Auto-Owners Ins. Co. v. Foster

Decision Date29 October 2014
Docket NumberNo. 18A05–1403–PL–107.,18A05–1403–PL–107.
Citation23 N.E.3d 49 (Table)
PartiesAUTO–OWNERS INSURANCE COMPANY, Appellant/Plaintiff, v. Edward FOSTER, Appellee/Defendant.
CourtIndiana Appellate Court

David L. Taylor, Andrew T. Padgett, Taylor Law Firm, P.C., Indianapolis, IN, Attorneys for Appellant.

Mark K. Dudley, Howard Deley & Dudley, LLP, Anderson, IN, Attorney for Appellee.



, Judge.


In 2009, a Honda Accord driven by Garrett Gaddis struck and seriously injured AppelleeDefendant Edward Foster, who was riding a bicycle. Approximately a month before, Garrett had executed a bill of sale for the Accord from Bill Gaddis Chrysler Dodge (“the Dealership”) and took possession of the Accord. Garrett was issued a temporary license plate for the Accord and purchased the Accord through his father, Scott Gaddis, who worked for the Dealership at the time. Scott was to pay for the Accord from his employee account over time, and Garrett was to pay Scott back. At the time of the sale, Garrett paid Scott $200.00 toward the $500.00 purchase price. At the time of the accident, Garrett was driving the Accord without permission after Scott had taken the keys as a disciplinary measure. Following the accident, Scott took the Accord from Garrett and had the Dealership sell it at auction, and the Dealership retained the proceeds.

In this insurance coverage case, AppellantPlaintiff Auto–Owners Insurance Company appeals from the trial court's judgment that it has a duty to defend and indemnify the Dealership because the dealership actually owned the Accord at the time of the accident and that Garrett was driving it with the Dealership's implied permission. Because we conclude that the trial court's conclusions that the Dealership owned the Accord at the time of the accident and that Garrett was permissively driving it, we affirm.


In late 2008 and early 2009, the Dealership in Muncie was owned by Bill Gaddis and employed, among others, Bill's sons Steve and Scott as manager and a salesman, respectively. Scott resided with his son Garrett in a house next to the Dealership. On December 15, 2008, Garrett and the Dealership executed a bill of sale for a 1996 Honda Accord for a total price of $500.00, plus tax. The Dealership issued a temporary paper license plate to Garrett for the Accord. Garrett made a down payment of approximately $200.00 cash to Scott, who put the Accord on his employee account, through which the Accord would be paid for by paycheck deductions over time. The arrangement between Scott and Garrett was that Garrett was to repay Scott the balance, also over time. Dealership records do not indicate that the Accord was ever put on Scott's account or that the Dealership paid sales tax.

At the time, Auto–Owners provided coverage to the Dealership pursuant to a Garage Liability Policy (“the Policy”) with policy terms from December 1, 2008, to December 1, 2009. (Policy 1). Pursuant to the terms of the Policy, Auto–Owners “will ... pay damages for bodily injury and property damage for which the insured becomes legally responsible because of or arising out of ... An auto or farm implement ... Owned by you [.] Exhibit Vol. p. 335. The Policy also provided the following:

B. With respect to any auto or farm implement as described under SECTION II—COVERAGE, COVERAGE A—BODILY INJURY AND PROPERTY DAMAGE LIABILITY, 1. COVERAGE, b. Bodily Injury and Property Damage Liability, only
1. You.
2. Your garage customers.
3. Any other person or organization using an auto or farm implement with your permission.

Exhibit Vol. pp. 350–51.

At some point before January 29, 2009, Scott took the keys to the Accord away from Garrett as a disciplinary measure. The Accord was parked on the Dealership's lot. On January 29, 2009, Garrett, who had found the hidden keys, was driving the Accord without permission when he struck and seriously injured Foster, who was riding a bicycle. Following the accident, Scott took the Accord away from Garrett and had Steve sell it at auction for $1465.00, with the Dealership retaining all of the proceeds.

On May 26, 2009, Foster filed suit against Garrett, alleging negligence. On May 17, 2010, Auto–Owners filed a suit for declaratory judgment against Foster, Garrett, and the Dealership seeking a judgment that it had no duty to defend or indemnify Garrett pursuant to the Policy or a separate Commercial General Liability policy.1 On May 25, 2011, Auto–Owners moved for summary judgment, which motion the trial court denied on September 22, 2011. The matter was certified for interlocutory appeal. On August 29, 2012, this court issued its published opinion, in which we held, inter alia, that genuine issues of material fact existed regarding (1) whether Garrett or the Dealership owned the Accord at the time of the accident and (2) if the Dealership owned the Accord, whether Garrett was a permissive driver. See Auto–Owners Ins. Co. v. Bill Gaddis Chrysler Dodge, Inc., 973 N.E.2d 1179, 1184–85 (Ind.Ct.App.2012)

, trans. denied.

