JAYNES, ET AL. v.
BECKER, ET AL.
June 5, 1998
Record No. 971959
CORRIE L. JAYNES, ET AL.
JON D. BECKER, ET AL.
OPINION BY SENIOR JUSTICE RICHARD H. POFF
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
A. Bonwill Shockley, Judge
Present: Carrico, C.J., Compton, Lacy, Hassell, Keenan and
Kinser, JJ., and Poff, Senior Justice.
In their principal assignment of error, the several appellants
contend that "[t]he trial court erred in finding that Ford
[Motor] Credit [Company] is in the business of leasing within the
meaning of Virginia Code Sec. 38.2-2205 and that the
limitation of liability coverage provided therein applies."
The appellants, plaintiffs in this action for declaratory
judgment, include two students injured and the estates of two
students killed in a collision between the vehicle they occupied
and a pickup truck driven by John Brian Haigh. The appellants
 are also plaintiffs in tort actions
seeking damages against Haigh who
was convicted and incarcerated for involuntary manslaughter of
The accident occurred in November 1993 when the Ford pickup
truck operated by Haigh crossed the center line of the road and
collided head-on with the car occupied by the four students.
Haigh had leased that truck on March 11, 1993 for a two-year term
from Beach Ford, Inc. (Beach Ford), a car dealership. By language
and signatures incorporated in the body of the lease document,
Beach Ford assigned "all of Lessors right, title and
interest in and to the Lease and the Vehicle described
therein" to Ford Credit. The Virginia Department of Motor
Vehicles issued an owners certificate of title to Ford
Credit, and Ford Credit paid the property taxes assessed upon the
At the time of the accident, Ford Motor was the primary named
insured under an automobile insurance policy issued by Michigan
Mutual providing a maximum liability coverage of $12 million.
policy endorsement defined "Named Insured" as
"Ford Motor Company, its subsidiary, associated and
affiliated companies, and its owned or controlled companies as
are now or may hereafter be constituted." Ford Credit is a
wholly-owned subsidiary of Ford Motor.
Appellants asked the trial court to declare that "the
[Michigan Mutual] insurance policy affords liability coverage
which would be available to satisfy plaintiffs claims
. . . or to pay any judgments recovered by plaintiffs
against Haigh in the lawsuits". The appellants filed a
motion for summary judgment. The appellees, having filed their
grounds of defense and a cross-motion for summary judgment,
joined with the appellants in a "STATEMENT OF FACTS NOT IN
Based upon that statement, exhibits related to the several
stipulations, other exhibits filed with the cross-motions, and
oral argument by counsel, the trial court issued a letter opinion
sustaining the cross-motions in part and denying them in part. In
a final judgment order entered June 20, 1997, the court ruled:
(1) that "Haigh is an insured under the subject Michigan
Mutual . . . policy . . . as a permissive
user of the vehicle owned by Ford Credit, as provided in Va. Code
Sec.38.2-2204"; (2) that, "because Haigh was a
permissive user, liability coverage under the Policy extends to
claims of the plaintiffs arising from the accident which prompted
this suit for declaratory judgment"; and (3) that "the
Defendants in this case are entitled to the limitation on
liability set forth in Va. Code Sec.38.2-2205 and
. . . the amount of liability coverage under the Policy
applicable to any liability of Haigh arising from the accident
which prompted this suit for declaratory judgment is limited to
$25,000 per person and $50,000 per accident as set forth in, and
subject to the provisions of, Va. Code Sec.38.2-2205 and
Appellants first assignment of error addresses the trial
courts third ruling. They contend that the appellees are
not eligible for the coverage limitation fixed in Code
Sec.46.2-472 because, they say, Ford Credit is not engaged in
the business of leasing vehicles within the intendment of Code
Sec.38.2-2205 but only in the business of financing leases.
In pertinent part, Sec.38.2-2205(A)(1) provides:
Each policy . . . of bodily injury
. . . liability insurance which provides
insurance to a named insured in connection with the
business of . . . leasing . . . motor
vehicles, against liability arising from the
. . . use of any motor vehicle incident thereto
shall contain a provision that the insurance coverage
. . . shall not be applicable to a person other
than the named insured . . . if there is any
other valid and collectible insurance applicable to the
same loss covering the other person under a policy with
limits at least equal to the financial responsibility
requirements specified in Sec.46.2-472. Such
provision shall apply to motor vehicles which are
. . . leased to the other person for a period
of six months or more. . . .
In the language of this statute, Ford Credit is a "named
insured" under Michigan Mutuals policy covering a
vehicle leased to the "other person [Haigh] for a period of
six months or more" and Haigh is the "person other than
the named insured" covered under that policy because there
is no "other valid and collectible insurance . . .
covering the other person under a policy with limits at least
equal to the financial responsibility requirements specified in
The dispositive question, then, is whether Michigan
Mutuals policy provides insurance to a named insured
"in connection with the business of . . .
leasing". The appellants insist that Ford Credits very
name identifies it as an entity engaged in the business of
financing rather than leasing. The trial court ruled that
"Ford Credit did more than just finance the
lease of the subject truck." As explained in its letter
opinion, the courts ruling was based upon the record and
the stipulated facts before it:
Ford Credit provides the blank lease documents for use
by Ford dealerships, approves the leases before the
dealerships enter into them, purchases the vehicles,
takes assignments of the leases, assumes all of the
duties and rights of ownership of the leased vehicles,
and performs administrative duties during the term of the
leases. Under the terms of the . . . leases,
Ford Credit becomes the lessor of the vehicles, not just
a financial backer.
We agree with the trial courts ruling that Michigan
Mutuals policy provides insurance within the intendment of
Code Sec.38.2-2205(A)(1) and 46.2-472.
Yet, appellants maintain that Ford Credit is bound by an
admission stated in its "Annual Report on Form 10-K"
filed in 1993 with the federal Securities and Exchange Commission
that it was in the business of financing. In an alternative
assignment of error, they contend that, if that admission was not
sufficient to "establish conclusively that Ford Credit is in
the business of financing rather than leasing, then the trial
court erred in granting [the appellees] summary judgment
. . . because a material fact is genuinely in
We disagree. Ford Credits acknowledgement that it was
"in the business of financing" is not factually
inconsistent with its contention that it is a "named
insured" in Michigan Mutuals insurance policy issued
"in connection with the business of . . . leasing
. . . motor vehicles". Consequently, we agree with
the trial court that Ford Credit was a lessor of the vehicle and
that "no material facts remain in dispute."
Finding no merit in the appellants assignments of error,
we will affirm the final judgment entered June 20, 1997.
 The appellants are Corrie L.
Jaynes, by her next friend and guardian, David H. Jaynes, David
H. Jaynes, individually, James W. Raney, Administrator of the
Estate of Brian Kent Raney, deceased, John Partilla and Marlise
Partilla, Administrators of the Estate of Jason Scott Partilla,
deceased, and Joseph Allen, individually.
The appellees, defendants in
the declaratory judgment action, are Haigh, Jon D. Becker,
Haighs Committee, Ford Motor Company (Ford Motor), Ford
Motor Credit Company (Ford Credit), and Michigan Mutual Insurance
Company (Michigan Mutual).
 Although the lease agreement
required the lessee to maintain liability coverage on the pickup,
Haighs own insurance policy was cancelled for failure to
pay premiums approximately two months before the accident.