Court Opinion

ID: 2978118
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:19:43.994894+00
Date Added: 2024-06-11T11:44:10.819850
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 09a0434n.06

                                     Nos. 08-4035, 08-4036                            FILED
                                                                                   Jun 24, 2009
                          UNITED STATES COURT OF APPEALS                     LEONARD GREEN, Clerk
                               FOR THE SIXTH CIRCUIT

PROGRESSIVE          CASUALTY         INSURANCE          )
COMPANY,                                                 )
                                                         )
       Plaintiff-Appellee/Cross-Appellant,               )
                                                         )
v.                                                       )    ON APPEAL FROM THE UNITED
                                                         )    STATES DISTRICT COURT FOR
BUDGET RENT A CAR SYSTEM, INC.,                          )    THE NORTHERN DISTRICT OF
                                                         )    OHIO
       Defendant-Appellant/Cross-Appellee.               )
                                                         )
                                                         )
                                                         )

       Before: MARTIN and KETHLEDGE, Circuit Judges; WATSON, District Judge.*

       KETHLEDGE, Circuit Judge. Budget Rent A Car System, Inc. (“Budget”) appeals the

district court’s grant of summary judgment in favor of Progressive Casualty Insurance Company

(“Progressive”) on Progressive’s declaratory action against Budget. Progressive cross-appeals the

district court’s decision not to award attorneys’ fees. We affirm.

                                                 I.

       For a number of years, Progressive rented cars from Budget at various corporate-discount

rates. To facilitate these rentals, Budget provided Progressive’s Travel Services department with

several computer codes for Progressive to use in obtaining these discounts when booking rentals.

       *
        The Honorable Michael H. Watson, United States District Judge for the Southern District
of Ohio, sitting by designation.
Nos. 08-4035, 08-4036
Progressive v. Budget

It is undisputed that—with Budget’s approval—Progressive used certain of the codes, called “AB

Codes,” to provide discounts for any person whom Progressive wished to receive a corporate

discount, regardless of whether that person was a Progressive employee.

       In 2004, Progressive solicited bids from several car-rental companies to provide a volume

discount specifically for Progressive-employee rentals. Budget won the contract. On April 1, 2004,

the parties entered into an agreement (the “Agreement”) that provided discounts to Progressive

employees renting cars for work-related reasons. The Agreement defined those employees—and

only those employees—as “Drivers” whose rentals were subject to the terms of the Agreement. The

Agreement did not address, however, the parties’ prior practice of extending discounts to non-

employees and employees renting for non-business reasons.

       The Agreement required Progressive to “carry an insurance policy that covers all rentals of

Rental Vehicles made pursuant to this Agreement.” The insurer for that policy, the Agreement

stated, “will be primary for both liability and physical damage.” Further, the Agreement’s mutual

indemnification clause required each party to

       indemnify, defend and hold harmless the other party . . . from and against any and all
       suits, actions, [and] claims . . . arising out of or relating to . . . the failure of the
       Indemnitor or its Agents to discharge any of its duties or obligations under, or to
       observe and comply with any of its covenants or the limitations on its authority
       contained in, this Agreement.

The Agreement said nothing, however, about the computer codes that Progressive used to obtain

corporate-discount rates.

       After the Agreement was signed, Progressive booked rentals the same way it always had,

using the computer codes. Budget’s computer system did not distinguish between Progressive

                                                 -2-
Nos. 08-4035, 08-4036
Progressive v. Budget

employees and other Progressive renters who used the codes. Thus, when a Progressive renter used

an AB Code, Budget could not tell whether her or she was a Progressive employee—and thus

covered by the Agreement—or not.

       Nancy Sevor was a customer, rather than an employee, of Progressive. In 2001, she was

involved in a car accident that injured another person. The injured person sued her. Progressive paid

for her defense. In June 2004, Progressive asked Sevor to come to New York for a deposition and

offered to pay for her trip. Accordingly, Progressive booked her a rental car with Budget, using an

AB Code. When Sevor arrived at the Budget rental counter, she was presented with a Rental

Agreement that included an automatic waiver of optional insurance. Budget says the waiver was

included because Budget’s computer system assumed the terms of the Agreement applied to every

Progressive rental; and the Agreement required Progressive to insure those rentals.

       While driving the rental car, Sevor was involved in another serious accident, this time with

a motorcyclist, Gregory Bouwens. Bouwens sued both Sevor and the owner of the rental car, PV

Holding Corp. Budget notified Progressive of the suit and requested that Progressive indemnify and

defend Budget pursuant to its obligations under the Agreement. Progressive refused, asserting that

the Agreement did not apply to Sevor’s rental because Sevor was not a Progressive employee.

