Opinion
CV-99-1531-ST
February 5, 2001
FINDINGS AND RECOMMENDATION
INTRODUCTION
This is a declaratory judgment action by plaintiff, Allstate Insurance Company ("Allstate"), against defendants, Wendy Delay ("Delay") and Mylo Lupoli ("Lupoli"), to resolve a coverage issue under an "omnibus" clause in an Allstate automobile insurance policy.
Delay and Lupoli are Oregon residents, Allstate is an Illinois corporation, with its principal place of business in Illinois, and the amount in controversy exceeds $75,000. Thus, this court has diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Now before the court is Allstate's Motion for Summary Judgment and Alternative Motion for Partial Summary Judgment (docket #26). On December 11, 2000, based on Lupoli's concession, this court granted Allstate's Alternative Motion for Partial Summary Judgment (part of docket #26) and limited Lupoli's counterclaim to $25,000.00. For the reasons set forth below, the remainder of Allstate's Motion for Summary Judgment should be granted.
UNDISPUTED FACTS
Allstate issued an automobile insurance policy to Bette J. Baker ("Baker") covering her 1991 Honda Civic ("Honda"). The policy provides bodily injury coverage limits of $25,000.00.
The Honda was a bright purple customized vehicle, "tricked out," low to the ground with wide tires and modular wheels. Lupoli Depo, p. 50. Baker apparently purchased the Honda for her son, Ron Snyder ("Snyder"), because he was unable to finance it himself. Baker Depo, pp. 7-8. Snyder contributed twice to the car payments. Id. He also made improvements to the Honda, such as installing a powerful stereo system. Id at 10.
Deposition excerpts are identified by the last name of the deponent and citations are to the page of the deposition transcript.
In November 1997, Baker allowed Snyder to drive the Honda for several weeks to and from work while his car was broken, and expressly prohibited him from allowing anyone else to drive it. During that time, Snyder kept the Honda at his girlfriend's and her parents' house where he was living. Id at 8-9. On December 6, 1997, Snyder allowed his friend Delay to drive the Honda. She lost control of the automobile and drove off the road. Lupoli, a passenger in the Honda, was injured and sued Delay in Multnomah County Circuit Court. In September 1999, Lupoli obtained a default judgment against Delay in the amount of $121,511.06.
Meanwhile, in August 1999, Allstate filed a declaratory judgment action against both Delay and Lupoli in Washington County Circuit Court. Allstate sought a declaration that it was under no duty to defend Delay or pay any judgment entered against her. On October 28, 1999, Lupoli removed that case to this court and filed an Answer and Counterclaim against Allstate for the full amount of the default judgment entered against Delay. As noted above, Lupoli has conceded that the counterclaim against Allstate is limited to $25,000.00. A default judgment has been entered against Delay (docket #21).
SUMMARY JUDGMENT STANDARD
FRCP 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show an absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party shows the absence of an issue of material fact, the non-moving party must go beyond the pleadings and designate specific facts showing a genuine issue for trial. Id at 324. A scintilla of evidence, or evidence that is merely colorable or not significantly probative, does not present a genuine issue of material fact. United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir), cert denied, 493 U.S. 809 (1989).
The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir 1987). The court must view the inferences drawn from the facts in the light most favorable to the nonmoving party. Thus, reasonable doubts about the existence of a factual issue should be resolved against the moving party. Id at 630-31. However, when the non-moving party's claims are factually implausible, that party must come forward with more persuasive evidence than would otherwise be required. California Architectural Bldg. Prods., Inc. v. Franciscan Ceramics Inc., 818 F.2d 1466, 1470 (9th Cir 1987), cert denied, 484 U.S. 1006 (1988). The Ninth Circuit has stated, "No longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment." Id at 1468.
