Progressive Se. Ins. Co. v. Empire Fire & Marine Ins. Co.

• Citation: 88 N.E.3d 188
• Decision Date: 21 November 2017
• Docket Number: Court of Appeals Case No. 32A05–1706–PL–1235
• Parties: PROGRESSIVE SOUTHEASTERN INSURANCE CO., Appellant–Plaintiff, v. EMPIRE FIRE AND MARINE INSURANCE CO., Appellee–Defendant.
• Court: Court of Appeals of Indiana

88 N.E.3d 188

PROGRESSIVE SOUTHEASTERN INSURANCE CO., Appellant–Plaintiff,

v.EMPIRE FIRE AND MARINE INSURANCE CO., Appellee–Defendant.

Court of Appeals Case No. 32A05–1706–PL–1235

Court of Appeals of Indiana.

Filed November 21, 2017

Attorney for Appellant : J. Thomas Vetne, Jones Obenchain, LLP, South Bend, Indiana

Attorneys for Appellee : Dennis F. Cantrell, Keith D. Mundrick, Cantrell, Strenski & Mehringer, LLP, Indianapolis, Indiana

Robb, Judge.

Case Summary and Issue

[1] Maria Rivera took her vehicle, which was insured by Progressive Southeastern Insurance Company ("Progressive"), to Terry Lee Honda for repairs. Terry Lee Honda provided Rivera with a courtesy car and requested she sign a "Rental Agreement for a Temporary Substitute Vehicle" ("Courtesy Car Agreement"). Terry Lee Honda insures its vehicles through Empire Fire and Marine Insurance ("Empire"). After Rivera had an accident in the courtesy car, Empire paid for the repairs and then sought to collect from Progressive, alleging Progressive was the primary insurer pursuant to the Courtesy Car Agreement. In turn, Progressive claimed that the Courtesy Car Agreement was an invalid rental agreement and the courtesy car was a loaned vehicle under Indiana law.

[2] Progressive initiated this declaratory judgment action against Empire seeking an order stating: 1) Rivera was a permissive driver of a loaned vehicle; 2) Empire's coverage was primary; and 3) Empire's coverage must be exhausted before Progressive is obligated on any claim. In response, Empire filed a motion for arbitration pursuant to a preexisting arbitration agreement with Progressive. Progressive then filed an Amended Complaint, attempting to jettison issues subject to arbitration by asking the trial court to declare the courtesy car was a loaned vehicle under Indiana law. On cross-motions for summary judgment, the trial court concluded the Courtesy Car Agreement constituted a rental agreement and ordered any remaining dispute to arbitration.

[3] Progressive now appeals, raising one issue for our review: whether the trial court erred in concluding the Courtesy Car Agreement constituted a rental agreement. Concluding the trial court erred in reaching the merits of the underlying claim because the dispute is subject to compulsory arbitration, we reverse in part, affirm in part, and remand to the trial court for entry of an order directing the parties to proceed to arbitration.

Facts and Procedural History¹

[4] On December 11, 2015, Rivera took her vehicle to Terry Lee Honda in Avon, Indiana, for service work. As part of the "Honda Courtesy Car Program," Rivera was issued a Honda CR–V courtesy car to use while her vehicle was serviced. Before receiving the courtesy car, Rivera signed a contract titled, "Rental Agreement for a Temporary Substitute Vehicle" ("Courtesy Car Agreement"). Relevant to this appeal, the Courtesy Car Agreement provided:

2. Rental: Consideration; Indemnity and Warranties. This is a contract for rental of the Vehicle. A fee You pay Us, or Our opportunity to service or repair Your vehicle and the benefits We receive for the service/repair work, is adequate consideration for rental of the Vehicle.

We may repossess the Vehicle at Your expense without notice to You if the Vehicle is abandoned or used in violation of law or this Agreement. You agree to indemnify Us, defend Us and hold Us harmless from all claims, liability, costs and attorney fees We incur resulting from or arising out of this Agreement or Your use of the Vehicle. We make no warranties, express, implied or apparent, regarding the Vehicle, no warranty of merchantability and no warranty that the Vehicle is fit for a particular purpose.

* * *

4. Responsibility for Damage or Loss; Reporting to Police. You are responsible for theft of the Vehicle and damage to it whether or not You are at fault....

* * *

6. Insurance. You are responsible for all damage or loss You cause to others. You agree to provide auto liability, collision and comprehensive insurance covering You, Us and the Vehicle. Your insurance is primary. If You have no auto liability insurance in effect on the date of a loss, or if We are required by law to provide liability insurance, We will provide auto liability insurance (the "Policy") that is secondary to any other valid and collectible insurance whether primary, secondary, excess or contingent....

