2004-050, PROGRESSIVE NORTHERN INSURANCE COMPANY v. CONCORD GENERAL MUTUAL INSURANCE COMPANY & a.

Insurance Company (Concord General) cross - appeals, an order of the Superior Company (Progressive), appeals, and defendant Concord General Mutual BRODE RICK, C.J. The plaintiff, Progressive Northern Insurance

Lara J. Saffo, of Orford, for defendant Gary Collins, filed no brief.

Christina Brown, pro se, filed no brief.

Jeremy Heath, pro se, filed no brief.

Ann Dempsey on the brief, and Mr. Rehnborg, orally), for the defendant. Wiggin & Nourie, P.A., of Manchester (Gordon A. Rehnborg, Jr. and Mary

brief and orally), for the plaintiff. Wadleigh, Starr & Peters, P.L.L.C., of Manchester (John A. Lassey on the

CONCORD GENERAL MUTU AL INSURANCE COMPANY & a.

No. 2004 - 050 Grafton

page is: http://www.courts.state.nh.us/supreme a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.n h.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, Supreme Court Building, Conco rd, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

parties appealed. statutory limits pr ovided under [the Financial Responsibility Act].” Both consent . . . [ma d e] Heath eligible for limited coverage up to the maximum policy operated to bar liability coverage for Heath but that “Brown’s implied granted both motions, ruling that an exclusion under the Concord General or otherwise provide Heath with insurance coverage. The trial court partially summary judgment, seeking a ruling that it owed no duty to defend, indemnify Act, RSA p. 2 264:18, VI. Concord General objected, and filed a cross - motion for General was required to provide coverage u nder the Financial Responsibility that even if the Concord General policy excluded Heath from coverage, Concord Concord General was obligated to defend and indemnify Heath and Brown, and obligation t o provide uninsured motorist coverage for the accident, that Progressive moved for summary judgment on the bases that it owed no

coverage for him. license at the time of the accident, an exclusion under its policy precluded Concord General contended that because Heath did not hold a valid driver’s obligation to provide uninsured motorist coverage to Collins. In its answer, and indemnify Heath and Brown for the Collins lawsuit, and that it had no respondents, and sought an order that Concord General was required to defend declaratory judgment, naming Concord General, Collins, Brown and Heath as seeking damages for his injuries. Progressive then filed a petition for In December p. 2 2002, Collins filed suit against both Heath and Brown,

insured by Progressive. operated by Heath, with Chestnut as the named insured. The motorcycle was anyone else drive it. Concord General provided liability insurance for the car Chestnut, was its registered owner, and had instructed Brown not to let Whil e Brown was the primary operator of the vehicle, her step - father, John Brown, was a passenger in the car and had given him permission to drive. at the time and was not the owner of the car. Heath’s girlfriend, Christina motorcycle driven by Gary Collins. Heath did not have a valid driver’s license operating a car in Lebanon when he was involved i n an accident with a The following facts are undisputed. In June p. 2 2002, Jeremy Heath was

affirm in part, vacate in part and remand. coverage up to the maximum statutory limits. See RSA p. 2 264:18, VI (2004). We 264, required Concord General to provide the unlicensed drive r with insurance (hereinafter referred to as Financial Responsibility Act or law), RSA chapter that the New Hampshire Accidents and Financial Responsibility Act insured vehicle, who was al legedly at fault for a motor vehicle accident, but insurance policy eliminated liability coverage for an unlicensed driver of the judgment. The trial court concluded that an exclusion in the Concord General Cour t (Burling, J.) partially granting their respective motions for summary p. 3 3

