Opinions of the United
1996 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-22-1996

US Underwriters Ins v. Liberty Mutl Ins Co
Precedential or Non-Precedential:

Docket 95-1558




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                           No. 95-1558


                U.S. UNDERWRITERS INSURANCE CO.;
                   MARYLAND CASUALTY COMPANY

                                 v.

               LIBERTY MUTUAL INSURANCE COMPANY;
                  PERLOFF BROTHERS, INC. a/k/a
                          PERLOFF, INC.

                                 Liberty Mutual Insurance Company
                                 and their insured, Perloff
                    Brothers, Inc.,
                                         Appellants.




         On Appeal from the United States District Court
            for the Eastern District of Pennsylvania
               (D.C. Civil Action No. 93-cv-05015)



                    Argued: February 5, 1996

          Before: SLOVITER, Chief Judge, ROTH and SAROKIN,
                          Circuit Judges

                (Opinion Filed    March 22, l996)




Bernard E. Jude Quinn, Esq. (Argued)
German, Gallagher & Murtagh
200 South Broad Street
5th Floor
Philadelphia, PA 19102
     Attorney for Appellee U. S. Underwriters Ins.




                                 1
Christopher P. Seerveld, Esq. (Argued)
Post & Schell
1800 JFK Boulevard
19th Floor
Philadelphia, PA 19103
     Attorney for Appellee Maryland Casualty

Andrew B. Klaber, Esq. (Argued)
Weber, Goldstein, Greenberg & Gallagher
1811 Chestnut Street
6th Floor
Philadelphia, PA 19103
     Attorney for Appellants




                        OPINION OF THE COURT



ROTH, Circuit Judge:


          In this diversity action, we must determine whether the

Supreme Court of Pennsylvania would consider certain conduct as

falling within the definition of "use or maintenance of a motor

vehicle," as defined by the Pennsylvania Motor Vehicle Financial

Responsibility Law's ban on subrogation for certain types of

insurance benefits, 75 Pa.C.S.A. § 1720.    We predict that the

Supreme Court of Pennsylvania would conclude that a driver who

slips on grease from a nearby kitchen when he steps on the ground

while alighting from a car is not engaged in use or maintenance

of a motor vehicle.    We will therefore reverse the decision of

the district court.

                                 I.



                                 2
          The district court disposed of this case on motion for

summary judgment.   We have jurisdiction over the appeal from the

district court's final order pursuant to 28 U.S.C. § 1291.

Subject matter jurisdiction rests on 28 U.S.C. § 1332.      We

exercise plenary review over the district court's order, both as

an appeal from grant of summary judgment, Petruzzi's IGA

Supermarkets v. Darling-Delaware Co., 

, 1230 (3d

Cir. 1993), cert. denied, ___ U.S. ___, 

(1993),

and because the dispute requires only an interpretation of law,

Matter of Resyn Corp., 

, 1280 (3d Cir. 1991).

                               II.

          The parties agree on the relevant facts.       On November

27, 1987, Robert Hilpl parked his car in the parking lot of the

St. Johns Neumann Nursing Home.       Hilpl was employed as a bid

manager for Perloff Brothers, Inc., and had arrived at the

nursing home to meet with representatives of Woods Management

Services, a company that operated the nursing home's kitchen.

Woods Management was a prospective customer of Perloff Brothers,

and Hilpl intended to present the Woods representatives with

calendars, planning guides, and other business-related paperwork.

          After parking his car and turning off the engine, Hilpl

began to exit the vehicle.   He placed his left foot on the ground

and started to stand up, pushing off with his right foot from

inside the vehicle.   In the process, Hilpl slipped on a pool of

grease or similar substance that had coated a section of the

parking lot.   He fell, striking his back on the sill of the car




                                  3
door.   At oral argument, the parties appeared to concede that the

grease emanated from the nursing home's kitchen.

           Hilpl's employer, Perloff Brothers, accepted

responsibility for the injury, treating it as a work-related

incident covered by the Pennsylvania Workers' Compensation Act,

77 P.S. §§ 1-1602.   Liberty Mutual Insurance Company ("Liberty

Mutual"), the workers' compensation carrier for Perloff, provided

Hilpl with lost wage benefits and medical benefits.   As of June

30, 1993, benefits totaled $285,875.82.   At the time of oral

argument, benefits exceeded $400,000.

