Allstate Insurance v. Thrifty Rent-a-car

• Decision Date: 15 March 2001
• Docket Number: No. 99-1882,A-C,99-1882
• Citation: 249 F.3d 450
• Parties: (6th Cir. 2001) Allstate Insurance Company; American Express, Property and Casualty Companies, Plaintiffs-Appellees, v. Thrifty Rent-ar Systems, Inc., an Oklahoma Corporation, Defendant-Appellant, Asad Abbas; Syed Risvi, Defendants-Appellees, Doris Loveland, Appellee. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 450

249 F.3d 450 (6th Cir. 2001)

Allstate Insurance Company; American Express, Property and Casualty Companies, Plaintiffs-Appellees, v. Thrifty Rent-A-Car Systems, Inc., an Oklahoma Corporation, Defendant-Appellant, Asad Abbas; Syed Risvi, Defendants-Appellees, Doris Loveland, Appellee.

No. 99-1882

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: March 15, 2001

Decided and Filed: May 3, 2001

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 97-75917, John Corbett O'Meara, District Judge. [Copyrighted Material Omitted] Daniel S. Saylor, Garan, Lucow, Miller, Seward, Cooper & Becker, Detroit, MI, James L. Borin, Garan, Lucow, Miller, Seward, Cooper, & Becker, Troy, MI, for Allstate Ins. Co.

Richard B. Poling, Jr., POLING, MCGAW & POLING, Troy, Michigan, for Appellees.

Raymond W. Morganti, Southfield, Michigan, for Appellant.

Thomas J. Tartaglia, Cicero, IL, for Asad Abbas.

Jeffrey C. Gerish, Plunkett & Cooney, Detroit, MI, for Doris Loveland.

Harry D. Hirsh, Southfield, MI, for Syed Risvi.

Before: COLE and GILMAN, Circuit Judges; ALDRICH, District Judge^*.

OPINION

Defendant-Appellant Thrifty Rent-A-Car Systems, Inc. ("Thrifty") appeals the district court's grant of summary judgment to Plaintiff-Appellee American Express Property and Casualty Companies ("AmEx") in this declaratory judgment action brought to determine which insurance company or companies should pay for injuries sustained in an accident involving a minivan rented from Thrifty. For the reasons that follow, we REVERSE the judgment of the district court and REMAND the case for entry of summary judgment in favor of Thrifty.

I. BACKGROUND

On August 8, 1997, Defendant-Appellee Syed Risvi entered into a contract to rent a 1997 Plymouth Voyager from Thrifty at its Southfield, Michigan, location. Defendant-Appellee Asad Abbas was named as an additional driver on the rental agreement. Risvi and Abbas used the minivan to take a number of people to a wedding in Texas. The next day at approximately 1:00 a.m., Abbas was driving westbound on I-70 in Cumberland County, Illinois, when he lost control of the vehicle, crossed the center median, and struck a 1992 Ford Explorer traveling eastbound. Syed Jaffery, Sr., a passenger in the minivan, and Ardel Cunningham, the driver of the Ford Explorer, were killed in the crash; others sustained serious, but not fatal, injuries.

At the time of the accident, Plaintiff-Appellant Allstate Insurance Company ("Allstate") insured Risvi's personal vehicles, and AmEx insured Abbas's personal vehicles. Abbas's insurance policy with AmEx specifically stated that it provided excess coverage for vehicles not owned by Abbas. The policy read: "Insurance afforded under this part for a vehicle you do not own, is excess over any other collectible auto liability insurance."

Allstate and AmEx filed the instant declaratory judgment action in the United States District Court for the Eastern District of Michigan on December 2, 1997, seeking, inter alia: (1) a declaration that Thrifty, as owner of the minivan, owes primary insurance coverage to Abbas; (2) a declaration that the insurance coverage Thrifty owes to Abbas is unlimited in amount; and, (3) a declaration that Thrifty has a duty to defend Abbas with respect to personal injury claims arising out of the accident. Jurisdiction was based on complete diversity of citizenship. The parties filed cross-motions for summary judgment and presented oral arguments to the district court on April 30, 1999. In a written opinion and order issued May 6, 1999, the district court granted Allstate's and AmEx's motions, but denied Thrifty's motion¹. Thrifty moved for re-hearing on May 17, 1999, which motion the district court denied in an order issued June 29, 1999.

On appeal, Thrifty argues that: (1) the district court erred in ruling that Thrifty had a duty to provide unlimited insurance coverage to Abbas under Michigan law; and (2) AmEx lacked standing to seek the declaratory relief granted by the district court in this case.

