Case Name: ALLSTATE INSURANCE COMPANY OF CANADA, et al., Appellants, v. VALUE RENT-A-CAR OF FLORIDA, INC., et al., Appellees
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 1985-01-03
Citations: 463 So. 2d 320
Docket Number: No. 83-1596
Parties: ALLSTATE INSURANCE COMPANY OF CANADA, et al., Appellants, v. VALUE RENT-A-CAR OF FLORIDA, INC., et al., Appellees.
Judges: FRANK D. UPCHURCH, Jr., J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 463
Pages: 320–327

Head Matter:
ALLSTATE INSURANCE COMPANY OF CANADA, et al., Appellants, v. VALUE RENT-A-CAR OF FLORIDA, INC., et al., Appellees.
No. 83-1596.
District Court of Appeal of Florida, Fifth District.
Jan. 3, 1985.
Rehearing Denied Feb. 13, 1985.
Elizabeth C. Wheeler, of Smalbein, Eu-bank, Johnson, Rosier & Bussey, P.A., Daytona Beach, for appellants.
Kimberly A. Ashby, of Maguire, Voorhis & Wells, P.A., Orlando, for appellees.

Opinion:
DAUKSCH, Judge.
This is an appeal from a summary judgment determining rights between insurance companies.
Donna Bennet was injured by a vehicle driven by Robert Cairns. Cairns was insured by appellant Allstate which settled with Donna Bennet for the limits of its coverage, $80,000. Cairns was driving a leased vehicle when he injured Bennet and the vehicle was insured for the lessor by appellee Value. Value paid Bennet $130,-000, which was the balance of the settlement due Bennet under an agreement between her and Cairns and the vehicle lessor. Twenty thousand dollars of the $130,-000 paid by Value was for "personal injury protection" and "financial responsibility" under the appropriate statutes. The re maining $110,000 paid by Value was the remaining amount, over that available from Allstate, to reach the agreed settlement of $210,000.
This lawsuit involves the claim by Allstate that the owner of the vehicle and its insured are primarily liable for payment to Bennet and that the driver's insurer, Allstate, is entitled to reimbursement for all it paid to Bennet. Allstate's argument is twofold: one, that the lessor's insurance was "primary" up to the limits of its coverage and; two, that lessor did not properly shift the primary responsibility to the lessee as required by section 627.7263, Florida Statutes (1983).
The lessor's position is that the lease agreement requires the lessee's coverage to be primarily responsible for payment for injuries to third parties and thus lessor's insurer is not required to indemnify lessee's insurer.
Under the dangerous instrumentality doctrine, owners of motor vehicles are liable for injuries which are caused by the operation of the vehicle. Negligent operators of motor vehicles are also liable for injuries they cause. Common law principles of negligence establish this responsibility. Where two persons are liable for an injury then the one who actually caused the injury is primarily liable and the other person may obtain indemnity from him for any payments made to the injured person. See Seaboard Air Line Railway Company v. American District Electric Protective Company, 106 Fla. 330, 143 So. 316 (1932). Thus, an automobile owner who is only vicariously liable for injuries caused by another person's operation of his vehicle is entitled to indemnification from the negligent driver. Rebhan Leasing Corporation v. Trias, 419 So.2d 352 (Fla. 3d DCA 1982), review denied, 427 So.2d 738 (Fla. 1983); Hertz Corporation v. Richards, 224 So.2d 784 (Fla. 3d DCA 1969); Allstate Insurance Company v. Fowler, 455 So.2d 506 (Fla. 1st DCA 1984). In the case at bar the lessor was not actively negligent in causing the accident; its liability is solely on account of its being the owner of the vehicle. The lessee was the real cause of the accident; the active tortfeasor. His coverage is primary because, among other things, his fault is primary.
Florida Statute 627.7263 regulates insurance coverage priorities. It says:
Rental and leasing driver's insurance to be primary; exception—
(1) The valid and collectible liability insurance or personal injury protection insurance providing coverage for the lessor of a motor vehicle for rent or lease shall be primary unless otherwise stated in bold type on the face of the rental or lease agreement. Such insurance shall be primary for the limits of liability and personal injury protection coverage as required by § 324.021(7) and 627.736. (emphasis supplied)
(2) Each rental or lease agreement between the lessee and the lessor shall contain a provision on the face of the agreement, stated in bold type, informing the lessee of the provisions of subsection (1) and shall provide a space for the lessee's insurance company's name if the lessor's insurance is not to be primary. (emphasis supplied)
This statute is not completely applicable here because it is not specific as to whose insurance coverage is used after personal injury protection and financial responsibility limits are paid out.