N.H. p. 3 337, 340 (1989), provided it violates no statutory provision, see O’Neill v. through use of a policy exclusion, Curtis v. Guaranty Trust Life Ins. Co., 132 (2003). Insurers are free to contractually limit the extent of their liability this court to decide.” Godbout v. Lloyd’s Ins. Syndicates, 150 N.H. 103, 105 “The interpretation of insurance policy language is a question of law for

vehicle. public way, regardless of consent given by the owne r or apparent owner of the matter of law reasonably believe he is entitled to use a motor vehicle upon a unlicensed driver who knows he lacks a valid driver’s license cannot as a Concord General co ntends, however, that no ambiguity exists because an

entitled to use the vehicle. user must have both consent and legal authorization in order to be reasonably believe he is entitled to use the vehicle; or, that the must have the consent of the owner or apparent owner in order to reasonably believe he is entitled to use a vehicle; that the user that the user must be authorized by law to drive in order to

similar exclusion was interpreted to have at least three different meanings: Hurst v. Grange Mut ual Casualty Co., 470 S.E.2d 659, 66 p. 3 3 (Ga. 1996), where a coverage. It urges us to follow the reasoning of the Georgia Supreme Court in meaning, and thus the policy must be interpreted in favor of providing because the term “entitled” is reasonably susceptible of more than one Progressive argues that the so - called entitlement exclusi on is ambiguous

motor vehicle upon a public way. We agree. valid driver’s license, and thus knew he lacked lawful authority to operate any us e the car, despite Brown’s permission, because he knew he did not have a exclusion, Heath could not have had a reasonable belief that he was entitled to so” (entitlement exclusion). The trial court determined that under this [u]sing a vehicle without a reasonable belief that that ‘insured’ is entitled to do policy. It states: “We do not provide Liability Coverage for any ‘insured’ . . . We first consider the exclusion at issue under the Concord General

judgment. Id. at 19 p. 3 3. judgment as a matter of law, then we will affirm the grant of summary discloses no genuine issue of material fact and if the mo ving party is entitled to the party opposing summary judgment. Id. If our review of that evidence reasonably drawn therefrom, must be considered in the light most favorable to 193 (2000). All evidence pres ented in the record, as well as any inferences its summary judgment ruling. Iannelli v. Burger King Corp., 1 p. 4 45 N.H. 190, We review de novo the trial court's application of the law to the facts in 4

Bohman, 578 N.W.2d 326, 329 (Mich. Ct. App. 1998). ways when that person knows he lacks a valid driver’s license. See Huggins v. a person to reasonably believe he is entitled to drive a vehicle upon the public the owner or apparent owner of the vehicle, standing alone, is not sufficient for learning to drive). Thus, in the context of operating a motor vehicle, consent of operator’s license); RSA 263:25 (200 p. 4 4) (provision creating exception for persons 263:1 - a (2004); see also RSA 263:14 (Supp. 2004) (provision concerning youth by a person who is not properly lic ensed or otherwise entitled to drive.” RSA knowingly permitting “a motor vehicle owned or controlled by him to be driven driver’s license. RSA 263:1 (2004). Our laws also prohibit any person from from driv ing any motor vehicle upon the ways of this State without a valid (unabridged ed. 2002). Our laws governing motor vehicles prohibit any person claiming something.” Webster’s Third New International Dictionary 758 qualify (one) for something: furnish with proper grounds for seeking or The term “entitle” commonly means, “to give a right or legal title to:

1 p. 4 47 (1997). understanding of terms.” Hudson v. Farm Family Mut. Ins. Co., 142 N.H. 144, process and “are of some value . . . to the extent they inform us of the common N.H. 641, 644 (1996). Dictionary defin itions may be used in the interpretive ordinarily intelligent insured. Weeks v. St. Paul Fire & Marine Ins. Co., 140 light of what a more than casual reading of the policy would reveal to an are not defined in the policy, we construe them objectively, in context, and in 1988). The term “entitled” is not defined in the policy. When disputed terms (Mo. Ct. App. 1993); General Accident v. Perry, 541 A.2d 1340, 1350 (Md. App. sound. See Omaha Prop. & Cas. Ins. Co. v. Peterson, 865 S.W.2d 789, 790 belief that he is “entitled” to use the car and that such belief is ob jectively The term “reasonable belief” requires both that the driver have a subjective an insured vehicle without “a reasonable belief” that he is “entitled to do so.” The Concord General policy excludes covera ge for an insured who uses

