Allied Group Ins. Co. v. Allstate Ins. Co.

• Decision Date: 30 April 1993
• Docket Number: No. 19148,19148
• Citation: 852 P.2d 485,123 Idaho 733
• Parties: ALLIED GROUP INSURANCE COMPANY, a foreign corporation, Plaintiff-Respondent, v. Robert Garcia, an individual, James Bartrop, an individual, Defendants, and ALLSTATE INSURANCE COMPANY, a corporation, Defendant-Appellant. Boise, December 1992 Term
• Court: Idaho Supreme Court

Page 485

852 P.2d 485

123 Idaho 733

ALLIED GROUP INSURANCE COMPANY, a foreign corporation, Plaintiff-Respondent, v. Robert Garcia, an individual, James Bartrop, an individual, Defendants, and ALLSTATE INSURANCE COMPANY, a corporation, Defendant-Appellant.

No. 19148.

Supreme Court of Idaho,

Boise, December 1992 Term.

April 30, 1993.

Brady Lerma & Thomas, Chartered, Boise, ID, for appellant. Rebecca A. Broadbent, argued.

Hollifield, Tolman & Bevan, Twin Falls, ID, for respondent. G. Richard Bevan, argued.

JOHNSON, Justice.

This is a motor vehicle liability insurance case.

The issues presented concern an insurance policy that covers family members while driving an insured vehicle, but excludes anyone driving an insured vehicle without a reasonable belief that the person has permission to do so.

We hold:

1. The insurance policy is not ambiguous.

2. The policy violates I.C. § 49-1212(1)(b) by limiting coverage to persons driving the insured vehicle with a reasonable belief of permission to do so.

3. A genuine issue of material fact exists whether the driver of the insured vehicle had implied permission to operate the vehicle.

Therefore, we reverse the summary judgment granted by the trial court and remand the case for further proceedings.

I.

THE BACKGROUND AND PRIOR PROCEEDINGS.

Robert Garcia was driving an automobile owned by his parents (the Garcias) when he struck a pedestrian, James Bartrop. Robert was twenty-eight at the time of the accident and was living with the Garcias. The Garcias had insured the vehicle with Allied Group Insurance Company (Allied). Bartrop carried uninsured motorist coverage with Allstate Insurance Company (Allstate).

The relevant definitions in Allied's policy state:

"Family member" means a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.

.... "Insured" as used in this Part means:

... You or any "family member" for the ownership, maintenance or use, including loading and unloading, of any auto or "trailer."

Allied's policy also contains the following exclusion (the entitlement exclusion):

We do not provide Liability Coverage for any person:

....

... Using a vehicle without a reasonable belief that that person is entitled to do so.

Allied sought declaratory judgment against Robert that Allied had no duty to defend or indemnify Robert against Bartrop's claim. By amendment, Allied later included Allstate and Bartrop as defendants in order to determine Robert's coverage under the Allied policy.

Allied sought summary judgment, contending no genuine issue of material fact existed. Allied argued that the insurance policy was unambiguous and that under the entitlement exclusion Robert was not covered, because Robert did not have a reasonable belief that he had permission to use the vehicle. Allstate also moved for summary judgment, arguing that Robert was covered as a family member as a matter of law.

The trial court granted summary judgment in Allied's favor, stating that based on the uncontested facts and a clear reading of the policy, the policy did not cover Robert, because Robert did not have a reasonable belief that he was entitled to use the vehicle. Allstate appealed.

II.

THE POLICY IS NOT AMBIGUOUS.

THE ENTITLEMENT EXCLUSION APPLIES TO FAMILY MEMBERS.

Allstate asserts that the entitlement exclusion is ambiguous on the question of its application to family members. We disagree.

One provision of the policy states that family members are insured. The entitlement exclusion states, however: "We do not provide Liability Coverage for any person ... [u]sing a vehicle without a reasonable belief that that person is entitled to do so." This exclusion is not ambiguous. It clearly excludes family members who are driving the vehicle without a reasonable belief of permission.

In addition to the clear language of the entitlement exclusion, the application of the entitlement exclusion to family members is demonstrated by a preceding section of the policy's list of exclusions. This exclusion states that it does not apply to family members. The entitlement exclusion at issue in this case, however, does not state that the entitlement exclusion does not apply to family members.

Therefore, we conclude that the entitlement exclusion applies to family members.

III.

THE ENTITLEMENT EXCLUSION'S FOCUS ON THE DRIVER'S STATE OF MIND VIOLATES I.C. § 49-1212(1)(b) TO THE EXTENT THAT IT DENIES COVERAGE WHEN THE OWNER HAS GIVEN IMPLIED OR EXPRESS PERMISSION TO THE DRIVER TO OPERATE THE VEHICLE.

