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Insurer Cleared Despite Incidental Sonic Work

ST. LOUIS (CN) - An insurer need not cover a Sonic franchisee whose employee had inadvertently run a work-related errand before striking a pedestrian with his car, the 8th Circuit ruled.

Tyler Roush hit Lloyd Miller with his car on Aug. 3, 2009. At the time, Roush was living with his parents whose business controlled 70 percent of Brash Tygr LLC, the owner and operator of a Sonic Drive-In in Carrollton, Mo.

Roush held a 5 percent interest in Brash Tygr and was a managing member, but had not worked at the business's drive-in restaurant for 19 years.

On the day of the accident, Roush's mother had asked him to go to the bank and post office for her. While Roush was at the first stop, a bank employee handed Roush the bank-deposit bags that Sonic used to make cash deposits.

Roush was headed toward the post office when he hit Miller in the crosswalk.

When Miller and his wife, Nancy, sued Sonic and Brash Tygr for damages, Hudson Specialty Insurance Co. accepted defense of Brash Tygr but reserved its right to contest its duty to indemnify any liability to the Millers.

Hudson claimed that Roush was not acting as anyone's agent at the time of the accident and moved for summary judgment.

When initial efforts to mediate the lawsuit failed, Hudson filed a declaratory judgment action.

Sonic entered into a settlement with the Millers a week later. The deal awarded $5.3 million to the Millers, and included an admission from Roush that he was on Sonic business at the time of the accident.

A federal judge in Kansas City, Mo., denied Hudson summary judgment, finding that Roush was using his car on Brash Tygr business at the time of the accident and that Hudson's policy covered damages.

On appeal, Hudson argued Roush was using his personal car and that no coverage should exist.

A three-judge panel for the 8th Circuit sided with the insurer Tuesday, finding "no evidence that some Sonic employee or Brash Tygr agent would have had to make a special trip to the bank for deposit bags if Tyler had not brought them to his parents' home."

"On this record, the undisputed facts established that picking up the bags was a matter of convenience, not necessity, for Brash Tygr and the Sonic Drive-In," the 18-page opinion states. "Tyler's accepting the unsolicited bags from a bank employee was a 'casual and incidental' aspect of a purely personal trip that did not give that trip a dual business purpose under Missouri law. Therefore, at the time of the accident, Tyler was not acting 'in the course of [Brash Tygr's] business' as a matter of law, and Hudson is entitled to summary judgment on the coverage issue

that there was no interpretation of the phrase 'in the course of your business' made by the Missouri Supreme Court, leaving the federal court in the position to predict how the state high court would rule."

Though Judge Steven Colloton concurred in full, Judge Kermit Bye partly dissented.

Though Bye agreed on the doctrine that controlled whether Roush was acting on company business, he disagreed with that doctrine's application.

"The majority implicitly relies upon an examination of the necessity of the underlying business practice - the use of bank deposit bags - to conclude a particular trip was unnecessary," Bye wrote. "And the court does so despite the fact that Hudson admitted the customary manner in which Brash Tygr conducted its business was to use bank deposit bags, and to occasionally make trips to the bank to retrieve the bags."

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