language of the contested entitlement exclusion in this case. exclusion applies. See id. at 3 p. 4 40. Given these parameters, we examine the cov erage, Concord General in this case, bears the burden of proving that the mean.” Curtis, 132 N.H. at 341. The insurer asserting an exclusion of exclusion language to mean “what a reasonable person would construe it to Contoocook Valley Sch. Dist., 147 N.H. at 393 - 94. Ultimately, we interpret parties may reasonably differ about the in terpretation of the language. 132 N.H. at 342 (ellipsis omitted). Policy terms create an ambiguity when the words used according to their plain, ordinary, and popular definitions.” Curtis, the claimed ambiguity, cons ider it in its appropriate context, and construe the N.H. 392, 393 (2001). “In determining whether an ambiguity exists, we look to expectations.” Contoocook Valley Sch. Dist. v. Graphic Arts Mut. Ins. Co., 147 however, as to create no ambiguity that might affect the insured’s reasonable Long, p. 5 54 P.3d 109, 114 (Okla. 2002). “Such language must be so clear, 5

Act. The releva nt provision of the Act provides: General is obligated to provide protection under the Financial Responsibility We next address whether the trial court erred in ruling that Concord

exclusion. grant of summary judgment in Concord General’s favor on the entitlement “entitled” in the context of this case. Accordingly, we affirm the trial cour t’s present dispute, its omission does not alter the clear meaning of the term unlicensed drivers in the entitlement exclusion might have prevented the failed to use it in the entitlement exclusion. A lthough specific reference to General used the term “unlicensed drivers” in other sections of its policy, but interpret the entitlement exclusion in favor of coverage because Concord We also are unpersuaded by Progressive’s argument that we should

otherwise illegally operates a motor vehicle upon a public way. myriad of circumstances in which a driver with a valid driver’s license limit our holding to the undisputed facts of this case, and do not resolve the person[’s] belief that he or she is entitled to operat e a vehicle.” We, however, “[i]llegality of itself, therefore, cannot be used to defeat the reasonableness of a unrestrained minor, RSA 26 p. 5 5:107 - a (2004). Progressive contends that uninspected vehicle, RSA 266:5 (2004), or driving a vehicle with an while under the influence of alcohol, RSA 265:82 (2004), operating an a reasonable expectation of liability coverage,” including operating a vehicle reasonable belief that he or she is entitled to operate it, at least with respect to insured may operate a motor vehicle ‘illegally’ without negating that person’ s Progressive identifies numerous circumstances where it argues “an

license, despite any permission extended to him by his girlfriend. he was entitled to drive the car wh en he knew he did not have a valid driver’s and that Heath could not as a matter of law have had a reasonable belief that we conclude that the entitlement exclusion is not ambiguous in its application, and excludes driver who lacks valid driver’s license). On the facts of this case, drivers) and Huggins, p. 5 578 N.W.2d at 329 (entitlement exclusion not ambiguous N.E.2d 833, 83 p. 6 6 (Ill. 2003) (entitlement exclusion bars coverage for unlicensed 550, 552 - 53 (Wash. 1986) (same) with Century Nat. Ins. Co. v. Tracy, 789 believe entitled to use car) and Safeco Ins. Co. of America v. Davis, 721 P.2d exclusion ambiguous regarding whether unlicensed driver can reasonably and City Ins. Co. v. Gilmore, 539 N.W.2d 154, 157 (Iowa 1995) (entitlement coverage, when the driver lacks a valid dr iver’s license. Compare, e.g., Farm whether entitlement exclusions are ambiguous, or otherwise operate to bar We acknowledge that a split exists among the jurisdictions concerning 6

permission conferred or contemplated at the time permission was given in the permittee commits a material violation [of] or deviation from the terms of the the protection afforded by the omnibus clause will not terminate un less the deviation rule is more forgiving. Under the rule, “once permission is conferred, restrictions will preclude coverage under the omnibus clause.” Id. The minor such permission.” Id. “[T]he slightest deviation f rom the time, place and use place and uses specified or intended by the parties as of the time of granting the owner of a vehicle to a permittee, the permittee must conform to the time, Under the strict or conversi on rule, “once initial permission is given by

