Estate of Trobaugh v. Farmers Ins. Exch.

Decision Date21 March 2001
Docket Number No. 21032, No. 21355., No. 21203
Citation2001 SD 37,623 N.W.2d 497
PartiesThe ESTATE OF Douglas Leroy TROBAUGH, Deceased, By and Through Kendra TROBAUGH, Personal Representative of the Estate, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant and Appellee. The Estate of Douglas Leroy Trobaugh, Deceased, By and Through Kendra Trobaugh, Personal Representative of the Estate, Plaintiff and Appellant, v. Michael Thomas Sylvester, Thomas H. Juffer, and Jefferson Township, a political subdivision of Union County, South Dakota, Defendants and Appellees. The Estate of Douglas Leroy Trobaugh, Deceased, By and Through Kendra Trobaugh, Personal Representative of the Estate, Plaintiff and Appellant, v. Amy Sylvester, Defendant and Appellee.
CourtSouth Dakota Supreme Court

Michael J. McGill, Beresford, for plaintiff and appellant.

Kristine L. Kreiter of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendants and appellees.

Nos. 21032, 21203 Considered on Briefs March 21, 2000.

No. 21355 Considered on Briefs September 19, 2000.

KERN, Circuit Court Judge.

[¶ 1.] Estate of Trobaugh (Estate) filed three separate suits seeking damages resulting from Douglas Trobaugh's (Trobaugh) death in an automobile accident.

APPEAL # 21302

[¶ 2.] The first suit against Farmers Insurance Exchange (Farmers) sought a declaration that the driver of the car, Mike Sylvester (Mike) was a permitted driver of the 1986 Ford Taurus involved in the fatal November 30, 1996 accident. Estate contended that although the car was titled and insured in Thomas Juffer's (Juffer) name, coverage for the accident was available under the omnibus clause of Juffer's policy. However, Farmers sought summary judgment contending there were no genuine issues of material fact since Mike had neither express nor implied permission from Juffer to drive the Taurus and was not a permitted driver. The trial court granted summary judgment in favor of Farmers. We reverse.

APPEAL # 21203

[¶ 3.] The second suit brought as a result of this accident was against Mike, Juffer, and Jefferson Township. Estate alleged Juffer negligently entrusted the Taurus to Mike. Estate also moved to amend its complaint to add Amy Sylvester (Amy), Mike's wife, as a defendant for negligently entrusting the vehicle to Mike. The trial court granted Juffer's motion for summary judgment and denied Estate's request to amend its complaint. We reverse.

APPEAL # 21355

[¶ 4.] This suit arose when Estate filed a separate action against Amy for negligent entrustment. Amy did not answer the complaint. Instead, she moved for dismissal under SDCL 15-6-12(b)(5), or in the alternative, summary judgment based on matters outside of the pleadings. The trial court granted Amy's motion. We reverse.

CONSOLIDATION

[¶ 5.] These actions were filed from one settled record, and raise similar issues and therefore, for purposes of judicial economy, are hereby consolidated.

FACTS

[¶ 6.] Juffer, of Yankton, South Dakota, provided vehicles for his adult children, which were titled and insured in his name. His daughter Amy received a 1988 Nissan Sentra. Amy was listed as the permitted driver and named insured although the vehicle was titled in Juffer's name. In June 1995, Juffer provided a 1986 Honda Civic to his son-in-law Mike for his use in commuting to work from Sioux City, Iowa, to Jefferson, South Dakota. The vehicle was titled in Juffer's name and insured by him, but no permitted driver was ever listed on the policy.

[¶ 7.] In the spring of 1996, Mike blew up the Honda's engine and was without transportation. In March, Mike admitted to Amy that he did not have a valid driver's license because the State of Iowa had revoked his license for alcohol related offenses. Estate produced evidence that Mike was a problem drinker and that this was well known to Amy and a source of friction in their relationship.

[¶ 8.] On July 16, 1996, Mike purchased a 1986 Ford Taurus to replace Juffer's Honda. Juffer told Mike to keep the vehicle since he had three vehicles at the time and did not need it. Mike informed Juffer that he did not have a valid driver's license and could not title or insure the car in his own name. Juffer testified that he then accepted the car but told Mike that he could no longer drive the Taurus or any of Juffer's vehicles. Mike and Amy stated in their depositions that they knew and understood this prohibition.

