ATTORNEYS FOR APPELLANT            ATTORNEY FOR APPELLEES

Stephen J. Peters                Vincent S. Taylor
Richard P. Winegardner            Bloomington, Indiana
Indianapolis, Indiana

Gerald Allega
Evansville, Indiana

MERIDIAN MUTUAL INSURANCE CO. ,        )
                                                       )
    Appellant (Defendant below                         ),    )  
                                                       )
        v.                                             )  
                                                       )  
AUTO-OWNERS INSURANCE COMPANY,                         )
                                                       )  14A01-9502-CV-41
    Appellee (Plaintiff below                          ).    )   in the Court of Appeals
                                                       )
        and                                            )  14S01-9605-CV-374
                                                       )  in the Supreme Court
BENJAMIN C. MARKHAM,                                   )
Individually and as administrator                      )
of the Estate of Sheila A. Markham,                    )
et.al.,                                                )
                                                       )
    Appellee/Defendants.                               ) 

    This case arose from an automobile accident between a car driven by Sheila Markham and a van owned by Gail Riggins but driven on the day of the accident by Larry Ramsey. The collision killed Markham and Ramsey and injured the eight other passengers in the van, some severely. Auto-Owners Insurance Company, as primary insurer of Riggins' van, initiated this interpleader and declaratory judgment action against Ramsey's insurer, Meridian Mutual Insurance Co., and others, to resolve conflicting claims against its limited liability.

    Meridian's policy provided coverage for liability arising out of Ramsey's permitted use of another's automobile, but excluded from coverage "[b]odily injury or property damage arising out of the . . . use of a vehicle when used to carry persons or property for a fee." (R. at 47 (emphasis excluded).) The exclusionary clause further stated, "This exclusion does not apply to . . . [s]hared-expense car pools . . . ." (Id.) The policy does not define "shared-expense car pool" or what it means to "carry persons or passengers for a fee." Meridian's potential coverage is secondary to the coverage afforded by Riggins' Auto-Owners policy; therefore, Meridian defends against excess liability claims arising from the accident. See Ind. Code Ann. § 27-8-9-7 (West Supp.

1997).

    Meridian denied liability and filed a cross-claim against the named defendants, averring that Ramsey was driving the van to carry persons for a fee. Defendants Yoder, Chestnut, Markham, and Craig filed a cross-claim seeking a declaratory judgment against Meridian, asserting that this incident fell within the "shared- expense car pool" exception.

    On cross-motions for summary judgment, the trial court held against Meridian. A divided panel of the Court of Appeals reversed. Meridian Mutual Ins. v. Auto-Owners Ins., 659 N.E.2d 207 (Ind. Ct. App. 1995). We grant transfer and affirm the decision of the trial court.

use her van, allowing an alternate driver (normally, Larry Ramsey) to deduct $5.00 from that week's $17.00 contribution for each day he drove in her place.

    Riggins had been involved in such an arrangement for many years. She had originally been a passenger, paying the previous owner/driver of the van $15.00 per week "for his expenses and things." (R. at 202.) In 1973 that driver sold Riggins the van and moved to Bloomington. Riggins and the other commuters continued the $15.00 per week arrangement until 1989, when Riggins' purchase of a new van and an increase in gasoline prices prompted an increase to $17.00. Riggins says she used the money for "[g]asoline and tires, and the upkeep of the van, and insurance." (R. at 203.) Although she did not keep any records to determine whether she received enough to cover her expenses, (id.), she did believe that the amount she received was completely spent on expenses related to the commute. She saw no need to report any of the receipts as income on her taxes, take business expense deductions, or even discuss the matter with her accountant. She stated that the group approached the payments as a sharing of the expenses of the trip, and that she was not involved in the arrangement as a business or for profit.

    Although there were some changes in riders over the fifteen- year period, most of the commuters had been riding with Riggins under this arrangement for many years with little fluctuation in

participation. When she began the driving the van, only five or six riders commuted with her.

    Riggins knew she would be working a late shift on February 18, 1992, so she made arrangements with Ramsey to drive the van. While returning from Bloomington that afternoon the van collided with Sheila Markham's car, killing Ramsey and Markham and injuring the van's other eight passengers.See footnote 1 ¹

    When insurance policy language is clear and unambiguous, however, it should be given its plain and ordinary meaning. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind. 1992). Under Indiana law, an insurance policy is unambiguous if reasonable persons cannot honestly differ as to the meaning of the policy language. Eli Lilly & Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985), cert. denied, 479 U.S. 1060 (1987). One way of determining whether reasonable persons might differ is to see if the policy language is

susceptible to more than one interpretation. Id.

    We conclude that the ordinary meaning of the exclusionary clause at issue here is such that the trial court was correct to hold that the driving arrangements in this case constituted a "shared-expense car pool."