899, 903 (1978) (GEICO). latter “initial permission” rules. See Gov’t Empl. Ins. Co. v. Johnson, 118 N.H. Ragatz, 571 N.W.2d 155, 159 (S.D. 1997). New Hampshire has adopted the and (3) the liberal or initial permis sion rule.” State Farm Mut. Auto. Ins. Co. v. standards are: “(1) the strict or conversion rule; (2) the minor deviation rule; consent initially granted by the named insured. The three most common statutory l iability coverage to a permissive driver who exceeds the scope of the degree of restriction, in considering whether an omnibus clause extends Courts around the country have adopted different standards, varying in

Peerless Ins. Co. v. Vigue, 115 N.H. 492, 494 (1975). compensation to persons harmed by the negligent operation of motor vehicles.” “paramount purpose” of our Financial Responsibility Act is “to provide vehicle by persons other than the owner.” O’Neill, 54 P.3d at 113. Indeed, the “in effect, p rotects third parties wrongfully injured by the use of the insured Co. v. Guthrie, 773 N.E.2d 7 p. 6 63, 765 (Ill. App. Ct. 2002). An omnibus clause, is commonly referred to as omnibus coverage. See St. Paul Fire & Marine Ins. 891 P.2d 538, 540 (N.M. 1995); O’Neill, 54 P.3d at 113. This type of coverage N.W.2d 553, 560 (Neb. Ct. App. 2001); United Services Auto. v. Nat. F armers, insured’s permission. See, e.g., State Farm Mut. Ins. v. AMCO Ins. Co., 621 extend liability coverage to persons who use an insured vehicle with the Many States, like ours, have enac ted statutes requiring that insurers

Responsibility Act. “possession or control” of the insured vehicle for purposes of the Financial Brown had given Heath implied consent to drive the car, Heath had RSA 2 p. 6 64:18, VI. Concord General disputes the trial court’s ruling that because

wrongfully deprive the owner of his property therein. shall not apply to the use of a vehicle converted with the intent to insured or is otherwise unauthorized. This provision, however, damages arises has b een expressly or impliedly forbidden by the consent even though the use in the course of which liability to pay or control of the vehicle of the insured with his express or implied The insurance applies to any person who has obtained possession p. 7 7

killed. Tragically, the friend crashed the car into a tree, and both occupants were they all consumed alcohol. The son permitted his friend to use his father’s car. drive the car. One evening, the son invited some friends to his home, where permission to use his car. The father told his son not to allow anyone else to VI). A father went on vacation and left his sixteen - year - old son at home with clause. See GEICO, 118 N.H. at 9 01 - 02 (decided under former RSA 268:16, obligated to provide liability coverage under a former version of the omnibus similar to the facts in the case before us to determine whether the insurer was In GEICO, we applied the “initial permission” rule to circumstances

named insured prohibition of third party use). regarding whether second permittee has implied consent to use car despite N.W.2d at 159 n.3 (outlining varying criteria that jurisdictions consider whether named insur ed granted restricted or unrestricted use); Ragatz, 5 p. 7 71 determining coverage for permissive use varies generally depending upon 252 F.3d 712, 717 (5th Cir. 2001) (under Mississippi law, standard for insured’s express limitations. See, e.g., Nationwide Mut. Ins. Co. v. Dunning, extends to a permissive driver when the use failed to adhere to the named have developed varying criteria for determining whether omnibus coverage Even among these three most common standards, however, jurisdictions

omitted). Manzella v. Doe, 664 So. 2d 398, 402 (La. 1995) (quotations and brackets liability, and (3) the rule greatly reduces a most costly type of litigation.” serves to discourage collusion between lender and lendee in order to escape and protec ting innocent accident victims from financial disaster, (2) the rule considerations: “(1) it effectively furthers the state’s policy of compensating (Colo. 1996). This liberal approach is based upon the following policy theft or conversion.” Wiglesworth v. Farmers Ins. Exchange, 91 p. 7 7 P.2d 288, 291 defeated only where “the deviation from the permitted use rises to the level of coverage under an omnibus clause,” Ragatz, 571 N.W.2d at 159. Coverage is instance, any subsequent deviation is wholly immaterial and will not defeat 1996), “once permission to use [an insured] vehicle is given in the first the “hell or high water” rule, see Barry v. Tanner, 547 N.W.2d 730, 733 (Neb. Under the “initial permission” or, as some authorities have described it,

