Bukulmez v. Hertz Corp., 83CA0666

• Decision Date: 25 April 1985
• Docket Number: No. 83CA0666,83CA0666
• Citation: 710 P.2d 1117
• Parties: Shayla BUKULMEZ, Plaintiff-Appellant and Cross-Appellee, v. HERTZ CORPORATION, Defendant-Appellee and Cross-Appellant, and Blue Cross of Western New York and Blue Shield of Western New York, Intervenors-Appellees and Cross-Appellees. . III
• Court: Colorado Court of Appeals

Page 1117

710 P.2d 1117

Shayla BUKULMEZ, Plaintiff-Appellant and Cross-Appellee, v. HERTZ CORPORATION, Defendant-Appellee and Cross-Appellant, and Blue Cross of Western New York and Blue Shield of Western

New York, Intervenors-Appellees and Cross-Appellees.

No. 83CA0666.

Colorado Court of Appeals,

Div. III.

April 25, 1985.

Rehearing Denied May 23, 1985.

Certiorari Granted Dec. 2, 1985.

Robert Dunlap, P.C., Robert Dunlap, Donald E. LaMora, Colorado Springs, for plaintiff-appellant and cross-appellee.

Anstine and Hill, Ronald C. Hill, Denver, for defendant-appellee and cross-appellant.

Spurgeon, Haney & Howbert, P.C., Terence P. Fagan, Colorado Springs, for intervenors-appellees and cross-appellees.

BERMAN, Judge.

Plaintiff, Shayla Bukulmez, appeals the trial court determination that intervenor, Blue Cross of Western New York and Blue Shield of Western New York (Blue Cross), is entitled to reimbursement from defendant, Hertz Corporation (Hertz), for medical expenses paid by Blue Cross on behalf of the plaintiff. Hertz cross-appeals the trial court conclusion that Hertz is responsible for payment to plaintiff of "no-fault" personal injury protection (PIP) benefits. We affirm in part and reverse in part.

The facts are undisputed. On August 28, 1980, Hertz, a Delaware corporation qualified to do business in Colorado, rented an automobile to James E. Hannon, Sr., who on September 1, 1980, permitted his 18-year-old son, James E. Hannon, Jr., to operate the automobile while plaintiff was riding with him as a passenger. Hannon, Jr., and plaintiff were involved in an accident in which plaintiff was seriously injured. Hannon, Jr., should not have been operating the car under the rental agreement between Hertz and Hannon, Sr.

Plaintiff incurred medical expenses in excess of $25,000, $23,825.57 of which was paid by Blue Cross pursuant to a policy issued to plaintiff's mother in New York. Blue Cross is a New York non-profit health services corporation not qualified to do business in Colorado.

Plaintiff, relying on the Colorado Auto Accident Reparations Act, § 10-4-701, C.R.S., et seq., filed suit against Hertz for payment of her medical expenses. Hertz filed a separate declaratory judgment action seeking a declaration that it was not required to pay no-fault PIP benefits to plaintiff. The two actions were consolidated. Plaintiff moved for summary judgment, and Hertz, in its answer, asked that plaintiff's complaint be dismissed. The trial court denied Hertz' motion but granted plaintiff's motion for summary judgment, holding that the breach by Hannon, Sr., of the written contract, which prohibited the operation of the rental car by anyone under the age of 21 years, could not bar the protection afforded plaintiff under the Colorado no-fault statute.

Blue Cross then intervened seeking subrogation of plaintiff's judgment against Hertz to the extent of the medical expenses it had paid on behalf of plaintiff.

After a hearing before the court on October 25, 1982, the trial court entered judgment denying Blue Cross' claim for subrogation and granting plaintiff reasonable attorney fees pursuant to § 10-4-708, C.R.S.

Blue Cross then filed a motion for reconsideration, attaching an affidavit of the secretary and corporate counsel of Blue Cross which set forth the New York law and insurance regulations covering coordination of automobile no-fault benefits. This information had not been presented at the October hearing. The court accepted the affidavit as describing the applicable New York law, and then, applying the laws of that state, entered judgment on March 11, 1983, in favor of Blue Cross against Hertz for the cost of medical care provided plaintiff by Blue Cross. The court affirmed its earlier ruling for plaintiff against Hertz for no-fault insurance coverage, allowing Hertz a set-off to the extent of the amounts to be paid directly to Blue Cross.

On May 3, 1983, the trial court entered an amended judgment making more specific its March judgment, holding Hertz liable to plaintiff for payment of her hospital and medical expenses up to the statutory limit of $25,000. See § 10-4-706(1)(b), C.R.S. Hertz was further ordered to pay Blue Cross $23,825.57 of this $25,000 liability as reimbursement for payments it had paid to plaintiff under a health benefit policy, with the remaining $1,174.43 plus 18% interest to be paid to plaintiff. Plaintiff was also granted attorney fees in the amount of $4,000 pursuant to § 10-4-708, C.R.S. This appeal followed.

I.

We first address Hertz' contention that it is not responsible to plaintiff for no-fault PIP benefits under § 10-4-706(1)(b), C.R.S., because Hannon, Jr., was operating the rental car in violation of the rental agreement between Hertz and Hannon, Sr.

Resolution of this issue requires an analysis of the pertinent provisions of the Auto Accident Reparations Act (Act). The legislative purpose in adopting the Act is to avoid inadequate compensation to victims of automobile accidents, and to require motor vehicle owners to purchase insurance policies which provide coverage for liability and no-fault benefits. Meyer v. State Farm Mutual Automobile Insurance Co., 689 P.2d 585 (Colo.1984); see § 10-4-702, C.R.S.

To accomplish its objective, the Act requires every owner of a motor vehicle who operates or knowingly permits its operation on the public highways of this state to have a policy which includes minimum coverage of $25,000 for medical expenses incurred by any single accident victim. See § 10-4-705 and § 10-4-706(1)(b), C.R.S. These personal injury protection (PIP) benefits are payable "without regard to fault," § 10-4-706(1)(b), C.R.S., and extend to persons occupying the covered vehicle with the consent of the insured. Section 10-4-707(1)(c), C.R.S.

Hertz contends that the breach by Hannon, Sr., of the rental car agreement relieved it from providing no-fault coverage where such coverage was conditioned on compliance with the rental contract. However, clauses in an insurance contract which attempt to dilute, condition, or limit statutorily mandated coverage are invalid or void. Meyer v. State Farm Mutual Automobile Insurance Co., supra. Hence, if plaintiff is a person for whom coverage is provided under the Act, Hertz cannot limit its statutory obligation by a contractual provision in the policy. See Marquez v. Prudential Property & Casualty Insurance Co., 620 P.2d 29 (Colo.1980).

Hertz argues that it did not knowingly permit its rental vehicle to be operated on public highways by Hannon, Jr., and thus, contends it had no obligation to provide no-fault coverage to the plaintiff, who was injured while Hannon, Jr., was driving. We do not agree with Hertz' narrow interpretation of the pertinent statute, § 10-4-705(1), C.R.S.

The Act is to be liberally construed in order to further its remedial and beneficent purposes. Travelers Indemnity Co. v. Barnes, 191 Colo. 278, 552 P.2d 300 (1976). We do not construe § 10-4-705 to require that the owner have knowledge and give permission to each individual who will be...