Opinion ID: 784792
Heading Depth: 3
Heading Rank: 2

Heading: The Hammonds were permissive users of Albin's Mercury

Text: 28 Albin also was an owner of the Mercury at the time of the Hammonds' accident pursuant to the second definition under Ky.Rev.Stat. Ann. § 186.010(7)(a) — a person who pursuant to a bona fide sale has received physical possession of the vehicle subject to any applicable security interest. Albin was a bona fide purchaser of the Mercury from Swope. Albin also had received physical possession of the Mercury prior to delivering it to Hammond. Although Motorists Mutual argues that Albin was not an owner under the second definition because it was not in physical possession of the car at the time of the accident, the definition does not explicitly require an owner to be in present possession, only that the owner has received physical possession at some point in time. The definition's use of the present perfect tense has described makes sense in the context of how dealers do business. For example, a dealer does not cease to own a car on its lot merely because it permits a customer to take the car for a test drive. 29 In this case, Albin had a statutory duty not to relinquish the Mercury, which it owned by virtue of purchasing and receiving it from Swope, without first obtaining proof of insurance from Hammond. By the same token, Hammond, who had no insurance, had no legal right under the titling statutes to take possession of the Mercury from Albin. Therefore, Albin permitted Hammond to leave the lot with its car, even assuming that Hammond had an ownership interest in the car by virtue of the law of sales. Treating Hammond as a permissive user of Albin's car under these circumstances serves the important public policy of keeping uninsured vehicles off Kentucky highways, roads, and streets. Auto Acceptance, 89 S.W.3d at 401. See also Rogers v. Wheeler, 864 S.W.2d 892, 894 (Ky.1993) (The failure of [the dealer] to comply with the licensing, registration and insurance statutes clearly makes him an owner and [the individual purchaser] a permissive user.). 30 The district court below acknowledged that Albin's and Swope's noncompliance with their respective statutory duties would quite possibly render both owners of the vehicle for liability insurance purposes. (J.A. 26.) Nevertheless, relying on the Kentucky Supreme Court's decision in Progressive N. Ins. Co. v. Corder, 15 S.W.3d 381 (Ky.2000), the court denied UIM coverage based on its view that public policy precludes a recovery in excess of the mandatory minimum amount of coverage (a minimum which, in the court's view, excludes UIM coverage) where a party would not be the vehicle owner under Kentucky's titling statutes but is deemed an owner for liability insurance purposes. (J.A. 27.) The court further opined that where true ownership overlaps with ownership for liability insurance purposes, recovery is based upon actual ownership without having to resort to ... public policy. Id. The court then held that Albin was not the actual owner because Swope had not assigned it title by the time of the accident. (J.A. 28.) Consequently, any insurance coverage for Hammond would be limited to mandatory minimum coverage. The court denied Vaniqua Hammond's claim for UIM coverage because, in the court's view, the coverage sought was not compulsory liability insurance, but optional UIM insurance. Id. Since she had already recovered from the tortfeasor's insurance carrier for her tort damages, she was not entitled to UIM benefits. Id. 31 The district court's reasoning was flawed in several respects. First, the Auto Acceptance decision clarified that Albin was an owner of the Mercury as that term is defined under the titling statutes. Albin also was an owner by virtue of having received possession of the Mercury pursuant to a bona fide sale and then permitting Hammond to use the car. Accordingly, the district court's public policy concerns must be subordinated to the clear mandate of the statutory language. 32 Second, the Court disagrees with the district court's perception of Kentucky public policy. Although acknowledging that a dealer can become the owner of an automobile without actually acquiring title, the district court found that Swope's noncompliance with the titling statute rendered it the owner of the Mercury, and, therefore, Albin's transfer of the car to Hammond was irrelevant. (J.A. 28.) This Court strongly disagrees. Regardless of Swope's statutory duties, Albin had an independent duty to Hammond and the public in connection with the transaction, namely, the duty to obtain proof of insurance from Hammond before delivering the car to her. By failing to do so, Albin permitted an uninsured driver to take to the road. Accordingly, public policy requires that Albin bear the social costs for its non-compliance, in the form of insuring the risk that it unlawfully imposed on Kentucky drivers and passengers. Motorists Mutual counters that this case really involves Albin's alleged duty to protect uninsured drivers like Hammond from their own failure to comply with the law prohibiting driving without insurance. The injured party in this case, however, was not the uninsured driver, but the driver's daughter, who just as easily could have had no familial relationship with the driver. 33 Third, the district court incorrectly described UIM coverage as optional insurance, thereby precluding Vaniqua Hammond's recovery beyond recovery for tort liability. In fact, since Albin elected UIM coverage and paid its premiums, UIM coverage for Vaniqua Hammond (an insured, as defined by the policy) was mandatory. See Coots v. Allstate Ins. Co., 853 S.W.2d 895, 898 (Ky.1993) (noting that underinsured motorist coverage is a mandatory contractual obligation to the insured, just like compulsory tort liability insurance under Ky. Stat. Ann. § 304.39-110, because the automobile insurer is required by statute to provide such coverage) (emphasis in original). Thus, the only relevant question is whether Albin owned the Mercury for purposes of triggering insurance coverage to Vaniqua Hammond under its garage coverage policy. Since Vaniqua Hammond was occupying the vehicle that Albin owned at the time of the accident, she was an insured who was contractually entitled to UIM benefits under the plain terms of the policy.