994 F. Supp. 2d 789
E.D. Tex.2013Background
- Sentry seeks declaratory relief regarding primary coverage for a March 20, 2010 Florida traffic accident involving Stevens driving a Classic vehicle; Roches sued Stevens in Florida and Classic in related actions.
- Stevens worked for Classic as a sales manager; he took a Classic vehicle to Florida on vacation under a Rental Agreement.
- Classic garage policy with Sentry and Stevens’ Safeco personal auto policy both potentially apply; dispute centers on which is primary depending on Stevens’ status.
- Rental Agreement labeled Stevens’ use as primary under Classic’s garage policy and noted Safeco would be primary if Classic’s limits are exhausted.
- Texas law governs contract interpretation and determines whether Stevens is an employee or permissive user, affecting coverage and limits.
- Magistrate Judge Craven recommended denying Defendants’ motion for summary judgment and granting Plaintiffs’ motion for summary judgment; declaratory relief that Sentry provides no coverage or defense arising from the Roche suits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sentry owes indemnity for Roches’ claims. | Sentry contends Stevens is a permissive user, not an employee, so Sentry’s limits are limited to Florida minimums. | Stevens is an employee using a Classic vehicle with permission, so Sentry’s garage policy provides primary coverage. | Stevens is not an employee; Sentry provides no indemnity for Roches’ claims. |
| Whether Stevens was an employee or permissive user under Sentry policy. | Stevens was a Classic customer using a car on vacation; not acting within employment. | Stevens was an employee using a demo vehicle with permission; falls under 3(a)(2). | Stevens is a permissive user, not an employee, under the Sentry policy. |
| Effect of Texas Insurance Code §§ 1952.251–1952.252 on coverage. | Under §1952.252, garage customers have primary personal insurance; Sentry must adjust accordingly. | Argues the statute does not override Sentry’s terms; Stevens remains within Sentry’s step-down framework. | Stevens is a garage customer; Sentry’s LIMIT OF INSURANCE step-down applies, reducing coverage to minimums after other insurance is exhausted. |
| Whether Sentry has a duty to defend Roches’ Florida lawsuits. | Eight-corners rule governs duty to defend; extrinsic evidence may be used to resolve coverage issues. | Extrinsic evidence would overlap merits of underlying claims and should be limited. | No duty to defend; extrinsic evidence properly resolves coverage issue under eight-corners framework. |
| Relation of limited coverage to Florida minimums and Safeco excess. | Safeco provides excess coverage; Sentry must respond only if Stevens’ limits are insufficient to Florida minimums. | Safeco and Sentry interact as primary/excess with minimums; dispute whether Florida minimums apply given Stevens’ limits. | Safeco’s limits exceed Florida minimums; Sentry’s coverage for Stevens is not triggered. |
Key Cases Cited
- Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009) (duty to indemnify hinges on actual facts; eight-corners framework for defense/indemnity decisions)
- Integon Indemnity Corp. v. Federated Mutual Ins. Co., 131 N.C.App. 323, 507 S.E.2d 53 (N.C. App. 1998) (customer vs employee under garage policy; permissive use concept)
- Liberty Ins. Co. of Texas v. Rawls, 358 S.W.2d 920 (Tex. Civ. App. – Fort Worth 1962) (definition of employee; scope of employment concepts in garage policies)
- Moritz v. St. Paul Fire and Marine Ins. Co., 48 Wash. App. 521, 739 P.2d 731 (Wash. App. 1987) (distinction between act within scope vs. permission in coverage analysis)
- Coronado v. Employers National Ins. Co., 596 S.W.2d 502 (Tex. 1980) (distinguishes express vs implied permission in omnibus coverage)