matter of law.” Fed. R. Civ. P. 56(c). A genuine issue exists only when “the evidence is such
that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). Accordingly, the nonmovant must “come forward with
specific facts showing that there is a genuine issue for trial.” Miller v. Am. Family Mut. Ins. Co.,
203 F.3d 997, 1003 (7" Cir. 2000) (quoting Matsushita Elec. Indus, Co. v. Zenith Radio Corp.,
475 US. 574, 587 (1986)). These same Rule 56 standards apply to cross-motions for summary
judgment. Int’l Bhd. of Elec. Workers v. Balmoral Racing Club, Inc., 293 F.3d 402, 404 (7" Cir.
2002). We will consider the merits of each motion separately and draw all reasonable inferences
against the party whose motion is under consideration. O’Regan v. Arbitration Forums, Inc., 246
F.3d 975, 983 (7" Cir. 2001) (citation omitted).
ANALYSIS

Before the Court reaches the various statutory and contract interpretation issues addressed
in the parties’ briefs, we must first address the threshold issue of whether NAC is liable for the
injuries incurred by Smith and Simpson. NAC argues that it is not responsible for the injuries
because they did not arise out of the “authorized use of [the] vehicle by the renter, renter’s spouse
or listed additional licensed driver.” (R. 21-1, Am. Compl., Ex. 2, Rental Agreement.) Smith
and Simpson in tum contend that this contractual limitation in the rental agreement is against
public policy. Thus, the Court initially must decide whether we will uphold the contractual
limitation that would exclude coverage over any injuries arising out of Bennett’s use of the car
because he was not a listed additional driver.

Illinois courts have long held that contractual limitations will not be voided unless the

limitations are against the settled public policy of the state. See, e.g., First Fin. Ins. Co., v.



not reach the issues surrounding the interpretation and application of the relevant sections of the
Illinois Vehicle Code and the TIG excess insurance policy. Smith and Simpson baldly assert that
Bennett’s unauthorized use of the rental vehicle does not relieve NAC of its statutory obligation
under the Code, but they do not cite any caselaw in support. (See R. 36, Smith and Simpson
Mem. at 6.) The Court’s research yielded at least one Illinois appellate case that hinted that a
rental agency’s statutory obligation survives a contractual breach. See Garrott, 606 N.E.2d at
219-23. That opinion, however, did not discuss why a statutory obligation might survive and
concluded by holding that the contractual obligation superceded any statutory obligation and thus
did not discuss the relevant Code sections. /d. at 244 (“we need not rule on the trial court’s
interpretation and construction of Hertz’s statutory obligation to indemnify third-party
claimants”). Thus, without any clear guidance from the Code or the Illinois courts, we are
reluctant to impose an underlying statutory obligation on NAC. Furthermore, even if we were to
impose such an obligation, the parameters of the obligations of self insurers are undecided, and
the parties’ briefs evidence the widely-divergent requirements each party urges us to impose.
This Court’s holding validating the contractual limitation, however, obviates the need to rule on
these undecided issues of state law. Therefore, although we sympathize with Smith and
Simpson’s predicament, the Court concludes that NAC bears no financial responsibility to Smith
and Simpson. As such, TIG, NAC’s excess liability insurer, is also relieved of any responsibility

to defend or indemnify the Bennett estate.



against the Bennett estate and others in the Circuit Court of Cook County and demanded that
NAC provide the Bennett estate with liability protection. NAC assumed and provided a defense
for the Bennett estate in the Cook County tort action, but when Smith and Simpson made
demands on NAC in excess of $100,000, the agency tendered and made demand upon TIG, its
excess liability insurer, to assume the defense of the Bennett estate.'

TIG currently seeks a declaration that it has no obligation to defend or indemnify the
Bennett estate because of the renter exclusion endorsement attached to the excess liability policy.

In response, NAC primarily asserts that the TIG policy should not even be implicated because

Smith and Simpson’s claims do not arise out of the authorized use of the vehicle by the renter,
renter’s spouse or a listed additional licensed driver, as specified in the rental agreement.2 Smith
and Simpson in turn argue that NAC should be held liable for the collision because the
authorized-use provision in the rental contract is against public policy. They further argue that
NAC’s liability should not be capped, and that the TIG excess liability policy thus should cover
NAC’s obligation.
LEGAL STANDARDS

Summary judgment is proper when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a judgment as a

‘ Another related action remains pending in the Circuit Court of Will County. In that suit,
Country Mutual filed a declaratory judgment action seeking to avoid coverage for damages
arising out of the accident.

