ERIC MITCHELL, ET AL. V. ALLSTATE INSURANCE COMPANY
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2005-SC-000571-DG
ERIC MITCHELL, ET AL
V
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2004-CA-001277-MR
HARRISON CIRCUIT COURT NO. 02-CI-000067
ALLSTATE INSURANCE COMPANY
APPELLEE
OPINION OF THE COURT BY JUSTICE SCOTT
REVERSING AND REMANDING
Appellants, Eric Mitchell and Candace Slade, appeal from a Court of
Appeals decision upholding a summary judgment ruling of the Harrison Circuit
Court in favor of Appellee, Allstate Insurance Company. The summary judgment
ruling held that a car insurance policy's omnibus clause did not provide coverage
for a non-owner driver of the vehicle because the vehicle's named insured did not
consent to the driver's use of the vehicle. Appellants contend that the question of
whether the driver had permission to use the vehicle, and hence had coverage
under the policy's omnibus clause, is a factual issue that should be submitted to
a jury. Appellants further request that the "initial permission" rule, which defines
the scope of permission one has to use a borrowed vehicle, be adopted in this
state . For the reasons set out, we now reverse the Court of Appeals and adopt
the initial permission rule.
In early 2001, Rita Taylor gave her friend, Virginia Warner, her husband
Rodney Taylor's 1989 Toyota Camry to use for an indefinite term . The car title
remained in Mr. Taylor's name and both Mr. and Mrs . Taylor were the named
insureds on the automobile policy issued by Appellee .
On April 1, 2001, Ms. Warner's son, Allan, asked her for permission to
drive the car to work. Ms. Warner granted this request and Allan took the car. At
some point during the day, Allan picked up two of his friends, the Appellants, and
drove them around . Unfortunately, Allan had a car accident and was killed .
Appellants were seriously injured .
In December 2003, Appellee intervened in Appellants' suit against Allan's
estate seeking a declaration that Allan could not be deemed an insured under the
omnibus clause' of the Taylors' policy because he did not have permission to
drive the car. Supporting this position are statements from Mrs. Taylor indicating
that Allan was forbidden from driving the car by her and from Ms. Warner that he
exceeded the scope of permission he was granted by her since he was given
permission only to drive to work, not to drive around with friends . However, other
facts disclosed by Mrs . Taylor indicated that Allan may not have been completely
barred from using the vehicle. Such facts include that the Taylors were going to
let Ms. Warner have the vehicle to use as her own, that the Taylors had no
intention of asking for their vehicle back, and that Mrs. Taylor, if asked, would
' The parties agree that the omnibus clause of the Taylors' insurance
policy defines "insured person" as:
1 . You and any resident relative ; 2. Any other person while in, on,
getting into or out of an insured auto with your permission ; 3. Any
other person who is legally entitled to recover because of bodily
injury to you, your resident relative, or an occupant of your insured
auto with your permission .
2
have let Allan drive the vehicle on the day of his accident . Despite the seeming
contradiction, the Harrison Circuit Court granted summary judgment to Appellee
finding that there were "no issues of material fact in dispute" and Appellee was
"entitled to judgment as a matter of law."
The Court of Appeals upheld the summary judgment, finding that
Appellants had "proffered no evidence that would permit a jury to disregard Mrs.
Taylor's expressly forbidding Allan from driving her car." The Court of Appeals
believed that Allan's driving of the car, even with his mother's permission, was a
major deviation from the permission Mrs. Taylor conferred, and thus, under the
"minor deviation" rule, no coverage was provided by the omnibus clause. In so
deciding, the Court of Appeals acknowledged that had the "initial permission" rule
applied, Allan's use of the vehicle would be covered because his usage, though it
frustrated Mrs . Taylor's restriction, did not amount to a conversion of the vehicle .
1. The initial permission rule satisfies the policy reasons and purpose
behind Kentucky's Motor Vehicle Reparations Act
An automobile insurance company has a general responsibility to provide
coverage for people who may not be named insureds in the written policy, but fall
under the coverage provided for in the policy. 46 C.J.S . Insurance § 4045
(1993); see also KRS § 304.39-080(5) (requiring that insurance be provided for
any vehicle that is operated by the insured or by someone who has the insured's
permission to operate the car) . This responsibility is usually satisfied through the
language of the policy's omnibus clause which extends insurance protection to
persons other than the named insured - including people who pay no premiums
toward the policy and are in effect unknown to the insurer. 46 C.J .S. Insurance §
1045 (1993) . The omnibus clause's main purpose is to maximize the availability
of insurance proceeds for the benefit of the general public. Id. ; see also Burr v.
