FILED

December 17, 1997

Cecil Crowson, Jr.

Appellate C ourt Clerk

 IN THE COURT OF APPEALS OF TENNESSEE

EASTERN SECTION

ERNEST JAMES WAYLAND, ) C/A NO. 03A01-9705-CV-00172

)

Plaintiff-Appellant, ) ANDERSON CIRCUIT

)

v. ) HON. JAMES B. SCOTT, JR.,

) JUDGE

CARL and LOLA PETERS, )

individually and d/b/a SCOTT COUNTY)

MOTORS, INC., a Kentucky )

Corporation, ) REVERSED

) AND

Defendants-Appellees. ) REMANDED

BRUCE D. FOX, RIDENOUR, RIDENOUR & FOX, Clinton, for Plaintiff-Appellant.

DEBRA L. FULTON and ROBERT L. KAHN, FRANTZ, MCCONNELL &

SEYMOUR, LLP, Knoxville, for Defendants-Appellees.

O P I N I O N

Franks, J.

Plaintiff alleged in his complaint that def endants did not comply with

Kentucky statutes relative to titling and transferring motor vehicles, and the financial

responsibility requirements in the State of Kentucky. Further, that defendants are

required to know and follow the applicable laws relative to automobile dealers, and

that the defendants in this matter ignored these laws and should be responsible to the

plaintiff for damages a s legal owner of the 1973 Buick involved in the collision with

the plaintiff.

The Trial Judge ultimately granted defendant’s motion for a summa ry

judgment and plaintiff has appealed. The material facts are not in dispute.
1K.R.S. §186A.220(1) states in part:

[W]hen any motor vehicle dealer licensed in this state buys or accepts

such a vehicle in trade, which has been previously registered or titled for

use in this or another state, and which he holds for resale, he shall not be

required to obtain a certificate of title for it, but shall, within fifteen (15)

days after acquiring such vehicle, notify the county clerk of the

assignment of the motor vehicle to his dealership and pay the required

transfer fee. 

Ky. Rev. Stat. Ann. §186A.220(1) (Banks-Baldwin 1996).

K.R.S. § 190.071(2) provides:

Any motor vehicle dealer . . . who is found by the commission to have

acquired a used motor vehicle for cash, trade-in, or in any other manner

and fails to have the registration transferred to him prior to the time the

vehicle is sold or otherwise transferred to another person shall be subject

2

Plaintiff essentially argues on appeal that Kentucky law is applicable to

the facts of this case, and that under Kentucky law, plaintiff is entitled to recover

damages from these defendants.

This case arose from an automobile accident that occurred in Anderson

County, Tennessee, on November 2, 1989. A 1973 Buick, driven by Milton Downey

collided with Plaintiff’s vehicle. Downey was apparently intoxicated at the time of

the accident and driving on the wrong side of the road. Plaintiff sued Downey and

was awarded $750,000.00 in damages in the Circuit Court for Anderson County. 

Plaintiff then sued these de fendants, and the record shows that Scott County Motors

sold the 1973 Buick to Downey on August 22, 1989, but it did not obtain a certificate

of title when it bought the car from Terry Darnell, the previous owner. Thus, it did

not sign a certificate of title to Downey at the time of his purchase. Defendants made

application for transfer of title from Darnell to Scott County Motors, and Scott County

Motors to Downey on July 27, 1990.

Plaintiff insists that defendants’ failure to transfer title properly meant

they owned the vehicle on the date of the accident and were liable for damages for

failure to comply with Kentucky law. This claim is based upon defendant’s alleged

violation of several Kentucky motor vehicle statutes concerning licensing and

registration1

.
to suspension, fine, or revocation of his motor vehicle dealer’s license.

Ky. Rev. Stat. Ann. §190.071(2) (Banks-Baldwin 1992).

K.R.S. § 186.190(2) states:

A person shall not purchase, sell, or trade any motor vehicle without

delivering to the county clerk of the county in which the sale or trade is

made the current registration receipt issued on the motor vehicle and bill

of sale.

Ky. Rev. Stat. Ann. §186.190(2) (Banks-Baldwin 1994).

