Harleysville Mutual Insurance v. Davis , 322 F. App'x 277 ( 2009 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1132
HARLEYSVILLE MUTUAL INSURANCE COMPANY,
Plaintiff - Appellant,
v.
JENNIE BRIDGETT DAVIS; MARYLAND AUTOMOBILE INSURANCE FUND;
VITTO PHILLIP LOMBARDO; SHAWNICE COTTON; PRESTON MAURICE
HAWKINS; JOHANNES MARIE WILSON; ESTATE OF LARRY SETH
GRIFFIN; JAMIE ANNA REEDER,
Defendants – Appellees,
and
JAY DOUGHERTY; ERIC EUGENE BALLARD; ANTHONY PANZO; EDWIN J.
DOUGHERTY; GEORGE PERDUE USED CARS, INCORPORATED,
Defendants.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. William M. Nickerson, Senior District
Judge. (1:05-cv-01107-WMN)
Argued: December 4, 2008 Decided: April 10, 2009
Before KING and DUNCAN, Circuit Judges, and Rebecca Beach SMITH,
United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed by unpublished opinion. Judge Smith wrote the majority
opinion, in which Judge King concurred. Judge Duncan wrote a
separate concurring opinion.
ARGUED: William C. Parler, Jr., PARLER & WOBBER, Towson,
Maryland, for Appellant. Donald S. Saiontz, James Kevin
MacAlister, SAIONTZ, KIRK & MILES, P.A., Baltimore, Maryland,
for Appellees. ON BRIEF: Phillip S. Anthony, PARLER & WOBBER,
Towson, Maryland, for Appellant. Arthur M. Rubenstein,
Baltimore, Maryland; Gerald F. Gay, ARNOLD, BACOT, GAY & DARBY,
P.A., Baltimore, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
SMITH, District Judge:
In July 2004, Larry Griffin (“Griffin”) was killed in a car
accident while driving a Monte Carlo, on loan to his girlfriend,
Jennie Davis (“Davis”), from a used-car dealership. The
dealership’s insurer claimed that its policy did not cover the
accident because Griffin did not have permission to drive the
loaner car. After a two-day bench trial, the district judge
concluded that Griffin had implied permission to drive the
loaner car. The district judge also found that the insurer had
not presented conclusive evidence to rebut the presumption under
Maryland law of permissive use. Thus, the district court
concluded that the insurance policy covered this accident.
Harleysville does not contest the district court’s findings
of fact, but challenges its conclusions of law based on the
factual findings. We review legal issues de novo. Fed. R. Civ.
P. 52(a); see, e.g., Roanoke Cement Co., LLC v. Falk Corp., 413
F.3d 431, 433 (4th Cir. 2005). For the following reasons, we
affirm.
I.
This dispute arises out of a July 1, 2004, accident
involving a car loaned by Perdue’s Used Cars to Davis while her
car was being repaired. Perdue’s Used Cars had an automobile
insurance policy with Harleysville Mutual Insurance Company
(“Harleysville”). The omnibus clause of the policy defined an
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“insured” as “anyone else while using with your permission a
covered ‘auto’ you own[.]” (J.A. 802.) No party disputes that
the policy covers the loaner car given to Davis, but
Harleysville claims that Griffin, the driver at the time of the
accident, is not an “insured” because he lacked permission from
either Perdue’s Used Cars or Davis to drive the loaner car.
Harleysville brought suit in the United States District
Court for the District of Maryland to establish that it had no
duty to defend or indemnify for claims arising out of this
accident. 1 On November 10, 2007, the district court found that
Harleysville had a duty to indemnify and defend Davis for all
claims arising against her from this accident, because she was
indisputably a permissive user of the loaner car. The district
court found genuine issues of material fact relating to whether
Griffin had implied permission from Davis to drive the loaner
car on the night of the accident.
Following the two-day bench trial, the district judge found
the following facts, which have not been challenged on appeal.
Davis regularly drove a 1996 Ford Taurus purchased from Perdue’s
Used Cars. On June 30, 2004, Davis took the Taurus to the
dealership for a repair under warranty. When told that the car
1
On March 3, 2006, the district court entered a consent
final judgment limited to claims between Perdue’s Used Cars and
Harleysville, which claims are not at issue on appeal.
