Opinion
No. 1153 MDA 2003.
Filed: July 28, 2004.
Appeal from the Order entered June 23, 2003, In the Court of Common Pleas, York County, Civil, No. 99-SU-01159-08.
Before: JOYCE, CAVANAUGH, JJ. and McEWEN, P.J.E.
¶ 1 Appellant, Josephine Generette, has taken this appeal from the order which granted summary judgment to appellee, Donegal Mutual Insurance Company, based on the conclusion of the learned trial court that Ms. Generette was not entitled to underinsured motorist benefits from appellee, Donegal Mutual Insurance Company, despite being the named insured on a policy issued by Donegal which provided for $35,000 in underinsured motorist benefits. We are constrained to reverse and remand
¶ 2 The trial court found that Ms. Generette was not entitled to the underinsured motorist benefits which she had purchased from Donegal because she had executed, as permitted by 75 Pa.C.S.A. § 1738(d), an election to reject stacked underinsured/uninsured motorist coverages. The Court reasoned that because Ms. Generette had received $25,000 from the tortfeasor's liability policy, as well as $50,000 in underinsured motorists benefits from Nationwide Insurance Company, which had issued a policy of insurance on the vehicle which Ms. Generette was occupying at the time of the accident, her execution of the waiver authorized by Section 1738 of the Motor Vehicle Financial Responsibility Law precluded any recovery of underinsured motorists benefits under her own policy.
¶ 3 Section 1733 of the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1733, sets forth the priority of recovery of UIM benefits where multiple policies are applicable. Section 1733(a)(1) requires that an injured claimant first seek UIM benefits under the insurance policy applicable to the vehicle occupied by the injured claimant. Subsection (a)(2) of Section 1733 provides that the next source of underinsurance benefits is the policy under which the injured claimant is an "insured". In some instances, the claimant will be fully compensated for his or her injuries under the policy applicable to the involved vehicle and no claim need be made under the injured claimaint's own policy. However, in those instances where the available limits of liability coverage and the UIM coverages applicable to the vehicle involved in the accident are insufficient to fully compensate the injured claimant, Section 1733 provides that payment of underinsurance benefits will then be made from "a policy covering a motor vehicle not involved in the accident with respect to which the injured person is an insured." 75 Pa.C.S.A. § 1733(a)(2).
¶ 4 Mrs. Generette, who claims that she was not fully compensated for her injuries by receipt of the UIM benefits available under the policy issued to the vehicle which she was occupying at the time of the accident, made a claim for UIM benefits against her own policy.
¶ 5 The trial court found, however, that the waiver of stacking form authorized by Section 1738 of the MVFRL, which had been signed by Ms. Generette, operated to preclude Ms. Generette from obtaining UIM benefits under her own policy solely because she had collected UIM benefits from the policy applicable to the involved vehicle. We disagree.
¶ 6 Section 1738 of the MVFRL provides in relevant part:
(a) Limit for each vehicle. — When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.
(b) Waiver. — Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.
(c) More than one vehicle. — Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.
75 Pa.C.S.A. § 1738(a), (b), (c) (emphasis supplied).
¶ 7 These subsections, while drafted in simple and straightforward language, present difficulties of interpretation under the many varied factual patterns which arise. See: State Farm Mutual Insurance Co. v. Rizzo, 835 A.2d 359 (Pa.Super. 2003); National Mutual Insurance Co. v. Harris, 826 A.2d 880 (Pa.Super. 2003), appeal denied, ___ Pa. ___, ___ A.2d ___, 2004 Pa. LEXIS 649 (March 4, 2004). The legislature, however, has provided a disclosure form intended to convey to the ordinary consumer exactly what rights are being relinquished by signing a waiver of the right to stack UIM benefits. That form explains:
(d) Forms. —
* * * *
(2) The named insured shall be informed that he may exercise the waiver of the stacked limits of underinsured motorist coverage by signing the following written rejection form:
UNDERINSURED COVERAGE LIMITS
By signing this waiver I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, THE LIMITS OF COVERAGE THAT I AM PURCHASING SHALL BE REDUCED TO THE LIMITS STATED IN THE POLICY. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.