3

As a preliminary issue to deciding which state law applies, it must be

determined whether an actual conflict of law exists.” Seals v. Delta Air Lines, Inc.,

924 F.Supp. 854, 859 (E.D. Tenn. 1996). In Tennessee, “the intention of the parties,

not the certificate of title, determines the ownership of an automobile.” Smith v. Smith,

650 S.W.2d 54, 56 (Tenn.App. 1983). Kentucky “is a certificate of title state for the

purposes of determining ownership of a motor vehicle and requiring liability insurance

coverage.” Potts v. Draper, 864 S.W.2d 896, 898 (Ky. 1993); Ky. Rev. Stat. Ann. §

186A (Banks-Baldwin 1996). Generally, the titleholder is considered the owner of the

vehicle in the absence of a valid conditional sale. Potts, 864 S.W.2d at 898; Ky. Rev.

Stat. Ann. § 186.010(7) (Banks-Baldwin 1996). Kentucky has changed from “an

equitable title state to a certificate of title state for the purposes of determining

ownership of a motor vehicle for liability insurance purposes.” Potts, 864 S.W.2d at

898. Kentucky courts have also held that an automobile dealer’s failure to comply

with licensing, registration and insurance statutes makes him an owner and the buyer a

permissive user. Rogers.v Wheeler, 864 S.W.2d 892 (Ky. 1993). Under Kentucky law,

Downey was not the titleholder on the date of the accident and therefore was not the owner. 

Accordingly, the laws of Kentucky and Tennessee are in conflict. 

Tennessee has adopted the “most significant relationship” approach of § 6,

145, 146 and 175 of the Restatement (Second) of Conflict of Laws (1971), for resolving tort

cases. Hataway v. McKinley, 830 S.W.2d 53 (Tenn. 1992). 

Section 145, is the general provision dealing with tort cases and provides: 

(1) The rights and liabilities of the parties with respect to an issue in
4

tort are determined by the local law of the state which, with respect to

that issue, has the most significant relationship to the occurrence and

the parties under the principles stated in § 6.

§ 146, which specifically addresses personal injury cases, states:

In an action for a personal injury, the local law of the state where the

injury occurred determines the rights and liabilities of the parties,

unless, with respect to the particular issue, some other state has a more

significant relationship under the principles stated in § 6 to the

occurrence and the parties, in which event the local law of the other

state will be applied. 

Generally, the law of the state where the injury occurred will have the most

significant relationship to the litigation. Hataway, 830 S.W.2d 53 at 59. In this case,

although the injury occurred in Tennessee, Kentucky has a more significant relationship to

the parties and events at issue. 

In analyzing §145(2), it is improper merely to count contacts . See Hataway,

830 S.W.2d at 57. Rather, these contacts should be used to guide the analysis of the interest

and policies to be considered under §6. While Tennessee is the place of injury, the place of

injury is less important when it is “fortuitous.” The Restatement does not define “fortuitous.” 

The Comments, however, refer to situations when the place of injury is fortuitous “or

when for other reasons it bears little relation to the oc currence and the parties with

respect to the pa rticular issue.” § 145(2) cmt. e. Hataway supports this proposition. 

Although Hataway did not define “fortuitous,” it determined that the injury

occurrence in Arkansas wa s “mere ly a fortuitous circumstanc e.” 830 S.W.2d at 60. 

Next, the parties dispute the loca tion of the conduct causing the injury. 

The Appellant contends the conduct occurred in Kentucky because that is where the

Appellees transferred possession of the car to Downey. Appellees maintain the

conduct causing appellant’s damages was the accident. In this case, the primary choice

of law issue involves ownership of the automobile, and this conduct took place in Kentucky. 

The Appellant is a Tennessee resident, and the appellees are Kentucky

residents. The parties’ domicile or residence will “usually ca rry little weight of itself”. 
2K.R.S. § 190.015 states that the purpose of K.R.S. Chapter 190 (regulating motor vehicle sales) 

is to promote the public interest and public welfare and to prevent frauds, impositions and other

abuses upon the citizens of Kentucky. Ky. Rev. Stat. Ann. § 190.015 (Banks-Baldwin 1982).

