Opinion
Civil Action 2:22-cv-00007
10-27-2022
RONALD PALDOLF, individually and on behalf of all others similarly situated, Plaintiff, v. UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant.
Cathy Bissoon, Judge
REPORT AND RECOMMENDATION ECF NO. 19
LISA PUPO LENIHAN, United States Magistrate Judge
I. RECOMMENDATION
For the reasons set forth below, it is respectfully recommended that Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6) (ECF No. 19) be granted.
II. REPORT
A. Factual Allegations and Procedural History
Defendant United Services Automobile Association (“USAA”) sells vehicle insurance, including for automobiles, motorcycles, ATVs and more. First Am. Compl. (“FAC”), ¶ 1, ECF No. 14. Plaintiff, Ronald Padolf, purchased a single-vehicle insurance policy from USAA. Id. at ¶ 2. When he purchased the policy, Plaintiff elected stacked uninsured and underinsured motorist (“UM/UIM”) coverage. Id. at ¶ 14. According to Plaintiff, “stacking” refers to the combination of insurance coverage of individual vehicles to increase the amount of total coverage available to an insured. Id. at ¶ 5. He asserts that there are two types of stacking: intra-policy and inter-policy stacking. Id. at ¶ 6. Intra-policy stacking refers to the stacking of UM/UIM limits applicable to more than one vehicle insured under a single policy, while inter-policy stacking refers to the stacking of UM/UIM limits available on two or more separate polices. Id. at ¶¶ 7, 11. Plaintiff asserts that by definition, a single-vehicle policyholder cannot intra-policy stack as there is only one vehicle insured on the policy. ECF No. 14 at ¶ 10.
Plaintiff alleges that the motor vehicle coverage provided by USAA to single-vehicle policyholders is identical regardless of whether the policyholders elected stacked UM/UIM coverage or waived stacking. Id. at ¶¶14, 25. Despite allegedly providing identical coverage, USAA charged Plaintiff increased premiums for stacked UM/UIM coverage, compared to the premiums he would have paid for a non-stacked UM/UIM policy providing the same amount of coverage. Id. at ¶¶ 15, 26. Plaintiff further alleges that he would have waived stacked UM/UIM coverage and selected a non-stacked UM/UIM policy, thereby foregoing the increased premiums that USAA charges for stacked UM/UIM coverage, if he had known that he would have actually received the same UM/UIM coverage under a non-stacked UM/UIM policy. Id. at ¶ 16. In addition, Plaintiff alleges that USAA was aware that its Pennsylvania policies did not provide a coverage differential to Plaintiff and other single-vehicle policyholders who paid for stacked UM/UIM coverage. Id. at ¶ 27.
Plaintiff instituted this civil action on behalf of himself and all others similarly situated in the Court of Common Pleas of Allegheny County, Pennsylvania. Defendant removed the case to this Court on January 3, 2022. Plaintiff seeks to recover damages based on, among other things, breach of contract and violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Stat. § 201-1 et seq. (“UTPCPL”). In addition to actual or statutory damages, Plaintiff seeks certification of this class action, declaratory and injunctive relief, attorney's fees and reasonable litigation expenses, costs, and pre- and post-judgment interest.
Defendant filed a motion to dismiss the original Complaint (ECF No. 12) which was mooted when Plaintiff filed his First Amended Complaint (ECF No. 14) on February 14, 2022. In response, Defendant filed the pending Motion to Dismiss (ECF No. 19) which is the subject of this Report and Recommendation. The motion has been fully briefed and responded to and is ripe for disposition.
