Farmers Texas County Mut. v. Hertz Corp.

• Decision Date: 22 May 2007
• Docket Number: No. 17643.,17643.
• Citation: 282 Conn. 535,923 A.2d 673
• Court: Connecticut Supreme Court
• Parties: FARMERS TEXAS COUNTY MUTUAL v. HERTZ CORPORATION.

923 A.2d 673

282 Conn. 535

FARMERS TEXAS COUNTY MUTUAL v. HERTZ CORPORATION.

No. 17643.

Supreme Court of Connecticut.

Argued February 9, 2007.

Decided May 22, 2007.

Steven M. O'Connor, White Plains, NY, for the appellant (plaintiff).

Thomas Anderson, with whom, on the brief, was Joseph Mascaro, Hartford, for the appellee (defendant).

Cesar A. Noble, Hartford, filed a brief for the Car and Truck Rental Leasing Association as amicus curiae.

BORDEN, NORCOTT, KATZ, PALMER and VERTEFEUILLE, Js.

KATZ, J.

This appeal, arising out of two consolidated declaratory judgment actions, involves a dispute between a car rental company, Hertz Corporation (Hertz), and an insurance provider, Farmers Texas County Mutual (Farmers), as to which company had the primary obligation to provide automobile liability coverage when an individual with personal automobile insurance from Farmers was involved in an accident while driving a car rented from Hertz.¹ Farmers appeals from the judgment of the trial court, which concluded that Hertz could, and in fact did, contractually establish that its obligation was secondary to that of Farmers. We conclude that Farmers' coverage is primary, and, accordingly, affirm the judgment of the trial court.

The following facts are undisputed. Mariano Nasser and Vijay Sharma each rented a vehicle from Hertz. Both men signed Hertz rental agreements in which they declined to purchase Hertz' liability insurance supplement.² In so declining, they agreed, pursuant to the terms of the rental agreement, that their personal insurance would be primary. Sharma and Nasser then were involved in separate traffic accidents with third parties on May 20, 2001, and on February 21, 2002, respectively, while driving the vehicles they had rented. In both cases the third parties involved in the accidents filed actions against Hertz and Sharma and Nasser, respectively, to recover damages for the injuries the third parties had sustained. At the time of the accidents, Nasser was covered by a personal insurance policy issued by Farmers,³ and Sharma was covered by a personal insurance policy issued by an affiliate of Farmers, Farmers Insurance Company.⁴ Farmers filed a declaratory judgment action against Hertz in the case arising out of Nasser's accident, and Hertz filed a declaratory judgment action against Farmers in the case arising out of Sharma's accident. Because of the factual similarity of the cases, the trial court consolidated the actions. Subsequently, Hertz and Farmers each filed motions for summary judgment claiming that the other should be deemed primarily responsible for liability coverage for the accidents. The court denied the motions for summary judgment on the basis of its determination that material issues of fact remained, specifically, those pertaining to Hertz' self-insurance filing and the representations contained therein regarding minimum liability coverage on its rental vehicles. The court then concluded that a trial was necessary to determine the "legal impact" of the self-insurance filings and state statutes and regulations.

After a trial to the court, the court rendered judgments in the consolidated cases in favor of Hertz, finding that, under the terms of the Hertz rental agreement and Farmers' insurance policies, and in accordance with the decision of this court in Hertz Corp. v. Federal Ins. Co., 245 Conn. 374, 713 A.2d 820 (1998), the liability coverage provided by Farmers was primary and the coverage provided by Hertz was secondary. The court determined that, by declining to purchase the liability insurance supplement from Hertz, the renters had agreed that their valid and collectible liability coverage from Farmers would be primary for any accident involving the vehicles they had rented from Hertz. The court further concluded that this interpretation conformed to the Farmers' policies because, according to their terms, the coverage Farmers provided for vehicles not owned by the insured was excess only to other applicable liability insurance, which the renters in this case had declined to purchase.

