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Burke-Dice v. Government Employees Insurance Companies

United States District Court, E.D. Pennsylvania

August 15, 2017



          GERALD J. PAPPERT, J.

         Plaintiffs Katherine Burke-Dice and John A. Dice, III sued GEICO General Insurance Company[1] in state court seeking a declaratory judgment that they are entitled to uninsured motorist benefits under John's GEICO policy. GEICO removed the case to federal court, filed an Answer and asserted a counterclaim seeking a declaratory judgment that it is not obligated to pay the benefits because the Plaintiffs failed to comply with the policy's notice requirement. Plaintiffs filed a Motion to Remand the case to state court, which the Court now grants.


         The parties' dispute arises out of a car accident that allegedly occurred on July 4, 2013. (Compl. ¶ 7, ECF No. 1, Ex. A.) Plaintiffs contend they were riding in a taxi when an “unknown/phantom vehicle” cut off the cab, causing Plaintiffs to be “abruptly thrown within the vehicle” and injured. (Id. ¶ 7.)

         At the time of the accident, John Dice was insured under a GEICO policy (“the Policy”) which provided for $100, 000.00/$300, 000.00 in uninsured motorist benefits, with stacking for multiple vehicles. (Compl. ¶¶ 6, 10, 31); (Policy, at 1, Compl., Ex. C.)[2]If certain requirements are met, the Policy also provides for spousal benefits, to which Mrs. Burke-Dice contends she is entitled. (Compl. ¶¶ 20, 34-36, 19-20); (Policy, at 12, ¶ 2.) The Policy defines “Uninsured Motor Vehicle” as:

(a) a motor vehicle for which there is no liability insurance or self-insurance applicable at the time of the accident or loss; or
(b) a motor vehicle whose insurer is or becomes insolvent or denies coverage; or
(c) a “hit-and-run motor vehicle.”

(Policy, at 13, ¶ 7 (emphasis added).)

         Section IV of the Policy further defines “hit-and-run motor vehicle”:

1. “Hit-and-Run Motor Vehicle” is a motor vehicle that causes an accident resulting in bodily injury to an insured and whose operator or owner is at fault and cannot be identified, provided the insured or someone on his behalf:

         (a) reports the accident promptly to a police, peace of judicial officer or to the Commissioner of Motor Vehicles;

(b) files with us within 30 days a statement setting forth the facts of the accident and claiming that he has a cause of action for damages against an unidentified person.

(Policy, at 12, ¶ 1 (emphasis added).)

         The Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa. Cons. Stat. Ann. § 1701, et seq., defines “Uninsured motor vehicle” as, inter alia, “[a]n unidentified motor vehicle that causes an accident resulting in injury provided the accident is reported to the police or proper governmental authority and the claimant notifies his insurer within 30 days, or as soon as practicable thereafter, that the claimant or his legal representative has a legal action arising out of the accident.” Id. § 1702.

         Plaintiffs immediately reported the July 4, 2013 accident to Philadelphia police, who completed a report for the incident that same day. (Id. ¶ 8); (Compl., Ex. B.) Plaintiffs did not, however, immediately notify GEICO. They contend that in October 2013, through their prior counsel, they informed GEICO of their intention to pursue an uninsured motorist claim. (Compl., at 5.) GEICO acknowledged notice of the claim in an October 21, 2013 letter. (Id.); (Compl., Ex. E.) On January 16, 2014, Plaintiffs completed an Application for Benefits. (Compl., Ex. C.) GEICO subsequently denied Plaintiffs' claim because they did not alert the insurer of the accident within 30 days. (Compl. ¶ 23.)

         Plaintiffs filed suit in the Philadelphia County Court of Common Pleas on June 16, 2017, seeking a declaration that (a) the Policy's notice requirement is void and unenforceable, (b) they complied with the MVFRL's notice requirement, (c) GEICO was not prejudiced, and (d) they are therefore entitled to uninsured motorist benefits. (Compl. ¶¶ 24-25, 38-48.)