75 Pa.C.S.A. § 1738(d) (emphasis supplied).
¶ 8 While resolution of certain issues presented by inter-policy and intra-policy stacking has presented challenges to the trial courts as well as this Court, see: State Farm Fire Casualty Co. v. Craley, ___ A.2d ____, 2004 Pa.Super. LEXIS 88 (Pa.Super. 2004); McGovern v. Erie Insurance Group, 796 A.2d 343 (Pa.Super. 2002), appeal denied, 570 Pa. 699, 809 A.2d 904 (2002); In Re: Insurance Stacking Litigation, 754 A.2d 702 (Pa.Super. 2000), appeal denied, 565 Pa. 673, 775 A.2d 807 (2001), the plain language of the waiver form required by our Legislature specifically describes what coverages were relinquished by Ms. Generette — only stacked coverages "for each motor vehicle insured under the policy," and not, as argued by Donegal Insurance Company, the ability to obtain the single "limits stated in the policy" of UIM benefits requested and paid for by Ms. Generette.
¶ 9 Donegal contends that, by signing the waiver of the right to stack policy coverages pursuant to Section 1738(b), an insured gives up his or her right to seek UIM coverages provided by separate, unrelated policies under the priority of policies contemplated by Section 1733. The waiver form, expressly provided by the General Assembly in subsection (d) of Section 1738, clearly states that the insured only relinquishes the right to multiply the UIM coverages stated in the policy limit by the number of vehicles insured under the policy.
¶ 10 While the policy applicable to the vehicle in which Ms. Generette was injured provided $50,000 in UIM benefits, if that policy had provided $15,000 and Ms. Generette's policy had provided one million dollars in UIM coverages, Donegal's argument would result in Ms. Generette being denied access to the one million dollars in UIM benefits she had purchased. Such a result is clearly not one contemplated by the Legislature or described by the waiver form executed by Ms. Generette. While the decision of the distinguished trial court reflects a careful analysis of the complex issues presented in this case, we are, nonetheless, of the mind that the ruling composed an error of law in interpreting the MVFRL. Thus, we reverse and remand
¶ 11 Order reversed. Case remanded. Jurisdiction relinquished. The application for post-submission communication is dismissed as moot.
¶ 12 JOYCE, J., FILES A DISSENTING OPINION.
¶ 1 I would affirm the order of the trial court. Therefore, I dissent and write separately.
¶ 2 Before us is another instance of an auto insurance consumer who makes a coverage decision that results in monetary savings, and then sues the carrier after being injured and realizing that more or better coverage would have been available absent that cost-saving decision. In this instance, the coverage decision was the waiver of stacking of underinsured motorist coverage ("UIM") in exchange for a premium reduction. This coverage election was made on November 19, 1990 and resulted in premium savings for Josephine Generette ("Generette") from that time through April 29, 1997, when she was injured in an automobile accident.
¶ 3 Following the accident, Generette recovered the $25,000 liability limits from the policy insuring the party responsible for the accident. Pursuant to 75 Pa.C.S.A. § 1733, she then presented a UIM claim to Nationwide, the carrier for the owner of the car in which Generette was a passenger at the time of the accident. Nationwide tendered its $50,000 limits. Generette then submitted a claim to her own carrier, Donegal, claiming entitlement to the $35,000 in UIM coverage she purchased as "non-stacked" coverage.
Section 1733 sets forth the priority of recovery when more than one UM/UIM policy applies. The general rule in § 1733(a) directs that the first claim for UM/UIM be made under the policy covering the vehicle occupied by the injured person at the time of the accident, and that any subsequent claim be made under a policy on a vehicle not involved in the accident with respect to which the injured person is an insured.