? NAC further asserts that even if it is responsible for Bennett’s use of the vehicle, its
liability is capped at $50,000 per person and $100,000 per occurrence, and that if these caps do
not apply, the TIG policy should provide coverage.

3



Purolator Sec., Inc., 388 N.E.2d 17 (Ill. App. Ct. 1979). This power to void, however, should be
used sparingly and only if the contract is “clearly contrary to what the constitution, the statutes or
the decisions of the courts have declared to be the public policy or unless they be manifestly
injurious to the public welfare.” First Nat'l Bank of Springfield v. Malpractice Research, Inc.,
688 N.E.2d 1179, 1182 (III. 1997) (quotations and citations omitted).

To support their argument that it is against public policy to allow NAC to limit coverage
only to the renter, renter’s spouse or listed additional licensed driver, Smith and Simpson rely on
Hertz Corporation v. Garrott, 606 N.E.2d 291 (Ill. App. Ct. 1992), and provisions of the Illinois
Vehicle Code, 625 ILCS 5/9-101 et seg. and 5/7-502. The Court’s review of Illinois law,
however, reveals that a rental agency’s liability does not extend to all cases involving a rental
vehicle. According to the financial responsibility statutes, for example, a bond will cover an
amount recovered only against the renter, agency or “any person operating the motor vehicle with
the customer's and the owner's express or implied consent,” 625 ILCS 5/9-103 (emphasis
added). Another provision covering self insurers provides that self insurers must pay judgments
rendered against “any person covered by such certificate of self-insurance.” 625 ILCS 5/7-502.
These statutes lead the Court to conclude that a rental agency’s liability does not extend to every
accident involving one of its vehicles; a rental agency may contract to limit coverage. In this
case, NAC limited coverage to only the renter, the renter’s spouse or any listed additional drivers.
This limitation is in accord with NAC’s interest in protecting its property and knowing in
advance its liability exposure. Jenkins easily could have listed Bennett as an additional driver,
but she did not. Therefore, we will uphold the contractual limitation because it is not clearly

against the public policy of Illinois to allow a rental agency to limit coverage to certain drivers.



CONCLUSION
For the reasons set out herein, NAC and TIG’s motions for summary judgment are
granted, (R. 30-1, 33-1), and Smith and Simpson’s motion is denied, (R. 35-1). The Clerk of the
Court is instructed to enter judgment pursuant to Federal Rule of Civil Procedure 58 in favor of

NAC and TIG and against Smith and Simpson.

ENTERED:

Judge Ruben Castillo
United States District Court

Dated: February 3, 2003



(0597)
United States District Court, Northern District of Dlinois

siror Magirate Joe Ruben Castillo “than Aniged Judge

CASE NUMBER 01.C 9712 DATE 2/3/2003

CASE TIG Insurance Company vs. Darrell Smith, et al.

TITLE

[in the following box (a) indicate the party filing the motion, c.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefty the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
@) Oo Answer brief to motiondue___. Reply to answer brief due
(4) Oo Ruling/Hearingon___—_sset fora
(5) Oo Status hearing[held/continued to] [set for/re-set for]on_—set for__—_at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for]on__—ssetfor__—s——sat_—
(7) oO Trial[set for/re-set for]on__at
(8) oO [Bench/Jury trial] [Hearing] held/continuedto__—_at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) CLocal Rule 41.1 OIFRCP41(a\(1) [1 FRCP41(a\(2).

ao [Other docket entry] Enter Memorandum Opinion and Order. Plaintiff's motion for summary

judgment [30-1] is granted. Defendant National Auto Credit, Inc.’s motion for summary judgment [33-
1] is granted. Defendants Darrell Smith and Aaron Simpson’s motion for summary judgment [35-1] is
denied. This case is hereby dismissed with prejudice.

a1) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required. umpc pi
Notices mailed by judge’s staff. k ra) U0
Notified counsel by telephone. date doc
oY | Docketing to mail notices. tunoo. Isia’s'n
av | Mail AO 450 form. - 0 sy inal
Copy to judge/magistrate judge. 60:8 Yd €- E34 EU
ui
mailed notice
courtroom woes as
RO deputy’s Ot 05-Gaild
initials
Date/time received in
central Clerk’s Office tallng deputy initials



In fact, public policy dictates that we do not unnecessarily restrict parties in their freedom to
make their own contracts. First Nat'l Bank of Springfield, 688 N.E.2d at 1182.

Furthermore, the instant case is distinguishable from Garrott. In that case, the renter
accepted insurance with the agency in a contract that excluded coverage if any driver used the
vehicle while under the influence of alcohol. The Illinois Appellate Court held that the blanket
intoxication exclusion was against public policy because it imposed an additional sanction upon
the driver at the expense of the public when criminal sanctions were already fixed. Garrott, 606
N.E.2d at 223-24. In the instant case, however, we are not faced with a blanket exclusion like the
one in Garrott. The relevant contractual limitation does not constitute a double punishment or
exclude coverage of all drivers in a particular situation, it simply limits coverage only to certain
persons. It is not a “broad and sweeping condition{} which nulliffies] [] protection,” but a
provision that allows the agency to protect its property by limiting coverage to only certain
drivers. Garrott, 606 N.E.2d at 223.

In addition, primary coverage for the rental vehicle in this case was not even provided by
NAC but by Jenkins’ personal insurance carrier, Country Mutual. See Farm Bureau Mutual Ins.
Co., Inc. v. Alamo Rent A Car, Inc., 744 N.E.2d 300, 304-05 (Ill. App. Ct. 2001) (holding that
rental car contract may shift primary liability to another insurer). Instead, Smith and Simpson
should look to Country Mutual to satisfy any judgment against the Bennett estate, an issue that
will be resolved by the Will County Circuit Court after the conclusion of the Cook County tort
action.

Because we find that the contractual limitation in the rental agreement lawfully excludes

coverage over any claims arising out of Bennett’s unauthorized use of the rental vehicle, we will



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

TIG INSURANCE COMPANY,

Plaintiff,
No. 01 C 9712
v.
Judge Ruben Castillo
DARRELL SMITH, AARON SIMPSON,
BRUCE BENNETT, Administrator of the
Estate of JON BENNETT, Deceased, and
NATIONAL AUTO CREDIT, INC.,

DOCKETED

FEB 4 2003

ween vere ww ww SD

Defendants.
MEMORANDUM OPINION AND ORDER

This unfortunate case arises out of an automobile accident involving a car rented from
National Auto Credit, Inc. (“NAC”) and driven by the deceased Jon Bennett (“Bennett”). Darrell
Smith (“Smith”) and Aaron Simpson (“Simpson”), passengers in the rental vehicle, suffered
injuries and are currently litigating a tort action against the Bennett estate in state court. NAC
assumed the defense of the Bennett estate in the state tort action, but because of the demands of
Smith and Simpson, NAC tendered defense to its excess policy insurer, TIG Insurance Company
(“TIG”). TIG denies that it has any obligation to defend or indemnify the Bennett estate or any
other party and filed this action seeking a declaration that no coverage is afforded under the
excess liability policy for injuries arising out of the accident. TIG currently seeks summary
judgment. (R. 30-1.) In response, NAC filed its own motion for summary judgment, and Smith
and Simpson jointly filed one as well. (R. 33-1; 35-1.) For the reasons set forth herein, we grant
both TIG and NAC’s motions for summary judgment, (R. 30-1; 33-1), and deny Smith and

Simpson’s motion for summary judgment, (R. 35-1).


RELEVANT FACTS

On June 30, 1994, Lorraine Jenkins rented a Ford Escort from a NAC Illinois office. (See
R. 21-1, Am. Compl., Ex. 2, Rental Agreement.) Jenkins did not list her son Jon Bennett or any
other individuals as additional licensed drivers on the rental agreement. The space provided on
the agreement to list any additional licensed drivers was directly below Jenkins’ personal
information, accompanied by the following warning in capital letters: “All additional drivers,
except renter’s spouse, must be listed.” Directly below the box for additional licensed drivers
was a provision shifting primary liability to the renter’s personal insurance. In the appropriate
space on the agreement, Jenkins listed her personal insurance policy with Country Mutual
Insurance Company (“Country Mutual”) as her primary insurance. The rental agreement further
states in pertinent part: “If required by the financial responsibility laws of the state in. which this
agreement was executed, the company shall settle or defend up to the minimum limits required
for any one rental vehicle per occurrence, as it considers appropriate, any claim or suit for bodily
injury and/or property damage arising out of the authorized use of this vehicle by the renter,
renter’s spouse or listed additional licensed driver.” (Id.; emphasis added.) The financial
responsibility laws at issue are contained in Chapter 9 of the Illinois Vehicle Code, 625 ILCS
5/9-101 et seq. In lieu of providing a bond or insurance policy as proof of financial
responsibility, NAC provided a certificate of self insurance as permitted by statute. See 625
ILCS 5/9-102.

On July 2, 1994, Bennett, Darrell Smith and Aaron Simpson were involved in an
automobile accident while Bennett was allegedly driving the Escort. Bennett was tragically

killed, and passengers Smith and Simpson were injured. Smith and Simpson filed a tort action