Court: Supreme Court of Florida; November 22, 2011; Florida; State Supreme Court
Petitioners are seeking a review of the First District Court of Appeal's decision in *Geico Indemnity Co. v. Shazier*, arguing it conflicts with prior rulings by the Florida Supreme Court, specifically in *Susco Car Rental System v. Leonard* and *Roth v. Old Republic Insurance Co.* The district court's decision favored the insurer regarding its duty to defend and indemnify the insured, Kutasha Shazier, based on a narrow interpretation of 'consent' and an unauthorized driver provision that contradicted established precedents under Florida’s dangerous instrumentality doctrine.
Shazier, as the named insured, rented a vehicle from Avis due to her own car being disabled. The rental agreement explicitly prohibited additional unauthorized drivers without Avis's prior written approval. Shazier allowed Frederick Royal to drive the rental car, who then permitted Tercina Jordan to operate the vehicle. Following a negligent incident, resulting in serious injuries and a fatality, personal injury lawsuits were filed against Shazier, Jordan, and Avis.
Geico initiated a declaratory judgment action, asserting there was no duty to defend or indemnify Shazier or Jordan based on the rental agreement's terms. Competing motions for summary judgment were filed, with the injured passenger arguing the rental car was a 'temporary substitute auto' under Geico's policy. Geico contended that since Avis had not authorized Jordan to drive, the vehicle did not qualify as a 'temporary substitute auto,' thus negating any duty to provide coverage. The Geico policy included provisions for liability protection for owned vehicles and stipulated that a 'temporary substitute auto' must be used with the owner's permission.
The vehicle in question is classified as a "temporary substitute auto," which allows for use when an owned auto or trailer is unavailable due to breakdown, repair, or loss. The insurance policy covers the policyholder and any authorized user of the owned auto, and relatives driving a non-owned auto with the owner's permission. A "non-owned auto" is defined as any private passenger vehicle not owned or regularly used by the policyholder or their relatives, excluding temporary substitute vehicles.
The trial court ruled in favor of the passenger, concluding that the rented vehicle qualified as a temporary substitute auto under the Geico policy, which obligated Geico to defend and indemnify Shazier for vicarious liability under Florida’s dangerous instrumentality doctrine. The court found no factual disputes regarding Geico's obligation to provide coverage for Shazier and others permitted to use the vehicle.
On appeal, the First District reversed this decision, asserting that the rental car did not meet the criteria for a temporary substitute auto. The court reasoned that coverage was contingent on the rental car being used with permission from Avis, the rental company, which specified in the rental agreement that only Shazier was authorized to drive the vehicle. Jordan’s use of the rental car revoked this permission, thus disqualifying it as a temporary substitute auto and eliminating coverage under the Geico policy. The petitioners then sought review of this ruling, arguing a conflict with previous court decisions regarding insurance policy interpretations. The analysis of the case will proceed based on a de novo review standard concerning the insurance contract interpretation.
Geico defined 'temporary substitute auto' as a vehicle used with the owner's permission. The First District ruled that because the rental agreement between Shazier and Avis did not explicitly allow Jordan to operate the vehicle, it was not used with Avis's permission. Consequently, the vehicle was classified as a 'non-owned auto,' resulting in Geico denying coverage. Petitioners argue that this new interpretation of permission conflicts with established case law regarding the dangerous instrumentality doctrine, which holds vehicle owners liable for damage caused by individuals they permit to operate their vehicles. This doctrine emphasizes the difference between 'use' and 'operation' and maintains that an owner's consent cannot be negated by third-party agreements restricting who may operate the vehicle.
The document references cases such as Susco and Roth, which highlight that even if a rental agreement prohibits unauthorized drivers, this does not absolve the owner of liability when the vehicle is used with their consent. In Susco, the court affirmed that restrictions in a rental contract do not affect the owner's liability to third parties injured in an accident involving the vehicle, as the car was being used for its intended purpose. The overarching principle is that consent from the vehicle owner remains intact despite any private contractual limitations.
In Susco, it was determined that consent for the use of a rental car cannot be restricted by an unauthorized operator clause, and the term 'use' does not pertain to the operator. A rental agreement's prohibition on other drivers does not absolve the owner of liability under the dangerous instrumentality doctrine. The court explained that relinquishing control of a vehicle only relieves the owner of liability if a breach of custody occurs, such as conversion or theft. Restrictions in a bailment agreement do not affect the legal liabilities of the owner who places a vehicle into circulation. Consent under the dangerous instrumentality doctrine is broadly defined, indicating that an owner's liability persists unless they have lost the incidents of ownership or the vehicle is operated without their authority.
