                           In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 02-2309
VANLINER INSURANCE COMPANY and
SECURITY STORAGE COMPANY INCORPORATED,
                                           Plaintiffs-Appellees,
                               v.

ADELL SAMPAT, Individually and as Administratix of
the Estate of RAMDEO SAMPAT, Deceased,
                                         Defendant-Appellant.
                        ____________
           Appeal from the United States District Court
     for the Northern District of Indiana, Hammond Division.
          No. 2:00 CV 277 JM—James T. Moody, Judge.
                        ____________
 ARGUED NOVEMBER 5, 2002—DECIDED FEBRUARY 25, 2003
                   ____________


  Before FLAUM, Chief Judge, and CUDAHY and COFFEY,
Circuit Judges.
  CUDAHY, Circuit Judge. On July 7, 1999, while traveling
on Interstate 80 through Northern Indiana, Ramdeo
Sampat was killed in a truck accident. Subsequently,
Security Storage Company (Security Storage) and Van-
liner Insurance Company (Vanliner Insurance) sued Adell
Sampat, Ramdeo’s widow, for indemnification on all claims
arising from the accident. Security Storage and Vanliner
Insurance won on summary judgment, and Adell appeals.
2                                              No. 02-2309

Finding the district court’s interpretation of the contracts
at issue correct, we affirm.


                             I.
  Ramdeo Sampat was a truck driver living in New York
State. In 1995, Ramdeo and Security Storage entered into
a Contractor Service Operating Agreement (the Contrac-
tor Agreement) under which Ramdeo provided transporta-
tion for trailers owned by Security Storage. Ramdeo
was operating under the Contractor Agreement on July 7,
1999, when, hauling a Security Storage trailer west on I-80
through Indiana, his 1998 Kenworth Conventional Trac-
tor swerved and collided with two other tractor-trailers,
sparking a fire that completely burned Ramdeo’s and one
of the other vehicles. Two lives, including Ramdeo’s, were
lost.
  There were three people in Ramdeo’s tractor that after-
noon: Ramdeo, Jesse Taylor, Jr. and Madalynne Reynolds.
Because Ramdeo and Reynolds perished, the only ac-
count we have of what happened on the job that day
comes from Taylor, who was driving the tractor at the
time of the accident. According to Taylor’s affidavit, he
was hired by Ramdeo about two days before the accident
under a verbal agreement. Taylor in turn brought in
Reynolds as an assistant to be paid out of his wages. The
Complaint in this suit states that the two of them were
brought in as “lumpers” to assist in the loading and the
unloading of the trailer. According to Taylor, Ramdeo
suddenly became ill on the fatal day and began operating
the vehicle erratically, eventually asking Taylor to take
over the driving. While Taylor was behind the wheel,
Ramdeo suddenly leaned over, obscuring Taylor’s view
and causing Taylor to swerve into the two tractors parked
at the side of the road.
No. 02-2309                                                    3

  The damage has already been done, and now remains
the question of liability. Security Storage held an insur-
ance policy with Vanliner Insurance, under which certain
“autos” belonging to Security Storage were covered. The
parties agree that the trailer involved in this accident
was such a “covered auto” and that the policy provided
for liability coverage for anyone using the trailer with
Security Storage’s permission. Thus, if Ramdeo was using
the trailer with permission, Vanliner Insurance may be
obligated to pay on any claims against Ramdeo or Security
Storage resulting from the accident. On the other hand, the
Contractor Agreement provided that Ramdeo, as an inde-
pendent contractor, would “indemnify and hold [Security
Storage] harmless from and against all claims . . . arising
directly or indirectly from [Ramdeo’s] operations.” Thus,
under the Contractor Agreement, it would appear that
Ramdeo, or his estate, is liable for any claims against
himself or Security Storage. It is the relationship between
the insurance policy and the Contractor Agreement that
is at issue in this lawsuit.
  Vanliner Insurance and Security Storage sued Adell
Sampat in the Northern District of Indiana1 for declara-
tory relief, arguing that they should be indemnified by
Adell and Ramdeo’s estate for any claims asserted against
them. In her defense, Adell invoked the anti-subrogation
rule. Under this rule, which is the law in Indiana, an
insurance company cannot sue its own insureds for the
risk it agreed to insure. Thus, despite the indemnifica-


