Corley v. Hertz Corp.

• Decision Date: 21 November 1994
• Docket Number: No. 32915-4-I,32915-4-I
• Citation: 76 Wn.App. 687,887 P.2d 401
• Parties: Melvin G. CORLEY and Lucy Corley, husband and wife, Respondents, v. The HERTZ CORPORATION and H.A.S. Corporation, Appellants.
• Court: Washington Court of Appeals

Page 687

76 Wn.App. 687

887 P.2d 401

Melvin G. CORLEY and Lucy Corley, husband and wife, Respondents, v. The HERTZ CORPORATION and H.A.S. Corporation, Appellants.

No. 32915-4-I.

Court of Appeals of Washington,

Division 1.

Nov. 21, 1994.

Publication Ordered Jan. 19, 1995.

E. Pennock Gheen, Harold Roland Hofstedt, Merrick Hofstedt & Lindsey, Robert Joseph Roche, Bullivant Houser Bailey Pendergrass & Hoffman, Ronald Stanford Dinning, Merrick Hofstedt & Lindsey P.S., Seattle, for appellants.

Maria Sophia Diamond, Levinson Friedman Vhugen Duggan & Bland, Ronald J. Bland, Levinson Friedman Vhugen Duggan Bland & Horowitz, Seattle, for respondents.

GROSSE, Judge.

Hertz Corporation and H.A.S. Corporation appeal the summary judgment in favor of Melvin and Lucy Corley (hereafter "Corley"). The judgment declared that, as a matter of law, Hertz and H.A.S. must provide underinsured motorist (UIM) coverage with policy limits of $500,000 to Corley under the agreement by which Melvin Corley rented the automobile he was driving when he was involved in a collision. ¹ We affirm, holding that the trial court did not err in concluding that: (1) venue was proper in Washington, not Colorado; (2) Washington law rather than Colorado law applied; (3) Corley did not reject UIM coverage; and (4) Hertz was obligated to provide UIM coverage with liability limits of $500,000 rather than the statutory minimum limits.

In February 1991, Melvin Corley sustained serious injuries in an automobile accident which occurred in King County. Corley was driving an automobile he had rented in Spokane from H.A.S. Corporation, a licensee of Hertz Corporation. The automobile was registered and licensed in Washington. Corley was a resident of Colorado and employed in Colorado by U.S. West. Corley had $100,000 of UIM coverage. The at-fault driver had $50,000 of liability insurance.

The rental agreement between Hertz and Corley contained the following provision:

Hertz will indemnify, hold harmless, and defend You and any Authorized Operators FROM AND AGAINST LIABILITY TO THIRD PARTIES, EXCLUDING ANY OF YOUR OR ANY AUTHORIZED OPERATOR'S FAMILY MEMBERS RELATED BY BLOOD, MARRIAGE OR ADOPTION RESIDING WITH YOU OR THEM. For bodily injury and property damage the limits of this protection, including owner's liability, are the same as the minimum limits required by the automobile financial responsibility law of the jurisdiction in which the accident occurred, unless higher limits apply for the CDP-ID number/Rate Plan shown on the Front, which accident results from the use of the Car as permitted by this Agreement. This will conform to the basic requirements of any applicable "No Fault" law BUT DOES NOT INCLUDE "UNINSURED MOTORIST", "UNDERINSURED MOTORIST", "SUPPLEMENTARY NO FAULT" OR ANY OTHER OPTIONAL COVERAGE. TO THE EXTENT PERMITTED BY LAW, HERTZ AND YOU HEREBY REJECT THE INCLUSION OF ANY SUCH COVERAGE. In the event that any such coverage is imposed by operation of law, then the limits of such coverage will be the minimum required by the law of the jurisdiction in which the accident occurred. Hertz warrants that the protection described in this paragraph is primary with respect to any insurance coverage You or an Authorized Operator may have. THIS PROTECTION IS VOID IN MEXICO.

The CDP-ID number/Rate Plan referred to in the foregoing provision of the rental agreement is the "Agreement for Vehicle Rental Services Between U.S. West Companies and Hertz Corporation" [CP 70] for the provision of vehicle rental services by Hertz to employees of U.S. West. ² The U.S. West agreement provided liability limits as follows:

Notwithstanding any contrary provisions of the rental agreement, [Hertz] shall, at its own cost and expense provide all [U.S. West's] travelers worldwide, primary coverage under an automobile liability insurance covering death or bodily injury to persons and property damage with combined single limits of $500,000 for each such occurrence arising out of the use, maintenance, condition or operation of any vehicle.

