Court Opinion

ID: 8052998
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:13:58.523655+00
Date Added: 2024-06-11T09:10:01.267291
License: Public Domain

Duggan, J.,
dissenting. Because I believe that RSA chapter 264 (1993 & Supp. 2002) requires Enterprise to provide primary financial responsibility act (FRA) coverage for accidents caused by the use of its fleet of cars, I respectfully dissent.
RSA chapter 264 is New Hampshire’s version of the financial responsibility statute passed by many States. See 6B J. & J. Appleman, Insurance Law and Practice § 4295, at 238 (Buckley ed. 1979). The purpose of these statutes is to ensure financial compensation for injuries and damages resulting from the faulty operation of motor vehicles. Id.; *493Peerless Ins. Co. v. Vigue, 115 N.H. 492, 494 (1975). Some financial responsibility acts make omnibus insurance policies a mandatory condition of registering a vehicle. Appleman, supra § 4299, at 300-01. Others require vehicle owners, in the event of an accident, to demonstrate some form of financial coverage, usually an insurance policy, which will cover injuries and property damage occasioned by the use of their vehicles. Id. at 302. In either case, FRA obligations are not necessarily related to the respective legal fault of the parties. See Rosenblum v. Griffin, 89 N.H. 314, 316-17 (1938). Thus, in cases involving borrowed or rented vehicles, the owner’s insurer may be liable for damages, even when the driver’s negligence caused the accident. See, e.g., Universal Underwriters Ins. Co. v. Allstate Ins. Co., 134 N.H. 315, 316-18 (1991); Forester v. Jerman, 90 F.2d 412, 413-14 (D.C. 1937); Globe Indem. Co. v. Universal Underwriters Ins. Co., 20 Cal. Rptr. 73, 75-76 (Dist. Ct. App. 1962); 15 L. Russ & T. Segalla, Couch on Insurance 3d § 219.48 (rev. ed. 1999).
New Hampshire’s FRA imposes post-accident requirements on both the owner and the driver of the vehicle, but does not require mandatory insurance. The parties agree that RSA 264:3 (1993) and RSA 264:20 (1993) govern the responsibilities of the drivers and owner in this case. The statutes provide two ways for an owner to comply with the FRA following an accident. The owner may follow the requirements of RSA 264:3, I (1993). Alternatively, it may argue that it falls under one of three exemptions in RSA 264:3, ll(a)-(c) (1993). In this case, Enterprise argues that its status as a self-insured qualifies it under RSA 264:3, 11(c), which allows an exemption when an owner can demonstrate it is “covered by... proof of financial responsibility in accordance with RSA 264:20 and 21.”
Up to this point, I do not understand my interpretation of the FRA as it relates to this case to differ from that of today’s decision. The majority, however, goes on to conclude that Enterprise has met its obligation under RSA 264:3, 11(c), 264:20 and 264:21 (1993) merely by demonstrating its ability to pay FRA damages, and need not actually provide damages unless found liable for the accident.
By the plain wording of RSA 264:3, 11(c) and 264:20, the owner must have already established the ability to “respond in damages for any liability thereafter incurred ... arising out of the ownership, maintenance, control, or use” of its vehicle, up to the statutory limits. RSA 264:20 (emphasis added). Assuming that Enterprise met this requirement of preexisting coverage, RSA 264:3,11(c), it must now “respond in damages” for the present accidents. RSA 264:20. Similarly, if RSA 264:3, I, applied to this case, Enterprise, as the owner, would be required to provide security for “any judgment for damages” that may be recovered against the owner or against the driver. RSA 264:3, I. The statutes make no distinction *494between liability occasioned by the fault of the owner and liability occasioned by the fault of the driver.
Had the legislature wished to exempt owners from providing coverage for accidents that were not their fault, it could have done so in RSA 264:6,1 (1993). This statute provides that:
I. The provisions of RSA 264:3 shall not apply:
(a) To the owner of a vehicle driven by one having obtained possession or control thereof without his express or implied consent;
(b) To either the owner or the driver involved in an accident when the director shall be satisfied that neither caused nor contributed to cause the accident...;
(c) To either the owner or driver of a vehicle involved in an accident that was caused by the criminal act of a third party, for which criminal act such other party has been convicted.
Thus, to be exempt from RSA 264:3, an owner must demonstrate that neither the owner nor the driver “caused or contributed to cause the accident,” unless the owner can demonstrate non-permissive use or a criminal act by a third party. RSA 264:6, I. Proof that the owner did not cause the accident does not by itself exempt the owner from providing coverage.
Our analysis in Universal Underwriters Insurance Co. v. Allstate Insurance Co., 134 N.H. 315, explains the relationship between the owner and the driver under the FRA. Universal Underwriters involved an accident with a borrowed car in which the driver was alleged to be at fault. Id. at 316. The owner had an insurance policy that covered the driver, but stated that the coverage was excess — i.e., that it only applied to the extent that the driver did not have his own policy. Id. The driver, conversely, owned a policy that stated its coverage was excess to that held by the car’s owner. Id. Universal Underwriters held that the excess clause in the owner’s policy was invalid under the FRA, and that the owner’s insurer was therefore primarily responsible under the FRA for providing coverage up to the statutory limits of the FRA. Id. at 317-18.
Universal Underwriters, thus, involves more than just an interpretation of insurance policies. The case establishes a rule of priority for FRA coverage, stating that an owner’s obligation to pay FRA damages is primary with regard to that of the driver. The only relevant difference between Enterprise and the owner in Universal Underwriters is that Enterprise is self-insured. Nothing in either RSA 264:3 or RSA 264:20, *495however, suggests that a self-insured entity has different FRA responsibilities than one that purchases an insurance policy from a third party. For this reason, I see no reason why Universal Underwriters' rule that an owner has the primary responsibility to provide FRA coverage should not apply in this case.
The purpose of the FRA is “to provide compensation to persons harmed by the negligent operation of motor vehicles.” Peerless Ins. Co., 115 N.H. at 494. Under the majority’s analysis, if Enterprise rented a car to a driver who could not meet his FRA responsibilities, and that driver caused an accident, an injured third party would be unable to obtain FRA compensation from either the driver or the owner.
Today’s decision also places a self-insured entity in a position superior to that of other entities. An entity covered by an insurance policy will ultimately bear some of the costs involved in accidents caused by its lessees in the form of higher insurance premiums. A self-insured entity, however, would not bear any costs except in those rare cases where the owner was alleged to be at fault. To avoid this inequitable result, most States that require owners to provide primary insurance coverage have held that a self-insured owner must also provide primary coverage. See, e.g., Enterprise Leasing Co. v. Sako, 590 N.W.2d 617, 618-19 (Mich. Ct. App. 1998); Hertz Corp. v. State Farm Mut. Ins. Co., 573 N.W.2d 686, 688-89 (Minn. 1998); Chambers v. Agency Rent-A-Car, Inc., 878 P.2d 1164, 1165-67 (Utah Ct. App. 1994); White v. Howard, 573 A.2d 513, 515-16 (N.J. Super. Ct. App. Div. 1990).
The practical effect is to encourage entities to self-insure their vehicles, at the expense of their drivers and victims of motor vehicle accidents. While the legislature provides the option to become self-insured under the FRA, I find nothing in the statute intended to create an incentive or to provide owners with an advantage for doing so.
For these reasons, I respectfully dissent from the majority opinion.
Nadeau, J., joins in the dissent.