Franklin v. Safe Auto Insurance Co.

Citations: 290 S.W.3d 69; 2009 Ky. App. LEXIS 58; 2009 WL 1160357Docket: 2008-CA-000615-MR, 2008-CA-000699-MR

Court: Court of Appeals of Kentucky; May 1, 2009; Kentucky; State Appellate Court

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Malinda and Charles Franklin, along with Nationwide Property and Casualty Insurance Company, appeal a summary judgment favoring Safe Auto Insurance Company regarding insurance coverage for a vehicle involved in an accident. The trial court ruled that the Franklins were not the vehicle's owners at the time of the accident, thus it was excluded from their policy. The appeals court disagreed, determining that the Franklins held ownership of the vehicle after receiving a notarized certificate of title from the seller, despite an unresolved lien preventing official title transfer. 

The facts indicate that the Franklins obtained a motor vehicle insurance policy from Safe Auto, covering a period from October 26, 2003, to April 26, 2004, with their two vehicles listed. On February 3, 2004, Charles purchased a 1984 Dodge RAM pickup for $2,000, signing the title transfer the following day. On February 6, 2004, Charles was involved in an accident with the truck, resulting in injuries and total loss of the vehicle. Safe Auto subsequently denied claims for basic reparation benefits (BRB) from both Charles and his passenger, Jeffrey Howell. Howell then sought BRB through the Kentucky Assigned Claims Plan, which assigned the claim to Nationwide, leading to litigation against Safe Auto. Safe Auto later filed for a declaratory judgment asserting that the pickup was not a covered vehicle under the policy. Nationwide intervened, seeking to recover the BRB paid to Howell.

On October 15, 2004, Charles and Howell initiated a lawsuit against Safe Auto and Easterly, which were subsequently consolidated. Easterly did not respond, leading to a default judgment against him. After discovery, the case was presented to the court through cross-motions for summary judgment, resulting in the trial court granting Safe Auto's motion. The court determined that Nadeau was the record owner of the truck at the time of the accident, rendering it not covered under the Safe Auto policy. The Franklins and Howell appealed this judgment, alongside a separate appeal filed by Nationwide, with both appeals consolidated for consideration.

The key issue is the ownership of the truck regarding insurance coverage under the Motor Vehicle Reparations Act (MVRA) and the Safe Auto policy. Under KRS 186.010(7)(a), an "owner" is defined as someone holding legal title or having physical possession due to a bona fide sale, while the Safe Auto policy specifies that a "covered vehicle" includes any vehicle listed on the declarations page or any additional vehicle acquired during the policy period, provided certain conditions are met.

The interpretation of these definitions is influenced by two cases: Nantz v. Lexington Lincoln Mercury Subaru, which clarified that title passes to a purchaser upon completion and delivery of necessary documents by a dealer, and Omni Insurance Company v. Kentucky Farm Bureau Mutual Insurance Co., which addressed title transfer between individuals. In the latter case, a father attempted to transfer ownership of a vehicle to his son while awaiting the official title from the Kentucky Transportation Cabinet, illustrating complexities in determining ownership and insurance coverage.

The father mailed the certificate of title to his son, who signed it and obtained liability insurance from Omni. However, the son was involved in an automobile accident before the father executed the title. Omni contested coverage, arguing that the father remained the vehicle's owner since the title transfer was incomplete at the time of the accident. The court, referencing KRS 186A.215(4) and the Nantz decision, ruled that the father was still the owner because he had not finalized the transfer before the accident. The court emphasized the responsibilities of both parties in completing the transfer process, noting that while Charles and Nadeau filled out the title transfer sections, Safe Auto claimed the filing of the title was necessary for ownership transfer. The trial court noted the title still being in Nadeau's name but the ruling clarified that the formal filing was not essential for the transfer of ownership. The court concluded that the transfer of title occurs once the transferor and transferee sign the necessary documents and deliver the completed title to the buyer. Furthermore, the court found that Nadeau’s completion of the title met statutory requirements, making additional paperwork unnecessary. The obligation to apply for a new certificate of title falls on the buyer, not the seller.

Nadeau and Charles successfully completed all necessary actions to transfer the vehicle's title to Charles before the accident, establishing Charles as the vehicle's owner under the Motor Vehicle Reparations Act (MVRA) and the Safe Auto policy. The trial court's grant of summary judgment to Safe Auto was erroneous. Safe Auto contended that Charles and Nationwide failed to establish their entitlement to summary judgment, citing disputed factual issues. Specifically, Safe Auto argued that Charles did not provide conclusive evidence of purchasing the vehicle from Nadeau and raised concerns about irregularities in the transaction, despite admitting acceptance of the sale for summary judgment. However, the court determined that the transfer was valid upon the completion and notarization of the title and odometer statement, with no evidence from Safe Auto challenging their legitimacy. Additionally, Safe Auto's claims regarding other coverage and the proof of damages were deemed irrelevant to the question of ownership under the MVRA. The court concluded that Nationwide and the Franklins were entitled to judgment on the ownership issue, while any disputes over damages should be addressed separately under the MVRA. Consequently, the Jefferson Circuit Court's judgment was reversed, and the case was remanded for judgment in favor of Malinda and Charles Franklin and Nationwide regarding coverage, along with further necessary proceedings.