Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


12-22-2004

Progressive N Ins Co v. Edmunds
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-4223




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                                                                    NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT


                                         No. 03-4223


                              PROGRESSIVE NORTHERN
                               INSURANCE COMPANY,

                                                        Appellant

                                             v.

                    HERBERT LEE EDMUNDS; JAMES BANTUM




                       Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                          (D.C. Civil Action No. 00-cv-05047)
                       District Judge: Honorable Berle M. Schiller


                       Submitted Under Third Circuit LAR 34.1(a)
                                  December 13, 2004

       Before: AMBRO, VAN ANTWERPEN and STAPLETON, Circuit Judges

                        (Opinion filed       December 22, 2004 )




                                          OPINION


AM BRO, Circuit Judge

       Progressive Northern Insurance Company (“Progressive”) appeals the decision of

the District Court that, as a matter of law, Progressive could not avoid coverage of
Herbert Lee Edmunds’ 1 and James Bantum’s injuries resulting from a car accident under

the “business use” exclusion in Edmunds’ automobile insurance policy. For the reasons

that follow, we affirm the decision of the District Court.

                    I. Factual Background and Procedural History

       On July 15, 2000, Edmunds and Bantum were involved in an automobile accident.

At the time of the accident, Edmunds was operating his 1992 Chevy Blazer, a personal

vehicle covered under an insurance policy with Progressive. This policy included a

“business use” exclusion providing that coverage did not apply to “bodily injury or

property damage arising out of the ownership, maintenance, or use of a vehicle while

being used to carry persons or property for compensation or a fee, including, but not

limited to, delivery of magazines, newspapers, food, or any other products.” The

applicability of this exclusion to Edmunds’ and Bantum’s claims arising out of the July

2000 accident is the sole issue before us.

       Edmunds is an equal partner in Burgess & Edmunds, a beer distributorship, the

operation of which includes delivering beer directly to customers—mainly to bars, but

also to personal residences. Bantum testified that he often performed odd jobs for the

distributorship. Edmunds stated that he paid Bantum “under the table” and that Bantum

sometimes helped Edmunds unload trucks.



  1
   In his brief, Appellee Edmunds’ last name is consistently spelled “Edmonds.”
However, because he is listed as “Edmunds” in the caption and on the docket sheet, we
refer to him as “Edmunds” in this opinion.

                                              2
       In July 2000, Burgess & Edmunds used a vehicle insured by State Farm Insurance

Company under a commercial policy to deliver beer. That vehicle displayed the license

number required by the Liquor Control Board for the transportation of alcoholic

beverages. On the day of the accident, the usual delivery vehicle was in the shop for

repairs, and the loaner vehicle usually provided by the garage for deliveries was also

unavailable.

       On the day of the accident, Edmunds traveled in the Chevy Blazer from his home

to the beer distributorship to pick up ice, beer, and soda for a family barbecue. While he

was at the distributorship, Mary Jones, whom Edmunds had known for approximately

twenty years, called and requested that two cases of beer be delivered to her home.

Edmunds testified that he told Jones there were no deliveries that day. He then relented

and told her that he would do her a favor and bring her the beer at cost. Bantum loaded

Jones’ beer into the Chevy Blazer, and the two drove to Jones’ house, where they dropped

off the beer. Bantum testified that he had never before seen Edmunds deliver beer in that

vehicle.

       At his deposition Edmunds testified that Jones was supposed to pay him $23.60 for

the beer but instead paid him $22.30. But at trial, Edmunds testified that he had been

mistaken about the amount at his deposition and that he charged Jones the wholesale cost

of the beer, which was about $18.00. Jones also stated that Edmunds charged her $18.00

for the beer she received that day.



                                             3
       Edmunds also testified that, after taking the beer to Jones, he planned on going

home because Bantum was going to help him take the supplies for the barbecue into the

house. According to Bantum, they had to go back to the distributorship instead because

they had forgotten the sodas for the barbecue. But en route to the distributorship, they

were in an accident.

       When the police arrived at the scene of the accident, they smelled alcohol and

placed Edmunds under arrest, believing that he had been driving under the influence. At

the police station, Edmunds was examined and taken to the hospital for his injuries.

