ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Timothy W. Woods Robert W. Miller
Wendell G. Davis, Jr. MILLER & MILLER
JONES, OBENCHAIN, FORD, Elkhart, Indiana
PANKOW, LEWIS & WOODS
South Bend, Indiana
WARNER TRUCKING, INC., ) Defendant-Appellant, ) v. )
This motor vehicle collision case involves a trial court's denial of summary
judgment motions filed by the defendant trucking company and its insurance carrier.
The plaintiffs-appellees, Carl and Sheri Hall, were injured when their automobile
collided with a truck owned by the defendant-appellant Warner Trucking, Inc., and driven
by its employee, Carl Manuel. The Halls brought an action for damages against Warner
Trucking and its driver. The Halls alleged vicarious liability against the trucking
company on grounds that the driver was working within the scope of his employment
when the accident occurred. Warner Trucking's liability insurance carrier, Carolina
Casualty Insurance Company, brought a separate action for declaratory judgment to
establish that it had no obligation under its insurance contract with Warner Trucking to
defend or provide coverage for the claims seeking to impose personal liability upon the
Warner Trucking and Carolina Casualty each sought summary judgment. The trial court consolidated the two actions and, in a thorough opinion, denied both motions for summary judgment, but later authorized Warner Trucking and Carolina Casualty to take an interlocutory appeal. The Court of Appeals accepted the appeal and held that both summary judgment motions should have been granted. Warner Trucking, Inc. v. Hall, 653 N.E.2d 1057 (Ind.Ct.App. 1995). We granted transfer.
While the party losing in the trial court must persuade us that the trial court's decision was erroneous, we face the same issues as did the trial court and analyze them in the same way. Ambassador Fin. Servs. v. Indiana Nat'l Bank, 605 N.E.2d 746, 751 (Ind. 1992). Summary judgment is appropriate only if the designated evidentiary matter shows the absence of any genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Ind.Trial Rule 56(C). A party opposing summary judgment
is not required to come forward with contrary evidence until the moving party
demonstrates the absence of a genuine issue of material fact. Kennedy v. Murphy, 659
N.E.2d 506, 508 (Ind. 1995). On appellate review, we construe the pleadings, affidavits,
and designated materials in a light most favorable to the non-movant. Heck v. Robey,
659 N.E.2d 498, 500 (Ind. 1995). When there are material disputed facts, or if
undisputed facts give rise to conflicting reasonable inferences that affect the outcome,
they must be resolved in favor of the non-movant. Mullin v. South Bend, 639 N.E.2d
278, 281 (Ind. 1994); Cowe v. Forum Group, Inc., 575 N.E.2d 630, 633 (Ind. 1991). We
give careful scrutiny to assure that the losing party is not improperly prevented from
having its day in court. Landmark Health Care Assoc. v. Bradbury, 671 N.E.2d 113, 116
drive a company vehicle if the driver had consumed any alcoholic beverage that day,
regardless of the quantity consumed." Record at 101. The driver in the present case was
scheduled to deliver a truckload of recreational vehicles early in the morning of June 15,
1990. After Warner Trucking's office had closed on June 14, 1990, the driver and his
family attended a cookout at a fellow employee's residence. The driver consumed two
shots of hard liquor and drank beer throughout the evening. He then left the cookout with
his family in their private automobile and drove to the employer's business premises.
The driver told his wife that he was going to sleep in the truck. His wife left to drop their
children off at home and, upon returning, found that her husband had unhooked the
cab/tractor from the semi-trailer and driven away. While driving the tractor, the
employee collided with the Halls' vehicle. Warner Trucking contends that the violation
of the no-drinking rule establishes that the driver was not authorized to drive at the time
of the accident and thus was outside the scope of employment. We disagree.