Nationwide Mut. Ins . Co., 359 S.E .2d 626, 632 (W. Va. 1987) ("the primary
purpose of the omnibus clause in a policy is to maximize the availability of
insurance proceeds; that the principal beneficiary of the clause is the general
public; and that the clause is remedial in nature and must be construed liberally
so as to provide insurance coverage where possible") . Frequently the omnibus
clause's language extends coverage to any individual properly using the insured
vehicle . 46 C.J.S . Insurance § 1045 (1993) . And generally, an individual is
covered if the person driving the insured vehicle had permission to operate the
vehicle. See Vezolles v. Home Indem . Co., New York, 38 F.Supp. 455, 459
(W.D. Ky. 1941) ("The main purpose of the clause is to substitute the operator of
the car for the owner of the car while the car is being operated with the
permission of the owner.") ; see also Maryland Cas . Co. v. Hassell , 426 S .W.2d
133, 137 (Ky. 1967) . Such permission can be either express or implied. Id. at
134-135.
Sometimes, as in this matter, an operator of a vehicle has initial express
or implied permission to operate a vehicle, but arguably exceeds the scope of the
permission granted . In these situations, it is necessary for the courts to
determine whether such a violation is egregious enough to justify denying
coverage despite the omnibus clause. There are three lines of thought on how to
analyze whether the deviation from the scope of permission should negate
coverage. See C .T. Drechsler, Annotation, Automobile Liability Insurance :
Permission or Consent to Employee's Use of Car Within Meanina of Omnibus
Coverage Clause , 5 A.L.R .2d 600 (1949); see also 46 C.J .S . Insurance § 1053
(1993) (discussing the different methods of analysis for determining whether the
deviation from permissive use of vehicle causes the driver to be uninsured) . The
harshest rule is the "strict" rule which holds that coverage only exists if the use of
the vehicle was one intended by the parties . Id . The intermediate rule is the
"minor deviation" rule, where coverage is extended under an omnibus clause as
long as the deviation from the granted permission in using the vehicle is "slight
and inconsequential, but not if it is substantial ." Id. Kentucky courts have
historically applied the "minor deviation" rule in determining whether or not a
deviation from the scope of permission invalidates coverage. Hassell , 426
S.W.2d at 138 .
The third rule is the "initial permission" rule which allows for coverage
even if the use of the vehicle was "not within the contemplation of the parties or
was outside any limitations placed upon the initial grant of permission ." 46 C.J .S.
Insurance § 1053 (1993) . Thus, as long as the original taking of the vehicle was
with the permission of the named insured, any subsequent use of the vehicle by
the borrower would be covered by the policy. 7 Am. Jur . 2d Automobile
Insurance § 235 (2007) . Any subsequent change in the character or scope of the
use does not require express permission from the insured . Id. Such a change in
the character or scope may involve the vehicle's initial borrower allowing a
secondary user to borrow the car without the insured's express permission . Id.
Even a person who was specifically prohibited from using the vehicle by the
named insured can be covered through the omnibus policy if that specific person
obtained consent from the initial borrower. Id. ; see also United Servs . Auto.
Ass'n v. Nat'l Farmers Union Prop . & Cas. , 891 P.2d 538, 540-541 (N.M . 1995)
(holding that coverage under omnibus clause extends to any subsequent
permittee operating insured vehicle as long as named insured has given his or
her initial permission to use vehicle, even if named insured prohibits use by
anyone other than initial permittee) . However, a use of the vehicle that amounts
to conversion or theft is not covered under the initial permission rule . 46 C.J.S .
Insurance § 1053 (1993) .
This Court has yet to examine whether the "minor deviation" rule should
remain the standard of analysis in light of the passage of the Motor Vehicle
Reparations Act (MVRA), KRS §§ 304 .39-010 - 304.39-340, in 1974 . While
Preferred Risk Mutual Insurance Co . v. Kentucky Farm Bureau Mutual Insurance .
