, as required by law, he is entitled to those stacked benefits now. Seiple brings this suit seeking declaratory relief stating that he is entitled to recover stacked underinsured motorist benefits, as well as a host of contract and tort claims seeking to recover the funds he says he is owed.


A. Motion to Dismiss

A motion to dismiss should be granted under Rule 12(b)(6) if the moving party “under any reasonable reading of the complaint ... may be entitled to relief.” Kerchner v. Obama, 612 F.3d 204, 207 (3d Cir.2010) (internal quotation marks omitted). The complaint must allege facts sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009). Rather, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

In deciding a motion to dismiss under Rule 12(b)(6), a court must “accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir.2006). This “assumption of truth” is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678.

B. Pennsylvania Motor Vehicle Financial Responsibility Law

Seiple claims that Progressive had a legal duty to provide him a new opportunity to waive stacked UM benefits each time he added a policy to his vehicle. Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”) requires all motor vehicle liability insurance policies to offer uninsured and underinsured motorist coverages, but states that purchase of such coverage is optional. 75 Pa. C.S.A. § 1731. Further, state law provides a default of stacked insurance coverage, such that “[t]he limits of coverages available . . . for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.” Id. § 1738(a). However, the insured may waive this stacked UM coverage. Id. § 1738(b). The statutory provision at issue in this case relates to when the insurer is required to notify the insured of his opportunity to waive stacked coverage:

(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).[3] The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.

Id. § 1738(c).

The Pennsylvania Supreme Court has issued two somewhat contradictory decisions interpreting when, under this statute, insureds must be given the opportunity to waive stacked UM coverage. In Sackett v. Nationwide Mut. Ins. Co., 919 A.2d 194 (Pa. 2007) (Sackett I), the court concluded that, under § 1738(c), “an insurer must provide a stacking waiver each time a new vehicle is added to the policy because the amount of coverage that may be stacked increases.” Id. at 202. Had that been the last word, Progressive’s motion would be denied, as Seiple would have been entitled to new stacking waivers with each motorcycle he added to his policy. However, the Pennsylvania Supreme Court granted a rehearing and substantially clarified its original opinion. 940 A.2d 329 (Pa. 2007) (Sackett II). The court solicited the opinion of the Insurance Commissioner, the cabinet-level official charged with the administration and enforcement of the MVFRL, while it was deciding whether to rehear the case. In his amicus statement, the Commissioner explained that the Insurance Department does not treat the addition of a new vehicle as a new purchase of coverage. “Rather, the Department has deemed this to be an extension of pre-existing coverage. Thus, the Department has not required carriers to issue, or policyholders to execute, serial waivers when vehicles are added to multi-vehicle policies in order to reaffirm the continuation for unstacked UM/UIM coverage.” Id. at 331. The Commissioner informed the court that vehicles are generally added to existing policies via an “after acquired vehicle clause, ” which he stated are “included universally” in Pennsylvania vehicle insurance policies. Id. The Sackett II court detailed how these clauses generally operate:

  1. The clause explicitly permits consumers to extent existing coverage, with the same applicable types of coverage and limits, to new and/or substitute vehicles, with coverage applying automatically upon acquisition, subject to various conditions, including a requirement of timely subsequent notice to the insurers. According to the Commissioner, this procedure facilitates immediate consumer transactions and affords predictability and certainty in terms of the availability and scope of coverage. The Commissioner argues that Sackett I effectively nullifies the newly-acquired-vehicle clause in policies and strips policyholders of the associated benefits.

Id. The plaintiffs, the Sacketts, offered a different explanation of the clause, which they described as operating more like a safe harbor that provides coverage for a short period until the insured has informed the insurer of the new purchase. They argued that, once the formal coverage was arranged during the clause’s reporting period, new UM insurance is effectively “purchased” for the new vehicle, triggering the waiver requirement of § 1738(c). Id. at 332.

In Sackett II, the Pennsylvania Supreme Court found the Insurance Commissioner’s brief both significant and convincing, and declared that his interpretation was entitled to “substantial deference.” Id. at 333 n.4. It concluded that “purchase” as used in the MVFRL is a term of art in the automobile insurance area that does not include the addition of a new vehicle to a policy under its after-acquired vehicle clause. Therefore, it was forced to modify its Sacket I opinion: “Thus, we clarify that Sacket I does not preclude the enforcement of the initial waiver of stacked UM/UIM relative to coverage extended under after-acquired-vehicle provisions of an existing multi-vehicle policy.” Id. at 333. Specifically, the court distinguished between after-acquired-vehicle provisions that are finite, specifying only a short term in which the new car will be covered, and those that are continuous:

To the degree that coverage under a particular after-acquired-vehicle provision continues in effect throughout the existing policy period, subject only to conditions subsequent such as notice and the payment of premiums, again, we clarify that Sackett I should not disturb the effect of an initial UM/UIM stacking waiver obtained in connection with a multi-vehicle policy. Again, our reasoning is that the term “purchase, ” as specially used in Section 1738, does not subsume such adjustments to the scope of an existing policy containing such terms. . . . However, where coverage under an after-acquired-vehicle clause is expressly made finite by the terms of the policy, see, e.g., Bird [v. State Farm Mut. Ins. Co.], 165 P.3d [343] at 346–47 [N.M. 2007], Sackett I controls ...

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