Today’s
case is brought to you by the letters A, B, and C because using anything other
than these basic letters (that is the proper insurance terminology) to describe
this case’s issue would render the whole deal confusing and awkward (kind of
like my high school years).
At any
rate, the question before the SCOV is whether an omnibus clause in an insurance
policy provides coverage for a person in the middle of a car-loaning
triangle. Put another way: A loans car
to B; B, in turn, loans car to C; C, in turn, gets in an accident. Is B covered under the policy for a
negligent-entrustment claim against B for loaning the car to C?
The
underlying story, using the A-B-C designations, is as follows. On the day of the accident, defendant (B)
picked up decedent (C) who was hitchhiking.
Eventually, they met policyholder (A) at a McDonald’s, where C asked A
to use her car. In response, A asked B
whether B was sober and licensed. B said
he was. A gave B the keys to A’s car
with no restrictions. But there seemed
to be an unarticulated understanding that C, who had been drinking and had had
a number of alcohol-related driving charges, would not be driving the
vehicle. A said something about needing
to get some boxes out of the trunk. B
gave C the keys so C presumably could go sit in the car and listen to the radio
(and maybe help with the boxes—this isn’t clear). C just got in A’s car and drove off.
B saw C a
couple times later in the day; at one point B told C he shouldn’t be driving
and to return the car to A immediately.
Eventually, C drove into a telephone pole at a high rate of speed and died
instantly.
C’s
estate sued A and B for wrongful death under a negligent-entrustment theory. B sought defense coverage under A’s
policy. Insurer objected, and as often
happens, the issue boiled down to a legal question of duty to defend and
indemnify on which both parties sought summary judgment.
The
policy at issue here provided coverage for people a car is loaned to “while
using such a car if its use is within the scope of [policyholder’s] consent.” Thus, there are two questions: (1) was B’s
giving the keys to C “use” under the policy; and (2) if so, was that “use”
within the scope of A’s consent?
The trial
court concluded that B’s action was not “use” under the policy and granted
summary judgment for insurer. B
appealed.
Because
the SCOV is reviewing a grant of summary judgment, we’re in same-standard-as-the-trial-court
territory: if there’s no genuine dispute of material fact, and the movant is
entitled to judgment as a matter of law, then summary judgment is proper—in
other words, not a lot of deference to the trial court. Additionally, the SCOV has a long history of reviewing
insurance policies and interpretating however the **** they feel like it.
The SCOV
notes at the outset that an insurance company’s “duty to defend” is the
broadest duty an insurance company has.
Accordingly, the relevant question is not whether there’s explicit
coverage under the policy, but whether there might be coverage.
The
SCOV’s first question is whether the transfer of keys from B to C was “use”
under the policy. What does “use” mean? To answer this question, the SCOV first looks
to the policy’s plain language. If a
disputed term is ambiguous, the language is construed against the insurance
company and in the individual’s favor.
Here, the policy does not define “while using.” Black’s Law Dictionary is no help. Accordingly, the SCOV finds the term
ambiguous.
There is
a lengthy review of the varying interpretations of “use” in insurance policies
amongst other jurisdictions that is quite educational, but nonetheless
unnecessary to delve into in great detail here.
There is also an educational discussion of the public-policy reasons for
favoring coverage. And the SCOV’s
ultimate determination is that “use” is an ambiguous term—broader than, for
example, “driving”—and with the principle that construction should be in favor
of coverage, the trial court’s interpretation of “use” was far too narrow. As the SCOV puts it, “[W]e find that
entrustment of another with a vehicle that one owns or controls constitutes
‘use’ for the purpose of the omnibus clause of an automobile liability insurance
policy.” Write that down, kids. Potential coverage just got a nice winter
coat.
This
brings the SCOV to the second question: whether the transfer of the keys from B
to C was within the scope of A’s consent.
The SCOV notes that everyone seems to have understood that C wasn’t
supposed to be driving. Accordingly, if
B gave the keys to C when he knew or should have known C was going to take off
with the vehicle, B doesn’t get coverage under the policy.
But B’s
account was that he only gave C the keys to go listen to the radio and maybe help
load some boxes. B even told C that he
was not to drive. Accordingly, there is
a factual dispute—indeed, if B’s testimony is believed and a jury finds that
B’s belief that C would not drive is reasonable, then there was no negligent
entrustment. The SCOV concludes that a
genuine dispute of material fact exists and summary judgment was not
proper.
And so
this one gets sent back to the trial court for another day in court—and maybe a
couple more after that when we get to the underlying claim . . . . The immediate result, however, as Louis Jordan might say,
is that B done hooked the insurance company, at least for another few
rounds. So beware, brother, beware.
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