5

Restatement (Second) of Conflict of Laws §145(2) cmt. e, unless all of the parties

reside in a single state. Id. Although Tennessee is the place of the accident, Kentucky

has the most significant re lationship to the events at issue. Appellees acted in

Kentucky and violated Kentucky statutes. Thus, it is not unfair to the appellees to

apply Kentucky law to their actions. The Tennessee rule of ownership is ba sed on our 

Court’s interpretations of Tennessee statutes. Its application to events outside

Tennessee is therefore less important. Kentucky has an interest in applying its laws

regulating automobile sales which are made in Kentucky. 

Generally, “the state whose interests are most deeply aff ected should

have its local law applied.” Resta tement (Second) of Conflict of Laws §6(2) cmt. f. 

Kentucky is a certificate of title state for purposes of de termining motor vehicle

ownership and insurance obligations. Potts v. Draper, 864 S.W.2d 896, 898 (Ky.

1993); Ky. Rev. Stat. Ann. § 186A (Banks-Baldwin 1996). Kentucky law requires

“the seller of a motor vehicle to take statutory steps to properly complete the sale and

until this is done the seller will be conside red the owner for purposes of liability

insurance.” Potts, 864 S.W.2d at 900. The effect of the rule is to insure “that all the

public will be protected from uninsured motorists.” Id.

In this case, the only person se eking protection from an uninsured motorist is

the Appellant, a Tennessee resident. The Potts court noted the goal of the law is

protecting “all the public”. Kentucky also seeks to regulate the conduct of Kentucky

automobile sellers.2

 Kentucky has an interest in assuring that local automobile dea lers

comply with the statute, thereby reducing the number of uninsured motorists on the

road.
3K.R.S. §186A.220(1) states in part:

[W]hen any motor vehicle dealer licensed in this state buys or accepts

such a vehicle in trade, which has been previously registered or titled for

use in this or another state, and which he holds for resale, he shall not be

required to obtain a certificate of title for it, but shall, within fifteen (15)

days after acquiring such vehicle, notify the county clerk of the

assignment of the motor vehicle to his dealership and pay the required

transfer fee. 

Ky. Rev. Stat. Ann. §186A.220(1) (Banks-Baldwin 1996).

6

Kentucky courts have held that a motor vehicle dealer’s failure to

comply with a registration statute makes him the owner, and the purchaser a

permissive use r. Rogers v. Wheeler, 864 S.W.2d 892 (Ky. 1993). The purpose of this

rule is to protect the public from uninsured motorists. Potts, 864 S.W.2d at 900.

Appellees argue that they were not the owners of the vehicle since they

had not received title from Terry Darnell a t the time of the accident. In Kentucky,

however, a dealer can become the owner of an automobile without actually acquiring

the title. Hartford Accident & Indemnity Co. v Maddix, 842 S.W.2d 871 (Ky.App.

1992); See K.R.S. § 186A.220. In Maddix, the court noted that, at the time of the

accident, the dealer had done everything necessary to acquire ownership. 842 S.W.2d

at 872. Specifically, he was within the fifteen day “window” of K.R.S. § 186A.2203. 

In this ca se, Appellees did not come within the fifteen day “window” . 

The primary purpose of the rule in Rogers and Potts is to protect the

public by ensuring that the dealer’s omnibus insurance policy will continue to cover

vehicles when there has been an improper transfer of title. As a Kentucky Court has

observed: 

“the significant changes brought about by the MVRA were aimed at a

specific objective: to ensure continuous liability coverage in order to

protect the victims of motor vehicle accidents, and to ensure that one

who suffers a loss as the result of an automobile accident would have a

source and means of recove ry. National Insurance Assoc. v Peach, 926 

S.W.2d 859 (Ky. App. 1996). 

Kentucky courts have determined that “the MVRA is a social legislation
7

that must be liberally construed to accomplish the se objectives. Id. (Citing Beacon

Ins. Co. Of America v. State Farm Mutual Ins. Co., 795 S.W.2d 62 (1990). Arguably,

the most effective way to ensure that victims have a means of recovery is to hold that

the owner is responsible for complying with the financial responsibility law for any

accidents caused by the owned vehicle.

