Opinion
Case No. C-1-00-1056
November 4, 2002
ORDER
This matter comes before the Court on Plaintiffs', Electric Insurance Company and National Union Fire Insurance Company of Pittsburgh, Motion for Summary Judgment (doc. #24) and Defendant Chrysler Insurance Motion for Summary Judgment (doc. #25). Plaintiffs Electric Insurance Company ("Electric Insurance") and National Union Fire Insurance Company of Pittsburgh ("National Union") ask the Court to find that: 1) the estate of Christopher S. Wallace is not entitled to uninsured motorist/under insured motorist ("UM/UIM") benefits under the insurance policies issued by Plaintiffs; and 2) the estate is entitled to both liability and UM/UIM benefits under policies issued by Defendant Chrysler Insurance Company ("Chrysler"). Defendant Chrysler moves the Court to find that: 1) Brian Downey was not covered under the auto liability policies it issued; and 2) the Wallace estate is not entitled to UM/UIM benefits under its policies. For the reasons set forth below, Plaintiffs' motion is GRANTED IN PART AND DENIED IN PART, and Defendant Chrysler's motion is GRANTED IN PART AND DENIED IN PART.
I. FACTUAL BACKGROUND
On April 16, 1999, the decedent Christopher Wallace brought his car to Mike Castrucci Ford Sales, Inc. ("Castrucci Ford") for repairs. Castrucci Ford loaned Mr. Wallace a Ford Taurus at no charge to use while his car was being repaired. That evening, Wallace joined his friends Brian Downey and Melanie Hoffer in an evening of drinking at a number of establishments. By the end of the evening, Wallace knew that Downey had consumed alcoholic beverages. Nevertheless, Wallace permitted Downey to drive the three of them home in the Ford Taurus. Tragically, Downey drove recklessly and lost control of the car, which struck a utility pole. Wallace was killed, and Downey and Hoffer were seriously injured. After the accident, Downey's blood alcohol level was found to be far in excess of the legal limit.
This lawsuit involves the various insurance policies held at the time of the accident by Downey, Wallace, Castrucci Ford, and Wallace's employer, the General Electric Company ("General Electric"). Downey held an auto liability policy issued by State Farm Insurance with a coverage limit of $25,000. Wallace was insured through an Allstate Insurance Company policy limiting recovery to $100,000 per occurrence. Defendant Chrysler provided motor vehicle liability and UM/UIM coverage to Castrucci Ford through a Commercial Lines Policy. The liability and uninsured/underinsured motorist ("UM/UIM") coverages provided under the Commercial Lines Policy each limit recovery to $1,000,000 per occurrence. Chrysler also provided excess coverage to Castrucci Ford under an umbrella/excess policy with a coverage limit of $10,000,000. At the time of his death, Christopher Wallace worked for General Electric, which held an automobile liability policy issued by Electric Insurance. General Electric was also insured under an umbrella/excess policy issued by National Union. The Electric Insurance policy limited its UM/UIM coverage to $500,000 per occurrence, while the National Union policy provided excess coverage for the underlying Electric Insurance policy with a limit of $22,500,000 per occurrence.
State Farm has already tendered its policy limit to Allstate in exchange for a release of claims. Allstate subsequently offered to settle the claims of the Wallace estate.
Defendant Phyllis H. Wallace, as executrix of the estate of Christopher Wallace, allegedly instituted a claim with Electric Insurance for UM/UIM coverage. In response, Plaintiffs filed this suit, seeking a declaratory judgment that any claims by the Wallace estate arising from the accident are not covered under the Electric Insurance and National Union policies. (See doc. #1.) Defendant Phyllis Wallace filed a cross-claim against Defendant Chrysler for a declaration that the claims of the Wallace estate arising from the accident are covered by the liability and UM/UIM provisions of Chrysler's Commercial Lines Policy. (See doc. #7.) She also filed a counterclaim against Plaintiffs for a declaratory judgment that the Wallace estate can collect UM/UIM benefits under the Electric Insurance and National Union policies. (See id.)
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56 governs motions for summary judgment. Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). On a motion for summary judgment, the movant has the burden of showing that there exists no genuine issue of material fact, and the evidence, together with all inferences that permissibly can be drawn therefrom, must be read in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The moving party may support the motion for summary judgment with affidavits or other proof or by exposing the lack of evidence on an issue for which the nonmoving party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). On those issues for which it shoulders the burden of proof, the moving party must make a showing that is "sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (emphasis and citation omitted). For those issues on which the moving party will not have the burden of proof at trial, the movant must "point out to the district court . . . that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325.