This issue was addressed, however, by the Florida Supreme Court in Insurance Company of North America (INA) v. Avis Rent-A-Car System, Inc., 348 So.2d 1149 (Fla.1977). Although this decision was not concerned with the effect of section 627.-7263, the opinion is nevertheless instructive because it discusses the effect of the dangerous instrumentality doctrine and the financial responsibility law on a rental agency's right to indemnification from a negligent lessee. In its opinion the court approved of the following argument by the lessor:
[Njothing in Roth [Roth v. Old Republic Insurance Company, 269 So.2d 3 (Fla. 1972)] or any other Florida precedent bars [the lessor's] right to obtain indemnification from the negligent driver of a motor vehicle or the driver's employer (or their insurers) to the extent of amounts paid out in excess of the primary $100,-000 coverage furnished by the express terms of the rental contract, since that business arrangement in no way affects either the statutes or common law of this state, (footnotes omitted) 348 So.2d at 1153.
The court then stated:
[N]either of these financial responsibility principles [the dangerous instrumentality doctrine and the financial responsibility law of section 324.011(7)] bear on the allocation of risk between owners and operators in excess of minimum statutory coverage, or on the right of indemnification which derives from the common law principle that fault attracts primary responsibility.

We hold that the public policy of the state was satisfied in this case when the injured's beneficiaries were compensated by the vehicle's owner for the. negligent operation of a rented vehicle. The parties were free to contract between themselves to shift the burden of loss so long as they met the requirements of law, and in this case there is no suggestion that those requirements were not met. (footnote omitted) 348 So.2d at 1153-54.
In the instant case, although the lessor's insurance policy contained no provisions intended to reduce the limits provided for the lessee's benefit, the lessor in its rental agreement with lessee attempted in three separate provisions to shift responsibility for primary coverage to the lessee. The first provision was contained on the face of the rental agreement and stated:
The valid and collectible liability insurance or personal injury protection insurance providing coverage for the rental or leasing driver or any other person operating the motor vehicle with the permission or consent of the rental or leasing driver shall be primary. Such insurance shall be primary for the limits of liability and personal injury protection coverage as required by ss. 324.021(7), 627.736 and 627.7263, Florida Statutes.
(R 82)
The other two provisions were contained on the back of the agreement and stated:
5. Lessor shall provide an automobile liability insurance policy for the benefit of Lessee with limits of coverage equal to or in excess of statutory requirements for public liability and property damage. Said insurance shall be excess insurance over any other liability insurance coverage available to Lessee, applicable after coverage under such other available insurance. .
8. Lessee shall defend, indemnify and hold harmless Lessor from and against any and all losses, liabilities, damages, injuries, claims, demands, costs and expenses, arising out of or connected with the possession or use of the car during the rental term (except those covered by the insurance provided herein by Lessor), including but not limited to any and all claims of or liabilities to third parties arising out of the abandonment, conversion, secretion, concealment, or unauthorized sale of the car by Lessee or its drivers, agents or employees, or the confiscation of the car by any government authority for illegal or improper use of said car.
The lessee contends, and the lessor implicitly concedes, that the provision on the face of the rental agreement was insufficient to shift primary responsibility to the lessee because it was not stated in bold type as required by section 627.7263(1). This is apparently the reason why the lessor agreed in the settlement with the plaintiff to pay the first $20,000 (representing $10,000 for financial responsibility and $10,000 for P.I.P.). However, the parties disagree as to the other consequences of this failure to comply with section 627.-7263(1). The lessee contends that this failure to shift primary responsibility leaves the lessor primarily responsible up to the limits of its insurance policy ($300,000) which would free the lessee from all liability. In support of this argument, he cites P & H Vehicle Rental and Leasing Corporation v. Garner, 416 So.2d 503 (Fla. 5th DCA 1982), disapproved on other grounds Travelers Insurance Company v. Bruns, 443 So.2d 959 (Fla.1984), in which this court ruled that the failure of the lessor in that case to comply with section 627.7263 made the lessor primarily liable for losses arising out of the use of its rental vehicle and there was no discussion of financial responsibility or policy limits. In P & H, however, the lessor's insurer's claim that it was entitled to indemnification by the lessee's insurer was dismissed for lack of jurisdiction. Therefore, we think P & H is not dispositive on the issue of whether a lessor who does not comply with section 627.7263 could legally shift responsibility for coverage beyond the financial responsibility and P.I.P. limits.
