847 F.3d 1327
11th Cir.2017Background
- In June 2012, LCC employee Brian Hensley drove a company pickup to his father’s lake house and later drove it home after drinking; he collided with Ulysses Anderson’s motorcycle, severely injuring Anderson.
- Hensley had acknowledged LCC’s long-standing policies banning alcohol on company property and forbidding impaired employees from working or driving; policy warned impaired employees would not be allowed to drive.
- A jury in the underlying tort action found Hensley liable and awarded Anderson about $1,000,000; LCC was dropped as a defendant.
- Great American Insurance Co. (GAAIC), which insured LCC, sued for a declaratory judgment that Hensley was not a permissive user (and thus not covered) because he violated LCC’s internal rules by driving while intoxicated; GAAIC alternatively argued policy exclusions barred coverage and that punitive damages were precluded by policy language.
- The district court granted summary judgment to GAAIC relying on Barfield (Ga. Ct. App.), concluding Hensley’s intoxication violated LCC rules and terminated permissive use; Anderson appealed.
- The Eleventh Circuit reversed, holding Georgia Supreme Court precedent (Strickland) governs permissive use and limits the inquiry to whether the vehicle was used for an approved purpose, not the manner of operation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether violations of employer rules (driving while intoxicated) remove permissive-user status under Georgia law | Anderson: Permissive-use inquiry should be limited to whether the vehicle was used for an approved purpose; Hensley was using the truck for an approved purpose (going home from the lake house) so he remained a permissive user | GAAIC: Barfield allows insurer to look to employer rules and deny coverage when an employee uses a vehicle in violation of explicit company rules (e.g., while intoxicated) | Reversed district court; followed Strickland — permissive use turns on purpose, not manner of operation; Hensley was a permissive user and coverage exists for the underlying liability (remanded for remaining issues) |
| Whether Strickland is distinguishable because of policy language or second-permittee doctrine | Anderson: Strickland governs despite differences in phrasing; policies here used "use" which Strickland treated as equivalent | GAAIC: Policy language differs from Strickland and second-permittee issues make Strickland inapplicable | Rejected — court held Strickland controls; if insurer wanted to limit coverage for violations of employer rules it needed clear policy language |
| Whether punitive damages are precluded by the insurance policies | Anderson: (implicit) insurer owes coverage for judgment including punitive damages question unresolved | GAAIC: Policy provisions preclude insurer liability for punitive damages awarded in underlying trial | Not decided on appeal; remanded to district court to resolve punitive-damages coverage issue |
Key Cases Cited
- Strickland v. Georgia Cas. & Sur. Co., 224 Ga. 487, 162 S.E.2d 421 (Ga. 1968) (permits permissive-use inquiry to focus on the purpose for which a vehicle was used, not the manner of operation)
- Barfield v. Royal Ins. Co. of Am., 228 Ga. App. 841, 492 S.E.2d 688 (Ga. Ct. App. 1997) (held employer rules can limit permissive use by forbidding certain operations)
- SCI Liquidating Corp. v. Hartford Fire Ins. Co., 181 F.3d 1210 (11th Cir. 1999) (choice-of-law and insurance-contract interpretation principles governing federal courts applying state law)
- York Ins. Co. v. Williams Seafood of Albany, Inc., 223 F.3d 1253 (11th Cir. 2000) (insurer must define exclusions clearly; ambiguities construed in favor of coverage)