In responding to a summary judgment motion, the nonmoving party may not rest upon the pleadings, but must go beyond the pleadings and "present affirmative evidence in order to defeat a properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). The nonmoving party "must set forth specific facts showing there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
Although "[t]he mere existence of a scintilla of evidence in support of plaintiff's position will be insufficient" to overcome a summary judgment motion, Anderson, 477 U.S. at 252, a court should not grant summary judgment merely because the nonmovant's case appears weak. The task of the Court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. A genuine issue for trial exists when there is sufficient "evidence on which the jury could reasonably find for the plaintiff." Id. at 252.
III. ANALYSIS
Because both summary judgment motions request resolution of the same issues, the Court will analyze them together. In their motion, Plaintiffs contend that the Wallace estate may not collect UM/UIM benefits under the Electric Insurance and National Union insurance policies, in part because the estate is entitled to collect under the Chrysler policies. Defendant Chrysler argues that the estate may not collect under either of its policies. The Court will address coverage under the Chrysler policies first, because disposition of such issues will aid in examining Plaintiffs' policies.
A. The Chrysler Policies 1. Liability Coverage
The parties first contest whether the Chrysler policies provided liability coverage to Downey. The liability coverage portion of the Commercial Lines Policy contains the following definition of an "insured":
1. For Covered "Autos."
a. You are an "insured" for any covered "auto."
b. Anyone else is an "insured" while using with your permission a covered auto. . . .
(Doc. #24 exh. C at 019.) Similarly, the Chrysler umbrella/excess policy defines an insured as any person driving a covered auto on a public highway with the permission of the named insured, as well as "[a]ny other person . . . who is insured under any policy of underlying insurance." (Id. exh. D at 009.) As Downey is not a named insured, (see id. at 005; doc. #25 exh. 2), the policies cover him only if he had the permission of Castrucci Ford to use the Taurus at the time of the crash.
It is clear from the record, and the parties do not dispute, that Castrucci Ford never directly authorized Downey to drive the Taurus. Instead, Castrucci Ford gave only Wallace explicit permission to use the car. However, an individual who is directly authorized by the owner of a vehicle to drive that vehicle (the "first permittee") may, under certain circumstances, grant valid permission to a third-party (the "second permittee") to use the vehicle. See West v. McNamara, 111 N.E.2d 909 (Ohio 1953) (citing with approval four rules set forth in 160 A.L.R. 1195 describing when, for insurance purposes, second permittee has original permittor's authorization to use automobile). Specifically, the original permission extends to use by the second permittee if such use "serves some purpose, benefit, or advantage of the first permittee." West, 111 N.E.2d at 912 (quoting 160 A.L.R. 1195). Such is the case here. Even though Downey's use of the vehicle ended in disaster, Wallace permitted Downey to drive the car for a purpose at least hypothetically beneficial to both of them-namely, to get them home. Consequently, the permission Castrucci Ford gave Wallace extended to permit Downey to drive the car at the time of the accident.
Chrysler contends, however, that Wallace could not have validly permitted Downey to drive the Taurus because Downey drove the car in violation of the rental agreement between Wallace and Castrucci Ford. That agreement expressly forbid use of the car in violation of federal, state, or local law or while under the influence of intoxicants or drugs. Chrysler argues that these prohibitions limited the scope of the permission that Chrysler granted to Wallace. Then, because Wallace did not have permission to drive the Taurus while under the influence of alcohol or in violation of federal, state, or local law, Chrysler contends that he could not authorize Downey to do so. Chrysler is incorrect. Under Ohio law, neither of the provisions limited the scope of Wallace's authority.
Chrysler also asserts that the rental agreement prohibited the use of the Taurus by any third-party who did not appear on Wallace's insurance policy. (Doc. #25 at 5; doc. #29 at 4.) The parties have stipulated to certain statements in the rental agreement, but not to the existence of such a provision. (See doc. #24 exh. A.) Also, no party submitted the rental agreement to the Court, and there is no factual support in the record for Chrysler's assertion that this additional provision was contained therein. The Court therefore will not consider this provision in its analysis. See In re Blazo Corp., No. 94-3797, 1995 WL 764130, at **3 (6th Cir. Dec. 27, 1995) (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915 n. 7 (5th Cir. 1992)) (district court not required to consider evidence not properly put before it on summary judgment).
First, not all limits on the use of a leased vehicle constitute limitations on the scope of the lessee's permission to use that vehicle. Specifically, only those limits that dictate that the leased vehicle may be used in a specific place, for a specific period of time, or for a specific purpose actually limit the scope of permission. Allstate Ins. Co. v. Porter, No. 91AP-1441, 1992 WL 185669, at *4-*5 (Ohio Ct.App. July 28, 1992) (citing Frankenmuth Mut. Ins. Co v. Selz, 451 N.E.2d 1203 (Ohio 1983); Gulla v. Reynolds, 85 N.E.2d 116 (Ohio 1949)). Other limitations, such as the one in this case prohibiting use of a rental car while under the influence of intoxicants or drugs, do not limit the scope of the lessee's permission; rather, they restrict the manner of use contemplated by the lessor. Id. at *5; see Jewell v. State Farm Mut. Auto. Ins. Co., No. 93 CA 89, 1994 WL 167934, at *3 (Ohio Ct.App. Apr. 15, 1994). Therefore, using the leased vehicle in a manner that violates such restrictions, as Downey arguably did here, does not vitiate the insurance coverage. Id.
When faced with an issue of state law, the Court first looks to decisions by that state's supreme court. If that court has not decided the legal question, then the Court may rely on state appellate court decisions, unless there is persuasive indication that the state supreme court would rule otherwise. Arnett v. Myers, 281 F.3d 552, 565 (6th Cir. 2002). The Ohio Supreme Court has not addressed this issue, and the Court has found no indication that the Ohio Supreme Court would not follow Porter and Jewell.
While the stipulated facts indicate that Downey consumed alcohol and that his blood alcohol level after the crash was in excess of the legal limit, such facts do not demand the conclusion that Downey was under the influence of intoxicants, as that phrase is used in the rental agreement. See Allstate Ins. Co., 1992 WL 185669, at *3 (fact that driver operated motor vehicle with blood alcohol level well above the legal limit did not resolve factual question of whether he was under the influence of alcohol at the time of accident).
Second, the provision prohibiting use of the Taurus in violation of federal, state, or local law offends public policy. See id. As such, that provision cannot be enforced to deprive Wallace, and hence Downey, of authority to drive the car. To hold otherwise essentially would render Chrysler's coverage of the vehicle a complete nullity, because a driver generally becomes liable to an injured party as a result of a traffic violation. See id. Consequently, Chrysler's arguments fails, and Downey was an "insured" under the Chrysler liability policies for this accident.
2. UM/UIM Coverage
The parties next dispute whether Wallace is entitled to UM/UIM benefits under either Chrysler policy. First, the UM/UIM endorsement to the Chrysler Commercial Lines Policy covers bodily injury for which the "insured" is entitled to recover from the operator of an "uninsured motor vehicle." (Doc. #24 exh. C at 022.) The policy defines an "uninsured motor vehicle," in relevant part, as "a land motor vehicle . . . for which the sum of liability bonds or policies applicable at the time of an accident . . . [is] less than the Limit of Insurance of this coverage." (See doc. #24 exh. C at 024.) Under this definition, the Ford Taurus that Castrucci Ford provided to Wallace was not an "uninsured motor vehicle." As explained above, the Chrysler policies provide liability coverage for this accident of up to $11,000,000. The Commercial Lines Policy limits the UM/UIM benefits payable thereunder to $1,000,000. Therefore, the liability coverage limit for this accident is not less than the UM/UIM limit of the Chrysler policy. As such, the Wallace estate may not receive UM/UIM benefits under the Chrysler Commercial Lines policy.
Second, Chrysler argues that the Wallace estate is not entitled to UM/UIM benefits under the Chrysler umbrella/excess policy. As an initial matter, when an insurance policy provides umbrella/excess coverage that includes automobile liability insurance, the policy must also offer UM/UIM coverage. Gyori v. Johnston Coca-Cola Bottling Group, Inc. 669 N.E.2d 824, 826 (Ohio 1996); see O.R.C. § 3937.18 (1998). If such a policy does not provide UM/UIM coverage, then such coverage will be implied by operation of law. Id. The Chrysler umbrella/excess policy provides auto liability coverage, but does not expressly offer UM/UIM coverage. The Court therefore finds UM/UIM coverage to be implied in that policy.
Because the UM/UIM coverage in the Chrysler umbrella/excess policy is implied, there is of course no explicit provision in that policy defining the limits of its UM/UIM coverage. In such a situation, a court relies on the definitions of coverage contained in the underlying UM/UIM coverage policy to determine the scope of the implied UM/UIM coverage. See Addie v. Linville, Nos. 80547, 80916, 2002 WL 31195177, at *4 (Ohio Ct.App. Oct. 3, 2002) (applying definition of "insured" in underlying UM/UIM coverage to implied UM/UIM coverage in umbrella/excess policy); see also Scott-Pontzer v. Liberty Mut. Fire Ins. Co., 710 N.E.2d 1116, 1120 (Ohio 1999) (implicitly using underlying UM/UIM policy definitions to determine coverage under UM/UIM coverage implied by operation of law in umbrella/excess policy). The Court will therefore look to the UM/UIM endorsement in the Commercial Lines policy to determine whether Wallace is entitled to UM/UIM coverage through the umbrella/excess policy.
