On January 26, 2012, the Third Circuit Court of Appeals issued an interesting uninsured (UM) motorists benefits coverage decision in the debris-in-the-road case of Allstate Property and Casualty Insurance Co. v. Squires, No. 11-1664 (3d Cir. Jan. 26, 2011).  There, the injured party insured was driving his pickup truck when he allegedly swerved to avoid a cardboard box lying in the middle of his lane.

Significantly, Allstate stipulated in this matter that an unidentified vehicle dropped the box.  Allstate rejected the injured party's claim for uninsured motorist benefits and sought a declaratory judgment. The insured responded with counterclaims for breach of contract and insurance bad faith under 42 Pa. Cons. Stat. § 8371.

At the trial court level, the District Court entered judgment for Allstate, finding that the injuries did not "arise out of ownership, maintenance or use of an uninsured auto." The Third Circuit reversed, rejecting the main argument by Allstate that the harm was caused by the box in the road and not by any vehicle, as required to support a UM claim under the insurance policy language and Pennsylvania law.  The Third Circuit relied, in part, on the notion that physical contact with an uninsured vehicle is not required for an accident to "arise out of" the use of an uninsured vehicle.  The Court ultimately held that, accepting for purposes of appeal the stipulated facts that the debris was placed on the road by an unidentified vehicle, the Court found that the accident arose out of the maintenance and use of a motor vehicle such that there was a sufficient causal connection to support a finding of potential coverage for the claims presented.  The Third Circuit stated its belief that the Pennsylvania Supreme Court would rule in the same fashion if presented with the same case.

Perhaps a significant difference between the Third Circuit's decision in Squires and other Pennsylvania state trial court decisions on debris-in-the-road cases is that it does not appear that there was any stipulation in any of the trial court decisions that the debris on the road had indeed come from a vehicle.  Rather, in those cases, the injured party was without any evidence to establish how the debris came to be on the road.  A number of the state court decisions resulted in findings of no coverage on the basis that the accident was not vehicle-caused, but rather caused by foreign objects on the roadway.

Daniel E. Cummins
Foley, Cognetti, Comerford, Cimini & Cummins
Scranton, PA
dancummins@comcast.net

PENNSYLVANIA—RETURN OF DEDUCTIBLES

The Pennsylvania Supreme Court in Jones v. Nationwide Property & Casualty Insurance Co., No. 61 EAP 2010 (Pa. Dec. 21, 2011) (Majority Opinion by Baer, J.) (Eakin, J., concurring), affirmed the practice of property damage carriers returning deductibles to insureds on a "pro rata" basis after a subrogation recovery against a third party tortfeasor.  The court rejected the plaintiff insured's contention that this practice violates the "made whole" doctrine, which according to the plaintiff required that she receive her whole deductible back.  The Pennsylvania Supreme Court ruled that the "made whole" doctrine did not apply to the collision coverage at issue in this case.  Accordingly, the court dismissed the insured's class action.

Daniel E. Cummins
Foley, Cognetti, Comerford, Cimini & Cummins
Scranton, PA
dancummins@comcast.net

PENNSYLVANIA—DISCOVERY

A federal district court ruled in Craker v. State Farm Mutual Auto Insurance Co., 2011 U.S. Dist. LEXIS 141811 (W.D. Pa. Dec. 9, 2011), that an insured was entitled to obtain production of an insurer's reserve with respect to disputed UIM claims.  However, Judge Lancaster rejected the insured's additional efforts to obtain reports from counsel notwithstanding the insured's contention that the lawyers were acting as an adjuster at the time.