Court Opinion

ID: 1083145
Source: CourtListenerOpinion
Date Created: 2013-10-09 21:10:15.514714+00
Date Added: 2024-06-11T12:50:51.753220
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE

                                    EASTERN SECTION                   FILED
                                                                     December 17, 1997

ERNEST JAMES WAYLAND,                                  Cecil Crowson, Jr.
                                   ) C/A NO. 03A01-9705-CV-00172
                                                       Appellate C ourt Clerk
                                   )
       Plaintiff-A ppellant,       ) ANDE RSON CIRCU IT
                                   )
v.                                 ) HON . JAM ES B . SCO TT, JR .,
                                   ) JUDGE
CAR L and LOL A PE TER S,          )
individually and d/b/a SCOTT COUNTY)
MO TORS, INC ., a K entu cky       )
Corporation,                       ) REVERSED
                                   ) AND
       Defendants-Appellees.       ) REMANDED

BRU CE D . FOX, R IDEN OUR , RIDEN OUR & FO X, Clinton , for Plaintiff-A ppellant.

DEBRA L. FULTON and ROBERT L. KAHN, FRANTZ, MCCONNELL &
SEYMO UR, LLP, Knox ville, for Defendants-Appellees.

                                         O P I N IO N

                                                                             Franks, J.

                 Plaintiff alleg ed in his com plaint that def endants d id not com ply with

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

responsibility requirements in the State of K entucky. Further, that defendan ts 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 d amages a s legal ow ner of the 1 973 Bu ick involve d in the collisio n with

the plaintiff.

                 The Trial Judge u ltimately granted defendant’s mo tion for a summa ry

judgment and plaintiff has appealed. The material facts are not in dispute.
                  Plaintiff esse ntially argues on appeal that K entucky 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 aw arded $ 750,00 0.00 in d amag es in the Circuit C ourt fo r And erson C ounty.

Plaintiff then sued these de fendants, and the reco rd shows that Sco tt County Motors

sold the 19 73 Buick to Dow ney on Au gust 22, 19 89, but it did n ot obtain a c ertificate

of title whe n it bough t the car from Terry Darn ell, the previou s owner. T hus, it did

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

application f or transfer o f title from D arnell to Sco tt County M otors, and S cott Coun ty

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 .

   1
   K.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
               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. Sm ith,

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

covera ge.” Potts v. Draper, 864 S .W.2d 896, 89 8 (Ky. 19 93); K y. Rev. St at. Ann . §

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

vehicle in the ab sence o f a valid conditio nal 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. Ke ntucky courts have also h eld that an au tomobile d ealer’s failure to comply

with licensing, registration and insuran ce statutes makes him a n owner and the buyer a

permissive user. Roge rs.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

           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
               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 f or other reas ons it bears little re lation to the oc currence a nd the partie s with

respec t to the pa rticular is sue.” § 1 45(2) c mt. e. Hataway suppo rts this pro position .

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

occurr ence in Arkan sas wa s “mere ly a fortuito us circu mstanc e.” 830 S.W.2 d at 60.

               Next, th e parties dispute the loca tion of th e cond uct cau sing 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

residen ts. The p arties’ do micile o r residen ce will “ usually ca rry little we ight of it self”.

                                                 4
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 mo st significant re lationship to th e events at issu e. Appelle es acted in

Kentuck y and violated Kentuck y statutes. Thus, it is n ot unfair to th e appellees to

apply Kentucky law to their actions. T he Tennessee ru le 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

regulati ng auto mobile sales w hich are made in Ken tucky.

               Generally, “the state who se interests are m ost deeply aff ected shou ld

have its local law applied .” Resta temen t (Seco nd) of Conf lict of L aws § 6(2) cm t. f.

Kentuck y is a certificate of title s tate for purp oses of de termining m otor vehicle

ownership and insurance obligations. Potts v. Draper, 864 S.W .2d 8 96, 8 98 (K y.

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 don e the seller w ill be conside red the ow ner for pu rposes of lia bility

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 pro tection from an uninsu red motor ist 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 assu ring that local automobile dea lers

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

road.

   2
    K.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
                Kentuck y courts have h eld that a mo tor vehicle d ealer’s failure to

comply with a registration statute mak es him the own er, and the purchaser a

permis sive use r. Rogers v. Wheeler, 864 S.W .2d 892 (K y. 1993). The purpose o f 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 f rom Terr y Dar nell a t the t ime o f the acci dent. In K entu cky,

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 Mad dix, 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, Ap pellees d id not co me w ithin the fifteen day “win dow” .

                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 signific ant chang es brough t about by the M VRA were aim ed at a
                specific ob jective: to ensu re continuo us liability coverag e 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 m eans of recove ry. National Insurance Assoc. v Peach, 926
                S.W.2 d 859 ( Ky. Ap p. 1996 ).

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

   3
   K.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
that mu st be libe rally cons trued to accom plish the se obje ctives. Id. (Citing Beacon

Ins. Co. Of America v. State Farm Mutual Ins. Co., 795 S.W .2d 6 2 (19 90). Arg uably,

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 M otor Veh icle Repara tions Act (“ MVR A”), wa s 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 30 4.39-040(1). Gen erally, 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 betw een ins ureds. 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 n ot apply. K.R .S. § 304.39 -060(2)(a) p rovides : “T ort liability with respe ct to

accidents occurring in this Com monw ealth and arising from the ownership,

maintena nce, or use o f a motor v ehicle is ‘abo lished’ for d amages b ecause of bodily

injury, sickness o r disease to the extent the b asic reparatio n benefits p rovided in th is

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 own er, operator, m aintainer or u ser of a m otor vehicle within sub section (1) o f this

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

maintains o r uses a mo tor vehicle o n the public roadwa ys of this Com monw ealth shall,

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

                                               7
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 K entucky. Thu s, the abolition o f tort liability is inapplica ble

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 expen ses arisin g from an auto mobile accide nt in Ke ntucky. Russell v. P roffitt,

765 F2d 72 (6th C ir. 1985). In the instant case, h oweve r, the acciden t occurred in

Tennessee.

               The only po rtion of the M VRA that significan tly addresses ou t-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 o r use of a m otor vehicle have a righ t 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 up on their tort rights . . . .

This section is apparently de signed to p rotect Ken tucky residents w hen travelin g out-

of-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

                                              8
demonstrate that the defendant’s violation of the statute was the proximate cause of

the dam ages su stained . 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 d amages w as Dow ney’s consum ption of alc ohol and c olliding with

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

Kentuck y made it poss ible for Do wney to hav e possessio n and op erate the veh icle

without having to comply with the financial responsibility law.

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

accide nt, they are owne rs unde r Kentu cky law a nd Do wney w as a per missive user.

The purp ose of the K entucky law is to protect the public by ensu ring that a ve hicle

licensed by the state is insured.

               We vac ate the Trial C ourt’s judgm ent and rem and the T rial Court to

determine to what ex tent the app ellant was d amaged by the failure of the appellee s to

comp ly with the statutes o f Ken tucky as d etailed in this opin ion.

               The costs of the appeal are assessed to appellees.

                                             __________________________
                                             Herschel P. Franks, J.

CONCUR:

___________________________
Houston M. Godd ard, P.J.

___________________________
Clifford E. Sanders, J.

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