Learman v. Auto Owners Ins. Co.

• Court: Indiana Appellate Court
• Writing for the Court: SHARPNACK.
• Citation: Learman v. Auto Owners Ins. Co., 769 N.E.2d 1171 (Ind. App. 2002)
• Decision Date: 14 June 2002
• Docket Number: No. 20A03-0110-CV-339.,20A03-0110-CV-339.
• Parties: Joshua J. LEARMAN, Appellant-Defendant, v. AUTO-OWNERS INSURANCE CO., Appellee-Plaintiff.

769 N.E.2d 1171

Joshua J. LEARMAN, Appellant-Defendant, v. AUTO-OWNERS INSURANCE CO., Appellee-Plaintiff.

No. 20A03-0110-CV-339.

Court of Appeals of Indiana.

June 14, 2002.

John C. Hamilton, South Bend, Robert W. Miller, Miller & Miller, Elkhart, Indiana, Attorneys for Appellant.

Sean E. Kenyon, Robert J. Konopa, Konopa, Reagan & Kenyon, South Bend, Indiana, Attorneys for Appellee.

OPINION

SHARPNACK, Judge.

Joshua J. Learman appeals the trial court's judgment in favor of Auto-Owners Insurance Company ("Auto-Owners") on Auto-Owners's declaratory judgment action. Learman raises two issues, which we restate as:

1. Whether the trial court's judgment that Learman was not a permitted driver of the insured vehicle is clearly erroneous; and

2. Whether the trial court's judgment denying Learman's request for attorney's fees incurred in defending the declaratory judgment action brought by Auto-Owners is clearly erroneous.

We affirm in part, reverse in part, and remand.

The facts most favorable to the judgment follow. Gladys Barbee and her husband, J.L. Barbee, entered into an auto insurance policy with Auto-Owners that covered their 1985 Pontiac for the period from February 17, 1995 through August 17, 1995. The policy defined "Insured," in pertinent part, as follows:

the named insured and any person using the automobile and any person or organization legally responsible for its use, provided the actual use thereof is with the permission of the named insured or if the named insured is an individual, with the permission of an adult member of the household who is not a chauffeur or domestic servant.

Appellant's Appendix at 97.

The Barbees were involved in an accident in June 1995 that rendered their insured vehicle inoperable. The Auto-Owners's policy provided that:

While the automobile is withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction, such insurance as is afforded by this policy with respect to such automobile applies with respect to another automobile not owned by the named insured while temporarily used as a substitute.

Id. at 98-99. As a result of the accident, Gladys and her daughter, Shirley Myers, went to Enterprise Rent-A-Car on June 7, 1995 where Gladys rented a vehicle. Gladys identified Myers as an authorized driver of the vehicle. The Enterprise contract provided as follows:

ADDITIONAL DRIVER—NONE PERMITTED WITHOUT ENTERPRISE'S APPROVAL

I request Enterprise's permission to allow

/s/ Shirley Myers

Who is under my control and direction to drive the rented vehicle for me and in my behalf. I am responsible for their acts while they're driving, and for fulfilling terms and conditions of this agreement.

Appellee's Appendix at 18. Thereafter, Myers drove the vehicle and transported the Barbees as necessary.

On June 20, 1995, Myers asked her son, A.J. Raines, to deliver a prescription to the Barbees. Raines requested and received Myers's permission to go swimming after delivering the prescription. After delivering the prescription, Raines drove to Learman's residence. Raines and Learman then drove to visit friends. During this visit, Raines asked Learman to drive the vehicle. Learman later lost control of the vehicle, injuring Raines and Learman.

Auto-Owners filed a complaint for declaratory judgment claiming that it was not obligated to provide insurance coverage for damages resulting from the accident because Learman was not an "insured" under the policy. Auto-Owners filed a motion for summary judgment, which the trial court granted. This judgment was the subject of a prior appeal to this court. See Raines v. Auto-Owners Ins. Co., 703 N.E.2d 689 (Ind.Ct.App.1998), trans. denied. We reversed the trial court's grant of summary judgment to Auto-Owners and remanded the case for further proceedings. Id. at 695. Subsequently, in a bench trial, the parties submitted stipulated evidence and argument to the trial court. On June 25, 2001, the trial court entered judgment in favor of Auto-Owners.

