Western District Court Rejects Challenge to Searfoss, Validates Rental Agreement Precluding Coverage for Violation of a Use Restriction

Judge Diamond issued an opinion in Martell v Palmer, et al.,  Civil Action 01-1071, USDC WDPA,  rejecting State Farm’s attempt to challenge or distinguish Searfoss v Avis Rent-A-Car Systems, Inc., 503 A.2d 950 (PA. Super. 1986).

Our client, Budget Rent-A-Car was originally sued in negligence as the renter of the vehicle that allegedly caused a rear-end accident.  The rental car was being operated by the renter’s girlfriend, an unauthorized user, who allegedly stopped the rental car in the passing lane of I-279.  Co-defendant was able to bring his truck to a stop without impact, but the driver of the car carrying plaintiff as a passenger slammed into the truck, resulting in plaintiff’s severely broken wrist.

In part one of the case, we were successful in having Budget dismissed from the case on summary judgment.

Subsequently, State Farm, carrier for the operator of plaintiff’s car, settled the case for $70,000, and took a default judgment against the unrepresented renter, and the unrepresented, unauthorized operator.  State Farm then initiated a garnishment proceeding against Budget,  asserting that the state minimum liability coverage was owed to the renter, in spite of the contract language voiding coverage for unauthorized users.  On cross summary judgment motions, the Court held that under the terms of the rental agreement, Budget owes no liability coverage to the renter, when the rental car is involved in an accident while being operated by an unauthorized driver.  Although Searfoss was decided under the No-Fault Act, the District Court found that the same reasoning applied under the PA Motor Vehicle Financial Responsibility Act.

Under Searfoss, and now Martell, a proper rental agreement disclaiming liability coverage for violation of a use restriction is valid.

Budget was represented by Pittsburgh partner Bob Arcovio and Steve Plonski, who wrote the briefs in support of the summary judgment motions.

Robert A. Arcovio
Margolis Edelstein, Pittsburgh
525 William Penn Place
Suite 3300
Pittsburgh, PA 15219