Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
6-7-2005
Nationwide Mutl Fire v. Quinn
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-2320
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 04-2320
__________
NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
Appellee
v.
MICHAEL P. QUINN,
Esquire as Administrator of the Estate of Howard Plotnick, Deceased,
Appellant
__________
On Appeal from the United States District Court
For the Eastern District of Pennsylvania
(D.C. No. 03-cv-2239)
District Judge: Honorable Thomas N. O’Neill, Jr.
__________
Submitted Under Third Circuit L.A.R. 34.1(a)
May 27, 2005
___________
Before: SCIRICA, Chief Judge, ALITO and GARTH, Circuit Judges
(Opinion Filed: June 7, 2005)
__________
OPINION
__________
Garth, Circuit Judge:
Nationwide Mutual Fire Insurance Company (“Nationwide”) filed suit in the
United States District Court for the Eastern District of Pennsylvania for a declaratory
judgment, seeking to determine its obligation, if any, to pay uninsured motorist benefits to
the Estate of Howard Plotnick, deceased, under his business auto policy. The District
Court entered summary judgment in favor of Nationwide, holding that the policy’s
“household exclusion” clause precludes coverage. We will affirm.
I.
Because we write only for the benefit of the parties, we will recount only those
matters essential to our limited discussion. In May 1979, Nationwide issued Howard
Plotnick, the decedent, a business auto policy that provided uninsured motorist coverage
with a benefit limit of $300,000.1 The Nationwide policy provided coverage for two
business vehicles owned and operated by Mr. Plotnick: a 1985 Ford Van and a 1982 Ford
Van. At the time in question, there also existed, in full force and effect, a separate policy
of insurance issued by Allstate Insurance Company (“Allstate”) to Howard Plotnick,
1
The Uninsured Motorist Coverage endorsement, appended to the policy issued by
Nationwide, provided, in pertinent part:
We will pay all sums, an “insured” is legally entitled to recover as compensatory damages
from the owner or driver of an “uninsured motor vehicle.” The damages must result from
“bodily injury” sustained by the “insured” caused by an “accident.” The owners or
driver’s liability for these damages must result from the ownership, maintenance or use of
an “uninsured motor vehicle.”
Complaint ¶ 14 (citing Pennsylvania Uninsured Motorist Coverage-Stacked).
2
individually, providing coverage to a third personal vehicle – a 1988 Honda Accord. The
Allstate policy provided $100,000 in stacked uninsured motorist benefits.
On February 17, 2002, while driving his 1988 Honda Accord, Howard Plotnick
suffered fatal injuries in an accident with an uninsured vehicle. Soon thereafter, the
Estate of Howard Plotnick made a claim upon Allstate for recovery of uninsured motorist
benefits. Following receipt of the claim, Allstate tendered and paid the $100,000 limit of
uninsured motorist coverage to the Estate of Howard Plotnick. In addition, Michael P.
Quinn, Esq., the duly appointed Administrator of the Estate of Howard Plotnick and the
Appellant in this matter, filed a Notice of Claim upon Nationwide for recovery of
additional uninsured motorist benefits under the aforesaid business auto policy. The
Estate essentially claimed that, although Mr. Plotnick was operating a vehicle not listed
on the business auto policy, he was nonetheless acting in the course and scope of his
business at the time of the accident, thus triggering coverage under the business auto
policy.
Nationwide denied the claim for benefits, contending, inter alia, that the business
auto policy contained a “household exclusion” clause which under the facts barred any
recovery of uninsured motorist benefits. That clause provided, in pertinent part:
C. Exclusions
This insurance does not apply to any of the following:
4. “Bodily injury” sustained by:
3
a. You while “occupying” or when struck by any vehicle owned
by you that is not a covered “auto” for uninsured motorist
coverage under this coverage form.
As noted, Plotnick’s Honda was not a covered vehicle under the Nationwide policy.
Nationwide then instituted the present action for declaratory and injunctive relief,
specifically seeking judgment that there is no coverage under its policy. Upon cross-
motions for summary judgment, the District Court entered judgment in favor of
Nationwide, finding that the “household exclusion” provision is valid and enforceable
and thus preclusive of coverage. This timely appeal followed.
II.
The District Court had subject matter jurisdiction over this diversity action
pursuant to 28 U.S.C. § 1332(a), and we have jurisdiction pursuant to 28 U.S.C. § 1291.
We exercise plenary review over the grant of a motion for summary judgment.
Nationwide Mut. Ins. Co. v. Riley, 352 F.3d 804, 806 n.3 (3d Cir. 2003) (citing Omnipoint
Communications Enters., L.P. v. Newtown Township, 219 F.3d 240, 242 (3d Cir. 2000)).
Summary judgment is appropriate where “there is no genuine issue as to any material fact
and [] the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
“We review the facts in the light most favorable to the party against whom summary
judgment was entered.” Coolspring Stone Supply, Inc. v. American States Life Ins. Co.,
10 F.3d 144, 146 (3d Cir. 1993).
4
III.
This appeal requires us determine, not for the first time, whether a “household
exclusion” clause in an automobile insurance policy is void, as the Estate claims, as
contrary to Pennsylvania public policy, which is embodied in the Commonwealth’s Motor
Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S. §§ 1701-1799.7.2 We have
previously traced the development of Pennsylvania law on this question, culminating in
the Pennsylvania Supreme Court’s decision in Prudential Property and Cas. Ins. Co. v.
