SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
The facts are based substantially on the deposition testimony and police reports. They
are essentially undisputed. In the summer of 2000, John Decker, a full-time police
officer, employed Hernandez in his side business, Decker Landscaping. During the course of
his employment, Hernandez, an unlicensed driver, occasionally drove Deckers pickup truck, but only
on private property and under Deckers supervision. Decker never gave Hernandez permission to
drive the truck off the lot or to run a personal errand. Decker
was the only person to drive the truck on public roads.
At the end of the workday, Decker locked the truck and landscaping equipment
in a rented garage. Hernandez did not have keys to the truck although
Decker could not recall if Hernandez had a key to the garage. At
his deposition, Decker confirmed that Hernandez was not authorized to operate the truck
on the day of the accident and added that Hernandez was aware that
he was not supposed to use the vehicle.
On the evening of Sunday, August 13, 2000, Hernandez somehow gained access to
the garage, took the keys to Deckers truck, drove the truck on public
roadways while under the influence of alcohol, and eventually collided head-on with a
vehicle driven by French, causing her to suffer serious physical injuries.
After the accident, Hernandez was taken to a local hospital for treatment of
injuries he suffered. While at the hospital, Hernandez was interviewed by a Dover
Township police officer who thereafter prepared an investigative report noting, among other things,
that Hernandez had consumed five to six beers prior to driving the truck
that belonged to his employer. The officers report also noted that Hernandez stated
that his employer had not given him permission to use the vehicle. Hernandez
was arrested for driving under the influence of alcohol and issued a number
of motor vehicle summonses, including one for driving a vehicle without the owners
consent and another for driving without a license. After leaving the hospital, Hernandez
disappeared, and is believed to have returned to his native Mexico.
French filed a complaint alleging that defendants Hernandez, Decker, Decker Landscaping, and various
John Doe companies and individuals (who allegedly served alcohol to Hernandez) negligently caused
her injuries. At an automobile arbitration proceeding, Hernandez was found 100% liable for
the accident and resulting injuries.
The trial court granted summary judgment dismissing Decker from the suit, finding no
evidence that Hernandez was acting as Deckers agent at the time of the
accident. At a de novo hearing, the trial court entered default judgment against
Hernandez, and following a proof hearing, entered judgment in the amount of $595,416.44,
including prejudgment interest. The trial court then allowed French to amend her complaint
to name Deckers insurance carrier, Harleysville Insurance Company if New Jersey (Harleysville), as
a defendant on the theory that Hernandez had implied permission to use the
vehicle involved in the accident and is therefore covered under the Harleysville policy.
The Harleysville policy provided coverage to Decker, the named insured, and anyone else
while using the covered vehicle with the owners permission. New Jersey Manufacturers Insurance
Company (NJM), the carrier providing uninsured motorist coverage to French, intervened to protect
its interests. If Hernandez was not covered under the Harleysville policy, he would
be considered an uninsured driver and NJM would have to indemnify French for
her damages up to the limits of her uninsured motorist coverage.
The trial court granted summary judgment in favor of French and NJM and
against Harleysville, finding that Deckers earlier permission to Hernandez to park the truck
on private property triggered the initial-permission rule, making Hernandez a permissive user at
the time of the accident.
Harleysville appealed and French cross-appealed, claiming that the trial court erroneously dismissed Decker
from the case. The Appellate Division affirmed the entry of summary judgment for
reasons different than those expressed by the trial court. The panel found that
Hernandezs possession of Deckers vehicle was not continuous and therefore did not fall
under the initial-permission rule. Instead, the Appellate Division found that, pursuant to the
implied permission doctrine, Hernandezs was a permissive user thereby triggering coverage under Harleysvilles
policy.
The Supreme Court granted certification.
HELD: No reasonable trier of fact could conclude that Hernandez had either express
or implied permission to operate Deckers truck on the night of the accident;
therefore, summary judgment should have been entered in favor of Harleysville because the
record does not raise a genuine issue of material fact supporting the plaintiffs
claim.
1. The scope of coverage is defined in the omnibus clause of the
Harleysville policy, which requires that Harleysville provide coverage if Decker gave either express
or implied permission to Hernandez to operate the truck. To effectuate the public
interest of ensuring coverage to the insured and compensation to victims of automobile
accidents, automobile policies are construed liberally, with all doubts resolved in favor of
coverage. Nonetheless, a policy cannot be so stretched beyond all reason to fit
a set of facts that fall beyond the reach of the omnibus clause.
