Byers v. Auto-Owners Ins. Co.

• Decision Date: 21 November 2003
• Docket Number: No. 25440.,25440.
• Citation: 119 S.W.3d 659
• Parties: Edna BYERS, personal representative of the estate of Patrick A. Duncan, Plaintiff-Respondent, v. AUTO-OWNERS INSURANCE COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

119 S.W.3d 659

Edna BYERS, personal representative of the estate of Patrick A. Duncan, Plaintiff-Respondent, v. AUTO-OWNERS INSURANCE COMPANY, Defendant-Appellant.

No. 25440.

Missouri Court of Appeals, Southern District, Division Two.

November 21, 2003.

JoAnne Spears Jackson, Yates, Mauck, Bohrer, Elliff & Croessmann, P.C., Springfield, for appellant.

Clifton M. Smart III, Neil Chanter, The Strong Law Firm, P.C., Springfield, for respondent.

NANCY STEFFEN RAHMEYER, Chief Judge.

Patrick A. Duncan ("Duncan") was killed in an automobile accident in Arkansas. The driver of the other vehicle, Jason Klein ("Klein"), resided in the State of Arkansas as did the insured, Dennis Honl ("Honl"), an employee of Fred C. Stoker & Sons, Inc. ("Stoker"). Stoker, a Tennessee corporation that engages in the manufacture and distribution of pouch tobacco, owned the automobile that Klein was driving and insured it with Auto-Owners Insurance Company ("Auto-Owners"). Auto-Owners appeals the grant of summary judgment against it wherein the court found that Auto-Owners was subject to an equitable garnishment action by a Missouri resident, Edna Byers ("Byers") as the personal representative of the Duncan estate. We affirm.

The pleadings and other documents before us reveal the following: Auto-Owners, which maintains an underwriting and claims office in Brentwood, Tennessee, began providing commercial automobile liability coverage for Stoker in 1994, through the Dresden Insurance Agency in Dresden, Tennessee. The premiums and the policy were renewed yearly and paperwork frequently moved from the Dresden agency to the Auto-Owners office in Brentwood. The policy provided liability insurance on vehicles owned or leased by Stoker with each vehicle being assigned to a specific, identified driver who was a Stoker employee. In 1998, Honl, was added to the policy as the driver of a 1999 Chevrolet Venture minivan. While the van was licensed in Tennessee, Mr. Honl was a resident of Hot Springs, Arkansas, had an Arkansas driver's license, and would be driving the van exclusively within the 100 mile radius of his Arkansas home. Stoker instructed Honl and its other employees that the vans were not for personal use and further required them to sign a memorandum agreeing that they would be the sole drivers of the vehicles assigned to them.

On August 20, 2000, Honl permitted his wife, Robin Honl ("Mrs. Honl"), to drive the insured minivan to Fayetteville, Arkansas. On the return trip, Mrs. Honl allowed her daughter's boyfriend, Klein, who was also an Arkansas resident, to drive the van. While he was driving, Klein was involved in a motor vehicle accident that killed not only Mrs. Honl but the driver of the other vehicle, Duncan. Byers, the personal representative of the estate of Duncan, filed a wrongful death action against Klein in United States District Court for the Western District of Arkansas. On October 31, 2001, a judgment was entered against Klein in Arkansas, the jurisdiction where the accident occurred, Klein resided, and the insured van was garaged.

On February 16, 2001, Auto-Owners filed a declaratory judgment action in Weakley County, Tennessee, the location of the agency that issued the Stoker policy, Dresden Insurance Agency. Auto-Owners' suit against Byers sought a declaration of its rights and obligations to Klein by virtue of the insurance policy it issued to Stoker. On March 23, 2001, Byers filed a Motion to Dismiss based on a lack of personal contacts with the state of Tennessee and the doctrine of forum non conveniens.¹ An entry of summary judgment was entered and the Weakley County Court found that Auto-Owners had no duty to defend Klein or to pay the Arkansas judgment against him.

