Case Title: Jaquez v. National Continental Ins. Co.

Citation: 

Docket Number: a-74-02

State: new-jersey

Court: New Jersey Supreme Court

Date: 2003-11-26T00:00:00Z

Document:
(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). On March 17, 1999, Erica Rochester was visiting her boyfriend s sister, Mildred, when Mildred s son, Carlos Ribot, asked if she had any cigarettes. Rochester told Ribot that he could get her cigarettes from her car, parked in front of Mildred s home, and handed him the keys. Rochester testified that the only reason she gave Ribot her car keys was so that he could retrieve the cigarettes. Ribot, however, decided to drive the vehicle and was involved in an accident with another car driven and owned by Edgar Loperena. Jacqueline Jaquez was a passenger in that vehicle. Meanwhile, Rochester realized her car was gone and called the police to report it stolen. At the time of the accident, National Continental Insurance Company (National) insured the vehicle driven by Loperena, and State Farm Indemnity Company (State Farm) insured Rochester s vehicle. Loperena and Jaquez instituted separate actions against Ribot, Rochester, and National. Following consolidation, State Farm denied coverage on the ground that Rochester had not given Ribot permission to use the car. Loperena and Jaquez then sought uninsured motorist coverage from National. National settled those claims and filed a third-party complaint against State Farm. Both National and State Farm moved for summary judgment. The court granted State Farm s motion, holding that no reasonable fact-finder could conclude that Rochester had granted Ribot permission to use the car on the record presented. The Appellate Division, in a reported opinion, reversed, concluding that, under the circumstances, Ribot would be considered a non-permissive user only if facts could establish that he subsequently engaged in an act amounting to theft or the like. The Supreme Court granted State Farm s petition for certification. HELD: The Court discerns no basis on which a reasonable trier of fact could find that Ribot s conduct amounted to permissive use. 1. Every owner of an automobile registered in New Jersey is required to maintain liability insurance coverage. When evaluating omnibus liability clauses of the kind at issue here, courts traditionally apply the initial-permission rule, which provides that if 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. Matits v. Nationwide Mut. Ins. Co., 33 N.J 488, 496-497 (1960). The initial-permission rule has been broadly construed, though it does not extend to every use of a car. Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law 6:3-5 at 137. Application of the rule first requires a determination that the insured or owner had given initial permission to the non-insured to use the vehicle. The permission can be either express or implied. If such permission is found, the question then becomes whether the subsequent use, while permission was retained, constitute theft or the like. If so, then the insured s initial consent is deemed vitiated and there is no coverage. (Pp. 6-10) 2. The trial court properly granted summary judgment in favor of State Farm based on that court s correct observation that the only permission granted was for Ribot to retrieve the cigarettes from the car and no permissive use of the vehicle can be implicated from that. Rochester did not permit Ribot, either expressly or impliedly, to use or employ the car at all; she merely gave him limited license to enter the parked vehicle to recover an item believed to be stored inside. Under the totality of the circumstances, there is a distinction to be drawn between permission to retrieve an item from the vehicle and permission to use the car itself. Although the Court bases its decision on the first prong of the initial-permission rule, it takes the opportunity to express its current position on the Court s earlier application of the second prong in Motor Club Fire & Casualty Co. v. New Jersey Manufacturers Insurance Co., 73 N.J. 425, cert denied, 434 U.S. 923, 98 S. Ct. 402, 54 L. Ed. 281 (1977). In Motor Club, in which Justices Clifford and Mountain dissented, the majority concluded that a mentally incompetent passenger s forceful taking of the driver s seat and causing the vehicle to crash into a building did not constitute theft or the like and did not vitiate the insured s consent to his use of the car (as a passenger). In short, the Court agrees with Justice Clifford s dissent therein and no longer considers the majority s analysis to be controlling authority of the Court. National s reliance on Motor Club and other cases, including the loading and unloading cases, is misplaced. Other than expressing disapproval of Motor Club, the Court s decision today does not signal a retreat from the traditional operation of the initial-permission rule. (Pp. 10-18) The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the trial court for reinstatement of its prior disposition. CHIEF JUSTICE PORITZ and JUSTICES LONG, LAVECCHIA, ZAZZALI, ALBIN and WALLACE join in Justice VERNIERO s opinion. Plaintiff, v. NATIONAL CONTINENTAL INSURANCE COMPANY, Defendant and Third Party Plaintiff-Respondent, and EDGAR LOPERENA, CARLOS RIBOT, ERICA ROCHESTER, C AND S AUTO SALES AND JOHN DOES 1 THROUGH 10 (fictitious parties), Defendants, v. STATE FARM INDEMNITY COMPANY, Third Party Defendant- Appellant. Argued October 20, 2003 Decided November 26, 2003 On certification to the Superior Court, Appellate Division, whose opinion is reported at 356 N.J. Super. 260 (2002). Peter DeSalvo, Jr., argued the cause for appellant (Soriano, Henkel, Salerno, Biehl & Matthews, attorneys). Thomas J. Decker argued the cause for respondent (Decker & Magaw, attorneys). Justice VERNIERO delivered the opinion of the Court. This is an insurance coverage case. As more fully set forth below, the insured drove her car to the home of her boyfriend s sister. When the insured reached that destination she locked the car after parking it on the street in front of the residence. Once inside the house, she gave her car keys to her boyfriend s nephew to retrieve a pack of cigarettes that she kept in the vehicle. Without the insured s knowledge, the nephew then drove the car and was involved in an accident. The question presented is whether, under those circumstances, a reasonable fact-finder could conclude that the nephew was the car s permissive user for purposes of coverage under the insured s liability policy. We hold that the answer to that question is no. Further, there is no implication that can be drawn from [Ms.] Rochester s certification of an expressed or permissive use simply by the handing over of the keys under the fact pattern presented. There is no reasonable inference that can be drawn from the evidence before the Court, even most favorably drawn, of any implicit suggestion of the operation of the vehicle on the part of Ribot based either on expressed, inferential or circumstantial evidence. The Appellate Division reversed in a reported opinion. Jaquez v. National Cont l Ins. Co., 356 N.J. Super. 260 (2002). The panel noted preliminarily that Rochester had given Ribot permission to retrieve the cigarettes from the car. Consistent with its view of the relevant case law, the panel then concluded that because Rochester had so acted, only a subsequent theft of the car by Ribot would have provided grounds to consider him a non-permissive user. Because it found insufficient facts to support theft or the like, the Appellate Division held that State Farm is required to provide coverage under Rochester s policy. We granted State Farm s petition for certification, 176 N.J. 71 (2003), and now reverse. [Matits v. Nationwide Mut. Ins. Co., 33 N.J. 488, 496-97 (1960).] Courts have held that a nearly unlimited range of conduct on the part of a driver or passenger, short of outright theft [of the vehicle,] is within the scope of an insured s or owner s permission. Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law 6:3-5 at 135 (2003). The rationale behind the rule s expansive treatment is to avoid the uncertainty in coverage that might result from having to litigate the scope of an owner s initial permission in every case. Matits, supra, 33 N.J. at 496. This Court more fully has explained: The initial-permission rule is not concerned with the scope of use for which permission is granted. [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, such as from a passenger to a driver, do not require the additional specific consent of the insured. . . . . We note that 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. The breadth of the rule is designed to assure that all persons wrongfully injured have financially responsible persons to look to for damages because a liability insurance contract is for the benefit of the public as well as for the benefit of the named or additional insured. [Verriest v. INA Underwriters Ins. Co., 142 N.J. 401, 413-14 (1995) (first alteration in original) (internal quotation marks and citations omitted).] Notwithstanding its broad application, the rule does not extend to every use of a car. Craig & Pomeroy, supra, 6:3-5 at 137. In Nicholas v. Sugar Lo Co., the parents of an underage young man permitted him to operate their motor vehicle under their supervision on certain occasions. 192 N.J. Super. 444, 447-48 (App. Div. 1983), certif. denied, 96 N.J. 284 (1984). On the first occasion, when he was twelve or thirteen years old, the son sat on his father s lap and steered the car at an airfield. On other occasions his parents permitted him to drive the car on the driveway of their home and at the airfield. His mother considered her son to be a good driver but she did not permit him to drive on public roads. Id. at 447. The father likewise considered his son to be a rather gifted driver. Id. at 448. Contrary to his parents instruction that he not drive on any public road, the son, who was then only fourteen years old, obtained the vehicle for use on the highway . . . without the knowledge of his parents. Id. at 446, 452. On those facts, the Appellate Division found no insurance coverage, stating that even though we liberally construe [a policy s] omnibus [liability] clause, we cannot find coverage here. Ibid. (internal citation omitted). The court further instructed: We do not suggest from our result 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. But this is not that case. [Id. at 452-53.] In other words, the user in Nicholas enjoyed neither the express nor implied permission of his parents to drive the car when his accident occurred on March 10, 