Chrysler suggests that the Court should instead rely on the scope of liability coverage in the umbrella/excess policy to decide whether Wallace is entitled to UM/UIM benefits under that policy, pointing to Gibson v. New Hampshire Insurance Co., No. C-2-01-0113 (S.D.Ohio Dec. 21, 2001) (slip opinion). In Gibson, the court refused to extend UM/UIM coverage implied by operation of law into an umbrella/excess policy purchased by the plaintiff's employer to the plaintiff's deceased family members. The Court will decline Chrysler's suggestion, however, as it is bound to follow the more recent, contradictory ruling of the Ohio Court of Appeals in Addie.
As noted above, the UM/UIM endorsement in the Commercial Lines Policy limited coverage to "uninsured vehicles," namely those vehicles for which the sum of liability coverage applicable at the time of the accident is "less than the Limit of Insurance of this coverage." (Doc. #24 exh. C at 022.) The Chrysler policies provide up to $11,000,000 in liability coverage. The Chrysler umbrella/excess policy limits coverage at $10,000,000. Consequently, the Taurus was not an uninsured vehicle under the Chrysler policy, and the Wallace estate may not collect UM/UIM benefits under the umbrella/excess policy.
B. The Electric Insurance and National Union Policies
Plaintiffs argue that Wallace is not entitled to UM/UIM benefits under either the Electric Insurance or National Union policy. The UM/UIM endorsement included in the Electric Insurance policy defines an "uninsured motor vehicle" in precisely the same way as that term is defined in the Chrysler Commercial Lines Policy. (See doc. 24 exh. E at 011.) As such, the same analysis applies. The Chrysler policies provide liability coverage for this accident of up to $11,000,000. The Electric Insurance policy limits the UM/UIM benefits payable thereunder to $500,000 per accident. The Ford Taurus therefore is not an "uninsured motor vehicle" under the Electric Insurance policy, and the Wallace estate is not entitled to UM/UIM benefits under that policy.
Four months after filings their motion for summary judgment, Plaintiffs filed a Supplemental Brief in Support of Motion for Summary Judgment on behalf of Defendants [sic] Electric Insurance Company and National Union Fire Insurance Company of Pittsburgh, PA. (Doc. #33.) Plaintiffs argue therein that they are entitled to summary judgment because under Ohio choice of law rules, the Electric Insurance and National Union policies should be interpreted under the laws of Connecticut, New York, Massachusetts, or some combination thereof. Unfortunately, while Plaintiffs present extensive argument on why Ohio law does not apply, they fail to connect the dots and specify which state's law does apply and why summary judgment would be appropriate under that state's law. Because Plaintiffs arguments are incomplete, the Court will not address the choice of law issue at this time, but will permit Plaintiffs to move again for summary judgment on this limited issue if they so choose.
Turning to the National Union policy, the Court notes that it is similar to the Chrysler umbrella/excess policy in that it contains no express UM/UIM provisions. Therefore, under the same analysis set forth with respect to the Chrysler umbrella/excess policy, the Court implies UM/UIM coverage into the National Union policy under operation of law. See Gyori, 669 N.E.2d at 826. Having done so, the Court now examines the UM/UIM provisions of the underlying Electric Insurance policy to determine whether Wallace was covered for UM/UIM purposes under the National Union policy. See Addie, 2002 WL 31195177, at *4.
Plaintiffs concede that, pursuant to the Ohio Supreme Court's decisions in Scott-Pontzer, Wallace was an insured for purpose of receiving UM/UIM coverage under the Electric Insurance policy. (Doc. #24 at 16.) However, the policy applies only to "uninsured vehicles." Plaintiffs argue that the Taurus was not an uninsured vehicle for two reasons: 1) the liability coverage for the Taurus was not less than the UM/UIM coverage provided by the Electric Insurance policy; and 2) the vehicle was furnished to Wallace for his regular use. Plaintiffs' first argument misapprehends the rule set forth in Addie. The Electric Insurance policy covers only "uninsured vehicles," namely those vehicles for which the net liability coverage is "less than the Limit of Insurance of this coverage." (Doc. #24 exh. E at 011.) Addie teaches that this definition applies to the UM/UIM coverage implied into the National Union policy. 2002 WL 31195177, at *4. Therefore, the National Union policy provides UM/UIM coverage if the liability coverage at the time of the accident is "less than the Limit of Insurance of this coverage." The term "this coverage" as implied into the National Union policy refers to that policy, not the one issued by Electric Insurance. In other words, UM/UIM coverage attaches if the liability coverage is less than the coverage provided by the National Union policy, not that provided by the Electric Insurance policy. The Court has determined that liability coverage of up to $11,000,000 is available for this accident under the Chrysler polices. The National Union policy would provide up to $22,500,000 in UM/UIM coverage. Consequently, Plaintiff's first argument fails.