Corley filed an action in Washington against Hertz seeking a declaratory judgment that he was entitled to UIM coverage of at least $500,000 under the rental agreement. Hertz, H.A.S., and Corley filed motions for summary judgment. The trial court granted Corley's motion and, applying Washington law, declared that Hertz was required as a matter of law to provide UIM coverage under the rental agreement to Corley with liability limits of $500,000.

I.

Hertz contends that pursuant to article 33 of the U.S. West agreement, proper venue for Corley's action is Colorado and Colorado law applies to the claim. ³ We disagree. Article 33 of the U.S. West agreement is not incorporated into the rental agreement. Rather, the rental agreement incorporates the liability limits of the U.S. West agreement and nothing more. The sole reference in the rental agreement to the U.S. West agreement is the provision, set forth above, adopting the higher liability limits in the CDP-ID number/Rate Plan as the liability limits under the rental agreement. Nor is incorporation of the entire U.S. West agreement necessary to the creation or viability of an insured/insurer relationship between Hertz and Corley because the rental agreement is a stand-alone policy of motor vehicle liability insurance. Van Vonno v. Hertz Corp., 120 Wash.2d 416, 425, 841 P.2d 1244 (1992).

Because article 33 of the U.S. West agreement does not apply to this dispute and because the rental agreement is silent on the issue, the proper choice of law is determined by applying the "most significant relationship" test. West American Ins. Co. v. MacDonald, 68 Wash.App. 191, 194, 841 P.2d 1313 (1992) ("For any issue the law of choice will be that of the state with the most significant relationship to the issue in question.... The contacts are to be evaluated according to their relative importance to the practical issues being examined.") In the instant case, the rental agreement between Corley and Hertz was entered into in Washington. The leased automobile involved in the accident was licensed and registered in Washington. The accident occurred in Washington. We find that these factors are highly important to the issues presented and establish Washington as the state with the most significant relationship to the issues presented. The trial court did not err by determining that Washington law applied. ⁴

For the same reasons, the trial court did not err by determining that Washington was the proper forum in which to litigate Corley's claim. The accident occurred in Washington and involved a contract of insurance executed in Washington by a party doing business in Washington. The action was properly governed by Washington law and Washington was the proper forum. Mangham v. Gold Seal Chinchillas, Inc., 69 Wash.2d 37, 416 P.2d 680 (1966); Exum v. Vantage Press, Inc., 17 Wash.App. 477, 563 P.2d 1314 (1977).

II.

Hertz contends Corley rejected UIM coverage by signing the rental agreement containing the provision, set forth above, which provided: "To the extent permitted by law, Hertz and you [the lessor] hereby reject the inclusion of any such [UIM] coverage." We disagree with Hertz's contention, holding that Corley did not specifically and unequivocally reject UIM coverage and that such coverage was therefore mandatory.

Washington's UIM statute, RCW 48.22.030, requires insurers to make UIM coverage available to Washington policyholders. Clements, 121 Wash.2d at 250, 850 P.2d 1298. Pursuant to RCW 48.22.030(4), an insured may reject UIM coverage "in writing". ⁵ In Clements, the Supreme Court determined that the wording of RCW 48.22.030(4) evinced a legislative intent that an insured decline UIM coverage in writing by "an affirmative and conscious act". Clements, 121 Wash.2d at 254, 850 P.2d 1298. ⁶ In Clements, the court held that the mere absence of UIM coverage in a policy may not be treated as a written rejection of that coverage. Clements, 121 Wash.2d at 255, 850 P.2d 1298. To hold otherwise, the court reasoned, would be to render the legislature's "bright line" statutory written rejection requirement completely meaningless. ⁷

Here, Corley did not reject UIM coverage by an affirmative and conscious act. In fact, he was not even given the option of rejecting such coverage, but rather had no choice but to reject it in order to enter into the rental agreement with Hertz. The requirement that an insured reject UIM coverage by an affirmative and conscious act necessarily implies that the insured is given a choice between rejecting or accepting UIM coverage. Only if an insured is given a choice between these options can it be said that the insured affirmatively and consciously rejected UIM coverage by choosing between the two options. We conclude that Corley's signing a rental agreement containing the clause, "Hertz and you [the lessor] hereby reject the inclusion of any such coverage" did...