Estate of Michael Lewis v. Concord General Mutual Insurance Company

Citations: 2014 ME 34; 87 A.3d 732; 2014 WL 841743; 2014 Me. LEXIS 37Docket: Docket Han-13-265

Court: Supreme Judicial Court of Maine; March 4, 2014; Maine; State Supreme Court

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The Maine Supreme Judicial Court addressed the appeal from the Estate of Michael Lewis concerning a summary judgment favoring Concord General Mutual Insurance Company, Allstate Fire and Casualty Insurance Company, and Property and Casualty Insurance Company of Hartford. The Estate, represented by Michael's mother, Angela Dorval, argued that genuine issues of material fact existed regarding whether Michael had completed the purchase of the truck he was driving at the time of a fatal accident. The Estate contended that if a sale had occurred, it was incomplete as Michael had not reached the age of majority and could not ratify the contract. Additionally, the Estate challenged the enforceability of the other-owned-vehicle exclusions in the insurance policies.

On August 8, 2009, at age sixteen, Michael expressed interest in purchasing a truck from William Dodge, agreeing on a price of $900. Michael later provided an envelope with cash, although it contained only $800. Dodge gave Michael a signed bill of sale, keys, maintenance history, and the title but did not complete the title assignment or odometer disclosure. Michael possessed the truck until the accident, which occurred eleven days later, without registering or insuring it. The truck was still registered in Dodge’s name, and Dodge's insurance card was found in the vehicle post-accident. After the accident, Dodge contacted his insurer to retroactively remove the truck from his policy, although the exact timing of this action relative to the accident is unclear. The Court vacated the summary judgment, indicating that material facts remain disputed.

The driver of the vehicle in the accident had a liability insurance policy with Hanover Insurance Company, which paid the Estate $100,000. At the time of the accident, Michael’s mother, Angela Dorval, was insured by Concord, and his father, David Lewis, was insured by Allstate, with both policies offering $100,000 per person for uninsured or underinsured motorist coverage. Michael was covered under these policies as a resident family member but was not a named insured. Both Concord and Allstate policies included exclusions for injuries sustained while driving or riding in an uninsured vehicle owned by the insured. Dodge’s Hartford policy provided $500,000 in uninsured motorist coverage.

Dorval, representing the Estate, sought coverage from all three insurance companies, but all denied the claims, leading to a lawsuit for breach of contract. All three insurers filed motions for summary judgment, which the court denied, noting the need for fact-finding regarding vehicle ownership. The court highlighted ambiguity in deposition testimony and suggested that there was enough evidence to determine whether Michael had ownership of the truck at the time of the accident.

Hartford later submitted a motion for summary judgment with an affidavit from Dodge, stating that ownership transferred to Michael when he took possession and that Dodge had informed him that his insurance would not cover Michael. Allstate and Concord aligned with Hartford’s motion. The court ultimately granted summary judgment, concluding that ownership passed to Michael as a matter of law on August 8, 2009. The Estate subsequently appealed this decision. 

The discussion section addresses the standards of reviewing summary judgment, emphasizing the importance of material facts and the necessity for fact-finding when disputes exist, regardless of the perceived credibility of evidence. The court clarified that genuine disputes must be resolved through factual investigation and that conflicting inferences drawn from undisputed facts cannot be determined at the summary judgment stage.

A binding contract requires mutual assent to all material terms, manifested either expressly or impliedly, with preliminary negotiations insufficient to establish a contract. The specifics of oral agreements and the parties' intent are factual questions for a fact-finder to resolve. The Estate contends there is a genuine dispute regarding whether the sale of a truck between Dodge and Michael was intended to be final immediately or contingent upon Michael obtaining insurance and registering the vehicle. Michael's ownership status is critical for the Estate's claims against the defendants; if he owned the truck at the time of an accident, certain policy exclusions would bar recovery.

