By Max Mitchell, The Legal Intelligencer
Just before the Pennsylvania Supreme Court was set to hear arguments about what insurance carriers have to do to ensure someone with a single-vehicle policy has properly been given the chance to waive stacking when they buy two additional vehicles years later, the case that presented the issue settled. As a result, the Superior Court decision that was left unreviewed might continue to haunt the plaintiffs bar—at least until the high court gets another chance to look at the issue.
The case that raised the issue was Toner v. Travelers Home and Marine Insurance. The justices were set to address whether a carrier needed to provide a stacking waiver to a vehicle owner when she sought to add two new vehicles to her policy years after she initially opted out of stacking the uninsured/underinsured benefits for a single-vehicle policy.
The case was on appeal by the plaintiffs, who were seeking to overturn a precedential decision from a three-judge state Superior Court panel that had said the carrier had not needed to provide the plaintiff with a new waiver form after she purchased the two new vehicles.
The decision hinged on an interpretation of the policy’s “after-acquired vehicle” clause, and whether it was “finite,” which would have required the carrier to provide the vehicle owner with a new waiver form. Language in the policy, however, showed it was not “finite,” the panel decided.
The plaintiffs were arguing that the decision failed to apply clear law, and was based on inapplicable case law. But, with Toner settling before the justices could weigh in on the matter, the defense win outlines precedent that the plaintiffs bar will likely not be able to ignore.
Attorney James Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith said that, although there is other binding precedent weighing in the plaintiffs’ favor on the issue, the Toner settlement gives the defense bar a decision “they can try to make something out of.”
“We’ll just have to wait and see what they’re going to do,” Haggerty said.
And one case is already making its way up the appellate ladder with Toner’s reasoning in mind.
That case is Pergolese v. Standard Fire Insurance, in which a three-judge Superior Court panel recently determined a family that initially chose not to stack insurance coverage for the cars they owned could still recover stacked insurance benefits because, when they added a new car to the policy several years later, the insurance carrier failed to obtain a waiver opting out of stacked coverage.
Marshall Dennehey Coleman Warner & Goggin attorney Brooks Foland, who is representing the defendants in Pergolese and handled Toner for Travelers, said the Pergolese ruling will soon be appealed to the Supreme Court.
“The same principles will be cited,” Foland said. “A lot of what was in the briefs in Toner you’re going to see again. There are just some factual differences that we don’t think will make a legal distinction.”
According to Schmidt Kramer attorney Scott Cooper, who filed an amicus in Toner for the Pennsylvania Association for Justice before he signed on to represent the plaintiffs in Toner before the Supreme Court argument session, those arguments raise needless considerations.
“Insurance companies keep trying to argue that under every circumstance the policy language is important … but it’s really statutory,” Cooper said. “It’s really a two-step analysis: What did the company know, and when did they know it?”
The plaintiffs in Toner argued, and attorneys like Cooper and Haggerty maintain, that Section 1738 of the Motor Vehicle Financial Responsibility Law makes it clear that carriers must provide stacking waivers when an insured adds a vehicle to the policy.
The only consideration, according to the plaintiffs, is whether the carrier has been notified of the owner’s intention to add a car. Only if the carriers weren’t timely notified does the “after-acquired” clause take effect and raise considerations about whether the clause was “finite,” or how the vehicle was technically added to the policy.
The plaintiffs argue that the Supreme Court’s 2007 decision in Sackett v. Nationwide Mutual Insurance, which the majority relied on in Toner, should not have come into play, since it deals primarily with the “after-acquired” clause, which, they argued, had not been triggered. Instead, the plaintiffs attorneys say the en banc Superior Court decision in Bumbarger v. Peerless Indemnity Insurance, which was not cited in Toner, should have been applied to the case, and should be the dominant reasoning going forward.
According to Haggerty, Bumbarger makes it clear that regardless of how the car was added to the policy, as long as the carrier was notified in time, considerations about the “after-acquired” clause are not triggered.
“It’s a confusing area of law, made even more confusing” by Toner, Haggerty said.
Foland, however, said that applying the decision in Pergolese would raise a host of additional considerations, and would lead to “a hearing within a hearing.”
“With every scenario we have to start figuring out: When did they pick it up from the dealer? When did they send in their check? When was the agent actually called?” Foland said. “We have to start getting into all those details. It’s certainly going to drive up the cost of everything, and it’s certainly not what Sackett intended.”
Foland said Pergolese also misapplied the 2007 Sackett case, which is the second in a trilogy of stacking decisions from the same case, and likened the decision of adding cars to that of adding drivers to a policy.
“We tweak and change things all the time, that doesn’t mean we’re purchasing new insurance,” he said.
Attorney Thomas McDonnell of Summers, McDonnell, Hudock & Guthrie said the Sackett line of cases was also concerned with cost-containment, which, he said, Toner also took into account.
“That’s another thing with Toner, it’s in line with the legislature’s goals of cost-containment,” McDonnell said. “Otherwise there would be all these waivers. From an industry standpoint it would be a nightmare.”
With the settlement in Toner these arguments are likely to linger. But, attorneys agree the high court’s decision to take up Toner bodes well that the appeal in Pergolese will be granted, so attorneys may see more clarity on the issue soon.