¶ 4 Donegal denied Generette's claim, contending she was barred from recovery by virtue of the language contained in her non-stacked UIM endorsement. The UIM endorsement under the Donegal policy includes an "other insurance" clause that, consistent with § 1733, first directs the insured to the UIM coverage applicable to the vehicle occupied by the insured at the time of the accident ("First priority"). When that coverage has been exhausted, the insured may pursue recovery under the policy affording UIM coverage to the insured as a named insured or family member ("Second priority"). In this case, Generette did exhaust the limits of the First priority policy, the Nationwide policy covering the vehicle in which she was a passenger. She then pursued the sole Second priority policy, her own Donegal policy.
¶ 5 The Donegal policy restricts recovery in the Second priority to the amount by which the First priority recovery is exceeded by the greatest limit for any one vehicle under any one policy at the Second priority. For example, had Generette's UIM coverage been $300,000, she would have been entitled to recover up to $250,000 in UIM benefits from Donegal, i.e., Donegal's $300,000 less Nationwide's $50,000. But in this case, because the $50,000 (First priority) limits paid by Nationwide exceeded the $35,000 (Second priority) limits elected by Generette under the Donegal policy, Generette was not entitled to any additional UIM benefits, in accordance with the language of her non-stacked UIM endorsement for which she received a reduced premium.
The policy provides: "[t]he maximum recovery under all policies in the Second priority shall not exceed the amount by which the highest limit for any one vehicle under any one policy in the Second priority exceeds the limit applicable under the policy in the first priority."
In an attempt to illustrate the trial court's error of law, the majority states that if Nationwide's UIM coverage had been $15,000 and Generette's policy provided $1,000,000 in UIM benefits, Generette would be precluded from any UIM recovery under her own policy. Majority Opinion, at 6. The majority's contention is erroneous. In accordance with the Donegal nonstacked UIM endorsement, Generette's available coverage under the majority's example would be $985,000, i.e., the amount by which the First priority recovery ($15,000) is exceeded by the greatest limit ($1,000,000) for any one vehicle under any one policy at the Second priority.
¶ 6 Generette pursued a declaratory judgment action against Donegal, asking the trial court to find that Donegal's "other insurance" clause was void as against public policy, and that Generette was entitled to UIM benefits in the amount of $100,000, the amount equal to her liability limits. Generette subsequently filed a motion for summary judgment, which was denied. Donegal then filed its motion for summary judgment, which was granted by order dated June 23, 2003. In the accompanying opinion, the trial court noted that Generette "has never denied that she elected to waive stacking, nor has she challenged the process by which she waived stacking and we reject [Generette's] public policy challenge to her nonstacking policy." Trial Court Opinion, 6/23/03, at 12-13. This timely appeal followed.
In the proceedings before the trial court, Generette also challenged the reduction of UM/UIM limits she made in 1985, from an amount equal to her liability limits of $100,000, down to the $35,000 in effect as of the 1997 accident date. She has not pursued that issue in this appeal.
¶ 7 Our scope of review on appeal from the grant of summary judgment is plenary. Yet, in reviewing the grant of summary judgment, we should reverse the trial court only where it is established that the court committed an error of law or clearly abused its discretion. Stanton v. Lackawanna Energy Ltd., 820 A.2d 1256, 1258-59 (Pa.Super. 2003).
¶ 8 Generette raises only one issue on appeal: whether she is entitled to UIM benefits under her Donegal policy because, as the named insured under a single-vehicle policy, she cannot waive inter-policy stacking. My examination of this issue begins with a review of the applicable statutory provisions set forth in 75 Pa.C.S.A. § 1738.
As explained by the Insurance Commissioner, inter-policy stacking "utilizes a separate insurance policy as the source of benefits to combine with the injured person's coverage under his [own] policy. In this scenario, coverage limits contained in separate policies are available for cumulation in the event primary coverage is insufficient." Leed v. Donegal Mutual Insurance Co., Declaratory Opinion and Order, February 23, 1998, at 6. By contrast, intra-policy stacking involves multiplying the limits of UM/UIM coverage under a single policy by the number of vehicles insured under that policy.
§ 1738. Stacking of uninsured and underinsured benefits and option to waive
(a) Limit for each vehicle. — When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.
(b) Waiver. — Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.