The principles established in Susco extend to bailees, who are also liable to third parties for negligence when they entrust the vehicle to another. This was further illustrated in American Fire and Casualty Co. v. Blanton, where a vehicle owner limited his son's permission to drive but the son allowed a friend to drive, resulting in an accident. The court held that implied permission under the dangerous instrumentality doctrine means the owner remains liable unless there is a breach of custody equivalent to conversion or theft. Therefore, the owner's liability for injuries from negligent operation persists even with limited permissions in place.
Original entrustment establishes liability for the vehicle owner, which remains unchanged even if the operator exceeds their authority. The district court determined that a father's restrictions on other passengers or operators did not negate liability under the dangerous instrumentality doctrine, similar to findings in the Susco case. In Roth, a rental agreement prohibited unauthorized drivers, yet when the bailee allowed another person to drive, resulting in an accident, the question arose whether the permittee's insurer could seek indemnity from both the rental car owner and the bailee. Relying on Susco and Blanton, it was concluded that despite contractual prohibitions, both the bailee's and owner's insurers were liable to cover the permittee, recognizing the necessity of temporary operation by third parties in modern car usage. This broad understanding of consent aligns with Florida public policy, highlighting that consent for vehicle use is not restricted by the identity of the operator. The interpretation of insurance contracts was identified as a source of conflict, necessitating a review of established Florida law principles.
The contract interpretation must adhere to its plain language, as established in Auto-Owners Ins. Co. v. Anderson. If the policy language allows for multiple reasonable interpretations—one offering coverage and another limiting it—the policy is deemed ambiguous. Such ambiguity is resolved against the drafter and in favor of the insured, with exclusionary clauses subjected to stricter scrutiny than coverage clauses. In this case, neither Geico nor the district court applied these principles correctly. Under Geico's policy, a "temporary substitute auto" is defined as a vehicle not owned by the insured but used with the owner's permission as a substitute for the insured’s vehicle. Although not owned by the insured, the policy treats a temporary substitute auto as if it were the insured's own vehicle, covering the insured and any authorized driver, provided their use is within the permission granted. The terms of "permission" are clarified in precedents like Susco and Roth, which indicate that consent allows for use beyond the owner's immediate control and can only be negated by conversion or theft. Avis granted permission to Shazier for vehicle use, thereby qualifying the vehicle as a "temporary substitute auto" under Geico’s policy. Geico's reliance on unauthorized driver prohibitions from the rental contract, of which it was not a party, contradicts established interpretations. The district court's reliance on Duncan Auto Realty, Ltd. v. Allstate Insurance Co. is also flawed. In Duncan, the court found that for a vehicle to qualify as a "temporary substitute auto," it must perform a function that the insured's disabled vehicle would have performed. The auto dealer limited Garcia's use to a test drive, meaning the truck could not be classified as a "temporary substitute auto" under Allstate's policy, as it did not align with the scope of permissible use.
The excerpt outlines a legal analysis regarding the interpretation of insurance coverage and the distinction between "use" and "operation" of a vehicle within the context of consent under Florida law. It critiques the First District's conclusion that Avis limited the car's permissible use by only allowing Shazier to use it personally. The text emphasizes that permission for use pertains to the purpose, not the identity of the operator, as explained in Couch on Insurance. Specifically, it states that revoking permission means the vehicle ceases to be a "temporary substitute car" under the insured's policy. The excerpt references the Duncan case, where permission was granted only for a test drive, not for business use, highlighting that limiting use does not depend on who drives the vehicle. It further discusses the legal precedent that distinguishes between "use"—broader in scope—and "operation," with the latter being the act of controlling the vehicle. The First District's ruling is criticized for misapplying these concepts, effectively construing the insurance contract against the insured and allowing Geico to leverage a private contract to evade liability, contrary to established Florida law. Geico's policy is clarified as covering a "temporary substitute auto" when used with the owner's permission, even if the insured does not own the vehicle.
Avis rented a vehicle to Shazier to serve as a temporary substitute for her inoperable Ford Expedition. Under the relevant insurance policy, coverage applies when a non-titled vehicle is used with the owner’s permission as a substitute for an owned vehicle. Since Shazier had the owner's permission to use the vehicle, it qualified as her "owned car" under Geico’s policy at the time of the collision. Consequently, Geico is liable, consistent with Florida law, public policy, and insurance contract interpretation standards. The court quashed the First District’s decision and mandated judgment in favor of the insureds and injured parties, while declining to review an additional issue raised by Geico. Justices Pariente, Quince, Labarga, and Perry concurred, while Chief Justice Canady dissented, joined by Justice Polston.
