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Farmers Insurance Exchange v. Crutchfield6/15/2005
Argued and submitted September 23, 2004.
Before Haselton, Presiding Judge, and Linder and Ortega, Judges.
Affirmed.
This appeal presents an issue of insurance coverage: Did a liability policy covering an automobile dealership obligate the issuing insurance company to defend or indemnify a person who ostensibly purchased a vehicle from the dealer and shortly thereafter was involved in an accident? Plaintiff Farmers Insurance Exchange brought an action seeking a declaration that the insurance policy it issued to Guthrie Motors, Inc., did not extend to liability incurred when a pickup truck sold by Guthrie Motors was involved in an accident in which defendant Nelson suffered serious injuries. On cross-motions for summary judgment, the trial court granted plaintiff's motion and denied defendant's motion, concluding that, because Guthrie Motors did not own the pickup at the time of the accident, the insurance policy issued by plaintiff did not cover the accident. Defendant appeals and, for the reasons set forth below, we affirm.
The trial court described the events that led to this action:
" n November 8, 1996, defendant Jeffrey Crutchfield drove his 1993 Mitsubishi automobile to Guthrie Motors, where he entered into a contract to trade that car for a 1986 Toyota pickup. This contract required Guthrie Motors to pay some cash back to Mr. Crutchfield because the car he traded in was worth more than the pickup he was purchasing. Guthrie gave Crutchfield a check at the time the contract was entered into in the amount of $1,690.00 with a written understanding that Guthrie would pay a remaining balance of $500.00 once Crutchfield produced clear title to the Mitsubishi. Crutchfield took possession of the pickup pursuant to the contract entered into with Guthrie Motors and later that day was involved in a collision wherein defendant [Nelson] was seriously injured."
Other uncontroverted facts provide context for our analysis. The contract between Guthrie Motors and Crutchfield for the sale of the Toyota pickup included the following notice: "WARNING: There is NO PUBLIC LIABILITY OR PROPERTY DAMAGE INSURANCE included in this transaction." It also provided that the "purchaser will bear the entire expense of repairing or correcting any defects that presently exist or that may occur in the vehicle." On the day that Crutchfield left the car lot with the pickup, Guthrie Motors prepared a standard form "Application for Title and Registration," listing Crutchfield as the owner. The following day--after the accident in which defendant was injured, but before Guthrie Motors learned of the accident--a Guthrie Motors employee signed the section of the application that states, "I hereby release all rights, title and interest in this vehicle except as otherwise noted on the application for title."
Unbeknownst to Guthrie Motors, there was a lien on the Mitsubishi that Crutchfield had traded in for the Toyota pickup. When a Guthrie Motors salesperson discovered the lien the day after the accident, shortly after executing the "Application for Title and Registration," the salesperson told Crutchfield that "the deal was off" and demanded that Crutchfield return the pickup and Guthrie Motors's partial payment of cash. Otherwise, the salesperson said, Guthrie Motors would "press charges for stealing" the pickup.
By then, of course, the pickup had been wrecked and could not be returned. Nonetheless, Crutchfield returned $700 of the $1,690 that Guthrie Motors had paid him. Eventually--roughly six months after Crutchfield drove off with the pickup--Guthrie Motors was able to clear title to the Mitsubishi and sell it. It then gave Crutchfield a ch
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