Monday, July 14, 2003
Appeals Court Limits Scope of Insurance Coverage for Permissive Users
By KENNETH OFGANG, Staff Writer/Appellate Courts
A driver who operated a vehicle with the permission of an insured, to whom the vehicle had been entrusted by its owner, was not an additional insured under the policy, the Fourth District Court of Appeal has ruled.
The justices Thursday affirmed a ruling by retired San Bernardino Superior Court Judge Ben T. Kayashima, sitting on assignment, resolving a coverage dispute in favor of State Farm Mutual Insurance Company.
The case came before the court on a joint petition to determine coverage under an unusual set of facts.
State Farm’s named insured, David Nave, was contemplating purchasing a motorhome from Apple Valley resident James Gilmer. Nave and Shirley Schnell drove to Gilmer’s home to take the motorhome for a test drove.
Gilmer drove for about a mile before relinquishing the wheel to Nave. As Gilmer walked toward his seat, according to the petition, Nave suddenly accelerated, then jammed on his brakes after Gilmer noted a red light at the approaching intersection.
Gilmer fell, was injured, and suffered what turned out to be an unstable fracture of the spinal column. With Gilmer on the floor in an awkward position, the petition recited, Schnell told Nave “I better take over the wheel” and, with Nave’s approval, drove back to Gilmer’s home.
Gilmer claimed damages for the negligence of Nave in causing the injury, and for the alleged negligence of Schnell in exacerbating it. State Farm paid its coverage limits of $125,000, including medical payments, based on the claim against Nave, but said it had no responsibility to cover Schnell.
Kayashima, to whom the joint petition filed by Gilmer and State Farm was assigned, ruled that the insurer was correct
He reasoned that as the permissive user of a vehicle not owned by the named insured, Schnell was not covered by the policy. And the judge concluded that there was only one accident, not two, so the $125,000 payment on behalf of Nave exhausted the policy limits.
The Court of Appeal upheld the trial judge on the first issue and said it was unnecessary to reach the second.
Justice Thomas Hollenhorst, writing for the panel, noted that under the policy, coverage for a vehicle not owned by the named insured was limited to the named insured, his or her spouse, their relatives, and “any person [who] does not own or hire the car but is liable for its use by one of the above persons.” Since Schnell and Nave were not related, Schnell is not covered, the justice declared.
Hollenhorst rejected the argument that Schnell and Nave were engaged in a joint venture, which would make Schnell a “person...liable for [the vehicle’s] use” by Nave. The justice called the contention “speculative,” noting that it was Nave, not Schnell, who arranged for the test drive and was considering purchasing the vehicle.
Justices James Ward and Barton Gaut joined in the opinion.
The case is Gilmer v. State Farm Mutual Automobile Insurance Company, E032839.
Copyright 2003, Metropolitan News Company