Auto Owners Ins. Co. v. Rollison

• Decision Date: 30 June 2008
• Docket Number: No. 26512.,26512.
• Citation: 378 S.C. 600,663 S.E.2d 484
• Parties: AUTO OWNERS INSURANCE COMPANY, Huckaby and Associates and Wright Auto Sales, Respondents, v. Lance ROLLISON, Appellant.
• Court: South Carolina Supreme Court

663 S.E.2d 484

378 S.C. 600

AUTO OWNERS INSURANCE COMPANY, Huckaby and Associates and Wright Auto Sales, Respondents, v. Lance ROLLISON, Appellant.

No. 26512.

Supreme Court of South Carolina.

Heard February 7, 2008.

Decided June 30, 2008.

Rehearing Denied August 8, 2008.

James B. Richardson, Jr., of Columbia and Mark Reagan Calhoun, of Calhoun Law Firm, of Lexington, for Appellant.

Henry H. Taylor, of Taylor Law Firm, of West Columbia, John T. Lay, Jr. and A. Johnston Cox, both of Ellis, Lawhorne & Sims, of Columbia, for Respondents.

Justice BEATTY.

In this declaratory judgment action, Lance Rollison, who was injured as a passenger in a vehicle insured by Auto Owners Insurance Company (Auto Owners), appeals the circuit court's order finding he was not entitled to uninsured motorist coverage because he was not a "guest" in the insured vehicle. This Court granted the Court of Appeals' motion for the appeal to be certified directly to this Court. We reverse the decision of the circuit court.

FACTUAL/PROCEDURAL HISTORY

On the night of January 6, 2001, fifteen-year-old David Reed was involved in a single-vehicle accident while driving a Plymouth Laser owned by his grandfather, James L. Wright d/b/a Wright's Auto Sales. Rollison, Reed's fifteen-year-old friend and passenger in the vehicle, was injured in the accident. The vehicle involved in the accident was insured by Auto Owners under a Commercial General Liability Policy that included a Garage Liability Coverage Form and a Dealers' Blanket Coverage Form.

Rollison brought suit against Reed, Wright, and Wright's Auto Sales to recover for injuries sustained in the accident. Auto Owners filed a declaratory judgment action seeking a determination that neither policy provided coverage. In its Complaint, Auto Owners alleged that Wright's policies did not provide coverage because, at the time of the accident, Reed: (1) was not a permissive user of the vehicle or a resident of Wright's home; and (2) was not using the vehicle for purposes associated with Wright's Auto Sales. Additionally, Auto Owners contended the policies did not provide underinsured or uninsured motorist coverage to Rollison because he was not a permissive user or guest in the vehicle at the time of the accident. In response, Rollison filed a counterclaim seeking liability coverage, or in the alternative, uninsured motorist coverage under the Garage Liability policy.

The circuit court judge conducted a nonjury trial. The trial and deposition testimony established that at the time of the accident Reed did not have permission to drive Wright's vehicle nor was he a resident relative of Wright. Wright testified that at the time of the accident Reed lived alone in a camper located on the premises of the auto sales business. Although Reed had unlimited access to the business office where the vehicle keys were stored, Wright claimed he did not give Reed permission to drive any of the vehicles off the sales lot. In terms of the vehicle involved in the accident, Wright testified he intended to give Reed the vehicle for his birthday when he received an unrestricted driver's license. Wright, however, never gave Reed permission to drive the vehicle on a public road. In fact, Wright stated he told the police officers at the scene of the accident that the vehicle had been taken without his permission. Wright further testified he was unaware that Reed had previously driven vehicles off the lot before the time of the accident. Had he known, Wright stated he would have "tried [his] best to stop" it.

Reed confirmed his grandfather's testimony. Reed testified his grandfather did not know before the date of the accident that he had driven vehicles off the sales lot. According to Reed, he had driven two of the vehicles off the sales lot on at least ten occasions. However, he always drove the vehicles at night so that his grandfather did not witness what he was doing. Reed acknowledged that his grandfather never gave him permission to drive the vehicle that was involved in the accident.

In contrast, Rollison testified he witnessed Reed drive five to ten different vehicles on at least thirty occasions. He further testified that Reed's grandfather was often present when Reed drove off and returned to the sales lot. Rollison assumed Reed had permission to drive the vehicle that was involved in the accident because Reed told him that his grandfather had given him the vehicle. Additionally, Rollison testified that Reed had the keys to the vehicle and had never been reprimanded by his grandfather for driving off the sales lot.

