A long-term lessee in Connecti-cut whose negligence is responsible for an accident must reimburse the lessor who pays damages to the victims, according to the state Supreme Court.
The unanimous ruling allows lessors to enforce the indemnity clause in their multiyear vehicle leases.
The decision 'puts people who lease a car on the same footing as the owner,' said Jeffrey Fisher, a Cheshire, Conn., lawyer for Mitsubishi Motors Credit of America Inc.
Although the lender holds the title to a leased vehicle, 'you treat the car as if it's your own and hold yourself out as the owner,' he said. And while victims still can sue the legal owners - the creditors - who have 'essentially bottomless pockets,' the ruling allows creditors to recover their losses from the lessees and the lessees' own insurers.
The controversy stemmed from a crash allegedly caused by Christopher Moore's negligence and recklessness while driving a leased 1994 Mitsubishi Galant. Two victims sued Mitsubishi Credit as the owner of the car, as well as Moore.
Mitsubishi Credit settled with one victim for $265,000 and lost a jury verdict for $287,000 on the other victim's claims.
It paid the judgments, then sought to recoup the money from Moore, whose insurer already had paid the smaller limits of his policy, according to Moore's lawyer, Geoffrey Naab of Manchester. Naab said Moore carried the amount of insurance required by the lease agreement.
A judge in New London District Court ruled that Moore was not required to reimburse Mitsubishi Credit. The Supreme Court disagreed, upholding the validity of the indemnity provision in Moore's lease.
The clause is clear and unambiguous and appears on the first page of a two-page lease agreement, Justice Ellen Ash Peters said, and enforcement of the provision is consistent with Connecticut's public policy holding that people should be held accountable for their own negligence.
The court noted that Moore did not claim that he had no chance to read the lease or that he did not understand the indemnity language. It also rejected his argument that the provision was 'unreasonably favorable' to Mitsubishi Credit.