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Metropolitan Property and Casualty Insurance Co. v. Hertz Corp.6/14/1999
Certiorari to the Colorado Court of Appeals
EN BANC AND CASE REMANDED
We granted certiorari to determine whether the Colorado Auto Accident Reparations Act, sections 10-4-701 to 726, 3 C.R.S. (1997), requires that a self-insured automobile rental agency provide coverage to a driver who was not authorized by the rental agency but was allowed to drive by the lessee. We review the court of appeal's ruling that a driver of a rental car who was unauthorized under the terms of the rental agreement did not have legal permission to drive the car for the purposes of insurance coverage. See Metropolitan Cas. Ins. Co. v. Hertz, 967 P.2d 175, 176 (Colo. App. 1998). The court of appeals agreed with the trial court's Conclusion that the rental company had no obligation to the driver pursuant to the company's insurance policy and the Colorado Automobile Accident Reparations Act. Thus, the court of appeals affirmed the trial court's grant of summary judgment in favor of the rental company.
We hold that the driver was a "permissive user" because he had permission from the insured lessee and that the self-insured rental company is responsible for providing coverage consistent with the Colorado Auto Accident Reparations Act. We reverse the judgment of the court of appeals and remand for further proceedings consistent with this opinion.
I.
On June 5, 1994, Micah Bachman (Bachman) rented an automobile from Hertz Rental Company (Hertz). The rental agreement provided that the lessee could not permit anyone to drive the car unless authorized by Hertz. Bachman loaned the automobile to Dale Rinkenberger (Rinkenberger). On June 12, 1994, Rinkenberger was involved in an accident while driving the rental car and was subsequently sued. His insurer, Metropolitan Casualty Insurance Company (Metropolitan), defended and indemnified him. This dispute arose when Metropolitan requested contribution from Hertz for the defense and indemnification of Rinkenberger as a result of his liability for the accident.
Hertz and Metropolitan filed cross motions for summary judgment. The motions for summary judgment dealt with two issues: whether Rinkenberger had permission to drive the automobile and whether, if Rinkenberger did have permission to drive the car, Hertz's "other insurance clause" shifted primary coverage to Metropolitan. The trial court found in favor of Hertz, and Metropolitan appealed to the court of appeals. The court of appeals affirmed the trial court on the issue of permissive use, rendering the "other insurance clause" issue moot. The decision of the court of appeals was made without the benefit of our subsequently announced decision in Raitz v. State Farm Mutual Auto Insurance. See 960 P.2d 1179 (Colo. 1998).
We now reverse the court of appeals. We hold that Rinkenberger was a permissive user because he had permission from an insured and no knowledge that the owner of the vehicle had prohibited his use of the car. Accordingly, Hertz is required by the Colorado Auto Accident Reparations Act to provide automobile insurance coverage for the accident.
II.
Resolution of this issue requires an analysis of the Colorado Auto Accident Reparations Act (No-Fault Act) and recent case law dealing with permissive use.
A.
Although the Colorado Auto Accident Reparations Act is known as the No-Fault Act, it mandates both no-fault and liability insurance for automobiles. See Allstate Ins. Co. v. Avis Rent-A-Car Sys., Inc., 947 P.2d 341, 344 (Colo. 1997). The no-fault coverage is known as Personal Injury Protection (PIP) and is provided to the injured party by his or her own insurance company regardless of fau
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