Gwendolyn Hall, Travelers Indemnity Company v. Wayne Wilkerson, Susan Kilmer, Richard Schoch. Susan Kilmer and Richard Schoch , 926 F.2d 311 ( 1991 )

OPINION OF THE COURT

SLOVITER, Chief Judge.

Appellants Wayne Wilkerson, Susan Kil-mer and Richard Schoch appeal from the district court’s order denying Wilkerson’s post-trial motions and declaring that Wayne Wilkerson is not an insured under the terms and conditions of the automobile liability policy issued by appellee Travelers Insurance Company to appellee Gwendolyn Hall.

I.

Facts and Procedural History

On May 16, 1987, Wayne Wilkerson was involved in a serious one-vehicle automobile accident in Stroudsburg, Pennsylvania while he was operating a vehicle owned by appellee Gwendolyn Hall. Susan Kilmer and Richard Schoch were both passengers in that vehicle and were seriously injured as a result of the accident.

At the time of the accident Wilkerson was residing at Hall’s home in Effort, Pennsylvania along with Hall’s son, Leo Yuspeh, who was Wayne Wilkerson’s stepfather for the period he was married to Wilkerson’s mother. In March of 1987, prior to leaving for France for an extended period of time pursuant to a research fellowship, Hall granted Wilkerson permission both to remain at her home in Effort and to operate her vehicle under certain prescribed conditions. The vehicle in question was insured under two insurance policies issued by Travelers, a general liability policy and a general umbrella policy. The general liability policy at issue on appeal provides, in pertinent part, as follows:

WHO IS AN INSURED

For YOUR car — YOU, any RELATIVE, and anyone else using YOUR CAR if the use is (or is reasonably believed to be) with YOUR PERMISSION, are INSUREDS....

App. at 8.

In February, 1988, Hall and Travelers filed a declaratory judgment action in the United States District Court for the Middle District of Pennsylvania against Wilkerson, Kilmer and Schoch requesting that the court determine that, at the time of the accident, Wilkerson was not an “insured” under the terms of the liability policy covering Hall’s vehicle. In January, 1989, Kil-mer and Schoch filed two separate actions in the same court. One was in tort against Wilkerson and Hall seeking damages for personal injuries sustained during the accident; the second was a declaratory judgment action requesting the court to determine whether Wilkerson was an “insured” under Hall’s policy at the time of the accident. The three actions were consolidated and a hearing was held before Chief Judge Conaboy on April 26, 1989. At that hearing the court heard testimony of several witnesses, and depositions and other evidence were submitted to the court.

Hall testified that she had informed Wilkerson that there were to be no drugs in the car. She further instructed him: “[ajlcohol is a drug like any other drug. No driving under the influence of mind altering drugs, including alcohol.” App. at 23. Wilkerson testified that he could not remember if alcohol was specifically mentioned along with drugs, but that it was his understanding that Hall’s definition of drugs included alcohol. App. at 31. The relevant question and answer were:

Q. When you had the conversation with Gwendolyn and she said, don’t drive and do drugs, was it your understanding that within her definition of drugs, she included alcohol?

A. I would have to say, yes.

The district court found that Wilkerson was not an “insured” under Hall’s policy because his consumption of alcohol on the evening of the accident was a violation of the limited permission to use the vehicle that was given to him by Hall. The district court reasoned that under Pennsylvania law coverage will be extended under a permissive use clause if the driver’s deviation from the named insured’s permission is slight and inconsequential, but coverage is not extended if that deviation is substantial. The court concluded that Wilkerson’s use of alcohol was a substantial deviation from the very specific and limited conditions under which Hall allowed him to operate her vehicle.

Wilkerson filed a post trial motion to amend the judgment under Federal Rule of Civil Procedure 59 or in the alternative for a new trial. This was denied by the district court and this appeal followed.

II.

Jurisdiction

We must first consider the question of our appellate jurisdiction. Because the judgment appealed from was entered in only two of the three cases that were consolidated in the district court, the question arises whether we are presented with a final order under 28 U.S.C. § 1291. At the time of this appeal, the third ease, Kilmer and Schoch’s tort action against Hall and Wilkerson, was set for trial several months in the future. At oral argument, this court asked counsel to ascertain whether the district court would certify the appeal under Fed.R.Civ.P. 54(b), so that it would not be necessary for us to reach the issue of the effect of the consolidation on our jurisdiction. The district court declined to certify the judgment as final, reasoning that the liability of Hall and Wilkerson to the tort plaintiffs remained open.¹ Thus we must determine our jurisdiction in the face of the consolidation.