B. Legal Standard
The United States Court of Appeals for the Third Circuit summarized the standard to be applied in deciding motions to dismiss filed pursuant to Rule 12(b)(6):
Under the “notice pleading” standard embodied in Rule 8 of the Federal Rules of Civil Procedure, a plaintiff must come forward with “a short and plain statement of the claim showing that the pleader is entitled to relief.” As explicated in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), a claimant must state a “plausible” claim for relief, and “[a] claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Although “[f]actual allegations must be enough to raise a right to relief above the speculative level,” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), a plaintiff “need only put forth allegations that raise a reasonable expectation that discovery will reveal Devidence of the necessary element.” Fowler, 578 F.3d at 213 (quotation marks and citations omitted); see also Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 11718 (3d Cir. 2013).Thompson v. Real Estate Mortg. Network, 748 F.3d 142, 147 (3d Cir. 2014).
C. Discussion
In support of its Motion to Dismiss, Defendant USAA argues that Plaintiff's Amended Complaint is fundamentally flawed in that it assumes, contrary to Pennsylvania law, that single-vehicle policyholders who paid increased premiums for stacked UM/UIM coverage received identical coverage to single-vehicle policyholders who waived stacked UM/UIM coverage and paid a less expensive premium. USAA contends that by operation of Pennsylvania law, its insurance policy provides distinct and valuable benefits to policyholders who elect stacked automobile insurance coverage on single-vehicle polices as recognized by both the Pennsylvania Insurance Commissioner and Pennsylvania appellate courts. USAA points out that, in this case, Plaintiff admits that he selected, and did not waive, stacked coverage. As such, USAA submits that it has not breached any contract or violated Pennsylvania's UTPCPL by providing Plaintiff with and charging for the valuable stacked automobile coverage he elected, which is the default coverage in Pennsylvania. Thus, USAA requests that Plaintiff's Amended Complaint be dismissed with prejudice.
In opposing the motion to dismiss, Plaintiff argues that the “Limit of Liability” provision in the UM and UIM Endorsement-Pennsylvania (Non-Stacked) does not change or prevent inter-policy stacking by a single-vehicle policyholder who executes a stacking waiver. As such, inter-policy stacking is available to both stacked and nonstacked single-vehicle policyholders, yet the stacked policyholders are paying more than non-stacked policyholders for the same coverage. Thus, Plaintiff submits that USAA has breached its duty of fair dealing and violated the UTPCPL.
1. Policyholders With Stacked UMUIM Coverage Do Not Have Identical Coverage to USAA's Single-Vehicle Non-Stacked Policyholders
In essence, the parties' arguments involve questions of law and policy interpretation. Thus, in order to resolve this dispute, the Court must examine the relevant sections of the Pennsylvania MVFRL and Pennsylvania precedent, as well as the relevant provisions of USAA's insurance policy.
A federal court exercising diversity jurisdiction is required to apply the substantive law of the forum state. Covington v. Continental Tire, Inc., 381 F.3d 216, 218 (3d Cir. 2004); Highlands Ins. Co. v. Hobbs Group, LLC, 373 F.3d 347, 351 (3d Cir. 2004) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)). Thus, Pennsylvania law governs the legal issues presented here.
Section 1738 of the MVFRL sets forth the provisions governing the stacking of UM and UIM benefits in Pennsylvania as well as the waiver of such stacking. 75 Pa. Cons. Stat. Ann. § 1738. Specifically, Section 1738(a) requires that insurers provide stacked UM and UIM coverage as the default coverage in Pennsylvania. Gallagher v. GEICO Indemn. Co., 201 A.3d 131, 137 (Pa. 2019). “The basic concept of stacking is the ability to add the coverages available from different vehicles and/or different policies to provide a greater amount of coverage available under any one vehicle or policy.” McGovern v. Erie Ins. Group, 796 A.2d 343, 344 (Pa. Super. Ct. 2002). Under the MVFRL, two types of stacking exist: intra-policy and inter-policy. Id. (citing In re Insurance Stacking Litig., 754 A.2d 702, 708 (Pa. Super. Ct. 2000)(“Stacking Litigation”). Intra-policy stacking of UM/UIM benefits refers to the multiplication of the limits of UM/UIM coverage under a single insurance policy by the number of vehicles insured by that policy. Id. at 345. On the other hand, inter-policy stacking involves adding together the coverages for vehicles insured under separate policies of insurance. Id.
