                                                                                                                           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Precedential or Non-Precedential: Non-Precedential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                                                    NOT PRECEDENTIAL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.
