Continental Ins. Co. v. Whittington

• Decision Date: 14 December 1994
• Docket Number: No. 93-667,93-667
• Parties: CONTINENTAL INSURANCE COMPANY, Appellee, v. WHITTINGTON et al., Appellees; Smith et al., Appellants.
• Court: Ohio Supreme Court

Page 150

71 Ohio St.3d 150

642 N.E.2d 615

CONTINENTAL INSURANCE COMPANY, Appellee, v. WHITTINGTON et al., Appellees; Smith et al., Appellants.

No. 93-667.

Supreme Court of Ohio.

Submitted Oct. 11, 1994.

Decided Dec. 14, 1994.

SYLLABUS BY THE COURT

Any error by a trial court in denying a motion for summary judgment is rendered moot or harmless if a subsequent trial on the same issues raised in the motion demonstrates that there were genuine issues of material fact supporting a judgment in favor of the party against whom the motion was made.

On July 5, 1989, at approximately 9:30 p.m., Sean Sonner ("Sonner") was involved in an accident while driving a van owned by his employer, appellees Terry Whittington and William Brinley, d.b.a. Whittington Produce ("Whittington Produce"). Thomas Sonner (Sonner's brother), Michelle Smith and Lewis Hawes, appellants, were passengers in the vehicle. At the time of the accident, Sonner was using the company van for his own personal purposes. No other vehicle was involved in the crash.

Whittington Produce was owned and operated as a partnership by Terry Whittington and William Brinley. At the time of the accident, Whittington Produce was insured under a policy of motor vehicle liability insurance issued by Continental Insurance Company ("Continental"), appellee. ¹ The policy contained a section known as an "omnibus clause" required by R.C. 4509.51(B). ² Specifically, Section II(A)(1) of the policy defined the "insureds" as follows:

"a. You [Whittington Produce] for any covered 'auto' "b. Anyone else while using with your [Whittington Produce's] permission a covered 'auto' you own, hire or borrow * * *." (Emphasis added.)

The vehicle involved in the accident was a covered "auto" within the meaning of the policy.

On October 13, 1989, Continental filed an action for declaratory judgment in the Court of Common Pleas of Darke County, naming, as defendants, Terry Whittington, William Brinley, Whittington Produce, Sonner, Michelle Smith, Lewis Hawes, Thomas Sonner and others. In the complaint, Continental alleged that Sonner did not have permission to use the company van for personal purposes at the time of the accident. Therefore, Continental sought a declaration that no coverage was available under the terms of the policy because Sonner was not an "insured" at the time of the accident. Further, Continental sought a declaration that it owed no duty to defend or indemnify Sonner or Whittington Produce in any subsequent tort action brought by anyone claiming to have suffered injury or damage as a result of the accident.

The following relevant matters were elicited upon discovery.

Whittington Produce is a business that transports live poultry from farms to other locations. As part of the business operation, employees are transported to and from work in company-owned vehicles. On July 5, 1989, at approximately 5:00 or 5:30 p.m., Terry Whittington gave Sonner express permission to use a company van to drive several employees home from work. Whittington instructed Sonner to keep the van overnight, to park the van in front of his (Sonner's) house, and to pick up the employees the following morning to return them to work. Whittington never told Sonner not to use the van for personal purposes. Whittington Produce had no written policy prohibiting personal use of company vehicles. However, according to Whittington, all employees knew that personal use of company vehicles was strictly prohibited.

On the evening of July 5, 1989, Sonner drove the employees to their homes in accordance with Whittington's instructions. He then drove home and parked the van. Later, he drove the van to a friend's house. There, he decided to take the vehicle out on the town for the evening. He was joined by Thomas Sonner, Hawes, Smith, and others. The accident occurred while Sonner was using the van for his own social and personal benefit. In his deposition, Sonner admitted that his personal use of the van at the time of the accident exceeded the scope of permission given to him by Whittington. He testified that company vehicles were ordinarily not used by employees for personal pursuits. Following the accident, Sonner was not fired or otherwise disciplined for having used a company vehicle for personal purposes.

Thomas Sonner and Lewis Hawes were deposed on August 22, 1990. Both men had worked for Whittington Produce. Thomas Sonner testified that prior to July 5, 1989, several Whittington Produce employees had regularly used company vehicles for personal purposes. He further testified that Whittington normally allowed employees to ride around or "cruise" in company vehicles after working hours. Hawes testified that he knew of no policy prohibiting personal use of company vehicles. Hawes also testified that Terry Whittington never seemed to care whether company vehicles were used by employees for personal purposes.

