United States Fire Insurance v. Barker Car Rental

132 F.3d 1123
CourtCourt of Appeals for the Seventh Circuit
DecidedDecember 17, 1997
DocketNo. 97-3810
StatusPublished
Cited by1 cases

This text of 132 F.3d 1123 (United States Fire Insurance v. Barker Car Rental) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Fire Insurance v. Barker Car Rental, 132 F.3d 1123 (7th Cir. 1997).

Opinion

RIPPLE, Circuit Judge.

United States Fire Insurance Company (“U.S. Fire”) filed a complaint for interpleader and declaratory judgment in the United States District Court for the Southern District of Indiana. It sought a determination of its contractual rights and obligations under three insurance policies for claims arising out of a November 26, 1993, motor vehicle accident. Specifically, U.S. Fire sought a determination that its deposit of certain funds with the district court satisfied its obligations under a Business Auto Policy issued to Barker Car Rental (“Barker”) and that neither its First nor Second Excess Policy issued to Barker was implicated by the accident which involved Bader Alkhuaini, who had rented one of Barker’s vehicles. On cross-motions for summary judgment, the district court held that U.S. Fire had satisfied its obligations under the Business Auto Policy and that the Second Excess Policy was not implicated. However, the district court held that Alkhuaini was partially covered under the First Excess Policy. U.S. Fire now appeals the district court’s decision with respect to its liability under the First Excess Policy. For the reasons set forth in the following opinion, we reverse the judgment of the district court and remand for further proceedings.

I

BACKGROUND

A.

On November 24, 1993, Bader Alkhuaini, a citizen of Kuwait, rented a 1993 Pontiac from Barker in Huntington, West Virginia. The ear rented to Alkhuaini was licensed in Illinois and carried Illinois plates. In the rental agreement signed by Alkhuaini, Barker agreed to provide liability insurance for Alk-huaini. Two days later, Alkhuaini was driving in Brown County, Indiana, and was involved in an accident with Barry and Verna Lawrence, Kimberly Creech and David Davies. Alkhuaini and Barry Lawrence died as a result of the accident. The others sustained personal injuries and property damage.

At the time of the accident, Barker held three insurance policies issued by U.S. Fire: a Business Auto Policy, a First Excess Policy and a Second Excess Policy. All three policies were negotiated and delivered at Barker’s principal place of business in Blooming-ton, Illinois.

On September 9, 1994, U.S. Fire filed this interpleader and declaratory judgment action in the United, States District Court for the Southern District of Indiana to determine its obligations under these three insurance policies. Barker, Alkhuaini’s Estate, Barry Lawrence’s Estate, Verna Lawrence, Creech and Davies were all named as defendants in this action.1 Transamerica Insurance Group, the Lawrences’ insurer, and Old Dominion Insurance, Creech’s insurer, were also included as defendants in this action because each had paid its insured as a result of, the accident.

[1155]*1155In Count I of its complaint, U.S. Fire sought interpleader and declaratory judgment as .to the Business Auto Policy. Specifically, U.S. Fire admitted that Alkhuaini was covered by that policy. It deposited with the district court the remaining funds available under that policy for equitable, distribution among the various claimants.2 IJ'.S. Fire also sought a declaration that its obligation under the Business Auto Policy to defend and indemnify Alkhuaini with respect to any claims or lawsuits arising out of the accident was extinguished by the-deposit of those.funds with the district court. In Counts II and III of its complaint, U.S. Fire requested declaratory relief as to the First and Second Excess Policies. U.S. Fire contended that Alkhuaini did not qualify as an insured under either policy and that it had no obligation to defend or indemnify Alkhuaini under those policies for any claim or lawsuit arising out of the November 26, 1993, motor vehicle accident.

Three of the defendants filed cross-claims against U.S. Fire. Both Transamerica and Old Dominion had paid their insureds for their property damage and therefore sought to enforce their subrogated interests. The Lawrence Estate and Mrs. Lawrence had filed a separate action for personal injury and wrongful death; this action was consolidated as a cross-claim for purposes of judicial economy. All three defendants agreed to stay prosecution of their cross-claims pending resolution of the coverage issues in U.S. Fire’s complaint for interpleader and declaratory judgment.3

On February 20, 1996, U.S. Fire filed a motion for summary judgment in its action for interpleader and declaratory judgment. A few days later, the Lawrences and Trans-america each filed cross-motions for summary judgment.

B.

’ On October 4, 1996, the district court issued its decision. It granted U.S. Fire’s motion for summary judgment on Counts I and III of its complaint. However, it granted the defendants’ crossmiotions for summary judgment on Count II. See United States Fire Ins. Co. v. Barker Car Rental, 944 F.Supp. 739, 748 (S.D.Ind,1996). The district court held that U.S. Fire had satisfied its obligations -under the Business,Auto Policy by depositing with the epurt the baL anee of the monies owed under that policy. Id. It further held that Alkhuaini was not covered under the Second Excess Policy. Id. However, with respect to the First Excess Policy, it held that Alkhuaini was partially covered under that policy and that U.S. Fire had an obligation to defend and indemnify Alkhuaini to the extent he was covered under the policy. Id.

At the outset of its analysis of the First Excess Policy, the district court noted that Barker, and Barker alone, is the named1 insured under that policy. Id. at 744. Unlike the Business Auto Policy, the First Excess Policy- does not carry, the court continued, endorsements expressly extending coverage to the individual renting the car. Id. In fact, “rentees” are specifically excluded from coverage by Endorsement 3 to the First Excess Policy. Id. Endorsement 3 states:

This Insurance does not apply to the ren-tee or to any ultimate net loss, claim occurrence, accident, loss damages or liatility [sic] imposed upon such rentee when such ultimate net loss, claim, occurrence, accident, loss, damages or liability arises out of the use, possession, or control of a covered auto by such rentee.

[1156]*1156Id. at 745. Endorsement 3, however, provides for one exception to the rule that ren-tees are not covered:

The above does not apply with respect to certain rentees addressed within the Illinois Motor Vehicle Code, Chapter 95:5, Section 9-1015 [sic]....

Id.

The district court then examined whether Alkhuaini was a “certain rentee” addressed by the section of the Illinois Motor Vehicle Code cited in Endorsement 3. Id. at 745. That Section provides:

A motor vehicle liability policy in a solvent and responsible company, authorized to do business in the State of Illinois, ... shall serve as proof of financial responsibility; provided however, every such policy provides insurance insuring the operator of the rented motor vehicle against liability upon such insured to a minimum amount of $50,000 because of bodily injury to, or death of any one person or damage to property and $100,000 because of bodily injury to or death of 2 or more persons in any one motor vehicle accident.

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132 F.3d 1123, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-fire-insurance-v-barker-car-rental-ca7-1997.