NEW HAMPSHIRE INDEM v. BUDGET RENT-A-CAR
| Decision Date | 11 December 2001 |
| Docket Number | No. 19543-1-III.,19543-1-III. |
| Parties | NEW HAMPSHIRE INDEMNITY CO., INC., Respondent, v. BUDGET RENT-A-CAR SYSTEMS, INC., A Corporation, Appellant, Thomas O. Bentley, and Patricia S. Reilly, Individually, and as Guardian for Sara L. Reilly, and John P. Reilly Individually, Defendants. |
| Court | Washington Court of Appeals |
K.C. Webster, Phillips, Webster, P.L.L.C., Woodinville, for Appellant.
Meriwether D. Williams, Patrick J. Cronin, Winston & Cashatt, Spokane, for Respondent.
Budget Rent-A-Car Systems, Inc., (Budget) rented a car to Thomas Bentley, who declined optional liability insurance because his policy with New Hampshire Indemnity Co. (New Hampshire) provided coverage for non-owned vehicles. Mr. Bentley was involved in a car accident. Claiming it was not primarily liable for the damages, New Hampshire brought a declaratory judgment action against Budget, Mr. Bentley, and the injured parties. The court granted summary judgment in favor of New Hampshire. We affirm.
On April 4, 1998, Mr. Bentley rented a car from Budget in Spokane. The rental agreement included a statement that Budget provided liability protection for bodily injury and property damage caused by the negligent use or operation of the vehicle. This protection, however, was not to apply until after the exhaustion of all automobile liability insurance and/or other protection available to the driver. Mr. Bentley did not purchase the optional liability insurance because he had coverage through his policy with New Hampshire. On April 7, Mr. Bentley was involved in a car accident with the Reillys, who submitted claims to both Budget and New Hampshire seeking compensation for their injuries.
On February 8, 2000, New Hampshire filed a complaint for declaratory judgment against Budget, Mr. Bentley, and the Reillys. It sought a judgment declaring that Budget's rental agreement with Mr. Bentley was a contract providing primary insurance protection. New Hampshire also sought attorney fees and costs. Budget answered by claiming New Hampshire was the primary insurer. Budget also filed a cross claim against Mr. Bentley for a declaration that if it was required to provide primary liability protection, it was entitled to indemnification from him under the contract.
New Hampshire and Budget filed cross motions for summary judgment with each claiming that the other provided primary insurance coverage. New Hampshire argued that Budget was the primary insurer because it owned the car. On the other hand, Budget asserted that New Hampshire was the primary insurer because the driver, not the owner, was obligated to provide primary insurance.
The court determined Budget provided primary insurance coverage. Its July 14, 2000 order stated that Budget's rental agreement provided primary coverage; New Hampshire's policy was excess only; and Budget was required to indemnify Mr. Bentley.1 On August 16, 2000, the court entered an order awarding New Hampshire $12,309.50 in attorney fees.
On September 1, 2000, Budget filed a notice of appeal that sought review of both the order granting summary judgment and the order awarding attorney fees. New Hampshire moved to dismiss the appeal as untimely, because the notice was filed more than 30 days after the July 14 order granting summary judgment. This court's commissioner denied the motion. New Hampshire's motion to modify was also denied with leave to raise the timeliness issue in its appellate brief. The matter was set before this panel.2
Summary judgment is appropriate "`if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Rigos v. Cheney Sch. Dist. No. 360, 106 Wash.App. 888, 892, 26 P.3d 304 (2001) (quoting Greater Harbor 2000 v. City of Seattle, 132 Wash.2d 267, 278, 937 P.2d 1082 (1997)). When reviewing an order of summary judgment, this court engages in the same inquiry as the trial court. Id.
Budget first claims the court erred by determining that Title 46.29 RCW, the Financial Responsibility Act (FRA), applied. It contends that Title 46.30 RCW, the Mandatory Liability Insurance Act (MLIA), is the controlling statutory scheme.
The FRA requires a driver to provide proof of insurance or other financial security after an accident has occurred. Mendoza v. Rivera-Chavez, 140 Wash.2d 659, 663, 999 P.2d 29 (2000) (citing RCW 46.29.060-.240). Failure to provide such proof will cause the driver's license to be suspended. Id. The act protects the public from motorists who are unable to compensate the victims of accidents. Id. at 664, 999 P.2d 29.
The FRA does not require that all drivers meet the statutory requirements. Royse v. Boldt, 80 Wash.2d 44, 46, 491 P.2d 644 (1971). It only requires an individual to prove that he is financially able to compensate those he may injure through the use of his vehicle after he is involved in an automobile accident resulting in bodily injury or death of a person or property damage of $300 or more. Mut. of Enumclaw Ins. Co. v. Wiscomb, 97 Wash.2d 203, 206, 643 P.2d 441 (1982) (citing RCW 46.29.080). If a qualifying accident occurs, the two-pronged approach of the FRA comes into play. Id.
First, if the injured or damaged person(s) submits information indicating the extent of injuries or damage within 180 days of the accident, the other party must demonstrate financial responsibility to the injured or damaged person(s). RCW 46.29.070(2). Unless the individual already carries liability insurance coverage or can demonstrate financial responsibility in some other manner, see RCW 46.29.080, he must post an "amount of security ... sufficient... to satisfy any judgment or judgments for damages resulting from such accident as may be recovered against each driver or owner." RCW 46.29.070(1). Second, the financial responsibility act requires the individual to demonstrate "financial responsibility for the future". This term is defined by the act as follows: "Proof of ability to respond in damages for liability, on account of accidents occurring subsequent to the effective date of said proof, arising out of the ownership, maintenance, or use of a vehicle...." RCW 46.29.260.
At the time of the accident here, there was no indication that Budget had a prior incident triggering the FRA. Budget is required to establish its financial ability to cover the potential damages from this accident as well as to show financial responsibility in the future by filing a certificate of insurance. Mut. of Enumclaw,97 Wash.2d at 207,643 P.2d 441. Under RCW 46.29.490(2)(b), that policy must include coverage for permissive users of the insured vehicle. For purposes of this case, the provisions of the FRA are inapplicable.
Budget asserts instead that the MLIA applies. The MLIA requires all individuals who drive vehicles registered in Washington to satisfy specific financial responsibility requirements. Mendoza, 140 Wash.2d at 665, 999 P.2d 29. This act refers only to drivers of motor vehicles and makes no mention of registered owners. See Title 46.30 RCW. There is no provision in the MLIA requiring insurance coverage to permissive users.
Mr. Bentley complied with the MLIA because he had insurance coverage through New Hampshire. The act is silent as to rental cars and excess coverage provisions. It is also inapplicable.
Neither the FRA nor the MLIA apply here. To the extent it relied on either statutory scheme or specifically RCW 46.29.490 in reaching its conclusions, the court erred.
Budget contends the court erroneously determined that it was primarily liable for the damages arising from the car accident. As part of its rental agreement, Budget provides liability protection for third-party claims in specified situations. That portion of the rental agreement or contract states:
Mr. Bentley had a private insurance policy through New Hampshire that included coverage for damages incurred while driving a non-owned automobile. The coverage, however, was limited:
If the insured has other insurance against a loss covered by Part I of this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance.
Budget claims that New Hampshire is the primary insurer because (1) Mr. Bentley agreed that Budget would not be primarily liable since he had private insurance; (2) as a self-insured entity, Budget's contingent liability protection is not "other insurance" under New Hampshire's excess coverage provision; and (3) Budget's policy contains a super escape clause which supersedes New Hampshire's excess coverage clause.
Under the rental contract, Mr. Bentley agreed that Budget...
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