II. DISCUSSION

We review de novo the district court's grant of summary judgment. See Prestige Cas. Co. v. Mich. Mut. Ins. Co., 99 F.3d 1340, 1348 (6th Cir. 1996). Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In diversity cases such as this, we apply state law in accordance with the controlling decisions of the state supreme court². See Prestige Cas. Co., 99 F.3d at 1348 (applying Michigan law). If the state supreme court has not yet addressed the issue presented, we must predict how the court would rule by looking to all the available data. See id. "Relevant data include decisions of the state appellate courts, and those decisions should not be disregarded unless we are presented with persuasive data that the Michigan Supreme Court would decide otherwise."Kingsley Assoc. v. Moll PlastiCrafters, Inc., 65 F.3d 498, 507 (6th Cir. 1995).

A. Duty to Provide Insurance Coverage vs. Vicarious Tort Liability

Thrifty first contends that the district court confused the issue of Thrifty's duty to provide insurance coverage under Michigan's no-fault insurance statute with the issue of Thrifty's vicarious tort liability under Michigan's owner's liability statute.

Michigan's no-fault insurance statute requires that motor vehicle owners maintain insurance coverage for liability arising out of the use of their vehicles. See Mich. Comp. Laws Ann. §500.3101(1) (West 2000). This requirement extends to car rental companies. See State Farm Mut. Auto. Ins. Co. v. Enterprise Leasing Co., 549 N.W.2d 345, 349 (Mich. 1996) (holding that car rental companies must provide primary insurance coverage for liability arising out of the use of their vehicles, pursuant to M.C.L.A. §500.3101). However, car rental companies are only required to provide insurance coverage equal to the statutory minimum coverage amounts prescribed by M.C.L.A. §§257.520 and 500.3009³. See Ryder Rental Truck, Inc. v. Auto-Owners Ins. Co., Inc., 597 N.W.2d 560, 561 (Mich. App. 1999) ("As long as the owner provides the primary insurance coverage with a policy limit equal to or above the minimum amounts required by M.C.L.A. §500.3009(1), . . . there is no violation of law...."). These sections provide for minimum statutory coverage limits of $20,000 for bodily injury to or death of one person in any one accident, and $40,000 for bodily injury to or death of two or more persons in any one accident. See M.C.L.A. §§257.520(b)(2); 500.3009(1).

A car rental company's liability in tort for loss caused by a lessee-driver is set out in Michigan's owner's liability statute, M.C.L.A. §257.401. The Michigan legislature enacted §257.401 in 1949 to create a cause of action, unknown at common law, against owners of motor vehicles arising from the negligent operation of those vehicles by authorized users. See Travelers Ins. v. U-Haul of Mich., 597 N.W.2d 235, 237 (Mich. App. 1999). The purpose of the statute is to place the risk of damage or injury on the vehicle owner, who has ultimate control over the vehicle. See id. at 240. In 1995, the legislature amended §257.401 to limit car rental companies' liability under the statute. Subsection (3) of the amended statute provides: (3) Notwithstanding subsection (1), a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle under a lease providing for the use of the motor vehicle by the lessee for a period of 30 days or less is liable for an injury caused by the negligent operation of the leased motor vehicle only if the injury occurred while the leased motor vehicle was being operated by an authorized driver under the lease agreement or by the lessee's spouse, father, mother, brother, sister, son, daughter, or other immediate family member. Unless the lessor, or his or her agent, was negligent in the leasing of the motor vehicle, the lessor's liability under this subsection is limited to $20,000.00 because of bodily injury to or death of 1 person in any 1 accident and $40,000.00 because of bodily injury to or death of 2 or more persons in any 1 accident.

M.C.L.A. §257.401(3). Subsection (4) of the statute requires that car rental companies notify lessees of these limits, and inform lessees that they may be liable for amounts in excess of these limits. See M.C.L.A. §257.401(4)⁴.

The district court first found that Thrifty had a duty to provide primary insurance coverage for its rental vehicles under Michigan's no-fault insurance statute, M.C.L.A. §500.3101(1). The district court then proceeded to analyze Thrifty's liability under Michigan's owner's liability statute, M.C.L.A. §257.401. The court found that Thrifty had been "negligent in leasing" the minivan to Risvi and Abbas under M.C.L.A. §257.401(3) because Thrifty had failed to notify Risvi and Abbas that its liability was limited to $20,000 and/or $40,000, as required under M.C.L.A. §257.401(4). Accordingly, the district court found that Thrifty was not entitled to limit its liability under M.C.L.A. §257.401(3), and consequently granted AmEx's motion for summary judgment.

We find that the district court erroneously conflated Thrifty's duty to provide insurance coverage under Michigan's no-fault insurance statute with Thrifty's vicarious tort liability under Michigan's owner's liability statute. The district court was correct in finding that, as the owner of the minivan, Thrifty had a duty to provide primary insurance coverage for liability arising out of the use of the minivan. See State Farm Auto Ins. Co., 549 N.W.2d at 349. However, Thrifty was only required to provide such primary insurance coverage up to the $20,000/$40,000 statutory minimum coverage limits established in M.C.L.A. §§257.520 and 500.3009. See Ryder...