Allstate Insurance v. Alamo Rent-A-Car, Inc.
Docket: Nos. 96-15506, 96-15655
Court: Court of Appeals for the Ninth Circuit; February 23, 1998; Federal Appellate Court
The validity of Alamo Rent-A-Car's "Shifting Clause" is the central issue in these diversity cases, which transfers liability insurance responsibilities from Alamo and its insurer to the automobile renter and their insurer. This legal question remains unresolved under Hawaii state law, prompting certification to the Hawaii Supreme Court. In the first case, Keith R. Douglas rented a car and was involved in an accident, leading to claims against him. Alamo denied liability coverage based on the Shifting Clause, which stipulates that if the renter lacks sufficient insurance, Alamo will provide minimal liability coverage. Alamo argues that this clause shifts the duty to defend and indemnify Douglas to his insurance provider, Allstate, which contends the clause violates Hawaii’s No-Fault Law, mandating coverage from vehicle owners. The district court sided with Alamo, asserting Douglas had other available insurance. In a second case, Michael E. Kaneshiro, after an accident in a rented vehicle, sought defense from Alamo and its insurer, Continental, which refused. Kaneshiro also argues the Shifting Clause contravenes Hawaii’s No-Fault Law. The district court again ruled in favor of Alamo and Continental. Hawaii’s No-Fault Law establishes minimum liability insurance requirements and mandates that vehicle owners maintain a no-fault policy covering both themselves and authorized operators. The unresolved question is whether Alamo's Shifting Clause contravenes these legal stipulations, with varying interpretations noted in other jurisdictions. The court expresses that it is not appropriate to determine the interpretation of a Hawaii statute, deferring instead to the Hawaii Supreme Court. It certifies a specific question regarding whether a vehicle rental owner can meet minimum liability coverage requirements under the No-Fault Law by stipulating in rental agreements that the renter's liability insurance is primary and the owner's is secondary. The court clarifies that its wording should not limit the Hawaii Supreme Court's analysis, which may reformulate the legal questions as deemed necessary. If the Hawaii Supreme Court declines the certification, the original court will resolve the issues based on its understanding of Hawaii law. A certified copy of this order will be sent to the Hawaii Supreme Court, and the parties must inform the court within specified timelines regarding the acceptance of certification and subsequent opinions. The rental agreement states that the rental company provides liability insurance only up to the minimum required by state law, with the renter responsible for any excess coverage and indemnifying the rental company for losses beyond this minimum. All terms and conditions of the insurance policy are included in the rental agreement.