Coverage Argument on Initial Permission Rule

I'm going to court tomorrow to argue a declaratory judgment action.

Facts: Renter rents a car from Enterprise and drives to Vegas with Client and Driver.  Renter gets to Vegas and decides she doesn't want to drive back to Louisville so she flies back.  Renter hands keys to Driver and tells him to drive it back to Louisville.  Client is in the car with Driver and there is a crash in Arizona.  Driver is at fault for rear ending someone.  Driver is insured by Allstate on his personal policy in the State of Kentucky.

Instead of defending Driver Allstate files an action against their own insured arguing that Allstate isn't liable for coverage because Driver wasn't supposed to be driving the car that wrecked.  Allstate fails to include Enterprise in the action.

I argued that Enterprise needs to be a party to the action.  Allstate eventually appoints Driver a different lawyer to defend him, but that lawyer isn't fighting for coverage for Driver (that lawyer also does a lot of work for Allstate).

244.S.W.3d 59 from the Kentucky Supreme Court governs this case.  Interestingly enough its entitled Mitchell v. Allstate Insurance and the defense lawyers are the exact same lawyers that filed the current declaratory judgment.   Clearly they are familiar with the law.  Mitchell adopts the "initial permission rule."  That rule holds "as long as the originally taking of the vehicle was with the permission of the named insured, any subsequent use of the vehicle by the borrower would be covered by the policy."

My argument is simple: Renter gave Driver the keys and thus he meets the initial permission rule and Allstate and Enterprise are on the hook for coverage.

The disappointing thing from my perspective is that Driver clearly pays premiums to Allstate and then when he gets in a crash Allstate argues they aren't on the hook for his damages.  I find that unbelievable, but not surprising based on what I've seen from Allstate.

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Brian Dettman

UPDATE: Judge held that as a matter of law the Renter could not have transferred permission for Driver to drive the vehicle.  Decision can be appealed...