On December 9, 2013, trial was held to the bench on the questions of who owned the Accord at the time of the accident and whether, if owned by the Dealership, Garrett was driving it with permission. On February 18, 2014, the trial court issued its judgment, in which it found that (1) the dealership owned the Accord at the time of the accident and (2) Garrett was driving the Accord with the Dealership's implied permission. The trial court's judgment reads as follows:


Comes now the Court, and the Plaintiff having appeared by Representative Darrin Earley and by counsel, and Defendant Edward Foster having appeared by counsel on the 9th day of December, 2013 for trial. Evidence was heard and concluded and counsel was given until December 23, 2013 to present trial briefs. Trial briefs have been received from both counsel, and the Court took this matter under advisement. The Court now being duly and sufficiently advised, finds as follows:

1. Bill Gaddis Chrysler Dodge, Inc. ( [the Dealership] ) and Garrett Gaddis were both previously disposed of in this case.
2. Edward Foster remains as the sole Defendant in this cause.
3. Auto–Owners Insurance Company (Auto–Owners) issued a Garage Liability Policy to Bill Gaddis Chrysler Dodge, Inc.
4. Garrett Gaddis, at the time of this accident, lived with his father, Scott Gaddis.
5. Scott Gaddis, at or near the time of this accident, was a salesman at Gaddis.
6. Garrett Gaddis' grandfather, Bill Gaddis, owned Bill Gaddis Chrysler Dodge, Inc.
7. On January 29, 2009, Garrett Gaddis was driving a 1996 Honda Accord and caused an accident with Defendant Edward Foster.
8. Plaintiff, Auto–Owners filed their Complaint for Declaratory Judgment against [the Dealership], Garrett Gaddis and Edward Foster.
9. The ultimate issues in this case are who owned the 1996 Honda Accord (Honda) that Garrett Gaddis was driving at the time of the accident, and, if [the Dealership] owned the car, did [the Dealership] give Garrett Gaddis permission to drive it.
10. The Court will address the ownership question first.
11. This is not a clear cut issue. There are facts that support both sides of the ownership issue.
12. Auto–Owners, Bill Gaddis, Scott Gaddis, Garrett Gaddis, and Steve Gaddis (Bill's other son and the minority owner of [the Dealership] ) all take the position that Garrett owned the Honda at the time of the accident.
13. Garrett went through his father, Scott, to purchase the Honda.
14. Family members, including Scott Gaddis, had accounts with the dealership through which they purchased vehicles, and had repairs done to their vehicles.
15. Defendant's Exhibit B is the account statement for Scott Gaddis. That exhibit shows no record of Scott Gaddis purchasing the Honda.
16. Scott was supposed to obtain the permission of either Bill or Steve to purchase the Honda on his account, however he did not obtain anyone's permission for the purchase.
17. Plaintiff's Exhibit 5, however, is a bill of sale from [the Dealership] to Garrett Gaddis for the Honda. That document was dated December 15, 2008, and is for the sum of Five Hundred Thirty Five ($535.00) dollars.
18. There was some dispute as to how much Garrett had paid toward the Honda, but the Court finds most credible that Garrett had given his father the sum of Two Hundred ($200.00) dollars towards the purchase of the Honda, and was to continue paying payments to his father, who then was to pay the money to [the Dealership].
19. Garrett had, at times, parked the Honda on the lot of [the Dealership], which was located next door to his father's residence.
20. Garrett had also used other [Dealership] cars for his job as a pizza delivery driver. Although Garrett alleges that he did not have permission to use those cars, he clearly had access to the keys to those cars and it happened on multiple occasions.
21. [The Dealership] did not stop Garrett from using the cars for pizza delivery.
22. Steve Gaddis discovered cars missing on multiple occasions, and he would retrieve the car from Garrett. On one occasion he found Garrett actually driving one of the cars. [The Dealership] never made a police report.
23. Once Garrett started driving the Honda, his behavior was unacceptable to his father. He was missing school, spending most of his time with his girlfriend, and not coming home.
24. Scott then took the car and keys away from Garrett and parked the car back on the [Dealership] lot. In taking such action, Scott was acting as Garrett's father, not as an agent of the dealership.
25. Garrett took the car and keys to the car on January 29, 2009, and drove the Honda when he collided with Edward Foster.
26. Subsequent to the accident, the Honda was taken to an auto auction and sold for One Thousand Four Hundred Sixty five ($1,465.00) dollars and that money was paid to [the Dealership]. Neither Garrett nor his father was given any of that money, even though Garrett allegedly owed the

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