Co. , 872 S.W.2d 469, 470-471 (Ky. 1994), does state that the MVRA did not
change the long-standing policy that one does not have insurance coverage if
they did not have the owner's permission to operate the vehicle, it did not
analyze what standard should be applied if the person had the owner's express
or implied permission but arguably exceeded the scope of that permission in
using the vehicle. Because of the spirit of the MVRA and for general policy
reasons, the "initial permission" rule is an attractive choice as the proper
standard for determining whether one's use of a vehicle exceeded the scope of
permission given to that person.
The main reason for the adoption of the MVRA was to create a system to
protect "the interests of victims, the public, policyholders and others ." KRS §
304 .39-010. Specific purposes for the act include :
3) To encourage prompt medical treatment and rehabilitation of the
motor vehicle accident victim by providing for prompt payment of
needed medical care and rehabilitation ;
5) To reduce the need to resort to bargaining and litigation through
a system which can pay victims of motor vehicle accidents without
the delay, expense, aggravation, inconvenience, inequities, and
uncertainties of the liability system
Id . In furtherance of simplifying and speeding up the process of providing
compensation for car accident victims, the MVRA must be interpreted liberally to
accomplish its public policy goals.
[T]he specific requirements of Kentucky's Motor Vehicle Reparation
Act, and the public policy goals it means to address, supercede
general principles of insurance law as broadly applied . The
significant changes brought about by the MVRA were aimed at a
specific objective: to insure continuous liability insurance coverage
in order to protect the victims of motor vehicle accidents and to
insure that one who suffers a loss as the result of an automobile
accident would have a source and means of recovery . Our courts
have explained that the MVRA is social legislation that must be
liberally construed to accomplish those objectives.
Nat'l Ins . Ass'n v. Peach, 926 S.W.2d 859, 861 (Ky. App. 1996) (internal citations
omitted) (emphasis added) .
Along those lines, the language of KRS § 304.39-030 broadly provides for
basic reparation benefits for car accident victims . "if the accident causing injury
occurs in this Commonwealth every person suffering loss from injury arising out
of maintenance or use of a motor vehicle has a right to basic reparation benefits,
unless he has rejected the limitation upon his tort rights as provided in KRS
304.39-060(4) ." KRS § 304.39-030(1) (emphasis added). Importantly, basic
reparation rights are not extended to those parties who have stolen or converted
the vehicle, KRS § 304 .39-190, or those who intended to cause injury to himself
or others with the vehicle, KRS § 304.39-200. A person is not considered a
converter if he has used "the motor vehicle in the good faith belief that he is
legally entitled to do so." KRS § 304.39-190.
Further, this Court in Beacon Insurance Co. of America v. State Farm
Mutual Insurance Co. , 795 S.W.2d 62 (Ky. 1990), held that a named driver
exclusion clause violated public policy because it "render[ed] a driver uninsured
as to the compulsory statutory minimum limits" as mandated by the MVRA. Id. a t
63. Beacon stated that "KRS 304 .39-010(1) purposes to require, and KRS
304 .39-080(5) does require, security for payment of tort liabilities arising from
maintenance or use of a motor vehicle ." Id. Hence any exclusion provision was
considered invalid because it "render[ed] a motor vehicle owner or operator
uninsured and thereby violate[d] the legislatively mandated public policy of
compulsory insurance ." Id. at 64, citing Bishop v. Allstate Ins. Co . , 623 S .W .2d
865 (Ky. 1981) . While the legislature ultimately allowed certain people to be
excluded from insurance coverage through the passage of KRS § 304.39-04 5,
Beacon makes clear that this Court can and will see that the General Assembly's
clear intent - that all Kentucky motorists should have automobile liability
coverage - is satisfied in all reasonable instances . Beacon, 795 S.W.2d at 63
(holding that the "clear and accurate enunciation of the express legislative intent
set forth in the MVRA, and its rationale" would not allow an exclusion which
would prevent a person from having automobile insurance to cover tort liability) .
The initial permission rule thus furthers the General Assembly's goal of making
sure an innocent driver, like Allan, is covered by insurance when given
permission by his mother to borrow a car, while the "minor deviation" rule more
often than not engenders litigation for this same purpose .