4
would not be ready that day, Davis asked for a loaner car to
drive to work and take her children to daycare. George Perdue
(“Perdue”), the owner of Perdue’s Used Cars, testified that he
authorized the loan of a 2000 Monte Carlo, and that he gave
Davis no instructions about how she could use the car or about
who was allowed to drive it. Since he was loaning a replacement
car, Perdue testified that he expected that Davis would use the
Monte Carlo just like the Taurus. According to Perdue, Davis
did not receive any paperwork or oral instructions when the car
was loaned. At trial, Perdue’s son, David Perdue, testified
that he--not his father--loaned Davis the Monte Carlo, and that
he instructed Davis to use the car only for driving to work and
daycare. Characterizing the testimony of Perdue’s son as
incredible, the district court found that Perdue’s Used Cars
gave Davis express permission to drive the car and that “no
restrictions were placed on its use.” (J.A. 1470.) Thus, the
district court found that Davis was free to use the Monte Carlo
as she would have used her Taurus, which included permitting
another person to drive the car.
Griffin had been living with Davis for several months
before the accident. Based on the testimony of numerous
witnesses, the district judge found that Griffin had Davis’s
permission routinely to use her Taurus, without having to ask
specifically to use the car on any given occasion. On the night
5
of the accident, Davis had picked up her children from daycare
and returned home. Griffin was not home, although his Crown
Victoria automobile was parked in the driveway. Davis left the
keys to the Monte Carlo on the kitchen table, where she usually
placed her car keys to the Taurus. After going to sleep early,
Davis awoke when Griffin returned home and asked if she would
like to go out to a club with him and some friends. She
declined, saying that she had to get up early for work. While
Davis later testified that she would not have let Griffin take
the car out with friends if he had asked, the district court did
not find that Griffin asked for permission to drive the loaner
car, nor did the court find that Davis had placed any express
restrictions on Griffin’s use of this car. The district court
found that Griffin picked up the keys to the Monte Carlo, from
the same place he usually found the keys to the Taurus, and that
he took the loaner car out with friends, “assuming he was free
to use the loaner car in the same manner that he freely and
frequently borrowed Davis’s Taurus.” (J.A. 1472.)
In the early hours of July 1, 2004, Griffin was killed in a
car accident. Several witnesses from the hospital testified
that Davis showed remorse for letting Griffin drive the Monte
Carlo, but the district court did not assume from this testimony
that Davis had earlier expressly told Griffin that he could take
the loaner car. The district court concluded: (1) Davis had the
6
authority to permit Griffin to use the Monte Carlo; (2) Griffin
had implied permission to drive the Monte Carlo based on his
unrestricted use of the Taurus; (3) Harleysville had not
rebutted the presumption under Maryland law that Griffin was a
permissive user of the car; and, thus, (4) the Harleysville
policy covered the liability and damages for the July 1, 2004,
accident.
II.
Under Maryland law, 2 words in an insurance policy receive
their “customary, ordinary, and accepted meaning,” as a
“reasonably prudent layperson” would understand them. State
Farm Mut. Auto. Ins. Co. v. DeHann, 900 A.2d 208, 226 (Md.
2006). While Maryland courts do not strongly construe insurance
policies against the insurer, they do resolve ambiguities
against the insurer as the drafter of the policy. Truck Ins.
Exch. v. Marks Rentals, Inc., 418 A.2d 1187, 1191 (Md. 1980).
Moreover, an “omnibus clause must be liberally construed in
favor of the insured.” DeJarnette v. Fed. Kember Ins. Co., 475
A.2d 454, 457 (Md. 1984).
2
The parties agree that “[t]he substantive law of the State
of Maryland governs the construction of the subject insurance
contract in this case.” (J.A. 105 n.2) (citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938)).
7
In an automobile insurance policy, an “omnibus clause” is a
provision that extends coverage to individuals who use a car
with the owner’s permission. See Blue Bird Cab Co., Inc. v.
Amalgamated Cas. Ins. Co., 675 A.2d 122, 128 n.9 (Md. Ct. Spec.
App. 1996). Under an omnibus clause, permission can be express
or implied. See Bond v. Pa. Nat’l Mut. Cas. Ins. Co., 424 A.2d
765, 768 (Md. 1981) (reading the term “permission” in an
automobile insurance policy “as though the word ‘implied’
precedes it”). The “existence of permission, whether express or
implied, is largely a factual determination, and one which
varies in response to the circumstances present in each case.”
Id. Implied permission may arise from the “course of conduct
among those involved[.]” See State Farm Mut. Auto. Ins. Co. v.
Martin Marietta Corp., 657 A.2d 1183, 1188 (Md. Ct. Spec. App.
1995). 3
The use of a car must “fall within the scope of permission
given by the insured[.]” Nationwide Mut. Auto Ins. Co. v.
