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A federal judge in Pennsylvania has barreled through a number of roadblocks the insurance industry has attempted to put up for plaintiffs in the wake of the state Supreme Court's "seismic" 2019 decision in Gallagher v. Geico, which invalidated the use of the "household vehicle exclusion" to bar stacked uninsured and underinsured motorist benefits.

In a Feb. 27 opinion in Stockdale v. Allstate Fire & Casualty Insurance, U.S. District Judge Wendy Beetlestone of the Eastern District of Pennsylvania denied Allstate Fire and Casualty Insurance's motion for summary judgment and granted plaintiff Kayla Stockdale's motion for summary judgment in a putative class action, one of several similar lawsuits alleging insurance companies have improperly used household exclusions to bar stacked coverage since as far back as 1990.

Stockdale had sought to stack UIM coverage under her parents' Allstate policy (referred to in the opinion as the "Sanders policy") with the UIM coverage provided under her own policy (referred to as the "Stockdale policy"). Allstate, however, denied the claim, citing the household exclusion provision in her parents' policy, which informed the insured that no UIM coverage would be available "to you or a resident relative" injured in a vehicle that wasn't specifically covered by that policy.

In seeking summary judgment in Stockdale's suit, Allstate argued that the Gallagher decision had limited reach beyond the specific facts in that case.

Beetlestone rejected that notion, however.

"Allstate's assertion that the Pennsylvania Supreme Court intended Gallagher to be a 'narrow' decision is misleading," the judge said. "Allstate makes much of a footnote stating that '[o]ur focus here is narrow.' That phrase, however, was written in the context of explaining that the majority's opinion did not endanger other, non-household coverage exclusions such as 'exclusions related to racing and other inherently dangerous activities' and does not narrow the scope of its holding as to the household exclusion."

Instead, Beetlestone continued, "The Pennsylvania Supreme Court must be presumed to have meant what it said when it wrote that 'household vehicle exclusions should not and cannot operate as a pretext to avoid stacking' and that 'these exclusions are unenforceable as a matter of law,' and this court declines to read any limiting language into that clear pronouncement."

Allstate also sought to factually distinguish Stockdale's case from Gallagher, which involved an insured who had attempted to stack UIM benefits across two Geico policies—one for his motorcycle and one for his automobiles. Allstate argued that, unlike the plaintiff in Gallagher, Stockdale had not purchased stacking on her own policy and the two policies she sought to stack coverage across had been purchased by two different insureds.

But Beetlestone said both of those factual distinctions between the two cases were "irrelevant," noting that while Stockdale had not purchased stacking on her own policy, her parents had paid for coverage for all "'resident relative[s]'" in their household.

"Here, it is undisputed that Stockdale is making a claim under the Sanders policy and that she was an insured under that policy," Beetlestone said. "Because it is also undisputed that the Sanders did not waive stacked coverage, and because a household exclusion 'cannot operate as a pretext to avoid stacking' or a 'de facto waiver' of stacked coverage, the household exclusion in the Sanders policy is 'unenforceable as a matter of law.'"

While a class has not yet been certified in the case, James Haggerty of Haggerty, Goldberg, Schleifer, & Kupersmith in Philadelphia, who argued the appeal on Stockdale's behalf, said Beetlestone's summary judgment ruling clearly enunciated the two requirements potential class members will need to meet: (1) the policy under which they've made a claim must provide for stacked coverage and (2) that coverage must have been denied on the basis of a household exclusion provision.

Haggerty said Beetlestone's decision is significant for all post-Gallagher litigation—of which there has been plenty—because the judge "considered all of the limitations carriers have been trying to impose on Gallagher and rejected them."

Counsel for Allstate, Mark Levin of Ballard Spahr in Philadelphia, could not be reached for comment on the decision.