DISCUSSION
Automobile liability insurance policies typically contain an "omnibus" clause that covers not only the policyholder but also anyone else using the vehicle with the named insured's permission. See W. David Hammett, Comment, "Permissive Use" under an Automobile Liability Insurance Policy: Louisiana's "Hell or High Water" Approach, 40 Loy L Rev 337, 338 (1994). In effect, this "omnibus" clause gives the named insured the discretionary power to select additional insureds. Id at 338; see also Ryan v. Western Pac. Ins. Co., 242 Or. 84, 88, 408 P.2d 84, 86 (1965) ("Under the omnibus clause, the named insured selects the risk to be covered"). However, problems may arise, as amply demonstrated by this case, when the permittee's use of the vehicle goes beyond the scope of the permission granted, or when the vehicle is used for a purpose neither intended nor consented to by the named insured.
One commentator notes that insurance companies have recently begun replacing this type of "omnibus" clause with an "entitlement exclusion clause" which disallows coverage for any person using a covered vehicle without a reasonable belief that he or she is entitled to do so. See Darla L. Keen, Note, The Entitlement Exclusion in the Personal Auto Policy: The Road to Reducing Litigation in Permissive Use Cases or a Dead End? 84 Ky L J 349, 351 (1995). "Instead of focusing on permission from the owner's perspective, the entitlement exclusion clause `shifts the inquiry from the express or implied intent of the owner to the subjective belief of the user.'" Under this standard, courts may determine the driver's belief to be reasonable even without the owner's permission. Id. at 352, citing Cooper v. State Farm Mut. Ins. Co., 849 F.2d 496, 499 (11th Cir 1988).
I. The Allstate Auto Insurance Policy
The interpretation of a provision in a standard insurance policy is a matter of law, committed to the court. Farmers Ins. Co. v. Munson, 145 Or. App. 512, 519, 930 P.2d 878, 882 (1996), rev denied, 325 Or. 368, 939 P.2d 45 (1997). Unambiguous terms in an insurance contract are given their plain and common meaning while defined terms are given their defined meaning. Mortgage Bancorp. v. New Hampshire Ins. Co., 67 Or. App. 261, 264, 677 P.2d 726, 728, rev denied, 297 Or. 339, 683 P.2d 1370 (1984).
Here, Allstate's insurance policy provides that it will defend "a person insured" who is sued as the result of an automobile accident. Complaint, Exhibit ("Ex") 1, p. 18. Allstate will defend "even if the suit is groundless, false, or fraudulent." Id. The policy also provides that in the event of an accident, Allstate will pay all damages "a person insured" is legally obligated to pay due to bodily injury or property damage. Id. The policy's omnibus clause defines "person insured" as "you," "any resident," and "any other person using [the covered automobile] with your permission." Id, p. 19 (emphasis added). It defines "you" and "your" as "the policyholder named on the declarations page and that policyholder's resident spouse." Id, p. 20. A "resident" is an individual residing in the policy holder's household "with the intention to continue living there," including "[u]nmarried dependent children while temporarily away from home."
Pursuant to the unambiguous language of the above policy provisions, Allstate is necessarily obligated through its "omnibus" clause to provide coverage to the policyholder and spouse, residents of the household, and those driving the vehicle with the policyholder's permission. The parties concede that Baker is the policyholder and that Delay is neither Baker's spouse nor a resident of her household. Therefore, Delay is a "person insured" under the policy only if she was using the Honda with either the express or implied permission of Baker. See e.g., Allstate Ins. Co. v. American States Ins. Co., 108 Or. App. 617, 816 P.2d 709, rev denied, 312 Or. 527, 822 P.2d 1196 (1991) (discussing both express and implied permission before concluding that sub-permittee had policyholder's implied permission to drive covered automobile).
