Executive Car & Truck Leasing, Inc. v. DeSerio

• Decision Date: 01 May 1985
• Docket Number: No. 84-119,84-119
• Citation: 470 So.2d 21,10 Fla. L. Weekly 1102
• Parties: 10 Fla. L. Weekly 1102 EXECUTIVE CAR AND TRUCK LEASING, INC., and Industrial Indemnity Insurance Company, Appellants, v. Alberta DeSERIO, individually, Edythe Hopewell, etc., et al., Appellees.
• Court: Florida District Court of Appeals

Page 21

470 So.2d 21

10 Fla. L. Weekly 1102

EXECUTIVE CAR AND TRUCK LEASING, INC., and Industrial Indemnity Insurance Company, Appellants, v. Alberta DeSERIO, individually, Edythe Hopewell, etc., et al., Appellees.

No. 84-119.

District Court of Appeal of Florida,

Fourth District.

May 1, 1985.

Rehearings Denied June 24, 1985.

Lloyd J. Heilbrunn and Brian C. Powers of Powers & Flanagan, West Palm Beach, for appellants.

Richard A. Sherman of Law Offices of Richard A. Sherman, Fort Lauderdale, and Eric A. Peterson, Peterson & Fogarty, West Palm Beach, for appellees, Commercial Union Ins. Co. and Action Bolt & Tool Co.

Michael B. Davis of Walton Lantaff Schroeder & Carson, West Palm Beach, for appellee, Allstate Ins. Co.

BARKETT, Judge.

Appellants challenge a judgment determining the order of responsibility for payment among multiple liability insurers in a suit for personal injuries arising out of an automobile accident. The pertinent entities may be grouped as follows:

(1) Executive Car and Truck Leasing, Inc. (Executive), owner and lessor of the motor vehicle in question, insured by Industrial Indemnity Insurance Company (Industrial) with a policy for $500,000 underlying coverage and $5,000,000 umbrella coverage;

(2) Action Bolt and Tool Company (Action), lessee of the motor vehicle in question, ¹ insured by Commercial Union Insurance Company (Commercial) with a policy for $1,000,000 underlying coverage and $20,000,000 umbrella coverage; and

(3) Mendelsohn, the permissive user and driver of the subject vehicle, insured by Allstate Insurance Company (Allstate) with primary coverage in the amount of $100,000.

Action loaned the subject vehicle to its employee Mendelsohn. While driving the subject automobile, Mendelsohn was involved in an automobile accident with Alberta DeSerio in which DeSerio was injured and Mendelsohn was killed. DeSerio sued all of the parties listed above and ultimately recovered damages in the amount of $1,200,000. Cross-claims for declaratory relief regarding the priority of insurance coverage had been filed by the various defendants and the trial court determined the order of responsibility among the insurers as follows:

(1) Industrial Indemnity Company would provide primary coverage up to its policy limits of $500,000;

(2) Industrial Indemnity Company would provide the secondary level of coverage under its umbrella coverage up to its limits of $5,000,000;

(3) The Allstate Insurance Company policy of $100,000 and the Commercial Union Insurance policy of $1,000,000 would provide the third level of coverage on a pro rata basis; and

(4) Commercial Union Insurance Company would provide the fourth level of coverage up to its limits of $20,000,000.

Executive and Industrial appeal the order of responsibility determined by the trial judge.

Appellants concede that it is their statutory obligation to provide primary insurance coverage, but argue that the lease agreement between Executive and Action shifts that duty to Action and thus to its insurance carrier, Commercial. Section 627.7263(1), Florida Statutes (1983), provides:

The valid and collectible liability insurance or personal injury protection insurance providing coverage for the lessor of a motor vehicle for rent or lease shall be primary unless otherwise stated in bold type on the face of the rental or lease agreement. Such insurance shall be primary for the limits of liability and personal injury protection coverage as required by §§ 324.021(7) and 627.736 [emphasis added].

Appellants contend that although there was no statement in bold type on the face of the rental or lease agreement purporting to shift this primary responsibility, the language of the agreement is clear in its intent to do so, rendering the requirement of bold type unnecessary. Alternatively, appellants argue that even if they are found to be primarily responsible, the statute specifically limits their responsibility to $10,000, the statutory limit of the Financial Responsibility Law. This issue has already been determined by this court and by the second district in Reliance Insurance Company v. Maryland Casualty Company, 453 So.2d 854 (Fla. 4th DCA 1984), and Patton v. Lindo's Rent-A-Car, Inc., 415 So.2d 43 (Fla. 2d DCA 1982). In accordance therewith we find that Industrial has the primary coverage, but only to the extent of $10,000.

We must then decide which insurance policy comes next as between the owner/lessor (Industrial), the lessee (Commercial), and the negligent user (Allstate). The supreme court appeared to address this issue in Roth v. Old Republic Insurance Company, 269 So.2d 3 (Fla.1972). In that case, the court held that as between the insurance companies of the owner/lessor, the lessee/bailor, and the bailee/permissive user, the owner/lessor's insurer must bear the primary coverage burden. The court based its decision on its holding in Susco Car Rental System of Florida v. Leonard, 112 So.2d 832 (Fla.1959) (which did not involve insurance coverage but merely held that an automobile rental company would not be relieved of liability under the dangerous instrumentality doctrine when the automobile had been operated in contravention of the lease agreement) and on the fact that the lessee had paid a premium pursuant to the lease for insurance coverage by the owner/lessor's insurance company. The supreme court found this coverage inured to the lessee's permittee.

In 1976, four years after the supreme court's ruling in Roth, the legislature amended the state's Financial Responsibility Law by decreasing the amount of liability insurance an owner of a motor vehicle must carry to $10,000. See section 324.021(7), Florida Statutes (1983). Then in Insurance Company of North America v. Avis Rent-A-Car System, Inc., 348 So.2d 1149, 1154 (Fla.1977), the supreme court, after extensively discussing Roth, modified or clarified its holding in Roth, stating:

The underlying policy of the statute is satisfied once the law's minimum financial protection is provided to injured members of the public. Neither this statute nor the dangerous instrumentality doctrine asserts any interest of the state with respect to the allocation of risk among commercial enterprises or the responsibility of commercial enterprises to furnish more than minimal statutory coverage to their customers.... or on the right of indemnification which derives from the common law principle that fault attracts primary responsibility.

Id. at 1153. The well-settled general principle of law is that one...