Section 1738(a) provides:
(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.
Under the MVFRL, a named insured may elect to waive stacked UM/UIM coverage. 75 Pa. Cons. Stat. Ann. § 1738(b); Gallagher, 201 A.3d at 137 (citing § 1738(b)). If a named insured chooses to waive such coverage, the MVFRL requires that the insured's premiums be reduced to reflect the different cost of such coverage. 75 Pa. Cons. Stat. Ann. § 1738(c); Gallalgher, 201 A.3d at 137 (citing § 1738(c)). As the Pennsylvania Supreme Court explained, “the MVFRL makes clear that to effectuate a waiver of UM/UIM coverage, an insurer must provide the insured with a statutorily-prescribed waiver form, which the named insured must sign if he wishes to reject the default provision of stacked coverage.” Gallagher, 201 A.3d at 137 (citing 75 Pa. Cons. Stat. Ann. § 1738(d)). Although “Section 1738 does not designate specifically whether or how inter-policy stacking can be waived when individual vehicles are insured through single-vehicle policies[,] Section 1738(a) . . . unambiguously provides for inter-as well as intra-policy stacking, thus expressing the clear intention of the General Assembly to compel insurers to provide stacking coverage absent a valid waiver.” Craley v. State Farm Fire & Cas. Co., 895 A.2d 530, 537 (Pa. 2006). With these precepts in mind, the Court turns to USAA's argument.
Section 1738(b) states:
(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.
USAA argues that the Pennsylvania appellate courts have found that insureds benefit from stacked coverage on a single vehicle policy and that nothing in section 1738 explicitly precludes an insurer from charging single vehicle policyholders an additional premium for stacking coverage. In support of its argument, USAA relies on Stacking Litigation and Craley, supra.
Similar to the case at bar, the insureds in Stacking Litigation brought class action claims against their insurers alleging that the insurers wrongly charged them increased premiums for stacking of UM/UIM coverage on single-vehicle policies. 754 A.2d at 704. The trial court determined that the Pennsylvania Insurance Commissioner had primary jurisdiction because the insureds were essentially challenging the rates that had been approved by the Insurance Commissioner and transferred the matter to the Insurance Commissioner for a determination of whether the premiums charged by the insurers wrongfully included a charge for stacking of UM/UIM coverage. Id. at 704-05. Subsequently, the Insurance Commissioner determined that the insurers' practice of charging the insureds a premium for stacking was lawful. Id. at 705.
As noted in Craley, the Insurance Commissioner reached this conclusion:
because she found that single-vehicle policy holders could obtain a real benefit from the provision of stacking in at least two situations: (1) where the insured is injured in his own vehicle insured with uninsured motorist coverage and is also covered as an insured under another policy providing uninsured motorist benefits, and (2) where the individual is injured in a vehicle other than his own insured vehicle and is an insured under the non-owned vehicle's
policy, which also has uninsured motorist coverage (such as an employer's vehicle).Craley, 895 A.2d at 537 (citing the Insurance Commissioner's declaratory opinion and order in Leed v. Donegal Mut. Ins. Co., Docket No. MS96-10-055 dated Feb. 23, 1998). Thus, the Insurance Commissioner found that “'Section 1738 permits single vehicle policy stacking and requires that insureds have the opportunity to waive this coverage. Rates commensurate with the risks assumed have been approved by the Department.'” Id. at 537-38 (quoting Leed at 15).
In reaching this conclusion, the Insurance Commissioner “noted that Section 1738(a) did not exclude stacking of [UM/UIM] benefits in single-vehicle policies, . . . [and] that the waiver option in Section 1738(b) is not qualified as to the type of stacking to which it applies and allows waiver of both multiple and single-vehicle policies.” Craley, 895 A.2d at 537. However, the Insurance Commissioner declined to decide the issue of how inter-policy stacking could be waived. Id. (citing Leeds at 4 n. 1 & 14 n. 9).