II. Permission to use the Honda
Baker expressly told Snyder not to allow anyone else to drive the Honda. Lupoli, however, urges this court to discount or ignore that express prohibition and instead find a question of fact as to whether Baker impliedly gave Delay permission to drive the Honda. Lupoli asserts that implied permission in this case may be found by examining the surrounding circumstances and relationships between the parties. To that end, she seeks to introduce certain deposition testimony to which Allstate objects. Before addressing the substance of Lupoli's argument, therefore, this court must first determine whether this additional testimony is in fact admissible. "[O]nly admissible evidence may be considered by the trial court in ruling on a motion for summary judgement." Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 1179, 1181 (9th Cir 1988), citing FRCP56(e).
A. Allstate's Evidentiary Objections
1. Hearsay
Allstate seeks to strike as hearsay under FRE 801 the following testimony by Lupoli:
Q: Was it Ron Snyder or his mother, Bette Baker [who owned the Honda]?
A: She said it was Ron's car. Julie [Gillett] had said it was Ron's car before we took off.
Lupoli Depo, p. 16.
Allstate also seeks to exclude various other statements made by Lupoli, including: "I asked Wendy [Delay] if it was her car, and she said, no, it was Ron [Snyder]'s, and they [Delay and Gillett] both pretty much at the same time said it was Ron [Snyder]'s, because it was a customized car, the color was customized," and "Ron [Snyder] told me that it was his car, and out of conversation that I had with him, he put his insurance in his mother's name and that's why he . . . was fighting it because he didn't want it to go against his mother's record." Id at 17, 46.
Allstate argues that Lupoli's statements are offered to prove the truth of the matter asserted, namely that Snyder owned the Honda. Allstate's objection, however, is misplaced. Insofar as Lupoli's statements are offered to prove that Snyder owned the Honda, they are inadmissible. However, it is apparent that Lupoli's statements are not offered for that purpose, but are offered merely to prove Lupoli's state of mind, namely that she believed that the Honda belonged to Snyder. As such, the statements are admissible. Similarly, insofar as Lupoli's statement regarding insurance is offered only to demonstrate her belief, it also is admissible.
2. Lay Opinion Testimony
Next, Allstate seeks to strike the following testimony by Lupoli as an improper lay opinion under FRE 701:
Q: (By Mr. Buckle) Now, who was the owner of this car, this Honda?
A: Apparently Ron Snyder.
Q: Wan it Ron Snyder or his mother, Bette Baker?
A: She said it was Ron's car. Julie [Delay] had said it was Ron's car before we took off.
Lupoli Depo, p. 16.
Allstate argues that this testimony is offered to prove that Snyder owned the Honda and as such, is impermissible lay opinion testimony concerning the legal concept of "ownership." Once again, this statement does not appear to be offered by Lupoli in order to prove that Snyder was the legal owner of the Honda. Insofar as this statement is offered to prove that Lupoli thought that the Honda belonged to Snyder, it is admissible.
3. Immaterial, Unsupported, and Otherwise Inadmissible
Allstate next argues that it is immaterial whether it was Baker or Snyder who actually owned the Honda and that such an immaterial fact will not preclude summary judgment. Allstate is partially correct. While actual ownership of the Honda is undisputed, any indication that Baker gave implied consent for Snyder to treat the Honda as his own is relevant. For example, when asked whether Snyder treated the Honda as his own, Baker stated with some ambiguity, "I think he treated it as probably, yeah, as if it was — I mean he was driving it. He was using it as if it was — wheels to get to and from work." Baker Depo, p. 13. This and similar statements are admissible for purposes of Allstate's summary judgment motion.
B. Implied Permission
Having disposed of Allstate's evidentiary objections, this court must return to the issue of implied permission. Though the Supreme Court of Oregon has yet to discuss a policyholder's implied permission for a sub-permittee to drive the policyholder's vehicle, the Oregon Court of Appeals has addressed this issue several times. In Allstate Ins. Co., 108 Or App. .at 622, 816 P.2d at 711, the court specifically noted that permission for a sub-permittee to use a policyholder's car: (1) "may be implied from the broad scope of the initial permission;" or (2) "from other surrounding circumstances, such as a relationship between the parties or their conduct over a period of time."
