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                                                               No. 99-448



                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                              2000 MT 106

                                                             299 Mont. 315

                                                             998 P. 2d 1168




                                                    P.C. RENTAL, INC., d/b/a

                                                     BUDGET RENT-A-CAR,



                                                       Plaintiff and Appellant,



                                                                      v.



                                             CHASE MANHATTAN BANK and

                                                             VISA U.S.A.,



                                                  Defendants and Respondents.




                          APPEAL FROM: District Court of the Eighteen Judicial District,

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                                                In and for the County of Gallatin,

                                      The Honorable Mike Salvagni, Judge presiding.




                                                    COUNSEL OF RECORD:



                                                             For Appellant:



                           William A. D'Alton, Brown Law Firm, P.C., Billings, Montana



                                                           For Respondents:



                      Allan H. Baris, Moore, O'Connell & Refling, P.C., Bozeman, Montana




                                           Submitted on Briefs: December 2, 1999

                                                      Decided: April 27, 2000

                                                                   Filed:




                                   __________________________________________

                                                                   Clerk


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                           Justice Jim Regnier delivered the opinion of the Court.

   1. ¶P.C. Rental, Inc., d/b/a Budget Rent-a-Car (P.C. Rental), appeals from the
      judgment entered by the Eighteenth Judicial District Court in Gallatin County,
      awarding summary judgment in favor of Chase Manhattan Bank and Visa U.S.A.
      (collectively, Visa) and dismissing P.C. Rental's Amended Complaint with
      prejudice. We affirm.
   2. ¶Of the issues raised on appeal by P.C. Rental, only one is dispositive: Whether the
      District Court erred when it concluded that P.C. Rental's physical damage coverage
      was primary coverage and Visa's auto rental insurance coverage was excess
      coverage? The other issues raised involve consideration of P.C. Rental's liability
      coverage. While the District Court addressed the arguments raised by the parties
      with regard to P.C. Rental's liability coverage, the District Court's ultimate
      resolution of this case rested on the primary versus excess coverage provisions of
      the respective property damage policies. Therefore, the issues presented involving
      consideration of P.C. Rental's liability policy are not germane to our resolution of
      this case and will not be addressed.

                                                         BACKGROUND

   1. ¶In the District Court proceeding, the parties stipulated to the following underlying
      facts: On May 7, 1995, John Hudson used his Visa Gold Card at the Gallatin County
      Airport to rent a 1995 Ford Mustang convertible from P.C. Rental. On May 10,
      1995, Hudson lost control of the vehicle, causing damage rendering the vehicle a
      total loss.
   2. ¶At the time of the accident, P.C. Rental had a commercial lines policy through
      Empire Fire and Marine Insurance Company (Empire), which included liability and
      physical damage coverage. As of May 10, 1995, Hudson did not own an automobile
      and was not covered by a personal automobile insurance policy at the time of the
      accident. However, one of the benefits provided by the Visa Gold Card Hudson used
      to rent the Mustang was auto rental insurance.
   3. ¶Empire paid P.C. Rental the agreed actual cash value of the vehicle in the amount
      of $18,223 (rounded off to the nearest dollar amount), minus a $1000 policy
      deductible. Empire subsequently sold the damaged vehicle for salvage and received
      $1108, resulting in a net payout of $17,115 to P.C. Rental. In addition, Visa paid P.
      C. Rental approximately $7800 to cover P.C. Rental's deductible and lost rental fees.