1
  Jurisdiction for this state-law insurance claim is based on
diversity of citizenship. 28 U.S.C. § 1332. Vanliner Insurance is
an Arizona corporation with its principal place of business in
Missouri, while Security Storage is a North Carolina corporation
with its principal place of business in North Carolina. Adell
Sampat is domiciled in New York, as is the estate of Ramdeo
Sampat. The amount in controversy exceeds $75,000.
4                                              No. 02-2309

tion clause of the Contractor Agreement, if Ramdeo was
insured under Security Storage’s policy with Vanliner
Insurance (for using a “covered auto” with permission),
actual indemnification by the Sampats would be barred.
   The district court ruled that Ramdeo was not insured
under Security Storage’s policy. To be covered under the
policy, a person must have been using the “covered auto”
with Security Storage’s permission. Security Storage
successfully argued that there was no permission here
because Ramdeo had handed the operation of the trac-
tor over to Taylor, who did not have a valid commercial
driver’s license. While the Contractor Agreement al-
lowed Ramdeo to hire others to assist him, it expressly
required that “any driver furnished by [Ramdeo] . . . be
properly licensed to operate” the equipment. The district
court reasoned that, while Indiana follows the so-called
“liberal rule” on permissive use, the express restriction in
the Contractor Agreement that Ramdeo not use unli-
censed drivers revoked Security Storage’s permission and
precluded coverage of Ramdeo under its insurance policy.
  Adell Sampat appeals on two grounds. First, she ar-
gues that summary judgment was improper because
there was a genuine issue of material fact with respect to
whether Ramdeo or Taylor were employees of Security
Storage or independent contractors. Second, she argues
that, under the “liberal rule” on permissive use, permis-
sion is extended to delegated drivers even if they are
unlicensed.


                            II.
  Declaratory judgments are reviewed de novo. NUCOR
Corp. v. Aceros y Maquilas de Occidente, S.A. de C.V., 28
F.3d 572, 578 (7th Cir. 1994). The parties, after applying
Indiana choice-of-law rules, appear to agree that Indiana
law applies.
No. 02-2309                                                5

                             A.
  Adell Sampat argues that Ramdeo and Taylor were
employees and not independent contractors of Security
Storage, and that this is a genuine issue of material fact
which makes summary judgment improper. We do not
reach the question of Indiana law as to Ramdeo’s and
Taylor’s status because, as the plaintiffs point out, Adell
fails to demonstrate how the determination of employee
status would affect either Ramdeo’s coverage under the
insurance policy or his liability under the Contractor
Agreement. If the dispute is irrelevant to the issues of
coverage and indemnification, there was and is no need to
resolve it. The defendant has made no argument for
the materiality of this question, and has as much as
conceded that, regardless of the drivers’ status, Ramdeo
would have been bound by the terms of the Contractor
Agreement, which is the document providing for indemnifi-
cation. The employee/independent contractor issue, which
is not material, could not properly preclude the district
court from reaching its determination of the contract law
questions, and provides no basis for reversal of the sum-
mary judgment.


                             B.
  Indiana’s anti-subrogation rule prohibits an insurance
company from seeking indemnification from its insureds
for the risk that it has agreed to insure. LeMaster Steel
Erectors, Inc. v. Reliance Ins. Co., 546 N.E.2d 313 (Ind. Ct.
App. 1989); S. Tippecanoe Sch. Bld’g Corp. v. Shambaugh
& Son, Inc., 395 N.E.2d 320 (Ind. Ct. App. 1979). Thus, the
relevant issue is whether Ramdeo was insured under
Security Storage’s policy with Vanliner Insurance. Be-
cause, under the policy, the class of covered persons
includes only those who are using Security Storage’s
trailers with permission, the question becomes whether
6                                              No. 02-2309

Ramdeo had, at the time of the accident, permission to
use the trailer. To determine this, we must consider Indi-
ana’s rule on permissive use.
   Different jurisdictions treat the issue of permissive use
quite differently. See generally C.T. Dreschler, Annotation,
Automobile Liability Insurance: Permission or Consent
to Employee’s Use of Car Within Meaning of Omnibus
Coverage Clause, 5 A.L.R.2d 600 (2000). First, there is the
“strict” or “conversion” rule. Under this rule, for the use
of a car to be “with permission,” the permission, express
or implied, must have been given with respect to the
particular use being made of the car at the time in ques-
tion. The use in question must be within the scope of the
permission given, during the time limits expressed and
within the geographical limits contemplated. At the op-
posite end of the spectrum is the “liberal” rule, under
which the user need only have received permission to
take possession of the vehicle in the first instance. After
that initial grant of permission, any subsequent use
while the user remains in possession is considered to be
with permission, even though that use may be for a pur-
pose not contemplated by the owner when he parted with
possession of the vehicle. This rule is based on the theory
that insurance contracts exist in part for the benefit of
the public and that it is not in the public interest to per-
mit litigation on the details of a permission and use. The
third rule is the “moderate” or “minor deviation” rule.
Under this intermediate rule, a slight deviation from the
scope of the authority or permission granted is not suf-
ficient to exclude coverage, but a material deviation re-
moves the use from the protection of the owner’s implied
permission. The measured geographical distance of the
deviation from the authorized use, the purpose for which
permission was given and other factors are taken into
consideration in determining whether the deviation is
material.
No. 02-2309                                               7

