Connecticut Car Rental, Inc. v. Patla

• Decision Date: 11 June 1996
• Docket Number: No. 14246,14246
• Court: Connecticut Court of Appeals
• Parties: CONNECTICUT CAR RENTAL, INC. v. Richard PATLA.

Page 967

677 A.2d 967

41 Conn.App. 632

CONNECTICUT CAR RENTAL, INC. v. Richard PATLA.

No. 14246.

Appellate Court of Connecticut.

Argued Jan. 16, 1996.

Decided June 11, 1996.

F. Woodward Lewis, Jr., Yalesville, for appellant (defendant-third party plaintiff).

Beverly Johns, Hartford, for appellee (third party defendant).

Before LANDAU, SCHALLER and STOUGHTON, JJ.

STOUGHTON, Judge.

The defendant, Richard Patla, appeals from the judgment rendered on his third party complaint in favor of the third party defendant, Allstate Insurance Company (Allstate). On appeal, the defendant claims that the trial court abused its discretion by (1) finding no insurance coverage for damage to an automobile he rented despite his claim that the insurance policy lacked conspicuous notice that the policy does not cover rental vehicles, as required by General Statutes § 38a-335(b), (2) interpreting language in the policy in a manner inconsistent with § 38a-334-5 et seq. of the Regulations of Connecticut State Agencies, (3) not requiring the third party defendant, Allstate, to bear the burden of proof on the exclusion, and (4) taking the issue of rental vehicle coverage from the jury.

The following facts are undisputed. On or about March 19, 1993, the defendant rented an automobile from the plaintiff, Connecticut Car Rental, Inc. (Connecticut Car). David Patla, the defendant's brother, was an additional driver under the rental contract. David Patla was operating the automobile a few days later when it was damaged in a collision.

The rental contract provided, inter alia, that the automobile must be returned in the condition in which it was received. On or about August 17, 1993, Connecticut Car instituted an action against the defendant to recover for the damage to the automobile and certain costs and expenses. David Patla, at the time of the collision, was the named insured on an automobile liability policy (policy) issued by Allstate. The defendant, therefore, filed a motion to implead Allstate as a third party defendant, which the trial court granted.

In his third party complaint, the defendant alleged that he rented the automobile for David Patla, who was driving at the time of the collision. The defendant further alleged that David Patla was insured by Allstate under a policy providing coverage for any nonowned automobile used by the insured or a resident relative with the owner's permission. The defendant claimed that Allstate was or might be liable to him for all or part of Connecticut Car's claim because he was a third party beneficiary of the insurance contract between David Patla and Allstate.

Connecticut Car and the defendant stipulated that the property damage claim amounted to $11,060.50 and that the defendant is liable for that amount. Allstate agreed that the defendant is insured under the policy and that it would not raise as a coverage defense the fact that the defendant had agreed to the amount of damages claimed by Connecticut Car.

The trial court rendered judgment in favor of Connecticut Car against the defendant in accordance with the facts agreed to in a stipulation. The issue for the trial court was whether the policy covered the defendant's liability to Connecticut Car. Although the case had been claimed to the jury, the trial court determined that interpretation of the insurance contract on the issue of coverage was a question of law and withdrew the issue from the jury. Thereafter, the trial court decided that coverage was excluded by the contract and rendered judgment with respect to the third party complaint in favor of Allstate.

Although the defendant alleged that Allstate was or might be liable to pay the Connecticut Car claim against him because he was a third party beneficiary of the contract, there is no allegation that Allstate and David Patla intended that Allstate should assume a direct obligation to the defendant. See Westport Bank & Trust Co. v. Corcoran, Mallin & Aresco, 221 Conn. 490, 493, 605 A.2d 862 (1992); Stowe v. Smith, 184 Conn. 194, 196, 441 A.2d 81 (1981). This deficiency has not been raised by the third party defendant and we, therefore, disregard it in this case.

