Federal Insurance v. Executive Coach Luxury Travel, Inc.
944 N.E.2d 215
Ohio2010Background
- In March 2007 Bluffton University's baseball team hired Executive Coach Luxury Travel to transport players to Florida; Jerome Niemeyer was an Executive driver.
- Niemeyer allegedly caused a fatal bus crash, killing five Bluffton players and others, with survivors injured.
- Bluffton carried Hartford auto policy, American umbrella, and Federal excess follow-form policy; Federal relies on American as controlling underlying and American on Hartford as underlying.
- The core dispute is whether Niemeyer is an insured under Bluffton's Hartford policy via the omnibus clause.
- Lower courts held Bluffton did not hire or permit Niemeyer to drive the bus; policy interpretation was at issue.
- The Ohio Supreme Court ultimately ruled Niemeyer is an insured under the omnibus clause; the dissent would have held he is not.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Niemeyer is an insured under the Hartford omnibus clause | Grandey hired the bus and granted Niemeyer permission to drive. | Executive Coach controlled the bus and driver; Bluffton did not hire or permit Niemeyer. | Yes; Niemeyer is insured under the omnibus clause. |
| Meaning of 'hire' and 'permission' in the omnibus clause | The clause uses ordinary definitions; Bluffton hired the bus and granted permission. | Control/possession tests from other circuits should apply to determine hire. | Ordinary meanings apply; Bluffton hired the bus and granted Niemeyer permission. |
| Effect of underlying/controlling insurance language on coverage | Omnibus clause governs coverage regardless of other policy structure. | Policy layering with controlling underlying coverage should limit exposure. | Omnibus clause controls; Niemeyer insured under Hartford. |
Key Cases Cited
- Gomolka v. State Auto. Mut. Ins. Co., 70 Ohio St.2d 166 (Ohio 1982) (claims construing undefined policy terms; ordinary meaning)
- United States Fid. & Guar. Co. v. Heritage Mut. Ins. Co., 230 F.3d 331 (7th Cir. 2000) (factors for possession/control in hire analysis)
- Toops v. Gulf Coast Marine Inc., 72 F.3d 483 (5th Cir. 1996) (control-based approach to hire tests)
- Burris v. Grange Mut. Cos., 46 Ohio St.3d 84 (Ohio 1989) (interpretation of insurance provisions; policy intent)
- Hrenko v. Blue Cross & Blue Shield Mut. of Ohio, 72 Ohio St.3d 120 (Ohio 1995) (liberal construction in favor of insured; but not for unreasonable interpretation)
- King v. Nationwide Ins. Co., 35 Ohio St.3d 208 (Ohio 1988) (interpretation favoring insured when reasonable)
- Galatis v. Westfield Ins. Co., 100 Ohio St.3d 216 (Ohio 2003) (interpretation of insurance contract terms)