A federal court interpreting state law is bound by the decisions of the highest state court. In re Kirkland, 915 F.2d 1236, 1238 (9th Cir 1990), citing Dimidowich v. Bell Howell, 803 F.2d 1473, 1482 (9th Cir 1986), reh'g denied, op modified, 810 F.2d 1517 (9th Cir 1987). However, federal courts are not precluded from affording relief simply because the state supreme court has not enunciated a clear rule governing a particular type of controversy or claim. Hewitt v. Joyner, 940 F.2d 1561, 1565 (9th Cir 1991); Paul v. Watchtower Bible and Tract Soc'y of New York, 819 F.2d 875, 879 (9th Cir), cert denied, 484 U.S. 926 (1987). In cases such as this one, where the state supreme court has not spoken on an issue, a federal court must determine what result the state supreme court would reach based on state intermediate appellate court opinions, statutes, and treatises. Hewitt, 940 F.2d at 1565.
1. Broad Scope of the Initial Permission
In Allstate Ins. Co., the Oregon Court of Appeals found that when a policyholder loaned a car to a permittee with no restrictions, the ensuing sub-permittee operated the car with the policyholder's implied permission. Id at 621-22, 816 P.2d at 711. In that case, a car dealership loaned a car to a Mr. and Mrs. Oathes while their car was being repaired. The car dealership did not put any restrictions on the use of its car and actually told the Oathes to treat the car as their own and to use it as they saw fit. The Oathes then allowed their friend to drive the car and he was involved in an accident. The Court of Appeals concluded that under these circumstances, the friend was using the car with the car dealership's implied permission and was covered under the car dealership's permissive use "omnibus" clause. Id.
Similarly, in N.W. Marine Iron v. Western Cas. and Sur. Co., 45 Or. App. 269, 608 P.2d 199 (1980), the owner loaned her car without restrictions to her brother while his car was being repaired. The brother in turn loaned it to a friend of a the family. There was evidence that the owner knew that her brother had been allowing his friend to drive his own vehicle on occasion. The Court of Appeals affirmed the trial court's decision that the friend had the owner's implied permission to use the car, and noted with approval that the trial court had applied the rule that "when an owner loans a vehicle to another for general use, and the permittee allows a subpermittee to operate the vehicle, the use by the latter is within the implied permission of the owner." Id at 273, 608 P.2d at 201; also see AIG Hawaii Ins. Co. Inc v. Vicente., 78 Haw. 249, 254, 891 P.2d 1041, 1046 (1995) ("where a named insured places `complete dominion' over the insured vehicle in the hands of a first permittee and does not otherwise limit the scope of permission, a rebuttable presumption arises that the scope of the permission granted to the first permittee includes the ability to allow others to drive the insured vehicle")
As argued by Allstate, this case is easily distinguishable from the above cases because Baker did not loan the Honda to Snyder "for general use." Instead, Baker's uncontroverted testimony is that "[a]pproximately two weeks before the accident, I permitted my son Ron Snyder to drive the Honda, but only to and from work. I expressly prohibited him from allowing anyone else to drive the Honda." Affidavit of Bette J. Baker ("Baker Aff"), ¶ 3. Unlike both Allstate Ins. Co. and N.W. Marine Iron, Baker gave no broad grant of permission to Snyder. As a result, this court must look to the surrounding circumstances in order to determine if a question of fact exists as to whether Baker impliedly permitted Delay to drive the Honda.
