210 F. Supp. 3d 652
E.D. Pa.2016Background
- Duncan was injured Oct. 2012 as a passenger on a SEPTA bus in Philadelphia when the bus was struck by Lamar’s vehicle insured by Omni.
- Aaron, who operated Lamar’s vehicle, was not licensed to drive.
- Omni denied coverage based on an unlicensed driver exclusion in Lamar’s Omni policy.
- Arbitrators awarded Duncan $28,000; Duncan obtained assignment of Lamar and Aaron’s claims against Omni and filed suit in Philadelphia County court, later removed to federal court on diversity grounds.
- Duncan seeks to collect the $28,000 judgment and asserts a bad-faith claim under 42 Pa.C.S. § 8371; Omni moves for summary judgment against the exclusion and Duncan moves for partial summary judgment to void it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of unlicensed-driver exclusion under PA law | Duncan argues exclusion violates MVC § 1574 and MVFRL §§ 1786, 1702 and public policy. | Omni contends exclusion is lawful and consistent with MVFRL and public policy. | Exclusion is valid; PA law does not require insurance coverage for unlicensed drivers. |
| Public policy and MVFRL alignment | Exclusion undermines MVFRL remedial goals and public policy. | Policy supports cost containment and insurer selectivity; legislature and commissioner approval endorse exclusion. | Exclusion does not contravene PA public policy; MVFRL promotes cost containment and insurer discretion. |
| Effect of MVC §1574 on liability vs. insurance coverage | §1574 imposes vicarious liability on owners for unlicensed drivers, implying lack of coverage | §1574 does not mandate insurance coverage or bar exclusions. | §1574 does not require coverage or restrict uncapped exclusion on unlicensed drivers. |
| MVFRL §§1786(a), (f) and §1702 scope | These provisions require financial responsibility for vehicle operation, including unlicensed drivers. | These provisions do not obligate insurers to provide coverage for unlicensed drivers. | These sections do not require insurer coverage for unlicensed drivers; exclusion permissible. |
Key Cases Cited
- Progressive N. Ins. Co. v. Universal Underwriters Ins. Co., 898 A.2d 1116 (Pa. Super. Ct. 2006) (issues unrelated to unlicensed-driver coverage; priority/coverage questions in loaned-vehicle context)
- McWeeney v. Estate of Strickler, 61 A.3d 1023 (Pa. Super. Ct. 2013) (coverages under limited tort; not about unlicensed-driver coverage)
- Burstein v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204 (Pa. 2002) (exclusion for regularly used non-owned vehicle upheld; cost containment rationale)
- Generette v. Donegal Mut. Ins. Co., 598 Pa. 505 (Pa. 2008) (public policy not weighed by courts; legislature controls MVFRL scope)
- Schneck v. Progressive N. Ins. Co., 813 A.2d 828 (Pa. 2002) (MVFRL public policy and cost containment; exclusions permissible under policy)