Pennell v. Foster
| Citation | 524 S.E.2d 630,338 S.C. 9 |
| Decision Date | 22 November 1999 |
| Docket Number | T,Now BB ,No. 3075.,w BB ,3075. |
| Court | Court of Appeals of South Carolina |
| Parties | James E. PENNELL, Guardian ad Litem for James E. Pennell, II, Francis T. Owens, Guardian ad Litem for Sunny Leighann Owens, Augusta J. Sitton, Jr., Guardian ad Litem for John Joseph Sitton, and John M. Ross for James Tyler Ross, Respondents, v. Katherine Cole FOSTER, Leasing Associates, Inc., Southern National Bank of North Carolina , Southern National Leasing Corporation (Wholly owned by Southern National Bank), BB & T Leasing Corporation (f/k/a Southern National Leasing Corporation) BB & T, Pennsylvania National Mutual Casualty Insurance Company, St. Paul Fire & Marine Insurance Company; Selective Insurance Company, Allstate Insurance Company, United Services Auto Association, CNA Insurance Company f/k/a Continental Insurance Company, Defendants, of whom, Pennsylvania National Mutual Casualty Insurance Company is, Primary Appellant, and St. Paul Fire & Marine Insurance Company is, Secondary Appellant, and Katherine Cole Foster, Leasing Associates, Inc., Southern National Bank of North Carolina , Southern National Leasing Corporation (Wholly owned by Southern National Bank), BB & T Leasing Corporation (f/k/a Southern National Leasing Corporation) BB & T, Selective Insurance Company, Allstate Insurance Company, United Services Auto Association, CNA Insurance Company f/k/a Continental Insurance Company, are, Respondents. |
F. Barron Grier, III, and Deborah Harrison Sheffield, both of Grier Law Firm; and Charles E. Carpenter, Donald V. Richardson, Georgia Anna Mitchell and S. Elizabeth Brosnan, all of Richardson, Plowden, Carpenter & Robinson, all of Columbia, for appellants.
Thomas W. Dunaway, III, of Dunaway & Associates; George L. Sands; Raymond A. Tate, Jr., of Doyle & O'Rourke; and Robert L. Waldrep, Jr., of Waldrep & Stoddard, all of Anderson; and Thomas E. Hite, Jr., of Hite & Pruitt, of Abbeville; and Michael S. Church, of Turner, Padgett, Graham & Laney; and Steven B. Licata, of Husman, Licata & Steele, both of Columbia; and David L. Moore, of Love, Thornton, Arnold & Thomason, of Greenville, for respondents.
This declaratory judgment action was brought to determine which of the captioned insurers provides coverage for injuries sustained by passengers in a one car accident. The trial court found both Penn National Mutual Casualty Insurance Company (Penn National) and St. Paul Fire & Marine Insurance Company (St. Paul) to be primary liability carriers, and determined both carriers must defend and indemnify their insureds based on the allegations of negligence of Katherine Foster, the driver. Both Penn National and St. Paul appeal. The remaining named insurers are alleged to provide underinsured or uninsured coverage to various parties which may be affected by the decision as to primary coverage in this case. We affirm in part, and reverse in part.
Leasing Associates, Inc. (LAI), a business which leased and sold cars, was the registered owner of an inventory of vehicles, including a 1986 Ford Bronco. LAI maintained a Garage Liability policy with Penn National. On May 16, 1994, LAI entered into a Plan and Agreement of Reorganization with Southern National Bank of North Carolina (the Bank) whereby the assets of LAI were purchased and transferred to the Bank's wholly owned subsidiary, Southern National Leasing Corporation (SNLC). The reorganization agreement was adopted, ratified, and approved by LAI's Board of Directors on May 25, 1994.2 The agreement provided that LAI would not dissolve for a period of one year without the Bank's consent.
As part of the acquisition, the Bank executed an Assumption of Liabilities which provides:
Pursuant to the Plan and Agreement of Reorganization dated as of May 16, 1994, by and between Bank and [LAI] (hereinafter "Leasing"), Bank hereby assumes the obligations, contracts and liabilities (herein the "Liabilities") set forth on "Schedule 2" attached hereto3 and incorporated herein by reference. The Bank hereby agrees to be responsible for and to perform and discharge, and to indemnify [LAI] against, the Liabilities.
The closing took place on June 6, 1994, at which time SNLC acquired substantially all of the assets of LAI.4 The 1986 Bronco which was involved in the collision giving rise to this litigation was among the assets transferred. Thereafter, SNLC continued to operate the business. Both the Bank and SNLC were insured by an Auto Liability Protection Policy with St. Paul. Although SNLC acquired the Bronco after the effective date of the St. Paul policy, it did not notify St. Paul of the acquisition.