           In addition to receiving benefits, Hilpl brought a

third party action in the Philadelphia Court of Common Pleas,

seeking damages for the injuries he sustained in the accident.

Hilpl sued Woods Management, Neumann Nursing Home, and the

nursing home's parent organization, the Archdiocese of

Philadelphia.   Pursuant to 77 P.S. § 319, Liberty Mutual acquired

a subrogation lien on the proceeds of this action by operation of

law.

           On June 30, 1993, the Common Pleas action was settled

for $800,000.   As part of the settlement, U.S. Underwriters

Insurance Co., the insurer of the nursing home, and Maryland

Casualty Co., the insurer of Woods Management, (hereinafter,

collectively, "the Tort Liability Insurers") agreed to assume

responsibility for all amounts that had accrued on Liberty

Mutual's subrogation lien on or before the settlement date.

           On October 1, 1993, the Tort Liability Insurers filed a

declaratory judgment action in the U.S. District Court for the


                                4
Eastern District of Pennsylvania seeking to invalidate the

subrogation lien pursuant to 75 Pa.C.S.A. § 1720.     Section 1720

bars a compensation insurer's right of subrogation to recover

workers' compensation benefits from an insured's third-party tort

recovery if the insured's injuries arose from the maintenance or

use of a motor vehicle.    The parties filed cross motions for

summary judgment, and on June 8, 1995, the district court entered

judgment for plaintiffs.   Liberty Mutual appealed.

                                III.

          This controversy is easily located within the landscape

of Pennsylvania law.   It takes place at the intersection of the

Pennsylvania Workers' Compensation Act, 77 P.C.S.A. §§ 1-1602,

and the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A.

§§ 1701-1798.   Hilpl and his injury are clearly subject to the

provisions of Workers' Compensation Act.   Section 319 of that act

grants a workers' compensation insurer subrogation rights to an

employee's recovery from a third party tortfeasor.    Section 1720

of the Financial Responsibility Law limits that right, barring

subrogation where an employee's injury arose out of the

maintenance or use of a motor vehicle.1
1
          This section provides:

          § 1720. Subrogation
               In actions arising out of the
          maintenance or use of a motor vehicle, there
          shall be no right of subrogation or
          reimbursement from a claimant's tort recovery
          with respect to workers' compensation
          benefits . . ..

Id.; Walters v. Kamppi, 

(Pa. Commw. 1988) (applying
plain meaning of statute to bar subrogation), appeal denied, 544


                                 5
          The current dispute turns on the meaning of

"maintenance or use of a motor vehicle" as defined by § 1720. The

Tort Liability Insurers contend, and the district court agreed,

that Hilpl's actions in exiting his car fell within the scope of

maintenance or use.   Liberty Mutual argues otherwise, claiming

that Hilpl's injury did not manifest the degree of causal

connection to the vehicle required by the Pennsylvania courts.

          The answer to this question is obviously controlled by

state law.   We therefore begin with the relevant statute.

Unfortunately, none of the terms in the phrase "arising out of

the maintenance or use of a motor vehicle" are among those

defined in 75 Pa.C.S.A. § 1702, the list of statutory definitions

for the Financial Responsibility Law.   The terms are also absent

from the general definition section for the Vehicle Code.    75

Pa.C.S.A. § 102.   There is therefore no controlling statutory

provision for this case.2




A.2d 512 (Pa. 1989). The Pennsylvania legislature subsequently
repealed § 1720's prohibition with respect to worker's
compensation benefits, leaving in place its bar on subrogation
rights for other types of compensation. Act of July 2, 1993, §
25(b), 1993 Pa. Laws 190-44. Pennsylvania courts have
interpreted this amendment as prospective only. Fulmer v.
Pennsylvania State Police, 

(Pa. Commw. 1994); Byard
F. Brogan, Inc. v. W.C.A.B., 

(Pa. Commw. 1994); see
also Carrick v. Zurich-American Ins. Group, 

(3d Cir.
1994) (predicting prospective application).
2
          The Tort Liability Insurers correctly point out that
Pennsylvania's Statutory Construction Act, 1 Pa.C.S.A.
§1921(c)(5), advises that former law on the subject may be
considered in ascertaining the legislature's intent when the
words of a statute are not explicit. For our purposes, however,
we must first look to controlling state authority, and prior
enactments are only persuasive, not binding.

                                6
          Absent controlling statutory authority, we turn to the

decisions of the highest state tribunal to answer a question of

state law.     The Pennsylvania Supreme Court, however, has not

ruled on the terms of this provision.

          When a state's highest court has not spoken on a

subject, we must attempt to predict how that tribunal would rule.

Kowalsky v. Long Beach Township, 

, 387 (3d Cir. 1995).

In making such determinations, we give due deference to the

decisions of lower Pennsylvania courts.     Winterburg v. Transp.

Ins. Co., 

, 322 (3d Cir. 1995).      The rulings of

intermediate appellate courts must be accorded significant weight

and should not be disregarded absent a persuasive indication that

the highest state court would rule otherwise.     City of

Philadelphia v. Lead Indus. Ass'n, Inc., 

, 123 (3d

Cir. 1993); Rolick v. Collins Pine Co., 

, 664 (3d

Cir. 1991).     In the current case, existing decisions of

Pennsylvania's intermediate appellate court provide ample

guidance for us to resolve this dispute.

             We begin with Lucas-Raso v. American Mfrs. Ins. Co.,

(Pa. Super. 1995), appeal denied, 

(Pa.

1995), a recent case in which the meaning of "maintenance and

use" under the Financial Responsibility Law was squarely before

the Pennsylvania Superior Court.      The court surveyed the relevant

Pennsylvania case law, placing particular reliance on the

adoption in Alvarino v. Allstate Ins. Co., 

, 20 (Pa.

Super. 1988), of an interpretation of "arising out of ownership,

maintenance or use" announced by the Pennsylvania Supreme Court


                                  7
in Manufacturers Casualty Ins. Co. v. Goodville Mut. Casualty

Co., 

(Pa. 1961).       In Manufacturers, the Supreme

Court had held:     "Arising out of 'means causally connected with,

not proximately caused by.'       'But for' causation, i.e., a cause

and result relationship is enough to satisfy this [requirement]."

   Alvarino applied this definition to § 1720.

            The Lucas-Raso court then stressed the importance of

the causation element.       First, the causation inquiry serves the

legislature's purpose in passing motor vehicle insurance

legislation, namely "to compensate losses directly resulting from

motoring accidents and to leave injuries tangential to driving to

other systems of compensation.      

(citing Prudential

Property & Casualty Ins. Co. v. McDaniel, 

(Pa.

Super. 1985)).    Even more importantly, causation ensures that

injuries suffered by a victim arise from the use of the motor

vehicle itself.    

words, "[t]here must be a link

between the injury and the motor vehicle before compensation will

be awarded."     

            The court next applied these principles to the facts of

the case.   In Lucas-Raso, the plaintiff had been injured when

walking around the back of her car to reach the driver's side.

The plaintiff alleged that despite her physical position outside

the vehicle, she was nevertheless an occupant of the car.       The

court considered this claim, noting that "it is not disputed that

'maintenance and use' is presumed if occupancy can be shown." 

Court ultimately ruled that she was not an occupant.

More importantly for the current case, the court then made clear


                                    8
that occupancy alone would not satisfy § 1720's requirement of

maintenance and use.   As the court explained, "Even if we agreed

that . . . [the victim] was an occupant, she must still prove the

existence of a causal connection between the injuries sustained

and the maintenance and use of the motor 

.

           We believe that Lucas-Raso accurately captures the

state of Pennsylvania law on maintenance and use of a motor

vehicle.   If nothing else, Lucas-Raso and the cases it surveys

make clear that the crucial point for triggering § 1720's

maintenance and use prohibition is a causal connection between

vehicle and injury.    We therefore turn to that element.