The initial permission rule is thus more consistent with Kentucky's
interpretation of the MVRA as well as its statutory intent than the "minor
deviation" rule . By adopting the initial permission rule, we fulfill the general spirit
and intent of KRS § 304.39-030 to provide a victim the right to compensation for
his/her injuries . In addition, we believe that the initial permission rule will further
the goals of KRS § 304.39-010 by speeding up the process of compensating
victims because determining the scope of permission granted to the vehicle
operator will no longer be as complex, or litigation prone, as it was under the
minor deviation rule. See generally Am . Fid. Co. v. N. British & Mercantile Ins.
Co. , 204 A.2d 110, 114 (Vt. 1964) (Shangraw, J., concurring) (opining that the
minor deviation rule breeds litigation because it is flexibly applied and offers too
many escape hatches) . Moreover, such a rule will also remove any incentive on
the part of an owner of a borrowed vehicle to unconsciously color his testimony in
order to avoid potential personal liability for the lending of a vehicle.
Indeed, several other jurisdictions have found multiple benefits and
justifications in adopting an "initial permission" rule under their statutory
schemes . See Norton v. Lewis, 623 So .2d 874, 875 (La. 1993) ("The primary
justification for the `initial permission' rule is that it effectively furthers the state's
policy of compensating and protecting innocent accident victims from financial
disaster. Moreover, its application serves to discourage collusion between lender
and lendee in order to escape liability and to greatly reduce a most costly type of
litigation .") ; U.S . Fid. & Guar. Co. v. Fisher, 494 P.2d 549, 551-552 (Nev. 1972)
(stating that the "initial permission rule" not only reduces litigation, but allows for
the wrongfully injured to have financially responsible people to look toward for
damages) ; Universal Underwriters Ins. Co. v. Taylor, 408 S .E.2d 358, 364 (W.Va.
1991) ("We think that the `initial permission' rule best effectuates the legislative
policy of providing certain and maximum coverage, and is consistent with the
language of the standard omnibus clause automobile liability insurance
policies.").
For the foregoing reasons, we now adopt the initial permission rule as the
standard for determining whether a non-owner's use of a vehicle exceeds the
scope of permission given to that person . Now as long as permission is initially
given to a person to use a vehicle, insurance coverage may extend to
subsequent vehicle users through the language of the omnibus clause as long as
those subsequent users have permission from the initial borrower to use the
vehicle . This coverage applies even if the subsequent usage of the vehicle was
not contemplated by the parties at the time the initial permission was granted .
However, our initial permission rule must be limited : use of a vehicle which
amounts to conversion is not covered through the omnibus clause unless the
clause specifically allows for such coverage . See KRS 304.39-190 ; Preferred
Risk, 872 S.W.2d at 470-471 (holding that the MVRA did not create a duty for
vehicle owners to carry insurance for one who operates the vehicle after
converting it) . Further, the initial permission rule analysis must also take into
consideration the bar for benefits arising from usage of a vehicle when the
operator intentionally attempts to injure someone with a vehicle. See KRS
304 .39-200.
II. Summary judgment was improper because under the initial permission
rule, Allan had the permission of his mother, Ms. Warner, to use the vehicle
10
The Harrison Circuit Court granted and the Court of Appeals upheld
summary judgment in favor of Appellee because they both believed that, under
the previous minor deviation standard, it was undeniable that Allan either did not
have permission to operate the vehicle the day of his car accident or that he
exceeded his scope of permission . However, under the initial permission rule,
Allan is not barred from coverage.
It is undisputed that Mrs. Taylor allowed Ms. Warner to use the vehicle.
This permission made Ms. Warner the initial borrower of the vehicle under the
initial permission rule and gave her the authority to allow others to use the
vehicle, including Allan . Even if Ms. Warner was expressly prohibited by Mrs.
Taylor from allowing Allan to use the vehicle, since Ms . Warner gave Allan
permission to use the vehicle, Allan receives coverage through the policy's
omnibus clause. There is no evidence that Allan's usage of the vehicle rose to
the level of conversion or that he intentionally caused the accident to injure
himself or others which would eliminate coverage . With the initial permission rule
in mind, we therefore do not believe that Appellee was entitled to judgment as a
matter of law.