Budget thereafter threatened to sue; and Progressive in turn filed this action, seeking a declaration

that the Agreement did not apply to the Bouwens litigation. Progressive also sought attorneys’ fees.

       Budget filed counterclaims, alleging that Progressive had breached the Agreement, and that

it negligently misrepresented that the Agreement governed Sevor’s rental. Budget also asserted that

                                                -3-
Nos. 08-4035, 08-4036
Progressive v. Budget

equitable estoppel barred Progressive’s claim for declaratory relief. Finally, Budget sought a

declaration that Progressive had a duty to defend, indemnify, and hold Budget harmless for any

liability in connection with Bouwens’ lawsuit. Budget too sought attorneys’ fees.

       After discovery, the parties filed cross-motions for summary judgment. The district court

granted Progressive’s motion and denied Budget’s, finding that the Agreement did not apply to

Sevor’s rental. The court also denied Progressive’s request for attorneys’ fees, finding that the

contractual attorneys’ fees provision—along with the rest of the Agreement—did not apply here.

       This appeal followed.

                                                  II.

       “This Court reviews a district court’s grant of summary judgment de novo.” Moses v.

Providence Hosp. & Med. Ctrs., Inc., 561 F.3d 573, 578 (6th Cir. 2009). “Summary judgment is

appropriate if 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

movant is entitled to a judgment as a matter of law.’” Id., quoting Fed. R. Civ. P. 56(c).

       Although the parties agree that the Sevor rental fell outside the Agreement—because as a

non-employee Sevor was not a “Driver”—Budget argues that Progressive should be estopped from

asserting that fact because Progressive accepted a discounted rate for her rental. To prove a claim

for estoppel under Ohio law, Budget must show “(1) that the defendant made a factual

misrepresentation; (2) that it is misleading; (3) [that it induced] actual reliance which is reasonable

                                                 -4-
Nos. 08-4035, 08-4036
Progressive v. Budget

and in good faith; and (4) [that the reliance caused] detriment to the relying party.” Helman v. EPL

Prolong, Inc., 743 N.E.2d 484, 495 (Ohio Ct. App. 2000) (brackets in original).

       That test is not met here, because Progressive never represented that Sevor’s rental was

governed by the Agreement. Progressive instead booked the rental using a code that undisputedly

was not exclusive to the Agreement. Budget’s own National Account Manager testified that the AB

Codes predated the Agreement; that they were not mentioned in the Agreement; that after the

Agreement, he would not be surprised to hear that the AB Codes were still being used for non-

employees; and that he himself directed that the AB Codes be used by Progressive job applicants.

The record therefore establishes, as a matter of law, that Budget knew the AB Codes were not

exclusive to the Agreement, and that to some extent it even approved of the practice of using them

outside the Agreement. Budget therefore cannot prove that Progressive’s use of an AB Code

amounted to a representation that the transaction was covered by the Agreement, or that Budget

reasonably relied on any such inference. That finding defeats Budget’s estoppel claim, and its

negligent misrepresentation claim as well.

       It bears mention that Budget, a sophisticated party, itself easily could have avoided the

difficulty for which it now seeks relief from the courts. Budget could have demanded that the

Agreement state that it governed any transaction in which Progressive used an AB Code. Or it could

have given Progressive a different code for off-Agreement rentals. Or it could have directed its

counter representatives to ask Progressive renters whether they were employees of the company,

                                                -5-
Nos. 08-4035, 08-4036
Progressive v. Budget

rather than have its computer system assume they always were. But Budget chose not to do any of

these things; and we will not rewrite the Agreement to function as if Budget did.

       Budget’s other arguments are likewise without merit, for the reasons stated in the district

court’s thorough and well-reasoned opinion.

       But Progressive, for its part, is not entitled to attorneys’ fees. Section 10.01 of the Agreement

provides:

       Disputes. Neither party shall seek or be entitled to punitive or exemplary damages
       in any action, proceeding or counterclaim arising out of or relating to this Agreement.
       Both parties waive their rights to a jury trial. In the event of litigation, the successful
       party is entitled to recover its reasonable attorneys’ fees and court costs.

       Progressive argues that it is entitled to its fees because this litigation “relat[es] to” the

Agreement. But the section’s “relating to” language pertains only to whether a party may assert a

claim for punitive or exemplary damages. The words “relating to” are absent from the sentence

governing attorneys’ fees. We construe that omission to mean something, namely, that the fees

provision is more narrow than the punitives one, and that a successful party is therefore entitled to

fees only for litigation arising under the Agreement. As discussed above, Progressive has persuaded

us that this litigation does not meet that description.

       The judgment of the district court is affirmed.

                                                  -6-