General Accident Insurance v. Safeco Insurance Companies
Docket: 2174
Court: Court of Appeals of South Carolina; April 25, 1994; South Carolina; State Appellate Court
In a declaratory judgment action concerning insurance coverage for an automobile accident on October 1, 1988, Eleanor Gebolys was injured when a rental car driven by Kent Lee Pullen struck her. Gebolys sued Pullen and his employer, Ace Chicago Great Dane, Inc., settling her claims for $225,000. Four insurance companies sought a determination of their coverage responsibilities. The trial court, applying Georgia law, found that all four insurers had coverage, designating Reliance Insurance Company as the primary carrier with a limit of $15,000, while the others were deemed excess carriers. The court allocated the remaining settlement amount of $210,000 among Safeco, Travelers, and General Accident based on their policy limits. Travelers appealed, arguing it had no coverage for Pullen as a permissive driver and, if coverage existed, it should be excess to General Accident's. General Accident contended it had no coverage because Pullen was not acting within the scope of his employment during the incident. Safeco acknowledged its coverage for Pullen and supported the trial court's ruling on the coverage of Travelers and General Accident and the method of prorating the settlement. The appellate court affirmed the trial court's decision.
The appeal centers on whether driver Pullen was a permissive user of the rental car involved in the accident. The trial judge determined that Georgia law applied, finding Pullen to be a permissive user, but alternatively ruled under South Carolina law, which Travelers contests. Travelers argues that South Carolina law should apply, asserting that Pullen was not a permissive user under this jurisdiction.
The court found sufficient evidence supporting the trial judge's conclusion of permissive use under South Carolina law, referencing S.C. Farm Bureau Ins. Co. v. Windham. The key issues were whether Great Dane Trailers provided express or implied permission for Pullen to drive the rental car and if Williams, who authorized Pullen's use, had the authority from his employer to allow such use. The evidence indicated that Williams had implied authority since he was driving the rental car with express permission from Great Dane Trailers and was a passenger at the time of the accident.
Great Dane Trailers, the named insured in the Travelers policy, allowed coverage for permissive users, and there were no restrictions against additional use by others attending the convention. The court cited a precedent (American Mut. Fire Ins. Co. v. Reliance Ins. Co.) stating that permission from the named insured to a permittee can implicitly include authority to allow third-party use based on the circumstances. The trial judge’s finding of permissive use was thus supported by evidence consistent with the established legal principles in South Carolina.
Travelers contends that it is not liable for settlement payments in a declaratory judgment action involving Pullen’s employer, Ace Chicago, arguing that General, the insurer for Ace Chicago, has no legal basis to seek payment from them. Travelers asserts that since the settlement arose from Ace Chicago’s potential liability, they should not contribute to it, claiming: 1) liability should have been allocated solely between Pullen and Ace Chicago; 2) Travelers does not cover Ace Chicago; and 3) the settlement was linked to Ace Chicago’s potential liability. However, Travelers fails to provide supporting legal authority and does not demonstrate any independent liability of Ace Chicago separate from vicarious liability for Pullen’s actions. The record lacks evidence of any independent liability, and Travelers has not fulfilled its burden of proof for appellate review regarding a reversible error. Additionally, Travelers argues that its policy's excess coverage clause should negate coverage since it operates under a retrospective rating program requiring Great Dane Trailers to reimburse Travelers for the first $500,000 of any accident. This argument is also unsupported by legal authority and is deemed meritless as the self-insured status of the named insured does not affect coverage. Consequently, the trial court's ruling affirming the coverage under Travelers' policy and the settlement proration is upheld.
On the appeal by General Accident, which insured Ace Chicago under a “garage operations” policy, the court determined that Pullen was acting within the scope of his employment during the accident, as he was required to attend a sales meeting for Great Dane Trailers, which was necessary for Ace Chicago’s operations. General Accident argues that Pullen’s attendance at the meeting was not incidental to garage operations and that he was not acting within his duties at the time of the accident.
Insurance policies are interpreted favorably for the insured, as established in South Carolina case law. The trial judge's findings regarding Pullen's attendance at a meeting being "necessary or incidental" to Ace Chicago's operations are supported by evidence. Pullen's presence was mandated by a distributorship agreement, indicating he was acting within the scope of his duties during the accident. General Accident's argument, referencing cases where employees were found outside their scope of employment, is countered by the fact that Pullen was traveling for employer-related purposes. Under South Carolina law, travel to meals is considered within the scope of employment when the employee is away for business, unless there’s a significant deviation. In this case, Pullen's travel to a restaurant did not exhibit any deviations from his work-related responsibilities. It is noted that an employee does not need to be performing explicit duties to be considered within the scope of employment, as long as their actions are related to their employment contract. The trial judge's conclusion that Pullen was acting within the scope of his duties at the time of the accident is therefore upheld.
