Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co

In Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 394, 682 P.2d 388, 399 (1984), after an automobile lessee injured a pedestrian while driving the leased vehicle, the lessee sought coverage under an insurance policy obtained by the lessor. Id. at 386, 682 P.2d at 391. Although the insurance policy provided only $ 15,000 of coverage to lessees, the lessor had an additional, umbrella policy that provided $ 100,000 of coverage. Id. The insurer denied coverage under the umbrella policy because lessees were not insureds as the umbrella policy defined that term. Id. The trial court entered summary judgment for the insurer. Id. The court of appeals affirmed, holding that the insured's failure to read the policy precluded recovery. Id. at 386-87, 682 P.2d at 391-92. The Arizona Supreme Court reversed, adopting the doctrine of reasonable expectations as set forth in Restatement 211: Standardized Agreements (1) Except as stated in Subsection (3), where a party to an agreement signs or otherwise manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included in the writing. (2) Such a writing is interpreted wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing. (3) Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement. Darner, 140 Ariz. at 391, 682 P.2d at 396. The supreme court reasoned that adoption of the Restatement approach would accommodate the needs of commerce by allowing enforcement of standardized contracts, which are often signed unread, but requiring drafters of such contracts to refrain from inserting unconscionable provisions. Id. at 393-94, 682 P.2d at 398-99. Specifically, if the drafting party had "reason to believe" that the signing party would not have accepted a particular term, the court may strike that term from the agreement. Id. at 391, 682 P.2d at 396.