Instead, the dispositive cases on this issue are Racecon, Inc. v. Mead, 388 So.2d 266 (Fla. 5th DCA 1980), and Patton v. Lindo's Rent-A-Car, Inc., 415 So.2d 43 (Fla. 2d DCA 1982). Racecon is a case in which the lessee prevailed on the facts but under the current version of section 627.-7263, the rule of law which flows from the ease will benefit lessors. In Racecon, the injured third party sued the lessee and the lessor, and prior to trial, the lessor cross-claimed against the lessee for indemnification. Although the rental agreement contemplated that the lessor was obligated to provide primary insurance coverage, the lessor argued that section 627.7263, Florida Statutes, as it existed in 1976 required the lessee's insurance to be primary notwithstanding the terms of the rental agreement. This court rejected that argument. Relying on Insurance Company of North America v. Avis Rent-A-Car Systems, Inc., supra, the court stated:
It is thus our view that so long as the public policy of the state was satisfied, . the parties were free to contract between themselves that the owner (lessor) would provide the primary coverage, thus shifting the burden of loss. The statute would determine that obligation where there was no agreement. (emphasis added)
388 So.2d at 268.
In Patton, the lessor provided in its rental agreement with the lessee a provision nearly identical to the one provided on the face of the rental agreement in the instant case. Also contained in the rental agreement, however, was a paragraph requiring the lessee to indemnify the lessor against any loss, liability, etc., arising out of or in connection with any possession or use of the vehicle. The court stated that because the paragraph shifting primary responsibility to the lessee was no different in size or color than the rest of the agreement, it was insufficient under section 627.7263 to shift primary responsibility. Nevertheless, the court determined that the failure to comply with this section only made the lessor primarily liable up to the financial responsibility requirements of the law. Relying on INA, the court ruled that the "hold harmless" provision in the rental agreement was controlling:
. Once the requirements of the statute are satisfied by requiring the lessor to be responsible up to the limits of the financial responsibility law, or to properly shift the burden, the parties are free to contract between themselves as to any additional responsibility....
415 So.2d at 45.
The lessee in the instant case attempts to distinguish Patton on the ground that the hold harmless clause in the rental agreement (Pagagraph 8) requires the lessee to indemnify the lessor for all losses "except those covered by the insurance provided herein by Lessor." In order to determine the effect of this exception, however, the extent of the lessor's coverage must be ascertained. Paragraph 5 provides that the lessor shall provide automobile liability insurance for the benefit of lessee but that such insurance "shall be excess insurance over any other liability insurance coverage available to Lessee, applicable after coverage under such other available insurance." This language effectively makes the lessee's liability insurance primary and the lessor's insurance secondary. Therefore, per Racecon and Patton, the lessor is primarily responsible only for the financial responsibility limits and the lessee is responsible primarily thereafter up to the limits of its policy. This was how the parties allocated their responsibility in their settlement agreement. The trial court properly denied the lessee's cross-claim against the lessor.
AFFIRMED.
FRANK D. UPCHURCH, Jr., J., concurs.
COWART, J., concurs specially with opinion.
. Sections 324.021(7) and 324.151(l)(a) require all owners of motor vehicles in the State of Florida to carry a liability insurance policy which shall insure the owner and any other person using the vehicle with the owner's express or implied permission against loss from the liability imposed by law for damages due to accidents arising out of the use of his motor vehicle in the amount of $10,000 because of bodily injury to, or death of, one person in any one accident, in the amount of $20,000 because of bodily injury to two or more persons in any one accident, and in the amount of $5,000 because of injury to, or destruction of, property of others in any one accident. Section 627.736(1) requires every owner or registrant of a motor vehicle to maintain an insurance policy which provides personal injury protection to the named insured and others including, as in the instant case, persons struck by such motor vehicle while riding a bicycle, to a limit of $10,000 subject to exclusions not relevant here.
. This doctrine was first established in Anderson v. Southern Cotton Oil Co., 73 Fla. 432, 74 So. 975 (1917) wherein it was held:
. The principles of the common law do not permit the owner of an instrumentality that is . peculiarly dangerous in its operation, to authorize another to use such instrumentality on the public highways without imposing upon such owner liability for negligent use. The liability grows out of the obligation of the owner to have the vehicle . properly operated when it is by his authority on the public highway....
See also Susco Car Rental System of Florida v. Leonard, 112 So.2d 832 (Fla.1959).