Ms. Lambert's husband had three insurance policies issued by State Farm Mutual Insurance Company, each of which provided coverage of $100,000 per person/$300,000 per accident in UIM benefits and each of which listed Ms. Lambert as an insured person.

The first policy covered a Harley Davidson motorcycle. The second policy covered four cars: a 2001 Toyota Highlander, a 1999 Acura Integra, a 1993 Ford F250, and a 1983 Toyota Supra. The third policy covered two cars: a 1993 Honda Civic and a 1992 Honda Prelude.

For each policy, Ms. Lambert's husband executed a form agreeing that the policies would not stack in the event of an accident.

Ms. Lambert made three claims for UIM benefits under the State Farm policies. State Farm settled her first claim for UIM benefits under the policy covering the motorcycle for $100,000. The insurer denied her request to stack coverage under the other two policies, explaining that her husband had rejected and relinquished stacking coverage in exchange for a lower premium.

Ms. Lambert filed a declaratory judgment action in a Philadelphia court, seeking $200,000 in UIM benefits under the two remaining policies. She alleged that the stacking rejection forms signed by her husband merely rejected intra-policy stacking and not inter-policy stacking and, therefore, that she was entitled to stack the UIM benefits of the two remaining policies.

State Farm removed the action to the U.S. District Court for the Eastern District of Pennsylvania.

Ms. Lambert moved to remand, citing the discretionary nature of the federal Declaratory Judgment Act and what she characterized as an "unsettled and novel issue of Pennsylvania law" – that is, when Ms. Lambert's husband executed the stacking waiver form for each policy, did he only reject stacking of benefits for the specific policy, which would be a rejection of intra-policy stacking benefits, or did he reject stacking for the three policies when considered together, which would be a rejection of inter-policy stacking?

The District Court's Decision

The district court granted the motion to remand.

In its decision, the district court explained that Pennsylvania courts had addressed stacking within a single policy and stacking between multiple policies when there was only single vehicle coverage, see Costa v. Progressive Preferred Ins. Co., No. 2:16-cv-74 (W.D. Pa. June 10, 2016); Craley v. State Farm Fire and Casualty Co., 895 A.2d. 530 (Pa. 2006), but had not squarely addressed the issue of stacking of multiple policies that covered multiple vehicles.

The district court added that stacking across different policies covering multiple vehicles had not been the subject of a decision handed down by the Supreme Court of Pennsylvania. "[N]either the Pennsylvania legislature nor relevant case law has determined whether waivers of inter-policy stacking can be considered 'knowing' in the context of multi-vehicle policies covering different automobiles," the district court said.

The district court then concluded that because Pennsylvania courts had not reached a well-settled conclusion on inter-policy stacking of multi-vehicle policies, this case presented a question of "undetermined or unsettled" state law that should be resolved by a Pennsylvania court and not a federal district court.

The case is Lambert v. State Farm Mutual Automobile Ins. Co., No. 19-0816 (E.D. Pa. Oct. 16, 2019). Attorneys involved include: For DAWN LAMBERT, Plaintiff: JOHN L. ARIS, LEAD ATTORNEY, LOWENTHAL & ABRAMS, P.C., BALA CYNWYD, PA. For STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant: DAVID RONALD FRIEDMAN, LEAD ATTORNEY, FORRY ULLMAN, KING OF PRUSSIA, PA.