           In assessing whether the necessary causal nexus exists,

we could--as the parties wish--struggle with the legal equivalent

of angels and pinheads.    For example, the vehicle obviously was,

in a sense, a cause of the accident:   Hilpl was alighting from

the car when he fell; the car was a part of the stream of events

that lead to his injury.    Viewing causation in these terms,

however, makes it essentially all-encompassing:    If not for the

unfortunate coincidence of a multitude of causes, Hilpl, his car,

and a layer of grease might not have combined so painfully on

that late November day.    This approach to causation would bring

§1720 into play whenever an automobile was even tangentially

related to an accident, since absent the car, the accident

arguably might not have occurred.    This in turn would contravene

the Pennsylvania Superior Court's repeated cautions that the

Financial Responsibility Law was not intended to be a general


                                 9
liability statute, but rather a system of compensation for

"losses directly resulting from motoring 

.   Nevertheless, so the counterargument goes, here the car was

involved.

            Fortunately, we can avoid this debate.   It is a matter

of hornbook tort law that every incidental factor that arguably

contributes to an accident is not a "but for" cause in the legal

sense.   See Berry v. Borough of Sugar Notch, 

(Pa.

1899).   Our survey of Pennsylvania cases demonstrates that the

Commonwealth's understanding of "use of a motor vehicle" simply

will not encompass the causal nexus at issue here.    See Smith v.

United Servs. Auto. Ass'n, 

, 787 (Pa. Super. 1990)

(rejecting claim that injury from hay thrown from hayride arose

from maintenance or use of a motor vehicle), appeal dismissed,

(Pa. 1991); Roach v. Port Auth. of Allegheny County,

(Pa. Super. 1988) (rejecting claim that bus

passenger injured in fight between two other passengers arose out

of maintenance or use of motor vehicle); Alvarino v. Allstate

Ins. Co., 

(Pa. Super. 1988) (holding that injury to

child bitten by dog while passenger in car did not arise from use

of motor vehicle); Camacho v. Nationwide Ins. Co., 

(Pa. Super. 1983) (holding that injury to driver from explosive

thrown into his car by passenger in passing automobile did not

arise out of maintenance or use of vehicle), aff'd, 

(Pa. 1984); Schweitzer v. Aetna Life & Cas. Co., 

(Pa. Super. 1982) (holding that injuries to woman, who was pushed

into her automobile and beaten inside automobile by operator of


                                 10
motorcycle, did not arise out of maintenance and use of motor

vehicle); Erie Ins. Exchange v. Eisenhuth, 

(Pa.

Super. 1982) (rejecting claim that injuries to automobile

passenger shot by police officer in pursuing vehicle arose out of

maintenance or use of automobile); see also Pecorara v. Erie Ins.

Exchange, 

(1991) (rejecting as absurd a literal

interpretation of "used by any person . . . employed . . . in the

automobile business" because such interpretation would prohibit

"coverage for an accident . . . if [the owner] had lent his dump

truck to a friend to haul lumber to a campsite, if that friend

also happened to be an employee of an automobile business");

Ferry v. Protective Indem. Co., 

(Pa. Super. 1944)

(refusing coverage for injury caused to pedestrian while truck

driver was loading truck); cf. Walters v. Kamppi, 

(Pa. Commw. 1988) (finding requirements of § 1720 met where truck

driver was injured in automobile accident caused by slippery

substance on highway from allegedly negligent road maintenance),

appeal denied, 

(Pa. 1989).   We also note that the

words "occupying, entering into, or alighting from a motor

vehicle," which appeared in the definition of "use or

maintenance" under the old Pennsylvania No-Fault Motor Vehicle

Insurance Act, 40 P.S. § 1009.106 (repealed), were not included

when the legislature replaced the No-Fault Act with the Financial

Responsibility Law.   We believe that this action shows a

legislative intent consistent with the Pennsylvania Superior

Court's understanding.   Hilpl's activity does not fall within the




                                11
meaning of § 1720, as intended by the legislature and interpreted

by the courts.

