United Truck Rental Equipment Leasing, Inc. v. Kleenco Corp.
N/A (1996)
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Rule of Law:
A 'full responsibility' clause in a rental agreement holding a renter liable for 'all loss or damage whatsoever' is unambiguous and includes loss by theft. Damages for a completely lost commercial rental item are measured by the replacement cost in the market available to the owner (e.g., retail), and loss of use damages are recoverable but require proof of net loss (gross rental value minus saved expenses) to exceed a nominal award.
Facts:
- On January 2, 1988, Keith Sugioka, an authorized employee of Kleenco Corp., rented a Toyota pickup truck from United Truck Rental Equipment Leasing, Inc.
- On behalf of Kleenco, Sugioka initialed a 'full responsibility' clause in the rental agreement, agreeing to pay for 'all loss or damage to vehicle (regardless of negligence)'.
- Sugioka did not initial the alternative 'collision waiver' clause offered in the agreement.
- While in Kleenco's possession, the truck was stolen after a Kleenco employee left the keys in the ignition of the unattended and unlocked vehicle.
Procedural Posture:
- United Truck Rental filed a complaint against Kleenco Corp. in the trial court for damages related to the stolen truck.
- Kleenco filed an answer and a counterclaim against United.
- Following a non-jury trial, the court dismissed Kleenco's counterclaim and entered a judgment in favor of United, awarding damages for the loss of the vehicle, loss of use, and other costs.
- Kleenco filed a motion to alter or amend the judgment, which the trial court denied.
- Kleenco, as appellant, appealed the judgment to the intermediate court of appeals; United is the appellee.
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Issue:
Does a 'full responsibility' clause in a vehicle rental agreement, which makes the renter liable for 'all loss or damage to vehicle (regardless of negligence),' unambiguously include liability for theft?
Opinions:
Majority - Acoba, Judge
Yes. A 'full responsibility' clause making a renter liable for 'all loss or damage to vehicle' unambiguously includes liability for theft. The court reasoned that contract terms should be interpreted according to their plain and ordinary meaning, and the phrase 'all loss or damage whatsoever' is broad enough to encompass any mechanism of loss, including theft. By declining the specific 'collision waiver' and instead initialing the 'full responsibility' provision, Kleenco contractually assumed the risk of all losses. The court also held that the appropriate measure of damages for the truck's value was its retail market value, as United purchased its fleet in bulk at wholesale but would have to replace a single truck at a retail price. Finally, while adopting the modern rule that allows for loss of use damages in cases of total destruction, the court reduced this award to nominal damages because United failed to prove its net loss; it presented evidence of gross rental income but no evidence of the operating costs it saved while not in possession of the truck.
Analysis:
This decision solidifies the enforceability of broad liability-shifting clauses in commercial rental contracts, emphasizing that terms like 'all loss or damage' will be interpreted literally to include events like theft. The case is also significant for adopting the modern rule permitting recovery for 'loss of use' damages even when property is totally destroyed, not just temporarily unusable during repairs. However, it sets a crucial precedent on the evidentiary burden for such damages, requiring plaintiffs to prove net profits by subtracting saved expenses from gross revenues, thereby preventing a windfall recovery and demanding more precise financial proof in future commercial litigation.
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