DUNCAN v. OMNI INSURANCE COMPANY
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE HARVEY BARTLE, III ON 9/28/2016. 9/28/2016 ENTERED AND COPIES E-MAILED.(sg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
OMNI INSURANCE COMPANY
September 28, 2016
Before the court are the cross-motions for summary
judgment of plaintiff Richard Duncan (“Duncan”) and defendant Omni
Insurance Company (“Omni”) under Rule 56 of the Federal Rules of
Civil Procedure with respect to an exclusion in an Omni automobile
The parties have stipulated to all the relevant
Duncan was injured in an automobile collision
on October 8, 2012, while he was a passenger on board a SEPTA
Route 47 bus.
The bus was struck by a motor vehicle at or near
the intersection of 8th and Dickinson Streets in Philadelphia.
Shameka Renee Lamar (“Lamar”) held title to the motor vehicle, a
2003 Chevrolet Avalanche and insured it through Omni under a
Private Passenger Auto Insurance Policy.
Chris Aaron (“Aaron”),
a/k/a Chris Porter, was the operator of the vehicle at the time
of the collision.
Aaron was not licensed to drive an
Following the collision, Duncan commenced an action
for damages against Lamar and Aaron in the Court of Common Pleas
of Philadelphia County. He alleged negligence and negligent
See Richard Duncan v. Chris Aaron and Shameka
Renee Lamar, No. 0479 (Pa. Ct. Comm. Pleas, Sept. 2014).
Lamar’s insurer, denied all coverage for loss sustained in the
collision on the basis of an unlicensed driver exclusion
contained in the insurance policy.
Omni informed Lamar and
Aaron of the coverage denial and advised them to retain their
Duncan, Lamar, and Aaron proceeded to arbitration in
the Court of Common Pleas of Philadelphia County.
awarded $28,000 in damages in favor of Duncan.
entry of Judgment on the Arbitration Award, Lamar and Aaron
assigned all claims and rights to Duncan against Omni.
satisfaction of the assignment, Duncan agreed not to collect or
execute against Lamar and Aaron, and he agreed to mark the
judgment against Lamar and Aaron satisfied upon the conclusion
of proceedings against Omni.
Duncan thereafter commenced this action in the Court
of Common Pleas of Philadelphia County against Omni seeking to
collect from Omni the $28,000 judgment.
He also alleges a claim
of bad faith in violation of the Pennsylvania Bad Faith Statute,
42 Pa. Const. Stat. § 8371 (2015). 1
Omni removed the action to
this court based on diversity of citizenship.
See 28 U.S.C. §
Lamar’s Omni Private Passenger Auto Insurance Policy
for the 2003 Chevrolet Avalanche provided in Part A Liability
. . .
B. Insured 2 as used in this Part means:
. . .
(3) A person using your covered auto with
the owner’s express or implied
permission and within the scope of the
permission granted. The person must
hold a valid driver’s license at the
time of the loss and must not be a
regular operator of your covered auto.
1. The jurisdictional amount in an action under 28 U.S.C.
§ 1332(a) is met where the matter in controversy exceeds the sum
or value of $75,000, exclusive of interests and costs. Our
Court of Appeals has stated the amount in controversy is not
based “on the ‘low end of an open-ended claim,’ but rather on ‘a
reasonable reading of the value of the rights being litigated.’”
Judon v. Travelers Property Cas. Co. of America, 773 F.3d 495,
507 (3d Cir. 2014) (quoting Werwinski v. Ford Motor Co., 286
F.3d 661, 666 (3d Cir. 2002). Because of the bad faith claim,
we deem the amount in controversy requirement to have been met.
It appears that the policy uses bold text to set apart terms
phrases defined therein. To the extent that we quote from
policy, all bold text in this opinion appears in the policy
has not been added by the court.
The policy contained an unlicensed driver exclusion that
[Omni]We do not provide liability
coverage for any insured:
. . .
(16) For bodily injury or property
damage resulting from the ownership,
maintenance or use of any vehicle when
driven by an individual who:
. . .
