On certification to the Superior Court, Appellate Division, whose opinion is reported at 370 N.J. Super. 104 (2004).
(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 issue before the Court is whether Enrique Hernandez was a permissive user of his employer's truck when he caused an accident injuring plaintiff, Linda French.
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 Decker's pickup truck, but only on private property and under Decker's 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 Decker's 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 officer's 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 owner's 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 Decker's 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 Decker's 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 owner's 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 Decker's 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 Hernandez's possession of Decker's 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, Hernandez's was a permissive user thereby triggering coverage under Harleysville's policy.
The Supreme Court granted certification.
HELD: No reasonable trier of fact could conclude that Hernandez had either express or implied permission to operate Decker's 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 plaintiff's 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 vehicle's 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 owner's 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 ...