from the Hendricks Superior Court The Honorable Karen M.
Love, Judge Trial Court Cause No. 32D03-1603-PL-38
Attorney for Appellant J. Thomas Vetne Jones Obenchain, LLP
South Bend, Indiana
Attorneys for Appellee Dennis F. Cantrell Keith D. Mundrick
Cantrell, Strenski & Mehringer, LLP Indianapolis, Indiana
Summary and Issue
Maria Rivera took her vehicle, which was insured by
Progressive Southeastern Insurance Company
("Progressive"), to Terry Lee Honda for repairs.
Terry Lee Honda provided Rivera with a courtesy car and
requested she sign a "Rental Agreement for a Temporary
Substitute Vehicle" ("Courtesy Car
Agreement"). Terry Lee Honda insures its vehicles
through Empire Fire and Marine Insurance
("Empire"). After Rivera had an accident in the
courtesy car, Empire paid for the repairs and then sought to
collect from Progressive, alleging Progressive was the
primary insurer pursuant to the Courtesy Car Agreement. In
turn, Progressive claimed that the Courtesy Car Agreement was
an invalid rental agreement and the courtesy car was a loaned
vehicle under Indiana law.
Progressive initiated this declaratory judgment action
against Empire seeking an order stating: 1) Rivera was a
permissive driver of a loaned vehicle; 2) Empire's
coverage was primary; and 3) Empire's coverage must be
exhausted before Progressive is obligated on any claim. In
response, Empire filed a motion for arbitration pursuant to a
preexisting arbitration agreement with Progressive.
Progressive then filed an Amended Complaint, attempting to
jettison issues subject to arbitration by asking the trial
court to declare the courtesy car was a loaned vehicle under
Indiana law. On cross-motions for summary judgment, the trial
court concluded the Courtesy Car Agreement constituted a
rental agreement and ordered any remaining dispute to
Progressive now appeals, raising one issue for our review:
whether the trial court erred in concluding the Courtesy Car
Agreement constituted a rental agreement. Concluding the
trial court erred in reaching the merits of the underlying
claim because the dispute is subject to compulsory
arbitration, we reverse in part, affirm in part, and remand
to the trial court for entry of an order directing the
parties to proceed to arbitration.
and Procedural History
On December 11, 2015, Rivera took her vehicle to Terry Lee
Honda in Avon, Indiana, for service work. As part of the
"Honda Courtesy Car Program, " Rivera was issued a
Honda CR-V courtesy car to use while her vehicle was
serviced. Before receiving the courtesy car, Rivera signed a
contract titled, "Rental Agreement for a Temporary
Substitute Vehicle" ("Courtesy Car
Agreement"). Relevant to this appeal, the Courtesy Car
2. Rental: Consideration; Indemnity and Warranties. This is a
contract for rental of the Vehicle. A fee You pay Us, or Our
opportunity to service or repair Your vehicle and the
benefits We receive for the service/repair work, is adequate
consideration for rental of the Vehicle. We may repossess the
Vehicle at Your expense without notice to You if the Vehicle
is abandoned or used in violation of law or this Agreement.
You agree to indemnify Us, defend Us and hold Us harmless
from all claims, liability, costs and attorney fees We incur
resulting from or arising out of this Agreement or Your use
of the Vehicle. We make no warranties, express, implied or
apparent, regarding the Vehicle, no warranty of
merchantability and no warranty that the Vehicle is fit for a
4. Responsibility for Damage or Loss; Reporting to Police.
You are responsible for theft of the Vehicle and damage to it
whether or not You are at fault. . . .
6. Insurance. You are responsible for all damage or loss You
cause to others. You agree to provide auto liability,
collision and comprehensive insurance covering You, Us and
the Vehicle. Your insurance is primary. If You have no auto
liability insurance in effect on the date of a loss, or if We
are required by law to provide liability insurance, We will
provide auto liability insurance (the "Policy")
that is secondary to any other valid and collectible
insurance whether primary, secondary, excess or contingent. .
Appendix, Vol. II at 59. The Courtesy Car Agreement provided
for a daily rental rate of $35 but Terry Lee Honda neither
collected the charge when Rivera signed the contract, nor did
it collect the charge when Rivera returned the courtesy car.
Terry Lee Honda did, however, receive $1, 420 for service
work paid by Rivera's vehicle warranty provider.
Prior to the events that led to this litigation, both
Progressive and Empire signed a "Special Arbitration
Agreement" ("Arbitration Agreement"),
administered by Arbitration Forums, Inc. The Arbitration
Upon settlement of a claim or suit, signatory companies must
submit any unresolved disputes to Arbitration Forums,
Incorporated (herein after referred to as AF) where:
(a) each has issued a policy of casualty insurance covering,
or as a self-insured covers, one or more parties asserted to
be legally liable for an accident, occurrence or event out of
which a claim or suit arises; or
(b)each has issued separate policies of property or casualty
insurance providing, or as a self-insured provides,
concurrent coverage to the same party or parties asserted to
cover an accident, occurrence or event out of which a first
or third party claim or suit for bodily injury or property
damage arises; or
(c)a workers compensation carrier or a self-insured seeks to
recover reimbursement of workers compensation benefits from
an alleged tortfeasor.
Id., Vol. III at 75. Arbitration Forums, Inc.,
defines "settlement" as:
Settlement - (Special Arbitration) The final disposition of a
claim or suit wherein the claimant or plaintiff releases any
and all causes of action against all alleged responsible
parties involved in the Special Arbitration filing. . . .
Id. at 86. Concurrent coverage is defined as:
Concurrent Coverage - (Special Arbitration) Two or more
policies of insurance and/or self-insureds providing coverage
to the same party or parties or the same risk or risks for
the same accident, occurrence, or event. Concurrent coverage
includes primary/excess disputes.
Id. at 85.
While driving the courtesy car, Rivera had an accident which
caused minor damage to the vehicle. Empire made full payment
for the damage, minus the deductible paid by Terry Lee Honda.
Empire then sought repayment of $328.45 from Progressive,
claiming Progressive was the primary insurance provider
pursuant to the Courtesy Car Agreement.
In response, Progressive claimed the Courtesy Car Agreement
was invalid because Terry Lee Honda did not comply with the
statutory requirements for rental agreements found in Indiana
Code section 24-4-9-5. Progressive argued that because the
Courtesy Car Agreement was unenforceable, the courtesy car
was a loaned vehicle under Indiana Code ...