Opinion ID: 688767
Heading Depth: 4
Heading Rank: 2

Heading: Anyone Legally Responsible for the Conduct of an Insured

Text: 30 Nonetheless, Showa may be covered under the Norton Lilly policy under the alternate definition of insured. The policy expressly covers anyone liable for the conduct of an insured. Showa argues that Roberts and Hightower were permissive insureds under the policy and, since Showa entrusted the trailer to Roberts and Hightower, Showa is insured as someone legally responsible for the conduct of an insured. 31 Although there is a paucity of case law to aid the court in interpreting this provision, a grant of summary judgment on this theory of coverage is clearly inappropriate. In Ohio Farmers, the California Court of Appeals found that a third party who used a car entrusted to her by the car owner's son without the owner's knowledge was a permissive user. In that case, a bicyclist was struck by an automobile driven by Sylvia Chiaravallo. The car was owned by Kathleen Sullivan, who was insured by Ohio Farmers. Sullivan's son, Murray Martin, had entrusted the car to Chiaravallo. Sullivan did not know Chiaravallo, but Martin had unlimited authority from Sullivan to drive the automobile and to allow others to do so. Sullivan's policy contained an endorsement excluding coverage while Martin was using the car. 32 The court held that the entrustment of the car by Martin to Chiaravallo was not use, and hence the endorsement did not apply. Ohio Farmers, 198 Cal.App.3d at 1343, 244 Cal.Rptr. at 362. However, the court also found that Chiaravallo was a permissive user under the policy and Ohio Farmers was responsible for coverage for the accident. Although the court did not specifically explicate its reasoning on this point, Chiaravallo appears to be a permissive user because she had permission to use the car from someone who, in turn, had the owner's permission to use and to entrust the car. See also Fremont Compensation Ins. Co. v. Hartnett, 19 Cal.App.4th 669, 675, 23 Cal.Rptr.2d 567 (1993) (appellate court upheld a finding of implied permission when owner took no positive steps to deny access to user). 33 The instant case falls squarely within this fact pattern. Once the lease expired, Norton Lilly did not impose any restrictions on Showa's use nor entrustment of the trailer. This was a specific factual finding by the district court. In addition, the court specifically declined to address whether the expired written lease imposed some restrictions on Showa's entrustment of the chassis. As a result, although Norton Lilly did not know that Showa was entrusting the trailer to Don Roberts, Don Roberts was a permissive user because Showa had unrestricted control over the trailer. In short, Don Roberts was entrusted the trailer by someone who had implicit, and apparently unlimited, authority to use and to entrust the trailer. Taking the evidence in the light most favorable to the non-moving party, Don Roberts and Hightower were permissive users under California law and, hence, were unnamed insureds under the Norton Lilly policy. Accordingly, if Showa is found liable under a negligent entrustment theory, Showa is a party liable for the conduct of an insured, and hence also an insured under the Norton Lilly policy. 34 We reverse the district court's grant of summary judgment on the issue of Showa's coverage under the Norton Lilly policy. We remand this issue to the district court to determine whether the expired lease imposed restrictions on Showa's use of the trailer.