[¶ 9.] Later in July, Juffer transferred physical custody of the Taurus to Amy. In August, Juffer gave Amy express permission to use the Taurus in Yankton if she needed it, but required her to obtain permission from him before taking the vehicle out of town. Mike did not have a car at this time and was working four miles outside of Yankton. Amy was working in Yankton and needed her car to get to work and take their baby to the day care. In August Juffer also titled and insured the Taurus in his own name. Again, no designated operator was ever listed on the policy.

[¶ 10.] Juffer testified in his deposition that at the time of the transfer he told Mike not to drive the vehicle. Despite this alleged prohibition Mike admitted that he took the vehicle on at least three occasions, including the date of the accident. Amy admitted that she knew Mike had used the vehicle on one occasion prior to the accident. Whether Juffer knew of Mike's use of the Taurus is in dispute.

[¶ 11.] On November 27, 1996, Amy's 1988 Nissan was in the shop for repairs. She and Mike had been invited to his father's home in Sioux City, Iowa, for the Thanksgiving holiday. She called Juffer and obtained permission to take the Taurus to Sioux City for the weekend.

[¶ 12.] On the morning of November 30, 1996, Amy went shopping with her mother-in-law. She left the Taurus in the driveway with the keys in the ignition so that it could be moved to accommodate other cars if necessary. Trobaugh, Mike's friend of several years, stopped by the house with a six-pack of beer and asked for a ride to Jefferson, South Dakota. Mike agreed to take him, and the two left together in the Taurus. Mike admitted that he took the Taurus without getting permission from anyone.

[¶ 13.] Instead of going immediately to Jefferson, Mike and Trobaugh drove around Sioux City and finished the beer. They stopped at the Town House Bar, ate lunch, and continued to drink. At 12:30 p.m., they proceeded to the Derby Bar where they played pool and drank. At 7:30 p.m. Mike and Trobaugh left for Jefferson, taking the back roads. [¶ 14.] Mike missed a turn on a township road southeast of Jefferson. The Taurus slid off the road, rolled on its top, and landed in a drainage ditch containing two feet of water. Mike was able to get out of the Taurus but Trobaugh died in it as a result of drowning. Seven hours after the accident Mike's blood alcohol content was .155.

[¶ 15.] From the time of its purchase until the date of the accident, the Taurus' odometer revealed that it had been driven approximately 4,635 miles. Juffer had used it seven or eight times and could account for 1,000 miles. Amy's usage accounted for 1,200 miles, leaving 2,435 miles unexplained. Estate produced evidence that Mike was seen driving the Taurus on many occasions during the months of July through November. David Trobaugh, brother of the decedent, stated in his affidavit that on two occasions in the summer of 1996, Mike stopped by to pick up his brother and that Amy was a passenger in the car.

STANDARD OF REVIEW

[¶ 16.] The standard of review of a trial court's grant of a motion for summary judgment is well settled and was recently reiterated in Estate of Shuck v. Perkins County, 1998 SD 32, ¶ 6, 577 N.W.2d 584, 586:

Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. Morgan v. Baldwin, 450 N.W.2d 783, 785 (S.D.1990). The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

[¶ 17.] When reviewing a grant of summary judgment, we are not bound by the trial court's factual findings, but, rather, must undertake an independent review of the record. Walz v. Fireman's Fund Insurance Co., 1996 SD 135, 556 N.W.2d 68.

[¶ 18.] In these consolidated cases, the trial court granted summary judgment in favor of Farmers finding no coverage under the omnibus clause for Mike. Estate sued both Juffer and Amy under the theory of negligent entrustment. The trial court granted summary judgment in the action against Juffer and demurred the action against Amy.

ANALYSIS AND DECISION
Appeal # 21032

The Suit Against Farmers Insurance For Coverage Under the Omnibus Clause.

[¶ 19.] At the time of the accident, Juffer carried a liability insurance policy through Farmers on the Taurus. The policy defined an insured person as:

1) You or any family member;
2) Any person using your insured car.

The policy excluded from coverage any person who used the vehicle without having sufficient reason to believe that the use was with the permission of the owner.

[¶ 20.] The omnibus insurance clause in South Dakota is codified at SDCL 32-35-70 and states in pertinent part:

An owner's policy of liability insurance referred to in § 32-35-68 shall insure the person named therein and any other person as insured, using any
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