State Farm Mutual Automobile Insurance Company v. David Harrison

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 04-1386
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STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
v.
DAVID HARRISON,
Appellant
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 03-cv-03491)
District Judge: Honorable Thomas N. O’Neill, Jr.
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Submitted Under Third Circuit LAR 34.1(a)
January 27, 2005
Before: SCIRICA, Chief Judge, RENDELL and FISHER, Circuit Judges.
(Filed: February 10, 2005)
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OPINION OF THE COURT
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FISHER, Circuit Judge.
The instant appeal arises from the District Court’s grant of summary judgment in
favor of State Farm Mutual Automobile Insurance Company (hereinafter State Farm) in a

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suit filed by State Farm seeking a declaratory judgment that it was not obligated to
provide underinsured motorist benefits to Harrison. We will affirm the District Court’s
grant of summary judgment.
I. Standard of Review
This Court exercises plenary review of a district court’s grant of summary
judgment, and applies the same standard as the district court below; summary judgment is
proper where no genuine issue of material fact exists, and where, viewing the facts in the
light most favorable to the party against whom summary judgment was entered, the
moving party is entitled to judgment as a matter of law. Marino v. Indus. Crating Co.,
358 F.3d 241, 247 (3d Cir. 2004).
II. Discussion
As we write only for the parties, we will recite a minimum of facts. The suit arose
from a car accident involving Harrison, who was operating his own motorcycle, and a
third-party operating an automobile. Harrison’s motorcycle was insured by Universal
Underwriters. This policy did not include coverage for underinsured motorist benefits.
Harrison also maintained insurance coverage on two other automobiles, which did include
underinsured motorist coverage. As a result of the accident, Harrison received a tender of
$50,000.00, the policy limit, from the automobile operator’s insurance company.
Harrison then sought underinsured motorist benefits pursuant to a policy of insurance
issued by State Farm to Harrison’s nephew, with whom Harrison was living at the time of

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the accident. Harrison’s nephew’s policy provided underinsured motorist benefits
coverage, but also included a “household exclusion” clause:
There is no [underinsured motorist] coverage for bodily injury to an insured
. . . while occupying a motor vehicle owned by or leased to that insured if
the vehicle is not insured for underinsured motor vehicle coverage under
this policy or any other policy.
State Farm denied coverage to Harrison pursuant to the “household exclusion”
contained in Harrison’s nephew’s policy. State Farm then filed suit, seeking a declaratory
judgment that it was not obligated to provide benefits to Harrison. Both parties filed
cross motions for summary judgment. The District Court granted State Farm’s Motion
for Summary Judgment, upholding the denial of coverage.
On appeal, Harrison argues that the District Court erred in its grant of summary
judgment to State Farm, because the “household exclusion” clause “as phrased can be
interpreted to mean that the coverage is either required to be on the policy covering the
vehicle involved in the accident, or it can mean that the coverage being sought can be
conferred via another policy covering other vehicles owned by the insured.” (Appellant’s
Br. at 11.) Harrison argues that this is a genuine issue of material fact that should have
precluded the District Court from granting summary judgment to State Farm.
Harrison is incorrect. In adjudicating cases under state law, this Court must apply
state law as interpreted by the state’s highest court. Gares v. Willingborough Twp., 90
F.3d 720, 725 (3d Cir. 1996). This case is therefore guided by the Supreme Court of
Pennsylvania’s decision in Eichelman v. Nationwide Ins. Co., 711 A.2d 1006 (Pa. 1998).

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In Eichelman, the Pennsylvania Supreme Court was faced with substantially similar facts
and virtually identical issues. The court there concluded that a person who voluntarily
elected not to carry underinsured motorist coverage on his own vehicle was not entitled to
recover underinsured motorist benefits from separate insurance policies issued to family
members with whom he resided where clear and unambiguous “household exclusion”
language expressly precluded underinsured motorist coverage for bodily injury suffered
while occupying a motor vehicle not insured for underinsured motorist coverage. 711
A.2d at 1010.
Eichelman supports the conclusion that Harrison’s claim to underinsured motorist
benefits under the terms of his nephew’s policy is without merit. A contract is ambiguous
if it is capable of more than one reasonable interpretation. Pacitti v. Macy’s, 193 F.3d
766, 773 (3d Cir. 1999) (citing Mellon Bank, N.A. v. Aetna Bus. Credit, Inc., 619 F.2d
1001, 1011 (3d Cir. 1980)). Where the written terms of a contract are not ambiguous and
can be interpreted only one way, the court interprets the contract as a matter of law.
Hullett v. Towers, Perrin, Forster, & Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994). As
the Pennsylvania Supreme Court did in Eichelman, we find this household exclusion
clause to be capable of only one reasonable interpretation, that which precludes the
collection of underinsured benefits by a motorist who chose to forego purchasing
underinsured motorist coverage for the specific automobile or motorcycle involved in the

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accident. Accordingly, the District Court was correct in resolving this case on the
undisputed facts at summary judgment.
For these reasons, we will affirm the District Court.
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