E-Bulletin
IT MAY HAVE TAKEN 26 YEARS, BUT THE COURT FINALLY GOT IT RIGHT
In an e-Bulletin issued in January 2003, we reported on a case in which the Appellate Division found coverage under an automobile policy in what, at best, was a "stretch" of the Initial Permission Rule
In Jaquez v National Continental, Erica Rochester drove her boyfriend to his sister's (Mildred's) house. She parked her car and locked it. Mildred's son (Ribot) asked Rochester for a cigarette, but
Rochester had left them in her car. She gave her car keys to Ribot for the purpose of getting her cigarettes. Ribot not only took the keys, he took the car, apparently on a joy ride. Within minutes,
Rochester realized the car was missing and called the police and reported that the car had been stolen. Apparently, Ribot had driven the car a short distance and was involved in an accident with
another car causing injuries to the driver and passenger of that car, Loperena and Jaquez. Ribot was arrested but ultimately not charged for the theft of the car.
State Farm denied coverage for the claims of the injured parties against Ribot. The trial court granted State Farm's motion for summary judgment but the Appellate Division reversed, holding, in essence
that Ribot had received permission to "use" the car and once that permission had been granted, it could not be limited.
The "Initial Permission Rule" dates back over 40 years to Matits v Nationwide, 33 N.J. 488 (1960) in which our Supreme Court held that once a person is given permission to use a vehicle, any subsequent
use short of theft or the like is a permissive use within the terms of the omnibus clause of an automobile liability policy.
On November 26, 2003, the Supreme Court reversed the Appellate Division as to the Jaquez claim and reinstated the trial court's dismissal of the case against State Farm. As the Court noted, Rochester
gave permission to unlock the car for the sole purpose of retrieving the cigarettes and the purpose "did not relate to a transportational or similar need." In other words, Rochester did not permit
Ribot either expressly or impliedly to "use" or "employ" the car at all. She merely gave him license to enter the parked vehicle to retrieve an item inside.
However, most notably, the Court went further in its discussion of the "Initial Permission Rule". It looked back to 1977, when the New Jersey Supreme Court decided Motor Club Fire & Casualty v New Jersey
Manufacturers, 73 N.J. 425. In that case, the insured was the operator of a vehicle when the passenger, a mentally disturbed adult, suddenly grabbed the steering wheel , forced the driver out of the car,
and then began driving the vehicle. As could easily be expected, the car was involved in an accident. In 1977, the New Jersey Supreme Court found that the insured allowed the "use" of the vehicle by the
passenger and that the forcible ouster of the driver did not constitute "theft or the like". Thus, for the past 26 years, this has been the law in New Jersey. While there is no way of determining how many
claims were paid on facts which would raise serious questions of "initial permission", most carriers have avoided coverage denials for theft based on this case. Now, after 26 years, our Supreme Court has
finally recognized what a bizarre (or "zany" as described by Justice Clifford in his dissent) conclusion this was. In a delayed (and somewhat remarkable) turn, the New Jersey Supreme Court looked back and
said that the "user's sudden, forced removal of the insured form the vehicle in that case...convinces us that the user's conduct constituted a "theft or the like". It went on to accept Justice Clifford's
dissent and rejected the majority's opinion as controlling authority.
So after 26 years, the Court has looked back and agreed with Justices' Clifford and Mountain. While we express kudos to the Court for its enlightened view, our only question is "what took you so long?"
Reason and sound logic have finally prevailed.