Peerless Ins. Co. v. Hannon

• Decision Date: 08 November 1990
• Citation: Peerless Ins. Co. v. Hannon, 582 A.2d 253 (Me. 1990)
• Parties: PEERLESS INSURANCE COMPANY v. Mary HANNON, et al.
• Court: Maine Supreme Court

Page 253

582 A.2d 253

PEERLESS INSURANCE COMPANY v.Mary HANNON, et al.

Supreme Judicial Court of Maine.

Argued Sept. 18, 1990.

Decided Nov. 8, 1990.

James D. Poliquin(orally), Norman, Hanson & Detroy, Portland, for plaintiff.

Steven D. Silin, Paul F. Macri(orally), Berman, Simmons & Goldberg, Lewiston, for Mary Hannon.

Marshall Tinkle(orally), Thompson, McNaboe, Ashley & Bull, Portland, for Universal Underwriters Ins. Co.

Before McKUSICK, C.J., and ROBERTS, WATHEN, GLASSMAN, CLIFFORD and BRODY, JJ.

ROBERTS, Justice.

Peerless Insurance Company, as insurer of Earl Lyons, and Universal Underwriters Insurance Company, as insurer of Brooks Chevrolet, Inc., appeal from a summary judgment of the Superior Court(Androscoggin County, Cole, J.) declaring that Universal had a primary and Peerless a secondary duty to defend and indemnify Lyons from tort liability that arose from his operation of a car owned by Brooks Chevrolet.Universal argues that Lyons was not an employee of the car dealership and thus not covered under the terms of its policy.Peerless contends that its policy excludes coverage of a non-owned automobile while used by one employed or otherwise engaged in the automobile business of another.Because Lyons was acting as an employee of the dealership at the time liability arose, and because the Peerless policy excluded such coverage, we affirm the judgment against Universal and vacate the judgment against Peerless.

On May 23, 1988, Earl Lyons, a resident of Colebrook, New Hampshire, was involved in a four car automobile accident in Turner, Maine.Allan Hannon, the sole occupant of one of the cars, was killed in the accident.At the time of the accident, Lyons was delivering an automobile purchased by Brooks Chevrolet, also of Colebrook, from another Chevrolet dealership in Winthrop, Maine.Mary Hannon, as personal representative of the estate of Allan Hannon brought suit in Superior Court (Androscoggin County) against both Lyons and Brooks Chevrolet.Peerless then commenced this declaratory judgment action to determine the coverage issues presented by Hannon's suit.Peerless, Universal and Hannon subsequently filed motions for summary judgment.

The summary judgment motions were each based on the uncontradicted deposition testimony of the owner and president of Brooks Chevrolet, Bradford Brooks.Brooks testified at length about the nature of car swapping and Lyons's activities on behalf of Brooks Chevrolet.According to Brooks a car swapper is a person hired to drive a car from one dealership to another in order to allow the dealerships to swap or make an outright purchase of the car.His dealership used swappers on a regular basis and Lyons carried out numerous swaps in the six years preceding the accident.Brooks Chevrolet's swappers were not regular employees, they were not on the payroll, worked only when needed, received no benefits or tax statements and were not invited to employee functions.Compensation was fixed at the completion of each swap by mutual agreement of the parties.By nature, the job required little supervision and Brooks allowed his swappers to choose their own routes and make minor personal stops.

The dealership, however, used swappers on a frequent and regular basis, since swapping was a common and useful practice in the industry.Brooks testified that occasionally he used his regular employees to swap, but preferred outside swappers because they were less expensive.Significantly, Brooks testified that he had an absolute right to control the activities of his swappers.He did not permit the swappers to substitute drivers, and he had the right to terminate a swapper in mid-swap if he discovered a problem with that swapper's performance.Brooks stated that if there were unexpected difficulties in accomplishing the swap, swappers would be expected to call the dealership to get instructions.

The Universal policy issued to Brooks Chevrolet insured it and its employees with respect to the operation of company-owned cars within the scope of company permission.The Peerless policy issued to Lyons covered liability "arising out of the ownership, maintenance or use" of any automobile, but excluded the use of non-owned automobiles while "employed or otherwise engaged in the automobile business of the insured or of any other person or...