PAUL PATTON, APPELLANT,
v.
LINDO'S RENT-A-CAR, INC., AND AMERICAN SOUTHERN INSURANCE COMPANY, APPELLEES

Fla. 2d DCA | 1982-05-07
No. 81-1718
SCHEB, C. J., and DANAHY, J., concur.
415 So. 2d 43 Florida District Court of Appeal, Second District (1982) Caution
Cited by 26 cases

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Holding

A lessor of a motor vehicle cannot shift primary liability insurance coverage to the lessee without strictly complying with the notice requirements of section 627.7263, Florida Statutes.


Headnotes

[1] A lessor of a motor vehicle is primarily liable for insurance coverage unless the lessor complies with the statutory requirements for shifting primary liability to the le…

[2] Failure to comply with statutory notice requirements for shifting primary liability in a motor vehicle lease agreement renders the lessor primarily liable regardless of o…

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Facts & Procedural History

The lessee rented a vehicle and was involved in an accident. The lessor's rental agreement failed to provide the required bold-type notice to inform t…

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Opinion of the Court
SCHOONOVER, Judge.

SCHOONOVER, Judge.

This is an interlocutory appeal from a summary judgment on a cross-claim holding that the lessee of a motor vehicle was obligated to provide primary liability insurance coverage on a rented vehicle notwithstanding the lessor’s failure to comply with section 627.7263, Florida Statutes (1979). We reverse.

On December 16, 1979, the appellant, third-party defendant, Paul Patton, rented an automobile from the appellee, third-party plaintiff, Lindo’s, who was insured by appellee American Southern Insurance Company, hereinafter referred to as American Southern.

The appellant, a Canadian citizen, carried liability insurance on his personal automobile with Ontario Motorist’s Insurance Company, a Canadian corporation.

On December 18, 1979, the appellant was operating the leased vehicle when it collided with a vehicle owned and operated by Will Howard. Howard, a nominal appellee in this appeal, filed suit against Lindo’s and American Southern in August 1980. The appellees answered the complaint and filed a third-party complaint for indemnity against the appellant and his insurer alleging that the latter had primary coverage for the damages sought by Howard. The appellant answered the third-party complaint and affirmatively alleged that Lin-do’s rental agreement failed to comply with the requirements of section 627.7263, Florida Statutes (1979), and therefore, the appel-lees were required to provide primary coverage up to American Southern’s policy limits.

Section 627.7263, Florida Statutes (1979), provides as follows:

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 ss. 324.021(7) and 627.736.

(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.

The rental agreement contained the following language:

17. 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 Florida Statutes SS. 324.021(7) and 627.7263.

The above-quoted portion of the rental agreement was no different in size or color from the rest of the agreement and was a quote from section 627.7263, Florida Statutes (1976).

The agreement also contained a paragraph requiring the appellant, as lessee, to indemnify Lindo’s against any loss, liability, et cetera arising out of or in connection with any possession or use of the vehicle. American Southern’s policy contained what is commonly known as an escape clause.

The trial court found the notice on the agreement inadequate to comply with section 627.7263, Florida Statutes (1979), but still entered a summary judgment finding that the parties had properly shifted the responsibility for primary coverage to the appellant and that Lindo’s insurance policy contained a valid escape clause. The summary judgment required the appellant to assume the primary defense of Howard’s claim and to indemnify Lindo’s under the terms of the rental agreement.

The sole question on this appeal is whether the parties to a motor vehicle lease agreement are free to contract between themselves as to which of them shall provide the primary liability insurance coverage without complying with the statute which makes the lessor primarily liable unless he follows a specific method of shifting that responsibility to the lessee.

We hold that section 627.7263, Florida Statutes (1979), provides the exclusive method of shifting primary liability coverage from the lessor to the lessee, and if the lessor fails to comply with the requirements of this section, he is primarily liable up to the financial responsibility requirements of the law regardless of any other provision contained in the rental agreement or policy.

The appellees’ reliance on the case of Racecon, Inc. v. Mead, 388 So. 2d 266 (Fla. 5th DCA 1980), is misplaced. In that case, the court was construing the statute as it existed in 1976, and not the statute that was in effect at the time of the incident which gave rise to the instant litigation.

The statute became as much a part of the rental agreement as if it were expressly written into it and accordingly must be given effect by the parties. Grand Lodge, Knights of Pythias v. Moore, 120 Fla. 761, 163 So. 108 (1935).

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. Insurance Company of North America v. Avis Rent-A-Car, 348 So. 2d 1149 (Fla.1977). Accordingly, under the agreement in this case, the lessor’s insurance company is only primarily liable up to the requirements of the financial responsibility law.

We reverse and remand for proceedings consistent herewith.

SCHEB, C. J., and DANAHY, J., concur.


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Citator

Cited By (13 total)

  • …uld 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…
  • Reliance Ins. Co. & Bob Salmon, Inc. v. Md. Cas. Co., 453 So. 2d 854 (Fla. 4th DCA 1984)
    …ance with the personal injury protection coverage as required by Section 324.021(7), Florida Statutes, and the financial responsibility requirements of 627.736. We join with the Second District Court of Appeal in Patton v. Lindo’s Rent-A-Car, Inc., 415 So. 2d 43 (Fla. 2d DCA 1982), in its conclusion that 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 […
  • Md. Cas. Co. v. Reliance Ins. Co., 478 So. 2d 1068 (Fla. 1985)
    …f primary coverage afforded by Reliance. Reliance urges us to uphold the district court’s finding that its policy is primary only up to the minimum amount required by the financial responsibility law, $10,000. See Patton v. Lindo’s Rent-A-Car, Inc., 415 So. 2d 43 (Fla. 2d DCA 1982). Maryland cites Sunshine Dodge, Inc. v. Ketchem, 445 So. 2d 395 (Fla. 5th DCA 1984), in support of its argument that Reliance’s primary coverage extends beyond the minimum $10,000, up to the full amount of the policy it issued to…

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