2. Surrounding Circumstances
To avoid summary judgment, Lupoli must show that, despite Baker's express prohibition, Baker impliedly permitted Delay to drive the Honda. One court has explained that implied permission is actual permission circumstantially proven. Rutgers Cas. Ins. Co. v. Collins, 158 N.J. 542, 549, 730 A.2d 833, 837 (1999) (citation omitted). The heart of the concept is whether, from all the surrounding circumstances, a fact-finder could reasonably find that the use by the putative permittee was not contrary to the intent or will of the alleged permitter. Id (citation omitted). The Hawaiian Supreme Court similarly explained that implied permission "`may arise as a product of the present or past conduct of the insured, and the relationship between the parties, including the lack of any objection to the use by the permittee, which signifies acquiescence or consent of the insured.'" AIG Hawai'i Ins. Co., Inc., 78 Haw at 252, 891 P.2d at 1044, quoting 12 GEORGE J. COUCH ET AL., CYCLOPEDIA OF INSURANCE LAW § 45:352, 696-97 (2d ed 1981). "Implied permission `is usually shown by such usage and practice of the parties over a sufficient period of time prior to the day on which the insured car was being used, as would indicate to a reasonable mind that the permittee had the right to assume permission under the particular circumstances.'" Id, quoting COUCH, supra at 697-99.
The evidence reveals that Baker bought the Honda for Snyder to use, and, on at least several occasions, Snyder loaned the car to friends. Baker Depo, pp. 13-14; Lupoli Depo, pp. 27, 29-30. Prior to the accident, Delay, Mike Gillett, and Julie Gillett all thought that the Honda belonged to Snyder. Lupoli Depo, pp. 16-17. After the accident, Snyder told Lupoli that he was the owner of the Honda, but that he had his insurance in his mother's name to save on insurance costs. Id at 46.
This evidence indicates that, at best, both Delay and Lupoli believed that Snyder owned the Honda and that he had authority to allow Delay to drive. That belief, however, does not necessitate a finding that Baker might have impliedly authorized Delay's use of the Honda. In fact, Baker expressly forbade anyone other than Snyder driving the Honda and was unaware that Snyder had permitted others to do so. There is no evidence of any particular relationship between Baker and Delay of which Baker was or should have been aware or of any conduct by Baker that would indicate her consent or acquiescence to anyone's use of the Honda other than Snyder.
No Oregon court, and very few courts in general, have adopted the position that an "omnibus" clause such as the one in this case requires an inquiry into the reasonableness of a sub-permittee's belief that he or she had valid permission to drive the car. Permission under this "omnibus" provision originates with the policyholder, not with the sub-permittee. Because Oregon courts have not shown any inclination to adopt an apparent agency or authority theory of insurance coverage, this court must examine whether the scope of permission conferred upon Snyder by Baker included Snyder's ability to permit others to drive the insured vehicle. Put another way, this court must determine whether Baker impliedly permitted Delay to drive the Honda through the scope of permission Baker conferred upon Snyder.
As discussed above, if the initial grant of permission is sufficiently broad, then the permittee is deemed to be acting within the scope of the initial permission by allowing others to drive the covered vehicle. Here, however, Baker did not grant Snyder broad permission to use the Honda as he wished. Instead, she expressly admonished him not to allow anyone else to drive the car. When Snyder permitted Delay to drive, Snyder undoubtedly acted outside the scope of permission granted him by Baker.
In Ryan, the Oregon Supreme Court addressed whether a permittee exceeding the scope of his permission would be covered under an "omnibus" clause. Though Ryan did not concern a sub-permittee, the court's discussion applies equally to the present situation concerning how the scope of permission from the named insured to the first permittee necessarily limits the scope of permission to the sub-permittee. See e.g., AIG Hawaii Ins. Co. Inc., 78 Haw at 254-55, 891 P.2d at 1046-47 (noting that permittee's scope of permission to sub-permittee was limited by the scope of permission initially granted to first permittee). In Ryan, the permittee's supervisor allowed him to take a company truck home overnight for personal use. The permittee exceeded the scope of that permission by driving the truck to a club in northeast Portland, where he was involved in an accident. The insurance issue revolved around whether the permittee's actual use of the truck was within the scope of permission given by the supervisor. Noting that "[t]his court has never decided this issue," Ryan discussed three broad rules used by other courts:
(1) The "strict" or "conversion" rule, i.e., any deviation from the scope of the permission given ends coverage; (2) the "minor deviation" rule, i.e., a minor deviation from the scope of the initial permission does not end coverage, buy a major deviation does; and (3) the "liberal" or "initial permission" rule, i.e., the permittee is covered although the use is beyond the scope of the initial permission unless the use so far exceeds the initial permission that the permittee is akin to a thief or converter."