Does not have a valid driver’s
Has a suspended or revoked
Omni argues, in support of its motion for
summary judgment, that the exclusion above in the Omni insurance
policy allowed Omni to disclaim coverage for the collision
between Aaron and the SEPTA Route 47 bus because Aaron was an
Duncan opposes Omni’s motion for summary judgment and
has moved for partial summary judgment in his favor on the basis
that the exclusion upon which Omni relies is void and
unenforceable under the Pennsylvania Motor Vehicle Code, 75 Pa.
Cons. Stat. § 1501 (2015) et seq., and under the Pennsylvania
Motor Vehicle Financial Responsibility Law, 75 Pa. Const. Stat.
§ 1701 (2015) et seq.
He contends this exclusion violates
Pennsylvania public policy.
Under Rule 56 of the Federal Rules of Civil Procedure,
summary judgment is appropriate “if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a);
see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
facts here, as noted above, are undisputed.
The sole issue is
which party is entitled to judgment as a matter of law.
We now turn to the exclusion in the Omni insurance
The parties do not dispute that in this diversity action
the substantive law of Pennsylvania applies.
See, e.g., Nationwide
Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d Cir. 2000).
The interpretation of an insurance policy is a question
of law for the court.
See Pac. Indem. Co. v. Linn, 766 F.2d 754,
760 (3d Cir. 1985); 401 Fourth St., Inc. v. Inv’rs Ins. Grp., 879
A.2d 166, 171 (Pa. 2005).
The primary goal is to “ascertain the
parties’ intentions as manifested by the policy’s terms.”
Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union
Ins. Co., 908 A.2d 888, 897 (Pa. 2006).
When the language of the
policy is clear, we give effect to its plain meaning.
See Am. &
Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526, 540
The meaning of the policy provision in issue is
There is an exclusion for coverage when, as here,
the driver who caused the bodily injury was unlicensed.
issue is whether the clear language violates Pennsylvania law.
Duncan maintains that the exclusion violates § 1574 of
the Pennsylvania Motor Vehicle Code (“MVC”) and §§ 1786(a),
1786(f), and 1702 of the Pennsylvania Motor Vehicle Financial
Responsibility Law (“MVFRL”).
Section 1574 of the MVC states:
General rule. - - No person shall
authorize or permit a motor vehicle
owned by him or under his control to be
driven upon any highway by any person
who is not authorized under this
chapter or who is not licensed for the
type or class of vehicle to be driver.
Penalty. - - Any person violating the
provisions of subsection (a) is guilty
of a summary offense and shall be
jointly and severally liable with the
driver for any damages caused by the
negligence of such driver in operating
the vehicle. 75 Pa. Const. Stat.
§ 1574 (2015).
Duncan argues that § 1574 of the MVC imposes vicarious
liability on owners who permit unlicensed drivers to operate
their vehicles, and therefore Omni’s exclusion disclaiming
liability coverage violates § 1574.
does not help Duncan.
However, this provision
Whatever the remedy may exist against
Lamar, the owner of the vehicle, there is nothing in § 1574
which makes any reference to insurance coverage.
requires insurance coverage nor prohibits any limitation on
Therefore, the Omni exclusion does not
violate § 1574.
We turn to §§ 1786(a), 1786(f), and 1702 of the MVFRL.
Sections 1786(a) and 1786(f) of the MVFRL provide:
General rule. - - Every motor vehicle
of the type required to be registered
under this title which is operated or
currently registered shall be covered
by financial responsibility.
. . .
Operation of motor vehicle without
required financial responsibility. - Any owner of a motor vehicle for which
the existence of financial
responsibility is a requirement for its
legal operation shall not operate the
motor vehicle or permit it to be
operated upon a highway of this
Commonwealth without the financial
responsibility required by this
chapter. In addition to the penalties
provided by subsection (d), any person
who fails to comply with this
subsection commits a summary offense
and shall, upon conviction, be
sentenced to pay a fine of $300. 3 75
Pa. Const. Stat. § 1786(a), (f) (2015).
Section 1702, in relevant part, defines “financial
responsibility” of a vehicle owner as:
The ability to respond in damages for
liability on account of accidents arising
3. Section 1786(d), referenced in § 1786(f), provides for the
suspension of the registration and of the operating privilege of
the vehicle if the Department of Transportation determines that
the vehicle has been operated or permitted to be operated
without the required financial responsibility. See 75 Pa.
Const. Stat. § 1786(d) (2015).
out of the maintenance or use of a motor
vehicle in the amount of $15,000 because of
injury to one person in any one accident, in
the amount of $30,000 because of injury to
two or more persons in any one accident and
in the amount of $5,000 because of damage to
property of others in any one accident. The
financial responsibility shall be in a form
acceptable to the Department of
Transportation. 75 Pa. Const. Stat. § 1702
Duncan asserts that § 1786(a) requires financial
responsibility of motor vehicle owners and that § 1786(f)
requires that this financial responsibility extends to
Section 1786(a) requires
motor vehicles in Pennsylvania to be covered by financial
See 75 Pa. Const. Stat. § 1786(a) (2015).
Section 1786(f) prohibits an owner of a motor vehicle from
operating or permitting the operation of a motor vehicle without
the required financial responsibility, that is, the ability to
respond in damages for personal injuries in a certain amount.
See 75 Pa. Const. Stat. § 1786(f) (2015).
liability may be assessed against a vehicle owner who violates
this provision, the statute cannot reasonably be interpreted to
require an owner’s insurer to provide coverage under an
insurance policy for injuries by an unlicensed driver.
Duncan relies on Pennsylvania Superior Court decisions
Progressive Northern Insurance Co. v. Universal Underwriters
Insurance Co., 898 A.2d 1116 (Pa. Super. Ct. 2006), and McWeeny
v. Estate of Strickler, 61 A.3d 1023 (Pa. Super. Ct. 2013).
However, neither of these cases supports his position.
In Progressive Northern, the insured’s son was in a
motor vehicle accident while he was driving a vehicle loaned to
the insured by a car dealership.
898 A.2d at 1117.
See Progressive N. Ins. Co.,
The issues before the Pennsylvania Superior
Court were which insurance carrier was required to provide
liability coverage to the insured, the carrier of the loaned
vehicle, or the carrier of the insured’s personal vehicle, and
whether the policies, which contained “mutually repugnant
clauses” concerning priority of coverage, could practically be
See id. at 1118-19.
The case had nothing to do with
insurance coverage for unlicensed drivers.
In McWeeny, a driver, who was listed as a principal
driver on the vehicle’s insurance policy, was involved in a
motor vehicle accident.
See McWeeny, 61 A.3d at 1025.
sought to recover benefits under the policy, but the other
driver in the accident alleged that she could not recover
because she was insured under the limited tort option of the
policy, and therefore could not recover without having sustained
a serious injury.
Again, this case did not involve the
issue of coverage for unlicensed drivers.
We now turn to Duncan’s assertion that the exclusion is
contrary to public policy.
We consider public policy arguments in
light of “reference to the laws and legal precedents and not from
general considerations of supposed public policy interest.
term ‘public policy’ is vague, there must be found definite
indications in the law of the sovereignty to justify the
invalidation of a contract as contrary to that policy.”
v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204, 207 (Pa. 2002)
(quoting Eichelman v. Nationwide Ins. Co., 711 A.2d 1006, 1008 (Pa.
This court has declared there is a “‘heavy burden
required to declare an unambiguous provision of an insurance
contract void as against public policy.’”
Williams v. Allstate
Ins. Co., 595 F.Supp.2d 532, 542 (E.D. Pa. 2009) (quoting
Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180, 1190 (Pa.
Duncan argues that the exclusion is contrary to the
public policy of the Commonwealth because it frustrates the
remedial purpose of the MVFRL.
This argument fails.
Pennsylvania Supreme Court has identified cost containment,
freedom of consumer choice, as well as remediation as goals of
See Williams v. GEICO Gov’t Emp. Ins. Co., 32 A.3d
1195, 1203 (Pa. 2011); see also Progressive N. Ins. Co. v.
Schneck, 813 A.2d 828, 832 (Pa. 2002).
It recognizes that the
goal of cost containment of insurance policies allows consumers
to have the ability to pay more in premiums for greater
coverage, and less in premiums for lesser coverage.
