Buntin v. Continental Ins. Co., Civ. No. 77/99.

• Decision Date: 27 September 1977
• Docket Number: Civ. No. 77/99.
• Citation: 437 F. Supp. 132
• Parties: Norman BUNTIN, Plaintiff, v. CONTINENTAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Virgin Islands

437 F. Supp. 132

Norman BUNTIN, Plaintiff, v. CONTINENTAL INSURANCE COMPANY, Defendant.

Civ. No. 77/99.

District Court of Virgin Islands, Division of St. Croix.

September 27, 1977.

Thomas Alkon, Isherwood, Colianni, Alkon & Barnard, Robert A. Ellison, Christiansted, St. Croix, V.I., for plaintiff, Norman Buntin.

David V. O'Brien, Merwin, Alexander & O'Brien, R. Eric Moore, Christiansted, St. Croix, V.I., for defendant, Continental Ins. Co.

MEMORANDUM OPINION

WARREN H. YOUNG, District Judge.

This case is before the Court on a motion for summary judgment by the plaintiff and a cross-motion for summary judgment by the defendant. The parties are in agreement as to the factual background of this case and therefore this matter is ripe for summary judgment since the only issues left to be resolved are legal in nature. Several questions have been raised by both parties but this Court is concerned only with the issue of liability at this time.

I FACTUAL BACKGROUND

Although neither party disputes the facts involved in this matter, I shall review the developments leading up to these motions for the sake of clarity. On July 4, 1975, Preferred Rentals, Inc. rented a car to Marion Edwards, which was insured by a policy issued by the defendant, Continental Insurance Co. ("Continental"). On July 6, Edwards met Norman Buntin and another friend, Clement Richardson, in a Christiansted bar. The three decided to go to Frederiksted and because Edwards was unfamiliar with driving on the left hand side of the road, he requested Buntin to drive the car which he had rented. This request proved to be fatal as Buntin negligently collided into an oncoming car while traveling to Frederiksted, killing Edwards and seriously injuring Richardson.

In April, 1976, an action for wrongful death was filed by the Estate of Marion Edwards and an action for personal injuries was filed by Richardson. Buntin was the named defendant in both suits and he promptly notified Continental of the two actions since it was the insurer of the rental car. Continental disclaimed coverage and declined to defend Buntin. Both causes were consolidated and, after a trial, judgment was entered on November 16, 1976 in favor of both plaintiffs. The Estate of Marion Edwards recovered $165,000 plus interest and attorney's fees while Richardson received an award of $26,500 plus interest and attorney's fees.

After judgment, there were attempts at settlement, all of which were transmitted to Continental. However, Continental continued to disclaim any liability on its part and finally Buntin brought this action against Continental basically alleging that Continental breached its obligations under the terms of its insurance policy. Buntin alleges inter alia that Continental is liable to him for all damages and expenses incurred by him as the result of Continental's failure to defend the initial suit against him and for Continental's refusal to pay the judgments awarded to Edwards and Richardson. Continental has responded and denied that the terms of the policy cover the rental car while Buntin was driving.

II THE INSURANCE CONTRACT

Continental and Preferred Rental, Inc. ("Preferred") entered into an agreement whereby Continental agreed to insure all of the cars owned by Preferred. The terms of the agreement were reduced to writing in several separate documents. The first document was the basic policy which is the standard one used by Continental. It is somewhat general so that it can be used to cover many different situations. Next there were several documents commonly referred to as "endorsements".

Endorsements are significantly different from the basic policy in that endorsements are normally used by insurance companies to either expand or contract the general language of the basic policy, to tailor the policy to fit the particular needs of the insured. To put it another way, the basic policy sets up a general framework that covers the primary requirements of most insurance contracts while endorsements usually set forth the details needed in a given situation.

Before analyzing the insurance contract in question, it might be helpful first to look at what the minimum insurance coverage required by law is in the Virgin Islands with respect to rental cars. Under Title 20 of the Virgin Islands Code a rental agency must procure liability insurance on its rental cars so as to cover all damage caused by the "driver" of such a car. 20 V.I.C. § 418(a). This section then goes on to define a driver as

any person . . . using or operating the drive-yourself car with the permission, express or implied, of such rental agency.

Thus, rental agencies are required by law to procure liability insurance so as to cover any individual who drives the car with the express or implied permission of the rental company.

With this background in mind, I now turn to the policy sub judice. It states in Section III(a) that coverage extends to:

the named insured . . . and also includes any person while using the automobile . . . provided the actual use of the automobile is by the named insured or such spouse or with the permission of either.

It is the plaintiff's contention that this section is applicable in this case. If there were no other provisions defining coverage, I would have very few problems with the plaintiff's argument. However, Endorsement Number Two ("endorsement") also has a section defining the term "insured" under the policy.¹ This section states in part:

Subject otherwise to the provisions of the Definition of Insured agreement of the policy (a) the insurance with respect to any driverless car applies only to the named insured and rentee and, while used for business purposes of the rentee, and employer or employee of the rentee.. .

Driverless car is further defined in the endorsement to mean a rental car. Defendant Continental argues that the terms of the endorsement should control over the terms of the policy in deciding this case.

At this point the task before the Court is clearly twofold. First, I must decide whether the terms of the policy or those of the endorsement should control in defining the term "insured" under the insurance agreement. Second, after I have decided which provision is controlling, I must analyze the language of that provision to determine whether Buntin was an "insured" driver under the policy.

III THE CONTROLLING PROVISION

It is stated in section 4:36 of Couch on Insurance, 2d:

A typewritten endorsement on an automobile liability policy must be given effect to the exclusion of any conflicting printed provision in the policy. (citing Lumbermens M. Cas. Co. v. Sutch, 197 F.2d 79 (3rd Cir. 1952)).

And in section 45:296 of Couch on Insurance, 2d it is stated that there is no rule of law, absent a specific statute, which prohibits the modification by an endorsement of the omnibus clause of the basic policy.

Obviously such a rule is subject to several qualifications. First, a policy and an endorsement should be construed if possible, so as to give effect to all provisions. See Aetna Ins. Co. v. Getchell Steel Treating Co., 395 F.2d 12 (8th Cir. 1968). Second, provisions within the basic policy are not modified except to the extent that the provisions of the endorsement are intended to be substituted for those within the basic policy. Third, an endorsement which is limited so as to apply to only certain provisions within the basic policy has no effect on the remaining parts of the policy. See generally 44 C.J.S. Insurance § 300.

These qualifications are general rules of law but they are not the only limitations on the effect of endorsements to insurance policies. However, there appears to be no dispute among the authorities concerning which instrument should control if there is a direct conflict between the policy provisions and the terms of the endorsement. All courts which have addressed the issue have basically reached the same conclusion which is succinctly stated by the Tenth Circuit:

It is the general rule that an endorsement or rider attached to an

...