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Chandler v. Geico Indem. Co.

Supreme Court of Florida

November 23, 2011

Rethell Byrd CHANDLER, etc., et al., Petitioners,
v.
GEICO INDEMNITY COMPANY, et al., Respondents. Monica Steele, Petitioner,
v.
Geico Indemnity Company, et al., Respondents.

Rehearing Denied Jan. 23, 2012.

Page 1294

David H. Burns of Cox, Burns and Giddings, P.A., Henry J. Graham of The Graham Law Firm, P.A., and Henry C. Hunter of Hunter and Associates, James E. Messer, Jr. of Fonvielle, Lewis, Foote and Messer, Tallahassee, FL, for Petitioners.

Angela C. Flowers of Kubicki Draper, Ocala, FL, for Respondent.

LEWIS, J.

Petitioners seek review of the decision of the First District Court of Appeal in Geico Indemnity Co. v. Shazier, 34 So.3d 42 (Fla. 1st DCA 2010), on the basis that it conflicts with the decisions of this Court in Susco Car Rental System of Florida v. Leonard, 112 So.2d 832 (Fla.1959), and Roth v. Old Republic Insurance Co., 269 So.2d 3 (Fla.1972). In Shazier, the district court resolved a question regarding an insurer's duty to defend and indemnify its insured in favor of the insurer. In doing so, the First District relied on a very constricted definition of " consent" and employed an unauthorized driver provision in contradiction of our clear precedent to the contrary under Florida's dangerous instrumentality doctrine to defeat coverage. We have jurisdiction. See art. V, ยง 3(b)(3), Fla. Const.

BACKGROUND

Kutasha Shazier was a named insured and owner of a Ford Expedition listed in her automobile insurance policy issued by the Geico Indemnity Company (Geico). In August 2006, because Shazier's vehicle became disabled due to transmission problems, she rented a Hyundai Sonata from Avis Rent-A-Car (Avis), designating her Geico insurance as the primary insurer. The rental agreement contained the following provision regarding other drivers:

NO ADDITIONAL OPERATORS ARE AUTHORIZED OR PERMITTED WITHOUT AVIS' PRIOR WRITTEN APPROVAL IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE RENTAL AGREEMENT OR APPLICABLE STATE LAW.

Another paragraph of the agreement also addressed " unauthorized drivers" :

Prohibited Use of the Car. Certain uses of the car and other things you or a driver may do, or fail to do, will violate this agreement. A VIOLATION OF THIS PARAGRAPH, WHICH INCLUDES USE OF THE CAR BY AN UNAUTHORIZED DRIVER, WILL AUTOMATICALLY TERMINATE YOUR RENTAL [AND] VOID ALL LIABILITY PROTECTION AND ANY OPTIONAL SERVICES THAT YOU HAVE ACCEPTED[.]

One evening soon thereafter, Shazier permitted the rental vehicle to be used by Frederick Royal, who in turn allowed the

Page 1295

rental vehicle to be operated by Tercina Jordan. Jordan negligently operated the vehicle, and the car crashed into a tree, resulting in serious injury to minor passengers in the vehicle and the death of another. The injured passengers and the decedent's representative subsequently filed personal injury actions against Shazier, Jordan, and Avis, and Avis filed a cross-claim for indemnity against Shazier. Geico, Shazier's insurer, filed a declaratory judgment action seeking a determination that Geico had no duty under the policy to defend and indemnify Shazier or Jordan. One of the injured passengers and Geico filed competing motions for summary judgment. The passenger contended that coverage existed because the rental car constituted a " temporary substitute auto" under the Geico policy. Geico countered that because Avis had not given Jordan express permission to drive the rental car, the rental vehicle was not a " temporary substitute auto" as to the named insured, Shazier, under the terms of the Geico policy and thus Geico had no duty to defend or indemnify either Shazier or Jordan.