In affirming the trial court's order dismissing the insureds' complaint, the Superior Court in Stacked Litigation agreed with the Insurance Commissioner “that nothing in section 1738 explicitly precludes an insurer from charging its single policy insureds a stacking premium.” 754 A.2d at 709. The Superior Court also rejected the insureds' contention that they received an illusory benefit, explaining:
[I]t appears that the legislature has expressed a clear preference in favor of stacking. All those who are insured in Pennsylvania pay for this privilege, via increased rates for uninsured or underinsured motorist benefits, except for those who are permitted to waive stacking under section 1738(b). In this manner, the risk and cost associated with stacking is shared by all who purchase insurance, except for those who exercise their option to waive, and thereby helps to maintain premiums at a more affordable level.Id. The Superior Court went on to provide an example of a situation where an insured may benefit from inter-policy stacking-in an instance “such as when a person is injured while occupying a vehicle that is not his own, in which he may be entitled to recover uninsured or underinsured benefits under the host vehicle's policy as well as his own policy.” Id. at 710. However, the Superior Court held that Section 1738 does not permit waiving of inter-policy stacking. Id. at 708.
Several years later in Craley, the Pennsylvania Supreme Court was faced with the question of whether Section 1738 permits waiver of inter-policy stacking of UM/UIM benefits and whether the insured's waiver inter-policy stacking in that case was enforceable. 895 A.2d at 532. Unlike the present case, Craley involved a coverage dispute after the insured submitted a claim for UM benefits under two separate policies. Id. at 533. In deciding the coverage question, the Pennsylvania Supreme Court had to first determine whether Section 1738 permitted waiver of inter-policy stacking of UM/UIM benefits and it concluded that it does, Id. at 541, thereby abrogating the Superior Court's ruling to the contrary in Stacking Litigation, Id. at 536.
The Pennsylvania Supreme Court declined to address the enforceability of a household vehicle exclusion that was included in the policy endorsement related to non-stacked UM coverage, upon which the superior court relied. 895 A.2d at 532.
The Craley court's conclusion and the reasoning behind it is relevant to the premise of Plaintiff's theory of recovery in the instant matter. In concluding that Section 1738 permitted waiver of inter-policy stacking, the Craley court looked to the legislative purposes behind Section 1738 and found that:
To prohibit waiver in single-vehicle policies . . . would conflict with the cost-containment purpose of the MVFRL because it
would prevent a class of insureds from taking advantage of a method to reduce their premiums. Conversely, to allow all insureds the opportunity to waive stacking would accord with this Court's view of the MVFRL and its amendments as a “scheme for motorist insurance which has been adjusted to preserve the core remedial aspects while also promoting, with increasingly greater emphasis, the containment of insurance costs.”Id. at 540 (quoting Lewis v. Erie Ins. Exch., 793 A.2d 143, 152 (Pa. 2002)). Thus, the court in Craley concluded that Section 1738(b) should be construed to provide waiver of interpolicy stacking, and that this construction was in harmony with the Insurance Commissioner's interpretation of the Section 1738 in her 1998 decision in Leed. Id.
Based on the holdings in Stacking Litigation and Craley, USAA submits that stacking is not an illusory benefit under its policy because a single-vehicle policyholder with stacking can stack his or her policy in a variety of inter-policy scenarios, whereas a policyholder who has rejected stacked coverage cannot. Moreover, USAA notes that the Pennsylvania Supreme Court in Craley approved the use of different rates for stacked and non-stacked coverage on single-vehicle policies. As such, USAA contends that Plaintiff's Complaint is built upon a foundational theory that has thoroughly been discredited under Pennsylvania law, and therefore, fails to state a claim upon which relief can be granted.
Since the Pennsylvania Supreme Court's decision in Craley, several U.S. District Courts in the Third Circuit have concluded that class actions similar to the one filed in this case failed to state a claim. See, e.g., Berardi v. USAA Gen. Indemn. Co.___, F.Supp.3d___, 2022 WL 2109193 (E.D. Pa. June 10, 2022); Jones v. GEICO Choice Ins. Co.___, F.Supp.3d___, 2022 WL 2974909 (E.D. Pa. July 27, 2022). In both cases, insured motorists brought a putative class against an automobile insurer alleging that they paid additional premiums for stacked UM/UIM coverage from which they could not benefit as single-vehicle policyholders with no other household policies. Berardi, 2022 WL 2109193 at *1; Jones, 2022 WL 2974909 at *1. In both cases, the district courts granted the insurers' motions to dismiss. In Berardi, the court rejected the insureds' argument that single-vehicle policyholders with no other household policies who purchased stacked UM/UIM coverage do not benefit from that coverage and therefore the insurer is required to return the premiums they paid for stacked UM/UIM coverage. 2022 WL 2109193 at *3-4. Relying on the Pennsylvania Supreme Court's decision in Craley which noted the Insurance Commissioner's opinion that a real benefit existed, the Berardi court found that “a single-vehicle owner without other household policies may well derive a benefit from stacked UM/UIM coverage.” Id. at *3. Similarly in Jones, the court rejected the insureds' argument that they received no actual benefit from stacking coverage on single-vehicle policies, i.e., the benefit was illusory. 2022 WL 2974909 at *6. The court found that “[t]o demonstrate that coverage is illusory, the plaintiffs must show that ‘the policy would not pay benefits under any reasonably expected set of circumstances.'” Id. (quoting TIG Ins. Co. v. Tyco Int'l Ltd., 919 F.Supp.2d 439, 466 (M.D.Pa. 2013)). In that case, the court found that numerous reasonably expected circumstances existed in which the policy would pay stacked benefits. Id.
In response, Plaintiff acknowledges the holdings in Stacking Litigation and Craley, but argues that they are not applicable here because that while it is undisputed that inter-policy stacking is a coverage benefit on a single-vehicle policy and that stacked UM/UIM coverage merits a higher premium, that is true only if it actually reflects an actual coverage differential. Here Plaintiff contends that there is no coverage differential because inter-policy stacking is identical and equally available on USAA's stacked and non-stacked Pennsylvania policies based on the limit of liability provision in the UM and UIM Endorsements - Pennsylvania (Non-Stacked) (“Non-Stacked Endorsement”) attached to the policy. See Ex. A attached to FAC, ECF No. 14-1 at 34-35.
In support, Plaintiff submits that because the Non-Stacked Endorsement sets forth the limit of liability for non-stacked coverage, a single-vehicle insured who executed a valid stacking waiver is not precluded from inter-policy stacking because the limit of liability provision only prevents intra-policy stacking by insureds who waived stacking. Plaintiff contends that on a single-vehicle policy, intra-policy stacking is not possible, and therefore, the Non-Stacked Endorsement allows single-vehicle policyholders who waived stacking to obtain inter-policy stacking. As such, Plaintiff posits that insureds with stacked UM/UIM coverage have identical coverage to USAA's single-vehicle non-stacked policyholders.
In reply, USAA submits that Plaintiff's argument is flawed for several reasons and the Court agrees. Initially, USAA notes that Plaintiff has not alleged in the Amended Complaint that the limit of liability provision in the Non-Stacked Endorsement provides inter-policy stacking to single-vehicle insureds who have rejected stacking in exchange for a reduced premium. Rather, Plaintiff proffers this theory of recovery for the first time in his opposition brief. Nonetheless, as discussed below, the Court finds that the Non-Stacked Endorsement does not render unenforceable a validly executed waiver of stacking benefits by a single-vehicle policyholder.