Colbert, 572 Pa. 82 (2002). See Riley, 352 F.3d at 807-10. We therefore find it
unnecessary to do so here, except to note that the public policy behind the MVFRL is to
control the rising costs of insurance. See Colbert, 572 Pa. at 94.
Under the test set out by the Pennsylvania Supreme Court in Colbert, the critical
inquiry focuses on whether the insured, absent the exclusion, would receive benefits far in
excess of the amount of paid coverage, which would result if the insurer were required to
underwrite unknown risks. Id. While we recognize that the validity of an insurance
exclusion clause is dependent upon the precise factual circumstances presented in each
case, see id. at 90-91, we find nothing in the facts of this case to support the conclusion
that the exclusion provision is invalid. The only possible distinction between this case
and Colbert is that Mr. Plotnick, the decedent, owned both relevant insurance policies,
i.e., Allstate’s and Nationwide’s. In Colbert, by contrast, the claimant sought to recover
2
Both parties agree that Pennsylvania law governs this action.
5
additional uninsured motorist benefits under his parents’ insurance policy. Id. at 93-94.
As we discuss below, however, this factual distinction does not compel a different result.
Mr. Plotnick did not pay Nationwide to insure his personal vehicle. As such, the
“household exclusion” clause, which is clear and unambiguous, excluded that vehicle
from coverage under the business auto policy. There is no indication in the record that
Nationwide had knowledge that Mr. Plotnick utilized the 1988 Honda Accord for
business purposes. To void the exclusion clause here, then, would compel Nationwide to
“underwrite unknown risks that the insured[] neither disclosed nor paid to insure.” Id. at
94.
Perhaps more importantly, Mr. Plotnick purchased uninsured coverage from
Allstate for the 1988 Honda Accord, the vehicle involved in the fatal accident, and his
Estate received the maximum amount of uninsured benefits under that policy. Under
these facts, absent the exclusion, Mr. Plotnick would receive “gratis coverage or, more
accurately, double coverage.” Id. As the Pennsylvania Supreme Court explained in
Colbert, “voiding the [household exclusion clause] would empower insureds to collect
[uninsured motorist benefits] multiplied by the number of insurance policies on which
they could qualify as an insured, even though they only paid for [uninsured] coverage on
one policy.” Id. The Pennsylvania Supreme Court consistently has rejected this result as
contrary to the public policy embedded in the MVFRL. Id.; Burstein v. Prudential
Property and Casualty Insurance Co., 570 Pa. 177 (2002); Eichelman v. Nationwide Ins.
6
Co., 551 Pa. 558 (1998); Paylor v. The Hartford Ins. Co., 536 Pa. 583 (1994); Windrim v.
Nationwide Ins. Co., 537 Pa. 129 (1994); see also Riley, 352 F.3d at 808- 09 (“In
subsequent cases, the so-called general rule has morphed into the minority rule, as most
exclusion clauses have been deemed valid.”); Nationwide Mut. Ins. Co. v. Ridder, 105 F.
Supp.2d 434, 436 (E.D. Pa. 2000) (“While the Pennsylvania Supreme Court has held that
the enforceability of the exclusion is dependent upon the factual circumstances presented
in each case, it has been upheld in nearly all of the cases in which it has been
considered.”).3 We, too, decline to countenance such a result.
We therefore hold that the “household exclusion” clause in the Nationwide policy
is consistent with the underlying public policy of the MVFRL and is not void.
Accordingly, we will affirm the judgment of the District Court.4
3
Appellant relies, almost exclusively, on Lastooka v. Aetna Ins. Co., 380 Pa. Super. 408
(Pa. Super. Ct. 1988), for the general proposition that uninsured motorist coverage is transitory in
nature. The Pennsylvania Superior Court there held that uninsured motorist coverage existed
despite the fact that the decedent was not occupying a “covered auto” at the time of the accident.
Id. at 410. In so holding, the court noted that the policy did not require a named insured to have
operated a “covered auto” in order to qualify for uninsured motorist benefits. Id. at 411. In stark
contrast to this case, however, Lastooka did not involve an exclusionary clause – the very basis
upon which Nationwide denied coverage. As such, Appellant’s reliance thereon is unavailing.
4
We acknowledge that Appellant raises several additional issues on appeal, at least one
of which has clearly been waived. Appellant argues that the “Individual Named Insured”
endorsement constitutes a legal basis for voiding the “household exclusion” clause. Appellant,
however, admits that this argument was not raised before the District Court. Because we find no
exceptional circumstances here warranting the review of this issue for the first time on appeal, it
has been waived. See Gass v. Virgin Islands Tel. Corp., 311 F.3d 237, 246 (3d Cir. 2002) (“It is
well established that failure to raise an issue in the district court constitutes a waiver of the
argument.”).
Appellant’s remaining contentions, to the extent they have not been waived, simply
correspond to the alternative grounds upon which Nationwide denied the claim for uninsured
7
motorist benefits. Whatever the merits of such contentions, the “household exclusion” clause,
which the District Court found to be dispositive here, constituted a sufficient and independent
justification for the denial of coverage. Because we also conclude that the “household exclusion”
is valid and enforceable, we find it unnecessary to discuss these matters further.