Continental filed a Civ.R. 56 motion for summary judgment, arguing that Sonner had exceeded the scope of permission granted to him by Whittington to use the van for a limited business purpose. Therefore, Continental claimed that it was entitled to a declaration that Sonner was not an "insured" at the time of the accident and, thus, no coverage was available under the terms of the policy. Continental also argued that Sonner's use of the vehicle at the time of the accident represented a "complete deviation" from the scope of permission originally granted to him by Whittington. In this regard, Continental claimed that no coverage was available under the so-called "minor deviation" rule of Gulla v. Reynolds (1949), 151 Ohio St. 147, 39 O.O. 2, 85 N.E.2d 116. The "minor deviation" rule states that where the use of a vehicle deviates slightly from the purpose for which permission was initially granted, a standard omnibus clause in a liability insurance policy will be interpreted to extend coverage, but if the use represents a gross deviation from the scope of permission given, no coverage is to be afforded. See Frankenmuth Mut. Ins. Co. v. Selz (1983), 6 Ohio St.3d 169, 171, 6 OBR 227, 229, 451 N.E.2d 1203, 1204, and Erie Ins. Group v. Fisher (1984), 15 Ohio St.3d 380, 383, 15 OBR 497, 500, 474 N.E.2d 320, 323-324.

Smith, Hawes and Thomas Sonner (collectively referred to as "appellants") opposed the motion, urging that questions of fact remained to be determined as to whether Sonner had implied permission to use the vehicle for personal purposes at the time of the accident. Whittington and Brinley also opposed the motion, but only on the issue whether Continental had a duty to defend them in any subsequent tort action filed by persons claiming to have been injured or damaged as a result of the accident. In a reply memorandum, Continental stated that "[t]he plaintiff does acknowledge the position of the defendants Terry Whittington and William Brinley. As they are named insureds on the policy, Continental does not assert the position that coverage should be excluded as to them." From that point forward, the interests of Continental and Whittington and Brinley, d.b.a. Whittington Produce, became aligned. Continental eventually dismissed those portions of the complaint relating to Whittington and Brinley.

On November 9, 1990, the trial court denied Continental's motion for summary judgment, finding that genuine issues of material fact remained to be determined regarding the scope of permitted use. Thereafter, the matter proceeded to trial before a jury.

At trial, evidence was presented which, if accepted, established that Sonner's use of the van at the time of the accident was within the scope of implied permission initially granted to him by Whittington. Sonner's testimony at trial indicated that prior to July 5, 1989, vehicles entrusted to Whittington Produce employees to transport workers to and from work were, as a matter of custom and practice, frequently used by employees for personal purposes. Sonner claimed that he had relied on this custom and practice when he used the van for personal reasons on the night of the accident. In this regard, Sonner admitted to having lied at his deposition wherein he had claimed no prior knowledge of authorized personal use of company vehicles. According to Sonner, he lied at his deposition because, among other things, he was afraid of losing his job. Sonner indicated that he was able to tell the truth at trial because he was "not afraid anymore," presumably because he was no longer employed by Whittington Produce. Sonner's testimony was supported by the testimony of other witnesses who detailed a long and established history involving personal use of company vehicles. The direct and circumstantial evidence at trial also tended to establish that Terry Whittington knew or should have been aware of the widespread personal use of company vehicles, and that Whittington may have tolerated or condoned such activities.

Following the presentation of evidence, the jury was asked to determine whether Sonner had express or implied permission to use the van for personal purposes at the time the accident occurred--i.e., whether Sonner was an "insured" within the meaning of Section II(A)(1)(b) of the policy. The trial court also instructed the jury on the "minor deviation" rule of Gulla, supra. The trial court rejected appellant Smith's request that the jury be instructed on the so-called "initial permission" rule. The "initial permission" rule, which has been rejected in this state on a number of previous occasions, provides that when an owner of a motor vehicle consents to its use by a permittee, any subsequent use by the permittee remains permissive short of conversion or theft of the vehicle, notwithstanding that the subsequent use exceeds limitations included in the initial grant of permission. See Erie, supra, 15 Ohio St.3d 380, 383, 15 OBR 497, 500, 474 N.E.2d 320, 323.

In response to specific interrogatories, the jury found that (1) Sonner did not have...