Shields v. Enterprise Leasing Co.

• Decision Date: 16 July 2007
• Docket Number: No. 58690-4-I.,58690-4-I.
• Citation: 139 Wn. App. 664,161 P.3d 1068
• Court: Washington Court of Appeals
• Parties: Brian SHIELDS, Appellant, v. ENTERPRISE LEASING COMPANY, a Washington Corporation, Respondent.

161 P.3d 1068

139 Wn. App. 664

Brian SHIELDS, Appellant, v. ENTERPRISE LEASING COMPANY, a Washington Corporation, Respondent.

No. 58690-4-I.

Court of Appeals of Washington, Division 1.

July 16, 2007.

Angela K. Wong, William Keller, Moran Windes & Wong, Seattle, WA, for Appellant.

Jeffrey D. Eberhard, Portland, OR, for Respondent.

SCHINDLER, A.C.J.

¶ 1 Enterprise Leasing Company (Enterprise) offers third party liability coverage as part of its vehicle rental agreement. Relying on language in the rental agreement and in the Financial Responsibility Act (FRA) chapter 46.29 RCW, Brian Shields argues that Enterprise must provide third party liability coverage even though he expressly rejected the option to purchase third party liability coverage. Shields also contends Enterprise acted in bad faith and violated the Consumer Protection Act (CPA), chapter 19.86 RCW, by misrepresenting available coverage, denying coverage, and failing to investigate his claim. We conclude that under the express terms of the rental agreement and the FRA, Shields is not entitled to third party liability coverage and affirm the trial court's summary judgment dismissal of his lawsuit against Enterprise.

FACTS

¶ 2 Brian Shields rented a car from Enterprise on May 20, 2005. The Enterprise rental agreement offers renters the option to purchase coverage for "Collision Damage Waiver" (CDW), "Personal Accident Insurance" (PAI), and "Supplemental Liability Protection" (SLP). CDW coverage waives responsibility for any damage to the rented vehicle. PAI coverage provides the renter with death or medical benefits in the event of an accident. SLP coverage provides third party liability coverage as applicable under state law and excess third party liability insurance coverage. Shields agreed to accept and pay for CDW and PAI coverage, but expressly rejected and did not pay for SLP coverage.

¶ 3 On May 25, Shields rear-ended a car driven by Adam Little. Immediately following the accident, Shields returned the rental car to Enterprise. In order to obtain a replacement car, Shields had to fill out and sign an accident report. In the Enterprise vehicle accident report, Shields stated that his employer is Installco, that he was working at the time of the accident, and that his insurance company is Allstate Insurance. But according to Shields, he told the Enterprise agent that although he had automobile insurance, he did not make his last payment. In his deposition, Shields explained why he signed the Enterprise vehicle accident report stating that he had insurance.

I signed this document on the date of the accident as a condition to getting another rental vehicle, and before I retained an attorney, I don't know anything about insurance law. Since I did have a policy with Allstate that lapsed for nonpayment of premium in the months before the accident, and I hoped that if I paid the premium, Allstate would cover the accident.

¶ 4 On June 28, MetLife Auto & Home wrote Shields demanding payment of $1621.36 for the damage to Little's car. According to the letter, if Shields did not have automobile insurance, MetLife was willing to set up a monthly payment schedule. After a collection agency threatened legal action, Shields forwarded the letter from MetLife and demanded coverage from Enterprise. In the July 9 letter Shields states that he expects Enterprise to provide coverage for Little's claims and if Enterprise did not contact him within seven days, he would contact an attorney.

Since I requested FULL COVERAGE on the rental vehicle, I expect to be covered for the other driver's car damage and medical claim. Please have your insurance company contact me within 7 days of this letter. If I do not hear from you or your insurance company by July 16, 2005, I will call a lawyer.

¶ 5 On July 13, an Enterprise loss control administrator, Jennifer Gwynn, contacted Shields and told him that because he did not purchase third party liability coverage, he should submit the MetLife claim to his insurance company. On July 14, Gwynn wrote a letter to Shields confirming their conversation.

This letter is in response to our conversation on July 13, 2005. Upon review of your rental contract you did not purchase the Supplemental Liability Protection for damages caused to third parties. SLP is not automatically included in your rental. Enterprise Rent-a-Car can not [sic] forward liability protection for your accident at this time.

Gwynn also faxed a copy of the letter to Shields. The fax cover sheet states "[h]ere is a copy of the denial letter for liability protection thru [sic] Enterprise Rent-a-Car."