Two teenage friends of Rollison corroborated his testimony. Michael J. Kinney testified that on at least five occasions he had been a passenger in a vehicle that Reed drove off the sales lot in the presence of his grandfather. Kinney believed Reed had permission to drive the vehicles because he had the keys and had never been reprimanded by his grandfather for driving. However, he admitted there were times when Reed avoided returning the vehicle at night when his grandfather was still present at the sales lot. Kinney testified that Reed would "circle around" until his grandfather left the dealership for the evening. Because of this behavior, Kinney conceded he was under the impression that Reed did not have permission to drive the vehicle at night.

H. Patrick Hodge, III, gave a similar account to that of Kinney. Hodge testified that Reed "always had keys to the [Plymouth] Laser" and that the vehicle was a gift from Reed's grandfather. Hodge claimed he had seen Reed drive "numerous" vehicles. On several occasions, Hodge witnessed Reed drive these vehicles off the sales lot in the presence of his grandfather. Like Kinney, Hodge also observed that when returning a vehicle at night Reed often would circle the auto sales lot and enter it only after his grandfather was no longer at the business. Kinney interpreted Reed's behavior to mean that he had permission to drive but just not at night.

Based on this evidence and the terms of the insurance policies, the circuit court ruled the Commercial General Liability Policy did not provide coverage for the accident as a matter of law because the policy contained an exclusion for bodily injury arising out of the use of the automobile. Additionally, the court found the Garage Liability policy did not provide coverage because Reed did not have Wright's express or implied permission to drive the vehicle on the night of the accident. Therefore, the court held Reed did not qualify as an "insured" pursuant to section 38-77-30(7)¹ of the South Carolina Code or the terms of the policy.

Because Reed was not a permissive user of Wright's vehicle at the time of the accident, the court found the vehicle would be deemed uninsured pursuant to this Court's holding in Unisun Insurance Company v. Schmidt, 339 S.C. 362, 529 S.E.2d 280 (2000). The court, however, concluded that Rollison was not entitled to uninsured motorist benefits under the Garage Liability policy because he was not a permissive guest in the vehicle at the time of the accident. In reaching this decision, the court reasoned that Rollison could not be a "guest" within the meaning of section 38-77-30(7) of the South Carolina Code without the named insured's permission.

Rollison only appeals the portion of the circuit court's order regarding his status as a "guest" for purposes of uninsured motorist coverage.

DISCUSSION

Rollison argues the circuit court erred in finding that he was precluded from receiving uninsured motorist coverage from the Garage Liability policy issued by Auto Owners to Wright's Auto Sales. He contends he was a "guest" in the vehicle to which the policy applied. Specifically, he asserts that a passenger is not required to use the vehicle or have the named insured's permission in order to qualify as a "guest" under the terms of section 38-77-30(7). For reasons that will be more fully discussed, we agree that Rollison was a guest at the time of the accident.

"A suit for declaratory judgment is neither legal nor equitable, but is determined by the nature of the underlying issue." Felts v. Richland County, 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991). An insurance policy is a contract between the insured and the insurance company, and the terms of the policy are to be construed according to contract law. Estate of Revis v. Revis, 326 S.C. 470, 477, 484 S.E.2d 112, 116 (Ct.App.1997). This case primarily involves the interpretation of statutes, which are questions of law. Charleston County Parks & Recreation Comm'n v. Somers, 319 S.C. 65, 67, 459 S.E.2d 841, 843 (1995). Thus, because this action involves the interpretation of a contract and statutes, it is an action at law. Barnacle Broad., Inc. v. Baker Broad., Inc., 343 S.C. 140, 146, 538 S.E.2d 672, 675 (Ct. App.2000). In an action at law tried without a jury, "our scope of review extends merely to the correction of errors of law." Id. Therefore, this Court will not disturb the trial court's findings unless they are found to be without evidence that reasonably supports those findings. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976).

As recognized by the circuit court judge in his order, this Court's case of Unisun provides guidance for a determination of whether a passenger in a vehicle may recover uninsured motorist benefits under the vehicle owner's policy. Unisun Ins. Co. v. Schmidt, 339 S.C. 362, 529 S.E.2d 280 (2000). In Unisun, January O'Neale was given a BMW by her father with instructions not to let anyone else drive the vehicle. One night, O'Neale and her friend Jennifer Hurst drove to a party at Christopher Schmidt's house. During the course of the party, Schmidt drove off in the BMW with Hurst as a passenger. Schmidt was involved in a single-vehicle accident which resulted in Hurst being injured. As stipulated by the parties, Schmidt's use of the vehicle was not consensual, but...