United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-3261
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Hawkeye-Security Insurance Company; *
The Midwestern Indemnity Company, *
*
Appellees, * Appeal from United States
* District Court for the Eastern
v. * District of Missouri.
*
Donald A. Bunch, Patricia A. Bunch, *
*
Appellants. *
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Submitted: June 14, 2011
Filed: July 7, 2011
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Before MURPHY and SMITH, Circuit Judges, and READE,1 District Judge.
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MURPHY, Circuit Judge.
Midwestern Indemnity Company and Hawkeye-Security Insurance Company
brought this declaratory judgment action seeking a determination that there was no
coverage for an accident involving a company car driven by Daniel Brandt and
injuring Donald Bunch. Donald and his wife Patricia were both employed by the
insured, The Installers Company (Installers). She had limited permission to drive the
company car, but she had asked an intoxicated Brandt to drive her husband on a
1
The Honorable Linda R. Reade, Chief Judge, United States District Court for
the Northern District of Iowa, sitting by designation.
personal errand in violation of company policies. The case was tried to the district
court2 which ruled in favor of the insurers, and the Bunches appeal. We affirm.
I.
Total Lock & Security, Inc. (Total Lock) and its sister company Installers
install commercial locks. Total Lock and Installers maintained insurance policies with
Midwestern Indemnity Company (Midwestern) and Hawkeye-Security Insurance
Company (Hawkeye) for several vehicles that were used by employees while traveling
for business, including the car that was damaged in the present case. Michele Fogerty
was the sole owner and president of both companies. Installers employed Donald and
Patricia Bunch at the time of the accident. The district court also found that Brandt
was an employee of Installers on the date of the accident despite being on leave from
work.
Installers had several policies related to company vehicles at the time of the
accident. Employees were prohibited from using vehicles for personal reasons except
when out of town on business, when returning late at night from an out of town job,
or when explicitly authorized. There was to be no driving after drinking, and
employees were prohibited from allowing an unauthorized person to drive a company
vehicle. While none of these policies were in writing, the district court found that they
had been orally communicated and were known by all employees.
Employees did not have free use of company vehicles while at home in St.
Louis. In fact Donald Bunch's authority to drive company vehicles had been revoked
before the accident because he had failed to disclose a citation for driving while
intoxicated when he was hired. After that revocation, only Patricia was permitted to
2
The Honorable E. Richard Webber, United States District Judge for the
Eastern District of Missouri.
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drive company vehicles when the couple was issued a company car for a work
assignment.
The Bunches had been out of town on a business road trip for seven or eight
months before the accident. After they returned to St. Louis late on November 21,
2007, Patricia Bunch had authorization to take a vehicle home, keep it at their
residence until after Thanksgiving, and use it to purchase food for the holiday. The
Bunches went to the Total Lock office on November 23 to meet with Fogerty. During
that meeting Fogerty authorized Patricia to take the company car for required
maintenance and to fill it with gas. She instructed Patricia Bunch to leave it parked
at the Bunches' home until they left town the following week for their next job.
Fogerty testified that she had not authorized personal use of the company car over the
weekend and that the Bunches agreed to that restriction. The district court heard
conflicting testimony on this point from the Bunches. Patricia Bunch stated that
"Fogerty didn't tell [her] anything," but Donald testified that she gave them
"permission for full use of that vehicle for all personal reasons." The district court
gave little weight to that testimony, however, for it found that neither Bunch seemed
"constrained by their oath" and both "appeared willing to say anything to advance"
their claims.
On November 26, while the Bunches were still in St. Louis, Patricia Bunch
asked Brandt to drive her husband on a personal errand to deliver leftover
Thanksgiving food to his mother. Brandt agreed even though he knew that he did not
have permission from their employer. He was not working on the day of the accident,
no one at the company authorized him to drive the car, and he had been drinking
alcohol. Unfortunately Brandt was involved in an accident which left Donald Bunch
with severe injuries characterized as "incomplete quadriplegia."
An officer at the accident scene reported that Brandt was obviously intoxicated.
At trial a forensic toxicologist testified that Brandt likely had "over seven and one half
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beers" in his body at the time of the accident. Patricia Bunch testified that she knew
of the company rule against drinking and driving but that she was unaware that Brandt
had been drinking. The district court found that Brandt had consumed at least fifteen
cans of alcohol on the day of the accident and that the Bunches were aware that Brandt
had been drinking.
Total Lock and Installers had a primary insurance policy with Midwestern and
an umbrella policy with Hawkeye. The liability policy provided coverage to "[y]ou
for any covered 'auto'" and "[a]nyone else while using with your permission a covered
'auto' you own, hire or borrow . . . ." "You" referred to the named insureds in the
policy which were listed as Total Lock and Installers. There was also underinsured
and uninsured motorist coverage, but that coverage did not extend to "[a]nyone using
a vehicle without a reasonable belief that the person is entitled to do so."
Midwestern and Hawkeye sought a declaratory judgment that Brandt was not
entitled to liability coverage and that Donald Bunch was not entitled to uninsured
motorists coverage. The Bunches counterclaimed, seeking a declaration that liability,
underinsured, and uninsured coverage existed. After trial the court found that no
liability insurance coverage existed because Brandt had not had express or implied
permission to use the car and Donald Bunch was not covered by the uninsured and
underinsured motorists coverage. The Bunches appeal, asserting that liability
coverage exists because Brandt had permission from Patricia Bunch to use the vehicle
and that the uninsured and underinsured sections of the policy are ambiguous.
We review a district court's findings of fact in a court trial for clear error and
its conclusions of law de novo. Eckert v. Titan Tire Corp., 514 F.3d 801, 804 (8th Cir.
2008). In this diversity action we use Missouri state law to construe insurance
policies, and questions about the interpretation of an insurance policy are reviewed de
novo. Brake Landscaping & Lawncare, Inc. v. Hawkeye-Sec. Ins. Co. et al., 625 F.3d
1019, 1022 (8th Cir. 2010).
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II.
The first issue raised by the Bunches is whether liability coverage extended to
Brandt. The liability policy covers "[a]nyone . . . using with your permission a
covered 'auto' . . . " under a section commonly known as an omnibus clause. Such
permission may be express or implied. Express permission exists when the named
insured or someone with authority "directly and distinctly" gave such permission.
Shelter Mut. Ins. Co. v. See et al., 46 S.W.3d 65, 67 (Mo. Ct. App. 2001). Implied
permission is derived from facts and circumstances and "may be the result of a
common practice or course of conduct whereby the owner acquiesces in the practice
of another operating his automobile." Id. It is also possible for a "second permittee"
to use the vehicle by either express or implied permission from the named insured.
See State Farm Fire & Cas. Co. v. Ricks et al., 902 S.W.2d 323, 325 (Mo. Ct. App.
1995). In making a coverage determination a court "will not add language to a
policy," and any ambiguity should be resolved against the insurer. Burns v. Smith et
al., 303 S.W.3d 505, 511 (Mo. 2010).
The district court found that Brandt did not have express or implied permission
to use the vehicle because he had never received permission from Total Lock or
Installers, Patricia Bunch had not been authorized to give him permission, and he had
violated company policy against drinking and driving. The Bunches do not dispute
that Brandt did not have permission from Total Lock or Installers. Instead, they argue
that the district court erred in denying liability coverage because Patricia Bunch had
the authority to give permission to Brandt and she did give it.
The Bunches first contend that Patricia Bunch, acting as a "Named Insured,"
could give permission to Brandt because the policy did not specify who at Total Lock
and Installers could grant permission. This argument is unavailing. The policy lists
Total Lock and Installers as the named insureds, and permission must come from the
named insured "or someone having authority to bind him in that respect." Hanover
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Ins. Co. v. Abchal et al., 375 S.W.2d 605, 609 (Mo. Ct. App. 1964). There was no
evidence that Patricia Bunch had authority to bind the company. She therefore could
not qualify as a named insured to give Brandt permission to drive the vehicle on
behalf of the company.
We are not persuaded that Fogerty's authorization to Patricia Bunch enabled her
to give Brandt permission to drive the vehicle as a second permittee. Under Missouri
law a second permittee must obtain express or implied permission to use the vehicle
from the named insured. U.S. Fidelity & Guar. Co. v. Safeco Ins. Co. of Am. et al.,
522 S.W.2d 809, 816 (Mo. 1975). Coverage may in some instances extend to second
permittees if the first permittee had unfettered control over the car and the second
permittee uses the car in a manner impliedly permitted by the owner. Universal
Underwriters Ins. Co. v. Davis et al., 697 S.W.2d 189, 193 (Mo. Ct. App. 1985).
Missouri courts have been reluctant to find implied permission for a second permittee
in circumstances where the first permittee must obtain permission each time she wants
to use the vehicle. St. Paul Ins. Co. v. Carlyle et al., 428 S.W.2d 753, 755-56 (Mo. Ct.
App. 1968). If the insured has specifically prohibited a first permittee from allowing
someone else to drive the car, there can be no implied use for a second permittee.
Ricks et al., 902 S.W.2d at 326.
Patricia Bunch lacked authority to permit Brandt to use the vehicle as a second
permittee. The Bunches did not have broad, unrestricted use of the car, and there is
no evidence that Total Lock or Installers generally allowed employees to give cars to
second permittees. Patricia Bunch was required to ask for permission to use the car
on every occasion, as indicated by her specific request to use the car to purchase
groceries after returning from their work assignment. Moreover, Fogerty had
expressly told the Bunches at the November 23 meeting that they had to keep the
vehicle parked at their home after taking it for maintenance and gas.
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Internal company rules also indicate that Patricia Bunch did not have authority
to allow Brandt to use the vehicle on this occasion. The Bunches suggest that
reference to these rules is improper, but whether an individual had permission to use
a vehicle under an omnibus clause is always a question of fact. State Farm Mut. Auto.
Ins. Co. v. Scheel et al., 973 S.W.2d 560, 567 (Mo. Ct. App. 1998). Missouri courts
often review company policies in determining whether permission had been granted.
Bituminous Cas. Corp. v. McDowell et al., 107 S.W.3d 327, 332 (Mo. Ct. App. 2003);
see United Fire & Cas. Co. v. Tharp et al., 46 S.W.3d 99, 107 (Mo. Ct. App. 2001).
Total Lock and Installers did not permit employees to use company vehicles for
personal reasons except in limited circumstances. There was to be no drinking and
driving, and employees could not give authority to others to drive a company vehicle.
The district court found that Patricia Bunch knew that Brandt had been drinking, and
she admitted that she knew that his personal use of the vehicle would not have been
sanctioned by the company if he had been. We conclude that Patricia Bunch did not
have authority to give Brandt permission to drive the vehicle as a second permittee.3
The Bunches concede that Brandt did not have express or implied permission
from Total Lock or Installers to drive the car, and we conclude that Patricia Bunch
lacked the authority to give Brandt permission to use the vehicle as either a named
insured or as a second permittee. The district court did not err in concluding that
liability coverage did not extend to Brandt.
3
The Bunches nevertheless argue that since that the omnibus clause in this
policy does not contain a "scope of permission clause," Patricia was not prohibited
from allowing Brandt to drive the vehicle as a second permittee. Missouri courts
consider the scope of a driver's permission regardless of whether such a clause is in
a policy, however. See Nautilus Ins. Co. v. I-70 Used Cars, Inc. et al., 154 S.W.3d
521, 526-31 (Mo. Ct. App. 2005).
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III.
The second argument advanced by the Bunches is that Donald Bunch is entitled
to uninsured and underinsured motorist coverage because the policy is ambiguous.
