Farm Bureau Ins. Co., Inc. v. Select Ins. Co.
| Decision Date | 15 April 1991 |
| Docket Number | Civ. A. No. 89-2379-O. |
| Citation | 762 F. Supp. 895 |
| Parties | FARM BUREAU INSURANCE COMPANY, INC., individually and as subrogee of Adrienne Petree, G & G Enterprises, Inc., James R. Ralston, and Esther Ralston, Plaintiff, v. SELECT INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — District of Kansas |
Paul P. Hasty, Jr., Wallace, Saunders, Austin, Brown & Enochs, Overland Park, Kan., for plaintiff.
Daniel M. Zimmerman, Wilson E. Speer, Speer, Austin, Holliday & Ruddick, Olathe, Kan., for defendant.
This matter is before the court on defendant's motion for summary judgment. Following a motor vehicle accident, plaintiff Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau), a Kansas corporation, brought an action in Johnson County District Court seeking to recover from defendant Select Insurance Company (Select), a Texas Corporation, amounts Farm Bureau expended as a result of physical damage and liability claims brought against Farm Bureau's insured, G & G Enterprises (G & G) and a G & G employee, Adrienne Petree (Petree).1 Subsequently, the case was removed to this court pursuant to 28 U.S.C. § 1446. Since Farm Bureau has not responded to Select's motion for summary judgment, the court will treat the motion as uncontested pursuant to Local Rule 206(g) and, for the following reasons, grants Select's motion.
The following facts are undisputed: On Friday, July 24, 1987, Petree, a sales employee of G & G, an auto sales and leasing corporation, delivered a vehicle to the John Chezik Mitsubishi (Chezik) dealership. In exchange, Petree received possession of a 1985 Cadillac El Dorado, titled in Kansas, upon which she placed G & G dealership plates. She then drove the Cadillac back to G & G. Although Petree received possession of the Cadillac from Chezik, she did not receive a Certificate of Title or any other paperwork. It is undisputed that Petree received possession of the Cadillac pursuant to a possible "switch sale" and that she, as G & G's agent, intended to try to find a buyer for the Cadillac.
Subsequently, Petree was permitted to drive the Cadillac home for the week-end. Lew Gangel, owner of G & G, testified that it was his practice to allow those employees involved in the selling and buying of cars to drive company cars for personal use. Gangel stated that one of the purposes of allowing his sales employees personal use of company cars was On Sunday, July 26, 1987, while driving a friend to his car from her apartment, Petree collided with a vehicle occupied by James and Esther Ralston. Both Ralstons sustained injuries. G & G was insured under a policy of insurance provided by plaintiff Farm Bureau and Chezik was insured under a policy provided by defendant Select.
On the day after the accident, Gangel spoke with the manager at the Chezik dealership and reached an understanding that, because the Cadillac was in G & G's possession at the time of the accident, G & G would complete purchase of the Cadillac and assume responsibility for the physical damage to the vehicle. G & G then executed a sight draft in the amount of $13,500, or the agreed upon full market value of the Cadillac before the accident, backdated the sight draft to July 24, 1987, and tendered the draft to Chezik. G & G then made a claim under its policy with Farm Bureau for the physical damage and, subsequently, Farm Bureau paid to G & G the sum of $13,725 on the collision damage claim.
On September 17, 1987, Mr. Ralston filed suit against G & G claiming vicarious liability for the negligence of Petree, G & G's employee. In a subsequently amended petition, filed March 3, 1988, Ralston added Petree as a party defendant, abandoned the vicarious liability claim, and added a claim against G & G for negligent entrustment. Ralston's Third Amended Petition, filed May 12, 1988, made claims on behalf of Ralston individually and as conservator for the conservatorship estate of Esther Marie Ralston.
On May 31, 1988, Farm Bureau reached a settlement by paying $345,000 to the Ralstons. At that time, the only claim against G & G was the claim for negligent entrustment, a claim clearly not covered by the Select policy. In effecting the May 31, 1988, settlement agreement, Farm Bureau made no allocation of its policy proceeds between the risk exposure of its insured, G & G, and that of Petree. Pursuant to the settlement agreement, the Ralstons released G & G from liability, reserved the right to proceed against any potential coverage provided to Petree under any other insurance policy, and entered into a covenant not to execute upon the personal assets of Petree following any future recovery on that claim. Subsequently, Select reached a settlement with respect to Petree's liability by paying the entire amount of its policy limits of $1,000,000 to the Ralstons. Gulf Insurance Company, Chezik's excess insurer, agreed to pay for the benefit of Esther Ralston the sum of $5000 per month during her life for a minimum of 20 years.
A moving party is entitled to summary judgment only when the evidence indicates that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Maughan v. SW Servicing, Inc., 758 F.2d 1381, 1387 (10th Cir.1985). The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party has the burden of showing the absence of a genuine issue of material fact. This burden "may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. The court must consider factual inferences tending to show triable issues in the light most favorable to the party opposing the motion. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir.1984), cert. denied, 469 U.S. 1214, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985).
Farm Bureau's present claim against Select is based upon the contention that, as to the liability claims, G & G and Petree were covered as insureds under the Select policy since Petree, as G & G's agent, was operating the Cadillac with Chezik's permission and outside the scope of her employment with G & G. With respect to the physical damage claim, Farm Bureau contends it is entitled to recover on the basis that Chezik was the owner of the Cadillac at the time of the accident. Select counters that even if Chezik were the owner of the Cadillac at the time of the accident (1) G & G and Petree were excluded from coverage under the policy and (2) with respect to the collision claim, Farm Bureau, as G & G's subrogee, is bound by G & G's agreement with Chezik by which G & G assumed responsibility for the physical damage.
The court agrees with Select that both G & G and Petree are excluded from coverage. First, with respect to G & G, the basis asserted by Farm Bureau in the Pretrial Order for coverage under the Select policy is G & G's vicarious liability as the employer of Petree.2 As stated previously, however, the only claim against G & G at the time of settlement was a claim for G & G's negligent entrustment of the vehicle to Petree3 and Farm Bureau has not contended that the Select policy can be construed to extend coverage to G & G for negligent entrustment. Since the vicarious liability claim was abandoned by the Ralstons before settlement was reached with Farm Bureau, the only possible exposure Select could have under its policy is coverage for Petree's liability.
Farm Bureau's theory of recovery from Select for sums paid on account of the liability of the driver, Petree, is that "the vehicle Petree was operating was actually owned by Chezik Mitsubishi and insured by Select at the time of the accident and Petree was operating the vehicle with the permission of Chezik and outside the scope of her employment." Acknowledging that there is a dispute regarding the ownership of the Cadillac at the time of the accident, Select counters that, even if Chezik were the owner of the vehicle, Petree is excluded from coverage as an insured under the terms of their policy. Again, we agree.4
In reviewing the applicable provisions of Select's policy, Part I of the policy defines an "insured" as "any person or organization qualifying as an insured in the WHO IS INSURED section of the applicable insurance." Part IV — Liability Insurance — provides as follows:
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