On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket Nos. L-2547-04 and L-2435-04.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman, Axelrad and Payne.
This appeal involves application of the "initial permission" rule, which governs the scope of coverage of an automobile insurance policy, to a case where the named insured gave permission to use the insured vehicle to another party but the vehicle was subsequently used by a third party without the express or implied permission of either the named insured or the initial permittee.
At a time when his son David's credit rating prevented him from obtaining financing, defendant Stephen Skovron purchased a pickup truck in his own name for David to use in his concrete business. Stephen obtained a motor vehicle liability insurance policy for the truck from plaintiff Rutgers Casualty Insurance Company (Rutgers). Stephen named David and David's wife, Patricia, as additional insureds under the policy.
Stephen also had another son, Lawrence, who sometimes worked with David in the concrete business. Lawrence's motor vehicle license had been suspended for many years due to a series of convictions for driving while under the influence of alcohol and drugs, driving while on the suspended list, and other motor vehicle violations. When Stephen expressed concern about the possibility that Lawrence might drive the truck, David and Patricia responded: "We don't let Larry drive."
David and Patricia were the sole drivers of the truck. When they were not using it in the concrete business, they parked it on a street near their house. David and Patricia generally kept the keys to the truck on a hanger located inside their house next to their other keys. They never allowed Lawrence to operate the truck.
On March 9, 2003, Lawrence went to David and Patricia's house when they were not at home, removed the keys to the truck from the house, and drove the truck away. Sometime that evening, Lawrence drove the truck into the front of a motel in Somers Point, causing damage to the building. As a result of this accident, Lawrence was charged with and pled guilty to driving while intoxicated and driving with a suspended license.
Atlantic States Group (Atlantic), which provided property insurance coverage for the motel, paid the motel owner for the damage to its premises and became subrogated to the motel's claim arising out of the accident. Atlantic subsequently brought a property damage action against Lawrence and Stephen.
Rutgers brought a separate action for a declaration that the policy it had issued to Stephen did not provide coverage to Lawrence for the damage he had caused to the motel because he was not a permissive user of the truck. The trial court consolidated the two actions.
The court granted summary judgment on liability to Atlantic on its negligence claim against Lawrence. The court also dismissed Atlantic's claim against Stephen.
Rutgers' coverage action was tried in a one-day bench trial in which Stephen, David and Patricia testified. The trial court concluded based on its analysis of the applicable law that the Rutgers' policy provided coverage to Lawrence for the damage to the motel unless Rutgers could show that Lawrence obtained possession of the truck from David and Patricia by "theft or the like," which the court found Rutgers had failed to establish.
After the presentation of evidence relating to damages, the court determined that the reasonable cost of repairing the motel was $7,790. The court subsequently entered a judgment requiring Rutgers to pay this amount directly to Atlantic.
On appeal, Rutgers argues that the trial court erred in concluding that Lawrence was a permissive user of his father's pickup truck and thus entitled to indemnification from Rutgers for the property damage caused to the motel. Rutgers also argues, in the alternative, that even if its policy provided coverage to Lawrence, the ...