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Omnibus insurance clause does not cover Second Permittee.

Payne v. Erie Insurance Exchange, et al.
--- A.3d--- (2014) (not yet published)

by Gregory Emrick, Associate
Semmes, Bowen & Semmes (

In February 2008, Plaintiff was struck by a vehicle being operated by Abdulkhalek, but which was owned by Alan Dwyer (“Mr. Dwyer”) for the use of his 34-year old daughter, Karen Dwyer (“Daughter”) who suffered from Lupus. Erie Insurance Exchange (“Erie”) provided insurance to Dwyer. While Mr. Dwyer had given his daughter the vehicle to use as she wished, he imposed one significant restriction – Abdulkhalek, the father of her children, was not permitted to operate the vehicle. On February 11, 2008, his Daughter was ill from Lupus, and she requested that Abdulkhalek use the vehicle to pick up the kids. Though the school was two blocks away in the same housing development, Abdulkhalek took the vehicle to a gas station a few miles away. As he was leaving the gas station, he drove into the back of Plaintiff’s vehicle. Thereafter, Plaintiff filed a lawsuit against Abdulkhalek and Erie. At the pretrial hearing, the trial court denied Plaintiff’s motion for declaratory judgment and summary judgment, and granted Erie’s motion for summary judgment. Plaintiff timely appealed.

The Court of Special Appeals observed that the appeal turned on the resolution of one question, “whether coverage under the omnibus clause of Erie’s insurance policy extended from [Mr. Dwyer] to Abdulkhalek.” The Court first addressed the distinction between “use” and “operation” of the vehicle, noting that a first permittee, like his Daugher, could use a vehicle while only being a passenger, though not operating the vehicle. The use of a vehicle “includes both the active modality of driving and the passive modality of being driven.” The omnibus clause would provide coverage for an accident as long as the first permittee was present in the car, even if a second permittee was actually operating the vehicle. Absent the first permittee’s presence the second permittee was not normally entitled to coverage.

The Court also observed that a second sufficient reason existed for the denial of coverage, namely that Abdulkhalek had been specifically excluded from using the vehicle. When the “limits place by the named insured on the grant of permissive use are unambiguous, those scope limitations are not to be ignored.” The Court then identified the limited exceptions that could extend coverage, including where the first permittee was riding in the vehicle, and where the second permittee’s driving was necessitated by an emergency.

The Court held that the circumstances surrounding Abdulkhalek’s use of the vehicle did not rise to an emergency, and further held that even if he had been granted limited authority for the use of the vehicle, Abdulkhalek was not using the vehicle for the designated purpose when he went to the gas station instead of the school. In affirming the trial court’s grant of summary judgment to Erie, the Court stated:

It is not the case that a grant of permissive use is made by the named insured to the first permittee and later regranted from the first permittee to the second permittee in a second transfer of permission. It is rather that the grant is made on a single occasion from the named insured to the first permittee and, implicitly, because the first permittee need not drive the car himself, to whatever agents or servants the first permittee may subsequently procure to do the driving for him. The grant may well have contemplated such a possible agency from the beginning.

When the first permittee designates an agent to drive him or her some place, that is not a second grant of a permissive use. It is only an incident or implementation by the first permittee of the original grant of the use. The so-called “second permittee” is simply an agent for the limited purpose of driving.