(quotations omitted). is alien or foreign to the orig inal permitted objective or operation.” Id. given, and other factors.” Id. (quotations omitted). “A deviation is material if it of deviation in actual distance or time, the purpose for which the vehicle was determine whether t he deviation was minor or material, considering “the extent first instance.” Id. at 160. Under this intermediate approach, courts p. 8 8

and the extent of deviation from that scope, which would proliferate litigation also reduces the need for factual inquiries regarding the scope of permission Guar. Co., 332 N.W.2d 160, 166 (Minn. 19 p. 8 83). The “initial perm ission” rule at 560; O’Neill, 54 P.3d at 113 - 14; Milbank Mut. Ins. Co. v. U.S. Fidelity and & Marine Ins. Co., 773 N.E.2d at 765; State Farm Mut. Ins. Cos., 621 N.W.2d of protecting accident victims from financia l hardship. See, e.g., St. Paul Fire coverage under the “initial permission” rule best preserves the legislature’s goal We conclude, as have other courts, that the liberal approach to omnibus

foresee that initial permittee would allow third party to use car). (implied permission depends upon whether named insured could reasonably use), with Wade v. Autoland, Inc., 767 So. 2d 766, 770 (La. Ct. App. 2000) exists as long as permittee does not know named insured prohibited third party (implied permission considered from perspective of subseque nt permittee and Compare Metropolitan v. Hertz Corp., 9 p. 8 81 P.2d 1091, 1094 (Colo. 1999) standpoint of the subsequent permittee. See GEICO, 118 N.H. at 902. vehicle with th e implied consent of the owner or named insured from the subsequent permittee, i.e., the driver, possessed or controlled the insured allowing third party use of car). Further, we determined whether the permittee even when named insured expressly prohibited initial permittee from following initial permission rule that extend omnibus covera ge to subsequent Auto. Ins. Co., 960 P.2d 1179, 1184 (Colo. 1998) (agreeing with courts allow others to use the car. Id. at 902, 903; see also Raitz v. State Farm Mut. named insured or car’s owner rest ricted the initial permittee’s authority to to use the car, and that subsequent permittee has no way of knowing that the authority to authorize consent to use the car, allows that subsequent permittee named insured or owner of the vehicle when an initial permittee, with apparent possession or control over an insured vehicle with the implied consent of the Id. (citation omitted). In essence, we held that a subsequent permittee obtains

[the father] restricting that authority. and, the friend] had n o way of knowing of the instructions from vehicle with the permission of a person authorized to give consent[; [the friend] had good reason to believe that he was using the his parents’ home and automobile while they were out of town[;] [t]o all appearances, [the s on] had possession and full control of

because with the implied consent of the father as the named insured or owner of the car subsequent permittee, gained “possession or control” over the insured vehicle allow anyone to use his car, we concluded that the son’s friend, as a second or GEICO, 11 p. 8 8 N.H. at p. 9 902. Despite the father’s admonition to his son not to totality of circumstances surrounding a given use of [an insured] vehicle.” to use the car, we considered whether “[c]onsent [could] be implied from the Because the father had not provided express consent for his son’ s friend 9

that sh e was the owner of the vehicle is irrelevant. Second, the trial court consent must be given from the actual owner or named insured, Brown’s belief insured or owner of the [insured] vehicle.” GEICO, 118 N.H. at p. 9 902. Because operating the vehicle must have the express or implied consent of the named the car. For omnibus coverage under the Act to apply, how ever, “the person First, the trial court relied upon Brown’s belief that she was the owner of

of material fact exist on the record precluding a grant of summary judgment. trial court’s reasoning contains severa l material errors and that genuine issues (Citations omitted.) After reviewing the record de novo, we conclude that the

