State Auto Property and Casualty Insurance Company v. Hash et al
Filing
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ORDER granting 30 Motion for Partial Summary Judgment. The injuries arising out of Thomas's use of the Powers Landscaping vehicle involved in the car accident with Hash are not covered by the State Auto insurance policy beyond the minimum limits required under state law. Signed by Chief Judge James C. Dever III on 3/28/2016. (Briggeman, N.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DNISION
No. 5:14-CV-426-D
STATEAUTOPROPERTY AND
CASUALTY INSURANCE COMPANY,
Plaintiff,
v.
RELLA J. HASH, and
KEITH MATTHEW THOMAS,
Defendants.
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ORDER
On April6, 2015, State Auto Property and Casualty Insurance Company ("plaintiff'' or "State
Auto") filed an amended complaint against Rella J. Hash ("Hash") and Keith Matthew Thomas
("Thomas") [D.E. 26]. State Auto seeks a declaratory judgment that an insurance policy it issued
to Powers Landscaping & Maintenance, L.L.C., does not cover injuries at issue in a state lawsuit that
Hash filed against Thomas arising from a car accident. See Am. Compl. [D.E. 26] ~~ 33-38. State
Auto moved for partial summary judgment [D.E. 30-32], Hash responded [D.E. 36] and State Auto
replied [D.E. 38]. As explained below, the court grants State Auto's motion for partial summary
judgment.
I.
On March 2, 2012, Thomas and Hash had a car accident near Roanoke Rapids, North
Carolina. [D.E. 26-1] 1. At the time of the car accident, Thomas was using a vehicle owned by his
employer, Powers Landscaping, L.L.C. ("Powers Landscaping"). Resp. Opp'nMot. Summ. J. [D.E.
36] 2; see [D.E. 32-1] 6--9; [D.E. 36-1] 7-10. Thomas had permission from Powers Landscaping
to use the vehicle in the course of his duties as a driver and laborer for Powers Landscaping. See
[D.E. 32-1] 12. When the accident occurred, however, Thomas was using the vehicle to go fishing
near Roanoke Rapids, and he had been drinking alcohol. See [D.E. 26-1] 1; [D.E. 36-1] 10-12.
At the time of the accident, Powers Landscaping had an automobile insurance policy with
State Auto. See [D.E. 26-2] 11. The policy covers accidents involving any "covered auto" driven
by the insured or by "[a]nyone else ... using [the 'covered auto'] with [the insured's] permission."
See [D.E. 26-2] 31. "Covered autos" include vehicles named by Powers Landscaping in the policy,
vehicles "lease[d), hire[d), rent[ed] or borrow[ed]," and non-owned vehicles used "in connection
with [the] business." [D.E. 1-2] 13, 30. The policy also contains alistof"principal and occasional"
drivers of Powers Landscaping vehicles, including Thomas. See id. 15, 25. This list, however, was
"for underwriting purposes only" and did not grant those employees on it "insured status or
coverage." See id. 15.
As a result of the accident, Thomas was arrested and incarcerated.
[D.E. 36-1] 13.
Foilowing his release from jail, Thomas contacted Powers Landscaping to apologize for the accident
and to ask whether he could return to his job at Powers Landscaping. Id. at 13-14. Powers
Landscaping allowed him to do so. Id. 14.
On July 23, 2014, Hash filed an amended complaint against Thomas in Wake County
Superior Court concerning injuries she suffered as a result of the accident. See [D .E. 26-1] 1. On
April6, 2015, State Auto filed an amended complaint in this court against both Hash and Thomas,
seeking a declaratory judgment that the State Auto insurance policy does not cover Hash's claims
in the underlying state action. See [D.E. 26] ~ 38. On June 1, 2015, State Auto moved for partial
summary judgment. See Mot. Summ. J. [D.E. 30]; Fed. R. Civ. P. 56.
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In its motion for partial summary judgment, State Auto contends that Powers Landscaping's
"Business Auto insurance policy" does not cover the claims in Hash's lawsuit against Thomas
beyond the minimum limits required under state law. See Mot. Summ. J. 1. In support, State Auto
argues that Thomas was not the "named insured" on the policy, that Thomas was not driving the
vehicle with Powers Landscaping's permission at the time of the accident, and that Thomas was not
using the vehicle in furtherance of Powers Landscaping's interests at the time of the accident. See
Mem. Supp. Mot. Summ. J. [D.E. 31] 3-6.
