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Meridian Security Insurance Co. v. Flick

United States District Court, M.D. Pennsylvania

May 26, 2015

MERIDIAN SECURITY INSURANCE COMPANY, Plaintiff,
v.
ADAM FLICK and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendants.

MEMORANDUM

JOHN E. JONES, III, District Judge.

This is a declaratory judgment action involving dueling interpretations of two automobile insurance policies. The matter is presently before the Court on cross motions for summary judgment. (Docs. 19, 20).

I. BACKGROUND

A. The Accident

On June 29, 2013, Adam Flick was operating a vehicle owned by the McVickers, and Brooke McVicker was in the passenger seat. The vehicle was covered by an insurance policy issued to William McVicker Jr. by Meridian Security Insurance Company ("Meridian").[1] Flick was driving southbound on Raystown Road in Penn Township, Pennsylvania, when he collided with a PT Cruiser occupied by Judy Harshbarger, Blaze Bailets, and Mikayla Campbell (the "Harshbarger claimants"). He also hit a truck operated by Nathan Shaw. The Harshbarger claimants and Brooke McVicker suffered bodily injuries as a result of the accident.

At the time, Flick was insured under a liability policy issued by State Farm Automobile Insurance Company ("State Farm") to Amy Boyer, Flick's mother with whom he resided.

The Harshbarger claimants demanded indemnification for bodily injury from Flick.

In a letter dated December 23, 2013, State Farm advised Flick that there was a question as to whether State Farm was obligated to pay, indemnify, defend, or otherwise perform under the policy based on Flick's alleged failure to cooperate in the investigation of the accident. (Doc. 20-10, p. 2). The letter stated that any further actions on the part of State Farm would not waive any of the terms or conditions of the insurance policy or Flick's rights under the policy. ( Id. ). In addition, the letter specified that State Farm did "not intend, by this letter, to waive any policy defense in addition to those stated above, but specifically reserves its right to assert such additional policy defenses at any time." ( Id. ).

On March 20, 2014, Brooke McVicker filed a negligence action against Flick in the Court of Common of Blair County, requesting compensatory and punitive damages.[2]

Soon after the commencement of the state suit, on March 25, 2014, State Farm sent a letter to Flick withdrawing its reservation of rights pertaining to the cooperation issue and advising that it would "extend coverage without reservation for all exposures." (Doc. 19-1, p. 116). The correspondence also clarified that State Farm did "not intend, by this letter, to waive any of the policy defenses of which you were previously advised" and that State Farm "specifically reserve[d its] right to assert such additional policy defenses at any time." ( Id. ).

Meridian sent Flick a letter dated June 23, 2014, confirming that it would provide excess liability coverage over any other collectible insurance. (Doc. 19-4, pp. 1-3). Therein, Meridian stated its position that State Farm should be considered the first tier of coverage for Flick, or that State Farm must contribute in equal shares for Flick's defense and indemnity up to the limits of the State Farm policy.

On June 25, 2014, State Farm informed Meridian of its position that the Meridian policy is primary and the State Farm policy is excess. (Doc. 20-13, p. 2).

B. The Policies

The relevant Meridian insurance policy issued to William McVicker Jr. was a 12-month policy and had an effective date of October 27, 2012. (Doc. 20-5, pp. 7, 22). The policy provided for a bodily injury liability limit of $500, 000 per person/per accident. ( Id. at p. 22). The parties agree that Flick was an "insured" as defined by the policy, as a driver using a "covered auto." ( Id. at pp. 27-28). Pertinently, the policy contained an "other insurance" clause, which reads as follows:

If there is other applicable liability insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own, including any vehicle while used as a temporary substitute for "your covered auto", shall be excess over any other collectible insurance. Any insurance we provide for use of "your covered ...

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