(c) More than one vehicle. — Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.(d) Forms. —
(1) The named insured shall be informed that he may exercise the waiver of the stacked limits of uninsured motorist coverage by signing the following written rejection form:
UNINSURED COVERAGE LIMITS
By signing this waiver, I am rejecting stacked limits of uninsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.
________________________________ Signature of First Named Insured ________________________________ Date
(2) The named insured shall be informed that he may exercise the waiver of the stacked limits of underinsured motorist coverage by signing the following written rejection form:
UNDERINSURED COVERAGE LIMITS
By signing this waiver, I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.
________________________________ Signature of First Named Insured ________________________________ Date
(e) Signature and date. — The forms described in subsection (d) must be signed by the first named insured and dated to be valid. Any rejection form that does not comply with this section is void.
¶ 9 The majority concludes that the form prescribed by § 1738 (d) states that the insured relinquishes only the right to stack coverages on a multi-car policy. In essence, the majority is suggesting that waiver of stacking is not an available option for policyholders insuring a single vehicle. However, that interpretation conflicts with the language of § 1738(b), which states that a named insured may waive stacking. Under § 1738 (b), that option is not restricted to named insureds purchasing UM/UIM for more than one vehicle under a policy.
¶ 10 Allowing a named insured with one vehicle the option to waive stacking is consistent with the language of § 1738, and § 1738(b) in particular, and the statute does not prohibit a carrier from offering that waiver. However, an affirmative offer of waiver to a single-vehicle owner is not mandatory, as it is with a named insured with multiple vehicles insured under one policy.
"Each named insured purchasing [UM/UIM] coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b)." 75 Pa.C.S.A. § 1738(c) (emphasis added).
¶ 11 The issue presented to this Court is whether Generette is entitled to stacked UIM benefits because, as she asserts, as a single-vehicle owner, she cannot waive inter-policy stacking. The majority concludes that the answer to this inquiry is found in the language of § 1738(d), the waiver form adopted by our Legislature. The § 1738(d) form directs that the limits of available coverage "shall be reduced to the limits stated in the policy." However, the language of the waiver form, by itself, does not end the inquiry. It is also necessary to examine the language of the Donegal policy to ascertain the "limits stated in the policy" when an insured, such as Generette, elects the waiver of stacking on a policy insuring a single vehicle.
¶ 12 The pertinent language from Donegal's "Underinsured Motorists Coverage — Pennsylvania (Non-Stacked) endorsement is:
OTHER INSURANCE
If there is other applicable similar insurance available under more than one policy or provision of coverage:
The following priorities of recovery apply:
First The [UIM] applicable to the vehicle the "insured" was "occupying" at the time of the accident.
Second The policy affording [UIM] to the "insured" as a named insured of family member.
1. When there is applicable insurance available under the First priority:
a. The limit of liability applicable to the vehicle the "insured" was "occupying," under the policy in the First priority, shall first be exhausted; and
b. The maximum recovery under all policies in the Second priority shall not exceed the amount by which the highest limit for any one vehicle under any one policy in the Second priority exceeds the limit applicable under the policy in the First priority.
¶ 13 In accordance with Donegal's policy, if Generette had been injured in her own vehicle, she would have simply presented a claim to Donegal for the $35,000 in UIM benefits available under her policy. However, she was injured while a passenger in a vehicle insured by Nationwide. Therefore, in accordance with § 1733 and the Donegal policy, she looked first to the Nationwide policy and collected the $50,000 UIM limits available under that policy. Having already recovered more UIM coverage than she purchased under her own policy, she then turned to her policy, which included the non-stacked UIM coverage she elected.
¶ 14 As set forth above, Donegal's "other insurance" clause provides a formula for calculating UIM benefits when the insured has recovered benefits under a policy insuring a non-owned vehicle. Because she had recovered UIM benefits in an amount greater than the level of coverage she purchased from Donegal, Generette was not entitled to any additional recovery from Donegal under her policy's formula.
