Car Dealership Insurance and Transferring the Car Title
Bissette v. Auto-Owners Insurance Co.
208 N.C. App. 321 (2010)
North Carolina Court of Appeals
The plaintiff, Joshua Watson Bissette (Bissette), sustained serious injuries as a result of a collision with Bryan Keith Cothran (Cothran). Cothran had recently bought the vehicle involved in the accident from Craig A. Cleveland (Cleveland), the owner and President of Connected Fiber, Inc.
Plaintiff Bissette brought a negligence action against Cothran for personal injuries sustained as a result of an automobile accident. Auto-Owners Insurance Company (Auto-Owners), as holder of the insurance policy on the vehicle, intervened in the case due to the fact that Cothran could not be contacted. At the close of the trial, Bissette prevailed, and was awarded $375,000.00 in compensatory damages and $80,000.00 in punitive damages.
Auto-Owners failed to pay the judgment, failed to acknowledge that the vehicle was covered under the policy, and questioned the existence of coverage for such damages. Bissette then initiated a declaratory judgment action seeking to have the judgment paid. During that hearing, Bissette moved for summary judgment, and the trial court granted his motion. It is from that order that the Defendant Auto-Owners appeals.
On August 11, 2007, Cothran bought a 1997 Ford F-150 (the vehicle) from Cleveland, from Cleveland’s business, Connected Fiber, Inc. (Connected). At the time of that sale, the vehicle was registered and titled in North Carolina. At the time of the transfer to Cothran, the certificate of Title was not notarized, and the North Carolina license plates were not removed from the vehicle.
Cothran, a resident of South Carolina, never registered the vehicle nor obtained license plates in South Carolina. On October 14, 2007, Cleveland sent an email to Connected’s insurance agent, General Insurance Services, requesting that the vehicle be removed from Connected’s policy with Auto-Owners. At that time, the agent of General Insurance Services informed Auto-Owners that the vehicle was to be removed from the Policy on the renewal date of November 25, 2007.
On November 16, 2007, Cothran, while driving the vehicle in Wilson County, North Carolina, collided with Plaintiff Bissette’s vehicle, causing serious injuries to Bissette. At the time that the accident occurred, the vehicle was still listed as an insured vehicle on the Auto-Owners insurance policy held by Connected, Inc.
After Auto-Owners failed to pay the judgment issued to Bissette, Bissette sought declaratory relief against them. After hearing argument, the judge granted Bissette’s motion for summary judgment.
North Carolina Courts have construed insurance policies such that “where the language of an insurance policy is clear and unambiguous, the contract must be enforce as the parties have made it.” Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co. 276 N.C. 348 (1970). Further, The Supreme Court of North Carolina has held that insurance policy provisions that extend coverage will be liberally construed so as to provide coverage when possible.
In this case, Auto-Owners argued that at the time of the accident Connected did not own the vehicle, and because the policy provided liability coverage only for vehicles owned by Connected, Cothran would not be afforded coverage under the policy.
The particular language in the policy provided that the term of the policy was from November 25, 2006 to November 25, 2007, that the 1997 Ford F-150 was a covered vehicle, and that there was one million dollars in coverage available in combined liability limits on the vehicle. Thus, according to the plain language of the policy, the vehicle was insured by Connected until November 25, 2007.
Auto-Owners also contested that Connected no longer owned the vehicle, and that Cothran was the owner of the F-150 at the time of the accident. The relevant North Carolina General Statute states:
“In order to assign or transfer title or interest in any motor vehicle registered under the provisions of this Article, the owner shall execute in the presence of a person authorized to administer oaths an assignment and warranty of title on the reverse of the certificate of title in form approved by the Division, including in such assignment the name and address of the transferee; and no title to any motor vehicle shall pass or vest until such assignment is executed and the motor vehicle delivered to the transferee.” N.C. Gen. Stat. § 20-72(b) (2007).
For a proper transfer of ownership, these statutes must be followed, and it is not within the discretion of the parties involved to comply. Thompson Cadillac-Oldsmobile, Inc. v. Silk Hope Auto Inc., 87 N.C. App. 467 (1987).
In this case, Cothran did actually receive delivery of the vehicle and certificate of title at the time he took possession. However, Cleveland failed to obtain proper notarization of the title. Thus, in accordance with North Carolina law, the certificate of title that Cothran received was insufficient to transfer him ownership of the vehicle and Connected remained the owner of the vehicle on the date that the accident occurred.
The Court of Appeals ultimately upheld the trial court’s determination that the vehicle was still covered under the Auto-Owner’s policy that was held by Connected. The failure to fully vest the transfer of ownership by Cleveland proved to be the crucial fact which prevented lawful transfer of the title.
Key Takeaways of this Case
One of the most important facets to this case was the failure to comply with the North Carolina General Statutes. The certificate of title, which was issued in Connected’s name, created a presumption that Connected owned the vehicle and not Cothran. This could not simply be overcome by will of the parties, but required proper notarization of the title. It is important to keep this in mind when selling a vehicle, so that your insurance company is not forced to pay for the new owner’s negligent actions.