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United States Fidelity & Guaranty Co. v. Budget Rent-A-Car Systems Inc.12/1/1992
We granted certiorari to determine whether the court of appeals, in United States Fidelity & Guaranty Co. v. Budget Rent-A-Car Systems, Inc., 829 P.2d 478 (Colo. App. 1991), erred in holding that an automobile rental company's rental agreement, providing for liability and other automobile insurance coverages required by the Colorado Automobile Reparations Act, and the lessee's automobile insurance carrier were co-primary insurers, and whether the court of appeals erred in apportioning liability based upon policy limits. We disagree with the court of appeals' interpretation of the rental agreement and, accordingly, reverse and return this case to the court of appeals with directions to remand it to the district court for further proceedings consistent with this opinion. Because of our Disposition of this issue, we do not address the question of the proper method to apportion liability between two co-primary insurers.
I.
On August 6, 1986, Fran Sterling, an employee of the Jewish Community Center ("JCC"), was driving a van with several children in it when she was involved in an accident. JCC had rented the van from respondent, Budget Rent-A-Car Systems ("Budget"). Two of the children, Leo Elliott and Ken Broman, were seriously injured in the accident.
Budget, a self-insurer, pursuant to section 10-4-716, 4A C.R.S. (1987), originally refused to provide liability insurance coverage to JCC on the children's claims because the driver of the van was only twenty years old. Budget asserted that this violated the "Authorized Driver" provision of the rental agreement between JCC and Budget (the "Rental Agreement"). According to the Rental Agreement, a driver was required to be at least twenty-one years of age to be an "Authorized Driver."
Petitioner, United States Fidelity & Guaranty Company ("USF&G;), was JCC's automobile insurer. USF&G;investigated the loss. Although it believed that it was required only to provide excess coverage to JCC, USF&G;realized that the loss was in excess of Budget's limits, which were the state mandatory minimum of $25,000 per person, and $50,000 per accident. USF&G;settled the claims of the two children for $148,328.68, and filed an action as subrogee for Fran Sterling and JCC against Budget for contribution or equitable apportionment, seeking the $50,000 liability limit from Budget.
In the trial court, USF&G;moved for summary judgment and Budget moved for a determination of law, both as to the primacy of Budget's and USF&G;s liability coverage. The trial court, finding that the Budget Rental Agreement and the USF&G;insurance policies contained mutually repugnant excess insurance clauses, held that Budget and USF&G;were co-primary insurers and apportioned equally the loss up to the lower policy's limits. The court of appeals, in United States Fidelity & Guaranty Co. v. Budget Rent-A-Car Systems, Inc., 829 P.2d 478 (Colo. App. 1991), affirmed the trial court's ruling that the two were co-primary insurers, but held that the loss should be apportioned proportionately to the policy limits. USF&G;s policy limits were $1,000,000, while Budget's limits were $50,000. Under this apportionment, Budget, whose $50,000 limit is 1/21st of the total combined liability limit, would be required to reimburse USF&G;$7,063.27, which is 1/21st of the total loss.
USF&G;petitioned this court for certiorari on both the primacy issue and the apportionment issue. We reverse the judgment of the court of appeals and hold that Budget's coverage is purely primary in this case and that USF&G;s coverage is purely excess. Because o
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