689 F.3d 288
3rd Cir.2012Background
- Mr. Sweeney owned a transmission repair shop and had an informal business relationship with Mr. Tradewell, who owned a car rental business; Sweeney would refer customers to Tradewell for rental cars.
- Cars from Tradewell were delivered in various ways, including by Tradewell staff or by Sweeney, and Sweeney sometimes used a rental car for personal errands.
- On February 4, 2004, Sweeney was injured in a crash while driving Tradewell's non-owned car, which he intended to deliver to a customer the next day.
- Sweeney applied for uninsured/underinsured motorist (UIM) benefits under Liberty Mutual; Liberty Mutual denied the claim based on three policy exclusions: auto business, intended use, and regular use.
- Liberty Mutual sued for declaratory relief; the district court granted Sweeney summary judgment on some points and Liberty Mutual appealed; on remand, the district court granted Liberty Mutual summary judgment on two exclusions while allowing the auto business exclusion to be reconsidered; this court reversed in part and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether auto business exclusion bars coverage | Sweeney argues he was on a personal errand, not engaging in auto business | Liberty Mutual contends the exclusion applies to any use of a non-owned vehicle in auto business | Auto business exclusion is unambiguous but does not apply here; coverage is not barred |
| Intended use provision breach | Liberty Mutual argues Sweeney violated owner’s intended use | Tradewell intended and encouraged personal use of the vehicles for errands | Provision not breached; owner’s intended-use was satisfied by Tradewell’s understanding and encouragement |
| Regular use exclusion applicability | Regular use exclusion should bar coverage due to vehicle availability | Use was incidental, conditional, and not habitual; no regular use | Regular use exclusion does not bar coverage; no unfettered access or habitual use established |
Key Cases Cited
- Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563 (Pa. 1983) (interpretation favors insured when ambiguity exists; plain language governs clear terms)
- Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (contracts interpreted to ascertain parties' intentions; ordinary usage applies)
- McKuhn v. Aetna Casualty & Sur. Co., 664 A.2d 175 (Pa. Super. Ct. 1995) (auto business exclusions examined by the conduct at issue)
- Pecorara v. Erie Ins. Exch., 596 A.2d 237 (Pa. Super. Ct. 1991) (exclusion applied where use aligned with business purpose)
- Zizza v. Mitchell, 418 A.2d 761 (Pa. Super. Ct. 1980) (exclusionary analysis based on time of accident and purpose of use)
- Crum & Forster Pers. Ins. Co. v. Travelers Corp., 631 A.2d 671 (Pa. Super. Ct. 1993) (regular use determinations rely on whether vehicle is furnished/available for regular use)
- Nationwide Mut. Ins. Co. v. Shoemaker, 965 F. Supp. 700 (E.D. Pa. 1997) (regular use considerations adapted to context; federal court supports Pa. precedent)
- Prudential Prop. & Cas. Ins. Co. v. Hinson, 277 F. Supp. 2d 468 (E.D. Pa. 2003) (regular use analysis showing availability and habitual use factors)
- Burstein v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204 (Pa. 2002) (policy concerns and practical realities support regular use exclusions)