32 A.3d at 1203.
Duncan avers that the exclusion contradicts the public
policy of deterring unlicensed drivers from operating vehicles.
We do not understand how insuring unlicensed drivers will keep
them off of the road.
If anything, the contrary seems more
We acknowledge a public policy of extending insurance
coverage to all licensed drivers.
to unlicensed drivers.
However, it does not extend
The MVFRL mandates certain benefits that
must be excluded from cover under § 1718, as well as certain
benefits that cannot be excluded from coverage under § 1724. 4
This public policy, as expressed by the General Assembly, does
not require automobile insurance coverage for personal injuries
in all situations.
The MVFRL is silent with respect to
insurance coverage for unlicensed drivers.
3. When an insured’s conduct in the following three ways
contributes to the insured’s injury, an insurer must exclude an
insured from benefits: while intentionally injuring, or
attempting to injure, himself or another, while committing a
felony, or while seeking to elude lawful apprehension or arrest
by law enforcement. See 75 Pa. Const. Stat. § 1718(a) (2015).
On the contrary, an insurance policy provision may not exclude
benefits solely because the driver of the insured vehicle was
under the influence of alcohol or drugs at the time of the
accident. See 75 Pa. Const. Stat. § 1724(a) (2015).
While the MVFRL does not address the subject of
insurance coverage for unlicensed drivers, the Pennsylvania
Insurance Commissioner has done so.
Pursuant to The Insurance
Company Law of 1921, 40 Pa. Cons. Stat. Ann. § 477b (2015), the
Insurance Commissioner must approve the language and terms of
all casualty insurance policies issued in the Commonwealth.
The imprimatur of the Commissioner on the Omni unlicensed driver
exclusion, together with the absence of any specific legislative
mandate for the inclusion of such coverage, undermines Duncan’s
argument that the exclusion is void as against Pennsylvania
Moreover, the exclusion is consistent with the cost
containment purpose of the MVFRL.
See GEICO, 32 A.3d at 1203.
If insurance policies had to provide coverage for unlicensed
drivers, premiums undoubtedly would increase.
coverage should exist is a matter for the General Assembly.
Finally, Duncan has cited no precedent where the
courts of Pennsylvania have overturned an automobile insurance
provision as against public policy.
In fact, the Pennsylvania
Supreme Court has upheld the validity of various exclusions in
insurance policies on several occasions.
See Burnstein, 809
A.2d at 210; see also GEICO, 32 A.3d at 1201; see also Schneck,
813 A.2d at 834; see also Eichelman, 711 A.2d at 1006.
For example, the Pennsylvania Supreme Court has held
that an exclusion that disclaims coverage when an insured driver
drives a regularly used, non-owned vehicle is allowable under
the MVFRL and does not violate public policy.
A.2d at 210.
See Burstein, 809
In its analysis, the court stated that finding the
exclusion invalid would force the insurance company to
“underwrite unknown risks that it had not been compensated to
insure,” thereby frustrating the goal of cost containment.
The Pennsylvania Supreme Court has also decided that
an exclusion was not void as against public policy where an
insurer disclaimed underinsured motorist coverage to an insured
Pennsylvania State Trooper under his personal automobile
insurance policy when he was injured in an accident while
driving a state covered vehicle provided to him for regular use.
See GEICO, 32 A.3d at 1209.
In upholding the exclusion, the
court declined to weigh the importance of various public policy
Id. at 1203-04.
The Court stated:
Appellant asks us to weigh the protection of
first responders against the recognized
scheme of cost containment underlying the
MVFRL. We have consistently held, however,
that this is not the proper function of this
Court to weigh competing public policy
interests; rather that task is bested suited
for the legislature. GEICO,32 A.3d at 1203.
(citing Generette v. Donegal Mut. Ins. Co.,
957 A.2d 1180, 1192 (Pa. 2008)).
In sum, the exclusion of insurance for unlicensed
drivers does not violate the public policy of Pennsylvania.
Accordingly, we will grant the motion of Omni for
summary judgment and deny the motion of Duncan for partial
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