Contrary to Warner Trucking's argument, the existence of a rule prohibiting behavior is not solely determinative. An employer is vicariously liable for the wrongful acts of employees committed within the scope of employment. Stropes by Taylor v. Heritage House Childrens Center of Shelbyville, Inc., 547 N.E.2d 244, 247 (Ind. 1989). The critical inquiry is not whether an employee violates his employer's rules, but whether the employee is in the service of the employer. Even though an employee violates the employer's rules, orders, or instructions, or engages in expressly forbidden actions, an employer may be held accountable for the wrongful act if the employee was acting within
the scope of employment. See Eagle Motor Lines, Inc. v. Galloway, 426 N.E.2d 1322,
1325 n.3 (Ind.Ct.App. 1981); Mock v. Polley, 116 Ind.App. 580, 586-87, 66 N.E.2d 78,
81 (1946); The Pittsburgh, Cincinnati and St. Louis Ry. Co. v. Kirk, 102 Ind. 399, 402, 1
N.E. 849, 852 (1885). Acts done "on the employee's own initiative, with no intention to
perform it as part of or incident to the service for which he is employed" are not "in the
service of the employer" and are thus outside the scope of employment. Stropes, 547
N.E.2d at 247 (citations omitted). However, an employee's wrongful act may still fall
within the scope of his employment if "his purpose was, to an appreciable extent, to
further his employer's business, even if the act was predominantly motivated by an
intention to benefit the employee himself" or if the employee's act "originated in activities
so closely associated with the employment relationship as to fall within its scope." Id.
Warner Trucking's vicarious liability for the acts of its driver therefore does not depend
upon the driver's permission to drive, but rather upon the relationship of the driver's
activities to the business of Warner Trucking.
Reviewing only the evidence specifically designated to the trial court,See footnote 1 we find that
the deposition of Warner Trucking's president raises a genuine issue of material fact as to this issue.See footnote 2 Specifically, the deposition established that the president gave a cash advance to the driver the night of the accident and that the "cash advance is money for [the driver] to use to pay for fuel . . . ." Record at 164. The deposition also established that employees usually fueled at "Yoder Oil" and that the accident occurred on the route from Warner Trucking's place of business to Yoder Oil. The designated materials show that it was not "unusual for a truck driver to take a tractor to be gassed up on the day before he was going to make a run if that run was going to be early in the morning" or "for drivers to sleep in the tractors," even if the employee lived in town. Record at 149, 155. Additionally, there were two official sets of keys to all semi-tractors: the employees kept one set of keys, the president kept the other.
Applying our standard favoring the party opposing summary judgment, we find
that the deposition raises a genuine issue of material fact regarding whether the
employee-driver acted within the scope of his employment. The trial court did not err in
denying Warner Trucking's motion for summary judgment.
It is undisputed that the Carolina Casualty "Commercial Transportation Policy"
issued to Warner Trucking contains the following provision in "Part III -- Liability
D. WHO IS INSURED.
1. You [Warner Trucking Company] are an insured for any covered
2. Anyone else is an insured while using with your permission a
covered truck you own, hire or borrow except someone using a
covered truck while he or she is working in a business of selling,
servicing, repairing or parking trucks or automobiles.
3. Anyone liable for the conduct of an insured described above is an
insured described above but only to the extent of that liability.
Record at 84 (emphasis added). Carolina Casualty contends that, as a matter of law, the
Halls' claim that Warner Trucking's driver had implied permission cannot satisfy the
definition of insured under D(2) where the vehicle was used contrary to Warner
Trucking's rule expressly restricting permission.
When interpreting insurance policies providing coverage to persons (other than the vehicle owner) operating a motor vehicle covered under the policy, Indiana adheres to the following 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 contemplated by the insured owner when he entrusted the automobile to the use of such permittee.
State Farm Mut. Auto. Ins. v. Gonterman, 637 N.E.2d 811, 813 (Ind.Ct.App. 1994)
(quoting Arnold v. State Farm Mut. Auto. Ins. Co., 260 F.2d 161, 165 (7th Cir. 1958)).
The effect of express restrictions upon such permission has been recently synthesized and summarized by Judge Najam:
[W]hen the owner places restrictions on use of the vehicle, violations of such use restrictions may terminate the initial permission. When the owner of a vehicle places express restrictions on its use by others, the focus is not on whether the operator deviated from the contemplated use; the determinative question is whether the operator's use of the vehicle was restricted in the first instance. In a coverage dispute, permissive use cannot be implied when an express restriction on the scope of permission prohibits the use at issue.