¶ 15 Having concluded that the § 1738 waiver form reduces UIM coverage to the limits stated in the policy and that the limits stated in Generette's policy are calculated in accordance with the "other insurance" language in her nonstacked UIM endorsement, the inquiry in this case returns to the issue raised by Generette: whether an insured may waive stacking on a policy insuring a single vehicle. A review of existing case law reveals that while the waiver of stacking issue has been discussed in several cases in recent years, it has been discussed only in dicta addressing the legitimacy of waiving inter-policy stacking. The following overview of case law is offered to substantiate this assertion.
¶ 16 The first case to discuss waiver of inter-policy stacking was In re Stacking Litigation ("Stacking Litigation"), 754 A.2d 702 (Pa.Super. 2000). In the Stacking Litigation case, the issue was whether automobile insurance carriers could charge a "stacking" premium to insureds who owned just one vehicle. We noted with approval that the trial court referred the issue to the Insurance Commissioner, who concluded that charging a premium for stacking was lawful. Quoting Donnelly v. Bauer, 553 Pa. 596, 608, 720 A.2d 447, 453 (1998), we recognized that:
Seven issues were presented by Appellants in the Stacking Litigation. The issue presented in the instant case, whether a single-vehicle owner could waive stacking of UM/UIM, was not among them.
Courts traditionally accord an interpretation of a statutory provision by an administrative agency charged with administering that statute some deference. However, the interpretation of a statute is a question of law for the Court to resolve and when the Court is convinced that the interpretative regulation adopted by the administrative agency is clearly erroneous or is violative of legislative intent, the Court disregards the administrative agency's interpretation.
Stacking Litigation, 754 A.2d at 706. See also Allstate Insurance Company v. Seelye, 846 A.2d 1286, 1289 (Pa. Super 2003) (citing Winslow-Quattlebaum v. Maryland Casualty Group, 561 Pa. 629, 752 A.2d 878 (2000) (finding that Insurance Department's interpretation of language of the MVFRL should be accepted as valid if not fraudulent, in bad faith, clearly arbitrary, or an abuse of discretion)).
Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701- 1799.7.
¶ 17 Having determined that the insurance premium issue referred to the Commissioner in the Stacking Litigation case was one within her area of peculiar expertise, we turned to the interpretation and application of the provisions of § 1738. We noted that "[a]ll of Appellants' causes of action were premised upon their belief that Appellees' conduct violates section 1738 by charging Appellants a premium for an illusory benefit and in failing to inform them of the opportunity to waive stacking." Id. at 709. We then pointed out the fallacy of the "illusory benefit" argument by explaining that single-vehicle owners could potentially stack their coverage with the coverage on another vehicle through inter-policy stacking, thereby reaping a benefit from their payment of "stacked" premiums. Id. at 709-10.
¶ 18 In the Stacking Litigation case, we also offered our opinion that subsections (b), (c) and (d) of § 1738, construed together, dictate that only those named insureds who purchase UM/UIM coverages for more than one vehicle may waive stacking of UM/UIM benefits. Id. at 708. However, because a determination of the validity of a waiver of stacking on a single-vehicle policy was not necessary for the Court's decision, that pronouncement constitutes obiter dicta and is not binding. See Lewis v. Erie Insurance Exchange, 753 A.2d 839, 849 ( Pa. Super. 2000) (providing that a statement unnecessary to the disposition of a case constitutes dicta); Hunsberger v. Bender, 407 Pa. 185, 188, 180 A.2d 4, 6 (1962) (statement in prior opinion, which clearly was not decisional but merely dicta, "is not binding upon us").
¶ 19 In McGovern v. Erie Insurance Group, 796 A.2d 343 ( Pa. Super. 2002), this Court discussed stacking under § 1738, but in a different context. In that case, the injured motorist, McGovern, collected liability coverage from the negligent driver and then UIM coverage from his own policy covering the automobile he owned. McGovern then turned to Erie for UIM coverage under a policy issued to his mother, with whom he lived. Erie paid its UIM limits but refused to honor McGovern's request for stacked limits under the policy. The refusal was not based on a waiver of stacking. In fact, both McGovern and his mother had elected stacking of UM/UIM coverages under their respective single-vehicle policies. Instead, Erie's refusal was based on the fact McGovern was trying to apply Erie's limits of coverage to his motorcycle and his automobile, both of which were insured under separate policies issued by companies other than Erie. This Court affirmed the trial court's determination that McGovern could not use § 1738's stacking language to extend Erie's coverage to vehicles not insured by Erie.
