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Easterday v. The Federated Mutual Insurance Co.

United States District Court, E.D. Pennsylvania

March 24, 2015

TERRY EASTERDAY, et al., Plaintiffs.
v.
THE FEDERATED MUTUAL INSURANCE COMPANY, Defendant.

MEMORANDUM

LAWRENCE F. STENGEL, District Judge.

This action involves an insurance coverage dispute arising from the defendant's denial of Plaintiff Terry Easterday's claim to recover underinsured motorist benefits under the defendant's business auto insurance policy. Mr. Easterday alleges that the defendant's form used to reject underinsured motorist coverage did not specifically comply with the requirements of the Pennsylvania Motor Vehicle Financial Responsibility Law. Therefore, he says, the form is void and he should be entitled to recover benefits under the insurance policy.

The defendant has moved to consolidate the above-captioned case with an earlier-filed case currently on the docket of the Honorable Joseph F. Leeson, Jr., of this district: Bryan Rarick v. Federated Service Insurance Company (13-cv-3286). The plaintiffs oppose consolidation. For the following reasons, I will deny this motion in its entirety.

I. BACKGROUND

On May 28, 2103, the Rarick case was filed as a Class Action Complaint in the Court of Common Pleas of Philadelphia County. On June 12, 2013, the defendant timely removed the case to federal court. The complaint alleges that Mr. Rarick sustained personal injuries in a June 27, 2011 car accident, while he was driving a car insured under a Commercial Package Policy issued by Defendant Federated Service Insurance Company to Keystone Automotive Operations, Inc., Mr. Rarick's employer and the owner of the vehicle. The vehicle driven by Mr. Rarick was forced off the roadway by the driver of an unidentified vehicle causing Mr. Rarick's vehicle to roll over. The owner and operator of the unidentified vehicle are both unknown. Mr. Rarick seeks to recover uninsured motorist benefits which were denied because that coverage was rejected by his employer, and therefore not provided by the policy. Mr. Rarick claims that he is entitled to those benefits because the defendant did not obtain a valid rejection of uninsured motorist benefits under Pennsylvania law. The defendant contends that the Commercial Package Policy does not provide underinsured motorist coverage by reason of an Uninsured and Underinsured Motorist Limit of Insurance Endorsement, which provides:

In consideration of the premium charged, the limit for Uninsured and Underinsured Motorist Coverage as provided by your policy is modified as follows:
l. For all directors, officers, partners or owners of the named insured and their "family members" who qualify as "insureds" under the WHO IS INSURED of the Uninsured and Underinsured Motorist Coverage attached to this policy, the limit of insurance shall apply per "accident" as follows:
$1, 000, 000 Uninsured Motorists
$1, 000, 000 Underinsured Motorists.
This limit of insurance is for each "accident" and is the most we will pay for all damages resulting from any one "accident" or "loss" regardless of the number of directors, officers, partners, owners or family members involved unless otherwise stated in the Uninsured and Underinsured Motorists Coverage attached to this policy.
2. For any other persons qualifying as "insureds" under the WHO IS AN INSURED provision of the applicable coverage, the limit shown below shall apply per "accident." If no limit is shown below, no coverage is afforded to any other person.

Thus, this endorsement permits recovery of up to $1M in uninsured motorist benefits from the named insured and family members while providing zero uninsured motorist benefits to all other persons. In Rarick, Keystone Automotive Operations, Inc., is the named insured on that policy. Bryan Rarick is only an employee of Keystone, so he would fit into the "all other persons" category - and would get no coverage according to the endorsement. Accordingly, Defendant Federated Service Insurance Company contends that Mr. Rarick has no uninsured motorist benefits available to him for injuries sustained in the accident.

On February 11, 2014, the Easterday case was filed as a Class Action Complaint in the Court of Common Pleas of Philadelphia County. On March 7, 2014, the defendant timely removed it to federal court, and it is currently on my docket. The complaint alleges that Mr. Easterday was injured in a car accident on May 3, 2010, when Jason Brubaker, an underinsured motorist, failed to stop his car and drove it into the rear of the car Mr. Easterday was driving. Mr. Easterday's employer owned the vehicle and insured it with the defendant under a business auto policy. On August 18, 2011, Mr. Easterday was involved in a second rear-end collision with Maria Lopez, another underinsured driver. Mr. Easterday seeks ...


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