Why it matters
According to the U.S. Court of Appeals for the Eleventh Circuit, an employee involved in a car accident while under the influence did not exceed the scope of his permission to use the vehicle, leaving the employer's insurer on the hook for approximately $1 million in damages. Brian Hensley was permitted to drive a company car for both work and personal purposes. One night, after consuming four beers, he drove home and was involved in an accident that seriously injured Ulysses Anderson. Anderson sued Hensley's employer, which tendered the claim to Great American Alliance Insurance Company. A jury found Hensley liable and awarded Anderson roughly $1 million. The insurer then sought a declaratory judgment that Hensley had exceeded the scope of the permissive use granted by the employer because he drove while intoxicated. Despite the company's policy banning the consumption of alcoholic beverages on company property and prohibiting employees under the influence from working, the court found Hensley remained within the scope of the employer's permission. Even though he was intoxicated, Hensley was using the vehicle for an approved purpose, the panel wrote, and he was therefore an insured under the terms of the policy.
In 1996, Looper Cabinet Company hired Brian Hensley to perform services auxiliary to cabinet installation. In the years that followed, the company allowed Hensley to drive its 2008 Chevrolet Silverado for both work and personal purposes. Under the general permission that was granted, Hensley was allowed to drive the vehicle to and from his father's lake house.
Exercising this privilege in June 2012, Hensley consumed four beers before driving the Silverado home from the lake house. During the drive, he encountered Ulysses Anderson on a motorcycle. While the parties dispute the facts, they agreed that when Anderson attempted to pass Hensley, an accident resulted that left Anderson severely injured.
Anderson sued both Hensley and Looper. A jury found Hensley liable and awarded Anderson approximately $1 million in damages. Looper tendered the award to Great American Alliance Insurance Company (GAAIC). The insurer balked. Pointing to the employer's policies banning alcoholic beverages on company property and prohibiting employees under the influence of alcohol from working, GAAIC argued that the verdict was not covered by the policy because Hensley exceeded the scope of the permissive use granted by Looper at the time of the accident due to his intoxication.
A district court agreed with the insurer that it owed no duty to cover the damages awarded at the trial of the underlying action. Anderson appealed and the U.S. Court of Appeals for the Eleventh Circuit reversed.
Applying Georgia law, the federal appellate panel said the state's highest court established a bright-line permissive use standard in Strickland v. Georgia Casualty & Surety Co. (1968). In that decision, the court held that, where a vehicle is used for an approved purpose, an employee's violations of explicit company policies do not foreclose status as a permissive user.
Pursuant to Strickland, it was irrelevant that Hensley was intoxicated, the court said. Because he was using the Silverado for an approved purpose—to drive home from his father's lake house—his use was within the scope of Looper's permission and therefore covered by the GAAIC policy, the panel explained.
"Under the objective standard employed for determining permissive use, the undisputed record shows that Hensley was permitted to drive the Looper vehicle for the purpose it was used on the day of the accident—to drive home from his father's lake house," the court wrote. "As such, we find that Hensley is an insured for purposes of the underlying action."
The district court erred by relying on a state appellate court decision that broke with Strickland in 1997, the court said, calling GAAIC's attempts to distinguish Strickland "nonstarters."
Reversing, the panel remanded the case for consideration of the insurer's argument that the provisions of its policies precluded the punitive damages awarded to Anderson in the underlying trial.
To read the decision in Great American Alliance Insurance Company v. Anderson, click here.