Allstate asserts that the entitlement exclusion violates I.C. § 49-1212(1)(b). We agree. The entitlement exclusion focuses on the driver's state of mind. I.C. § 49-1212(1)(b), on the other hand, requires that an owner's policy of liability insurance shall insure the named person and any other person using the insured vehicle with the express or implied permission of the named person.

The prior decisions of this Court concerning implied permission do not focus on the driver's state of mind, but rather on the relationship of the driver and the owner and on the owner's conduct in relationship to the driver's access to the vehicle. E.g., Farm Bureau Mut. Ins. Co. v. Hmelevsky, 97 Idaho 46, 49-51, 539 P.2d 598, 601-03 (1975); Eckels v. Johnson, 96 Idaho 264, 267-68, 526 P.2d 1100, 1103-04 (1974); Steele v. Nagel, 89 Idaho 522, 530-31, 406 P.2d 805, 809-10 (1965); Abbs v. Redmond, 64 Idaho 369, 372-73, 132 P.2d 1044, 1045-46 (1943).

In Hmelevsky, the Court stated the policy embodied in I.C. § 49-1521(b) (now I.C. § 49-1212(1)(b)) required that motor vehicle insurance policies are subject to the requirements of the statute:

I.C. § 49-1521(b) is part of the motor vehicle safety responsibility act and provides that a vehicle owner's policy "shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured." Policies such as that issued by both Farm Bureau and Farmers are subject to the requirement. I.C. § 49-1521. Motor vehicle insurance policies must be construed in conformance with the mandate of that act. Farmers Insurance Exchange v. Wendler, 84 Idaho 114, 368 P.2d 933 (1962). The stated policy and purpose of that safety responsibility act "is to protect the public against irresponsible drivers." Farmers Exchange, supra, 84 Idaho at 119, 368 P.2d at 935.

97 Idaho at 49, 598 P.2d at 601; cf. Farmers Ins. Group v. Reed, 109 Idaho 849, 712 P.2d 550 (1985).

The entitlement exclusion violates the provisions of I.C. § 49-1212(1)(b), and is, therefore, not enforceable.

Allied attempts to salvage the entitlement exclusion on the ground that this Court must assume that the policy was submitted to and approved by the director of the state department of insurance, and, accordingly, the insurance policy is presumed to be in harmony with public policy under Hansen v. State Farm Mut. Auto Ins. Co., 112 Idaho 663, 667, 735 P.2d 974, 978 (1987). In Hansen, however, the Court concluded its discussion of the presumption arising from an assumption that the director had approved the form of the policy by stating:

In the absence of proof that a policy contains provisions which conflict with express legislative directives, the Director's approval of an insurance policy form is an administrative determination that the policy form is in the "public interest."

Id. at 668, 735 P.2d at 979.

To the contrary in this case, as we have concluded above, the entitlement exclusion conflicts with an express legislative directive in I.C. § 49-1212(1)(b). Therefore, the director's approval did not determine that the policy form is in the public interest.

IV.

A GENUINE ISSUE OF MATERIAL FACT EXISTS WHETHER ROBERT HAD IMPLIED PERMISSION.

Allstate asserts that the trial court should not have granted summary judgment in favor of Allied, because there is a genuine issue of material fact whether Robert had implied permission to use his parents' automobile. We agree.

In Steele, the Court reversed a summary judgment and said that "the element of permission ... is a question of fact to be proved at the trial." 89 Idaho at 529, 406 P.2d at 809. The Court continued:

This genera1 rule is further stated in 8 Am.Jur.2d § 605, at p. 157:

"There is no formula which will aid the courts in deciding whether a motor vehicle was operated with the implied permission or consent of the owner, but it is rather a question of fact for the jury, unless the evidence is such that only one reasonable conclusion is deducible therefrom."

In the case of Elkinton v. California State Auto. Ass'n, Int. Ins. Bur., [173 Cal.App.2d 338, 343 P.2d 396 (1959) ], the First District Court in California said:

"Where the issue of implied permissive use is involved, the general relationship existing between the owner and the operator is of paramount importance. Where, for example, the parties are related by blood [Cases cited], or marriage [Case cited], or where the relationship between the owner and the operator is that of principal and agent [Cases cited], weaker direct evidence will support a finding of such use than where the parties are only acquaintances [Case cited], or strangers [Cases cited]. Of the above cases only those falling within the last group (mere acquaintances and strangers) hold that the evidence of permissive use was insufficient as a matter of law." 343 P.2d at 399.

Id. 89 Idaho at 529-30, 406 P.2d at 809-10 (alteration in original).

Following this same rationale, the Court again reversed a summary judgment in Eckels, another case involving implied permission. In doing so, the Court said:

On appeal from an order granting summary judgment, this [C]ourt must construe the record presented to the trial court liberally in favor of the party opposing the order and accord [this party] the benefit of all inferences which might reasonably be drawn therefrom.

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