The meeting aimed to educate salesmen, including Pullen, about new products from Great Dane Trailers. Pullen's travel from Chicago to Hilton Head, arriving Saturday, was authorized to ensure his timely presence for the convention's Sunday afternoon start. His participation in a Sunday morning golf tournament with other attendees further aligned with the meeting's objectives. Other arguments presented in the dispute were deemed without merit, leading to the affirmation of the appealed order.
Insurance policy limits were established for multiple carriers: Travelers Ins. Co. ($10 million for Great Dane Trailers, Inc.), General Accident Ins. Co. ($1 million for Ace Chicago Great Dane, Inc.), SAFECO Ins. Co. ($100,000 for Kent Lee Pullen), and Reliance Ins. Co. ($15,000 for Budget Rent-A-Car). Great Dane Trailers, Inc. and Ace Chicago Great Dane, Inc. are distinct entities. The settlement allowed insurers to seek a declaratory judgment regarding their responsibilities. Reliance was identified as the primary insurer liable for $15,000, though it is not part of this appeal.
Travelers' policy covers "any auto" and extends to others using a covered vehicle with permission. Although Travelers cited the rental contract's prohibition on third-party drivers, the focus should be on the named insured (the renter’s employer), not the rental company. There was no evidence that the employer knew of the contract restriction or prohibited the renter from allowing a third party to drive. The trial court confirmed that the rental agency's policy with Reliance provides coverage, a finding that has not been contested. Additionally, the appeal does not raise “choice of law” issues, as General relies solely on South Carolina law. The “scope of employment” rule from Merritt is relevant to the “scope of duty” question in this case, since the insurance policy does not define that term.
Using workers’ compensation principles to interpret an insurance policy's “course of volunteer employment” provision is reasonable, given that insurance contracts are construed against the drafter and favor the insured. The findings of the trial judge that Pullen’s attendance at a meeting was “necessary or incidental” to Ace Chicago’s garage operations are supported by evidence. Pullen’s participation was required by his employer's distributorship agreement.
General Accident argues that Pullen was not acting within his employment scope at the time of the accident, citing cases where employees were deemed to be off duty. Specifically, they reference McAllister, where an employee's accident while engaging in personal business was not covered, and Harris, where a soldier was found acting outside his military role. They assert that Pullen's early arrival for an optional golf tournament and his travel to dinner were personal, not professional, activities.
However, South Carolina law indicates that travel for meals is within the scope of employment during business trips unless there is a clear deviation from work. The precedent set in Merritt supports this, as an employee’s death was deemed compensable when it occurred while traveling to dinner during a work-related trip, with no evidence of deviation established. In Pullen’s case, he was directly traveling from the hotel to a restaurant, indicating that his presence in Hilton Head was indeed within the scope of his duties at the time of the accident.
An employee does not need to be performing their explicit job duties to be considered within the scope of employment; involvement in activities related to their employment is sufficient. In Beam v. State Workmen’s Compensation Fund, an employee's injury from a car accident while traveling to a meeting scheduled for the following day was deemed compensable. Evidence supported the trial judge’s conclusion that Pullen was acting within his employment scope during the accident. The meeting's purpose included training salesmen, like Pullen, on new products, and it was reasonable to infer that his early arrival on Saturday was authorized and aligned with his employer's intentions for the meeting. Pullen's participation in a golf tournament with other attendees was also deemed consistent with the meeting's objectives. The court found no merit in other arguments presented, affirming the order.
Insurance policy limits were detailed for various carriers involved: The Travelers Insurance Company had a limit of $10,000,000 for Great Dane Trailers, Inc.; General Accident Insurance Company had $1,000,000 for Ace Chicago Great Dane, Inc.; SAFECO Insurance Company of America had $100,000 for Kent Lee Pullen; and Reliance Insurance Company had $15,000 for Budget Rent-A-Car. Great Dane Trailers, Inc. and Ace Chicago Great Dane, Inc. are distinct entities. The settlement preserved the insurers' rights to determine their responsibilities regarding coverage. Reliance was identified as the primary carrier liable for $15,000, but it was not part of the appeal. The Travelers policy included coverage for any auto owned, hired, or borrowed, defining "insureds" to include those using a covered auto with permission. The court noted Travelers' reliance on the rental contract terms, which restricted third-party drivers.
Reliance on the car owner's status is inappropriate; the focus should be on the named insured, William's employer, not the rental company. The ownership interest of the original permittee does not dictate coverage; instead, consent from the named insured is essential. There is no evidence indicating that Williams’ employer was aware of any restrictions in the rental agreement or prohibited the renter from allowing a third party to drive the car. The trial court confirmed that the rental agency’s policy with Reliance Insurance Company provides coverage, and this finding has not been contested. The appeal does not raise any choice of law issues, as General relies on South Carolina law. Although the Merritt case established a "scope of employment" rule for workers' compensation, this is relevant to the "scope of duty" question here, particularly since the insurance policy lacks a clear definition of this phrase. It is reasonable to apply workers' compensation principles regarding "scope of employment" to interpret "course of volunteer employment" in the insurance policy, as insurance contracts are typically interpreted against the drafter and in favor of the insured.