In opposition, Hash does not argue that Thomas is the named insured on the policy or that
Thomas was using the vehicle in furtherance of Powers Landscaping's interests at the time of the
accident. Rather, Hash argues that Thomas had permission to use the Powers Landscaping vehicle
when the accident occurred. Thus, according to Hash, the policy covers the injuries at issue in
Hash's state-court action against Thomas. See Resp. Opp'n Mot. Summ. J. 3-10. In support, Hash
filed Thomas's deposition transcript of June 15, 2015 [D.E. 36-1]. 1
II.
In considering a motion for summary judgment, the court views the evidence in the light most
favorable to the non-movant and applies well-established principles under Ru1e 56 of the Federal
Ru1es of Civil Procedure. See,~. Fed. R. Civ. P. 56; Scott v. Harris, 550 U.S. 372, 378 (2007);
Celotex Com. v. Catrett, 477 U.S. 317, 325-26 (1986); Anderson v. Liberty Lobby. Inc., 477 U.S.
242, 247-55 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Com., 475 U.S. 574, 585-87
(1986). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as
1
State Auto moves to exclude Thomas's deposition testimony, claiming that the deposition
violated the schedu1ing order's mandate that "all discovery ... be completed by May 15, 2015."
[D.E. 38] 1-2. The motion to exclude is denied.
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to any material fact and the movant is entitled to judgment as a matter oflaw." Fed. R. Civ. P. 56(a);
see Anderson, 477 U.S. at 247-48.
The party seeking summary judgment initially must demonstrate an absence of a genuine
issue of material fact. Celotex Corp., 477 U.S. at 325. Once the movant meets its burden, the
nonmoving party then must affirmatively demonstrate that there exists a genuine issue of material
fact for trial. See Matsushim, 475 U.S. at 587. "[T]here is no issue for trial unless there is sufficient
evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 4 77
U.S. at 249. Conjectural arguments will not suffice. See id. at 249-52; Beale v. Hardy, 769 F.2d
213,214 (4th Cir. 1985) ("The nonmoving party ... cannot create a genuine issue of material fact
through mere speculation or the building of one inference upon another."). Nor will a "mere ...
scintilla of evidence in support of the [nonmoving party's] position ... ; there must be evidence on
which the [fact fmder] could reasonably fmd for the [nonmoving party]." Anderson, 477 U.S. at
252.
State Auto's policy with Powers Landscaping covered a period from April 2, 2011, until
April2, 2012. See [D.E. 26-2] 11. The insurance policy covers the policy holder for any "covered
auto" and "[a]nyone else ... using with [the insured's] permission a covered auto." See [D.E. 26-2]
31 (quotations omitted). Whether Thomas was using the vehicle with the insured's permission on
March 2, 2012, is a question of state law.
See,~'
Francis v. Allstate Ins. Co., 709 F.3d 362,
369-72 (4th Cir. 2013).
North Carolina law recognizes two ways an insured may confer permission to use a vehicle.
First, an insured may give "express permission," where the insured communicates permission "in
an affrrm.ative character, directly and distinctly stated, clear and outspoken, and not merely implied
orleftto inference." Hawleyv. Indemnity Ins. Co., 257N.C. 381,384, 126 S.E.2d 161, 164 (1962).
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As for express permission, Powers Landscaping issued a written company policy and granted limited
"permission" for employees to use its vehicles. See [D.E. 32-1] 12, 22-23. Powers Landscaping,
however, expressly prohibited "personal use" of its vehicles. See id. at 22-23. Indeed, Hash does
not argue that Powers Landscaping expressly granted permission to Thomas to use its vehicles for
his personal use. Rather, Hash argues that Powers "never told Thomas that [the vehicles] could not
be used for personal use." Resp. Opp'n Mot. Summ. J. 7.
The court rejects Hash's permission-by-silence argument. North Carolina law requires that
express permission be "affirmative [in] character, directly and distinctly stated, [and] clear and
outspoken." Hawley, 257 N.C. at 384, 126 S.E.2d at 164. Accordingly, Thomas did not have
express permission to use Powers Landscaping's vehicle for personal use.
North Carolina law also recognizes that an insured can give "implied permission."
See,~
Bissette v. Auto-Owners Ins. Co., 208 N.C. App. 321, 328, 703 S.E.2d 168, 173 (20 10); Nationwide
Mut. Ins. Co. v. Land, 318 N.C. 551, 560--61, 350 S.E.2d 500, 505 (1986). Implied permission
"involves an inference arising from a course of conduct or relationship," where ''there is mutual
acquiescence or lack of objection under circumstances signifying assent" to vehicle use. See
Nationwide Mut. Ins. Co., 318 N.C. at 560--61, 350 S.E.2d at 505 (quotation omitted).