USAA further replies that the limit of liability provision is just that-a provision which limits USAA's liability to the amount of coverage in the declaration page for a single vehicle in cases in which the USAA policy applies and coverage exists. According to USAA, it is not, as Plaintiff suggests, an extension of coverage which does not otherwise exist, such as when an insured has executed a premium reducing waiver. Rather, USAA submits that the limit of liability provision is necessary to address the limit of liability for policies which apply to a loss and insure multiple vehicles at the time of the accident, either because the policy was issued for multiple vehicles or because multiple vehicles were added between the time the policy was issued and the time of the accident. USAA further submits that noticeably, Plaintiff has failed to identify any language in the limit of liability provision which affords inter-policy stacking, nor does he cite any legal authority that supports his position.
The Court agrees with USAA that the limit of liability provision merely limits USAA's liability to the amount of coverage in the declaration page for a single vehicle in cases in which the USAA policy applies and coverage exists. Nothing in the limitation of liability provision suggests the conclusion that Plaintiff asks this Court to draw-that since intra-policy stacking is not possible with single-vehicle policies, then the Non-Stacked Endorsement does not preclude inter-policy stacking with singlevehicle policies. This argument ignores the Craley court's holding that a validly executed stacking waiver by a single-vehicle policyholder is enforceable. The limit of liability provision clearly applies to multi-vehicle policies and intra-policy stacking. It does not apply to single-vehicle policies where intra-policy stacking is not possible. Thus, since the facts alleged here involve a waiver of inter-policy stacking by singlevehicle policyholders, the limit of liability provision is simply not implicated.
Moreover, to the extent Plaintiff is suggesting that when USAA attaches a Non Stacked Endorsement to a policy with only a single insured vehicle, the only conclusion that can be drawn is that inter-policy stacking is not precluded since intra-policy stacking is not possible, that conclusion does not take into consideration that the policyholder may acquire or add new vehicles to the policy after the policy is issued.
It is clear that the USAA policy attached to Plaintiff's Amended Complaint is issued to both singlevehicle and multi-vehicle policyholders. See, e.g., Title-“Pennsylvania Auto Policy” (does not state it is a single-vehicle policy); Definitions-J. Newly acquired vehicle; Q. Your covered auto; and Part A- Liability Coverage (“These limits are the most we will pay regardless of the number of . . . Vehicles or premiums shown on the Declarations . . .”). See Ex. A attached to FAC, ECF No. 14-1 at 2, 4-6. Thus, because the USAA policy is issued to insureds with multiple vehicles as well as to insureds with only one vehicle, the Non-Stacked Endorsements are attached to all policies where the insured has waived stacking, regardless of whether one or multiple vehicles are insured under the policy.
More importantly, Plaintiff's argument ignores the fact that the policyholder of a single-vehicle policy executed a valid stacking waiver. Based on Craley, the execution of a valid stacking waiver by the owner of a single-vehicle policy waives inter-policy stacking as a matter of law.
Plaintiff does not challenge the validity of the stacking waiver and the Court assumes without deciding that the waiver is valid and enforceable.
Plaintiff's proposed construction of the limit of liability provision in the Non Stacked Endorsement is not only contrary to the holding in Craley, but not logical. Plaintiff would have the Court imply from a complete absence of any language in the limit of liability provision that a single-vehicle policyholder who executed a valid stacking waiver may still inter-policy stack UM/UIM coverage. The Court declines to do so. Tellingly, Plaintiff fails to cite any authority to support his interpretation of the limit of liability provision in the Non-Stacked Endorsement.
Because the Court has found that the limit of liability provision does not, by inference or expressed language, permit inter-policy stacking by single-vehicle policyholders who have waived stacking, then it necessarily follows that coverage for insureds with stacked UM/UIM benefits is not identical to the coverage for singlevehicle policy holders who have waived stacking. As Plaintiff has failed to show that a coverage differential does not exist between stacked and non-stacked policies, the Court finds that Plaintiff has failed to set forth a basis for recovery. Thus, the Court recommends that Plaintiff's request for declaratory and injunctive relief be denied and the action be dismissed with prejudice.