It is noted that McGovern was injured while riding his motorcycle. No UIM coverage was available under that policy, due to an exclusionary clause. In accordance with § 1733, he next looked to a policy under which his automobile was insured and recovered his first layer of UIM coverage from that policy.
¶ 20 In Nationwide Mutual Insurance Company v. Harris, 826 A.2d 880 (Pa.Super. 2003), this Court considered whether a "household exclusion" clause could operate to preclude recovery of UIM benefits. In that case, Harris was injured while operating her own vehicle. At the time, she resided with a brother and her mother. Harris first recovered the liability limits from the policy insuring the negligent driver. She next recovered UIM benefits under her own Allstate policy and benefits under an Allstate policy issued to her brother. She then presented a claim to Nationwide, her mother's carrier. Nationwide denied coverage based on its "household exclusion."
Nationwide's policy directed, inter alia, that UIM coverage did not apply to "[b]odily injury suffered while occupying a motor vehicle owned by you or a relative but not insured for [UIM] coverage under this policy." Harris, 826 A.2d at 882.
¶ 21 The opinion in the Harris case is silent as to whether Harris had elected to waive stacking of UM/UIM benefits. Waiver was not the issue; validity of the household exclusion was the issue. Nevertheless, the Court stated, "[t]his case, like McGovern, involves the issue of inter-policy stacking, a form of stacking § 1738 specifically requires. In fact, an insured may not waive the right to inter-policy stacking; only intra-policy stacking may be waived." Id. at 884. The Court did not include a direct citation to authority for its pronouncement that inter-policy stacking may not be waived. However, there is a notation that this Court held, in Stacking Litigation, supra, "that the legislature has circumscribed the class of named insureds to whom notice must be given and who may therefore waive stacking to those who purchased coverage for more than one vehicle under a single policy." Id. at 883 (citing Stacking Litigation, 754 A.2d at 708).
¶ 22 As noted previously, the issue in the Stacking Litigation case was whether insurance carriers could charge stacking premiums to insureds who own one vehicle. Statements concerning limitations on stacking were dicta.
¶ 23 This Court next examined § 1738 in State Farm Mutual Automobile Insurance Company v. Rizzo, 835 A.2d 359 ( Pa. Super. 2003). In that declaratory judgment action, the parties presented stipulated facts to this Court in the appeal brought by the injured insured, Rizzo. After recovering liability coverage from the negligent driver, Rizzo received the UIM policy limits under the State Farm policy insuring her own vehicle. She then turned to the State Farm policy covering the vehicle owned by her father, with whom she resided. Both Rizzo and her father had waived stacking under their policies and had received a premium discount for doing so.
¶ 24 State Farm denied coverage under Rizzo's father's policy, claiming that its "other insurance clause" precluded coverage. In a joint stipulation of facts presented to the trial court in State Farm's declaratory judgment action, the parties agreed that Rizzo would not be entitled to coverage under her father's policy, should the court determine that the "other insurance" clause was enforceable.
State Farm's "other insurance" clause mirrors the Donegal policy, providing in pertinent part: "The maximum recovery under all policies in the Second priority shall not exceed the amount by which the highest limit for any one vehicle under any one policy in the Second priority exceeds the limit applicable under the policy in the First priority."
¶ 25 The trial court found in favor of State Farm, not on the basis of the "other insurance clause," but rather based on Rizzo's waiver of stacking pursuant to § 1738. On appeal, Rizzo raised several issues, including whether the trial court erred in failing to address the sole issue presented to the court, i.e., the validity of State Farm's "other insurance" clause, and whether the trial court erred in determining that a waiver of stacking under § 1738 operates to preclude inter-policy stacking of UIM benefits.