Hash makes three implied-permission arguments concerning the vehicle. First, Hash argues
that Thomas was unaware of the company policy regarding personal use and that Powers
Landscaping "never told defendant Thomas that he could not use the vehicle for personal use." See
Resp. Opp'n Mot. Summ. J. 4.
Even ifThomas was ignorant ofthe company policy, Thomas's ignorance does not constitute
"mutual acquiescence or lack of objection" by Powers Landscaping regarding Thomas's personal
use of company vehicles.
See,~,
Nationwide Mut. Ins. Co., 318 N.C. at 560--61, 350 S.E.2d at
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505 (quotation omitted); Ins. Co. ofN. Am. v. Aetna Life & Cas. Co., 88 N.C. App. 236,241-42,
362 S.E.2d 836, 839 (1987). Thus, the argument fails.
Second, permission may be implied when the employer (1) knew of at least one prior
instance of impermissible use by the employee and (2) chose not to object to the impermissible use
through punishment or reprimand. See,~' Ins. Co. ofN. Am., 88 N.C. App. at 241-42, 362 S.E.2d
at 839. However, the record contains no evidence that, before March 2, 2012, Thomas had driven
company vehicles for personal use, much less that Powers Landscaping knew of a prior violation
and chose not to reprimand or punish Thomas. In fact, the record suggests just the opposite. See
[D.E. 36-1] 12; compare Ins. Co. ofN. Am., 88N.C. App. at241-42, 362 S.E.2d at 839 (noting that
a written agreement to the contrary undermined implied permission), with [D.E. 36-1] 18-19
(acknowledging that Thomas received a written copy of the company policies, prohibiting personal
use of company vehicles, when he began working for Powers Landscaping), and [D.E. 32-1] 22-23
(reciting written policy language). Thus, the argument fails.
Third, Hash argues that Powers Landscaping's conduct following the accident indicates that
Thomas had implied permission to use the vehicle at the time of the accident. In support, Hash
cites three facts: (1) Powers Landscaping "did not take out any criminal charges against the
defendant ... at the time of the accident;" (2) Powers Landscaping "allowed defendant Thomas to
continue work for Powers Landscaping within two weeks of his release from jail for the accident;"
and (3) Powers Landscaping "did not have Thomas removed from the insurance policy." See Resp.
Opp'n Mot. Summ. J. 5-7.
The court rejects Hash's argument. At most, these actions or inactions suggest acquiescence
that could apply prospectively after the accident. In other words, when Thomas drove the vehicle
on March 2, 2012, Powers Landscaping had never permitted Thomas to return to work with no
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apparent sanction after impermissibly using a Powers Landscaping vehicle. As such, Hash's
allegations regarding Powers Landscaping's post-accident treatment of Thomas fail to raise a
genuine issue of material fact.
Finally, State Auto also issued a "Business Auto Policy Plus Endorsement" to Powers
Landscaping in addition to its basic policy. See [D.E. 26-2] 12, 13, 62-65. The endorsement
extended coverage to otherwise non-covered vehicles used by employees acting in the insured's
"business or ... personal affairs." Id. 63. Both parties argue about the Business Auto Policy Plus
Endorsement, but Hash misapprehends State Auto's argument concerning the Business Auto Policy
Plus Endorsement. Compare Mem. Supp. Mot. Summ. J. 3-6 (arguing that Thomas neither had
permission to use the vehicle nor did he use the vehicle for Powers Landscaping's business or
personal affairs), with Resp. Opp'n Mot. Summ. J. 7-10 (arguing that State Auto has ignored the
permission language altogether and replaced it with an inquiry into whether Thomas's use of the
vehicle was in furtherance of Powers Landscaping's business or personal affairs). Moreover,
Thomas's use of the vehicle on March 2, 2012, was not in furtherance of Powers Landscaping's
business or personal affairs. Cf. MOM Transp. Corp. v. Cain, 128 N.C. App. 428,430-31,496
S.E.2d 822, 824-25 (1998). Thus, the Business Auto Policy Plus Endorsement does not cover
injuries arising out of the car accident.
III.
In sum, plaintiffs motion for partial summary judgment [D.E. 30] is GRANTED. The
injuries arising out ofThomas's use of the Powers Landscaping vehicle involved in the car accident
with Hash are not covered by the State Auto insurance policy beyond the minimum limits required
under state law.
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SO ORDERED. This 2.8 day of March 2016.
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