Gallagher, B., Aplt. v. Geico Indemnity
201 A.3d 131
Pa.2019Background
- On Aug. 22, 2012, Gallagher was injured when a third‑party driver’s truck struck his motorcycle; the tortfeasor’s insurance was insufficient.
- Gallagher had two GEICO policies: a motorcycle policy with $50,000 UIM and an automobile policy with $100,000 UIM per vehicle; he purchased and paid for stacked UM/UIM on both.
- GEICO paid the motorcycle policy limit but denied stacked UIM under the automobile policy, invoking an automobile‑policy amendment containing a "household vehicle exclusion."
- The exclusion denied coverage for bodily injury involving a vehicle owned by the insured or a relative that is not insured for UIM under that policy (i.e., the motorcycle).
- Trial court granted GEICO summary judgment citing Superior Court precedent; Superior Court affirmed. The Pennsylvania Supreme Court granted review to decide whether the exclusion violates 75 Pa.C.S. § 1738.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the household vehicle exclusion unlawfully defeats stacking under § 1738 | Gallagher: exclusion operates as a de facto waiver of stacking; he paid premiums for stacking and never signed a statutory waiver | GEICO: § 1738 governs stacking only where coverage is provided; the exclusion legitimately limits the scope of coverage and thus bars stacking here | Held: exclusion invalid and unenforceable as it functions as an impermissible waiver of stacking absent the MVFRL‑prescribed written waiver |
| Whether insurer can rely on a buried policy exclusion instead of obtaining a § 1738 waiver | Gallagher: insurer cannot deprive insured of stacked coverage without the statutorily required written waiver and premium reduction | GEICO: the exclusion is a permissible contractual limitation on coverage scope | Held: insurer cannot circumvent § 1738 via such an exclusion; policy language that accomplishes this is preempted by statute |
| Whether prior non‑binding or split authorities control | Gallagher: prior split decisions do not cure the statutory violation | GEICO: cites Ayers and Baker to support enforceability of household exclusion | Held: prior plurality/split decisions are not binding; court analyzes statute and holds exclusion invalid |
| Remedy at summary judgment stage | Gallagher: seeks enforcement of stacking he purchased | GEICO: sought summary judgment denying stacking | Held: Supreme Court reversed summary judgment for GEICO and remanded for further proceedings consistent with holding |
Key Cases Cited
- Gov’t Employees Ins. Co. v. Ayers, 955 A.2d 1025 (Pa. Super. 2008) (Superior Court upheld household exclusion; later affirmed per curiam by an evenly divided Supreme Court)
- Gov’t Employees Ins. Co. v. Ayers, 18 A.3d 1093 (Pa. 2011) (per curiam affirmance by an evenly divided Court)
- Erie Ins. Exchange v. Baker, 972 A.2d 507 (Pa. 2009) (plurality treatment of household exclusion issue; no binding majority)
- Prudential Prop. & Cas. Ins. Co. v. Colbert, 813 A.2d 747 (Pa. 2002) (contracts that conflict with statute are unenforceable)
- Swords v. Harleysville Ins. Companies, 883 A.2d 562 (Pa. 2005) (summary judgment standards)