SNORAC INC v. SKURA (2000)

Plaintiff, a self-insured rental car agency, rented a car to defendant, who struck and injured a pedestrian while operating the car.   Plaintiff settled with the pedestrian for $8,250 and thereafter sued defendant on various theories, including contractual indemnification, for reimbursement of that sum.   County Court affirmed the judgment of City Court denying defendant's motion for summary judgment dismissing the complaint and granting plaintiff's cross motion for summary judgment on the cause of action seeking contractual indemnification.   We reverse.

 Plaintiff's attempt to disclaim completely the liability imposed by Vehicle and Traffic Law § 388 is contrary to public policy (see, Morris v. Snappy Car Rental, 84 N.Y.2d 21, 27, 614 N.Y.S.2d 362, 637 N.E.2d 253;  Government Empls. Ins. Co. v. Chrysler Ins. Co., 256 A.D.2d 1212, 1213, 682 N.Y.S.2d 508;  Worldwide Ins. Co. v. U.S. Capital Ins. Co., 181 Misc.2d 480, 485-486, 693 N.Y.S.2d 901;  Allstate Ins. Co. v. Snappy Car Rental, 16 F.Supp.2d 410, 414).   Neither public policy nor the applicable statutes (see, Vehicle and Traffic Law §§ 370, 388) prohibit plaintiff from disclaiming the portion of its liability that exceeds the amount for which motor vehicle owners are required to be insured and from seeking indemnification for such sums pursuant to the parties' agreement (see, Morris v. Snappy Car Rental, supra, at 27-29, 614 N.Y.S.2d 362, 637 N.E.2d 253;  Government Empls. Ins. Co. v. Chrysler Ins. Co., supra, at 1213, 682 N.Y.S.2d 508).   Here, however, the liability of plaintiff to the injured third party has been fixed by its settlement of the third party's claim for $8,250, an amount less than the required coverage.   Public policy therefore bars plaintiff from obtaining indemnification from defendant in these circumstances.   Thus, we reverse the order and judgment, deny plaintiff's cross motion, grant defendant's motion and dismiss the complaint.

Order and Judgment unanimously reversed on the law with costs, cross motion denied, motion granted and complaint dismissed.

MEMORANDUM: