Lynch v. Spirit Rent-a Car, Inc.

• Decision Date: 06 March 2009
• Docket Number: No. 2007-247-Appeal.,2007-247-Appeal.
• Citation: 965 A.2d 417
• Parties: James C. LYNCH, Jr., et al. v. SPIRIT RENT-A-CAR, INC., et al.
• Court: Rhode Island Supreme Court

965 A.2d 417

James C. LYNCH, Jr., et al. v. SPIRIT RENT-A-CAR, INC., et al.

No. 2007-247-Appeal.

Supreme Court of Rhode Island.

March 6, 2009.

Michael J. McCaffrey, Esq., Warwick, for Plaintiff.

Paul J. Bogosian, Jr., Esq., Providence, for Defendant.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, SUTTELL, and ROBINSON, JJ.

OPINION

Justice GOLDBERG, for the Court.

After their relative was killed in a motor vehicle accident on West Shore Road, the plaintiffs, James C. Lynch, Jr. and Patricia Lynch (collectively plaintiffs), co-administrators of the estate of Kevin Lynch (Lynch or decedent), filed the present action against the defendants, Spirit Rent-A-Car, Inc. (Spirit), and Alamo Rent-A-Car, LLC (Alamo) (collectively defendants),¹ and alleged that the defendants failed to pay claims for uninsured motorist (UM) coverage. The trial justice granted the defendants' motion for summary judgment, and the plaintiffs timely appealed to the Supreme Court. We affirm the judgment of the Superior Court.

Facts and Travel

On October 2, 2001, during the early hours of the morning, Kenneth Germani (Germani)² met Lynch at Hooters Restaurant in Warwick. After Lynch paid his bill, he and Germani left the restaurant in separate motor vehicles—Lynch was driving a Chevrolet Cavalier that was owned by Spirit and rented from Alamo. The pair proceeded to West Shore Road at a high rate of speed where, at a bend in the road, Lynch lost control of his vehicle and crashed into a tree.³ The Warwick police were able to extract Lynch from the wreckage using a hydraulic rescue tool; he died shortly thereafter at Rhode Island Hospital.

On September 30, 2004, plaintiffs filed a complaint against the decedent's insurance carrier, Travelers Insurance Company (Travelers), and Alamo, Spirit, and Germani. The plaintiffs alleged that they made several claims under the UM provisions of defendants' various insurance policies that the companies denied. The plaintiffs also alleged that Germani's negligent driving caused the decedent to strike a tree. However, on March 8, 2003—before the complaint was filed—plaintiffs had executed a release, upon payment of $25,000, of any and all claims against Germani arising from the accident. Accordingly, the trial justice granted Germani's motion for summary judgment.

Spirit and Alamo also moved for summary judgment, alleging that the decedent rejected supplemental insurance in the rental agreement (rental agreement or agreement) with Alamo. Appended to the motion was a copy of the rental agreement, with the decedent's initials, "KL," next to the following statements listed in the contract that decline insurance coverage:

"RENTER DECLINES PHYSICAL DAMAGE WAIVER (PDW) AND ACCEPTS DAMAGE RESPONSIBILITY;

"RENTER DECLINES PERSONAL ACCIDENT INSURANCE (PAI) AND PERSONAL EFFECTS COVERAGE (PEC);

"RENTER DECLINES OPTIONAL SUPPLEMENTAL LIABILITY PROTECTIONS."

The defendants argued that when he initialed the portions of the agreement that expressly declined coverage, Lynch rejected any insurance coverage under the rental agreement.

In response, plaintiffs challenged the authenticity of the initials appearing in the agreement and provided an affidavit from Patricia Lynch, the decedent's sister, who testified that the initials that appeared on the rental agreement were not penned by her brother. She conceded, however, that the decedent signed the agreement. Notably, the decedent's initials did not appear in the portions of the rental agreement signifying that Kevin Lynch purchased insurance. However, the trial justice denied defendants' motion for summary judgment without prejudice, finding that Patricia Lynch's affidavit raised a genuine issue of fact as to whether the decedent rejected the insurance coverage that was offered.

Approximately one year later, defendants again moved for summary judgment, this time approaching the UM coverage issue from two directions; the defendants argued (1) that they rejected UM coverage in their own insurance policies and (2) that the decedent failed to purchase coverage from them at the time he rented the vehicle.⁴

The record before us discloses that defendants were covered by two insurance policies that are relevant to the issues in this case. The first policy was issued by National Union Fire Insurance Company on June 30, 1997 (National Union policy), to Republic Industries, Inc. (Republic Industries), the original named insured of the policy and predecessor insured to defendants. Under Endorsement 1 of the National Union policy, defendants are listed as named insureds. The second insurance contract is an umbrella policy (umbrella policy) issued by Lexington Insurance Company that covered Alamo at the time of the fatal accident.

