Colonial Ins. Co. of California v. Jermann

Because I find that the insurance policy unambiguously excludes coverage for the commercial use of the vehicle used by Jason Jermann, I must respectfully dissent.

At the outset, we should not disregard certain language fromStanton v. Nationwide Mut. Ins. Co. (1993), 68 Ohio St.3d 111,623 N.E.2d 1197, which the majority dismisses as "dicta." While it is true that Stanton was decided on grounds other than the ambiguity of the commercial use exclusion, the Supreme Court nonetheless saw fit to address the contended ambiguity of the exclusion, and found that it "plainly eliminates coverage to at least those persons * * * who are injured while driving vehicles that are being used for commercial purposes." Id. at 114,623 N.E.2d at 1199.

Moreover, it is difficult to reconcile the majority's conclusion that "[o]ne would be hard-pressed to argue that a trucker engaged solely to haul goods is not carrying property for a charge or fee," with the majority's extensive reliance onNationwide Ins. Co. v. Johnson (1992), 84 Ohio App.3d 106,616 N.E.2d 525, in which the Butler County Court of Appeals reached the exact opposite conclusion on facts similar to those inStanton, by finding that an over-the-road trucker was not subject to the exclusion. Both cases involve over-the-road truckers paid by their trucking company employer.

A close examination of Johnson reveals that its rationale is not only unpersuasive but nonexistent. The court in Johnson concluded that the exclusion was ambiguous because it could apply to two different situations: "anytime a vehicle used by the insured carries property and any fee or payment to the insured is involved," and "if the insured was using the vehicle for the specific purpose of obtaining a fee for carrying goods." It is not entirely clear what line can be drawn between these two situations, but the court in Johnson appeared to be distinguishing between the position of a trucker who charged his fee directly to the shipper, and one who draws a salary from a trucking company employer. This is an attempt to manufacture ambiguity by creating a distinction without a difference. I would conclude that the exclusion was not ambiguous merely because it fails to specify to whom the fee for carrying property must be paid; the exclusion's silence on this matter does not make it ambiguous, but merely comprehensive, and applicable to either situation. I therefore find Johnson unpersuasive.

The distinction which must be made in the case before us is between a vehicle carrying property for a charge and one which is not. The facts before us indicate that Jermann had placed his vehicle into commercial operation and was carrying property for a charge. It is undisputed that Jermann was carrying property in the form of pizza. I would further conclude he was doing this for a charge, in the form of his hourly wage paid by Papa John's. The delivering of pizza, using a privately insured vehicle, is the type of commercial use which is excluded by the policy of insurance. As the Supreme Court in Stanton indicated, a commercial trucker drawing salary and mileage pay from his trucking company employer would be excluded.¹ Therefore, on the basis of Jermann's salary alone, I would find the exclusion applicable.

Moreover, if the case must ultimately turn on whether Jermann received compensation above and beyond his salary which would constitute a charge for carrying property, I believe that the same conclusion would obtain. Jermann received a 6.5 percent commission which was described as compensation for gas and mileage on his vehicle when making deliveries. This commission payment is manifestly more closely related to the pizza delivery driver's diligence and efficiency in increasing his delivery volume, than to actual vehicle mileage incurred. As such, the commission constitutes incentive compensation above the hourly wage, and a means by which Jermann could increase his income when using his vehicle. The commission alone can constitute, therefore, a charge for carrying property. Furthermore, Jermann received tips for making deliveries; while these were certainly discretionary on the part of the customers, they must nonetheless have constituted an appreciable (and appreciated) source of additional income for driving which would not have been available when Jermann was engaged in his kitchen duties. On the basis of the commission and tips received, even if the salary were not taken into account, I would again find the exclusion applicable on the facts before us.

Ultimately, the issue is whether the insured placed his vehicle into commercial use and thereby significantly increased the risk above that contemplated and covered under the policy. It seems clear to me on the facts before us that this is the case, and the exclusion of coverage for carrying property for a charge is applicable. Furthermore, there is a sound public policy argument against permitting businesses to shift the expense of carrying liability insurance on delivery vehicles onto the personal policies of employees. Other courts have reached similar conclusions. See, e.g., Dhillon v. Gen. Acc. Ins.Co. (Tex.App. 1990), 789 S.W.2d 293 (pizza deliveries), and Martin v. ColonialIns. Co. of California (D.Del.1986), 644 F. Supp. 349 (trucking). Based upon the foregoing reasoning, I would reverse the judgment of the trial court.

¹ While there has been some attempt to emphasize the fact that Jermann's hourly pay covered both kitchen duties and deliveries, this is not of great relevance since at the time of the accident he was indisputably driving his personal vehicle as required by his employer and making a pizza delivery. Jermann's ancillary kitchen duties have no bearing on the question.