84 N.Y.2d 21 (1994)
A car rental company can secure indemnification from a renter for liability exceeding the minimum insurance coverage required by Vehicle and Traffic Law §§ 370 and 388, provided the indemnification agreement is clear, conscionable, and doesn’t attempt to disclaim the minimum liability mandated by statute.
Summary
Barbara Morris rented a car from Snappy Car Rental. She was injured in an accident while her husband was driving. Morris sued Snappy, among others. Snappy sought indemnification from Morris based on a clause in the rental agreement. The New York Court of Appeals held that Snappy could enforce the indemnification clause for liability exceeding the statutory minimum insurance requirements, but not for amounts within that minimum. The court emphasized the importance of freedom of contract and found the indemnification clause was not unconscionable, as it was clearly stated and the renter had the opportunity to read it. The court affirmed that Snappy was not entitled to litigation costs and attorney’s fees.
Facts
On October 5, 1989, Barbara Morris rented a car from Snappy Car Rental for 30 days. Three days later, she sustained injuries in a collision while her husband, a permissive user under the agreement, was driving. The other vehicle was driven by Eric Sherry, who was working for Franco’s Pizzeria. Morris suffered a fractured femur requiring multiple surgeries.
Procedural History
Morris sued Snappy, Eric Sherry, Laura Sherry, and Franco’s Pizzeria. Snappy denied negligence and asserted an affirmative defense and counterclaim for indemnification based on the rental agreement. Supreme Court denied Snappy’s motion to dismiss the complaint but granted a conditional order of summary judgment for Snappy on its indemnification counterclaim, also granting Snappy attorney’s fees and denying Morris’s cross-motion for summary judgment. The Appellate Division modified the order, limiting Snappy’s indemnification to amounts exceeding the statutory minimum insurance and denying Snappy costs and attorney’s fees. Both parties appealed to the Court of Appeals.
Issue(s)
Whether a car rental company can enforce an indemnification clause in its rental agreement, requiring the renter to indemnify the company for liability arising out of the use of the vehicle, specifically regarding:
1. Whether such an indemnification clause is void as against public policy to the extent it seeks to disclaim liability imposed by Vehicle and Traffic Law § 388.
2. Whether the indemnification agreement is unenforceable as an adhesion contract or the result of procedural unconscionability.
Holding
1. No, because while a car rental company cannot disclaim the minimum liability coverage mandated by Vehicle and Traffic Law § 388, it can secure indemnification for amounts exceeding that minimum.
2. No, because the indemnification agreement was not an adhesion contract, nor was it procedurally unconscionable, as the renter had the opportunity to read and understand the terms.
Court’s Reasoning
The Court of Appeals reasoned that Vehicle and Traffic Law § 388 was enacted to ensure injured parties have access to financially responsible insured persons. However, the statute does not prevent a lessor/owner from securing indemnification from a lessee/driver for liability exceeding the statutory minimum insurance. The court emphasized the importance of freedom of contract, stating that the Legislature did not intend to abrogate the right of indemnification. Quoting the Restatement of Restitution § 76, the court said, “[a] person who, in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity’”. The court distinguished this case from MVAIC v. Continental Natl. Am. Group Co., where the rental agreement sought to entirely evade liability. Here, Snappy only sought indemnification for amounts exceeding the statutory minimum. The court found no evidence of high-pressure tactics or deceptive language, and the plaintiff signed the agreement, affirming she had read and understood it. Therefore, the indemnification agreement was enforceable up to the point of overage of mandatory insurance requirements. The court agreed with the Appellate Division in denying Snappy its costs and expenses of litigation.