3
Citing Maryland’s anti-theft statute, Harleysville
contends that permission to use a vehicle cannot be presumed or
implied based on prior permission. Md. Code Ann., Transp.,
§ 14-102(c) (for crimes of unauthorized use, owner’s consent may
not “be presumed or implied because of the owner’s consent on a
previous occasion”). As Maryland’s anti-theft statute has never
been applied in any civil case, we do not find that it abrogates
Maryland’s presumption of permission or examination of conduct--
which may include the driver’s prior use of a vehicle--to
support a finding of implied permission. See Martin Marietta
Corp., 657 A.2d at 1187-88; see also Bond, 424 A.2d at 768.
8
Cont’l Cas. Co., 589 A.2d 556, 561. To determine if a specific
use falls “within the purview of the omnibus clause, one must
examine the total facts” presented by the case. Fed. Ins. Co.
v. Allstate Ins. Co., 341 A.2d 399, 407 (Md. 1975)(internal
quotation omitted). Express restrictions may limit the scope of
permission. See Md. Indem. Ins. Co. v. Kornke, 319 A.2d 603,
611 (Md. Ct. Spec. App. 1974). But “comprehensive permission is
more readily to be assumed where the use of the car is for
social or non-business purposes,” rather than business purposes.
Fed. Ins. Co., 275 A.2d at 408.
Finally, Maryland courts presume that the driver of a car
has the permission of the car’s owner. See Martin Marietta
Corp., 657 A.2d at 1187. The party arguing that the driver
lacked permission has the burden of rebutting the presumption by
conclusive evidence. Id. at 1188.
III.
The unrestricted language of the omnibus clause in the
Harleysville policy with Perdue’s Used Cars covers any use of an
insured car, if permitted by Perdue’s Used Cars or its permitted
drivers. The omnibus clause extends coverage to “anyone else
while using with your permission a covered ‘auto’ you own[.]”
(J.A. 802.) From the perspective of a reasonable layperson,
this language does not limit the authority of Perdue’s Used Cars
9
to give others permission to use loaner cars insured by the
Harleysville policy. Nor does this language restrict the
authority of permitted drivers to allow others to use these
loaner cars. Given Maryland’s liberal construction of omnibus
clauses in favor of policyholders, the Harleysville policy
allows both Perdue’s Used Cars and their permitted drivers to
let others use an insured loaner car.
The district court found that Perdue’s Used Cars gave Davis
express permission to drive the Monte Carlo--a car insured by
the Harleysville policy--and that Perdue’s Used Cars did not
restrict the use of the Monte Carlo by Davis. The district
court further found that after this grant of express,
unrestricted permission from Perdue’s Used Cars to Davis, she
had full authority to use the Monte Carlo as she would have used
the Taurus, including to let others drive the Monte Carlo.
These factual findings are not contested.
Importantly, further undisputed facts establish a course of
conduct supporting the district court’s conclusion that Griffin
had implied permission from Davis to drive the Monte Carlo. On
the night of the accident, Davis parked the Monte Carlo in her
driveway where she parked the Taurus, and she left the keys on
kitchen counter, just as she normally did. Griffin then found
the keys in their usual place, and he saw the Monte Carlo where
the Taurus was typically parked. Moreover, Griffin routinely
10
drove Davis’s Taurus, without her being present in the car. The
district judge found that Griffin had Davis’s permission to
“freely and frequently” drive the Taurus--a finding of fact that
Harleysville does not contest. Further, Davis never forbade or
restricted Griffin’s use of the Monte Carlo. 4
As a regular driver of the Taurus, who saw the Monte Carlo
located in the same place as he would have seen the Taurus,
Griffin had the same freedom to take the Monte Carlo loaner car
as the car it replaced. The ongoing implied permission that
Davis gave Griffin to drive her personal car did not vanish when
she received a substitute car. Perdue loaned the Monte Carlo to
Davis to replace the Taurus while finishing repairs on it, and
to use as a substitute for her regular car. Thus, the Monte
Carlo was meant to serve the same purposes, and to be for the
same uses, as the Taurus. Davis clearly viewed the Monte Carlo
as a replacement for the Taurus, as shown by where she drove the
car, where she parked it, and where she put the keys. Griffin
was a regular permissive user of Davis’s Taurus. On these
uncontested facts, we conclude that Griffin had implied
4
Although Davis may have had uncommunicated restrictive
thoughts and intentions on the night of the accident, she did
not express them to Griffin. (J.A. 1471.)
