On November 29, 2022, the Pennsylvania Supreme Court heard argument in the case Franks v. State Farm Mutual Automobile Insurance Company, 563 MAL 2021 (Pa. 2022) to determine whether, pursuant to 75 Pa. C.S. § 1738 of the Pennsylvania Motor Vehicle Financial Responsibility Law, the removal of a vehicle from an auto insurance policy constitutes a “purchase” which triggers the statutory requirement to obtain a new UM/UIM “stacking” waiver in order to properly reject UM/UIM “stacking” on a given auto insurance policy.  A three-judge Superior Court panel in Franks previously found that removal of vehicles triggers such a “purchase,” but an en banc Superior Court reversed the decision.

At the Supreme Court level, the appellants argued that the removal of a vehicle constitutes a “purchase” because it presents insureds with a new opportunity to obtain “stacking” of UM/UIM coverages on the remaining vehicles on the policy and, in turn, requires a new “stacking” waiver to properly reject “stacking” per 75 Pa. C.S. § 1738.  In response, Justice Dougherty questioned the claimants on how the removal of a vehicle constituted a “purchase” under the test the Supreme Court developed in 2019 in Barnard v. Travelers Home and Marine Insurance Company, 216 A.3d 1045 (Pa. 2019). In Barnard, the Supreme Court measures the “purchase” requirements of 75 Pa. C.S. § 1738 by assessing whether the insured 1) acquired something they did not have before; and 2) paid an additional premium for it. Justice Dougherty questioned whether the claimant’s proposed test outright asks for reversal of Barnard. He further appeared to reject the claimant’s suggestion that the ability to purchase stacking on less vehicles in and of itself a purchase, labeling the argument “mental gymnastics” and a twisting of the Court’s holding in Barnard. Chief Justice Todd stated this was a “creative argument” but a “straining” of the Court’s prior decisions. Justice Wecht analogized the claimant’s argument to a phone company offering a free phone with a new “purchase” of coverage. He explained that the claimant’s position would allow a customer with three active phone lines would be able to cancel one of those lines and argue for a new phone as a result of such a “purchase.” Some of the Justices stressed that the record below stipulated that there was no change in the remaining policy premiums paid after vehicle removal whilst Barnard required an addition payment in order to trigger the “purchase” requirement of 75 Pa. C.S. § 1738.  Counsel for State Farm largely relied on the definition of “purchase” under Barnard and that a removal of a vehicle could not constitute an acquiring of something the claimants did not have before.

The Justices advised that they would take the matter under consideration, with a decision coming following review and discussion of the briefs and argument points above. Once issued, the Franks decision will clarify whether the Supreme Court is willing to extend the previous “purchase” test from Barnard and require new “stacking” waivers each time a vehicle is removed from an auto insurance policy per 75 Pa. C.S. § 1738.

The audio of the Franks v. State Farm Mutual Automobile Insurance Company can be found here. For additional questions, please contact Glen Shikunov, Esq. or Scott Tredwell, Esq.

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