Thus, we reverse the Opinion of the Court of Appeals and the summary
judgment in favor of Appellee, and remand the matter to the Harrison Circuit
Court for further proceedings .
All sitting. Lambert, C.J. ; Cunningham, Noble and Schroder, JJ., concur .
Minton, J ., concurs in result only by separate opinion, with Abramson, J., joining
this opinion .
COUNSEL FOR APPELLANTS:
Dan E . Siebert
Siebert & Johnson, PLLC
500 West Jefferson Street, Suite 2250
Louisville, Kentucky 40202
Kevin C. Burke
125 South Seventh Street
Louisville, Kentucky 40202
COUNSEL FOR APPELLEE:
A. Campbell Ewen
Ewen, Kinney & Rosing
1090 Starks Building
Louisville, Kentucky 40202
William P . Carrell II
Ewen, Kinney & Rosing
1090 Starks Building
Louisville, Kentucky 40202
RENDERED : JANUARY 24, 2008
TO BE PUBLISHED
6;VUyrrUtrC0Urf
of ~ftrufurhv
2005-SC-000571-DG
ERIC MITCHELL, ETAL.
V
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2004-CA-001277-MR
HARRISON CIRCUIT COURT NO. 02-CI-000067
ALLSTATE INSURANCE COMPANY
APPELLEE
OPINION BY JUSTICE MINTON
CONCURRING IN RESULT ONLY
Today, a majority of our Court boldly embraces the initial permission rule, a new
law that rewrites every Kentuckian's compulsory auto liability insurance contract . I do
not join the majority in this venture because, as I see it, broad public policy decisions
like this belong to our General Assembly where the costs and the benefits of this new
direction for all citizens of the Commonwealth can be fully debated in the public arena
and subjected ultimately to a majority vote by those whom the people have elected for
that purpose . My position on this larger issue of judge-made law on a grand scale
compels me to write separately to disagree respectfully with the decision of the majority
even though I do agree that the summary judgment must be reversed in light of facts
affecting whether liability coverage for permissive use existed under the minor deviation
rule.
I . WE SHOULD RESOLVE ONLY THE CASE BEFORE US .
1 would reverse this case on issues that are properly before us, resolving it simply
under our known precedent. Under our known precedent, a slight or non-material
deviation by the driver from the purpose and use for which the owner granted
permission to use the motor vehicle does not preclude coverage under the omnibus
clause of the auto liability policy. See Maryland Casualty Co . v. Hassell , 426 S .W.2d
133,137 (Ky. 1967); see also Vezolles v. Home Indemnity Co., New York, 38 F.Supp.
455, 459 (W.D .Ky. 1941). Summary judgment cannot be granted if there is a factual
dispute surrounding the application of this rule.
From the evidence thus far produced in the case before us, it does not appear at
all clear to me that Rita Taylor had "expressly forbidden the driver's [Allan's] use of the
car."' The record contains deposition testimony that Rita forbade Allan from using the
car at one point ; but it is not clear that her flat prohibition was effective on the day of the
accident, especially since Rita testified that Virginia had the authority to decide when
Allan could use the car. The record is not clear that Rita had communicated directly to
Virginia that Allan could not use the car. It seems that Virginia may have witnessed or
heard that Rita told Allan not to use the car after he exceeded the bounds of the
permission Virginia gave Allan on one occasion . But there is a conflict between
Virginia's deposition testimony that she was very strict about Allan's use-only allowing
him to use the car for specific purposes, such as going to work, and not allowing him to
take passengers along-and Allan's friends' affidavits stating that Virginia allowed him
The Court of Appeals opinion stated that the trial court had granted summary judgment
because "[t]he trial court found that there was no issue of fact because the named insured
had expressly forbidden the driver's use of the vehicle."
more liberal use of the car, including transporting passengers . So there are genuine
issues of material fact to be resolved by a jury.
II . KENTUCKY'S MVRA DID NOT CHANGE LAW TO
REQUIRE INITIAL PERMISSION RULE .
The majority builds its case for the initial permission rule on the premise that we
are constrained to do so "[b]ecause of the spirit of the MVRA[,] and . . . general policy
reasons" impel it. But I do not agree that the MVRA, which became effe ctive in
Kentucky in 1975, really changed the law in any way that would mandate the initial
permission rule . And we said that in Preferred Risk Mutual Insurance Company
Kentucky Farm Bureau Mutual Insurance Company , 872 S.W .2d 469, 470-71 (Ky.
1994) .
Before the MVRA, Kentucky had motorists' financial responsibility laws codified
in former KRS 187.290, et. seq., which was enacted in 1946 and mostly repealed in
1975.2 A main purpose of these statutes was to ensure that innocent victims of motor
vehicle accidents received compensation . 1946 Acts, Chapter 118 was titled "AN ACT
to promote safe driving and to remove the reckless and financially irresponsible drivers
from the highways; . . . providing for operator to offer proof of ability to respond in
damages as condition precedent to future licensing or registration . . . ." See also
Allen v. Canal Ins. Co . , 433 S .W.2d 352, 354 (Ky. 1968) (stating that fundamental
purpose of Financial Responsibility Law was to provide compensation to people injured
Other laws (former KRS 187.010 to 187 .280) relating to the financial responsibility of
motorists were repealed by the 1946 Act. I would imagine that these former statutes also
required in some form that motorists be prepared to provide compensation to innocent
people injured by their irresponsible driving .
by "faulty" driving) . So the goal of providing compensation to victims of motor vehicle
accidents was not something new in the MVRA .
In fact, a careful reading of the stated goals of the MVRA does not support the
view that the General Assembly meant for that statute always to call for the most liberal
compensation of victims.
KRS 304.39-010 frames the policy and purpose behind Kentucky's MVRA
(KRS Chapter 304, Subtitle 39) as follows:
The toll of about 20,000,000 motor vehicle accidents nationally and
comparable experience in Kentucky upon the interests of victims, the
public, policyholders and others require that improvements in the
reparations provided for herein be adopted to effect the following
purposes :
To require owners, registrants and operators of motor vehicles in
the Commonwealth to procure insurance covering basic reparation
benefits and legal liability arising out of ownership, operation or use
of such motor vehicles;
(2)
To provide prompt payment to victims of motor vehicle accidents
without regard to whose negligence caused the accident in order to
eliminate the inequities which fault-determination has created ;
(3)
To encourage prompt medical treatment and rehabilitation of the
motor vehicle accident victim by providing for prompt payment of
needed medical care and rehabilitation ;
(4)
To permit more liberal wage loss and medical benefits by allowing
claims for intangible loss only when their determination is
reasonable and appropriate;
(5)
To reduce the need to resort to bargaining and litigation through a
system which can pay victims of motor vehicle accidents without
the delay, expense, aggravation, inconvenience, inequities and
uncertainties of the liability system ;
(6)
To help guarantee the continued availability of motor vehicle
insurance at reasonable prices by a more efficient, economical and
equitable system of motor vehicle accident reparations;
(7)
To create an insurance system which can more adequately be
regulated ; and
(8)
To correct the inadequacies of the present reparation system,
recognizing that it was devised and our present Constitution
adopted prior to the development of the internal combustion motor
vehicle .
In short, the plain language of these statutory goals-particularly subsection 4-reflects
a list of policy choices to provide prompt and liberal wage loss and medical benefits (nofault benefits) without the victim's being forced into litigation regarding fault. In
exchange, the General Assembly placed some limitations on tort liability by allowing
damages for non-economic losses only after a certain threshold has been met. I would
note that in the instant case, no-fault benefits are not an issue. Rather, the issue before
us concerns the broader tort liability coverage for an accident resulting in major injuries.
I believe that the majority confuses the MVRA's goal of providing broader compensation
in terms of no-fault benefits with a different goal of providing broader liability coverage
when, in fact, the MVRA traded broader no-fault coverage for limitations on liability
coverage .
My interpretation of the spirit of the MVRA finds support in secondary authority
published soon after the enactment of the MVRA. A Kentucky Law Journal note
published just a year or two after the MVRA became effective interpreted these stated
legislative goals to "reflect a desire for prompt and liberal recovery to accident victims
without regard to fault. While this section does not emphasize the abolition of tort
liability, it does express the desire to reduce litigation ." Robert P. Moore & David W .
Rutledge, Note, Kentucky No-Fault: An Analysis and Interpretation, 65 Ky . L.J. 466,
473-74 (1976-77).
I would note that the "prompt and liberal recovery" relates to no-fault benefits . In
fact, tort liability is somewhat limited under the MVRA . And the sought-after reduction of
litigation means fewer lawsuits over relatively minor accidents, not necessarily less
litigation over whether coverage exists . Ironically, according to this law journal note, the
MVRA, as originally enacted, was actually not as strong as the former financial
responsibility laws in requiring insurance . Id. at 504.
In addition to the MVRA's not generally providing broader tort liability coverage, it
also did not specifically alter tort liability coverage where another driver operated the car
with the owner's permission . The former financial responsibility laws exempted owners
from the requirement of providing security where the vehicle was operated by someone
else without the owner's permission . Former KRS 187.340(3). These laws required
that motor vehicle liability insurance policies "[s]hall insure the person named therein
and any other person, as insured, using any such motor vehicle with the express or
implied permission of the named insured, against loss from the liability imposed by law
for damages arising out of the ownership, maintenance[,] or use of the motor vehicle[.]"
Former KRS 187 .490(2)(b) . In other words, omnibus clauses for others using the car
with the owner/insured's permission were required by the law years before the MVRA .
The MVRA did not essentially change this by requiring that owners provide security
such as insurance for basic reparations or tort liability arising out of others' operating the
vehicle with the owner/insured's permission . KRS 304.39-080(5) .
So I believe the majority builds
on sand its foundational premise that attributes to
the General Assembly the mandate to adopt the initial permission rule through its
enactment of the MVRA, which does not generally broaden the availability of liability
coverage nor specifically broaden tort liability coverage for accidents arising from the
permissive use of a vehicle by one other than the named insured .
III . LACK OF PRESERVATION. OF IMPLIED
PERMISSION RULE APPLICABILITY.
Preservation of this issue is questionable at best since the appellants' arguments
to the trial court and their briefs to the Court of Appeals did not explicitly urge adoption
or application of the initial permission rule. Actually, the trial court made no ruling
concerning the applicability of the initial permission rule or the minor deviation rule. The
trial court
simply ruled that no genuine issue of material fact remained and that
summary judgment was granted on the basis that Rita Taylor prohibited Allan from
using the car.
I recognize that the trial court and Court of Appeals lacked the authority to
overrule binding precedent that applied the minor deviation rule; but, nonetheless, I
hesitate to disturb precedent and adopt a sweeping new rule where the issue was not
presented to the trial court or even to the Court of Appeals . It was the Court of Appeals,
acting on its own initiative, that effectively invited consideration of the issue by
suggesting in its opinion that the trial court's ruling on summary judgment was correct
under the minor deviation rule established in Kentucky precedent but would not be
correct if the initial permission rule were applied. And I would note that Allstate has not
objected to appellants arguing this issue before us. But I would decline to consider the
initial permission rule issue as unpreserved .
IV . ALLURE OF THE INITIAL PERMISSION RULE .
I recognize the appeal of the initial permission rule as reducing litigation
concerning coverage and ensuring that victims are compensated . I also think one could
fairly say that Kentucky has a long history of enacting statutes aimed at providing motor
vehicle accident victims with compensation going back to at least 1946 and probably
earlier . Clearly, the initial permission rule would be more successful in meeting this
goal; and I really do not understand why earlier precedent embraced the minor deviation
rule instead, although I recognize that perhaps the minor deviation rule was viewed as a
middle-of-the road approach that better reflected the parties' intentions as to coverage
under the contract .
As the majority demonstrates today, this Court has the authority to overrule
existing precedent and embrace the initial permission rule as best achieving longstanding and laudable legislative goals compensating injured victims-goals that I view
as pre-dating the MVRA . But I would decline to abandon settled law in this area,
especially since the adopting the initial permission rule is pure policy-making, which I
view as a legislative function .
V . CONCLUSION .
I concur with the result reached by the majority, but l would reverse the lower
courts' decisions only because there exist genuine issues of material fact.
Abramson, J., joins this opinion concurring in result only.
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