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permission to drive the Monte Carlo on the night of the
accident. 5
Finally, even if Davis had not submitted ample evidence of
Griffin’s implied permission to drive the loaner car,
Harleysville has not presented conclusive evidence to rebut the
presumption that Griffin had permission to use the Monte Carlo.
See Martin Marietta, 657 A.2d at 1187-88. Indeed, Harleysville
has not presented any evidence that Griffin actually lacked
permission to drive the Monte Carlo. Harleysville has failed to
rebut Maryland’s strong presumption of permissive use.
IV.
The uncontested facts of this case show that Griffin had
implied permission to drive the Monte Carlo and that he did not
exceed the scope of this implied permission. Moreover, no facts
rebut the presumption under Maryland law that Griffin was a
permissive user of the loaner car. As a result, the district
5
Harleysville contends that Griffin could not have driven
the car within the scope of permission, unless Davis had
expressly permitted Griffin to take the Monte Carlo the night of
the accident. This position contravenes Maryland’s settled law
that permission may be express or implied and shown through a
course of conduct. See Bond, 424 A.2d at 768; Martin Marietta,
657 A.2d at 1188. Moreover, Griffin’s use of the car for the
social purpose of going out with friends, rather than for a
business reason, also supports the conclusion that he drove
within the scope of his permission. See Fed. Ins. Co., 275 A.2d
at 408.
12
court properly held that Harleysville’s insurance policy covers
this accident.
For the above reasons, the judgment of the district court
is
AFFIRMED.
13
DUNCAN, Circuit Judge, concurring:
Although I ultimately agree with the majority’s fine
opinion, I do so on slightly different grounds and with somewhat
greater reservations, which I write separately to express.
My concern flows from the majority’s conclusion that under
the facts of this case, Maryland’s implied permission transfers
between two vehicles. It is clear, as the majority states, that
Griffin had permission to use Davis’s Taurus and that Davis
herself was a permissive user of the Monte Carlo. It is also
clear under Maryland law a course of conduct between parties may
be sufficient to give rise to implied permission to use an
automobile. However, in this case there was absolutely no
evidence that Griffin had permission--implied or express--to use
the Monte Carlo. There is no evidence in the record that
Griffin and Davis discussed the provenance of the Monte Carlo or
that Griffin even knew that it was a loaner car to replace her
Taurus. Leaving one’s keys in the same place each night seems
too small a quantum of evidence from which to imply permitted
use.
Were we deciding the issue of whether to imply permissive
use, I would prefer to certify the question of such
transferability to the Maryland courts to resolve in the first
instance. I am persuaded, however, that the issue before us is
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slightly different. This appeal presents the narrower question
of whether Harleysville has carried its burden of proof.
As the majority notes, under Maryland law there is a
presumption that a driver operating a vehicle has either express
or implied permission to do so. State Farm Mut. Auto. Ins. Co.
v. Martin Marietta Corp., 657 A.2d 1183, 1186 (Md. Ct. Spec.
App. 1995). The existence of this presumption shifts the burden
to Harleysville to establish that Griffin did not have
permission to use the vehicle when the accident occurred. * A
party must show “conclusive evidence” to rebut the presumption
as a matter of law. In the absence of such conclusive evidence,
the presumption is a question for the finder of fact. State
Farm, 657 A.2d at 1188; see also Empire Fire & Marine Ins. Co.
*
The case law reveals that the presumption of permission
functions as a burden-shifting device. In State Farm, the case
cited by both parties to support the presumption, the court
employed the presumption in this way:
There is, however, a presumption that Mansel did have
permission to be driving at that time. As soon as the
stipulation was read to the jury, appellant had the
benefit of this presumption, which shifted to
appellees the burden of persuading the jury that
Mansel did not have permission to be driving when the
accident occurred.
657 A.2d at 1186 (internal citations omitted). The court went
on to say:
The owner who asserts that the driver did not have
permission should be held to the same burdens of
production and persuasion as the owner who asserts
that the driver was not an agent. . . . .[of showing]
by a preponderance of the evidence that . . . [the
driver] did not have permission.
Id. at 1187.
15
v. Liberty Mut. Ins. Co., 699 A.2d 482, 500 (Md. Ct. Spec. App.
1996).
As I noted earlier, in this case the record reflects an
absence of evidence on the question of whether or not Griffin
had permission to drive the Monte Carlo. I am not unsympathetic
to Harleysville’s plight. Proving a negative-- here, the
absence of implied permission-- is a difficult burden. It is,
however, the burden imposed by Maryland law, and Harleysville
has failed to meet it.
For the narrow reason that Harleysville has failed to carry
its burden of rebutting the presumption of permission, I concur
in the majority’s opinion.
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