Gonterman, 637 N.E.2d at 814 (emphasis in original) (internal citations and quotations
omitted). See also Liberty Mut. Ins. Co. v. Metzler, 586 N.E.2d 897, 904 (Ind.Ct.App.
1992); Hartford Ins. Co. v. Vernon Fire & Cas. Ins., 485 N.E.2d 902, 905 (Ind.Ct.App.
1985); Michael v. Indiana Ins. Co., 469 N.E.2d 1222, 1224-25 (Ind.Ct.App. 1984).
The materials designated for consideration in the summary judgment proceeding included Warner Trucking's previously noted rule that "no driver was allowed to drive a company vehicle if the driver had consumed any alcoholic beverage that day, regardless of quantity consumed." Record at 101. The Halls do not challenge the evidence that the driver was seen consuming alcohol and they designate no evidentiary materials challenging the existence, nature, or content of the rule prohibiting driving after consumption of alcohol. Nor do they raise any issue as to whether Warner Trucking actually communicated this rule to its driver or whether the rule was consistently enforced. In response to Carolina Casualty's claim that the rule expressly restricted the
grant of permission, the Halls only point to the fact that Warner Trucking had provided its
driver with his own set of keys to the truck, that he had an early delivery scheduled for
June 15, that the company had provided cash to purchase fuel, and that drivers regularly
filled their tanks with fuel before making their run.
While these matters may be relevant to whether the employee acted within the scope of the employment, they are insufficient to contradict the designated materials which establish that the Warner Trucking driver's use of the company truck was restricted in the first instance--when he began to use the company truck after consuming alcohol. As recognized in Gonterman, implied permission is inadequate as a matter of law to overcome Warner Trucking's express restriction upon permission in the first instance. Gonterman, 637 N.E.2d at 814. Thus, because there is no issue of fact regarding the driver's violation of the company rule restricting permission, the Halls' claim of implied permission fails. There is no genuine issue of material fact as to the application of section (D)(2) defining "who is insured" in the Carolina Casualty insurance policy. The driver is not an insured under this provision.See footnote 4
Notwithstanding our conclusion that the Carolina Casualty policy definition of "insured" excludes the Warner Trucking driver because he used the truck without
permission, we address the Halls' alternative claim that coverage exists by reason of a
Uniform Motor Carrier Bodily Injury and Property Damage Liability Insurance
Endorsement filed with the Interstate Commerce Commission and the Indiana Department
of Transportation. See 49 U.S.C. § 14102 (1995); Ind.Code § 8-2.1-18-16 and -13
(1993). The Halls contend that the filing of this endorsement and the Interstate
Commerce Commission regulations "require coverage and supersede the insurance
policy" and that the terms of the policy "are not applicable if they defeat the financial
responsibility requirements of the Federal Government or the State of Indiana." Brief of
Appellees at 28-29. However, the Halls fail to provide or identify any state or federal
statute, regulation, or other authority requiring the motor-carrier's liability insurer to
provide personal liability coverage for an employee-driver's of a company vehicle.
Additionally, we note that there is no lessor-lessee relationship between Warner Trucking
and its employee-driver and, therefore, the I.C.C. regulations are not applicable. C.C. v.
Roadrunner Trucking, Inc., 823 F.Supp. 913, 919 (D.Utah 1993) ("[T]he policy reasons
supporting a strict interpretation of the ICC leasing regulations are nonexistent when the
truck is owned by an ICC-regulated company and driven by its employee. . . . [W]here
there is no leasing arrangement, problems in determining who is responsible for the
operation of the truck do not arise."). See also 49 C.F.R. § 1057.1 (1996) (Applicability
In seeking summary judgment in its declaratory judgment action, Carolina Casualty did not claim that its insurance policy provides no coverage for any vicarious
liability that may be imposed upon Warner Trucking for its driver's actions within the
scope of his employment. Rather, Carolina Casualty asserts that its policy provides no
coverage for any personal liability that may be assessed against the driver. As against the
Halls, Carolina Casualty is entitled to summary judgment on this issue.
SHEPARD, C.J., and SULLIVAN, SELBY, and BOEHM, JJ., concur.
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