1978. As for express permission, the facts revealed that he had breached his parents directive that he not drive the vehicle on any public highway. In respect of implied consent, the court found that the prior occasions of supervised use were so remote from the events of March 10, 1978 that the use on that day may not reasonably be regarded as being related to the earlier permission. Id. at 452. Thus, it was not a question whether the son had exceeded the scope of some initial permission; the court found that there was no permission to use the car at all on the date in question. In sum, as reflected in the above case law, application of the initial-permission rule first requires a determination that the insured or owner had given initial permission to the non-insured to use the vehicle. To satisfy that first prong of the analysis, the permission can be either express or implied. State Farm Mut. Auto. Ins. Co. v. Zurich Am. Ins. Co., 62 N.J. 155 (1973). If such permission is found, then the analysis shifts to a second question: Did the subsequent use, while possession was retained, constitute theft or the like? Verriest, supra, 142 N.J. at 412 (internal quotation marks and citation omitted). If yes, then we consider the insured s initial consent to have been vitiated, and there is no coverage. Id. at 413. The facts in Verriest, particularly the fact that the vehicle s owner expected to transfer the car to the user, supported an inference of permissive use. That an intended buyer of an automobile would try it and see how it operates is well within the concept of use reasonably contemplated under the rule. But that also is not this case. Here, Ribot s intended act of retrieving cigarettes from Rochester s parked automobile bears no rational relationship to his driving that automobile as he ultimately did and for the reason he gave, that he was all fed up. As a result, the record cannot sustain an inference of permissive use. We are confident in our belief that a contrary conclusion would represent an unreasonable extension of past decisions, without foundation in law or logic. Similarly, National s reliance on another case, Odolecki v. Hartford Accident & Indemnity Co., 55 N.J. 542 (1970), is misplaced. In that case, the mother of a teenage son gave him permission to use her automobile, but [s]he also told him not to let anyone else drive the car. Id. at 544. The son thereafter permitted his friend to use the car and the friend was involved in an accident. Ibid. We held that once the insured initially had permitted her son to use the car, the son s subsequent action in allowing his friend to drive it was not enough to remove the case from the scope of the initial-permission rule. Id. at 550. Again, the present case is different. Unlike Odolecki or the other cases cited by National in which the non-insured merely exceeded his initial status as a permissive driver, passenger, repairer, or similar user, Ribot never was given permission to drive, park, ride in, repair, or otherwise employ Rochester s car for any related purpose. Ribot did not obtain such status in the first instance because Rochester gave him no permission whatsoever to use or employ her car as those terms reasonably are understood within the meaning of our existing jurisprudence. Nor are we persuaded by the suggestion that the so-called loading and unloading cases require a finding that Ribot s intended retrieval of the cigarettes constituted a use of the vehicle. Under those cases, the concept of use of a vehicle includes acts of loading and unloading the vehicle[.] Kennedy v. Jefferson Smurfit Co., 147 N.J. 394, 398 (1996). Fairly read for our purposes here, the cases stand for the proposition that when the loading and unloading action is related to the transportation of goods from one location to another, then it constitutes use of a vehicle. See, e.g., id. at 401 (finding that selection of pallets part of loading and unloading process because pallets are used to facilitate movement of goods ). In this case, the purpose of Rochester s car in respect of the cigarettes was storage, not transportation. Thus, Ribot s anticipated retrieval of them cannot reasonably be considered use of the vehicle. We repeat that, other than expressing disapproval of Motor Club, we do not signal a retreat from the traditional operation of the initial-permission rule. We merely conclude that finding permissive use under the circumstances of this case would breach the rule s outer limits. In the last analysis, our holding is compelled not only by a sensible application of prior case law, but by simple common sense. Harleysville Ins. Cos. v. Garitta, 170 N.J. 223, 241 (2001). From that perspective, we are persuaded that State Farm did not assume the risk of liability on the record presented and that the trial court properly entered summary judgment in favor of that insurer. See id. at 242 (upholding exclusion of insurance coverage on summary judgment in case in which exclusion may be found as a matter of law, without further inquiry by a trier of fact ). JACQUELINE JAQUEZ, Plaintiff, v. NATIONAL CONTINENTAL INSURANCE COMPANY, Defendant and Third Party Plaintiff-Respondent. DECIDED November 26, 2003 Chief Justice Poritz PRESIDING OPINION BY Justice Verniero CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY