Progressive Southeastern Insurance Co. v. Empire Fire and Marine Insurance Co.
32A05-1706-PL-1235
| Ind. Ct. App. | Nov 21, 2017Background
- Maria Rivera received a Honda CR-V courtesy car from Terry Lee Honda after leaving her vehicle for service and signed a document titled “Rental Agreement for a Temporary Substitute Vehicle” (Courtesy Car Agreement). The form identified a $35/day rental charge, but Terry Lee Honda never collected that fee; it did receive payment for service work from Rivera’s warranty provider.
- Terry Lee Honda insures its vehicles with Empire Fire and Marine Insurance (Empire); Rivera’s personal auto policy (with Progressive Southeastern Insurance Company, Progressive) included coverage for non-owned autos.
- Rivera had a minor accident in the courtesy car; Empire paid for repairs (less dealership deductible) and sought reimbursement of $328.45 from Progressive, asserting the Courtesy Car Agreement made Progressive primary.
- Progressive sued for declaratory judgment asking the court to declare the arrangement a loan (making Empire primary under Ind. Code § 27-8-9-7(b)), arguing the Courtesy Car Agreement failed to meet statutory rental-agreement requirements and was therefore unenforceable.
- Empire moved to compel arbitration under a preexisting Special Arbitration Agreement (both insurers were signatories), arguing the dispute was a concurrent-coverage/priority issue subject to compulsory arbitration. The trial court ruled the Courtesy Car Agreement was a rental agreement and sent remaining disputes to arbitration.
- The court of appeals reversed the trial court’s ruling that resolved the rental/loan issue on the merits, held the entire dispute falls within the Arbitration Agreement, affirmed the partial arbitration order, and remanded with instructions to compel arbitration of the dispute.
Issues
| Issue | Plaintiff's Argument (Progressive) | Defendant's Argument (Empire) | Held |
|---|---|---|---|
| Whether the Courtesy Car Agreement is an enforceable rental agreement under Ind. Code § 24-4-9-5 (vs. a loan under § 27-8-9-7) | The form is invalid as a rental agreement because Terry Lee Honda never "charged" the $35/day fee required by statute; thus the vehicle was a loan and Empire is primary | The written Courtesy Car Agreement constitutes a rental agreement (and/or lease) on its face, making the question of coverage priority one for the arbitrator | Court of appeals reversed the trial court’s merits ruling on the rental issue and held this merits question must be decided in arbitration; trial court erred by resolving it on summary judgment |
| Whether the dispute (priority/concurrent coverage) is subject to the parties’ Special Arbitration Agreement and thus must be compelled to arbitration | Progressive contended its declaratory action (statutory interpretation that the car was a loan) fell outside the Arbitration Agreement and/or that arbitration should not resolve this statutory question | Empire argued the complaint seeks a determination of coverage priority (concurrent coverage) — precisely the type of dispute the Arbitration Agreement requires to be arbitrated | The court held the Arbitration Agreement unambiguously covers concurrent-coverage/priority disputes, declaratory/statutory-interpretation claims fitting that description are not excluded, and arbitration must be compelled; the court reversed the trial court’s on-the-merits ruling and remanded to compel arbitration |
Key Cases Cited
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary judgment standard)
- Reed v. Reid, 980 N.E.2d 277 (Ind. 2012) (cross-motions for summary judgment review)
- Brumley v. Commonwealth Bus. Coll. Educ. Corp., 945 N.E.2d 770 (Ind. Ct. App. 2011) (review standard for orders compelling arbitration)
- Mislenkov v. Accurate Metal Detinning, Inc., 743 N.E.2d 286 (Ind. Ct. App. 2001) (doubts resolved in favor of arbitration; limits on extending arbitration by implication)
- St. John Sanitary Dist. v. Town of Schererville, 621 N.E.2d 1160 (Ind. Ct. App. 1993) (court should not decide merits when determining arbitrability)
- Wright v. City of Gary, 963 N.E.2d 637 (Ind. Ct. App. 2012) (arbitrators may interpret state law; courts afford limited review)