Appellant's Appendix, Vol. II at 59. The Courtesy Car Agreement provided for a daily rental rate of $35 but Terry Lee Honda neither collected the charge when Rivera signed the contract, nor did it collect the charge when Rivera returned the courtesy car. Terry Lee Honda did, however, receive $1,420 for service work paid by Rivera's vehicle warranty provider.

[5] Prior to the events that led to this litigation, both Progressive and Empire signed a "Special Arbitration Agreement" ("Arbitration Agreement"), administered by Arbitration Forums, Inc.² The Arbitration Agreement provides:

Upon settlement of a claim or suit, signatory companies must submit any unresolved disputes to Arbitration Forums, Incorporated (herein after referred to as AF) where:

(a) each has issued a policy of casualty insurance covering, or as a self-insured covers, one or more parties asserted to be legally liable for an accident, occurrence or event out of which a claim or suit arises; or

(b) each has issued separate policies of property or casualty insurance providing, or as a self-insured provides, concurrent coverage to the same party or parties asserted to cover an accident, occurrence or event out of which a first or third party claim or suit for bodily injury or property damage arises; or

(c) a workers compensation carrier or a self-insured seeks to recover reimbursement of workers compensation benefits from an alleged tortfeasor.

Id., Vol. III at 75. Arbitration Forums, Inc., defines "settlement" as:

Settlement—(Special Arbitration) The final disposition of a claim or suit wherein the claimant or plaintiff releases any and all causes of action against all alleged responsible parties involved in the Special Arbitration filing....

Id. at 86. Concurrent coverage is defined as:

Concurrent Coverage—(Special Arbitration) Two or more policies of insurance and/or self-insureds providing coverage to the same party or parties or the same risk or risks for the same accident, occurrence, or event. Concurrent coverage includes primary/excess disputes.

Id. at 85.

[6] While driving the courtesy car, Rivera had an accident which caused minor damage to the vehicle. Empire made full payment for the damage, minus the deductible paid by Terry Lee Honda. Empire then sought repayment of $328.45 from Progressive, claiming Progressive was the primary insurance provider pursuant to the Courtesy Car Agreement.³

[7] In response, Progressive claimed the Courtesy Car Agreement was invalid because Terry Lee Honda did not comply with the statutory requirements for rental agreements found in Indiana Code section 24–4–9–5.⁴ Progressive argued that because the Courtesy Car Agreement was unenforceable, the courtesy car was a loaned vehicle under Indiana Code section 27–8–9–7(b), and Empire's insurance was primary because Rivera was a permissive driver.⁵

[8] On March 24, 2016, Progressive initiated the current litigation by filing its Complaint for Declaratory Judgment, seeking an order declaring: 1) Rivera was a permissive driver of a loaned vehicle; 2) Empire's coverage was primary; and 3) Empire's coverage must be exhausted before Progressive is obligated on any claim. In response, Empire filed a motion for arbitration pursuant to the Arbitration Agreement and, in the alternative, Empire argued the Courtesy Car Agreement qualified as a rental or lease under Indiana law.

[9] Attempting to jettison issues subject to arbitration, Progressive filed an Amended Complaint asking the court to declare that the Courtesy Car Agreement between Rivera and Terry Lee Honda was, as a matter of law, a loan and not a rental or lease. Both parties moved for summary judgment.

[10] Following a hearing on April 7, 2017, the trial court issued its findings of fact and conclusions thereon granting summary judgment in favor of Empire and denying Progressive's motion for summary judgment. The trial court concluded the Courtesy Car Agreement was a rental agreement as defined by Indiana Code section 24–4–9–5 and that any remaining dispute was subject to arbitration. Progressive now appeals.

Discussion and Decision

I. Standard of Review

[11] Our standard of review in matters of summary judgment is the same as the trial court: summary judgment is appropriate only where the evidence shows there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014) ; Ind. Trial Rule 56(C). Cross-motions for summary judgment do not alter our standard of review and we consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012). We review de novo the trial court's interpretation of a contract, Showboat Marina Casino P'ship v. Tonn & Blank Constr., 790 N.E.2d 595, 597 (Ind. Ct. App. 2003), as well as orders compelling arbitration, Brumley v. Commonwealth Bus. Coll. Educ. Corp., 945 N.E.2d 770, 775 (Ind. Ct. App. 2011).

II. Agreement to Arbitrate

[12] Empire contends the dispute is subject to arbitration while Progressive argues the dispute is outside the scope of the Arbitration Agreement and, even if the dispute is within the scope, Empire failed to meet its burden to compel arbitration.

A. Scope of the Arbitration Agreement

[13] Although often comingled, we view Progressive's argument regarding the scope of the Arbitration Agreement as consisting of two, separate components. First, Progressive argues that its action is outside the scope of the Arbitration Agreement because it sought a determination of whether the courtesy car was a loan, a...