Farmers appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to General Statutes § 51-199(c) and Practice Book § 65-1.⁵ There are two related issues on appeal. The first is whether, under our statutory and regulatory scheme, Hertz is required to provide primary liability coverage on its rented vehicles. If we answer this question in the negative, we then must determine whether the trial court properly considered the Hertz rental agreement in determining the priority of coverage as between Hertz and Farmers in the present case.

Farmers claims that the statutory scheme mandates that Hertz, as owner of the vehicle, is "expressly and exclusively" responsible for providing liability coverage, and that the trial court improperly determined that Hertz was under no such obligation. Farmers further contends that the trial court improperly relied on Hertz' rental agreement to determine the order of coverage, rather than on Hertz' self-insurance filing with the state. Hertz responds that the trial court properly determined that it was not statutorily obligated to provide primary liability coverage on its rented vehicles and that, pursuant to its rental agreement, Hertz' coverage was secondary to that provided by Nasser's insurance policy with Farmers. We agree with Hertz.

I

We turn first to Farmers' contention that Hertz is obligated by our statutory and regulatory scheme to provide primary liability coverage on its rented vehicles. We begin with the standard of review and the applicable legal principles guiding our analysis. "Because the interpretation of ... [statutes and] regulations presents a question of law, our review is plenary." (Internal quotation marks omitted.) Jewett City Savings Bank v. Franklin, 280 Conn. 274, 278, 907 A.2d 67 (2006). "When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply.... In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.... When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter...." (Citation omitted; internal quotation marks omitted.) Kinsey v. Pacific Employers Ins. Co., 277 Conn. 398, 405, 891 A.2d 959 (2006). With these principles in mind, we review the applicable statutes and regulations governing Connecticut's motor vehicle liability insurance scheme.

Our statutory and regulatory scheme guarantees coverage for legal liability incurred in the use of motor vehicles and allocates the responsibility for that coverage to the owner of the vehicle. General Statutes § 38a371 describes the mandatory security requirements for the vehicle owner under the state's no-fault motor vehicle insurance scheme. That section provides in relevant part that "[t]he owner of a private passenger motor vehicle required to be registered in this state shall provide and continuously maintain throughout the registration period security in accordance with sections 38a-334 to 38a-343, inclusive [setting forth, inter alia, minimum insurance policy coverage mandated in conformity with regulatory requirements]." General Statutes § 38a-371(a)(1). To ensure that a vehicle owner complies with security requirements, General Statutes § 14-12b⁶ prohibits the registration of a vehicle absent proof of the owner's requisite coverage, and § 38a-371(e)⁷ ensures that, even if the owner allows insurance coverage to lapse on a vehicle, the owner will still be liable for damages in the event of an accident.

Other statutes dictate that an owner is not relieved of liability simply because the owner is not the operator of the vehicle. General Statutes § 14-213b⁸ proscribes operation of an uninsured vehicle, and places responsibility for adherence to that rule on the owner, even when the owner is not the operator of the vehicle. In addition, General Statutes § 14-154a addresses owners who rent or lease their vehicles, providing in relevant part: "(a) Any person renting or leasing to another any motor vehicle owned by him shall be liable for any damage to any person or property caused by the operation of such motor vehicle while so rented or leased, to the same extent as the operator would have been liable if he had also been the owner...."

The legislature, therefore, has made clear, through its use of mandatory language and mutually reinforcing statutes, that, as a general matter, the owner of a vehicle registered in Connecticut is responsible for maintaining liability insurance on that vehicle.⁹ Pursuant to General Statutes §§ 38a-371(c) and 14-129, Hertz elected to provide that security through self-insurance.¹⁰ This court has determined that "the funding mechanism by which an owner of vehicles decides to meet the requirements of Connecticut insurance law is irrelevant to the obligation of that funding entity to comply with such requirements, [and] that self-insurance is the functional equivalent of commercial insurance." Hertz Corp. v. Federal Ins. Co., supra, 245 Conn. at 378 n. 4, 713 A.2d 820. Thus, in choosing and being approved for...