I

The defendant first claims that the trial court should have found coverage because the exclusionary language relied on by the trial court fails to satisfy § 38a-335(b). He claims liability coverage, under part I of the policy, ¹ for claims resulting from accidents "arising out of the ownership, maintenance or use, loading or unloading of the auto we insure." ²

Part I, paragraph four, of the policy defines an "insured auto" to include "[a] non-owned auto used by you or a resident relative with the owner's permission. This auto must not be available or furnished for the regular use of an insured person." It was conceded at oral argument that the Patla brothers were residents of the same household. Thus, either the defendant or David Patla would have been insured against liability for damages he became legally obligated to pay arising out of ownership, maintenance or use, or loading or unloading of the automobile. There is no question that the Allstate policy covered David Patla for liability while operating the rental vehicle.

Allstate, however, claimed that there was no coverage in this instance because of an exclusion from coverage in part I, paragraph six, for "injury or destruction of property an insured person owns, is in charge of, or rents...." The trial court, in its oral decision on November 17, 1994, agreed, finding that the language of the insurance contract was clear and unambiguous, and that Allstate had established by a fair preponderance of the evidence that this exclusion applied. The court, therefore, found that there was no coverage. The court specifically relied on Lyon v. Aetna Casualty & Surety Co., 140 Conn. 304, 99 A.2d 141 (1953), apparently agreeing with Allstate that damage to a rental vehicle was excluded from coverage.

In Lyon, our Supreme Court held that the defendant insurer was not liable under a liability insurance policy for any sums the plaintiff garage owner might become obligated to pay as a result of damage caused by a fire to automobiles left at his shop for repairs. Id., at 309-10, 99 A.2d 141. The basis on which the court found no coverage was an exclusion for damage to " 'property owned by, rented to, in charge of or transported by the Insured.' " Id., at 307, 99 A.2d 141. The court in Lyon found that the plaintiff garage owner was "in charge of" the automobiles at issue within the meaning of the exclusionary clause. Id., at 310, 99 A.2d 141.

Although the exclusionary language in the present case is nearly identical to that in Lyon, the defendant claims that the rental car exclusion does not apply here because the policy did not contain or have attached to it a "conspicuous statement" specifying that coverage is excluded for a rental car, as required by § 38a-355(b). ³ He asserts that § 38a-335(b) "overrules" Lyon, requiring a conspicuous statement before this exclusion can apply. The defendant claims that the policy here contains no such conspicuous statement of an exclusion of coverage for rental vehicles.

Section 38a-335(b) no doubt was enacted so that policyholders would know whether they were covered while operating rental vehicles. It is unnecessary, however, to the determination of coverage in this case to decide whether § 38a-335(b) "overrules" Lyon or whether the rental vehicle language in the policy here constitutes a sufficiently conspicuous statement to satisfy the statute. The issue of whether the rental vehicle language satisfies the statute is a "red herring" in this case. The issue is not whether a rental vehicle is properly excluded from coverage, but whether part I of the policy relied on by the defendant provided coverage for any vehicle for the type of claim made here.

Connecticut Car's claim against the defendant arises out of the rental contract and not out of the use of the automobile by the defendant. The insurance contract does not cover contractual liability. The defendant's claim is, therefore, that he is a third party beneficiary of the insurance contract and, although not clearly articulated by him, that Allstate is liable to pay his claim against David Patla for damage to the automobile. Because David Patla was in charge of the automobile when it was damaged, however, the exclusion applies and the damage to the automobile is not covered. Lyon v. Aetna Casualty & Surety Co., supra, 140 Conn. at 310, 99 A.2d 141.

The same provision that excludes liability coverage for damage to a rental vehicle excludes coverage for liability for damage to a vehicle that the insured person is "in charge of." It is undisputed that David Patla was "in charge of" the vehicle in question in this case. The exclusion, therefore, applies without the necessity of looking to the "rental vehicle" language. The damage to the vehicle in question is not covered under the clear language of the contract. Id. This would be so whether the vehicle was owned or rented.

The exclusion of coverage for damage to "property an insured person owns, is in charge of or rents," in essence, means that only "liability coverage," and not "collision coverage," is provided. It means that coverage is provided for liability for damage inflicted on others and their property by an insured's...