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Ramos v. Hertz Corp.

United States District Court, D. Colorado

September 26, 2018

JENNY M. RAMOS, as assignee of Mario Benavides, Plaintiff,
THE HERTZ CORPORATION a/k/a Hertz Rent A Car a/k/a/ Hertz Car Sales a/k/a Hertz Claim Management Corporation, Defendant.



         This matter comes before the Court on Plaintiff's Motion to Strike Defendant's Affirmative Defenses. The Court has reviewed the Motion and all responsive papers. On September 12, 2018, the Court heard extensive argument by counsel on the Motion. For the reasons outlined below, the Motion is DENIED.


          This insurance bad-faith case arises out of a head-on automobile collision that occurred in Adams County in 2014. The Plaintiff, Jenny M. Ramos (“Plaintiff”), was injured in the crash. Per the Complaint, the at-fault vehicle was a rental car, owned by Defendant The Hertz Corporation (“Hertz”). At the time of the accident, the rental vehicle was not being driven by the renter, Mr. Allen George (“Mr. George”). Mr. George, apparently, had given the rented car to Mr. Mario Benavides (“Mr. Benavides”) to drive. According to Hertz's Amended Answer to the Complaint (Dkt. #36), Mr. Benavides was under the influence of drugs at the time he was driving the borrowed rental vehicle. In fact, per Hertz's Amended Answer, the reason Mr. George had rented the car from Hertz was because Mr. Benavides had crashed Mr. George's Pontiac Grand Prix only a few days earlier. Mr. Benavides' Colorado driver's license had also been revoked (under the habitual traffic offender statute) prior to his asking Mr. George to borrow the rented car, allegedly making Mr. Benavides' operation of Hertz's car a felony offense. Mr. Benavides allegedly had numerous prior intoxication and driving under the influence convictions.

         When Mr. George rented the vehicle from Hertz, he expressly declined any insurance coverage in the rental agreement.

         On August 3, 2014, Plaintiff requested that Hertz tender the alleged policy limit of $25, 000, based on Plaintiff's assertion that Hertz was obligated by law to insure its rental vehicle, regardless of whether the renter (Mr. George) declined coverage.

         One issue in this case is whether Hertz, as owner of the vehicle, was required by Colorado law to insure the car, despite the fact that the renter had declined insurance. Another issue is, assuming without deciding that the renter who declined insurance (Mr. George) was nevertheless insured by operation of law, whether that insurance would have transferred to an arguably permissive user (Mr. Benavides), who was barred by Colorado law from driving because he lacked a valid driver's license.

         In its Amended Answer, Hertz disputes that it was mandated by law to provide insurance to Mr. George, since Mr. George had declined insurance on the rental agreement. Hertz also disputes that Mr. Benavides was a permissive user. Hertz alleges in its Amended Answer that Mr. Benavides was instead a “converter, ” in part because Mr. Benavides likely failed to disclose his lack of a valid driver's license to Mr. George when borrowing the car.

         But the case gets even more complicated. Hertz refused to tender $25, 000 to Plaintiff within the deadline set for a response and, just over a month later, the injured Plaintiff sued Mr. Benavides in state court in Adams County for her injuries. The state court case was then resolved in part by the execution of a Nunn agreement between Plaintiff and Mr. Benavides. See Nunn v. Mid-Century Insurance Company, 244 P.3d 116 (Colo. 2010). Per the Nunn agreement, Mr. Benavides assigned his claims against Hertz (for breach of contract and for insurance bad faith) to Plaintiff in exchange for Plaintiff's agreement not to execute any judgment beyond available insurance policy limits against Mr. Benavides' personal assets. In that agreement, Mr. Benavides and Plaintiff also purportedly agreed to proceed to an arbitration to determine the amount of damages to which Plaintiff would be entitled.

         The arbitration was scheduled. Plaintiff alleges Hertz was invited to participate and appear to present a defense on behalf of Mr. Benavides. Hertz did not appear at the arbitration. Neither did Mr. Benavides. As a result, the arbitrator was presented with only evidence from Plaintiff, Plaintiff's witnesses, and Plaintiff's experts. That arbitration resulted in a $3.426 million judgment against Mr. Benavides and in favor of Plaintiff.

         In her Complaint, Plaintiff purports to step into the shoes of Mr. Benavides (having been assigned his claims against Hertz) and insists that “as a consequence of the misconduct by Hertz - including its failure to resolve the [case against Mr. Benavides] within the policy limits without delay - Mr. Benavides was deprived of the opportunity to put the matters at issue behind him and has now been exposed to a high adverse judgment against him.” (Dkt. #1 at ¶12.) Plaintiff asserts that having been assigned Mr. Benavides' rights to any claims against Hertz for collection of the judgment entered after the state court arbitration, she has the right to prosecute those claims in a civil action against Hertz, and retain the proceeds of such action. (Dkt #1 ¶13.) In the Scheduling Order entered by the Court, Plaintiff states that she is seeking $3.426 million in damages from Hertz plus interest which continues to accrue, plus non-economic damages for Hertz's alleged bad faith. (Dkt. #33 at 7-8.) Thus, a demand for $25, 000 in alleged insurance policy limits has transmogrified into a claim for nearly $3.5 million-plus in damages (and potentially multiples of that, given the bad faith claims in the case).

         Hertz's Defenses and Affirmative Defenses

          Hertz, in its Amended Answer, recites multiple reasons why it is not liable to Plaintiff for anything, much less the $3.5 million being sought. Some of these reasons constitute straight denials of Plaintiff's assertions. For example, at Paragraph 7 of the Complaint, Plaintiff asserts that at the time of the collision, the vehicle operated by Mr. Benavides “was insured by Hertz.” Hertz denies that allegation. (See Dkt. #36 ¶7.) This is not an affirmative defense. Plaintiff will have to prove at trial (or via a motion pre-trial) that the vehicle was insured by Hertz. Similarly, Hertz denies that it has somehow “exposed” Mr. Benavides to a high adverse judgment against him. See Complaint (Dkt. #1 at ¶12); Amended Answer (Dkt. #36 ¶12). This, again, is not an affirmative defense, but merely a denial of something Plaintiff will have to affirmatively prove.

         Other Hertz defenses do appear to be classic affirmative defenses that will require proof of facts (or legal argument) by the Defendant at trial or on motion that, if proven, would negate Plaintiff's claims. See Black's Law Dictionary, 6th ed. (1990) (defining “affirmative defense” as a matter asserted by a defendant in a pleading which, “assuming the complaint to be true, constitutes a defense to it”). Rule 8(c)(1) requires a defendant in responding to a pleading to affirmatively state any affirmative defense, including, ...

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