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Smith v. Nationwide Mutual Insurance Co.

United States District Court, E.D. Pennsylvania

June 24, 2019

BRENDAN SMITH, individually and on behalf of all others similarly situated
v.
NATIONWIDE MUTUAL INSURANCE COMPANY

          MEMORANDUM RE: MOTION TO DISMISS

          Baylson, J.

          In this putative class action, Plaintiff Brendan Smith seeks underinsured motorist coverage (“UIM”) from Defendant Nationwide Mutual Auto Insurance under his parent's automobile policy. Plaintiff brings claims for declaratory relief and breach of contract. (Compl., ECF 1.)

         The central question presented in Defendant's Motion to Dismiss is whether the recent Pennsylvania Supreme Court case, Gallagher v. GEICO Indem. Co., 201 A.3d 131 (Pa. 2019), applies to this set of facts. Gallagher was the first time that a majority of the Pennsylvania Supreme Court addressed the viability of a household vehicle exception to a UIM policy under Pennsylvania's Motor Vehicle Financial Responsibility Law (“MVFRL”).

         For the following reasons, Defendant's motion is denied.

         I. Factual allegations [1]

         a. Insurance Coverage

         Plaintiff lived with his parents in West Chester, Pennsylvania, at all relevant times. (Compl. ¶ 2.) Plaintiff himself was covered by two insurance policies issued by State Farm Mutual Automobile Insurance Company-a motorcycle policy and a personal automobile policy. (Compl. ¶¶ 7, 9.) The motorcycle policy provided $15, 000/$30, 000 in UIM coverage for one motorcycle. (Compl. ¶ 7.) The automobile policy provided $15, 000/$30, 000 in UIM coverage for one motor vehicle. (Compl. ¶ 9.)

         Smith's parents had an automobile insurance policy with Nationwide that provided for $50, 000/$100, 000 in stacked UIM coverage for two motor vehicles. (Compl. ¶ 11.) Smith's parents had “selected and paid for stacked underinsured motorist coverage under the Nationwide Policy, ” which would include “both intra-policy stacking and inter-policy stacking.” (Compl. ¶¶ 33, 35.)[2]

         b. Smith's accident and insurance claims

         On June 26, 2018, while was driving his motorcycle, Smith was hit by a driver who was exiting a driveway. (Compl. ¶ 12.) Smith was thrown from the motorcycle and “sustained serious and permanent injuries in the collision” “caused by the negligence and carelessness” of the tortfeasor. (Compl. ¶¶ 15, 16.)

         Smith made a claim upon the tortfeasor's insurance policy with Allstate Insurance Co. which provided $25, 000/$50, 000 in liability coverage. (Compl. ¶¶ 17-18.) Smith received the $25, 000 liability limit under the tortfeasor's Allstate policy. (Compl. ¶ 20.) Plaintiff alleges that this coverage was “insufficient to compensate [him] for the serious injuries and damages sustained in the accident, ” and that thus the tortfeasor is an “underinsured motorist” as defined by the MVFRL. (Compl. ¶¶ 21-22.)

         Smith also filed a claim with State Farm for recovery of UIM benefits under his State Farm motorcycle policy. (Compl. ¶ 23.) Plaintiff received the $15, 000 limit of UIM coverage under the motorcycle policy. (Compl. ¶ 24.) Plaintiff asserts that the limits of tortfeasor's insurance liability coverage and his motorcycle policy's UIM coverage were “insufficient to compensate [him] for the serious and permanent injuries sustained in the June 26, 2018 motor vehicle accident.” (Compl. ¶ 25.)

         Plaintiff then made a claim for UIM benefits under his parent's Nationwide policy. (Compl. ¶ 26.) Nationwide denied the claim based upon the “household vehicle exclusion” in the policy. (Compl. ¶¶ 27-29.) That exclusion states that there is no coverage for:

6. Bodily injury suffered while occupying a vehicle owned by you or a relative but not insured for Underinsured Motorists coverage under this policy; nor to bodily injury from being hit by any such motor vehicle. If you purchased ‘Underinsured Motorists-Bodily Injury Stacked' coverage, this exclusion does not apply to bodily injury suffered while occupying or struck by a motor vehicle owned by you or a relative that ...

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