Federal Court Rejects Challenge to Regular Use Exclusion as Violative of UM/UIM “Stacking” Requirements

Recently, the District Court for the Eastern District of Pennsylvania in Dayton v. Hartford Ins., No. 3:20-CV-1833, 2024 WL 1745041 (M.D. Pa. Apr. 23, 2024) analyzed the breadth of the recent Supreme Court decision in Rush v. Erie Ins. Exch., 308 A.3d 780 (Pa. 2024) and applied the “regular use exclusion” to bar recovery of underinsured (“UIM”) motorist benefits.  

In Dayton, the claimant was operating his employer’s truck when he was struck and injured by the tortfeasor. After resolving the tort claim, the claimant received UIM benefits from the employer’s auto insurance policy that insured the vehicle and made a claim for additional benefits under his household policy issued by Hartford Insurance. Hartford denied coverage under the “regular use” exclusion and the claimant challenged the exclusion as violative of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”). The Court stayed the case until such a time as when the Supreme Court resolved the appeal in Rush. After the Rush decision was issued and the Pennsylvania Supreme Court directed that the exclusion remains a valid limitation in auto insurance policies, the case was set to active status. The claimant nevertheless maintained that Rush is a plurality non-binding opinion and, further, that the Rush Court at no point decided whether the exclusion violates the UIM “stacking” principles of Section 1738 of the MVFRL.

The ­Dayton Court rejected these arguments, first finding that Rush is indeed a binding and precedential decision by virtue of the fact that three of the four Justices that actually heard the case sided with Erie thereby creating a majority of the quorum, as opposed to the entire Supreme Court, and thus creating binding precedent. Turning to the second argument, the Court explained that the Rush opinion only tangentially touched the issue of whether the exclusion violates Section 1738 of the MVFRL and thus did not create binding precedent on that issue. The Dayton Court cited to Erie Ins. Exch. v. Mione, 289 A.3d 524, 525 (Pa. 2023) to explain that where the concept of stacking isn’t implicated by the facts of a given case, an exclusion cannot violate Section 1738 of the MVFRL. Turning to the question of whether Section 1738 is implicated, the Court explained that the concept of “stacking” is limited to instances where the claimant is a named insured or resident relative thereof on both policies seeking to be stacked together. Because the claimant was not a named insured or resident relative thereof on his employer’s policy that insured the vehicle he operated at the time of the accident, Section 1738 of the MVFRL was not implicated and thus could not be violated. The Court affirmed application of the regular use exclusion, accordingly.

The Dayton decision can be found here.

For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.

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