Middle District Upholds Regular Use Exclusion in the Wake of Rush and Takes One Step Further

Datyon was injured while operating his employer’s vehicle and subsequently submitted a claim for underinsured motorist benefits to his personal auto insurer, The Automobile Insurance Company of Hartford, Connecticut, which denied his claim based upon the regular use exclusion in the UIM policy. Dayton brought suit, which was removed to the Middle District. The insurer filed a motion for summary judgment. Upon consideration, the Middle District stayed the litigation pending the opinion from the Pennsylvania Supreme Court in the Rush v. Erie Ins. Exch. case, which would resolve the validity of regular use exclusions such as those found in the policy in the Dayton case.

Following the Supreme Court’s opinion in Rush upholding the regular use exclusion, the Middle District lifted the stay, and both parties filed supplemental briefs addressing the Rush opinion and its impact on the Dayton case.

Dayton, pointing to Judge Wecht’s minority opinion in Rush, argued and Judge Mannion agreed that the Supreme Court failed to address the argument that regular use exclusions violated Section 1738 of the MVFRL (stacking of UM/UIM coverage is required absent a valid waiver). The court, however, looked to another Supreme Court case—Erie Ins. Exch. v. Mione, a progeny of the much-discussed Gallagher decision—to predict how the Supreme Court would rule were it to directly address whether regular use exclusions violated Section 1738 and acted as impermissible de facto stacking of coverage waivers. In Mione, the Supreme Court determined that, where there was no UIM coverage on the vehicle involved in the accident, the household vehicle exclusion in a UIM policy could be enforced on another vehicle owned by the insured as there was no stacking involved in the first instance.

Applying the reasoning of Mione, Judge Mannion ultimately determined that, since Dayton was not a named insured on the policy insuring the vehicle he was operating at the time of the accident (which was owned by his employer), Section 1738 does not entitle him to stack his personal auto UIM insurance on the policy covering that vehicle. As Dayton was not permitted to stack these UIM policies, the regular use exclusion did not act as a de facto waiver of stacked coverage. Judge Mannion, therefore, concluded that the enforcement of the regular use exclusion does not violate Section 1738 and granted summary judgment in favor of the insurer. No appeal was taken from this decision. 

_{Case Law Alerts, 3rd Quarter, July 2024 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2024 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}