(Pp. 8-10)
2. The Court agrees with the Appellate Division that Hernandez cannot be considered
a permissive user under application of the initial-permission rule. An essential component of
that rule is continuous possession of the vehicle by the user following the
initial grant of permission. Hernandez did not remain in continuous possession of the
vehicle from the time of permission until the accident. (Pp. 10-13)
3. It still must be determined whether Hernandez had implied permission to use
the truck. Implied permission is generally proven by circumstantial evidence and requires the
fact-finder to consider the surrounding circumstances in deciding whether the use of a
vehicle was not contrary to the intent of the owner, including the pattern
of permitted use. The resolution of that issue is fact-sensitive and is construed
liberally in favor of coverage. (Pp. 13-14)
4. The parallels between Nicholas v. Sugar Lo Co., an implied permission case,
and the present case are significant. In both cases, the vehicles owner had
a relationship with the driver. In both cases, an unlicensed driver operated the
vehicle under narrow circumstances, on private property, only under the owners direct supervision,
and relatively infrequently. Further, the drivers in these cases did not have continuous
control over the vehicle from its initial use and a substantial period of
time had lapsed between the permitted use and the subsequent forbidden use. Finally,
both drivers acknowledged that they were never given permission to drive on public
roadways. (Pp. 14-16)
5. The facts presented do not justify the conclusion reached by the Appellate
Division. Nothing in the record remotely suggests that Hernandez had implied permission to
enter the Decker Landscaping garage on a Sunday, take the keys to the
truck, and then operate it on public roads. (Pp. 16-18)
Judgment of the Appellate Division is REVERSED, summary judgment is entered in favor
of Harleysville, and the matter is REMANDED to the trial court for entry
of a judgment consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, WALLACE, and RIVERA-SOTO join in JUSTICE
ALBINS opinion. JUSTICE LONG did not participate.
SUPREME COURT OF NEW JERSEY
A-
58 September Term 2004
LINDA R. FRENCH,
Plaintiff- Respondent and Third Party Plaintiff,
v.
ENRIQUE HERNANDEZ, ABC COMPANY (1-5) and JOHN DOES (1-5),
Defendants,
and
JOHN H. DECKER and DECKER LANDSCAPING,
Defendants-Respondents,
and
HARLEYSVILLE INSURANCE COMPANY,
Third Party Defendant-
Appellant,
and
NEW JERSEY MANUFACTURERS INSURANCE COMPANY,
Defendant-Intervenor-Respondent.
Argued February 28, 2005 Decided June 30, 2005
On certification to the Superior Court, Appellate Division, whose opinion is reported at
370 N.J. Super. 104 (2004).
Lance J. Kalik argued the cause for appellant (Riker, Danzig, Scherer, Hyland &
Perretti, attorneys; Mr. Kalik and Ronald Z. Ahrens, on the briefs).
John J. Hopkins, III, argued the cause for respondent Linda R. French.
Edward Hoagland, Jr. argued the cause for respondents John H. Decker and Decker
Landscaping.
Patricia M. Reilly argued the cause for intervenor-respondent New Jersey Manufacturers Insurance Company
(Wolff, Helies, Duggan, Spaeth & Lucas, attorneys; John Peter Duggan, of counsel).
JUSTICE ALBIN delivered the opinion for the Court.
In this insurance coverage case, we must determine whether defendant Enrique Hernandez was
a permissive user of his employers truck when he caused an accident injuring
plaintiff Linda French. On the day of the accident, a non-workday, Hernandez entered
his employers garage, took the truck, and drove it while intoxicated. Plaintiff contends
that Hernandez had permission to use the vehicle. Based on that contention, plaintiff
argues that defendant Harleysville Insurance Company of New Jersey, the employers insurance carrier,
is responsible for covering her damages.
The trial court found Hernandez to be a permissive user of the vehicle
and entered summary judgment in favor of plaintiff and against Harleysville. The Appellate
Division affirmed that judgment. We now reverse.
A blood test revealed that Hernandezs blood-alcohol content was .166%, considerably higher than
the then legal limit of .10% necessary for a per se violation of
N.J.S.A. 39:4-50(a).
Hernandez was arrested for driving under the influence of alcohol and issued a
number of motor vehicle summonses, including one for driving a vehicle without the
owners consent and another for driving without a license. After leaving the hospital,
Hernandez disappeared, and is believed to have returned to his native Mexico.
Plaintiff filed a complaint alleging that defendants Hernandez, Decker, Decker Landscaping, and various
John Doe companies and individuals (who purportedly served Hernandez alcohol) negligently caused her
injuries. At an automobile arbitration proceeding, Hernandez was found 100% liable, and plaintiff
and Decker 0% liable for the accident. Plaintiff was awarded $300,000 in damages
exclusive of prejudgment interest.