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   4. ¶On July 25, 1996, P.C. Rental brought a breach of contract action against Hudson
        for failing to return the car in the same condition in which it had been rented to him
        as required by the rental agreement. Hudson filed an Answer and Third Party Claim
        on October 2, 1996, alleging that Chase Manhattan Bank, as the issuer of his Visa
        Gold Card, was responsible for any damage sustained to the rental car under the
        terms of the auto rental insurance.
   5.   ¶Hudson subsequently filed for bankruptcy and assigned all his rights in the third-
        party claim against Chase Manhattan Bank to P.C. Rental. Based on those events, P.
        C. Rental filed a motion for leave to amend its complaint on June 20, 1997, which
        was granted. In its Amended Complaint, P.C. Rental added Visa U.S.A., as a
        defendant on the basis that the auto rental insurance Hudson obtained through his
        Visa Gold Card, issued by Chase Manhattan Bank, was provided by Visa U.S.A. P.
        C. Rental alleged that the auto rental insurance provided coverage on a 24-hour
        basis for damage to a rental car rented with the credit card up to the full value of the
        car in the event of collision or rollover. Visa filed an answer to the Amended
        Complaint denying P.C. Rental's allegations regarding the auto rental insurance.
   6.   ¶On September 10, 1998, the parties entered into a Stipulation of Fact Concerning
        Real Party in Interest, which stated that this lawsuit was a subrogation action
        brought by Empire in the name of its insured, P.C. Rental, and that Empire was an
        additional real party in interest agreeing to be bound as if named as a party plaintiff.
        In addition, the parties entered into a Stipulation of Fact for Purposes of Submitting
        Coverage Issue to Court for Ruling on Summary Judgment.
   7.   ¶The parties subsequently filed cross-motions for summary judgment. Visa alleged
        that they had met their obligation under the auto rental insurance when they paid P.
        C. Rental approximately $7800 to cover P.C. Rental's policy deductible and lost
        rental fees. In addition, Visa asserted that the auto rental insurance provided excess
        coverage and Empire's property damage coverage provided primary coverage for the
        loss of the rental vehicle. Furthermore, Visa alleged that Hudson was an insured
        under the liability coverage issued by Empire and thus, Empire could not subrogate
        against its own insured.
   8.   ¶P.C. Rental/Empire argued that Hudson was not a designated insured under the
        property damage/collision coverage and thus, Empire was not attempting to
        subrogate against its own insured. Moreover, P.C. Rental/Empire asserted that no
        issue of primary or excess coverage existed in this subrogation action and Visa was
        ultimately responsible for the loss of the vehicle.
   9.   ¶The District Court concluded that Hudson was an insured under the liability policy
        provided to P.C. Rental by Empire and thus, Empire was not entitled to subrogate

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      against its own insured under the liability coverage. With regard to the property
      damage/collision coverage, the District Court stated that since both policies
      provided property damage coverage for the same vehicle, the court must honor the
      "other insurance" clauses of the policies. The policy issued by Empire states that its
      coverage is primary and the auto rental insurance provided through Visa states that
      it is excess coverage. Accordingly, the District Court concluded that Empire was not
      entitled to recover any of the amount it paid to P.C. Rental from Visa.
  10. ¶After its ruling, the District Court entered judgment granting Visa's motion for
      summary judgment, denying P.C. Rental's motion for summary judgment, and
      dismissing P.C. Rental's Amended Complaint with prejudice. P.C. Rental appeals
      from the judgment entered by the District Court.



                                                  STANDARD OF REVIEW

    1. ¶Our standard of review in appeals from summary judgment rulings is de novo. See
        Ruckdaschel v. State Farm Mut. Auto. Ins. (1997), 285 Mont. 395, 398, 948 P.2d
        700, 702 (citations omitted). When we review a district court's grant of summary
        judgment, we apply the same evaluation, based on Rule 56, M.R.Civ.P., as the
        district court. See Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900
        P.2d 901, 903. In Bruner, we set forth our inquiry:

The movant must demonstrate that no genuine issues of material fact exist. Once this has
been accomplished, the burden then shifts to the non-moving party to prove, by more than
mere denial and speculation, that a genuine issue does exist. Having determined that
genuine issues of fact do not exist, the court must then determine whether the moving
party is entitled to judgment as a matter of law. We review the legal determinations made
by a district court as to whether the court erred.



Bruner, 272 Mont. at 264, 900 P.2d at 903 (citations omitted). In this case, the parties have stipulated
to the facts. Therefore, our review is confined to determining whether the District Court's conclusions of
law are correct.