Defendants cite Dodge’s affidavit as proof that the sale was finalized on August 8, 2009, with no further obligations. However, evidence exists that the sale was conditional, as Dodge did not remove the truck from his insurance, allowed Michael to use it with his plates, and did not transfer the title. Testimony indicated that Dodge intended to retain ownership until Michael secured his own insurance and registration. Legal ownership can be inferred from the vehicle's registration and insurance status, and since Dodge did not retain the registration certificate, it may indicate that ownership was not fully transferred.

Despite the supporting affidavit, a fact-finder could reasonably conclude that the sale was not complete, as conflicting interpretations of the agreement exist. Summary judgment is inappropriate due to the necessity of resolving these conflicting accounts of the agreement's terms.

The oral agreement's terms are crucial in determining Michael's ownership of the truck during the accident. The Estate contests that a final sale was agreed upon when Michael took possession, supported by evidence, albeit not overwhelming. A fact-finder must decide between the conflicting interpretations of this evidence. Title transfer in sales, according to 11 M.R.S. § 2-401(2), occurs upon delivery unless a different agreement is made. If no such agreement existed, ownership would pass with possession. The Estate claims that the sale was incomplete as Michael did not reach the age of majority and could not ratify the contract before his death. Conversely, the defendants argue that Michael remained the owner since he did not disaffirm the contract. Maine law recognizes the "infancy doctrine," preventing enforcement of contracts against minors unless ratified in writing after they reach eighteen. While a minor can sue, they cannot be sued on contracts. A minor may rescind purchases, except for necessaries, based on their age, and if a contract is avoided, it is as if it never existed. The Estate cites Foss v. Circuit City, suggesting a minor's contract lacks legal existence without ratification, but there is no evidence that Michael sought to disaffirm the truck purchase. A minor's contract remains valid until disaffirmed. Therefore, Michael's age did not impede his legal ability to own the truck. The judgment is vacated and the case is remanded for further proceedings.

The Court's opinion addresses principles relevant to summary judgment but incorrectly characterizes the Estate's claims as creating a factual dispute that the transaction constituted only "preliminary negotiations" rather than a final sale. This mischaracterization downplays undisputed facts affirming the transaction as a final sale and transfer of ownership, undermining the certainty essential for economic decision-making and potentially inviting speculative litigation regarding past sales.

In the case involving a 1990 Ford truck, it is established that there was a clear offer, acceptance, payment, a written bill of sale, transfer of possession, and the buyer's removal of the vehicle. According to existing law, title and ownership passed to the buyer upon these actions, regardless of partial payment. The transfer of title cannot be altered by later speculations about the seller retaining registration plates and insurance cards.

Precedents dictate that title transfers from seller to buyer at the completion of delivery, with the seller retaining no ownership unless the buyer refuses the goods. While Maine sales law, governed by the Uniform Commercial Code (UCC), typically applies to sales, the basic principles regarding the passage of title remain unchanged regardless of whether the UCC is applicable to a private sale. There is no evidence of an agreement to alter the timing of title transfer from the point of physical delivery, which was documented without reservations. Thus, the seller’s actions did not limit the finality of the sale and transfer of ownership.

The Uniform Commercial Code (UCC) allows for a liberal interpretation of what constitutes a sale but maintains that the fundamental common law principles of contract law must still apply. Specifically, parties must intend to create a binding agreement supported by consideration. In prior case law, such as Zamore v. Whitten, it was established that despite the UCC's more flexible approach, these common law requirements remain essential.

In Ford v. Howgate, it was determined that an oral agreement to sell a half interest in a 1907 Ford was enforceable despite the absence of a written contract, payment, or transfer of stock certificates. The enforceability was based on the defendant's actions, which indicated acceptance of the agreement.

In the current case, there are more definitive attributes affirming the contract of sale than in Ford. A written bill of sale exists, payment was made, and the buyer took possession and used the truck immediately. Under Maine law, these actions suggest that ownership transferred to the buyer upon taking possession, negating any claims from the seller regarding ownership. Attempts to question the sale's finality, such as whether the seller retained registration plates or insurance, are irrelevant to the ownership issue and undermine the integrity of sales law. The trial court's judgment should be affirmed, recognizing the buyer's ownership of the truck.