The trial court granted summary judgment dismissing Decker from the suit, finding no
evidence that Hernandez was in any way undertaking to act as an agent
for Mr. Decker, and, therefore, that respondeat superior did not apply. At a
de novo hearing, the trial court entered default judgment against Hernandez, and following
a proof hearing, entered judgment in the amount of $595,416.44, including prejudgment interest.
The trial court then allowed plaintiff to amend her complaint to name as
a defendant Harleysville Insurance Company of New Jersey, Deckers insurance carrier. The amendment
permitted plaintiff to pursue recovering damages from Harleysville on the theory that Hernandez
had implied permission to use a vehicle covered under the policy. The Harleysville
insurance policy at issue provided coverage to Decker, the named insured, and to
[a]nyone else while using with [his] permission a covered auto [he] own[ed], hire[ed]
or borrow[ed] . . . . (Emphasis added). New Jersey Manufacturers Insurance Company
(NJM), which provided uninsured motorist coverage to plaintiff, intervened to protect its interest.
If Hernandez was not covered under the Harleysville policy and therefore was an
uninsured driver, NJM would be required to indemnify plaintiff for her damages up
to the limits of her uninsured motorist policy.
Plaintiff, NJM, and Harleysville filed cross-motions for summary judgment. The trial court found
that because Decker allowed Hernandez to park the truck on private property earlier
in the summer, the initial-permission rule was triggered, making Hernandez a permissive user
of the truck weeks later at the time of the accident. Based on
that finding, the court granted summary judgment in favor of plaintiff and NJM
and against Harleysville. Harleysville appealed that ruling. Plaintiff cross-appealed, claiming that the trial
court erroneously dismissed Decker from the case on the mistaken theory that Hernandez
was not acting as his employers agent.
The Appellate Division affirmed the entry of summary judgment against Harleysville, but not
for the reasons articulated by the trial court. French v. Hernandez,
370 N.J.
Super. 104, 108 (App. Div. 2004). The panel rejected the trial courts application
of the initial-permission rule to this case. Id. at 112. The panel noted
that [a]n essential element of the rule is that the driver must be
in continuous possession of the vehicle from the time the owner gave permission
for its initial use until the accident. Ibid. It found that Hernandezs possession
of Deckers vehicle was not continuous, and did not fall within the initial-permission
rules general pattern: a single trip in a vehicle by a permittee, who
deviates from the scope of the permission for which the trip was authorized.
Id. at 112, 117.
The panel then proceeded to analyze the facts under the implied permission doctrine.
Ibid. Reasoning that permitted use on prior occasions, coupled with other facts evidencing
a course of dealings between the parties, can furnish the predicate to support
implied permission on the subsequent occasion notwithstanding the absence of express permission on
that occasion, the panel concluded that Hernandez was a permissive user. Id. at
116, 118.
Acknowledging the case to be close, the panel further concluded that Hernandez merely
borrowed the truck with the intention to return it later and that his
conduct did not constitute a theft or the like within the meaning of
the initial permission rule.
See footnote 2
Id. at 115, 120. Accordingly, it held that Hernandezs
use of the truck was covered by Harleysvilles policy and that plaintiff could
collect her damages pursuant to that policy. Id. at 108, 119-21.
We granted Harleysvilles petition for certification,
182 N.J. 142 (2004). We now reverse.
[33 N.J. at 496-97.]
The rule provides that [a]s long as the initial use of the vehicle
is with the consent, express or implied, of the insured, any subsequent changes
in the character or scope of the use . . . do not
require the additional specific consent of the insured. Verriest v. INA Underwriters Ins.
Co.,
142 N.J. 401, 413 (1995) (per curiam) (internal quotations omitted). Simply put,
once an owner gives his vehicles 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 drivers later conduct amounts
to a theft or the like of the vehicle. See Butler v. Bonner
& Barnewall, Inc.,
56 N.J. 567, 574-75 (1970).
The initial-permission rule was adopted because it best effectuate[d] the legislative policy of
providing certain and maximum coverage. Verriest, supra, 142 N.J. at 412 (quoting Matits,
supra, 33 N.J. at 496). We were concerned that adopting a narrower rule
would render coverage uncertain in many cases, foster litigation as to the existence
or extent of any alleged deviations, and ultimately inhibit achievement of the legislative
goal. Matits, supra, 33 N.J. at 496.
