DAVID PAYNE et ux.
ERIE INSURANCE EXCHANGE et al.
Matricciani, Kehoe, Moylan, Charles E., Jr. (Retired, Specially Assigned), JJ.
A grant of permission to use a motor vehicle can pass swiftly from a named insured to a first permittee to a second permittee. The liability coverage under a policy's omnibus clause, however, may not replicate so facile a transfer, as if passing easily from Tinker to Evers to Chance. The grant of permissive use may sometimes stop at Evers and never make it all the way to Chance. Even should the permissive use get into the hands of Chance, however, his status may be discounted as that of a mere agent or chauffeur of Evers. Tinker, by and large, will be free of troubles. In any event, insurance law can be a more sluggish arena than Wrigley Field.
Did The Tortfeasor Have Insurance?
At approximately three p.m. on February 11, 2008 on Route 202 in Prince George's County, the automobile then being driven by the appellant, David J. Payne, Sr., was struck by a 1995 Subaru Legacy being driven by Ameen Ragher Abdulkhalek. The appellant sued, inter alia, Abdulkhalek. The 1995 Subaru Legacy, however, was owned by Alan Dwyer. The appellee, Erie Insurance Exchange, had issued a policy of automobile liability insurance to Alan Dwyer for the Subaru Legacy. The only issue before us is whether coverage under the omnibus clause of Erie's insurance policy extended from Alan Dwyer to Abdulkhalek.
Under the policy, Alan Dwyer was the named insured. In defining precisely who received liability protection under the policy, the omnibus clause spelled out:
"Anyone we protect" means:
1. "you" or any "relative" using an "auto we insure;"
2. any person using, or any person or organization legally responsible for the use of, an "owned auto we insure." This use must be with "your" permission unless the use is by a "relative;" and
3. any person or organization legally responsible for the use, by "you" or a "relative, " of any "non-owned auto." This protection applies only if the person or organization does not own or hire the vehicle being used.
(Emphasis in original).
The 1995 Subaru Legacy that figures in this case had been purchased by Alan Dwyer primarily for the use of his 34-year-old daughter, Karen Dwyer. Karen, along with her three children, lived at home with her mother and father. Karen suffered periodically from Lupus. For purposes of analyzing the policy coverage on the Subaru Legacy, Karen generally had the unlimited permission of her father to use the Legacy as she wished, with one significant prohibition. Karen was the first permittee for using the insured vehicle.
The one significant prohibition imposed by Alan Dwyer on the use of the Legacy was with respect to Abdulkhalek. Dwyer absolutely forbade Karen's allowing Abdulkhalek to drive the car. Abdulkhalek, though he did not live with Karen, was the biological father of her three children. Two of Karen's and Abdulkhalek's three children attended the St. Ambrose private school, which is located within the same residential community where the Dwyers live. Normally, Karen makes the two minute drive to pick the two up from school. On February 11, 2008, however, Karen was feeling ill with Lupus and asked Abdulkhalek to take the Legacy and pick the children up. Instead of going directly to the school, which is only two blocks away, Abdulkhalek for some unknown reason drove out onto Md. 202 and to an Exxon station, where he remained for approximately three minutes. Whether the detour was to gas up the car or simply to pick up a pack of cigarettes, we are not told. In any event, it was after leaving the Exxon station that, at a traffic light on Md. 202, Abdulkhalek hit the rear of the car driven by David Payne.
When this case came on for a pretrial hearing before Judge John P. Davey in the Circuit Court for Prince George's County on February 15, 2013, Judge Davey denied the appellant's motions for a declaratory judgment and for summary judgment but granted Erie's motion for summary judgment. This appeal timely followed.
The Use Versus The Operation Of A Vehicle
The appellant relies primarily on Maryland Indemnity Insurance Co. v. Kornke, 21 Md.App. 178, 319 A.2d 603 (1974). In Kornke, the named insured of a vehicle was the father and the first permittee was the father's teenaged son. At the very outset of the opinion, this Court pointed out that we were dealing with the extent of the coverage of a policy's omnibus clause.
The so-called "omnibus clause, " required by statute in a number of states, is in addition to the general insuring clause and extends the protection of the automobile liability insurance policy to any person using the insured vehicle provided the use (or "actual use") is by the named insured or with his permission or consent. The clause, irrespective of language variations, clothes the named insured with broad authority to constitute other persons as "additional insureds."
21 Md.App. at 180 (footnotes omitted; emphasis supplied).
In Kornke the named insured of a 1960 Chevrolet hardtop was William T. Kornke, Sr. His 18-year-old son, a high school student living at home, used the car regularly for purposes of going to school and to work and drove the car "almost every day." When the son would wish to use the car for a date or other social purpose, however, he would generally ask for special permission from his father. On the critical date in the case, the son, with his father's permission, was driving the family car, with three other friends, to a late-night cookout. In attempting to repair a faulty electrical connection in the engine, the son received an electric shock and his right hand and arm temporarily "numbed up." Although his father had in the past told him not to allow anyone else to drive the car, on this occasion the son asked one of his friends to take over the driving. An accident ensued.