Plaintiffs' second argument is no more successful. Plaintiffs contend that the Taurus was not an "uninsured vehicle" under the Electric Insurance policy because Castrucci Ford furnished it to Wallace for his "regular use." The Electric Insurance policy excludes from its definition of "uninsured vehicle" any vehicle "[o]wned by or furnished or available for your regular use or that of any family member." (Id. exh. E at 011.) Such an exclusion encompasses use that is "frequent, steady or constant over a substantial period of time." Ohio Cas. Ins. Co. v. Travelers Indem. Co., 326 N.E.2d 263, 264 (Ohio 1975). While this phrase provides little more clarity than the term it defines, Ohio courts have set forth some of the contours of "regular use" in their decisions. On on hand, Ohio courts have found "regular use" when a police officer drove the same police car on 122 of 164 working days, Kenney v. Employers' Liab. Assurance Corp., 214 N.E.2d 219 (Ohio 1966), and when an employee drove his company's van every day for a year and a half, Withrow v. Liberty Mut. Fire Ins. Co., 595 N.E.2d 529 (Ohio Ct.App. 1991). On the other, "regular use" does not include when an employee drives his employer's truck no more than ten times per year, Sanderson v. Ohio Edison Co., 635 N.E.2d 19 (Ohio 1994), or when a dealership turns over a new car to its owner with only a temporary license pending issuance of title, Oberdier v. Kennedy Ford, Inc., 261 N.E.2d 348 (Ohio Ct.App. 1970).
This definition is to be differentiated from instances in which an insurance policy explicitly provides coverage for a vehicle provided for the insured's "regular use." In such a situation, where the phrase "regular use" is intended to broaden, rather than restrict, coverage, that phrase is construed more broadly to include any use within the scope of permission given by the insured. See Ohio Cas. Ins. Co., 326 N.E.2d at 265-66.
As made clear from the above examples, whether use qualifies as "regular" is an issue of fact, see Ohio Cas. Ins. Co., 326 N.E.2d at 264, and such issues normally are not be decided on summary judgment. However, the parties do not dispute the facts material to this question. Wallace took his car to Castrucci Ford to be repaired. In the interim, Castrucci Ford provided him with the Taurus to use in its stead. Wallace's use of the Taurus was only temporary, and he would have been required to return the car to Castrucci Ford once the repairs on his vehicle were completed. In light of these facts and Ohio law, no reasonable jury could conclude that the Taurus was provided to Wallace for his "regular use" as that term appears in the Electric Insurance policy.
Plaintiffs contend that Wallace's use of the Taurus was "regular" as that term is used in the common parlance, because Castrucci Ford furnished Wallace to use as he would his own vehicle. However, the phrase "regular use" when included in a policy exclusion has a different meaning than it does when spoken in conversation. As the Court in Oberdier explained,
There is a vast difference between the words `regular use' as used in the insurance policy and what might be loosely spoken of as regular use for three days. If an automobile may be in `regular use' for three days, it could also be in `regular use' for fifteen minutes. Each could, in one sense of the word, be called or spoken of as regular use. But this is not the contemplated meaning of the phrase as used in the insurance policy.261 N.E.2d at 351.
III. CONCLUSION
For the reasons set forth above, the Court makes the following determinations of law:
1) Brian Downey was covered under both the Chrysler Commercial Lines Policy and the Chrysler umbrella/excess policy for purposes of liability;
2) Neither Chrysler policy provided UM/UIM coverage to Wallace for the April 16, 1999 accident;
3) Pursuant to Ohio law, the Electric Insurance policy did not provide UM/UIM coverage to Wallace for that accident; and
4) Pursuant to Ohio law, Wallace was covered under the National Union policy for UM/UIM purposes on April 16, 1999.
The Court therefore GRANTS IN PART AND DENIES IN PART Plaintiffs', Electric Insurance Company and National Union Fire Insurance Company of Pittsburgh, Motion for Summary Judgment (doc. #24) and GRANTS IN PART AND DENIES IN PART Defendant Chrysler Insurance Motion for Summary Judgment (doc. #25).
IT IS SO ORDERED.