   Indiana follows the “liberal rule” on permissive use.
Warner Trucking, Inc. v. Hall, 686 N.E.2d 102, 106-07 (Ind.
1997) (affirming the rule as announced by Indiana appel-
late courts in cases such as State Farm Mut. Auto. Ins.
Co. v. Gonterman, 637 N.E.2d 811, 813 (Ind. Ct. App. 1994),
and by the Seventh Circuit in Arnold v. State Farm Mut.
Auto. Ins. Co., 260 F.2d 161 (7th Cir. 1958)). For example,
if Security Storage asked one of its contractors to deliver
a trailer from New York to Chicago, as long as there
were no express restrictions, the contractor could presum-
ably travel by way of San Francisco. His possession of
the trailer would presumably be considered to be with
permission and be covered under Security Storage’s in-
surance policy under Indiana law. However, as the defen-
dant acknowledges, even under the liberal rule, permis-
sion is no longer effective if an express restriction on the
permission is violated. Warner Trucking, 686 N.E.2d at
107; Raines v. Auto-Owners Ins. Co., 703 N.E.2d 689, 692
(Ind. Ct. App. 1998). Following the above example, this
limitation would mean that, if Security Storage had ex-
pressly required that the driver take only a direct route
between New York and Chicago with no detours, the
permission would be revoked when the driver strayed
from the course.
  Article 5 of the Contractor Agreement required that
drivers furnished by Ramdeo be properly licensed; Taylor
was not—his license had been suspended. Thus, under
Warner Trucking and the express restriction limitation
to the liberal rule on permissive use, Security Storage’s
permission was voided by Ramdeo’s delegation of the
driving to Taylor, and the insurance coverage was re-
voked. The only argument that Adell provides in response
to this conclusion is that, in a pair of cases, the Supreme
Court of Washington determined Washington’s liberal
rule on permissive use to encompass circumstances
in which the delegated drivers were unlicensed. See Wood
8                                                No. 02-2309

v. Kok, 360 P.2d 576, 579 (Wash. 1961); Odden v. Union
Indemnity Co., 286 P. 59, 61 (Wash. 1930). Adell asks us
to adopt the reasoning of these cases and apply them
here in her favor. While we agree that the Washington
cases serve as reasonable elaborations of the liberal rule
on permissive use, and might be persuasive in some
cases arising in a liberal rule jurisdiction, we do not be-
lieve they are sufficiently on point factually to be help-
ful here. Wood and Odden did not involve a situation
where, as here, a user was expressly prohibited from
lending a car to unlicensed drivers. In those cases, per-
mission was viewed to be effective, despite the fact that
the delegated driver was unlicensed, precisely for the
stated reason that there was no such express restriction
in the original grant of permission. See Odden, 286 P. at
61 (“[The] loan of the automobile . . . was unrestricted as
to . . . use of it and as to [borrower’s] authority in permit-
ting others to use it.”); Wood, 360 P.2d at 578 (noting
that Odden extended permission to the unlicensed driver
“in the absence of any restrictions as to the [automobile’s]
use”).
  The Contractor Agreement here clearly provided that
no unlicensed person should drive the vehicle. Once
Ramdeo turned the driving over to Taylor, Ramdeo’s per-
mission to use Security Storage’s trailer was terminated,
as was any coverage he may have had under Security
Storage’s policy with Vanliner Insurance. See Gonterman,
637 N.E.2d at 814. Since Ramdeo was not an insured,
Indiana’s anti-subrogation rule does not apply, and the
indemnification clause of the Contractor Agreement be-
tween Security Storage and Ramdeo is effective. Ramdeo,
and now Adell, must indemnify Security Storage for any
claims successfully brought against it as a result of
Ramdeo’s trucking operations.
No. 02-2309                                             9

                           III.
  For the foregoing reasons, the judgment of the district
court is AFFIRMED.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit




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