Opinion
DOCKET NO. A-1501-14T4
08-03-2016
DRIVE NEW JERSEY INSURANCE COMPANY, Plaintiff-Respondent, v. ESTATE OF IVAN RIVERA and ESTEBAN CHAVEZ, Defendant, and ALL SHEEN d/b/a AUTOSHEEN CAR WASH & DETAIL CENTER, and SELECTIVE WAY INSURANCE COMPANY, Defendants-Appellants, and PENN NATIONAL INSURANCE COMPANY, Defendant-Respondent.
Todd J. Leon argued the cause for appellants Selective Way Insurance Company and All Sheen, Inc. d/b/a Auto Sheen Car Wash & Detail Center, i/p/a All Sheen d/b/a Autosheen Car Wash & Detail Center (Hill Wallack LLP, attorneys; Mr. Leon, of counsel and on the brief). Daniel J. Pomeroy argued the cause for respondent Drive New Jersey Insurance Company (Pomeroy, Heller & Ley, LLC, attorneys; Mr. Pomeroy and Karen E. Heller, on the brief). The Law Offices of Stephen E. Gertler, attorneys for respondent Penn National Insurance Company a/s/o Estate of Ivan Rivera, join in the brief of appellant Selective Way Insurance Company and All Sheen, Inc. d/b/a Auto Sheen Car Wash & Detail Center, i/p/a All Sheen d/b/a Autosheen Car Wash & Detail Center.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Guadagno and Vernoia. On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4312-12. Todd J. Leon argued the cause for appellants Selective Way Insurance Company and All Sheen, Inc. d/b/a Auto Sheen Car Wash & Detail Center, i/p/a All Sheen d/b/a Autosheen Car Wash & Detail Center (Hill Wallack LLP, attorneys; Mr. Leon, of counsel and on the brief). Daniel J. Pomeroy argued the cause for respondent Drive New Jersey Insurance Company (Pomeroy, Heller & Ley, LLC, attorneys; Mr. Pomeroy and Karen E. Heller, on the brief). The Law Offices of Stephen E. Gertler, attorneys for respondent Penn National Insurance Company a/s/o Estate of Ivan Rivera, join in the brief of appellant Selective Way Insurance Company and All Sheen, Inc. d/b/a Auto Sheen Car Wash & Detail Center, i/p/a All Sheen d/b/a Autosheen Car Wash & Detail Center. PER CURIAM
Defendants Selective Way Insurance Company (Selective) and All Sheen, Inc., doing business as Autosheen Car Wash and Detail Center (All Sheen), appeal from the October 10, 2014 Law Division order granting summary judgment to plaintiff Drive New Jersey Insurance Company (DNJ), declaring that DNJ had no obligation to provide liability coverage to defendant Esteban Chavez-Garnica (Chavez) and/or All Sheen, and declaring that Selective is the sole liability insurer of Chavez and All Sheen. Defendants argue that the motion judge erred in concluding that Chavez and his employer, All Sheen, do not qualify as permissive users under the language of the DNJ policy and that coverage for them is not triggered under the DNJ policy. We agree and reverse.
I.
The facts are not in dispute. All Sheen owns and operates a car wash in Blackwood. Chavez was employed by All Sheen with the responsibility of driving customers' vehicles from the end of the automated wash track to the drying area.
On August 17, 2011, Stephen Heath was employed by John Micklewright and his company Available Animal Control. Heath was instructed to bring one of the company work vans to All Sheen to be washed. When Heath arrived at the entrance to the wash track, he was required to surrender the vehicle to an All Sheen employee.
At the terminus of the wash track, Chavez entered the van and began to drive it to the drying area. On the way, Chavez struck and severely injured Ivan Rivera, who died of his injuries on August 24, 2011.
Investigating authorities ruled out any mechanical defect or malfunction of the van, and eventually Chavez was charged criminally with causing Rivera's death while driving with a suspended license.
In March 2013, Rivera's estate filed a complaint alleging wrongful death, negligence, and other causes of action against All Sheen, Chavez, and Micklewright. Micklewright was insured by a commercial auto policy issued by DNJ. Prior to the filing of the Rivera complaint, DNJ filed a separate complaint in October 2012, seeking a declaratory judgment that the DNJ policy did not provide liability coverage to Chavez or All Sheen for the August 17, 2011 accident involving the Micklewright van. In the alternative, DNJ sought a declaration that any liability coverage owed to Chavez and/or All Sheen be limited to $15,000, "the minimum limits required by law."
The matters were consolidated. At the completion of discovery, DNJ moved for summary judgment. Selective cross-moved seeking the same relief. After oral argument, the motion judge granted DNJ's motion. The judge noted that All Sheen hired Chavez, an unlicensed driver, and had the ability to
control that aspect of the risk by making sure that the drivers that are behind the wheel are able to proficiently perform the task. To shift the risk in this circumstance to [DNJ] by making All Sheen a permissive user does disincentivize All Sheen from using smart business practices in choosing its drivers.
