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Payne v. Erie Ins. Exchange

August 5, 2020

In Payne v. Erie Ins. Exchange, Erie insurance filed a Motion for Summary Judgment as to whether the Defendant in the underlying tort suit was covered by the policy when he exceeded the scope of permission when driving an insured vehicle.  The named insured purchased a car, which he gave to his daughter to use as she wished.  Although the named insured gave the car to his daughter, he imposed upon her one restriction — the father of her children, the Defendant in the underlying lawsuit, was not to use the car.
At some point, the named insured’s daughter became ill and could not pick up her children at school and she requested that the children’s father pick them up instead.  During that trip, the father took the car to a nearby gas station.  As he was leaving the gas station, he rear-ended the Plaintiff’s vehicle.  When the Plaintiff sued the father, Erie denied coverage and filed a Motion for Summary Judgment asserting that coverage did not apply to the father. The Court granted Erie’s Motion for Summary Judgment.
On appeal, the Court of Appeals agreed with Erie.  The Court first looked to the “omnibus clause” of the policy, which provided coverage for non-named drivers who are driving the insured vehicle with the permission of an insured.   The Court called such non-named drivers “first permittees.”  In examining that clause and the applicable case law, the Court held that the “omnibus clause” would extend coverage to a “second permittee” – the person to whom the “first permittee” had given permission to drive the vehicle – if the second permittee “drove the car for the benefit of the first permittee at her request, regardless of whether the first permittee happened to be physically in the car at that time.”  However, the Court then held that the omnibus clause did not extend coverage “when [the second permittee] operated the car for a purpose other than that requested by the first permittee.”
            With regard to factual situation before it, the Court stated that the father’s grant of permission to use the vehicle only extended as far as the daughter’s request – picking the children up from school.  There was no evidence, however, that the daughter asked the father to go to the gas station.  Similarly, there were no facts on the record to support the reason for the father’s presence at the accident scene.  As such, the Court granted Erie’s motion and denied coverage.
Payne v. Erie Ins. Exch., 2015 Md. LEXIS 172 (Md. Mar. 30, 2015).