In Bergman v. City of Atlantic City, 860 F.2d 560, 566 (3d Cir.1988), we held, in the face of a circuit split on the issue, that we would apply a case-by-case approach to the appealability of an order finally disposing of less than all consolidated cases. We noted that we had considered a similar issue in Bogosian v. Gulf Oil Corp., 561 F.2d 434 (3d Cir.1977), where we held that a Rule 54(b) certification was sufficient to give this court jurisdiction over an order granting summary judgment for some but not all defendants in one of two consolidated actions. Nonetheless, we held in Bergman that appeal from the summary judgment order on behalf of the defendants in one of two consolidated actions was not final for the purposes of section 1291, primarily because the actions had been consolidated for all purposes of discovery and trial.

Among the criteria we considered in deciding whether the orders in Bergman and Bogosian were appealable were whether the cases were in the same forum with the same judge; whether the complaints and defendants were identical; whether plaintiffs had the same counsel in both actions; and, as noted, whether the cases were consolidated for trial or simply for pre-trial administration.

Both Bogosian and Bergman found the latter consideration dispositive. In Bogo-sian, we emphasized that the two cases had not been consolidated for trial, whereas in Bergman, they were. Moreover, in Bergman both the complaints were “substantially similar” in the two actions.

The consolidation order in this case consolidated two declaratory judgment actions directed to the coverage issue with an action based on the underlying tort claim. It is evident that the claims are not the same. The declaratory judgment actions sought to resolve the question whether Wilkerson was an insured under Hall’s policy with Travelers, while the tort action will determine the extent of Wilkerson’s liability to Kilmer and Schoch. The parties are not identical. Travelers, a plaintiff in one declaratory action, was not even a party to the tort action.

Most significant, it is unlikely that the actions could have been tried together. Even if there had been a triable issue of fact as to the extent of Hall’s permission to Wilkerson with respect to the use of the vehicle, trial of the insurance coverage issue before the same jury deciding the extent of Wilkerson’s negligence would have introduced impermissibly the issue of insurance into the tort action. Indeed, it is not unusual to have the underlying tort action pending in state court while the coverage issue remains in federal court, thereby rendering consolidation impossible.

Under these circumstances, we hold that the order disposing of the declaratory judgment issue, the order for which the appellants seek review, is a final order for the purposes of section 1291. Therefore, we have jurisdiction to hear the appeal.

III.

Standard of Review

The question of whether or not Wilkerson was an “insured” under the policy at issue is a mixed question of law and fact. Federal Kemper Ins. Co. v. Neary, 366 Pa.Super. 135, 139-40, 530 A.2d 929 (1987). We must apply a clearly erroneous standard to the factual component and a plenary standard to the legal component. Ram Constr. Co., Inc. v. American States Ins. Co., 749 F.2d 1049, 1053 (3d Cir.1984).

The precise bounds of the permission given by Hall to Wilkerson and whether or not Wilkerson’s use of her vehicle on the night of the accident exceeded those bounds are questions of fact to be determined by the factfinder, in this case the trial court after it has heard the witnesses, weighed the evidence and drawn permissible inferences. These findings will be set aside only if this court determines that they were clearly erroneous. In applying that standard, an appellate court may not substitute its own findings for that of the district court; a reviewing court may only assess whether or not there is enough evidence to support the lower court’s findings. Cox v. Keystone Carbon Co., 894 F.2d 647, 650 (3d Cir.), cert. denied, — U.S. -, 111 S.Ct. 47, 112 L.Ed.2d 23 (1990). However, the question whether a Pennsylvania court would find this particular type of deviation to be such a “substantial deviation” that Wilkerson would not be an “insured” under the policy is a question of law over which this court has plenary review. Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir.1986).

IV.

Discussion

The thrust of appellants’ argument for reversal is that the trial court failed to reconcile ambiguities and inconsistencies in the testimony of both Hall and Wilkerson. We have examined the record and conclude there was ample evidence to support the court’s finding that Hall’s permission to use Hall’s automobile was specifically circumscribed by the admonition “not to use alcohol or drugs when he was driving the vehicle.” App. at 13. Certainly, the district court’s finding is not clearly erroneous.

We turn next to the question of whether this condition of permission was actually violated. This also is a question of fact to be determined by the trial court and subject to reversal only if clearly erroneous. Wilkerson admitted to having consumed a large quantity of beer on the evening of the accident, App. at 31-32, and he also admitted he knew it was improper to drink and drive, App. at 33. Thus, the record supports the district court’s finding that “Wilkerson was driving Hall’s car at a time when he continued to consume alcohol.” App. at 15.

