French v. Hernandez

• Decision Date: 30 June 2005
• Citation: 875 A.2d 943,184 N.J. 144
• Parties: Linda R. FRENCH, Plaintiff-Respondent and Third Party Plaintiff, v. Enrique HERNANDEZ, ABC Company (1-5) and John Does (1-5), Defendants, and John H. Decker and Decker Landscaping, Defendants-Respondents, and Harleysville Insurance Company, Third Party Defendant-Appellant, and New Jersey Manufacturers Insurance Company, Defendant-Intervenor-Respondent.
• Court: New Jersey Supreme Court

875 A.2d 943

184 N.J. 144

Linda R. FRENCH, Plaintiff-Respondent and Third Party Plaintiff, v. Enrique HERNANDEZ, ABC Company (1-5) and John Does (1-5), Defendants, and John H. Decker and Decker Landscaping, Defendants-Respondents, and Harleysville Insurance Company, Third Party Defendant-Appellant, and New Jersey Manufacturers Insurance Company, Defendant-Intervenor-Respondent.

Supreme Court of New Jersey.

Argued February 28, 2005.

Decided June 30, 2005.

Lance J. Kalik, Morristown, argued the cause for appellant (Riker, Danzig, Scherer, Hyland & Perretti, attorneys; Mr. Kalik and Ronald Z. Ahrens, on the briefs).

John J. Hopkins, III, Long Branch, argued the cause for respondent Linda R. French.

Edward Hoagland, Jr., Somerset, argued the cause for respondents John H. Decker and Decker Landscaping.

Patricia M. Reilly, argued the cause for intervenor-respondent New Jersey Manufacturers Insurance Company (Wolff, Helies, Duggan, Spaeth & Lucas, attorneys; John Peter Duggan, of counsel, Manasquan).

Justice ALBIN delivered the opinion for the Court.

In this insurance coverage case, we must determine whether defendant Enrique Hernandez was a permissive user of his employer's truck when he caused an accident injuring plaintiff Linda French. On the day of the accident, a non-workday, Hernandez entered his employer's garage, took the truck, and drove it while intoxicated. Plaintiff contends that Hernandez had permission to use the vehicle. Based on that contention, plaintiff argues that defendant Harleysville Insurance Company of New Jersey, the employer's insurance carrier, is responsible for covering her damages.

The trial court found Hernandez to be a permissive user of the vehicle and entered summary judgment in favor of plaintiff and against Harleysville. The Appellate Division affirmed that judgment. We now reverse.

I.

The facts are based on deposition testimony and police reports and are essentially undisputed. Defendant John Decker is a full-time police officer. In the summer of 2000, Decker employed nineteen-year-old Enrique Hernandez in his side business, Decker Landscaping. During the course of his employment, Hernandez, an unlicensed driver, occasionally operated Decker's pickup truck, but only on private property and under Decker's direct supervision. Decker explained that when they were washing the truck, he would allow Hernandez to park it. Decker, however, never permitted Hernandez to drive the truck off the lot or to run a personal errand, and only Decker drove the truck on the public roads.

At the end of a workday, Decker locked the truck and landscaping equipment in a rented garage. Hernandez did not have keys to the pickup truck, though Decker could not recall whether Hernandez ever had a key to the garage. At a deposition, Decker confirmed that Hernandez was not authorized to operate the truck on the day of the accident and added conclusorily that Hernandez "knew he wasn't supposed to use the vehicle."

On the evening of Sunday August 13, 2000, Hernandez somehow gained access to the garage without breaking in, and then took the keys to Decker's truck.¹ While under the influence of alcohol, he drove the truck on public roadways, eventually crossing over a center line and colliding head-on into a vehicle driven by plaintiff Linda French, causing her to suffer significant physical injuries.

Following the accident, Hernandez was taken to a local hospital where he was treated for his injuries. A Dover Township police officer interviewed Hernandez at the hospital and prepared a report summarizing Hernandez's account:

Mr. Hernandez stated that he consumed approximately five to six beers prior to driving the motor vehicle. He stated that he did not remember where he consumed the beverages. He stated that the vehicle he was driving, ([a] 1985 Dodge Pickup) was parked near where he had been drinking and that he decided to take it for a ride. He did not remember where he gained access to the keys. He said that they could have been in the truck. He stated that he was too drunk to remember who he had been drinking with, however, he remembered that when he started the vehicle, someone told him not to drive because he was too drunk. He stated that the truck belonged to his employer, however, he did not have permission to use it.

[(Emphasis added).]