2. Breach of Contract
In support of his breach of contract claim, Plaintiff asserts that implied in its Pennsylvania insurance policies is a duty of good faith and fair dealing. ECF No. 14 at ¶ 41. Plaintiff alleges that USAA breached its policies and duty of good faith and fair dealing to Plaintiff because it charged Plaintiff an increased premium for stacked UM/UIM coverage but provided him with the same coverage as provided by USAA's less expensive, non-stacked UM/UIM coverage. Id. at ¶ 42.
Under Pennsylvania law, to state a claim for breach of contract, the plaintiff must allege facts that plausibly show “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract, and (3) resultant damages.” Albert v. Erie Ins. Exch., 65 A.3d 923, 928 (Pa. Super. Ct. 2013) (citing McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010)). Although Plaintiff alleges in his Amended Complaint that USAA breached its implied duty of good faith and fair dealing by charging him an increased premium for stacked UM/UIM coverage but providing him with the same coverage as provided by USAA's less expensive, non-stacked UM/UIM coverage, the Court has found, as a matter of law, that the coverage is not identical. Therefore, USAA was justified in charging a higher premium for stacked coverage. And finds, as a matter of law, that USAA did not breach its duty of good faith and fair dealing. Accordingly, the Court finds that Plaintiff has failed to state a plausible breach of contract claim and recommends that that USAA's motion to dismiss this claim be granted.
3. Unfair Trade Practices and Consumer Protection Law Claim
Plaintiff also claims that USAA violated the Pennsylvania UTPCPL. To state a claim for a violation of the Pennsylvania UTPCPL, plaintiffs must allege facts to plausibly show: “(1) they purchased or leased ‘goods or services primarily for a personal, family, or household purpose'; (2) they suffered an ‘ascertainable loss of money or property'; (3) the loss occurred ‘as a result of the use or employment by a vendor of a method, act, or practice declared unlawful by the CPL; and (4) the consumer justifiably relied upon the unfair or deceptive business practice when making the purchasing decision.” Gregg v. Ameriprise Fin., Inc., 245 A.3d 637, 646 (Pa. 2021) (quoting 73 Pa. Stat. § 201-9.2(a), and citing Schwartz v. Rockey, 932 A.2d 885, 897 n. 16 (Pa. 2007) (noting that “the justifiable reliance criterion derives from the causation requirement” of Section 201-9.2)) (other citation omitted).
In support of his UTPCPL claim, Plaintiff alleges that the vehicle insurance that USAA sold to him and the putative class are goods purchased for personal, family and/or household use. ECF No. 14 at ¶ 46. He further alleges that by not waiving stacked UM/UIM coverage, he justifiably relied on the election of stacked UM/UIM coverage, expecting that USAA would provide a coverage differential between its nonstacked UM/UIM coverage so as to justify the increased premiums for stacked coverage. Id. at ¶ 49. However, Plaintiff claims that USAA provided Plaintiff with coverage identical to its less expensive non-stacked UM/UIM coverage. Id. at ¶ 50. If he had known that he would have received the same UM/UIM coverage, Plaintiff alleges he would have selected and chosen to pay a lower premium for non-stacked UM/UIM coverage. Id. at ¶ 52. Plaintiff avers that USAA's conduct constitutes unfair methods of competition and unfair or deceptive acts under the UTPCPL as defined in 73 Pa. Stat. §§ 201-2(4)(ii), (v), (vii), (ix) and (xxi) and thus violates the UTPCPL.
Plaintiff does not list subsection (ix) in his citation to § 201-2(4) but it is clear from the text of paragraph 53 of his Amended Complaint that he is alleging a violation of subsection (ix). See ECF No. 14 at ¶ 53.