Although the trial court entered findings of fact and conclusions thereon, the record does not reflect a request for such findings by either party. Where the trial court enters specific findings of fact and conclusions sua sponte, we apply the following two-tier standard of review: whether the evidence supports the findings, and whether the findings support the judgment. Western Ohio Pizza, Inc. v. Clark Oil & Refining Corp., 704 N.E.2d 1086, 1090 (Ind.Ct.App.1999), trans. denied. The trial court's findings and conclusions will be set aside only if they are clearly erroneous, that is, when the record contains no facts or inferences supporting them. Id. A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. Id. Sua sponte findings control only as to the issues they cover and a general judgment will control as to the issues upon which there are no findings. Id. A general judgment entered with findings will be affirmed if it can be sustained on any legal theory supported by the evidence. Id.

I.

The first issue is whether the trial court's judgment that Learman was not a permitted driver of the insured vehicle is clearly erroneous. Learman argues that the trial court relied upon the Enterprise contract to find that Learman was not a permitted driver and, thus, failed to follow the "law of the case" as decided by this court in the prior appeal.

In the prior appeal, Learman argued that the trial court erred by granting summary judgment to Auto-Owners. Raines, 703 N.E.2d at 691. We held that the Enterprise agreement could not operate as an express restriction on permission to drive the vehicle for purposes of the Auto-Owners policy. Id. at 694. However, we could not "say that as a matter of law, a reasonable fact-finder could not infer from these facts that Learman had Barbee's and/or Myers' implied permission." Id. at 693. Thus, we reversed the trial court's grant of summary judgment to Auto-Owners and remanded for further proceedings. Id. at 695.

On remand, the parties presented stipulated evidence and argument to the trial court in a bench trial. However, the trial court then held:

Even if the rental Agreement itself [cannot] serve as an express limitation on permission to use the vehicle for purposes of the policy of insurance at issue, it is the opinion of the Court that Myers did not possess the requisite actual or apparent authority to give permission for anyone else to use the rental vehicle.

Actual authority is created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him to act on the principal's account. The focus of actual authority is the belief of the agent and the authority may be express or implied. The evidence shows that both Barbee and Myers were present when Barbee rented the vehicle from Enterprise. The evidence further supports that Barbee and Myers were aware that they were the only authorized drivers of the rental vehicle. Based upon the specific facts of the instant case, the scope of Myers' authority to drive the rental vehicle was given within the context of the rental agreement. Accordingly, Myers' express authority to drive the rental vehicle did not extend to her being able to authorize others to drive the rented vehicle. Additionally, the evidence does not support a conclusion that Myers could have reasonably and justifiably believed that she had the authority to give such permission. To the contrary, Myers specifically was on notice that she did not possess such authority. Therefore, because Myers did not have express or implied authority to grant permission to Learman to drive the rental vehicle, there is no coverage under the policy and Auto-Owners is not liable to Learman.

Appellant's Appendix at 41-42 (citations omitted).

Thus, the trial court analyzed the coverage issue under the principles of actual and apparent authority and determined that based upon the Enterprise contract, Myers did not have actual or apparent authority to grant Learman permission to drive the vehicle. Learman argues that the trial court relied upon the Enterprise contract to find that Learman was not a permitted driver and, thus, failed to follow the "law of the case" as decided by this court in the prior appeal.

The "law of the case" doctrine is a discretionary tool by which appellate courts decline to revisit legal issues already determined on appeal in the same case and on substantially the same facts. Cutter v. State, 725 N.E.2d 401, 405 (Ind. 2000),reh'g denied. Upon remand following an appellate decision, the law of the case doctrine requires a trial court to "apply the law as laid down by the appellate court." Riggs v. Burell, 619 N.E.2d 562, 564 (Ind.1993). However, to invoke the law of the case doctrine, the matters decided in a prior appeal "must clearly appear to be the only possible construction of the opinion." Id. Questions not conclusively decided in a prior appeal do not become the law of the case. Id.

In the prior appeal, we determined whether the trial court erred by granting summary judgment to Auto-Owners based upon express and implied permission principles. We must now determine whether the trial court erred by granting judgment to Auto-Owners based upon actual or apparent agency principles. Because the actual or apparent agency theory was not argued in the prior appeal, the law of the case doctrine is inapplicable. See, e.g., Riggs, 619 N.E.2d at 565.

Thus, we must determine whether the trial court correctly applied actual or apparent authority principles in determining this issue. The insurance provision at issue here is based upon Ind.Code § 27-1-13-7 which provides, in pertinent part:

No policy of insurance against loss or damage ... shall be issued or delivered in this state to the owner of a motor vehicle, by any domestic or foreign corporation, insurance

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