Ryan, 242 Or at 89, 408 P.2d at 86.
The "liberal" or "initial permission" rule is also referred to as the "hell or high water rule." Hammett, supra, at 339-40. Under this rule, any sub-permittee given permission by a first permittee is covered by the initial grant of authority to the first permittee, even if the policyholder expressly forbids the first permittee from allowing anyone else to drive. See, e.g., Rutgers Cas. Ins. Co., 158 N.J. at 549, 730 A.2d at 837 (explaining that once it is established that the first user had permission from the named insured, "lack of permission, whether express or implied, of such named insured for use by a later permittee is irrelevant to coverage, short of theft, or the like").
The Oregon Supreme Court chose not to adopt any of these three approaches. Id at 89-91, 408 P.2d at 86-87. Instead, it stated that "[o]ur view of the solution lies between the initial permission rule and the minor-deviation rule. . . . If the use is the same as that generally authorized — in the case of an employee, personal use as distinguished from business use — and the time and place of use do not represent a gross deviation from that authorized, the driver is a permissive user and covered under the omnibus clause." Id at 92-93, 408 P.2d at 88.
Here, it is undisputed that when Baker loaned the car to Snyder, she explicitly told him to drive only to and from work and not to let others drive the vehicle. Thus, she did not give him unfettered control over the use of the automobile. The scope of her permission was limited, and, thus, the corresponding scope of permission Snyder was able to give Delay was limited. Snyder's action in permitting Delay to drive the Honda grossly exceeded his scope of authority and was much more than a "minor deviation." As such, Delay was not covered under the policy.
This conclusion is in accord with the only Oregon Court of Appeals case decided on similar facts. In Colonial Ins. Co. v. Allstate Ins. Co., 90 Or. App. 564, 752 P.2d 1290, (1988), the owner of the vehicle expressly authorized its use only by her daughter and told her not to let anyone else drive it. Contrary to the owner's directions and without the owner's knowledge or consent, the daughter allowed her friend to drive the vehicle on a regular basis for approximately four weeks prior to the accident. On the date of the accident, the daughter's friend was using the vehicle for his own purposes and the daughter was not in the car. Without any explanation, the Court of Appeals affirmed the trial court's conclusion that the owner did not impliedly permit the daughter's friend to drive the car.
Lupoli's citations to other authorities are not persuasive in light of the Oregon cases discussed above and are also distinguishable. In Cascade Ins. Co. v. Glacier Gen. Ins. Co., 156 Mont. 236, 479 P.2d 259 (1971), the insured obtained a car for her son to use while he attended college and told him not to loan out the car to anyone. The son loaned the car to a college roommate who was involved in an accident. After examining case law from other jurisdictions concerning the "omnibus" clause and noting a trend toward broadening insurance coverage, the court concluded that each case should be assessed on its own facts:
considering the extent of the dominion granted to the first permittee, together with the reasonable foreseeability of the particular use to which such permittee puts the automobile. The relationship of the parties becomes a factor to consider. These considerations become necessary since the strict prohibition not to loan an automobile is now viewed as an admonition with reasonable exceptions.
Id at 243, 479 P.2d at 262-63.
Based on that analysis, the court found coverage because the insured could anticipate that her son would loan the car to a college friend. In effect, the court applied a theory of apparent authority or apparent agency in reaching its conclusion:
Considering the family relationship between the insured and the first permittee, together with the unfettered dominion over the automobile away from home, this insured clothed the first permittee with the ostensible authority to engage in the simple transaction of permitting a friend to use the automobile. This is true particularly when it was not shown that any restrictions were within the knowledge of the second permittee and, in fact, he had used the automobile on at least one other occasion.