¶ 6 On July 21, Shields filed a lawsuit against Enterprise. Shields alleged that Enterprise had a duty to indemnify him for Little's third party liability claims "to the extent required by the motor vehicle financial responsibility laws of Washington State." Shields also alleged that by denying coverage, Enterprise breached the rental agreement, acted in bad faith, and violated the CPA.¹

¶ 7 Enterprise filed a summary judgment motion to dismiss Shields' lawsuit. Enterprise asserted that as a matter of law, Enterprise has no duty to provide third party liability coverage to renters who do not purchase SLP coverage. In opposition, Shields argued that under the terms of the rental agreement and Washington's Financial Responsibility Act (FRA), chapter 46.29 RCW, Enterprise has a duty to provide liability coverage for third party claims. Shields also argued that by denying coverage, Enterprise violated several Washington Administrative Code (WAC) regulations governing insurance claims and the CPA. The trial court granted the motion for summary judgment and dismissed Shields' lawsuit. The court also awarded Enterprise statutory attorney fees. Shields appeals.

ANALYSIS

Third Party Liability Coverage

¶ 8 Even though Shields did not purchase third party liability coverage, he contends Enterprise has a duty to provide third party liability coverage under the terms of the rental agreement and RCW 46.29.490(2)(b) of the FRA.

¶ 9 We review summary judgment de novo. Wright v. Safeco Ins. Co. of America, 124 Wash.App. 263, 270, 109 P.3d 1 (2004). Summary judgment is properly granted when the pleadings and affidavits show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). Only when reasonable minds could reach but one conclusion on the evidence should the court grant summary judgment. Smith v. Safeco Ins. Co., 150 Wash.2d 478, 485, 78 P.3d 1274 (2003).

¶ 10 To the extent a rental car agreement contains insurance provisions, it is treated as a stand-alone motor vehicle insurance policy. New Hampshire Indem. Co., Inc. v. Budget Rent-A-Car Systems, Inc., 148 Wash.2d 929, 935, 64 P.3d 1239 (2003); Van Vonno v. The Hertz Corp., 120 Wash.2d 416, 425, 841 P.2d 1244 (1992). And when a self-insured vehicle rental company offers liability insurance, it must give the renter the opportunity to expressly accept or reject coverage. Corley v. Hertz, 76 Wash.App. 687, 693, 887 P.2d 401 (1994).

¶ 11 Interpretation of the Enterprise rental agreement is a question of law we review de novo. New Hampshire Indem. Co., 148 Wash.2d at 933, 64 P.3d 1239; McDonald v. State Farm Fire & Cas. Co., 119 Wash.2d 724, 730, 837 P.2d 1000 (1992). We construe insurance agreements in the same manner as contracts. Weyerhaeuser Co. v. Commercial Union Ins. Co., 142 Wash.2d 654, 655, 15 P.3d 115 (2000). The agreement is read as a whole and given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance. American Nat'l Fire Ins. Co. v. B & L Trucking and Construction Co., Inc., 134 Wash.2d 413, 428, 951 P.2d 250 (1998). We interpret the agreement in a manner that gives effect to each provision. Smith v. Cont'l Cas. Co., 128 Wash.2d 73, 78, 904 P.2d 749 (1995). Courts determine coverage under the plain meaning of the agreement. Capelouto v. Valley Forge, Ins. Co., 98 Wash. App. 7, 13-14, 990 P.2d 414 (1999). If the language of an insurance agreement is clear and unambiguous, the terms must be given the effect of their plain meaning. Progressive Cas. Ins. Co. v. Jester, 102 Wash.2d 78, 79-80, 683 P.2d 180 (1984). The court must enforce a clear and unambiguous agreement as written and may not create ambiguity where none exists. Quadrant Corp. v. Am. States Inc. Co., 154 Wash.2d 165, 171, 110 P.3d 733 (2005). An ambiguity only exists if the language is susceptible to two different reasonable interpretations. American Nat'l Fire Ins. Co., 134 Wash.2d at 428, 951 P.2d 250.

¶ 12 The Enterprise rental agreement offers the renter the opportunity to purchase and accept insurance coverage for collision damage (CDW), accidental death and medical benefits (PAI), and supplemental third party liability protection (SLP). There is no dispute Shields purchased and accepted CDW and PAI but rejected SLP coverage. The SLP provision explicitly describes the availability of minimum and excess third party liability coverage.

16. Optional Supplemental Liability Protection.

THE PURCHASE OF SUPPLEMENTAL LIABILITY PROTECTION IS OPTIONAL AND NOT REQUIRED IN ORDER TO RENT A VEHICLE.

SLP Benefits:

Optional Supplemental Liability Protection (SLP) provides Renters with minimum financial responsibility limits as outlined in the applicable motor vehicle financial responsibility laws of the state where Vehicle is operated AND excess insurance provided by Empire Fire and Marine Insurance Company, which supplies Renter and Additional Authorized Drivers with third-party liability protection with a combined single limit per accident equal to the difference between the minimum financial responsibility limits set forth above and $1,000,000.00. Combined Single Limit per accident.

¶ 13 Relying on the language in paragraph 6 of the rental agreement, Shields asserts that nevertheless Enterprise has a legal obligation...