Bantum was also hospitalized. On July 20, 2000, while Edmunds was still in the hospital,

he gave a statement to a Progressive representative over the telephone and told the

representative that the police smelled beer in his truck at the time of the accident because

he was going to make a delivery. At the time Edmunds made this statement, he was being

given morphine in addition to Percocet, which he had been taking prior to the accident for

another condition. Edmunds’ wife stated that he was not himself when he gave the

statement. Edmunds made another statement to Progressive on July 24, 2000. In that

statement, Edmunds also said that he was “delivering to houses” on the day of the

accident.

       Edmunds and Bantum made claims under Edmunds’ Progressive policy, and

Progressive denied both claims under the business use exclusion quoted above.

Progressive then filed a declaratory judgment action in the United States District Court



                                              4
for the Eastern District of Pennsylvania seeking a decision that the exclusion applied

because, at the time of the accident, Edmunds was using his personal vehicle to deliver

beer to Jones for compensation as part of his beer distribution business. The parties

consented to trial before a magistrate judge. After trial, Chief Magistrate Judge Melinson

entered judgment in favor for Edmunds and Bantum. Progressive appeals from that

order. 2

                                           II. Analysis

           Progressive argues that: (1) the District Court’s finding of fact that Edmunds was

not using his personal vehicle to carry property for compensation or a fee at the time of

the accident was clearly erroneous; and (2) the District Court erred as a matter of law in

concluding that the business use exclusion did not apply to preclude coverage of

Edmunds’ and Bantum’s claims under the Progressive policy.

           A.     District Court’s Finding of Fact Regarding the Use of Edmunds’
                  Personal Vehicle

           As Progressive concedes, we review the District Court’s findings of fact for clear

error. Medtronic Ave, Inc. v. Advanced Cardiovascular Sys. Inc., 

, 53 (3d

Cir. 2001); Fed. R. Civ. P. 52(a). “A finding of fact is clearly erroneous when, after

reviewing the evidence, the court of appeals is left with a definite and firm conviction that

a mistake has been committed.” Shore Regional High Sch. Bd. of Ed. v. P.S. ex rel. P.S.,




   2
       We have jurisdiction under 28 U.S.C. § 1291.

                                                5


, 199 (3d Cir. 2004) (internal quotation omitted). Our review of the District

Court’s factual findings is even more deferential regarding determinations of the

credibility of witnesses. Newark Branch, NAACP v. City of Bayonne, 

, 120

(3d Cir. 1998) .

       The District Court here found that, at the time of the accident, “Edmunds’ vehicle

was not being used to carry persons or property for compensation or a fee.” The Court

based this finding on the following factors: (1) “Edmunds was driving his car on personal

business picking up supplies for his barbeque”; (2) Edmunds’ “delivery to Mrs. Jones was

done as a favor to a personal friend”; (3) “[t]he only monies received were for

reimbursement of the costs for the two cases of beer delivered to Mrs. Jones”; and (4)

“the delivery to Mrs. Jones was incidental and would not have been made if it were not

for the fact that Edmunds was already picking up his own supplies at the distributorship.”

These findings are amply supported by the testimony at trial. As the District Court noted,

Edmunds’ trial testimony was consistent with the testimony of other witnesses3 ,

particularly Jones’ testimony that she paid about $18.00 for the beer on the day of the

accident, as opposed to her usual payment of $23.60 for the same order.

       Progressive nevertheless contends that the District Court’s ultimate finding that

Edmunds was not using his personal vehicle for business purposes was clearly erroneous



  3
   Before trial, the parties engaged in an arbitration of Progressive’s declaratory
judgment claim. Edmunds demanded a trial de novo to appeal the arbitration award, and
the parties stipulated to the admission of the arbitration testimony at trial.

                                             6
because, inter alia, Bantum was an employee of the beer distributorship and, in Edmunds’

statements to Progressive, he conceded that he was making deliveries to houses. We are

unpersuaded. Regarding Bantum’s employment, the District Court’s finding that Bantum

performed odd jobs for the distributorship and was paid under the table is supported by

the trial testimony of both Bantum and Edmunds. As to Edmunds’ statements that he was

making deliveries to houses at the time of the accident, the District Court correctly noted

that those statements do not mention whether the deliveries were made for a fee.