John Robert Foster, Jr. (Mr. Foster), was the general manager for LAI until the closing, and was thereafter employed by SNLC. Mr. Foster decided to purchase a vehicle for his daughter, Katherine, as she attained the age of sixteen. Mr. Foster allowed his daughter to test drive various vehicles from SNLC's lot. Ultimately, they settled upon the Bronco. Throughout the week of September 9, 1994, Katherine kept the Bronco for her personal use, though Mr. Foster had not purchased it. Katherine, though quickly approaching sixteen, was still fifteen years old and possessed a restricted driver's license requiring her to drive under supervision after 8:00 p.m. On September 9, after 8:00 p.m. and without supervision, Katherine and her passengers proceeded in a course of conduct that ultimately resulted in a single-car accident.
The accident report listed LAI as the owner of the Bronco. The Bronco was operated under a dealer's license plate registered to LAI. When Penn National purchased the Bronco as salvage, LAI was listed as the seller on the Application for Certificate of Title/Registration. As a result of the accident, Foster's passengers, Pennell, Owens, Sitton, and Ross, initiated tort actions against Katherine Foster, LAI, and SNLC.
A dispute arose between Penn National and St. Paul as to which carrier was responsible for the defense of the tort actions, which led to this declaratory judgment action. The parties stipulated to the above recited facts, leaving the inferences to be decided by the trial court sitting without a jury. The trial court found: 1) Foster had permission from her father to drive the Bronco on the day of the wreck; 2) LAI had an insurable interest on the day of the wreck notwithstanding the transfer of assets to SNLC; 3) LAI and SNLC each provided insurance for "owned" vehicles, and therefore, both Penn National and St. Paul were primary insurers. Both insurers appeal. We affirm in part and reverse in part.
A declaratory judgment action to determine which of two insurers has primary liability coverage is at law. Unisun Ins. Co. v. First Southern Ins. Co., 314 S.C. 54, 443 S.E.2d 808 (Ct.App.1994), aff'd as modified, 319 S.C. 419, 462 S.E.2d 260 (1995). A declaratory judgment action to determine the coverage under an insurance policy's omnibus clause is an action at law. United States Fire Ins. Co. v. Macloskie, 320 S.C. 459, 465 S.E.2d 759 (Ct.App.1995). An action to declare excess or secondary liability coverage is an action at law. State Auto Prop. & Cas. Ins. Co. v. Gibbs, 314 S.C. 345, 444 S.E.2d 504 (1994). In an action at law tried without a jury, findings of fact made by the trial court have the same force and effect as those of a jury; that is, the court's findings will not be disturbed on appeal unless without evidence which reasonably supports the judge's findings. Townes Assocs. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976).
I.
On appeal, Penn National argues there is no coverage for Katherine Foster under the policy issued to LAI because Foster was not an "insured" as defined under the policy. The policy defines the "insured" to include "[a]nyone else while using with [LAI's] permission a covered `auto' [LAI] own[s], hire[s], or borrow[s] ...." Because the Bronco was no longer owned by LAI as a result of the asset transfer (there is no issue that the vehicle was hired or borrowed), Penn National asserts Katherine Foster was not within the definition of an insured. Though the trial court did not rule LAI owned the vehicle the court held they had an "insurable interest", and thus, coverage was still in effect covering the vehicle, and therefore, Katherine. We agree with Penn National.
The issue of ownership is a question of fact for purposes of coverage under insurance policies. South Carolina Farm Bureau v. Scott, 274 S.C. 264, 262 S.E.2d 739 (1980). The determination depends on the specific facts and circumstances of the case in question. Id. Though a certificate of title constitutes prima facie evidence of ownership for purposes of insurance coverage, this presumption can be rebutted by evidence establishing someone other than the titleholder is the true owner. Tollison v. Reaves, 277 S.C. 443, 445, 289 S.E.2d 163, 164 (1982).
In Unisun Ins. Co. v. First Southern Ins. Co., 319 S.C. 419, 462 S.E.2d 260 (1995), our supreme court was faced with a similar fact situation. We believe Unisun provides guidance here. In Unisun, the driver of a Subaru automobile, named Peters, was at fault in an accident. Peters' use of the Subaru arose from an agreement negotiated between Peters' father and Subaru Center as a part of the father's sale of the Subaru dealership. Under the agreement, Peters' father received the use of three new vehicles per year for ten years. The certificates of origin on the untitled vehicles remained in Subaru Center's name, and as each vehicle accumulated 6000 miles, they were exchanged for new ones, and Subaru Center then sold them as demonstrators, retaining all of the sales proceeds. Peters' father maintained his own automobile liability policy which named him as the insured even though the agreement obligated Subaru Center to maintain insurance. Subaru Center maintained a dealership...
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