Shazier is the named insured in the Geico policy, which provides that Geico " will pay damages which an insured becomes legally obligated to pay because of bodily injury, sustained by a person, and damage to or destruction of property[,] arising out of the ownership, maintenance, or use of the owned auto. " Geico also " will defend any suit for damages payable under the terms of [the] policy." An " owned auto" includes " a vehicle described in [the] policy for which a premium charge is shown" and also " a temporary substitute auto." The latter term is defined as follows:

" Temporary substitute auto " means a private passenger, farm or utility auto or trailer, not owned by [the policy holder], temporarily used with the permission of the owner. This vehicle must be used as a substitute for the owned auto or trailer when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.

With regard to an " owned auto," the insurance contract covers the policy holder and " any other person using the auto with [the policy holder's] permission." As to a " non-owned auto," the insurance contract covers the policy holder and his or her relatives " when driving the non-owned auto" with permission of the owner. The term " non-owned auto" includes " a private passenger, farm or utility auto or trailer not owned by or furnished for the regular use of either [the policy holder] or a relative " but expressly excludes a " temporary substitute auto."

The trial court entered a summary final judgment in favor of the passenger based on the determination that (1) the rented vehicle satisfied the definition of " temporary substitute auto" and thus was an " owned auto" under the Geico policy, (2) Geico had a duty to defend and indemnify Shazier for her vicarious liability under the dangerous instrumentality doctrine, and (3) Shazier's decision to permit others to drive the car was covered because it was within the " use" of the vehicle under the policy. The trial court held that there was no genuine issue of material fact in dispute as to Geico's obligation to defend and provide insurance coverage for Shazier and others using the vehicle and that the Geico policy covered Tercina Jordan based on the permission given by Shazier for the use of the vehicle. Accordingly, the court ruled that, as a matter of law, Geico would be obligated to pay damages, if and when Kutasha Shazier becomes legally obligated to pay damages because of bodily injury sustained by the injured parties in the underlying tort action based on Florida's dangerous instrumentality doctrine.

Page 1296

On appeal, the First District reversed and ordered the entry of summary judgment in favor of Geico. The district court determined that the rental car did not constitute a " temporary substitute auto," reasoning as follows:

Under the policy, in order for coverage to attach in this case, the " temporary substitute auto" must have been used with the permission of Avis. As the owner, Avis had the authority to define the scope of permissible use of the rental car. See Duncan Auto Realty, Ltd. v. Allstate Ins. Co., 754 So.2d 863, 865 (Fla. 3d DCA 2000) (" [T]he owner of the temporary substitute vehicle, not its user, possesses the authority to define the scope of permissible use of the substitute vehicle." ). As evidenced by the rental agreement, Avis did just that. Avis granted Shazier permission to use the rental car so long as she was the only person who did so. Jordan's use of the rental car automatically revoked the permission granted to Shazier by Avis. Therefore, because it was not being used with Avis's permission, the rental car did not qualify as a " temporary substitute auto" and no coverage existed under the policy.

Geico, 34 So.3d at 43-44.

Petitioners filed separate notices to invoke our jurisdiction and briefs alleging express and direct conflict between the district court's decision and this Court's decisions in Susco and Roth. We granted review and consolidated the two cases.

ANALYSIS

The issue in this case stems from a trial court's ruling on summary judgment based upon the interpretation of an insurance contract which causes our standard of review to be de novo. See Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So.2d 126, 130 (Fla.2000) (summary judgment); Kattoum v. N.H. Indem. Co., 968 So.2d 602, 604 (Fla. 2d DCA 2007) (insurance policy).

In this case, the district court determined that the rental contract between Avis and Shazier, which prohibited anyone not authorized by Avis from driving the car, governed whether Avis had given its permission for the use of the car within the meaning of Geico's policy. That is, Geico's definition of " temporary substitute auto" required that the vehicle be " temporarily used with permission of the owner." The First District held that because the Avis rental contract between Shazier and Avis did not expressly authorize Jordan to operate the vehicle, the rental car was not being " used with the permission of the ...


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