A United States District Court, applying South Carolina law, found that an automobile liability insurer had no obligation to defend or indemnify a driver who was operating an insured vehicle without the named insured’s permission, even though the operator allegedly received consent to drive it from an “insured driver,” who was expressly so named in the policy. The decision, titled Nationwide Mutual Fire Insurance Company v. Van Sickle and Rush was filed April 14, 2017 and is reported at 2017 U. S. Dist. LEXIS 57262.
The facts alleged were that a vehicle driven negligently by Appolonia Rush injured the Van Sickles in a collision with their vehicle in April 2015. The Van Sickles sued Rush and Lois Prince, the owner of the vehicle driven by Rush and insured by Nationwide. Nationwide sued the Van Sickles and Rush in federal court seeking a declaratory judgment that it had no obligation to provide liability coverage to Rush for the Van Sickles’s injury claims, filed in South Carolina state court.
The Van Sickles alleged that Prince was liable for Rush’s negligent driving because she entrusted the vehicle to Rush, authorizing her to drive the vehicle. Starting in 2009 Prince had authorized her son, one Broderick Goodwin, to use her vehicle. At that time, Goodman did not reside with his mother, Prince, and she acquired another car for her use. Goodwin and Prince both testified at deposition that Prince told Goodwin that only he could drive Prince’s vehicle, and no one else was allowed to use it.
The Nationwide policy insured the vehicle owned by Prince and operated at the time of the accident by Rush. It provided coverage for damages for which “you” are legally liable as a result of an accident arising out of the ownership, maintenance or use of “your” auto. The policy said that a “relative” also had this protection, as did any person or organization liable for the use of “your” auto while used with “your” permission.
The definition section of the Nationwide policy provided that the term “Policyholder” was the person named in the policy declarations and was the “named insured” under the policy. The same section states, also, that the words “you” and “your” “mean… the policyholder… when the policyholder is a person,” as in this case. The term “relative” was defined as one who regularly lives in your household and is related to you by blood, marriage or adoption….” Finally, the term “insured” was defined as “one who is described as entitled to protection under each coverage.”
Nationwide moved for summary judgment in the insurance coverage case, contending that the driver, Rush, was not covered under the policy. Nationwide argued that Rush was not a named insured or resident relative under the policy, and was not a permissive user of the vehicle because Prince, the named insured under the policy, specifically instructed Goodwin not to allow anyone else to operate her vehicle. Nationwide contended that Prince did not know Rush was driving her vehicle so she gave no implied permission for him to do so.
Most importantly, Nationwide argued that Goodwin’s alleged permission to Rush to use the Prince vehicle, although disputed, did not satisfy the policy requirement for permissive user coverage, because Rush was not a “named insured” – a “you” – under the policy. The court concluded that “the plain language of the policy clearly shows there is only one ‘named insured,’ and that is Prince.”
For their part, the Van Sickles argued that Goodwin, who was listed by name in the policy declarations as an “insured driver,” was therefore a named insured under the policy and, as such, gave Rush permission to operate Prince’s vehicle. They contended that Goodwin allowed Rush to drive the vehicle regularly, with and without Goodwin as a passenger, and that Goodwin gave Rush implied consent to use the vehicle on the night of the accident.
Knitting the parties’ arguments together, the court in the coverage case articulated the issue it needed to decide as being whether Goodwin was a “named insured” under the Nationwide policy, and therefore able to grant Rush insurance coverage while she used the Prince vehicle.
In ruling on the summary judgment motion in the coverage case, the court invoked the general principle that words in insurance contracts are to be given their plain, ordinary and popular meaning, and that courts should not torture the meaning of policy language in order to extend or defeat coverage that was never intended by the parties. The policy language in this case, limiting permissive user coverage status to those granted driving permission by the “named insured,” would fulfill the auto insurance statutory policy requirement of at least one populous state, California. (Cal. Ins. Code, Section 11580.1(b)(4).)
The key to the case, the court held, was that Goodwin, who allegedly gave Rush permission to use the Prince vehicle, although expressly listed by the policy as an “Insured Driver,” did not thereby qualify as a named insured under the plain language of the policy, so Goodwin’s permission, if granted in favor of Rush, was ineffective to confer on Rush liability protection under the policy. The court relied on cases holding that an individual listed in auto policies as “operator,” “driver,” or even as an “insured driver” did not mean that any of them was a “named insured” for purposes of “stacking” uninsured motorist (UM) and underinsured motorist (UIM) coverage limits for a policy’s multiple vehicles. In brief, the court rejected the defendants’ contention that the term “driver” is synonymous with phase “named insured.”
The court observed that, since Prince was the only named insured under the policy, she alone could extend Nationwide’s coverage to Rush by granting him permission to drive her vehicle. Also, it was undisputed that Rush, herself, was neither a named insured nor a relative of the single named insured, Prince.
Additionally, the deposition testimony of Prince and Goodwin established that Prince expressly told Goodwin no one besides him was to drive her vehicle. There was no evidence Prince ever changed her instruction or gave permission for others to drive the car. Accordingly, Rush did not have Prince’s permission to drive the vehicle, and Rush did not have her implied consent, either. Consequently, Rush was not a permissive user of the vehicle under the terms of the policy, and the policy did not cover claims arising from the accident that occurred while Rush was driving.
Nationwide’s motion for summary judgment was granted.
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