¶ 26 This Court reversed the trial court, citing reversible error based on the trial court's analysis of the stacking issue and noting that this Court had recently discussed, in Stacking Litigation, supra, whether a single-vehicle owner could waive stacking of UM/UIM. Quoting dicta from Stacking Litigation, that "subsections (b), (c) and (d) [of § 1738] must be construed together such that only named insured who purchase coverage for more than one vehicle under a policy may waive the stacking of uninsured or underinsured benefits," this Court concluded that Rizzo and her father, each with just one vehicle, could not waive inter-policy stacking of UIM benefits. And because, as State Farm had agreed, the "other insurance" clause would not apply absent the Rizzos' waivers of stacking, and because the Court concluded that the Rizzos could not waive stacking under § 1738, the "other insurance" clause did not apply to the facts of the case. Therefore, Rizzo was permitted to pursue coverage under her father's policy.
Having concluded that "other insurance" clause was inapplicable to the case, the Court stated, "we need not determine whether or under what circumstances it might be enforceable or unenforceable." Rizzo, 835 A.2d at 365.
¶ 27 In the Rizzo opinion, the Court stated:
Applying the Stacking Litigation court's analysis to the facts of this case, we find that daughter and father could not waive stacking because neither insured more than one vehicle under a policy (intra-policy stacking); in fact, neither possessed more than one vehicle, the very situation the Stacking Litigation addressed. See Nationwide Mut. Ins. Co. v. Harris, 826 A.2d 880, 883-884 ( Pa. Super. 2003) (interpreting the Stacking Litigation court's analysis of § 1738 and concluding that an insured may not waive the right to inter-policy stacking; only intra policy stacking may be waived). Thus, despite the fact that State Farm apparently reduced insureds' premiums for their purported "election" to waive stacking, their election was void ab initio because it conflicted with the provisions of § 1738 as this court has interpreted it.
Id. at 364.
¶ 28 Again, the issue of the waiver of stacking was not before this Court in the Stacking Litigation and was not necessary to the resolution of the issue facing the Court, i.e., whether carriers could charge a premium for stacking of UM/UIM on single-vehicle policies. Compounding the confusion here is the fact that this Court, in the Harris case, included the statement, without reference to authority, that "[i]n fact, an insured may not waive the right to inter-policy stacking; only intra-policy stacking may be waived." Harris, 826 A.2d at 884. Yet, the issue in the Harris case was the validity of Nationwide's household exclusion, not waiver of stacking. As a result, the above-quoted passage from the Rizzo case is Harris dicta based on Stacking Litigation dicta. "Repetition does not elevate assertions that are otherwise dictum into binding precedent." Kane v. State Farm Fire and Casualty Co., 841 A.2d 1038, 1048 (Pa.Super. 2003) (citation omitted).
¶ 29 In essence, what is found through this review of cases is aptly described as "stacking of stacking dicta." Clearly, dicta, including dicta based on prior dicta, is not binding on us. Id.
¶ 30 The interplay between § 1738 and the household exclusion was re-examined recently in State Farm Fire and Casualty Company v. Craley, 844 A.2d 573 (Pa.Super. 2004). In the Craley case, Jayneann Craley was killed in an accident caused by an uninsured driver. At the time, she was operating a vehicle that she owned and insured through State Farm. Her husband Randall also owned a vehicle insured under a separate policy issued by State Farm. Both policies included waivers of stacking and household exclusions.
¶ 31 State Farm filed a declaratory judgment action, apparently having paid its UM limits under the policy issued to Jayneann but having denied the claim made for UM benefits under her husband's policy. The trial court found in favor of the insured, holding that the stacking waivers and the household exclusions violated public policy. On appeal, this Court reversed, stating that:
We agree that because these were two separate policies, resulting in "inter-policy" stacking, the stacking waiver is not valid. However, under recent case law, the household vehicle exclusion clause does not violate public policy and therefore State Farm is only liable under Jayneann's policy and need not pay under Randall's policy.
Craley, 844 A.2d at 573-74.