The parties do not dispute that Pennsylvania law governs the issues in this ease. The district court properly stated the rule to be applied. Under clearly established Pennsylvania law, when this type of permissive use clause is at issue and it is determined that the driver deviated from the scope of the permission, coverage will be extended to the driver if the deviation from the named insured’s permission is slight and inconsequential, but not if it is substantial. Freshkorn v. Marietta, 345 Pa. 416, 29 A.2d 15 (1942); General Accident Ins. Co. v. Margerum, 375 Pa.Super. 361, 544 A.2d 512 (1988).

The district court’s conclusion that Wilkerson’s driving of Hall’s vehicle in violation of her no-alcohol restriction was a substantial deviation from her permission is consistent with Pennsylvania law. In Federal Kemper Ins. Co. v. Neary, 366 Pa.Super. 135, 530 A.2d 929 (1987), the named insured had given permission to his stepson to use his automobile under the condition that only the stepson was to drive the vehicle unless an emergency arose, and that under no circumstances was an unlicensed driver allowed to operate the vehicle. The stepson allowed an unlicensed driver to operate the vehicle and an accident occurred. The court ruled that because the stepson violated specific restrictions placed on the use of the vehicle by the named insured, there was no coverage under the insurance policy’s permissive use clause.

Even more instructive than Neary is General Accident Ins. Co. v. Margerum, 375 Pa.Super. 361, 544 A.2d 512 (1988). In Margerum, the Pennsylvania Superior Court ruled that a driver’s violation of an express restriction of the automobile owner not to drink and drive was a substantial deviation from the owner’s permission to operate the vehicle, and therefore the driver was not an “insured” under the owner’s policy. The appellants argue that Marge-rum is distinguishable because in that case, unlike this one, there was no question of fact raised as to the exact nature of the restriction or as to its violation. The distinction is unavailing because we look to that case for the legal principle. In cases under Pennsylvania law, once the factfinder determines that there was a no-alcohol restriction placed on the use of the vehicle and that restriction was violated, the legal principle applied in Margerum governs. This is a diversity case and we are bound by Pennsylvania's construction of the law, even though its application may appear harsh in certain cases.

Nothing in State Farm Mutual Automobile Ins. Co. v. Moore, 375 Pa.Super. 470, 544 A.2d 1017 (1988), alloc. denied, 521 Pa. 622, 557 A.2d 725 (1989), derogates from the Margerum opinion’s applicability here. In Moore, the court interpreted an omnibus clause that excluded liability coverage “[f]or any person using a vehicle without a reasonable belief that the person is entitled to do so.” A jury held that an unlicensed driver who was driving with the primary user’s permission was covered under the policy. The verdict was upheld on the ground that the term “entitled” was ambiguous, and that the driver could have reasonably believed that he was entitled to use the car once he had permission of the owner or lawful possessor. Id. 544 A.2d at 1020. We note that there was no evidence that the driver’s permission to use the car was conditioned on his possession of a license. Thus Moore is irrelevant here where Wilkerson’s permission to use the car was circumscribed by the condition Hall imposed. This case is controlled by Marge-rum, not Moore.

We are not insensitive to the policy concerns forcefully expressed by the dissent. However, we are not free in diversity cases to apply our own notion of policy, but must predict that which is likely to be accepted by the Pennsylvania Supreme Court. The dissent suggests that that court will not accept the holding of the only Pennsylvania appellate court to speak to the issue. We are not convinced that the Superior Court’s Margerum decision is so far out of the mainstream of state law that it will be rejected by the Supreme Court.

Appellants have also raised before this court the propriety of the district court’s admission of a blood alcohol test as evidence of Wilkerson's condition at the time of the accident. Wilkerson’s own admissions show that he violated the condition of his permission to use the vehicle. They also argue that because the test results showed a blood alcohol level only scantly over that of legal intoxication, Wilkerson's drinking was only a slight deviation from the permission granted by Hall. The only relevant issues were whether Wilkerson violated the specific permission given and whether that deviation was properly characterized as substantial. Any evidence contained in the blood alcohol test concerning his degree of intoxication is irrelevant and, a fortiori, any error by the district court in this matter is harmless.

V.

Conclusion

For the reasons set forth, we will affirm the judgment of the district court.

1 . Subsequent to the district court’s decision on the Rule 54(b) motion, summary judgment was entered in favor of defendant Hall in the tort action, and a default judgment was entered against Wilkerson. Since the outstanding issue tort liability was a key reason for the district court’s refusal to certify the appeal, we note that, at this time, the district court itself might well agree that this appeal warrants certification. In light of our decision, we see no reason to remand once again for that purpose.