The U.S. District Court for the Southern District of New York ruled that lessees were not permissive users under a lessor's policy in Tokio Marine and Fire Ins. Co. v. Sortino, No. 02 CV 7519RLC, 2005 WL 3543698 (S.D.N.Y. Dec. 28, 2005).

 

Joseph and Christine Sortino leased a vehicle from Potamkin Toyota, which assigned all their rights under the lease to Toyota Motor Credit Corporation (TMCC).

 

Christine Sortino, while driving the leased vehicle, struck and injured a pedestrian, Vincent Poccia. Poccia brought personal injury actions against Sortino and, on a theory of vicarious liability, TMCC. Both actions were settled by TMCC's insurer, Tokio, and the Sortino's insurer, Allstate.

 

Tokio sought recovery from the Sortinos for the portion it had paid to Poccia. The Sortinos argued that Tokio was required by New York law to insure lessees as permissive users and that the exclusion of lessees from coverage under Tokio's policy was against public policy. They further contended that if they were insureds under Tokio's policy by the striking of the exclusion, New York's anti-subrogation rule would bar Tokio from recovering from its insured for covered claims.

 

The court said, “Defendant's argument that they are 'permissive users' is factually misguided and legally inaccurate.” The court explained that the permissive user law was in force to protect injured third parties, such as Poccia, when insurers deny coverage for accidents caused by drivers of vehicles who are not the owners.

 

The court also pointed out that Poccia was not denied coverage—he received his settlement. Thus, the court pronounced the exclusion of lessees from coverage as valid and said that the Sortinos were not insureds under the Tokio policy.