Id. at 213. Determining that Riggins' arrangement was not a "shared-expense car pool," the Court of Appeals found that Meridian's "carrying for a fee" exclusion applied to deny coverage for injuries and damage arising out of this accident.

    In assessing the meaning of the term "shared-expense car pool," the Seventh Circuit observed that requiring formal expense accounting and allocation made little sense in light of the informal nature of most car pool arrangements. Id. at 677-78. Instead, the court adduced its own "rough estimates" of Gonzales' costs, compared them to what he received weekly from his passengers, and concluded that his expenses more than outweighed

his revenue. Id. at 678. Buttressing its calculations with passenger statements testifying that $5.00 a day was "fair" and "a good deal," which to the court further proved that the expenses were fairly proportioned, id. at 679, the Seventh Circuit concluded that this arrangement indeed constituted a "shared-expense car pool."

    We agree with the Seventh Circuit's analysis and conclusions regarding "shared-expense" car pooling arrangements.

    First, car pools are predominantly informal arrangements typically based on "ball-park" figures and "reasonable guesses" about the expenses incurred in the daily trip. See Gonzales, 86 F.3d at 678 n.6. Unlike a single check arriving at the table of a group of friends out for lunch, the costs of commuting are not readily discernable or easily divisible. The expense per person can fluctuate daily with changes in the price of fuel, the number of riders on a given day, or the route taken, and it could be further complicated if the driver picks up each passenger at his or her home instead of at a central location.

    Moreover, true expensing would require accounting for vehicle depreciation, and amortization and allocation of fixed costs like repairs and tune-ups. Such complicated accounting operations are made even more difficult if the driver must further distinguish between personal and car pool use of the vehicle. How often must

the driver recalculate the amount she requests from each passenger: once a year? once a month? every time the price of gas changes? each time a different number of people ride? The Court of Appeals recognized the accounting morass that would result from true expensing, but concluded that without it "the owner is merely carrying passengers for a fee." Meridian Mutual, 659 N.E.2d at 213.See footnote 3 ³

    Our society encourages ride-sharing as a good way of decreasing engine emissions, alleviating congested roadways and highway wear and tear, and decreasing fuel consumption and expense. See, e.g., Gonzales, 86 F.3d at 679. Requiring car pool drivers to maintain standard accounting and expense allocation in order to qualify for protection under their insurance policies would presumably prompt some people to abandon car pooling altogether, a result disadvantageous to commuters as individuals and society as a whole.

    Second, evidence of detailed accounting does not necessarily indicate "sharing of expenses." A high degree of expense tracking is actually more suggestive of a commercial enterprise than of a

"proportional" sharing of expenses in a car pooling situation. The Seventh Circuit stated:
    It seems inapposite that the policy exception for car pools, an essentially informal arrangement, requires such a level of formality in the calculation of expenses. If Gonzales had indeed operated his private vehicle as a business, keeping precise track of daily expenses, reflecting it in his tax returns and possibly even reporting it as a business endeavor with its benefits, and accounting for the fluctuating price of fuel, that seems to us the type of formal arrangement that was not intended by the policy exception for car pools. To the contrary, a precise formulation of expenses reflects a commercial endeavor and not a car pool arrangement initiated for convenience, efficiency, cost reduction and camaraderie.

Id. at 677.     

    Third, we do not see how the level of underwriting risk incurred by the carrier would change if Riggins had performed detailed expense calculations and allocations. How is the risk of accident increased, such that Meridian would not wish to insure Riggins' car-pooling arrangement, simply because she failed to link the amount she asked the others to contribute with her actual expenses? As the Seventh Circuit noted:

    It makes little sense to focus so intently on the precise calculation of expenses. . . . The risk incurred by Gonzales in traveling with his co-employees remains the same whether the calculations of gas and mileage are made to the penny or whether each passenger chips in five bucks for the ride to and from work; either way a group of co-employees are sharing part of the expenses and enjoying the convenience, fun, and camaraderie of traveling together to and from their place of employment.

Gonzales, 86 F.3d at 678.

    The inquiry should be whether a reasonable person, after reviewing the totality of the circumstances surrounding the transportation arrangement, would conclude that the commuting participants were involved in a car poolSee footnote 4 ⁴ in which the non-driving participants contributed money to share the commuting burdens born by the driving participant.

    The correlation of expenses to the amount contributed by each passenger may be one item to consider in reviewing this issue, but there are many other questions a reasonable person might ask in

determining whether a commuting arrangement is a shared-expense car pool. One might be: "What appears to be the driver's primary motivation to participate (i.e. is the driver doing this to make money)?" Objective evidence which might help answer this question would be: whether the driver merely has an operator's license, or a more specialized form of driver's license;See footnote 5 ⁵ whether the driver declares the money she receives from her passengers as income or lists her expenses as business deductions on her tax returns; whether the vehicle is owned by the driver or by a commercial entity; whether the driver holds herself out as providing transportation to the general public or a large group of people, or only to a small group that generally does not vary in participation; whether there is significant formality in the relationship between the driver and passengers, such as a written agreement; whether the driver has a purpose besides the travel itself for going from the point of departure to the point of arrival; and whether the driver uses the vehicle at other times for her own personal use. Evidence on these and other points will tend to establish whether the arrangement is a joint venture of shared burden or an enterprise existing for the profit of the driver.

    In the present case, the evidence shows that Riggins did not participate in the commuting arrangement for a commercial purpose. She positively testified that she was not involved in this

arrangement to make a profit. She did not declare the amount she received as income or list her expenses as business deductions on her taxes.See footnote 6 ⁶ She stated that she believed the money she received was used entirely to cover the cost of the commute. There was no evidence that she had any form of specialized driver's license, nor any indication that the arrangement's level of formality rose above the weekly payment of $17.00 to Riggins on either Friday or Monday, (i.e., there were no signed contracts, no tickets, no invoices or bills distributed or mailed to the passengers, etc). The van involved in the accident was titled in her name, and not that of a corporation or transportation company. While the arrangement had gone on for many years, there was relatively low fluctuation in participation. Moreover, the opportunity to ride was extended only to Thomson co-workers living in and around Odon, all of whom the driver knew personally. Finally, because she herself worked at Thomson, she was not making a trip that she otherwise would not have made but for the transportation arrangement with the other passengers.

    The only evidence that could indicate that Riggins had a commercial motivation is her statement that she might have purchased her van with the transportation of her co-workers in mind:
    Q.    [W]hat was your reason for buying the van [in 1989]?

(R. at 194). One could legitimately purchase a van in anticipation of transporting people as part of a car pool, however, instead of in anticipation of transporting people as part of a commuter service. In light of the other evidence from the record, we interpret her statement as indicating that she purchased the van in anticipation of continuing the group's shared-expense car pool.

    Another legitimate question one might ask to determine the existence of a shared-expense car pool is how the passengers view the arrangement (i.e., do they think they are "paying for" their ride, rather than sharing the expenses of one)? For example, in Gonzales "[t]he deposition testimony clearly reflect[ed] that the employees considered themselves car pooling." Gonzales, 86 F.3d at 674. Although no passenger depositions appear in this record, Riggins said she believed they viewed the arrangement as a collective effort to share expenses, and not as payment for transportation services. Notwithstanding the self-serving nature of this declaration, it is the only evidence about the passengers' viewpoint.

    Of course, whether the amount of money contributed by the passengers reasonably reflects the cost of the trip is highly

pertinent. Meridian argues that the money Riggins received from passengers greatly exceeded the cost of the trip, implying that the parties really must not have intended to conduct a shared expense car pool. We disagree. Meridian bases its argument on federal "per mile" business expense deduction, which, when used to calculate Riggins' expenses, indicates that the 1992 commuting expenses would have been about $3500 less than what she would have received from her co-workers. We believe the rough estimates performed by the Seventh Circuit in GonzalesSee footnote 7 ⁷ are more appropriate, see Gonzales, 86 F.3d at 678 n.6, reflecting both the fact that calculating expenses in a car pool is not an exact science nor is it intended to be, and that certain rates and figures from one area of the law, like federal income tax, are not always appropriately applied in other areas of the law, such as insurance policy interpretation.

    Of the $187 she received each week, only $79 remained after subtracting fuel and depreciation expenses alone. Further subtractions for upkeep (tires, brakes, oil, regular maintenance, repairs, etc.) cause the $79 surplus to diminish even further.

    Besides upkeep expenses, the remaining $79 must also cover other costs born by Riggins which the other commuters did not bear. When a person makes an eighty-mile-per-day commute consisting of city streets, county roads and state highways, she gives up 90-120

minutes each day (not counting traffic jams and road construction) that she could have spent doing something other than driving.See footnote 8 ⁸ This "opportunity cost" is part of the cost of commuting. Just as the passengers help bear the more obvious costs of the commute by contributing money, they might also reasonably help bear the opportunity costs of driving that the driver bears alone but for the monetary contributions of the others.See footnote 9 ⁹

    Another cost born exclusively by the driving car pool member is the cleaning of the vehicle. Because of the daily travel, its exterior will get dirtier faster than if it remained parked and relatively unused, like the passengers' cars. Moreover, the interior is more prone to coffee stains, dirt from shoes, smudged windows, wrappers on the floor, etc., than the passengers' unused cars. Thus, the burden on the passengers to clean their vehicles regularly is lessened by the car pooling arrangement, while the driver's cleaning responsibilities remain, and may even increase, because of it.

    We conclude that a reasonable person, after viewing the totality of the circumstances, would find Riggins, Ramsey, and the

other commuters to have been involved in a shared-expense car pool. Our review has considered several questions reasonable people might ask in making such a determination. While these questions are helpful and probative, they do not herald a new "x-part test" for determining the existence of a "shared-expense car pool." The paramount consideration is whether a reasonable person, after reviewing the totality of the circumstances surrounding the transportation arrangement, would conclude that the commuting participants were involved in a car pool in which the non-driving participants contributed money to share the commuting burdens born by the driving participant. Any evidence reasonably probative to that issue is relevant.

Dickson, and Selby, JJ., concur.
Boehm, J., dissents with separate opinion in which Sullivan, J., joins.

                            )
MERIDIAN MUTUAL INSURANCE         )
COMPANY,                        )
    Appellant (Defendant below),        )    Supreme Court
                            )    Cause No. 14S01-9605-CV-374
    v.                        )    
                            )    Court of Appeals
AUTO-OWNERS INSURANCE COMPANY,     )    Cause No. 14A01-9502-CV-41     Appellee (Plaintiff below),            )
                            )
    and                        )
BENJAMIN C. MARKHAM,            )
Individually and as administrator of the         )
Estate of Sheila A. Markham, et. al.,        )
    Appellee/Defendant.            )
                            )

    We are interpreting an insurance policy that both the insured and the insurer agree was intended to provide coverage for ordinary use of an automobile, not use as a commercial carrier. The specific provisions involved are the exclusion for “carrying persons or property for a fee” and the recognized exception to that exclusion of a “shared-expense car pool.”
    I agree that it is not necessary for a car pool to maintain anything approaching detailed accounting in order to meet the standard for a “shared-expense car pool,” and that informal arrangements to share commuting transportation are to be encouraged. For that reason I would indulge a presumption that informal arrangements among people who commute to a common destination are within the car pool exception to the policy exclusion. However, the factors identified by the majority seem to me to go too far in permitting and even encouraging an enterprise in the underground economy. In particular, the fact that the operator of a bootleg commercial carrier chooses neither to pay taxes nor obtain a commercial driver's license does not seem relevant to the car pool inquiry to me. Identifying these as factors favoring insurance coverage at the lower cost afforded to everyday drivers instead of the higher premium charged commercial carriers only encourages skirting the tax and motor vehicle laws.
    I also think that “expense” means only depreciation and out of pocket costs, not compensation for driving that the driver would do in any event to get herself to work. The “opportunity cost” as described by the majority would be incurred by Riggins regardless of

whether eleven others or no one rode with her. Slip op. at 17. The fact that Riggins was paid to drive while others slept or read would be called compensation for services by the tax authorities and most ordinary citizens. Reduction of the passenger charge by $5.00 per day for any of the passengers who drive confirms that this arrangement included a compensation component to Riggins as the usual driver. As such, this looks to me like any other service business that also furnishes the equipment needed to provide the service. As the majority notes, the Internal Revenue Service mileage allowances may or may not be controlling in other contexts, but they give us some idea of whether this was a profitable enterprise or not. And the idea they give me is that it was indeed profitable in the range of $2,000 to $4,000 per year.See footnote 10 ¹⁰
    It seems to me the test of a shared-expense car pool where the passengers furnish something other than their own driving and vehicles from time to time (in this case $17.00 in cash per week) should be no more and no less than 1) do the participants think they are sharing expenses or something more and 2) is the consideration within a reasonable ballpark estimate of the actual costs of providing the transport including depreciation. Here the factors identified, in particular the fact that the arrangement contemplates compensation to Riggins as the driver, overcome the presumption that an informal arrangement is a “shared-expense car pool.” It seems to me that the Court of Appeals for the Seventh Circuit correctly decided Gen. Accident Ins. Co. of Am. v. Gonzales, 86 F.3d 673 (7th Cir. 1996) on the facts of that case, and in doing so pointed to several factors

that distinguish it from this case. These include 1) Gonzales offered “rough estimations” and “passenger testimony” that the five dollars per day from passengers at best covered only a portion of his expenses, 2) if Gonzales did not go to work the passengers took the bus or drove themselves in a vehicle other than the one owned by Gonzales, and 3) four to six people were transported by Gonzales in a vehicle that he used for his personal transportation as opposed to the eleven passengers transported by Riggins in a vehicle purchased specifically to engage in this commuter service. Id. at 679.

    SULLIVAN, J. concurs.

Converted by Andrew Scriven