After examining the case law and observing that "use and operation are not synonymous, " 21 Md.App. at 186, this Court's opinion held that the son was, indeed, using the car even though someone else was behind the wheel. Our holding clearly stated that the son was using the car even though he was not driving it, but also that his actual presence in the car was nonetheless a sine qua non for extending the liability coverage.
[U]sing a car by a borrower includes riding in it while another drives, at least where the former remains "the custodian of the instrumentality confided to his keeping, " or the latter "is the agent or servant of another and subject to his immediate and present direction and control."
21 Md.App. at 192 (emphasis supplied).
After analyzing earlier Maryland cases, our opinion pointed out for the first time in this state that the scope of the permission ordinarily granted by the named insured to the first permittee is not simply the entitlement to operate the vehicle but, more broadly, an entitlement to use the vehicle for a permitted purpose even though the literal operation of the vehicle is delegated to someone else.
The First Permittee Must Be In The Car
The actual presence of the first permittee in the vehicle, however, is a sine qua non for any coverage of the actual driver as a second permittee. It is the first permittee who is deemed to be actually using the car and the second permittee, who is driving, is considered to be the mere agent (or chauffeur) of the first permittee. The Maryland case law has never extended coverage under an omnibus clause to an absentee use of the vehicle by the first permittee, such as sending the second permittee on an errand while the first permittee stays home. The rationale energizing Kornke's expanded interpretation of a "permitted use" as opposed to a more restricted "permitted operation" of the vehicle is that the first permittee is present in the car as the master of the ship even when not literally standing at the helm. Under all circumstances, the first permittee must be on board. On this critical issue, Kornke relied heavily on the earlier Maryland decision of Hardware Mutual Casualty Co. v. Mitnick, 180 Md. 604, 26 A.2d 393 (1942).
Chief Judge Bond, writing for the Court, rejected this contention, holding that using includes riding while another drives:
"But using a car in the ordinary acceptation of the words seems clearly to include a borrower's making use of it by riding while driven by another. Mrs. Phillips (the granddaughter) was 'still the director of the enterprise, still the custodian of the instrumentality confided to (her) keeping, still the master of the ship.'"
21 Md.App. at 185 (emphasis supplied).
The second earlier Maryland opinion that Kornke relied upon was Melvin v. American Automobile Insurance Co., 232 Md. 476, 194 A.2d 269 (1963). In that case, Judge (later Chief Judge) Henderson made it clear that although the actual user of a vehicle need not be the person behind the steering wheel, the user must nonetheless be present in the vehicle so that the driver may be said to be "subject to his immediate and present direction and control."
We see no reason to limit the meaning of the words "actual use" to the operation of a vehicle, where the operator is the agent or servant of another and subject to his immediate and present direction and control.
232 Md. at 478-79 (emphasis supplied).
As the case law about the extent of coverage authorized by the typical omnibus clause developed, this Court's opinion in Kornke was a major landmark in that evolution. It articulated for the first time in a clear holding the critical distinction between the permitted use of a vehicle and the permitted operation of a vehicle. Permitted use embraces permitted operation but is significantly broader. It includes both the active modality of driving and the passive modality of being driven.
Kornke's recognition of the passive modality of being driven in a vehicle for a permitted purpose was a logical expansion of liability coverage, but the expansion was not without its limits. The first permittee's use of the automobile contemplates an actual use and not a mere constructive use. If the first permittee is actually driven to the pharmacy to pick up her medicines, the expanded liability coverage travels with her and with her driver as well. If, on the other hand, the first permittee's trip to the pharmacy is only a constructive one, as she stays at home and sends her driver in her stead, the expanded liability coverage stays home with her. The permitted use of a vehicle contemplates that the first permittee, who is the first and last recipient of the grant of permission by the named insured, actually be present in the vehicle. It is not enough that the vehicle is being used for her purposes or benefit. It is required that the first permittee be the actual user and not simply the beneficiary of the use. The chain of permissive use does not extend to an absentee user. The expanded liability coverage adheres to the person of the first permittee. To enjoy coverage derivatively from the first permittee, the second permittee must be within the first permittee's penumbra.
The failure to appreciate that a permitted use demands the first permittee's presence as well as being for the first permittee's benefit is the fatal flaw in the appellant's argument. He looks only to the fact that the trip to pick up the children from school was for Karen's benefit. He utterly discounts the requirement of Kornke, and all of the other cases, that Karen must have been in the vehicle for the expanded coverage to attach to the vehicle.
In Federal Insurance Co. v. Allstate Insurance Co., 275 Md. 460, 341 A.2d 399 (1975), the Court of Appeals held that under the omnibus clause of an automobile liability policy issued by Allstate to a named insured, the coverage extended to a second permittee who was driving the vehicle at the time of an accident. The named insured was Direct Way Auto Shippers, a company in the business of delivering automobiles for its customers from New York to Florida. The driver hired by Direct Way to deliver the vehicle to Florida was Richard Frank. Without permission having been granted to do so Frank took along on the trip both his girlfriend and another acquaintance, James Straz. It was Straz who was actually driving when the car was involved in an accident in Prince George's County, Maryland. The issue before the Court of Appeals was clear.
Clearly, Direct Way, the named insured, gave permission to Frank to drive the car to Florida. There was, however, no express permission given Frank to carry passengers or to ...