A blood test revealed that Hernandez's blood-alcohol content was .166%, considerably higher than the then legal limit of.10% necessary for a per se violation of N.J.S.A. 39:4-50(a). Hernandez was arrested for driving under the influence of alcohol and issued a number of motor vehicle summonses, including one for driving a vehicle without the owner's consent and another for driving without a license. After leaving the hospital, Hernandez disappeared, and is believed to have returned to his native Mexico.

Plaintiff filed a complaint alleging that defendants Hernandez, Decker, Decker Landscaping, and various John Doe companies and individuals (who purportedly served Hernandez alcohol) negligently caused her injuries. At an automobile arbitration proceeding, Hernandez was found 100% liable, and plaintiff and Decker 0% liable for the accident. Plaintiff was awarded $300,000 in damages exclusive of prejudgment interest.

The trial court granted summary judgment dismissing Decker from the suit, finding no evidence "that Hernandez was in any way undertaking to act as an agent for Mr. Decker," and, therefore, that respondeat superior did not apply. At a de novo hearing, the trial court entered default judgment against Hernandez, and following a proof hearing, entered judgment in the amount of $595,416.44, including prejudgment interest.

The trial court then allowed plaintiff to amend her complaint to name as a defendant Harleysville Insurance Company of New Jersey, Decker's insurance carrier. The amendment permitted plaintiff to pursue recovering damages from Harleysville on the theory that Hernandez had implied permission to use a vehicle covered under the policy. The Harleysville insurance policy at issue provided coverage to Decker, the named insured, and to "[a]nyone else while using with [his] permission a covered `auto' [he] own[ed], hire[d] or borrow[ed].. . ." (Emphasis added). New Jersey Manufacturers Insurance Company (NJM), which provided uninsured motorist coverage to plaintiff, intervened to "protect its interest." If Hernandez was not covered under the Harleysville policy and therefore was an uninsured driver, NJM would be required to indemnify plaintiff for her damages up to the limits of her uninsured motorist policy.

Plaintiff, NJM, and Harleysville filed cross-motions for summary judgment. The trial court found that because Decker allowed Hernandez to park the truck on private property earlier in the summer, the initial-permission rule was triggered, making Hernandez a permissive user of the truck weeks later at the time of the accident. Based on that finding, the court granted summary judgment in favor of plaintiff and NJM and against Harleysville. Harleysville appealed that ruling. Plaintiff cross-appealed, claiming that the trial court erroneously dismissed Decker from the case on the mistaken theory that Hernandez was not acting as his employer's agent.

The Appellate Division affirmed the entry of summary judgment against Harleysville, but not for the reasons articulated by the trial court. French v. Hernandez, 370 N.J.Super. 104, 108, 850 A. 2d 585 (App. Div.2004). The panel rejected the trial court's application of the initial-permission rule to this case. Id. at 112, 850 A.2d 585. The panel noted that "[a]n essential element" of the rule is that the driver "must be in continuous possession of the vehicle" from the time the owner gave permission for its initial use until the accident. Ibid. It found that Hernandez's possession of Decker's vehicle was not continuous, and did not fall within the initial-permission rule's general pattern: "a single trip in a vehicle by a permittee, who deviates from the scope of the permission for which the trip was authorized." Id. at 112, 117, 850 A.2d 585.

The panel then proceeded to analyze the facts under the implied permission doctrine. Ibid. Reasoning that "permitted use on prior occasions, coupled with other facts evidencing a course of dealings between the parties, can furnish the predicate to support implied permission on the subsequent occasion notwithstanding the absence of express permission on that occasion," the panel concluded that Hernandez was a permissive user. Id. at 116, 118, 850 A.2d 585.

Acknowledging the case to be "close," the panel further concluded that "Hernandez merely borrowed the truck with the intention to return it later" and that his conduct did not constitute "a theft or the like within the meaning of the initial permission rule."²Id. at 115, 120, 850 A.2d 585. Accordingly, it held that Hernandez's use of the truck was covered by Harleysville's policy and that plaintiff could collect her damages pursuant to that policy. Id. at 108, 119-21, 850 A.2d 585.

We granted Harleysville's petition for certification, 182 N.J. 142, 861 A.2d 846 (2004). We now reverse.

II.

The Appellate Division properly posed the question that we must decide: whether Hernandez was a permissive user of his employer's pickup truck on the evening of the accident. Specifically, we must determine whether Decker gave Hernandez either express or implied permission to enter his business's garage and take the truck for a drive on a weekend evening when Hernandez was not working.

We first look to the scope of insurance coverage, which is defined in the omnibus clause of the Harleysville policy, as required by N.J.S.A. 39:6B-1.³ The policy provided automobile liability coverage to Decker, as the named insured, and to "[a]nyone else while using with [his] permission a covered `auto.'" Under the policy, Harleysville must provide coverage if Decker gave either express or implied permission to Hernandez...