Hurst v. Grange Mut. Cas. Co.

• Decision Date: 28 May 1996
• Docket Number: No. S95G1470,S95G1470
• Citation: 266 Ga. 712,470 S.E.2d 659
• Parties: HURST v. GRANGE MUTUAL CASUALTY COMPANY.
• Court: Georgia Supreme Court

Page 659

470 S.E.2d 659

266 Ga. 712

HURST v. GRANGE MUTUAL CASUALTY COMPANY.

No. S95G1470.

Supreme Court of Georgia.

May 28, 1996.

Kermit S. Dorough, Jr., W. James Sizemore, Jr., Divine, Dorough & Sizemore, Albany, for Steve Hurst.

Joseph B. Gray, Jr., Melanie B. Cross, Simpson, Gray & Cross, Tifton, for Grange Mutual Casualty Company.

BENHAM, Chief Justice.

Grange Mutual Casualty Company issued a liability insurance policy on a 1976 pickup truck owned by appellant Steve Hurst. The vehicle was involved in a collision while being driven by Hurst's friend, Jerry Adams. In a declaratory action filed by the insurer, the trial court granted summary judgment to the insurer, absolving it of its duty to provide a defense and coverage, and the Court of Appeals affirmed in an unpublished opinion. Hurst v. Grange Mutual Ins. Co., 217 Ga.App. XXX (1995). We granted Hurst's petition for writ of certiorari, and reverse the judgment of the Court of Appeals.

On the day in question, Hurst, the named insured, was driving the truck and Adams was a passenger. Hurst asked Adams to drive and, while Adams was driving, the pickup truck was involved in a collision with a tractor-trailer driven by Floyd Shiver. After Shiver filed suit against Hurst and Adams, Grange Mutual filed the instant action seeking a declaratory judgment that the terms of the policy issued to Hurst afforded no liability coverage to Adams. The insurer relied on undisputed evidence that, at the time Adams drove Hurst's truck, Adams' driver's license had been suspended or revoked. The insurer sought judicial application of the evidence to an exclusionary provision in the policy which stated that no liability coverage was provided for "any person ... [u]sing a vehicle without a reasonable belief that person is entitled to do so." Concluding as a matter of law that Adams could not reasonably have believed that he was entitled to operate Hurst's truck on the day of the collision because he did not have a valid driver's license, the trial court found that the insurer was under no obligation under the policy issued to Hurst to defend Adams or pay out monies on his behalf, and granted summary judgment to the insurer. The Court of Appeals adopted the trial court's order and affirmed the judgment. This court granted the petition for writ of certiorari, asking whether the policy exclusion automatically excluded from coverage an unlicensed driver using the vehicle with the express permission of the insured who did not know that the driver was unlicensed.

1. The exclusion clause at issue differs from the traditional "omnibus" clause which authorizes coverage for a non-owner's permissive use of a vehicle. The new clause is couched in terms of entitlement rather than permission, causing a shift in the inquiry from an objective determination--whether the owner or one in legal possession of the car gave the user permission--to a mixed objective/subjective determination of the user's state of mind--the reasonableness of the user's subjective belief of entitlement. See Ga. Farm Bureau Mut. Ins. Co. v. Fire, etc., Ins. Co., 180 Ga.App. 777, 779, 350 S.E.2d 325 (1986); Cooper v. State Farm Mut. Auto. Ins. Co., 849 F.2d 496, 497 n. 1 (11th Cir.1988); Jenkins and Miller, Ga. Auto. Ins. Law (1993 ed.), § 10-5(b).

2. This exclusion has been the subject of much litigation in Georgia, and has been treated in a variety of ways on appeal. ¹ In the early case law which developed around this exclusion, the Court of Appeals' decisions turned on whether the driver/tortfeasor had the express or implied permission of the vehicle owner. See Robertson v. Lumbermen's Mut. Cas. Co., 160 Ga.App. 52(2), 286 S.E.2d 305 (1981), overruled on other grounds Grange Mut. Cas. Co. v. Brinkley, 182 Ga.App. 273, 355 S.E.2d 767 (1987), where the Court of Appeals affirmed the trial court's grant of summary judgment to the insurer after concluding that the driver could have had no reasonable belief he was entitled to use his estranged wife's car since he had no reasonable belief that he had express or implied permission to use the vehicle. In Nationwide Mut. Ins. Co. v. Southern Trust Ins. Co., 174 Ga.App. 513, 330 S.E.2d 443 (1985), the Court of Appeals found that the exclusion clause was not vague, ambiguous, or susceptible to more than one construction, and affirmed the submission to the trier of fact of the issue whether the driver had used the vehicle with a reasonable belief he was entitled to do so. The court focused its attention on the term "reasonable belief" and found it "clear" that coverage was excluded if the driver knew he was not entitled to drive or, if he believed he was entitled to drive but was without reasonable grounds for such a belief. The appellate court implicitly found the exclusionary language unambiguous in Ga. Farm Bureau Mut. Ins. Co. v. Fire, etc., Ins. Co., supra, 180 Ga.App. 777, 350 S.E.2d 325, and noted that the issue under the exclusion clause, as compared to the more traditional "omnibus" clause, was the state of mind of the driver. Since the driver did not have the owner's permission to use the vehicle and knew that he would have been denied permission had he sought it, the appellate court affirmed the declaratory judgment finding no coverage because the driver did not have a reasonable belief he was entitled to use the vehicle. The Court of Appeals again affirmed a trial court's determination of no coverage in light of the exclusion in McCraney v. Fire & Cas. Ins. Co. of Conn., 182 Ga.App. 895, 357 S.E.2d 327 (1987), where the tortfeasor/driver had stolen the car he was driving. Likewise, there was no coverage for the driver who took his friend's car without express permission, assuming that their friendship gave him implied permission to use the vehicle. Samples v. Southern Guaranty Ins. Co. of Ga., 197 Ga.App. 258, 398 S.E.2d 220 (1990). The appellate court concluded that evidence of the friendship was not sufficient to establish that the driver had a reasonable belief he was entitled to use the friend's vehicle. Id. In United Services Auto. Assn. v. Lail, 192 Ga.App. 487, 489, 385 S.E.2d 424 (1989), the court went so far as to suggest that one driving with permission "therefore had a reasonable belief in his entitlement to use [the vehicle]."

When faced with a series of cases wherein the tortfeasor/driver was unlicensed and therefore was driving in violation of the law, the Court of Appeals initially affirmed a finding of coverage, holding that the operation of a vehicle in violation of licensing laws did not establish that the driver had no reasonable belief he/she was entitled to drive if the unlicensed driver had the permission of the vehicle's owner or apparent owner to do so. Safeway Ins. Co. v. Holmes, 194 Ga.App. 160(2), 390 S.E.2d 52 (1989). Two years later, however, the Court of Appeals held that an unlicensed driver operating a vehicle with permission could not have reasonably believed he was entitled to drive the vehicle in light of his unlicensed status. Safeway Ins. Co. v. Jones, 202 Ga.App. 482, 415 S.E.2d 19 (1992). The appellate court reiterated that holding in Cincinnati Ins. Co. v. Plummer, 213 Ga.App. 265(2), 444 S.E.2d 378 (1994), but noted that the unlicensed driver in that case was also driving without permission of the owner. See also Cincinnati Ins. Co. v. Mullinax, 215 Ga.App. 331(3), 450 S.E.2d 336 (1994). In Miller v. Southern Heritage Ins. Co., 215 Ga.App. 173, 450 S.E.2d 432 (1994), the Court of Appeals completely jettisoned the concept that an unlicensed driver driving a vehicle with the owner's permission could be found to have a reasonable belief he was entitled to do so. The court held that the exclusionary clause required two types of permission--the permission of the owner as well as the permission of the State. In light of the unlicensed driver's admission that he knew he was legally prohibited from driving a car, the court concluded that the exclusion of coverage applied because, as a matter of law, the driver could not have had a "reasonable belief" he was entitled to drive the car. The court distinguished Safeway Ins. Co. v. Holmes, supra, 194 Ga.App. 160, 390 S.E.2d 52, on the ground that there was no evidence that the unlicensed driver in that case knew she was not legally authorized to drive. The Miller holding was the foundation for the Court of Appeals' unpublished opinion in the case at bar.

3. The appellate courts of several sister States have also wrestled with the exclusionary provision at issue in the case at bar. Several courts have found the clause ambiguous and construed it against the insurer. Most recently, the Supreme Court of Iowa observed that the word "entitled" was not defined in the insurance policy and concluded the policy was ambiguous since "entitled" could be interpreted to mean having a legal right or authority under applicable law or having the consent or permission of the owner or both. Farm and City Ins. Co. v. Gilmore, 539 N.W.2d 154 (Iowa 1995). In light of the ambiguity, the Iowa court adopted the reading most favorable to the insured, and held that coverage was excluded only when the driver was using the vehicle without a reasonable belief he had the permission of the vehicle's owner or apparent owner. See also Canadian Indemnity Co. v. Heflin, 151 Ariz. 257, 727 P.2d 35 (App.1986), where the Supreme Court of Arizona found the exclusion clause to be "clearly ambiguous" in light of the divergent interpretations given to it by the parties and the trial court, and construed it against the insurer; State Farm Mut. Auto. Ins. Co. v. Moore, 375 Pa.Super. 470, 544 A.2d 1017, 1019 (1988), where...