However, as noted by the Appellate Division, one of the essential components of
the initial-permission rule is continuous possession of the vehicle by the user following
the grant of permission. French, supra, 370 N.J. Super. at 112. While supervised,
Hernandez had parked his employers truck several times on private property. It was
not until weeks later, on a non-workday, that he entered the Decker Landscaping
garage, took the truck without express permission, and crashed it into plaintiffs vehicle.
In other words, Hernandez did not remain in continuous possession of the truck
from the time of his initial limited use until the day of the
accident.
Like the Appellate Division, we conclude that [t]his case does not fall within
the usual paradigm of the initial permission rule because of the break in
possession after the original limited authorization. Id. at 118. In particular, we agree
with the panel that earlier uses by Hernandez do not constitute initial permission
for the later use of the vehicle. Ibid. This Court has never extended
the initial-permission rule to a case in which the user or his delegate
did not remain in continuous possession of the vehicle. See, e.g., Martusus, supra,
150 N.J. at 151, 153-57 (applying initial-permission rule in case of continuous possession);
Verriest, supra, 142 N.J. at 404-05, 411-15 (same); State Farm Mut. Auto. Ins.
Co. v. Travelers Ins. Co.,
57 N.J. 174, 177-79 (1970) (per curiam) (same);
Butler, supra, 56 N.J. at 570, 574-75 (same); Odolecki v. Hartford Accid. &
Indem. Co.,
55 N.J. 542, 544, 550 (1970) (same); Small v. Schuncke,
42 N.J. 407, 410, 412-15 (1964) (same).
That the initial-permission rule does not apply to Hernandezs early instances of parking
the truck does not end our inquiry into whether plaintiff may recover under
the Harleysville policy. As the Appellate Division recognized, we still must decide whether
Decker gave Hernandez implied permission to use the pickup truck on the night
of the accident. French, supra, 370 N.J. Super. at 118. Accordingly, we turn
to the doctrine of implied permission.
Implied permission has been defined as actual permission circumstantially proven. State Farm, supra,
62 N.J. at 167-68 (internal quotations omitted). It may arise from a course
of conduct or relationship between the parties in which there is mutual acquiescence
or lack of objection signifying consent. Id. at 167 (internal quotations omitted). Implied
permission customarily is proven by circumstantial evidence and requires the fact-finder to consider
the surrounding circumstances in deciding whether the use of a vehicle was not
contrary to the intent of its owner. Id. at 168. As mentioned, the
relationship between the owner and user will be important. Not surprisingly, a finding
of implied permission may be more likely when the vehicles operator is a
friend or employee of the owner. See id. at 179-80 (Weintraub, C.J., concurring
in part) (Weight must be given to the relationship of the parties and
to the probabilities which that relationship would normally generate.). Equally significant will be
a pattern of permitted use of the vehicle, which may give rise to
an inference that the owner gave his consent to use on a subsequent
occasion. Ultimately, the resolution of the issue will be fact-sensitive and depend on
the totality of the circumstances. In analyzing whether Hernandez had implied permission to
drive the truck, we give plaintiff the benefit of our canon of liberal
construction of [automobile] liability insurance [policies] to effect the broadest range of protection
to those who travel on and across roadways. Id. at 168.
A case similar to the present one is Nicholas v. Sugar Lo Co.,
192 N.J. Super. 444 (App. Div. 1983), certif. denied,
96 N.J. 284 (1984),
which we cited with approval in Jaquez v. Natl Contl Ins. Co.,
178 N.J. 88, 94-95 (2003). In Nicholas, supra, an insurance coverage case, the Appellate
Division had to determine whether a fourteen-year-old boy had his parents implied permission
to operate his fathers car on the public roads. 192 N.J. Super. at
446-47. When he was twelve or thirteen, and while under his parents direct
supervision, the boy had driven his fathers car at an airfield and in
the family driveway on a number of occasions. Id. at 447-48. He was
expressly told not to drive on the public roads. Ibid. Despite that parental
admonition, the boy, many months later, gained access to his fathers keys and
secretly took the familys company car for drives on more than a dozen
occasions with friends. Id. at 448. Eventually, he was involved in an accident,
which gave rise to a lawsuit. Ibid.
Although referring to the initial-permission doctrine, the appellate panel in Nicholas, supra, essentially
analyzed whether the boy had implied permission to drive the car he crashed.
See id. at 452-53. The boy was not in continuous possession of the
car from its initial permitted use until the accident. According to the panel,
operating the car on an airfield and driveway under parental supervision did not
translate into permission to drive unsupervised with friends on public roads. Id. at
448, 452. Significantly, the boy took the car without the knowledge of his
parents and in disregard of his parents express direction. Id. at 447-48, 452.
