The Pennsylvania Superior Court has declined to apply an auto insurance policy's "household exclusion" to a case where a woman was thrown from a motorcycle and then hit by another car.
The unanimous three-judge panel reaffirmed previous jurisprudence that draws a distinction between policies, which courts are to construe broadly, and policy exclusions, which courts have construed narrowly. The panel followed its previous directive to construe household exclusions narrowly in deciding not to apply a list of factors to the case of Swarner v. Mutual Benefit Group that may have otherwise stood for the conclusion that plaintiff Rebecca Swarner was "occupying" the motorcycle she was thrown from before another car ran her over and caused serious injuries. The four factors, set forth by the state Supreme Court in Utica Mutual Insurance v. Contrisciane in 1984, broadly define the concept of occupying a vehicle. The case dealt with whether a plaintiff was insured under his employer's policy so as to qualify for underinsured motorist (UIM) coverage.
But as Judge Mary Jane Bowes pointed out in the court's opinion in Swarner, this case is not about coverage. Instead, she said, the case is over an exclusion from coverage, which the courts have construed narrowly.
"In accord with our directive to construe exclusions narrowly, we find it does not cover the situation herein where Ms. Swarner is lying in the roadway and subsequently struck by an underinsured motorist," Bowes said. "Ms. Swarner had ceased to occupy the motorcycle, i.e., she was no longer 'on' or in the process of 'getting in, on, out or off' within the meaning of the household exclusion when she was run over by Mr. Howie's truck."
According to Bowes, the case dates back to September 2008, when Swarner was a passenger on her husband Jason Swarner's motorcycle. The pair was turning onto an on-ramp in Juniata County when a Dodge pick-up truck driven by Joshua Bender turned onto the on-ramp from the opposite direction. The motorcycle hit the front of the truck and both passengers were ejected. Rebecca Swarner became airborne and eventually landed in a lane of travel, where a truck driven by Philip Howie ran her over. Jason Swarner was pronounced dead after arriving at an area hospital.
The married couple had coverage through a Mutual Benefit insurance policy that covered two cars and a truck, and provided UIM coverage that could be stacked. Jason Swarner solely owned the motorcycle and separately insured it.
Mutual Benefit pointed to the Utica Mutual decision's four factors for determining whether a person is occupying a vehicle: there must be a causal connection between the injury and use of the vehicle; the person claiming coverage must have been in "reasonably close" proximity to the vehicle; the person must be vehicle-oriented rather than highway- or sidewalk-oriented; and the person must be "engaged in transaction essential to the use of the vehicle at the time."
Mutual Benefit argued the factors applied and were met.
A Juniata County judge agreed, granting a motion for summary judgment by the insurance company and disposing of Rebecca Swarner's declaratory judgment action.
But the Superior Court reversed and remanded for entry of summary judgment in favor of Swarner, agreeing with the plaintiff that it was bound to conduct a plain-meaning analysis of the concept of occupying a vehicle in this case, not apply the Utica Mutual four-factors test.
Bowes noted the Utica Mutual factors were adopted by the Pennsylvania high court from a Washington State Supreme Court decision, a court that subsequently declined to apply those same factors to a case dealing with a household exclusion.
The court agreed with Swarner that its 2011 decision in Allstate Fire and Casualty Insurance v. Hymes was instructive to the case at bar instead.
In Hymes, the court applied the plain meaning of the policy language in analyzing a household exclusion, not the Utica Mutual factors, Bowes said. In that case, the court found the plaintiff was occupying his motorcycle at the time of the accident, in which he was thrown from his motorcycle into the windshield of another person's car. The court concluded the injuries were the direct result of operation of the motorcycle while "on" it, enforcing a household exclusion.
The plain-meaning analysis led to a different result in Swarner, as the court agreed with Swarner that there were two separate and distinct accidents in her case: the motorcycle and truck collision and when she was run over by a different truck.
In Utica Mutual, the claimant was involved in a minor accident while driving his employer's vehicle. While he was standing next to a police car on the side of the road, another car driven by an uninsured motorist struck and killed him.
The case made its way up to the Supreme Court, the issue on appeal being whether the deceased claimant was "occupying" the vehicle such that he could claim UM benefits. The justices noted that where a contract exists without a history of bargaining over its terms, individual terms will be construed as a question of law. The court rejected a literal definition of the word occupying in favor of one that revolved around the causal relationship between the injury and the use of vehicle, the first of the four factors it set forth.
The court concluded it was only because of statutory mandates and the police officer's request that the claimant was out of contact with vehicle, ruling the claimant was entitled to UM benefits.
In the current case, according to Bowes, the Pennsylvania Association for Justice submitted an amicus brief in which it reminded the court that policy exclusions should be narrowly construed, while coverage clauses are broadly interpreted, to ensure policyholders get the most protection. The PAJ cited the Superior Court's 1981 decision in Eichelberger v. Warner.
James C. Haggerty, of Haggerty, Goldberg, Schleifer & Kupersmith, represents the PAJ.
Haggerty said the court's decision is noteworthy because it recognizes that exclusions are to be strictly construed and, further, because it did not apply Utica Mutual decision to an exclusion.
The Pennsylvania Defense Institute and the Pennsylvania Association of Mutual Insurance Companies urged the court to take heed of the validity and enforceability of household exclusions and previous courts' recognition that those exclusions serve a legitimate purpose.
The defense amici disputed the applicability of Eichelberger and maintained the key inquiry for the court was the public policy that protects insurance companies from underwriting risks unknown to them that insureds have not paid for.
The court agreed with the PAJ and the plaintiff.
Matthew S. Crosby of Handler Henning & Rosenberg in Harrisburg represents Swarner.
"The court was spot on," Crosby said. "From the get-go, this was a pretty simple case."
He added: "The carrier was the one that drafted the contract language. It was clear and unambiguous and they should be bound by that language that they drafted."
Crosby noted he was pleased the court stressed that UIM coverage and policy language should be construed broadly and in favor of the policyholder while holding that exclusions, on the other hand, should be construed narrowly.
"It's just a real good result and we're thrilled," Crosby said.
James M. Horne of McQuaide Blasko in State College represents Mutual Benefit and did not return a call.
(Copies of the 21-page opinion in Swarner v. Mutual Benefit Group, PICS No. 13-2222, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •