[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 10-12825 JAN 9, 2012
________________________ JOHN LEY
CLERK
D.C. Docket No. 1:07-cv-23044-AJ; 1:07-cv-23358-AJ
1:07-cv-23044
ESPERANZA GARCIA,
as Personal Representative of the Estate of Paola Penafiel,
lllllllllllllllllllll Plaintiff - Appellant,
versus
GEICO GENERAL INSURANCE COMPANY,
llllllllllllllllllll Defendant - Appellee,
____________________________________________________________
1:07-cv-23358
GEICO GENERAL INSURANCE COMPANY,
a foreign insurance company,
llllllllllllllllllll Plaintiff - Appellee,
EDGAR BAENA,
MIGUEL BAENA,
ESTATE OF PAOLA PENAFIEL,
ERICA MANSON,
lllllllllllllllllllll Defendants - Appellants,
ALEXANDRA MONTOYA, et al.,
lllllllllllllllllllll Defendants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(January 9, 2012)
Before BARKETT, WILSON, and ARNOLD,* Circuit Judges.
PER CURIAM:
This is a consolidated appeal involving the interpretation of an automobile
insurance policy’s “non-owned auto” provision. Esperanza Garcia, Edgar Baena,
and Miguel Baena appeal a series of district court orders in favor of Geico General
Insurance Company (“Geico”). For the following reasons, we reverse and remand.
In December 2006, Miguel flew to South Florida for vacation. At the Fort
Lauderdale airport, he rented a car from Enterprise Rent-A-Car (“Enterprise”).
When an Enterprise representative asked him whether there would be any other
drivers, Miguel responded in the negative. The rental agreement therefore stated,
*
Honorable Morris S. Arnold, United States Senior Circuit Judge for the Eighth Circuit,
sitting by designation.
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“no other drivers permitted.” Miguel did not have his own automobile insurance,
and he did not purchase liability insurance from Enterprise.
Miguel later met his brother Edgar, who was not privy to the terms of the
rental agreement with Enterprise. The brothers attended a Miami Heat game
together, and on the way home from the game, Miguel asked Edgar to drive.
Edgar agreed, and during the course of operating the vehicle, Edgar crashed into
Paola Penafiel’s car. Penafiel was killed in the collision.
Although Miguel was uninsured, Edgar had an automobile insurance policy
with Geico.1 Geico conceded that its policy with Edgar stated that Geico was
liable for damages arising out of Edgar’s use of a “non-owned auto”—here, the
Enterprise rental car. However, under the policy, Geico’s liability was contingent
on the condition that, “[s]uch use [of the non-owned auto] must be with the
permission, or reasonably believed to be with the permission, of the owner and
within the scope of that permission.” (emphases added). Because Geico believed
that Enterprise did not grant such permission, Geico denied coverage for the
accident.
Garcia, the representative of Penafiel’s estate, subsequently reached a
1
Edgar’s policy was the only possible source of insurance coverage for Penafiel's claims
because the Graves Amendment prohibited Garcia from bringing suit against Enterprise or
Enterprise’s insurer to recover for Penafiel’s death. See 49 U.S.C. § 30106.
3
Coblentz agreement with Edgar, in which Edgar agreed to the entry of a consent
judgment in the amount of $5 million in resolution of the estate’s wrongful death
action against him. See Coblentz v. Am. Sur. Co. of N.Y., 416 F.2d 1059, 1062–63
(5th Cir. 1969).2 Garcia is now proceeding against Geico on a theory of bad faith
under Florida law to recover the $5 million judgment.
There were three trials in this case, and neither jury in the first two trials
was able to reach a verdict. After the first trial, the district court granted a directed
verdict for Geico on the issue of whether Enterprise consented to Edgar’s use of
the rental vehicle. In doing so, the district court rejected the argument that
Enterprise had given implied permission to Edgar, and found as a matter of law
that Enterprise did not consent to Edgar’s use. Therefore, the second and third
trials addressed only whether Edgar reasonably believed he had the owner’s
permission to drive the rental car. In the third trial, the jury rendered a verdict in
favor of Geico, finding that although Edgar had Miguel’s express permission to
drive the rental car, Edgar did not reasonably believe he had the permission of
Enterprise, the owner. Garcia, Edgar, and Miguel now appeal.
We focus first on the main issue of the appeal: Appellants’ contention that
2
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we
adopted as binding precedent all of the decisions of the Fifth Circuit handed down prior to
October 1, 1981.
4
the court erred by refusing to apply Florida’s dangerous instrumentality doctrine in
this case and interpreting “permission . . . from the owner” as express permission.
We review construction of an insurance policy de novo. James River Ins. Co. v.
Ground Down Eng’g, Inc., 540 F.3d 1270, 1273–74 (11th Cir. 2008). “Because
federal jurisdiction over this matter is based on diversity, Florida law governs the
determination of the issues on this appeal.” State Farm Fire & Cas. Co. v.
Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004). We will “follow the decisions of
the state’s highest court when that court has addressed the relevant issue,”
Technical Coating Applicators, Inc. v. U.S. Fid. & Guar. Co., 157 F.3d 843, 844
(11th Cir. 1998), and “apply the state law as it exists at the time of the appeal and
not at the time of the district court judgment,” id. at 845 (citing Kramer v. Piper
Aircraft Corp., 868 F.2d 1538, 1541 (11th Cir. 1989) (per curiam)). In light of the
Florida Supreme Court’s recent ruling in Chandler v. Geico Indem. Co., —So.
3d—, 2011 WL 5864808 (Fla. Nov. 23, 2011), we agree with Appellants and
reverse and remand.3
The Geico policy dictated that Geico would provide coverage if Edgar had
been using a borrowed vehicle with the “permission . . . of the owner.” Appellants
3
Given that in Chandler the Florida Supreme Court addressed the same issue raised in
Appellants’ Motion for Expedited Certification to the Florida Supreme Court, we find
certification to be unnecessary, and thus Appellants’ motion is DENIED.
5
argue that such permission is established—even in the absence of an express
statement granting permission—where the owner has given its consent to the use
or operation of the automobile beyond its immediate control, unless it can be
demonstrated that there has been “a breach of custody amounting to a species of
conversion or theft.” Roth v. Old Republic Ins. Co., 269 So. 2d 3, 5 (Fla. 1972)
(quoting Susco Car Rental Sys. of Fla. v. Leonard, 112 So. 2d 832, 835–36 (Fla.
1959)). Appellants assert that “permission” is present in the rental car context
when the driver receives permission to drive the car from someone lawfully in
possession of the vehicle. Because the jury determined that Edgar received
express permission from Miguel (the authorized renter), Appellants argue that
Edgar therefore had permission as a matter of law from Enterprise.
The Florida Supreme Court’s decision in Chandler supports Appellants’
interpretation of “permission.” In Chandler, Kutasha Shazier was insured by
Geico under a policy that provided coverage for Shazier’s vehicle and any
“temporary substitute auto.” 2011 WL 5864808, at *2. A “temporary substitute
auto” was defined as a vehicle not owned by the policy holder that was
temporarily used “with the permission of the owner.” Id. When Shazier’s vehicle
broke down, she obtained a rental car from Avis Rent-A-Car (“Avis”). The rental
agreement between Shazier and Avis, much like the agreement in this case, stated
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that no additional operators of the vehicle were authorized and that allowing an
unauthorized driver to operate the car would automatically terminate the rental
agreement. Id. at *1. Shazier subsequently permitted an unauthorized driver to
operate the car, who in turn lent the car to another unauthorized driver who
crashed the vehicle. Id.
Geico denied coverage for the accident in Chandler, arguing that use of the
rental car by the unauthorized driver terminated the rental agreement between Avis
and Shazier and thus revoked the “permission of the owner.” Id. Because Geico
determined that Shazier lacked permission, the car was not within Geico’s
“temporary substitute auto” coverage. Id. The trial court disagreed, finding that
Geico would be liable for any damages owed by Shazier, but the First District
Court of Appeals reversed, holding that Avis had the right to define the scope of
its permission and that unauthorized use of the car effectively revoked that
permission. Id. at *2. The Florida Supreme Court then quashed the district
court’s decision. Id. at *10.
The Florida Supreme Court explained that under Florida’s dangerous
instrumentality doctrine, the type of consent given by a car owner “is simply
consent to the use or operation of such an instrumentality beyond [the owner’s]
immediate control,” id. at *5 (quoting Susco, 112 So. 2d at 837), and that consent
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is not revoked in the absence of “a breach of custody amounting to a species of
conversion or theft,” id. at *4 (quoting Susco, 112 So. 2d at 835–36). Because
Florida law holds that a contract between a rental company and a renter that
restricts use by unauthorized drivers cannot “change the fact that the automobile
was being used with the owner’s consent,” see Susco, 112 So. 2d at 835, the
Florida Supreme Court found that Shazier had Avis’s permission to use the car at
the time of collision, Chandler, 2011 WL 5864808, at *9.
Edgar Baena’s Geico policy covered his use of a non-owned auto, provided
that such use was “with the permission, or reasonably believed to be with the
permission” of the owner. Chandler instructs that the broad definition of
“permission” developed in Florida’s dangerous instrumentality cases is applicable
to contractual insurance disputes, such as the one at hand. See Chandler, 2011
WL 5864808, at *9. Therefore, if Enterprise gave its consent to Miguel to rent the
car, that consent—in the absence of a breach of custody amounting to a species of
conversion or theft—extended to any person that Miguel allowed to use the car.
The district court did not apply this proper definition of permission. Instead, it
incorrectly found as a matter of law that because Enterprise did not give express
permission to Edgar, Enterprise did not consent to Edgar’s use of the car. This
finding of law, as well as the district court’s grant of partial summary judgment in
8
favor of Geico regarding this issue, was in error. We therefore reverse and remand
for proceedings that apply the law of Chandler.4
REVERSED AND REMANDED.
4
Because we find that reversal and remand are warranted on the grounds above, we need
not reach Appellants’ other arguments.
9