With respect to their first argument, defendants asserted that, in accordance with G.L.1956 § 27-7-2.1, Republic Industries lawfully reduced their UM coverage to zero. Therefore, defendants claimed that at the time of the collision in this case there was no UM coverage. Furthermore, defendants argued that the umbrella policy did not extend coverage into areas excluded in the National Union policy. The defendants supported these contentions with an affidavit from Mary Morse, who was the risk-management director for Vanguard Car Rental USA, Inc. (Vanguard USA)⁵ and, prior to that, held the same position with ANC Rental Corporation.⁶

Turning to their second argument, defendants alleged that although there may be a genuine issue of fact as to whether the decedent initialed the portions of the rental agreement rejecting coverage, he nevertheless did not purchase insurance because he did not pay the necessary fees, as demonstrated on the face of the agreement. This assertion was supported by an affidavit from Diana Geremia (Geremia), who, according to her testimony, was the director of damage recovery operations for Vanguard USA and Spirit—apparently related entities in this case—at the time of the decedent's accident.

The plaintiffs again asserted that Patricia Lynch's affidavit created a genuine issue of fact about whether the decedent rejected the insurance offered in the rental agreement. In addition, plaintiffs alleged that because Kevin Lynch was an insured under the National Union policy, and because he did not expressly reject UM coverage in writing—as, they contended, was required by § 27-7-2.1(a)—he was entitled to UM coverage by operation of law.⁷

The trial justice issued a written decision granting defendants' motion for summary judgment. She first found that the National Union policy did not provide UM coverage. In reaching this conclusion, the trial justice noted that the initial policyholder selected the minimum limit for general liability coverage; she further noted that, in an attached form entitled "Rejection of Uninsured/Underinsured Motorists Coverage or Selection of Lower Limit of Liability (Rhode Island)" (rejection form), that explicitly referred to § 27-7-2.1, Republic Industries, one of the named insureds, elected to reduce to zero the UM coverage afforded under the National Union policy.

The trial justice found that, as provided by § 27-7-2.1(a), named insureds, including defendants who had purchased minimum coverage for bodily injury, could decline UM coverage as long as they signed "an advisory notice approved by the director of business regulation concerning the hazard of uninsured and underinsured motorists"—a condition that the trial justice deemed satisfied by the rejection form. The trial justice also rejected plaintiffs' argument that the decedent was a named insured under the National Union policy; instead, she found that Republic Industries and defendants, clearly and unambiguously, were the named insureds in the policy as set forth in the declarations page and Endorsement 1. Accordingly, the trial justice concluded that because Republic Industries properly rejected UM coverage, plaintiffs were not entitled to claim it under the National Union policy.

Furthermore, after examining the Morse affidavit,⁸ the trial justice denied the motion to strike and found that "because the [National Union policy] provided no uninsured/underinsured motorist coverage to [defendants], the [u]mbrella [p]olicy, likewise, afforded no such coverage."⁹

Finally, the trial justice found that the issue of fact created by Patricia Lynch's affidavit—specifically, whether the initials on the rental agreement declining coverage were the decedent's—was not material and, therefore, did not prevent the grant of summary judgment in this case. The trial justice determined (1) that the decedent failed to initial the provision of the agreement in which one expressly requests personal accident insurance and, (2) significantly, that no additional money was paid for that coverage. The trial justice also deemed relevant to her decision a provision on the back of the rental agreement that provided:

"Waiver and Rejection of Personal Injury Protection, Uninsured or Underinsured Motorist Protection. Alamo provides no personal injury protection, uninsured or underinsured motorist protection, * * * or other optional coverage pursuant to this Agreement, and renter expressly rejects and waives such coverage from Alamo. If notwithstanding the foregoing, Alamo is required by law to provide personal injury protection, uninsured or underinsured motorist protection, or other coverage to anyone, Alamo will provide coverage only up to the minimum limits required by the state in which the vehicle is rented, and renter, authorized driver and other occupants or claimants expressly waive and reject any coverage in excess of the minimum required limits."

Subsequently and in accordance with her written decision, the trial justice entered a final judgment pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure denying and dismissing plaintiffs' claims against defendants. The plaintiffs timely appealed.¹⁰

Standard of Review

This Court reviews de novo a trial...