       Although Progressive’s interpretation of the facts may have some support in the

record, that alone does not render clearly erroneous the District Court’s finding regarding

the use of Edmunds’ personal vehicle on the day of the accident. The record in a case

may often support different interpretations of events, yet (as stated above) we may only

overturn the District Court’s finding if we have a “definite and firm conviction that a

mistake has been committed.” Here, because the District Court’s factual finding that

Edmunds was not using his personal vehicle for business purposes is supported by the

trial and arbitration testimony, we are not left with such a conviction. Accordingly, we

will uphold the District Court’s finding of fact.

       B.     District Court’s Determination that the Business Use Exclusion Does
              Not Preclude Coverage

       Our review of the District Court’s application of the law to the facts of this case is

plenary. See Carlisle Area Sch. v. Scott P., 

, 526 (3d Cir. 1995). Under




                                              7
Pennsylvania law 4 , the determination of whether the business use exclusion operates to

preclude coverage under a personal vehicle insurance policy depends on the facts of the

particular case. Aetna Cas. & Surety Co. v. Davis, 

, 278-79 (Pa. Super. Ct.

1992). In the context of business use exclusions that prohibit the use of personal vehicles

to carry passengers for hire, it is “well settled that an occasional or incidental use of the

insured vehicle to transport passengers” will not trigger the application of the exclusion.

In this case, Bantum testified that he had never seen Edmunds use his Chevy

Blazer to deliver beer prior to the day of the accident, and it is undisputed that the

distributorship had another vehicle, insured under a commercial policy, that was regularly

used for deliveries. Edmunds’ use of his personal vehicle to drop off beer to Jones

appears to have been incidental, rather than a regular occurrence, such that the application

of the business use exclusion in his policy would not be triggered.5

       Progressive emphasizes that Edmunds was paid for the beer he delivered and


  4
  The parties agree that Pennsylvania law applies to this diversity action because
Edmunds’ policy was issued in Pennsylvania and the accident occurred in Pennsylvania.
  5
   Progressive’s reliance on Ratush v. Nationwide Mut. Ins. Co., 

(Pa.
Super. Ct. 1992), and Rykill v. Franklin Fire Ins. Co., 

(1922), in
support of its argument that the business use exclusion applies here is misplaced. In both
Ratush and Rykill the vehicles in question were regularly used for business purposes.
See 

(holding that business use exclusion precluded coverage
when insured was operating a taxicab whose purpose was to carry passengers for hire
even though, at the time of the accident, insured did not have a passenger); Rykill, 80 Pa.
Super. at 493-95 (holding that business use exclusion applied when the car’s use for the
prohibited purpose of carrying passengers for hire was habitual rather than exceptional).
As we discussed, there is no support in our case for finding that Edmunds’ use of his
personal vehicle to deliver beer was habitual.

                                               8
argues that even if that payment merely covered Edmunds’ costs, it still amounted to

compensation for delivering the beer to Jones. The mere fact that some consideration was

paid, however, is not dispositive. In determining whether a business use exclusion

applies, courts take into account not just the “bare transaction but all its surrounding

circumstances.” 

The following factors, among others, are relevant to this

determination: “[1] the status and relations of the parties to one another, [2] the existence

or lack of a common interest, [3] pleasure or benefit in the making of the journey, and [4]

the relation of the amount of money to the actual costs of carrying.” 

omitted).

       Edmunds was using his personal vehicle to carry supplies for a family event. He

had known Jones for many years and agreed to deliver beer to her as a personal favor.

Bantum accompanied Edmunds in order to help him unload beer, soda, and ice for the

barbecue. Although Jones paid Edmunds for the beer he dropped off, nothing about the

transaction indicates that the beer delivery to Jones in Edmunds’ personal vehicle was

anything other than an isolated incident in which Edmunds performed a favor for a friend

and for which he received no compensation beyond the wholesale cost of the beer. Thus,

the District Court was correct that, under the factors articulated in Davis, the business use

exclusion in Edmunds’ policy does not apply. 

(holding that business

use exclusion did not apply to preclude coverage of an insured after a car accident when

the insured had been transporting a refrigerator in his personal vehicle as a favor to a



                                              9
friend, had no expectation of compensation except being reimbursed for the cost of gas,

and it was an isolated incident.).

                                     III. Conclusion

       As the District Court’s decision appears correct on each of Progressive’s two

arguments, we affirm.




                                            10
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