The judge distinguished these facts from the line of cases establishing parking valets as permissive users:
That's why it's a little different than the valet case, because in that circumstance, the patron doesn't want to drive beyond the doorway. The patron wants to just get out right there. You're not trying to avoid
risk when you're giving a valet service, you're trying to provide a convenience and let them get right out at the front door. So, I don't see it the same.
On October 10, 2014, the judge entered orders granting DNJ's declaratory judgment motion and denying the motion for summary judgment by Selective and All Sheen. In 2015, All Sheen and Chavez settled the claim for $837,500, which was funded entirely by Selective. Micklewright and DNJ did not participate in the settlement.
II.
On appeal, Selective and All Sheen argue that the motion judge erred in concluding that Chavez and All Sheen did not qualify as permissive users under the DNJ policy because Micklewright, through his employee, Heath, gave permission to All Sheen to drive the van to and from the car wash.
Under its "Liability to Others" section, the DNJ policy extends coverage to "[a]ny person while using, with your permission, and within the scope of that permission, an insured auto you own, hire, or borrow."
In the seminal case, Matits v. Nationwide Mutual Insurance Co., the Court determined the coverage available to persons other than the named insured under a standard omnibus clause by adopting the broadest and most liberal approach, known as the "initial permission" rule. 33 N.J. 488, 496 (1960). The Court formulated this rule as follows:
[I]f a person is given permission to use a motor vehicle in the first instance, any subsequent use short of theft or the like while it remains in his possession, though not within the contemplation of the parties, is a permissive use within the terms of a standard omnibus clause in an automobile liability insurance policy.
[Id. at 496-97.]
Since Matits was decided, the initial permission rule has been broadened. In Rutgers Casualty Insurance Co. v. Collins, an unlicensed driver was involved in a one-car accident, which resulted in the death of his wife, a passenger in his vehicle. 158 N.J. 542, 545-46 (1999). The accident occurred while the husband was driving, with the wife's permission, a car owned by the husband's stepfather. Id. at 545. Rutgers disclaimed coverage for the wife's estate under an exclusion for persons "[u]sing a vehicle without a reasonable belief that [the] person is entitled to do so." Id. at 546 (first alteration in original). The Court disagreed that the "reasonable belief" standard governed the entitlement to coverage, and held that if the wife had permission to use the car, and had in turn given her unlicensed husband permission to drive it, then his reasonable belief became irrelevant as the result of the operation of the initial permission rule. Id. at 547, 551.
In French v. Hernandez, the Court explained that "once an owner gives his vehicle's keys to another person for a drive, the courts ordinarily will find coverage, even if the driver deviates from the expected scope of use of the vehicle, unless the driver's later conduct amounts to a theft or the like of the vehicle." 184 N.J. 144, 152 (2005). The French Court allowed an insurance company to disclaim coverage because there was no evidence that an unlicensed driver ever had permission to drive the insured vehicle. Id. at 157. However, the Court held that had the driver "been given either express or implied permission to drive the truck that [day], then his use of the truck, 'short of theft or the like[,] while it remain[ed] in his possession' would have provided the basis for coverage under the initial-permission rule." Id. at 156-57 (quoting Matits, supra, 33 N.J. at 496-97).
In Ferejohn v. Vaccari, the owner of a car gave his unlicensed sixteen-year-old son permission to operate the car in the family driveway to make repairs and to listen to music on the car radio. 379 N.J. Super. 82, 84-85 (App. Div. 2005). After attending a party where he became intoxicated, the son returned home, took the car, and drove out of the driveway onto the street at a high rate of speed, eventually striking a tree. Id. at 85. Although the driver exceeded the scope of permission to drive the vehicle, we applied the initial permission rule, noting that the rule "contemplates a situation in which the subsequent use of a car may be inconsistent with and even frustrate the intentions and plans of the person granting permission." Id. at 89 (quoting Verriest v. INA Underwriters Ins. Co., 142 N.J. 401, 414 (1995)).
Applying these principles, we are satisfied that All Sheen had initial permission from Micklewright's employee to drive the van onto the automated belt of the car wash and from the terminus of the automated belt to the drying area. That permission was not voided simply because Chavez was unlicensed. We find no basis to support the motion judge's conclusion that All Sheen's permissive use of a customer's vehicle is dependent on whether it has hired drivers who are "able to proficiently perform the task." Chavez's unlicensed use of the vehicle did not equate to theft. The initial permission rule contemplates a situation in which the subsequent use of a car may be inconsistent with and even frustrate the intentions and plans of the person granting permission. Ferejohn, supra, 379 N.J. Super. at 89.
We also reject the motion judge's suggestion that any express or implied permission given by Micklewright to All Sheen was revocable: "You know, when you give permission, I think part of permission is also the ability to take back permission." We are aware of no authority supporting that principle and find no facts in the record to indicate that Micklewright's employee sought to revoke his permission.
Reversed and remanded for proceedings consistent with our opinion. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION