Negligent Entrustment of Auto Requires Ownership

Sell a Car & Eliminate Responsibility for its Operation

When a person is injured or killed in an automobile accident where the owner and operator of the vehicle causing the accident is uninsured the injured parties try everything possible to find a person with assets to pay the damages incurred. Sometimes the injured must grasp at arguments that verge on the frivolous.

In Burchett v. Burchett, — S.W.3d —-, Court of Appeals of Kentucky, 2016 WL 2855384 (MAY 13, 2016) the Court of Appeals of Kentucky was asked to find that a person who sold a car to an unlicensed driver who later drove drunk and killed one person and injured others, was responsible for negligently entrusting the vehicle to the buyers and was, therefore, responsible for the injuries suffered by the buyers victims.

BACKGROUND

On May 14, 2012, Amanda Burchett (Amanda) and Erick Blair (Blair) bought an automobile from David Perry, d/b/a Louisa Auto Mart (Perry). Blair crashed the automobile six days later while driving intoxicated. Amanda Burchett and Benjamin Burchett II (Benjamin) were riding with Blair at the time. Benjamin was killed in the crash.

Sandra Burchett (Burchett), as the representative of Benjamin’s estate, later filed a wrongful death action against Blair and Perry. In the complaint, she alleged (1) that Perry violated KRS  186A.220 because he sold the automobile to Blair and Amanda and neither one had insurance; (2) that Perry violated KRS 186.620 by authorizing and permitting a person without a driver’s license to drive an automobile; (3) that Perry negligently entrusted the automobile to Blair and Amanda; and (4) that Perry remained the owner of the automobile because he sold it to individuals who did not have insurance in violation of KRS 186A.220.

Perry eventually moved for summary judgment with respect to these claims. On June 9, 2014, the trial court granted Perry’s motion as to the violations of KRS 186A.220 and denied the remaining motions. A jury trial was later held to decide two issues: whether Perry delivered title documents to Blair and Amanda on the day of the sale, and whether Amanda had a driver’s license.

After considering and weighing the evidence, the jury determined that Perry delivered the automobile’s original title and an Application for a Kentucky Certificate of Title to Blair and Amanda on May 14, 2012. The jury also determined that Amanda did not have a drivers’ license. Based on the jury’s determination, the trial court ruled that title to the automobile transferred on the day of the sale and eliminated any issues relating to Perry’s alleged liability.

DISCUSSION

In Kentucky, the owner of a vehicle is the one who holds its legal title, KRS 186.010(7), and he has a duty to prevent those without a legal right to drive from driving his vehicle. An owner may transfer ownership of his vehicle in two ways. First, he can complete and sign the assignment of title section on the certificate of title and deliver it to the buyer directly.

Second, when the owner is also licensed motor vehicle dealer, he can obtain the purchaser’s consent to file the certificate of title and other necessary paperwork directly with the county clerk on the purchaser’s behalf. If the vehicle’s ownership is transferred under the first method, the responsibility for insurance coverage on the part of the dealer ceases. However, if ownership is transferred under the second method, the dealer must verify that the purchaser has obtained insurance on the vehicle before relinquishing possession.

Here, because the jury determined that Perry delivered the necessary title documents to Blair and Amanda on May 14, 2012, Blair and Amanda became the owners of the automobile on that day. Moreover, since Perry was no longer the owner, he was under no duty to prevent either Blair or Amanda from driving the automobile on the day of the accident. Finally, because Perry transferred the title documents to Blair and Amanda directly, and did not retain the certificate of title with the consent of the new owners to file it with the county clerk, he did not have to verify whether Blair or Amanda were insured.

The common law theory of negligent entrustment is that one who entrusts his vehicle to another whom he knows to be inexperienced, careless, or reckless, or given to excessive use of intoxicating liquor while driving, is liable for the natural and probable consequences of the entrustment. Logically, one cannot maintain a negligent entrustment suit against the former owner of a vehicle who properly transferred ownership of the subject vehicle.

Here, Blair crashed the automobile he jointly owned with Amanda on May 20, 2012. Perry did not own the automobile following May 14, 2012. Accordingly, Burchett’s negligent entrustment claim must fail as a matter of law.

ZALMA OPINION

Kentucky statutes are clear: when title transfers on a vehicle the seller no longer owns it and the buyer is the sole owner responsible for insurance and entrusting the vehicle to responsible drivers. Blair was the owner and operator and, therefore solely responsible for the accident. The car dealer has no responsibility once title transferred. The plaintiffs are not without a remedy, they can obtain a judgment against Blair and attempt to execute on the judgment.

ZALMA-INS-CONSULT                      © 2016 – Barry Zalma

Barry Zalma, Esq., CFE, practiced law in California for more than 49 years as an insurance coverage and claims handling lawyer.  He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Check in on Zalma’s Insurance 101 – a Videoblog – that allows your people to learn about insurance in three to four minute increments at http://www.zalma.com/videoblog

Look to National Underwriter Company for the new Zalma Insurance Claims Libraryat www.nationalunderwriter.com/ZalmaLibrary  The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide

The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at  http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=214624, or 800-285-2221 which is presently available and “Diminution of Value Damages” available at http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=203226972

Mr. Zalma’s new e-books  “Getting the Whole Truth,” “Random Thoughts on Insurance – Volume III,” a collection of posts on this blog; “Zalma on California SIU Regulations;”  “Zalma on California Claims Regulations – 2013″ explains in detail the reasons for the Regulations and how they are to be enforced; “Rescission of Insurance in California – 2013;”  “Zalma on Diminution in Value Damages – 2013; “Zalma on Insurance,” “Heads I Win, Tails You Lose,”  “Arson for Profit”  and others that are available at www.zalma.com/zalmabooks.htm

Mr. Zalma’s reports on World Risk and Insurance News’ web based television programing, http://wrin.tv  or at the bottom of the home page of his website at http://www.zalma.com on Tumbler at https://www.tumblr.com/search/zalma and Twitter at Follow me on Twitter at https://twitter.com/bzalma

Legal Disclaimer:

The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
This entry was posted in Zalma on Insurance. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.