The uninsured and underinsured motorists sections cover "[a]nyone . . . 'occupying'
a covered 'auto' . . ." and then exclude "[a]nyone using a vehicle without a reasonable
belief that the person is entitled to do so." The parties do not dispute that Donald
Bunch was "occupying" the car as a passenger at the time of the accident, but they
disagree about the effect of the exclusion. The Bunches also contend that the policy
is ambiguous because it does not define the word "vehicle." The district court
determined that Donald Bunch was not covered by the uninsured and underinsured
motorists provisions because he could not have had a reasonable belief that he was
entitled to use the car.
The Bunches argue that the policy is ambiguous because it "promises
something at one point and takes it away at another . . . ." Burns, 303 S.W.3d at 512
(citation omitted). They argue that this case is similar to Miller's Classified Ins. Co.
v. French et al., 295 S.W.3d 524, 527 (Mo. Ct. App. 2009), where the court found a
policy ambiguous because it purported to cover "any person" without defining that
term and then excluded certain people from coverage. The term "any person" was
open to two interpretations, either meaning anyone or only referring to those persons
not otherwise defined in the policy. Id. The Bunches contend that the uninsured and
underinsured motorists provisions in this case are similarly ambiguous because the
policy did not define the word "anyone" and thus could be read to apply to anyone or
to anyone unless such person was excluded by the policy.
Exclusions in insurance contracts are enforceable so long as they are
unambiguous. Todd et al. v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 163 (Mo.
2007). Exclusions by their very nature set limitations on broader grants of coverage.
Missouri courts have routinely held that exclusions like the one at issue here are not
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ambiguous. See Haulers Ins. Co. v. Pounds et al., 272 S.W.3d 902, 904 (Mo. Ct. App.
2008); Omaha Prop. & Cas. Ins. Co. v. Peterson et al., 865 S.W.2d 789, 790-91 (Mo.
Ct. App. 1993). Miller's Classified does not compel the conclusion that the exclusion
is ambiguous. In that case the policy stated that it "did not provide Liability Coverage
for any person" and then listed certain activities that would lead to an exclusion
without repeating who was being referred to in the exclusions. See 295 S.W.3d at
527. The relevant policy language in the case before our court states that "[a]nyone
occupying a covered 'auto'" is insured but the immediately following section excludes
"[a]nyone using the vehicle without a reasonable belief that the person is entitled to
do so." (emphasis supplied). This policy thus differs from the one in Miller's
Classified because here both the grant of coverage section and the exclusion section
expressly apply to "anyone." We conclude that the exclusion in the present uninsured
and underinsured motorist sections is unambiguous.
The district court properly found that Donald Bunch was excluded from
uninsured and underinsured motorist coverage because he lacked a reasonable belief
that he was entitled to use the vehicle for personal use at the time of the accident.
Whether a person has a reasonable belief that he can use a vehicle is determined by
several factors, including whether he had express permission, whether he exceeded
the scope of that permission, whether the law prohibited the use, whether he owns the
car, and the relationship between the driver and the insured. Marchand v. Safeco Ins.
Co. of Am., 2 S.W.3d 826, 830 (Mo. Ct. App. 1999). Donald Bunch did not have a
reasonable belief that he was entitled to be a passenger at the time of the accident
because the car was being used for a prohibited purpose. Fogerty had explicitly told
the Bunches that the vehicle was not to be used over the weekend, and the district
court found that Donald Bunch was aware that company policy forbade any use of the
car after consuming alcohol.
We are also not persuaded that the lack of a definition of the word "vehicle" in
the uninsured and underinsured motorists sections renders them ambiguous. The
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Bunches contend that the word vehicle could refer to all covered autos or any vehicle
other than a covered auto. An unambiguous term in an insurance policy will be given
its "plain meaning and enforced as written . . . ." Lindsay et al. v. Safeco Ins. Co. of
Am. et al., 447 F.3d 615, 617 (8th Cir. 2006). Here, there is no indication that the
term "vehicle" is ambiguous or that a person reading the policy would not understand
that the vehicle referred to in the exclusion would have included the car involved in
this accident. The district court did not err in determining that Donald Bunch did not
qualify for uninsured or underinsured motorist coverage.
For these reasons we affirm the judgment of the district court.
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