O'NEILL v. Long

• Decision Date: 02 July 2002
• Docket Number: No. 96,002.,96,002.
• Citation: 2002 OK 63,54 P.3d 109
• Parties: Lawrence D. and Darlene E. O'NEILL, husband and wife, and American Fidelity Insurance Company, Plaintiffs/Appellees, v. Jeffery Dean LONG, Douglas F. Cole, Willie Cole, Jr., and Kevin Cole, Defendants, State Farm Fire & Casualty Company, Garnishee/Appellant.
• Court: Oklahoma Supreme Court

54 P.3d 109

2002 OK 63

Lawrence D. and Darlene E. O'NEILL, husband and wife, and American Fidelity Insurance Company, Plaintiffs/Appellees, v. Jeffery Dean LONG, Douglas F. Cole, Willie Cole, Jr., and Kevin Cole, Defendants, State Farm Fire & Casualty Company, Garnishee/Appellant.

No. 96,002.

Supreme Court of Oklahoma.

July 2, 2002.

Anthony P. Sutton, Tulsa, OK, for appellees.

John A. Glad, Gail W. Harris, Tulsa, OK, for appellant. BOUDREAU, Justice.

¶ 1 The trial court decided this garnishment proceeding in favor of the garnishor and against the garnishee, the insurer under a motor vehicle liability policy providing omnibus coverage to any person using the insured vehicle within the scope of consent granted by the named insured. The primary question on appeal is whether Oklahoma's Compulsory Insurance Law requires omnibus coverage even though the permittee exceeds the scope of consent granted by the named insured. We answer that once express or implied permission to use an insured vehicle is granted the omnibus coverage is fixed up to the statutory minimum compulsory insurance limits.

I. Background

¶ 2 Willie Cole, Jr. loaned his 1978 Mercury Marquis to his eighteen-year old nephew, Kevin Cole, so he could look for a job. Willie instructed Kevin, who resided in a household separate from Willie, not to let anyone else drive the car. Notwithstanding Willie's instructions, Kevin let Jeffery Dean Long drive the car to work. While driving Willie's car home from work the next morning, Jeffery collided with an automobile driven by Lawrence D. O'Neill. Lawrence and his passenger, wife Darlene E. O'Neill (O'Neills), were seriously injured.

¶ 3 The O'Neills' uninsured motorist insurer, American Fidelity Insurance Company, now American Mercury Insurance Company (American Fidelity), paid them $100,000 uninsured motorists benefits. The O'Neills and American Fidelity filed suit against Jeffery Dean Long, Willie Cole, Jr. and Kevin Cole. The O'Neills sought damages for personal injury and property loss and American Fidelity sought reimbursement for the uninsured motorists benefits. At the time of the collision, Willie Cole, Jr.'s vehicle was insured under a policy issued by State Farm & Casualty Company (State Farm) with liability limits of $25,000/$50,000 for bodily injury and $25,000 for property damage.

¶ 4 Initially, State Farm provided defense counsel to Willie Cole, Jr., Kevin Cole and Jeffery Dean Long. Later, defense counsel withdrew as counsel of record claiming that their respective clients failed to cooperate in the defense of the action. The O'Neills and American Fidelity subsequently secured default judgments against Jeffery Dean Long and Kevin Cole.¹ The trial court entered a money judgment in favor of the O'Neills and American Fidelity for damages and prejudgment interest in the sums of $131,079.62 for Darlene O'Neill's personal injury, $62,037.80 for Lawrence O'Neill's personal injury and $11,871.11 for property loss, together with costs and attorney fees.

¶ 5 The O'Neills and American Fidelity initiated garnishment proceedings against State Farm to collect their judgment. In answer to the third garnishment, State Farm denied liability or indebtedness to Kevin Cole or Jeffery Dean Long due to the lack of cooperation in defense of the civil action and the non-permissive use of the subject motor vehicle. The trial court allowed the O'Neills and American Fidelity to file their election to take issue with State Farm's answer out of time.²

¶ 6 The O'Neills and American Fidelity filed three separate motions for summary interlocutory adjudication in the garnishment proceedings. The first motion sought a ruling from the trial court that State Farm owed the statutory minimum compulsory liability insurance coverage to the O'Neills as required by 47 O.S.2001, § 7-601.³ The second motion sought a ruling that Kevin Cole was a permissive user and an insured under the motor vehicle liability insurance policy and entitled to coverage up to the policy limits of $25,000/$50,000 for personal injury damages and $25,000 for property damage. The third motion sought a ruling that Kevin Cole was entitled to coverage under the policy because State Farm failed to prove it was prejudiced by Kevin's failure to cooperate in the defense of the underlying tort action. By a separate order, the trial court granted the O'Neills' first and second motions for summary interlocutory adjudication. When the trial court subsequently granted the O'Neills' third motion for summary interlocutory adjudication, it also entered judgment upon the garnishment in favor of the O'Neills and American Fidelity and against State Farm.