Sections 201-2(4)(ii), (v), (vii), (ix), and (xxi) of the UTPCPL protect consumers from companies engaged in the following conduct:
(ii) Causing likelihood of confusion or of misunderstanding as to the . . . approval or certification of goods or services;
(v) Representing that goods or services have . . . characteristics . . . that they do not have . . .;
(vii) Representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another;
(ix) Advertising goods or services with intent not to sell them as advertised;
(xxi) Engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.73 Pa. Stat. §§ 201-2(4)(ii), (v), (vii), (ix) & (xxi).
The Court finds that Plaintiff has failed to allege a plausible claim for a violation of the UTPCPL. At the outset, the Court notes that it has already found that coverage for insureds with stacked UM/UIM benefits is not identical to the coverage for singlevehicle policy holders who have waived stacking, and therefore USAA was justified in charging a reduced premium for stacking waivers. In light of this finding, Plaintiff cannot plausibly show that USAA engaged in any deceptive practices in charging Plaintiff and the putative class more for stacked UM/UIM coverage. In particular, because the Court has found as a matter of law that coverage for insureds with stacked UM/UIM benefits is not identical to coverage for single vehicle policyholders who have waived stacking, Plaintiff cannot plausibly show that USAA: (1) caused a likelihood of confusion or misunderstanding as to the insurance coverage provided (§ 201-2(4)(ii), (2) represented that the stacked coverage had characteristics that it did not have (§ 201-2(4)(v), (3) represented that the stacked coverage purchased was illusory (§ 201-2(4)(vii), (4) advertised the stacking of UM/UIM coverage as providing a coverage differential from a waiver of stacking coverage with the intent not to provide a coverage differential (§ 201-2(4)(ix), and (5) engaged in any other fraudulent or deceptive conduct (§ 201-2(4)(xxi)). Any confusion or misunderstanding on Plaintiff's part is the result of his failure to inquire about the scope of insurance coverage, not misrepresentations on the part of USAA. See Berardi, 2022 WL 2109193, at *5 (noting that “Pennsylvania courts have often stressed that the insured has both the capacity and the duty to inquire about the scope of insurance coverage, rather than rely on ‘hand holding and substituted judgment.'”) (quoting Wisniski v. Brown & Brown Ins. Co. of Pa., 906 A.2d 571, 579 n. 6 (Pa. Super. Ct. 2006)).
Accordingly, the Court finds that Plaintiff has failed to state a plausible claim for violation of the Pennsylvania UTPCPL. Therefore, the Court recommends that USAA's motion to dismiss the UTPCPL claim be granted.
D. Conclusion
For the reasons set forth above, it is respectfully recommended that Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6) be granted and the Amended Complaint be dismissed with prejudice.
As this case is not a civil rights case, the Court is not required to sua sponte grant leave to amend the complaint. See Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 252-53 (3d Cir. 2007). As Plaintiff has already amended his complaint once as a matter of course, any additional amendment requires that Plaintiff file a motion for leave to file an amended complaint. Fed.R.Civ.P. 15(a)(2). Although Rule 15(a)(2) provides that the “court should freely give leave when justice so requires[,]” leave to amend may be denied when it would be futile to do so. Foman v. Davis, 371 U.S. 178, 182 (1962); Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000). Here the Court finds that it would be futile to allow further amendment of the complaint as the Court has concluded as a matter of law that the First Amended Complaint fails to state a claim upon which relief can be granted. See Alvin, 227 F.3d at 121 (“An amendment is futile if the amended complaint would not survive a motion to dismiss for failure to state a claim upon which relief could be granted.”)(citation omitted).
In accordance with the Magistrate Judges Act, 28 U.S.C. § 636(b)(1)(B) and (C), and Rule 72.D.2 of the Local Rules of Court, the parties are allowed fourteen (14) days from the date of service of a copy of this Report and Recommendation to file objections. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. Failure to file timely objections will constitute a waiver of any appellate rights.