A federal appeals court overturned a lower court on Tuesday, holding a Zurich Insurance Group Ltd. unit liable to compensate a man injured in a motor vehicle accident caused by its policyholder's drunk employee because she was authorized to use the vehicle.  Zurich units Zurich American Insurance Co. issued a general insurance policy to Phoenix-based Underwood Bros. Inc., which operates as AAA Landscape, which provided coverage for car accidents, under the joint decision of the 9th U.S. Circuit Court of Appeals in San Francisco in James McGee v. Zurich American Insurance Co.
The insurance defined insured as anyone "who, with your permission, uses a covered" car "that you own."
After McGee filed a claim against Ms Foutz, Zurich rejected coverage on the grounds that she "could not have qualified as an insured under the insurance because she had exceeded the permitted use by driving while intoxicated."
Ms. Foutz awarded her rights to McGee, who sued Zurich for breach of contract and bad faith.
The U.S. District Court in Phoenix issued Zurich a summary judgment on both allegations and concluded that AAA Landscape never gave Ms. Foutz express or implied allowed to drive while intoxicated, her use of the vehicle at the time of the accident was not permitted, and she was therefore not insured.
When he twisted this decision, the 2-1 majority statement said, "There is no dispute that Foutz was covered by the policy. if she was a permitted user at the time of the accident, both under the policy and Arizona law. ”State law states that“ permitted use includes minor deviations from the law. granted the permit. "
The document shows that Foutz used the vehicle at the time of the accident was allowed, according to the opinion, she was allowed to use the company vehicle for personal matters after work, and evidence shows that the vehicle's use at the time of the accident, which was while driving home from a grocery store, falls within  "Seeing the evidence in the light that is most favorable to McGee, this was either within the permissible use or, at the very least, a minor deviation for that condition," the decision said.
"Zurich claims that Foutz's use was unauthorized because she did not have an express or implied license to operate a company vehicle while intoxicated, the decision states.
However, she was allowed to use the vehicle for the purpose of conducting her personal affairs. Her negligence in driving while intoxicated "does not exclude the fact that her use ( as a case) was permitted," the decision states, contrary to the lower court's decision and the handling of the case for further negotiation.  The dissenting opinion stated: "The district court correctly granted a summary judgment in favor of Zurich on McGee's breach of contract because Foutz did not have permission to use the company vehicle while intoxicated."
"The decision of the ninth district makes sense," said McGee's attorney, David L. Abney, of the Ahwatukee Legal Office PC in Phoenix. "If an insurance company can revoke insurance coverage each time an insured is involved in a traffic accident in which the insured has broken against a law on motor vehicle safety, there would actually be very little coverage for traffic accidents.
"After all, it's a rare traffic accident where both sides are completely impeccable. One or the other of the drivers, and often both, will have violated at least one law on car safety, whether it is driving fast, or follow too closely … The list of motor vehicle safety laws that the average motorist violates each trip is as long as your arm.
"The ninth circuit also got things right at the permitted use. There is some space. "When an employer allows an employee to use a car for commuting to and from work and for tasks. Using a company car to make a short trip to a local grocery store is hardly an unexpected, incorrect or unauthorized use."
Zürichs lawyers did not respond to a request for comment.