Id at 244-45, 479 P.2d at 263.
Cascade Ins. Co. is distinguishable as the owner allowed the permittee to take the car to college in a different city for months on end. In that situation, the admonition not to let others drive does not carry the same weight as Baker's admonition to Snyder. Furthermore, Oregon courts have not indicated that they would adopt a theory of insurance coverage based on apparent authority or agency.
Lupoli also cites Country Mut. Ins. Co. v. Bowe, 13 Ill. App.3d 386, 300 N.E.2d 274 (1973), in which the insured purchased a car for her son to use while he attended college and told him on many occasions that he could not loan the car to anyone. Nevertheless, the son allowed a college roommate to use the car on several occasions and the roommate wrecked the car. The court determined that, under an apparent ownership theory, the son, as an initial permittee, had authority to grant permission to others for the purpose of coverage under the mother's insurance policy:
The effect of a prohibition so far as it may be said to limit the authority of the first permittee to grant permission to third persons, must be weighed in reference to the particular facts of each case. There is a difference between an express specific prohibition limited in time and one which is general and broad. Even though the prohibition in this case was express, it was a general and broad direction and there is no indication that it was effective at the time [the son's roommate] borrowed the car for this occasion. The fact that [the son] had such control that he was the apparent owner thereof is the controlling circumstance, especially since he was not living at home with his mother.
Id at 390-91, 300 N.E.2d at 277.
Once again, Oregon courts have not indicated that they would adopt a theory of insurance coverage based on apparent authority or agency. In addition, Illinois courts follow the "liberal" or "initial permission" rule, which the Oregon Supreme Court expressly rejected. Lastly, Lupoli cites to Belasco v. Nationwide Mut. Ins. Co., 73 N.C. App. 413, 326 S.E.2d 109 (1985). However, that case involved substantially different policy language and therefore is not particularly helpful.
For a recent Illinois decision concerning this rule, see e.g., Zimmerman v. State Farm Mut. Auto. Ins. Co., 312 Ill. App.3d 1065, 1068, 729 N.E.2d 70, 73, appeal denied, 189 Ill.2d 704, 734 N.E.2d 899 (2000) ("When the named insured of a policy, which contains a clause extending liability coverage to those driving the covered automobile with the insured's consent, gives consent to another, any third person allowed to drive the insured vehicle by the initial permittee is likewise covered").
C. Conclusion
Although noting the public policy "to protect those injured by careless drivers," the Oregon Supreme Court in Ryan nevertheless rejected the "liberal" or "initial permission" rule. Ryan, 242 Or at 91, 408 P.2d at 87. Instead, the court adopted a slightly more conservative rule that provides coverage for all but gross deviations from the scope of the policyholder's permission. Id at 92-93, 408 P.2d at 88. Over 30 years later, in Colonial Ins. Co. the Court of Appeals impliedly rejected the "liberal" or "initial permission" rule once again, by concluding that the sub-permittee did not have the policyholder's permission to drive the insured vehicle, despite express permission given by the first permittee. See Colonial Ins. Co., 90 Or App. .at 566-68, 752 P.2d at 1290-91.
Here, Snyder grossly exceeded the scope of Baker's permission when he allowed Delay to drive the Honda and nothing indicates that Delay's use was consistent with Baker's intent. Thus, this court is unable to conclude that Delay was driving the Honda with Baker's express or implied permission. Accordingly, Delay's use of the Honda was not covered by the "omnibus" clause in Allstate's insurance policy and Allstate is entitled to summary judgment.
RECOMMENDATION
For the reasons stated above, Allstate's Motion for Summary Judgment (docket #26) should be GRANTED.
SCHEDULING ORDER
Objections to the Findings and Recommendation, if any, are due February 23, 2001. If no objections are filed, then the Findings and Recommendation will be referred to a district court judge and go under advisement on that date.
If objections are filed, the response is due no later than March 12, 2001. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will be referred to a district court judge and go under advisement.