         On July 13, 2017, the parties stipulated that the statute of limitations for Plaintiffs to pursue a breach of contract claim for uninsured motorist benefits would be tolled as of that date and that should the court find, pursuant to their declaratory judgment action, that coverage exists under the Policy, Plaintiffs could bring their subsequent breach of contract claim on the same docket. See (Stipulation, Def.'s Answer, Ex. A, ECF No. 3).

         On July 18, 2017, GEICO removed the case to federal court on the basis of diversity jurisdiction. (ECF No. 1.) GEICO filed its Answer the following day which included a counterclaim seeking a declaration that, due to Plaintiffs' failure to give the requisite 30 days' notice, GEICO is not obligated to pay the benefits. (ECF No. 3.) Plaintiffs filed their Motion to Remand on July 31, 2017, (ECF No. 4), to which GEICO responded on August 4, 2017, (ECF No. 5).


         The Declaratory Judgment Act (“DJA”) provides, in part, that “[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201. Jurisdiction conferred by this act is discretionary and district courts are “under no compulsion to exercise it.” State Auto Ins. Cos. v. Summy, 234 F.3d 131, 133 (3d Cir. 2000)[3] (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942)). “[S]uch discretion is founded on considerations of practicality and wise judicial administration.” Reifer v. Westport Ins. Corp., 751 F.3d 129, 149 n.25 (3d Cir. 2014) (internal quotations and citation omitted). “The central question is whether the controversy may ‘better be settled' in the state court.” United States v. Pennsylvania Dep't of Envtl. Res., 923 F.2d 1071, 1075 (3d Cir. 1991).

         The Third Circuit has articulated over time general factors district courts must consider when deciding whether to exercise jurisdiction, such as whether a declaration “will resolve the uncertainty of obligation which gave rise to the controversy; the convenience of the parties; the public interest in settlement of the uncertainty of obligation; and the availability and relative convenience of other remedies.” Pennsylvania Dep't of Envtl. Res., 923 F.2d at 1075 (citations omitted). The Third Circuit has also outlined three additional factors district courts should consider in determining whether to exercise jurisdiction where the subject of the declaratory judgment action involves an insurance coverage issue: (1) a general policy of restraint when the same issues are pending in state court; (2) an inherent conflict of interest between an insurer's duty to defend in a state court and its attempt to characterize that suit in federal court as falling within the scope of a policy exclusion; and (3) avoidance of duplicative litigation. Summy, 234 F.3d at 134.

         In Summy, in which parallel proceedings were pending in state court, the Third Circuit emphasized that the state's interest in determining issues of state law weighs against exercising jurisdiction in declaratory judgment actions, particularly when the state law involved is close or unsettled. See Id. at 135 (“In order to maintain the proper relationship between federal and state courts, it is important that district courts ‘step back' and allow the state courts the opportunity to resolve unsettled state law matters.”). “[D]istrict courts should give serious consideration to the fact that they do not establish state law, but are limited to predicting it. This is especially important in insurance coverage cases.” Id. at 135. “[I]t is counterproductive for a district court to entertain jurisdiction over a declaratory judgment action that implicates unsettled questions of state law. . . . Such matters should proceed in normal fashion through the state court system.” Id. (citing Mitcheson v. Harris, 955 F.2d 235, 240 (4th Cir. 1992); Meritcare, Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 225 n.7 (3d Cir. 1999)). “Finally, Summy found that district courts should weigh a party's ‘vigorous objection' to the district court's assumption of jurisdiction.” Reifer, 751 F.3d at 141 (quoting Summy, 234 F.3d at 136).

         In Reifer, the Third Circuit further clarified the bounds of a district court's discretion in actions involving insurance coverage issues where, as here, there are no parallel proceedings pending in state court dealing with the same issues. 751 F.3d at 144-47. The Court of Appeals held that the absence of pending parallel state court proceedings “militates significantly in favor of exercising jurisdiction, although it alone does not require such an exercise” and “is but one factor for a district court to consider.” Id. at 144. “In this circumstance, as part of exercising sound and reasoned discretion, district courts declining jurisdiction should be rigorous in ensuring themselves that the lack of pending parallel state proceedings is outweighed by opposing factors.” Id.

         The Third Circuit then combined elements of several tests to articulate a more uniform set of factors that district courts ...

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