82 A.3d 1174
Vt.2013Background
- Colby (defendant) picked up Lamotte (decedent) and, at McDonald’s, Macie (owner) handed Colby her car keys but did not want Lamotte to drive because his license was suspended and he appeared intoxicated.
- Colby testified he understood Macie did not want Lamotte to drive, told Lamotte not to drive, and claimed he gave the keys only so Lamotte could load boxes and listen to the radio.
- Colby later saw Lamotte driving Macie’s car; Lamotte later crashed and died. Lamotte’s estate sued Colby (negligent entrustment) and Macie (wrongful death).
- Colby sought coverage under Macie’s State Farm automobile policy; State Farm denied coverage and moved for summary judgment. The trial court granted summary judgment for State Farm, holding Colby’s act was not "use" under the omnibus clause.
- The Supreme Court of Vermont reviewed whether (1) entrustment of keys equals "use" of the vehicle under the omnibus clause, and (2) if so, whether Colby’s entrustment was within the scope of Macie’s consent.
Issues
| Issue | Plaintiff's Argument (State Farm) | Defendant's Argument (Colby) | Held |
|---|---|---|---|
| Whether entrustment (giving keys to a third person) constitutes "use" under the omnibus clause | "Use" does not include mere entrustment/transfer of keys; therefore Colby is not an insured while "using" the car | Entrustment is an act of employing the car and thus falls within "use," making Colby an insured | Court: Entrustment can constitute "use." The policy term "use" is ambiguous and should be construed to include entrustment (but with limits). |
| Whether Colby’s entrustment was within the scope of Macie’s consent (so as to trigger coverage) | Macie did not consent to Lamotte driving; Colby exceeded the scope of permission by giving keys to Lamotte | Colby reasonably believed Lamotte would not drive (only load boxes/listen to radio); absence of an express restriction creates a presumption of scope | Court: Material fact dispute exists. Because Colby admitted he knew Macie didn’t want Lamotte to drive, the scope question depends on whether Colby’s belief that Lamotte would not drive was reasonable — a question for the factfinder. Summary judgment for insurer reversed and remanded. |
| Insurer's duty to defend at summary judgment stage | No possible basis for coverage → no duty to defend | If claim "might be" covered (entrustment = use and within consent), insurer has duty to defend | Court: Because entrustment can be "use" and factual dispute exists as to scope of consent, insurer’s duty to defend cannot be resolved for summary judgment; remand required. |
Key Cases Cited
- Barnstable Cnty. Mut. Fire Ins. Co. v. Lally, 373 N.E.2d 966 (Mass. 1978) (held negligent entrustment may fall within "use" or similar provisions)
- Dutton v. State Farm Mut. Auto. Ins. Co., 383 So. 2d 519 (Ala. 1980) (adopted a "benefit test," holding entrustment is "use" only if it benefits the entrustor)
- Coop. Fire Ins. Ass’n of Vt. v. Gray, 599 A.2d 360 (Vt. 1991) (discussion of negligent entrustment and coverage; concurrence urging coverage in some entrustment contexts)
- Am. Fid. Co. v. Elkins, 215 A.2d 516 (Vt. 1965) (loaned car with express prohibition; court resolved coverage on scope-of-consent grounds)
- Md. Cas. Co. v. Baker, 196 F. Supp. 234 (E.D. Ky. 1961) (holding a permissive user who loaned car to another was an insured under omnibus clause)
- Samuels v. Am. Auto. Ins. Co., 150 F.2d 221 (10th Cir. 1945) (articulated benefit-based distinctions for determining "use")
- State Farm Fire & Cas. Co. v. Martin, 869 P.2d 79 (Wash. Ct. App. 1994) (objective-reasonableness standard for permission; subjective belief of permittee insufficient)