Opinion ID: 2997424
Heading Depth: 2
Heading Rank: 2

Heading: Old Republic Policy

Text: In holding that the MCS-90 endorsement provided coverage, the district court also determined that a separate policy, which Old Republic Insurance Company issued Ryder insuring its trailers, did not provide coverage for the accident. Carolina Casualty challenges this conclusion on two fronts: first, it argues that the district court should not have sua sponte decided this issue and second, it argues that the district court was wrong to conclude that the Old Republic policy did not apply. We disagree with both arguments. Although it is not favored, a district court may enter summary judgment sua sponte so long as the losing party is given notice and an opportunity to be heard on the underlying issues. Jones v. Union Pac. R.R. Co., 302 F.3d 735, 740 (7th Cir. 2002). Here, Carolina Casualty was on notice and had a reasonable opportunity to present evidence regarding whether the Old Republic policy provided coverage for the accident. In fact, in its brief in support of its motion for summary judgment, Carolina Casualty specifically raised the issue of coverage under the Old Republic policy and attached a copy of the policy to its brief. The brief included a separate heading discussing the Old Republic policy and also specifically noted: “To the extent the Old Republic policy provides coverage, this Court should find that [Carolina Casualty] has no obligation to pay under the No. 03-1225 7 MCS-90.” Appellant’s Summary Judgment Brief at 18. Having placed this issue before the district court at a time when the court was actively considering summary judgment motions, Carolina Casualty cannot now complain that it was denied an opportunity to present evidence on the issue. We now turn to the district court’s disposition of Carolina Casualty’s substantive claim on this issue. The relevant provision of Ryder’s Old Republic policy provides: The following are “insureds”:

sion a covered “auto” you own, hire or bor- row . . . . Indiana1 follows the “liberal rule” on permissive use. See Vanliner Ins. Co. v. Sampat, 320 F.3d 709, 713 (7th Cir. 2003); State Farm Mut. Auto. Ins. Co. v. Gonterman, 637 N.E.2d 811, 813 (Ind. Ct. App. 1994). Pursuant to this rule: [O]ne who has permission of an insured owner to use his automobile continues as such a permittee while the car remains in his possession, even though that use may later prove to be for a purpose not con- templated by the insured owner when he entrusted the automobile to the use of such permittee. Gonterman, 637 N.E.2d at 813. Nevertheless, when an owner has placed restrictions on the use of a vehicle, violations of such restrictions may terminate permission. Id. at 814. “In a coverage dispute, permissive use cannot be implied when an express restriction on the scope of permission prohibits the use at issue.” Id. In the case at bar, Ryder did not authorize Keller to use its trailer with a tractor bearing Ryder's placards and ICC 1 The parties do not dispute that Indiana law governs this issue. 8 No. 03-1225 authority. To the contrary, the Ryder/Keller subcontractor agreement, pursuant to which Nance was acting when he had the accident, provided that all runs done pursuant to the agreement would use E.C. Trucking owned tractors bearing Keller placards and ICC authority. Keller did not obtain permission to use the trailer involved in the accident and, because permissive use is a prerequisite for coverage under the Old Republic policy, the district court did not err by finding that the policy does not cover the accident. Carolina Casualty contends that Ryder gave implied permission to use the trailer because, according to Carolina Casualty, the same trailer would have been used had the originally scheduled tractor not experienced mechanical difficulties. But permissive use cannot be implied when, as here, an express restriction prohibits that use. See Warner Trucking, Inc. v. Carolina Cas. Ins. Co., 686 N.E.2d 102, 107 (Ind. 1997) (“[I]mplied permission is inadequate as a matter of law to overcome [an] express restriction upon permission”).