Liability for Permissive Use of a Rental Vehicle

Chandler v. GEICO Indemnity Co., 36 Fla. L. Weekly S660 (Nov. 23 2011) is a case in which the Florida Supreme Court continued to apply the dangerous instrumentality doctrine notwithstanding attempts by rental car companies or insurers to contractually limit that doctrine’s application.

In this case, a party rented a car from Avis under a contract which specifically limited the operation of the car to the renter, precluding its operation by any additional operators and providing that if permission were given to operate the car to anyone other than the renter, the rental agreement would be vitiated.

Shortly after renting the car, the renter permitted its use by another party who, in turn, permitted the rental vehicle to be operated by yet a third party who, in turn, negligently crashed the car into a tree causing serious injury and death to several of the passengers. One of the injured passengers brought suit against the renter’s insurer who denied both coverage and defense under the theory that the rental car did not constitute a temporary substitute automobile under the policy because the rental agency, Avis, had not given the driver permission to drive the car and, in fact, had negated that permission under the terms of the rental agreement.

The trial court entered summary judgment in favor of the plaintiff passenger and the First District reversed holding that since Avis was the owner of the vehicle, only Avis could give permission to drive the vehicle and the vehicle, therefore, did not qualify as a temporary substitute vehicle.

The Supreme Court reversed the First District’s opinion under the authority of the cases of Susco Car Rental System of Florida v. Leonard, 112 So. 2d 832 (Fla. 1959), American Fire & Casualty Co. v. Blanton, 182 So. 2d 36 (Fla. 1st DCA 1966) and Roth v. Old Republic Insurance Co., 269 So. 2d 3 (Fla. 1972).

Susco, supra, was remarkably similar to the case under consideration by the Supreme Court. In Susco, a bailee rented a car from a rental company under an agreement that provided that no person other than the renter could drive the car without the rental company’s written consent. The renter permitted an unauthorized driver to drive the car who then caused the collision and the occupants of the other vehicle filed an action. The trial court entered a summary judgment for the rental car company and the Third District reversed. In affirming the District Court, the Supreme Court in Susco defined the dangerous instrumentality doctrine under these circumstances as follows:

In the final analysis, while the rule governing liability of an owner of a dangerous agency who permits it to be used by another is based on consent, the essential authority or consent is simply consent to the use or operation of such an instrumentality beyond his own immediate control. Only to that limited extent is the issue pertinent when members of the public are injured by its operation, and only in a situation where the vehicle is not in operation pursuant to his authority, or where he has in fact been deprived of the incidents of ownership, can such an owner escape responsibility. Certainly the terms of a bailment, either restricted or general, can have no bearing upon that question. (Emphasis by the Court).

In Blanton, a farmer gave his underage son permission to drive his car to the farm but specifically told the son not to allow anyone else to ride with him. The son, ignoring the father’s limitations, picked up a friend and let the friend drive the car who crashed the car into a ditch. The District Court in Blanton, at 182 So. 2d 38 applied the Supreme Court’s decision in Susco stating:

. . . implied permission “has come to have a fixed, definite meaning in this jurisdiction” under the dangerous instrumentality doctrine, which is to the effect that the owner of a motor vehicle is relieved from responsibility for its use or misuse only upon a breach of custody amounting to a species of conversation or theft. (Emphasis by the Court).

In Roth, supra, there was again a rental car where the rental agency prohibited the renter from permitting another driver to operate the car and another person was allowed to operate the car and he then negligently struck two pedestrians. In the action by the pedestrians and the subsequent suit by the insurer of the renter against the rental company, the Court held at 6-7:

Susco recognizes that a bailee or a lessee of a rented automobile, similarly as its owner, may permit another to operate it (and often does) and the latter’s negligent operation of it renders the owner vicariously liable, together with his liability insurer, under the dangerous instrumentality doctrine, despite an agreement between the owner and the lessee to the contrary. See American Fire & Casualty Co. v Blanton, [182 So. 2d 36, 39 (Fla. 1st DCA 1966)]. A necessary legal corollary to

this recognition in Susco is that the owner and the lessee’s insurance coverage under financial responsibility (in this instance afforded by Old Republic) covers the lessee’s permittee as well. . . .

The Susco and Blanton cases recognize that in the very nature of modern automobile use a lessee of a rental car often has to turn the car over to car park, garage, or filling station personnel and others for temporary operation and that it would be unreasonable to negate the rental car agency’s liability and its insurance coverage in case of accident because of the existence of a collateral or side agreement of the kind here involved. Often such permittees of rental car lessees temporarily driving rental cars would not be as fortunate as [the permittee] and have the protection of their own personal auto liability insurance coverage, rendering it even more difficult for injured members of the public to recover their losses arising from the negligence of drivers of rental cars. (Emphasis supplied by the Court).

Based upon this settled law, the Supreme Court reversed the First District holding that the insurer for the renter could not rely upon the terms of the rental contract to which it was not a party because such terms were inconsistent with the Supreme Court’s decision in both Susco and Roth, supra, and directed that the judgment of the trial court in favor of the insureds and

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the injured parties be reinstated.

This case follows the reasoning of the Supreme Court in prior cases that once permissive use is given for the operation of an automobile, the owner and bailee bear a responsibility for the use of that vehicle by any party who subsequently has permissive use and that statements in contracts or otherwise attempting to limit that use to the original bailee are not applicable to a claim made by an injured third party.

Originally published March 2012