The Motor Vehicle Repara tions Act (“MVRA”), was enacted to

compensate accident victims promptly and without regard to fault. KRS 304.39-

010(2). The first $10,000.00 worth of injuries, known as “basic reparation benefits”

are paid without regard to fault. KRS 304.39-040(1). Generally, these benefits are

paid by the victim’s insurer. KRS 304.39-050(1). The victim’s insurer, however, may

seek subrogation from the insurer of the alleged tortfeasor. KRS 304.39-070(3). Thus,

the MVRA abolishes tort liability only in the amount of basic reparations benefits and

only between insureds. Safeco Ins. Co. Of America v. Brown, 887 F.Supp. 974 (W.D.

Ky. 1995). Additionally, there is no limit on recovery for property damage.

Because the accident took place in Tennessee, the MVRA’s limitations

would not apply. K.R.S. § 304.39-060(2)(a) provides : “Tort liability with respe ct to

accidents occurring in this Commonwealth and arising from the ownership,

maintenance, or use of a motor vehicle is ‘abolished’ for damages because of bodily

injury, sickness or disease to the extent the basic reparation benefits provided in this

subtitle are payable therefor . . .“ (emphasis added). Additionally, K.R.S. § 304.39-

060(2)(c) states that “[t]ort liability is not so limited for injury to a person who is not

an owner, operator, maintainer or user of a motor vehicle within subsection (1) of this

section . . .” Subsection (1) provides : “[a]ny person who registers, operates,

maintains or uses a motor vehicle on the public roadways of this Commonwealth shall,

as a condition of such registration, operation, maintenance or use of such motor
8

vehicle and use of the public roadways, be deemed to have accepted the provisions of

this subtitle . . .” There is also no evidence that the Appellant ever maintained or

registered his car within Kentucky. Thus, the abolition of tort liability is inapplicable

to the Appellant. The Sixth Circuit determined that it did not violate the Kentucky

Constitution to apply the MVRA to bar a nonresident from recovering medical and

hospita l expenses arising from an automobile accident in Kentucky. Russell v. Proffitt,

765 F2d 72 (6th Cir. 1985). In the instant case, however, the accident occurred in

Tennessee.

The only portion of the MVRA that significantly addresses out-of-state

accidents is K.R.S. §304.39-030(2) which states:

If the accident causing injury occurs outside this Commonwealth but

within the United States, its territories and possessions, or Canada, the

following persons and their survivors suffering loss from injury arising

out of ma intenance or use of a motor vehicle have a right to basic

reparation benefits:

(a) basic reparation insureds; and

(b) the driver and other occupants of a secured vehicle who have not

rejected the limita tion upon their tort rights. . . .

This section is apparently de signed to protect Kentucky residents when traveling outof-state. Since the appellant is not insured under a policy covering a Kentucky

vehicle, he is not a “basic reparation insured.” K.R.S. §304.39-080(5) requires that

owners maintain security for the payment of basic reparations benefits for vehicles

operated in Kentucky or registered there. (Emphais supplied).

Finally, K.R.S. §446.070, states that:

[a] person injured by the violation of any statute may recover from the

offender such damages as he sustained by reason of the violation,

although a penalty or forfeiture is imposed for such violation.

This statute affords the appellant an avenue of recovery for appellee’s violation of the

registration statutes. In order to prevail under this statute, however, a plaintiff must
9

demonstrate that the defendant’s violation of the statute was the proximate cause of

the damages sustained. See generally, Real Estate Marketing, Inc. v. Franz, Ky., 885

S.W.2d 921(Ky. 1994). In this case, appellees argued the proximate cause of

appellant’s damages was Downey’s consumption of alcohol and colliding with

appellant, but appellees’ failure to comply with the titling and registration statutes of

Kentucky made it possible for Downey to have possession and operate the vehicle

without having to comply with the financial responsibility law.

Although appellees did not have possession of the title at the time of the

accident, they are owne rs unde r Kentucky law and Downey was a permissive user. 

The purpose of the Kentucky law is to protect the public by ensuring that a vehicle

licensed by the state is insured.

We vac ate the Trial Court’s judgment and remand the Trial Court to

determine to what extent the appellant was damaged by the failure of the appellee s to

comply with the statutes of Kentucky as detailed in this opinion. 

The costs of the appeal are assessed to appellees.

__________________________

Herschel P. Franks, J.

CONCUR:

___________________________

Houston M. Goddard, P.J.

___________________________

Clifford E. Sanders, J.