Thereafter, on December 11, 2001, Byers filed a Petition for Equitable Garnishment against Auto-Owners in the Circuit Court of Greene County, Missouri for the full amount of the Arkansas judgment against Klein. Both parties filed motions requesting summary judgment on issues of law. The parties agreed that there were no issues of material fact and that summary judgment was an appropriate remedy for either party, depending upon the resolution of two issues: 1) whether the law of Tennessee or Arkansas applied to the insurance coverage issue, and 2) whether Klein was a permissive user under the law of Tennessee or Arkansas.²

Our review is essentially de novo. ITT Commercial Finance v. Mid-Am. Marine Supply, 854 S.W.2d 371, 376 (Mo. banc 1993). The propriety of summary judgment is purely an issue of law; therefore, we need not defer to the trial court's order. Id. This court's criteria for ascertaining the propriety of summary judgment are the same as those that a trial court initially uses. Quaker Oats Co. v. Stanton, 96 S.W.3d 133, 136 (Mo.App. W.D.2003). Consequently, our only question is whether the trial court drew the proper legal conclusion from the stipulated facts and cross motions for summary judgment on undisputed facts. Even if "the parties in cross motions for summary judgment would agree that all facts [are] undisputed," the proceeding is not converted to a non-jury trial under Rule 73.01³; the standard remains that which is applicable to any grant of summary judgment. Quaker Oats, 96 S.W.3d at 136.

Auto-Owners brings three points on appeal. First, Auto-Owners contends that under a conflict of laws analysis, the trial court erred in applying Arkansas law rather than Tennessee law to the issue of which individuals would be covered as insureds under the policy at issue. The trial court found that § 193 of the Restatement (Second) of Conflicts Law (1971), which discusses applying the law of the principal location of the insured risk, is controlling over the "significant contacts" section found in § 188. Therefore, the trial court applied Arkansas law and determined that Klein was a permissive user of the vehicle under the Arkansas "initial-permission" rule.⁴ Had the trial court found Tennessee law to be controlling, Auto-Owners would have prevailed. Tennessee does not follow the initial-permission rule, but instead has adopted the "specific purpose rule," under which the issue is whether the permittee was given general custody of the car or limited permission to use the car. Estate of Adkins v. White Consol. Indus. Inc., 788 S.W.2d 815, 819 (Tenn.App.1989).

To commence the analysis we turn to § 188 and § 193 of the Restatement (Second) of Conflict of Laws, both of which have been adopted by Missouri. Crown Center Redevelopment Corp. v. Occidental Fire & Cas. Co., 716 S.W.2d 348, 358 (Mo.App. W.D.1986). Auto-Owners concedes that the nature of this matter, an action on an automobile liability insurance contract, requires that the choice of law analysis begin with § 193.

While both § 188 and § 193 are contained in Chapter 8 of the Restatement entitled "Contract," § 188, "Law Governing the Absence of Effective Choice by the Parties," is located in Title A, the "General Principles" portion of the chapter. Section 193, "Contracts of Fire, Surety or Casualty Insurance," is located in Title B, which addresses "particular contracts."

Section 193 provides:

The validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the state which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular issue, some other state has a more significant relationship under the principles stated in 6....⁵

Clearly, under § 193, Arkansas was the principal location of the insured risk of this particular automobile during the term of the policy. It was undisputed that Stoker added Honl to the company policy as the driver of the vehicle in question. Stoker furnished Auto-Owners with Honl's personal information and stated that the van to be issued to him would be garaged in Hot Springs, Arkansas, and primarily driven within a one-hundred-mile radius of that location. Further, Honl had an Arkansas drivers' license and 80-90 percent of the time the van was driven in Arkansas.

Auto-Owners focuses on the entire insurance policy rather than the policy for the individual vehicle, and contends that the exception to § 193 comes into play because the automobile insurance policy covered a fleet of vehicles which were mostly garaged in the state of Tennessee. Following this argument and relying on Comment b of § 193, Auto-Owners asserts that the exception to § 193 is dispositive because the question involves the generic issue of entitlement to coverage, rather than the specific issue of the location of the insured risk. Comment b to § 193 provides:

The location of the insured risk will be given greater weight than any other single contact in determining the state of the applicable law provided that the risk can be located, at least principally, in a single state. Situations where this cannot be done and where the location of the risk has less significance, include ... where the policy covers a group of risks that are scattered throughout two or more states.

Thus, Auto-Owners argues, that the exception indicates that the provision regarding the insured risk cannot be given greater weight because the policy covered cars located in two or more states and we must turn to the more general choice of law principles found in § 188 to determine which individuals should be covered as insureds. Section 188 provides in part:

(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in 6.

(2) In the absence of an effective choice of law by the parties (see 187), the contacts to be taken into account in applying the principles of 6 to determine the law applicable to an issue include:

(a) the place of contracting,

(b) the...