¶ 32 Despite deciding the case based on the household exclusion, the Court, in dicta, offered its analysis of the Insurance Stacking case and its progeny and proposed an alternate interpretation of § 1738. A concurring and dissenting opinion, on the other hand, concurs with the result reached on the issue of the household exclusion but dissents from what the author concludes is dicta in an unnecessary analysis of the validity of waivers of "inter-policy" and "intra-policy" stacking. Id. at 575 (Bender, J. concurring and dissenting).
¶ 33 Returning to the case presently before this Court, it is first necessary to ascertain whether the validity of the waiver of stacking under single-vehicle policies has been squarely addressed by this Court in any context other than as dicta. As is apparent from the above overview, it has not. From the origins of the discussion in the Stacking Litigation through the most recent discussion in Craley, waiver of stacking under single-vehicle policies has not been an issue essential to the resolution of any case before this Court and must be categorized as non-binding, non-precedential dicta. See Kane v. State Farm Fire Casualty Co., 841 A.2d 1038, 1048 (Pa. Super 2003).
¶ 34 While the waiver of stacking under single-vehicle policies has not been addressed by this Court other than in dicta, it has been discussed by the Insurance Commissioner in the consolidated cases that were presented to this Court in the Stacking Litigation case. In Leed v. Donegal Mutual Insurance Co., Declaratory Opinion and Order, February 23, 1998, the Commissioner stated:
A waiver option is allowed for named insureds in [§ 1738] (b). Waiver permits the named insured to refuse "stacking." In 75 Pa.C.S.A. § 1738 (b), the statute unmistakably requires that "notwithstanding the provisions of subsection (a)," that the named insured may waive coverage which provides for stacking of uninsured or underinsured coverages. Just as the creation of stacking in subsection (a) does not utilize "inter-policy stacking" or "intra-policy stacking" labels, neither is the waiver option qualified as to any type of stacking.
Id. at 12. The Commissioner continued, stating:
Subsection (b) allows all classes of policyholders to waive stacked UM/UIM coverage. However, the General Assembly reserved a separate waiver provision for the multiple vehicle owner by creating subsection (c), entitled "More than one vehicle." This subsection specifically requires that multi-vehicle policyholders be provided the opportunity to waive stacked limits of coverage. Subsection (d) supplies the form for this waiver. Subsections (c) and (d) are separate provisions for waiver by multiple vehicle policyholders of the stacked limits of coverage described in subsection (a).
Evident from the above analysis of § 1738, and from the examination and approval of rates and policies for single vehicle (i.e., inter-policy) stacking, is that single vehicle policy stacking is still permissible after the Act 6 amendments to the Financial Responsibility Law. Stacking coverage may be waived by the named insured, whether under a multiple or single vehicle policy.
Id. at 13.
¶ 35 To reiterate what this Court recognized in the Stacking Litigation:
Courts traditionally accord an interpretation of a statutory provision by an administrative agency charged with administering that statute some deference. However, the interpretation of a statute is a question of law for the Court to resolve and when the Court is convinced that the interpretative regulation adopted by the administrative agency is clearly erroneous or is violative of legislative intent, the Court disregards the administrative agency's interpretation.
In re Stacking Litigation, 754 A.2d at 706, quoting Donnelly v. Bauer, 553 Pa. 596, 608, 720 A.2d 447, 453 (1998).
¶ 36 I find that the Insurance Commissioner's conclusion, that both inter-policy and intra-policy stacking are permitted under § 1738, is neither erroneous nor violative of legislative intent. I further conclude that Generette elected the waiver of stacking of her UIM coverage and received a reduced premium as a result. I also find that the waiver is implemented through the "other insurance" language of Donegal's UIM endorsement and that the endorsement restricts Generette's UIM recovery to the $50,000 coverage already paid to her under the Nationwide policy in accordance with § 1733.
¶ 37 Because the applicable standard of review in this case is error of law or abuse of discretion and because I conclude that the trial court neither committed error of law nor abused its discretion by granting Donegal's motion for summary judgment, I would affirm the order of that court.