                                                            DISCUSSION

    1. ¶Whether the District Court erred when it concluded that P.C. Rental's physical

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       damage coverage was primary coverage and Visa's auto rental insurance coverage
       was excess coverage?
    2. ¶P.C. Rental contends that Hudson is not an insured under its physical damage
       coverage, therefore, Visa is Hudson's only physical damage insurer. P.C. Rental
       cites cases from other jurisdictions that have found that subrogation should not be
       precluded when a physical damage claim is made. However, we think it is important
       to note that the cases cited by P.C. Rental all indicate that the contract language of
       the collision or physical damage insurance is of key importance and that such
       insurance covers physical damage to a specific insured vehicle irrespective of who
       was driving or whether the car was being driven at all. One particular quote cited by
       P.C. Rental is worth repeating:

However, of central importance in this case is the fact that Penn's policy is one of collision
insurance and not liability insurance. The issues of who is an "insured" and of permissive
use are critical in the resolution of a dispute involving automobile liability insurance
policies but not in cases involving automobile collision coverage; liability insurance
covers whomever may be construed as an "insured" under the terms of the policy and
permission is relevant in determining whether the acts of the driver are insured by the
policy. Collision insurance is basically a contract of indemnity which merely covers
physical damage to a specific insured vehicle . . . irrespective of who is driving.



Aetna Cas. & Sur. Co. v. Pennsylvania Nat'l Mut. Cas. Ins. Co. (N.C. 1986), 341 S.E.2d 548,
550 (citations omitted).

    1. ¶Visa asserts that the District Court correctly determined that P.C. Rental's physical
       damage coverage was primary and their auto rental insurance was excess. Visa also
       contends that regardless of whether Hudson was an "insured" under the physical
       damage policy, Empire covered the 1995 Ford Mustang on a primary basis pursuant
       to the terms of its policy.
    2. ¶The physical damage coverage issued to P.C. Rental by Empire provided:

1. We [Empire] will pay for "loss" to a covered "auto" or its permanently installed
business equipment under:



....

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b. Collision Coverage. Caused by:



(1) The covered "auto's" collision with another object; or



(2) The covered "auto's" overturn.



The auto rental insurance issued to Hudson by Visa provided:

                                      Part IV. DESCRIPTION OF COVERAGE



                                               A. Collision Damage Insurance



Coverage is provided for covered loss to a Rental Car caused by the Rental Car's collision
with another object or its overturn.



    1. ¶Since both policies provided coverage for the loss of the Mustang, it is necessary to
        look to the "other insurance" clauses of the policies to determine the scope of
        coverage each policy provided. The other insurance clause of the physical damage
        coverage issued to P.C. Rental by Empire provided:

a. For any covered "auto" you own, this Coverage Form provides primary insurance.



The auto rental insurance issued to Hudson by Visa provided:

                                                   A. 1. Secondary Coverage

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This coverage is excess over any other collectible insurance including coverage on an
automobile an Eligible Person owns.



    1. ¶Pursuant to its terms, the Empire policy provided primary coverage, which was
       collected by P.C. Rental. In addition, the terms of the auto rental insurance provided
       that it was excess over any other collectible insurance. Pursuant to the terms of their
       respective policies, Empire paid P.C. Rental for the loss of the Mustang, minus a
       $1000 deductible, and Visa paid P.C. Rental's $1000 deductible as well as
       approximately $6800 in lost rental fees.
    2. ¶Given the nature of the physical damage/collision coverage available, no
       determination of whether Hudson was an insured under Empire's physical damage
       coverage was necessary or possible under the policies. Based on the plain language
       of the two policies, we conclude that the District Court did not err when it
       concluded that P.C. Rental's physical damage coverage was primary coverage and
       that Visa's auto rental insurance was excess coverage.
    3. ¶Affirmed.



/S/ JIM REGNIER




We Concur:



/S/ J. A. TURNAGE

/S/ TERRY N. TRIEWEILER

/S/ WILLIAM E. HUNT, SR.

/S/ JAMES C. NELSON

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