          In concluding that there was no causal connection

between Hilpl's alighting and his subsequent accident, we place

particular reliance on the Superior Court of Pennsylvania's

discussion in Ohio Casualty Group of Ins. Cos. v. Bakaric, 

(Pa. Super. 1986), appeal denied, 

(Pa.

1987).   In Bakaric, a husband injured his wife by shooting her in

the face with a handgun.   There was evidence that the discharge

occurred as the husband forced his wife into the driver's seat of

their automobile and then pushed her across the seat to the

passenger's side.   

n.1.   The court refused to

interpret the incident as resulting from the use of a motor

vehicle "since it is not clear in this instance that entering or

loading the vehicle caused the injuries."    

    The court

then explained that:
          A lay person's consideration of this factual
          situation . . . would probably produce a
          conclusion that any damages awarded [the
          couple] would not result from the use of an
          automobile by them, but from the wanton use
          of a gun. We believe that the proper legal
          conclusion should be the same.

(quoting slip op. of trial court).
          The sentiments expressed in Bakaric convey our view of

the present case.   Pennsylvania law makes clear that "maintenance

or use of a motor vehicle" requires causation.    The court must

determine the "instrumentality used to cause the injury."       Spisak

v. Nationwide Mut. Ins. Co., 

, 893 (Pa. Super. 1984).

A layman would understand that the instrumentality used to cause


                                12
the injury in the case at bar was the substance on the surface of

the parking lot.   The cause of Hilpl's injury was the fact that

he slipped on grease, and all the clever arguments of skilled

legal advocates cannot alter this central event.    It was "mere

fortuity" that Hilpl was still partially in his car when he

slipped.   

.    Causation, however,

requires more than "mere happenstance."    

.

                               IV.

           We therefore conclude that the Supreme Court of

Pennsylvania would hold that an individual who slips on grease

from a nearby kitchen when he steps on the ground while alighting

from his automobile has not been injured as a result of

maintenance or use of a motor vehicle.    Consequently, § 1720 of

the Pennsylvania Motor Vehicle Financial Responsibility Law will

not apply, and Liberty Mutual retains its subrogation lien.     We

will reverse the decision of the district court.




                                13
U.S. Underwriters Ins. Co. v. Liberty Mutual Ins. Co.

No. 95-1558




SLOVITER, Chief Judge, Dissenting.

          The issue is whether the Supreme Court of Pennsylvania, which had a long

of protecting the recovery of damages for injuries incurred by the drivers and occu

of automobiles, would have permitted the workers' compensation carrier in this case

subrogated to the recovery received by the driver.   At the time of the accident in

question, the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL), 75 P

Cons. Stat. Ann. § 1720, explicitly barred a workers' compensation carrier from

subrogation for benefits paid if the injuries arose "out of the maintenance or use

motor vehicle."   See 75 Pa. Cons. Stat. Ann. § 1720 (1984).   The driver in this cas

Robert Hilpl, was injured while alighting from the vehicle when he slipped and inju

himself by landing on the vehicle.   I believe that under these facts the Supreme Co

Pennsylvania would have held that Hilpl was engaged in the "use" of that vehicle.

          The MVFRL replaced the Pennsylvania No-fault Motor Vehicle Insurance Act,

Stat. Ann. § 1009.101-1009.701 (repealed effective Oct. 1, 1984), which had defined

"maintenance or use of a vehicle" as "maintenance or use of a motor vehicle as a ve

including, incident to its maintenance or use as a vehicle, occupying, entering int

alighting from it." (Emphasis added).   The MVFRL continues to use the phrase "maint

or use" but does not define it.   Thus, the strongest argument for the majority's po

is that there is no longer language explicitly covering alighting from a vehicle in

new law's reference to the "maintenance or use" of the vehicle.

          However, there is no legislative history to indicate that by enacting the

the Pennsylvania legislature intended to exclude accidents occurring when a person


                                             2
vehicle. Moreover, Pennsylvania's Statutory Construction Act, 1 Pa. Cons. Stat. Ann

1921(c)(5), provides that it is appropriate to consider former law where legislativ

intent is unclear.    Significantly, Pennsylvania intermediate courts have looked to

statutes and case law interpreting these statutes to determine whether an injury "a

out of the maintenance or use of a motor vehicle."     See, e.g., Alvarino v. Allstate

Co., 

(Pa. Super. Ct. 1988) (analyzing prior statute and case law to det

that dog bite did not arise out of use of motor vehicle); Roach v. Port Authority o

Allegheny County, 

(Pa. Super. Ct. 1988) (analyzing prior statute and

law to determine that injury resulting from fight on bus did not arise out of use o

vehicle).

