Ramos a/a/o Benavides v The Hertz Corporation: U.S. District Court, D. Colorado, 2018 WL 4635972 (Notice of Appeal filed).

• Author: Rogak, Lawrence N.

This insurance bad-faith case arises out of a head-on automobile collision that occurred in Adams County, Colorado in 2014. The Plaintiff, Ramos was injured in the crash. The alleged at-fault vehicle was a rental car, owned by Hertz. At the time of the accident, the rental vehicle was not being driven by the renter, Allen George. Mr. George, apparently, had given the rented car to Mario Benavides to drive.

According to Hertz, Benavides was under the influence of drugs at the time he was driving the borrowed rental vehicle. Hertz alleged that the reason Mr. George had rented the car from Hertz was because Mr. Benavides had crashed Mr. George's Pontiac Grand Prix only a few days earlier. Benavides' Colorado driver's license had also been revoked (under the habitual traffic offender statute) prior to his asking Mr. George to borrow the rented car, allegedly making Benavides' operation of Hertz's car a felony offense. Benavides allegedly had numerous prior intoxication and driving under the influence convictions.

On August 3, 2014, Plaintiff requested that Hertz tender the alleged policy limit of $25,000, based on Plaintiff's assertion that Hertz was obligated by law to insure its rental vehicle, regardless of whether the renter (Mr. George) declined coverage.

One issue in this case is whether Hertz, as owner of the vehicle, was required by Colorado law to insure the car, despite the fact that the renter had declined insurance. Another issue is, assuming without deciding that the renter who declined insurance (George) was nevertheless insured by operation of law, whether that insurance would have transferred to an arguably permissive user (Benavides), who was barred by Colorado law from driving because he lacked a valid driver's license.

Hertz disputed that it was mandated by law to provide insurance to Mr. George, since Mr. George had declined insurance on the rental agreement. Hertz also disputed that Mr. Benavides was a permissive user. Hertz alleged that Mr. Benavides was instead a "converter," in part because Benavides likely failed to disclose his lack of a valid driver's license to George when borrowing the car.

"But," wrote the Judge, "the case gets even more complicated." Hertz refused to tender $25,000 to Plaintiff within the deadline set for a response and, just over a month later, the injured Plaintiff sued Mr. Benavides in state court in Adams County for her injuries. The state court case was then resolved in part by the execution of a Nunn agreement [see footnote] between Plaintiff and Mr. Benavides. Per the Nunn agreement, Mr. Benavides assigned his claims against Hertz (for breach of contract and for insurance bad faith) to Plaintiff in exchange for Plaintiff's agreement not to execute any judgment beyond available insurance policy limits against Benavides' personal assets. In that agreement, Benavides and Plaintiff also purportedly agreed to proceed to an arbitration to determine the amount of damages to which Plaintiff would be entitled.

The arbitration was scheduled. Plaintiff alleges Hertz was invited to participate and appear to present a defense on behalf of Benavides. Hertz did not appear at the arbitration. Neither did Benavides. As a result, the arbitrator was presented with only evidence from Plaintiff, Plaintiff's witnesses, and Plaintiff's experts. That arbitration resulted in a S3.426 million judgment against Benavides and in favor of Plaintiff.

In her Complaint, Plaintiff purports to step into the shoes of Mr. Benavides (having been assigned his claims against Hertz) and insists that "as a...