Farmers Insurance Exchange v. Enterprise Leasing Co.

Bataa Baasanjav rented an automobile from Appellant Enterprise Leasing Company (Enterprise). Baasanjav declined to purchase supplemental liability insurance for the rental. The lease agreement contained an indemnification provision in which the renter would have financial responsibility to Enterprise for any losses associated with the rental. Baasanjav was insured under an automobile insurance policy issued by Appellee Farmers Insurance for his own automobile. The Farmers policy would pay for "all sums which the insured shall become legally obligated to pay. . .because of injury to or destruction of property. . .arising out of the ownership, maintenance or use of the owned vehicle." Under the terms of the policy, "owned vehicle" included the rental. Baasanjav was involved in an accident with another driver while driving the Enterprise rental. The parties stipulated Baasanjav was liable for damages to the other driver's car; Enterprise paid the damages to the other driver. Enterprise sought indemnification from Baasanjav; Baasanjav refused. Farmers filed a complaint for declaratory relief asking the court to determine whether Enterprise had a right to recover from Farmers or Bassanjav or both, under the terms of the Farmers policy and the Enterprise lease agreement. The circuit court ruled that Farmers is liable to Enterprise for the amount paid to the other driver; Farmers appealed. On review, the Supreme Court affirmed the lower court's decision.