            In a recent Pennsylvania Superior Court case, the court reaffirmed that

"maintenance or use" of a vehicle is presumed if the injured party is an "occupant"

vehicle at the time of the accident.    Lucas-Raso v. American Manufacturers Ins. Co.

A.2d 1, 4 (Pa. Super. Ct. 1995).   I do not understand the majority to dispute that

was an "occupant" of his car at the time of the accident.     See Tyler v. Insurance C

N. Am., 

, 97 (Pa. Super. Ct. 1983) (person alighting from vehicle still

occupant); Frain v. Keystone Ins. Co., 

, 1357 (Pa. Super. Ct. 1994) (e

vehicle is transaction essential to its use).     It follows that Hilpl was "using" hi

vehicle when he was injured.

            In Lucas-Raso, upon which the majority relies, the court found no "use" b

case is distinguishable.   When the plaintiff fell in a parking lot it was not while

was alighting but while she was walking around her car with the intent of entering

She did not come into any contact with the vehicle in the course of her fall, and i

indeed stretch "maintenance or use" language to encompass "intended use."     In contr

this case Hilpl had never completely disengaged from his use of the car.

            Hilpl described his position at the time of the accident in the following

picturesque manner:


                                              3
               Q. Where was your weight?      Was your weight on your feet at that poi
               you rose from the seat?

               A. No. My weight was still on -- my butt was still, like, in the c
               my feet went out from under me. You know, if you could only picture
               know, you're getting out of the car and getting out of it front ways
               you have all of this and you're inching out and your feet go out fro
               underneath of you, like that (Witness indicating), and then you come
               and boom.

               Q. So when your back hit the rocker panel -- what you mean by the r
               panel, I'll call the --

               A.   Where the door closes.

               Q.   The threshold of the door?

               A.   Yes.

               Q.   The bottom part that's parallel to the ground?

               A.   No, the top part.

               Q.   Well --

               A.   Where the door closes.    Where that silver thing is.

               Q.   Okay.    Where the floor ends and the door part begins.

               A.   Yes.

               Q. Okay. Now, when you came down, did you come down on to that roc
               panel, that silver part you just mentioned?

               A.   Yes.    That's solid iron.   That's only a silver plate over that.

               Q.   And that silver plate is still within the car; correct?

               A.   Oh, yes.

               Q.   And, so, your back hit that portion still within the car?

               A.   Yes.

               Q.   After your back hit that portion, what did your body do?

               A.   I slid down on the ground.


App. at 194.



                                                 4
            The majority appears to base its decision that Hilpl was not "using" his

when he was in the process of alighting from it and injured himself on the car's ro

panel on the fact that the car didn't cause the injury.    While it may be true that

ultimate cause of Hilpl's injury was the grease left on the parking lot which he ca

contact with, there seems to be no dispute that his injuries resulted from his phys

contact with a portion of the car as he was exiting from it.

            The majority concedes that under Pennsylvania law the causal connection r

is not proximate cause; "but for" causation is sufficient.    See Alvarino, 

("but for" causation is sufficient as long as there is connection greater than m

happenstance between injuries sustained and insured vehicle).    That "but for" causa

evident in this case.    But for the manner in which Mr. Hilpl exited his car, and bu

the fact that he landed on the rocker panel of his car, this accident would not hav

happened.    Thus, Mr. Hilpl's accident and injuries were directly related to his use

car.   It is not helpful to speculate whether a different accident might have happen

he slipped on a slippery substance elsewhere in the parking lot.           Thus, I belie

Pennsylvania courts would hold that Hilpl was vehicle oriented, because he was stil

partially in the car, the keys remained in the ignition and he was "inching out."

            I would therefore affirm the decision of the district court.




                                              5