Additionally, the boys earlier limited permissive uses at different places under his parents
supervision [were] so remote from the events of [the accident] that the use
on that day [could] not reasonably be regarded as being related to the
earlier permission. Id. at 452. The panel concluded that based on all the
circumstances the boy did not have his parents implied consent to use the
[car] on the highway. Ibid. The panel noted, however, that a different fact
pattern might yield a different result:
We do not suggest . . . that subsequent permission to use a
vehicle could not be inferred from the granting of initial permission at different
times. Thus it might well be reasonable to hold from a course of
dealings between parties that the continuous granting of permission to use a vehicle
implied permission to use it without express consent on another occasion.
[Id. at 452-53.]
We subscribe to that last observation made by the Nicholas court.
The parallels between Nicholas, supra, and the present case are significant. In both
cases, the vehicles owner had a relationship with the driver. In both, an
unlicensed driver operated the vehicle under narrow circumstances, on private property, only under
the owners direct supervision, and relatively infrequently. Neither driver had continuous control over
the vehicle from its initial use, and a substantial amount of time had
lapsed between the authorized drives and subsequent forbidden excursions. Last, both drivers acknowledged
that they were never given permission to drive on public roadways.
The Appellate Division found the present case to be close. French, supra, 370
N.J. Super. at 115. We find that although the panel properly charted the
law, the facts do not justify the conclusion that it reached. Even viewing,
as we must, the evidence in the light most favorable to plaintiff, Brill
v. Guardian Life Ins. Co. of Am.,
142 N.J. 520, 523 (1995), and
liberally construing the Harleysville policy in favor of coverage, we cannot conclude that
Hernandez had either express or implied permission to drive Deckers vehicle.
Hernandez was a short-term seasonal employee, who had parked the truck on a
private lot while supervised on prior discrete occasions. Decker testified that he never
gave Hernandez permission to take that truck on a non-workday onto the public
roads for an excursion. Hernandez admitted to the police that he did not
have permission to drive Deckers vehicle. Nothing in the record remotely suggests that
Hernandez had implied permission to enter the Decker Landscaping garage on a Sunday,
take the keys to the truck, and then operate it on public roads.
We note that had Hernandez been given either express or implied permission to
drive the truck that Sunday, 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. Matits, supra, 33 N.J. at
496-97.
In viewing the totality of the circumstances, including both Deckers and Hernandezs assertions,
we hold that no reasonable trier of fact could conclude that Hernandez had
implied permission to drive the truck on the night of the accident. It
is the absence of any evidence to support plaintiffs claim that compels us
to reach this result. We, therefore, find that summary judgment should have been
entered in favor of Harleysville and against plaintiff and NJM.
SUPREME COURT OF NEW JERSEY
NO. A-58 SEPTEMBER TERM 2004
ON CERTIFICATION TO Appellate Division, Superior Court
LINDA R. FRENCH,
Plaintiff-Respondent
And Third Party
Plaintiff,
v.
ENRIQUE HERNANDEZ, ABC
COMPANY (1-5) and JOHN DOES
(1-5),
Defendants,
And
JOHN H. DECKER and DECKER
LANDSCAPING,
Defendants-Respondents.
DECIDED June 30, 2005
Chief Justice Poritz PRESIDING
OPINION BY Justice Albin
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
The record does not resolve the question of how Hernandez obtained access
to the garage.
Footnote: 2
The appellate panel also rejected Harleysvilles argument that summary judgment was not validly
entered against it because plaintiff never filed its amended complaint with the court.
French, supra, 370 N.J. Super. at 120. It likewise rejected Harleysvilles claim that
the matter should be remanded for trial. Id. at 120-21. Finally, the panel
rejected plaintiffs argument on cross-appeal that this Court had changed the law of
respondeat superior in Carter v. Reynolds,
175 N.J. 402 (2003). French, supra, 370
N.J. Super. at 121-22. The issues raised before the Appellate Division concerning respondeat
superior and plaintiffs alleged failure to file an amended complaint are not before
us, and we do not address them in this opinion.
Footnote: 3
N.J.S.A. 39:6B-1(a) provides:
Every owner or registered owner of a motor vehicle registered or principally garaged
in this State shall maintain motor vehicle liability insurance coverage, under provisions approved
by the Commissioner of Banking and Insurance, insuring against loss resulting from liability
imposed by law for bodily injury, death and property damage sustained by any
person arising out of the ownership, maintenance, operation or use of a motor
vehicle . . . .
[(Emphasis added).]