Brown. Court holds that Heath drove the car with the implied consent of her presence in the car with him clearly implies consent. This to drive. Even if she did not expressly tell him that he could drive, drive because she was tired and thought it would be safer for him vehicle with him at the time of the accident. Brown had Heath though t the vehicle belonged to his girlfriend, who was in the made payments on the vehicle and paid the insurance. Heath also Brown considered herself the true owner of the car since she

record: ruling upon the following conclusions it drew from the summary judgment owner for purposes of the Financial R esponsibility Law.” The court based its possession and control of the motor vehicle with the implied consent of the to drive” the insured vehicle, and thus, following GEICO, it ruled “Heath had The t rial court concluded that “Brown had given Heath implied consent

been asked.” give him permission – whether or not Chestnut would have agreed, if he had factor in this case is “that Heath clearly believed that Brown had authority to would not let him drive [the car].” Progressive contends that the dispositive the owner insured” and Heath “knew that the owner [Chestnut] of the vehicl e Brown gave Heath permission to use the car is “irrelevant because she is not use the car had he asked. Thus, according to Concord General, whether father owned the car and that the step - fat her would not have allowed him to additionally argues that the evidence shows Heath knew both that the step control of the insured vehicle through her consent. Concord General t hat Heath thought Brown owned the car, and thus obtained possession or In the case before us, Concord General disputes the trial court’s ruling

concern of the statutory scheme. process, especially where the protection of accident victims is the primary favor a standard that provides efficiency and finality in the adjudicative in this area. See Wiglesworth, p. 9 917 P.2d at 291; Barry, 547 N.W.2d at 733. We p. 10 10

Responsibility Act should not have been granted. conclude that summary judgment on the omnibus clause of the Financial was prohibited from using vehicle). Therefore, on the record before us we to use insured vehicle because no suggestion from evidence that he knew he Metropolitan, 981 P.2d at p. 10 1094 (subsequent permittee h ad implied permission knowledge of Chestnut’s admonition regarding third party use of the car. Cf. apparent authority to grant him consent to use the vehicle; and (2) Heath’s material fact exist in the recor d regarding: (1) Heath’s belief that Brown had Concord General as the non - moving party, we conclude that genuine issues of After viewing the facts and inferences in the light most favorable to

car on the day of the accident. actually and reasonably believed Brown had authority to grant him use of the on occasions prior to the accident may also shed light on whether Heath the primary operator of the car and the apparent fact that Heath drove the car knowl edge of his admonition. We also note that Brown’s undisputed status as vehicle only dispels Chestnut himself as the source of Heath’s potential during his deposition that Chestnut never spoke with him about the insured that insured’s permission was limited to initial permittee). Heath’s averment So. 2d 1263, 1264 (Ala. 1983) (no coverage when su bsequent permittee knew prohibited third party use) and Dairyland Ins. Co. v. General Acc. Ins. Co., 435 coverage for persons who use vehicle with knowledge that named insured has anyone else to use insured vehicle) with Raitz, 960 P.2d at 1186 (no omnibus no way of knowing of owner’s admonition to initial permittee not to allow use of the car. Compare GEICO, 118 N.H. at 902 (subsequent permittee had perhaps that he had reason to know of Chestnut’s prohibition on third party Brown had the authority to grant him permission to use the car, or even at the time he operated the insured vehicle, he did not subjectively believe that actually said and done prior to accident). His belief may, however, reflect that Mut. Ins. Co., 621 N.W.2d at 565 (implied permissi on depends upon what was Heath’s belief may simply amount to reflective speculation. See State Farm given Heath] his permission, if [Heath had] asked him to use the vehicle.” permission to use the v ehicle, he did not “think that [Chestnut] would [have statements during his deposition that while he never asked Chestnut for his We are also troubled by the trial court’s failure to address Heath’s

thought Brown was “the owner of the car [on] that day.” again referred to Chestnut as the owner of the c ar, but also stated that he that he was driving his “girlfriend’s dad’s car.” During his deposition, Heath believed was the owner of the car. In his statement to the police, Heath stated him consent to drive, the r ecord is inconsistent as to which person Heath subjective belief may inform whether he thought she had the authority to grant stated that Heath also believed Brown was the owner of the car. While Heath’s p. 11 11

NADEAU, DALIANIS, DUGGAN and GALWAY, JJ., concurred.

clause under the Financial Responsibility Act, and remand. trial court’s grant of summary judgment in favor of Progressive on the omnibus Concord General on the entitlement exclusion under its policy, we vacate the In sum, we affirm the trial court’s grant of summary judgment in favor of