¶ 7 State Farm appealed. The Court of Civil Appeals reversed, finding that Jeffery Dean Long's use of Willie Cole, Jr.'s automobile was unauthorized. Relying upon Pierce v. Oklahoma Property and Casualty Co., 1995 OK 78, 901 P.2d 819, the Court of Civil Appeals concluded that compulsory liability insurance need not cover unauthorized uses of the automobile. However, the Court of Civil Appeals remanded the cause for further proceedings, finding that the evidentiary record did not clearly address certain facts that might make Kevin Cole an insured.

¶ 8 We previously granted the O'Neills' and American Fidelity's petition for certiorari review. We vacate the opinion of the Court of Civil Appeals. We affirm the trial court's summary adjudication that State Farm owed the statutory minimum compulsory liability insurance coverage to the O'Neills. We reverse the summary adjudication that Kevin Cole was entitled to coverage up to the policy limits when he allowed Jeffery Dean Long to drive the vehicle contrary to the named insured's instructions.

II. Standard of Review

¶ 9 A garnishment proceeding may be decided by summary process resulting in a post-judgment order where it appears there is no dispute as to any identified material fact or inference to be drawn therefrom and all material facts are stipulated or otherwise established.⁴ These legal rulings are reviewable de novo, independent of and without deference to the trial court.⁵

III.

The trial court correctly determined that State Farm is liable to the O'Neills in this garnishment action for the minimum limits of compulsory insurance prescribed by 47 O.S.2001, § 7-601.

¶ 10 An omnibus clause in a motor vehicle insurance policy extends liability coverage to the named insured and other persons using the insured vehicle with permission. Hartline v. Hartline, 2001 OK 15, ¶ 15, 39 P.3d 765, 771, note 22. The omnibus clause creates liability insurance in favor of permissive users in addition to the named insured(s) or other persons insured in the policy.⁶Lumbermens Mutual Casualty Company v. Iowa Home Mutual Casualty Company, 1965 OK 87, 405 P.2d 160, 165. The omnibus clause, in effect, protects third parties wrongfully injured by the use of the insured vehicle by persons other than the owner.

¶ 11 Oklahoma's Compulsory Insurance Law requires omnibus coverage. Title 47 O.S.2001, § 7-600(1)(b) provides:

1. "Owner's policy". An owner's policy of liability insurance:

...

b. shall insure the person named therein and insure any other person, except as provided in subparagraph c of this paragraph, using an insured vehicle with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance, operation or use of such vehicle,..

(Underlining added.)

By the terms of the above statutory omnibus provision, an owner's policy issued in Oklahoma must provide liability coverage to persons using the insured vehicle with the permission of the named insured.

¶ 12 The omnibus provision in State Farm's policy reads as follows:

Who Is an Insured

When we refer to your car, a newly acquired car or a temporary substitute car, insured means:

1. you;

2. your spouse;

...

4. any other person while using such a car if its use is within the scope of consent of you or your spouse;

....

(Underlining added.)

By the above policy term, State Farm allows the named insured or the insured's spouse to limit omnibus coverage by placing restrictions on the scope of consent granted. The policy provides omnibus coverage to a permissive user who is liable for loss arising out of the use of the insured vehicle only if the harm-generating use falls within the scope of the consent granted.

¶ 13 Notwithstanding our statutory omnibus provision, State Farm contends that the policy definition of insured excepts Jeffery Dean Long from any category of individuals to whom it owes coverage. State Farm maintains that Long's use of the insured vehicle was outside the scope of the consent granted because Kevin Cole disregarded Willie Cole, Jr.'s instructions not to let anyone else drive the car. The O'Neills and American Fidelity argue, on the other hand, that terms of the statutory omnibus provision require an insurer to provide coverage to any person using the insured vehicle with the named insured's consent without regard to any restrictions or understandings between the insured and the permittee as to the particular use for which permission was given.

¶ 14 Oklahoma's Financial Responsibility Act, 47 O.S.2001, §§ 7-101, et seq., requires that owners maintain liability insurance on their automobiles. The Compulsory Insurance Law, 47 O.S.2001, §§ 7-600, et seq., Article VI of the Financial Responsibility Law, mandates that all motor vehicle owners keep in force liability insurance or other security at not less than the minimum amount provided by § 7-204. The principal purpose of the Act and its compulsory liability insurance requirement is to protect the public from the financial hardship that may result from the use of automobiles by financially irresponsible people. Harkrider v. Posey, 2000 OK 94, ¶ 15, 24 P.3d at 829. "This clearly articulated public policy of our compulsory liability insurance law plainly overrides...