Allstate Ins. Co. v. Larkin's Body Shop and Auto Care, Inc.

• Decision Date: 17 December 1996
• Docket Number: No. 32A05-9501-CV-1,32A05-9501-CV-1
• Citation: 673 N.E.2d 846
• Parties: ALLSTATE INSURANCE COMPANY, (Third Party Defendant) Appellant, v. LARKIN'S BODY SHOP AND AUTO CARE, INC. d/b/a Larkin Auto Sales (Defendant and Third Party Plaintiff), Kathy Andruniak (Plaintiff), Nathan Andruniak (Third Party Defendant), and Jeffrey Springer (Third Party Defendant), Appellees.
• Court: Indiana Appellate Court

Page 846

673 N.E.2d 846

ALLSTATE INSURANCE COMPANY, (Third Party Defendant) Appellant, v. LARKIN'S BODY SHOP AND AUTO CARE, INC. d/b/a Larkin Auto Sales (Defendant and Third Party Plaintiff), Kathy Andruniak (Plaintiff), Nathan Andruniak (Third Party Defendant), and Jeffrey Springer (Third Party Defendant), Appellees.

No. 32A05-9501-CV-1.

Court of Appeals of Indiana.

Dec. 17, 1996.

Rehearing Denied April 22, 1997.

Kimberly E. Howard, Smith, Maley & Douglas, Indianapolis, for Appellant.

Divina K. Westerfield, Westerfield & Associates, Carmel, for Appellees.

OPINION

RUCKER, Judge.

When Kathy and Nathan Andruniak sued Larkin's Body Shop and Auto Care, Inc. ("Larkin") for selling them a previously wrecked truck without disclosing that fact to them, Larkin filed a third party action against Allstate Insurance Company seeking indemnity. According to Larkin, Allstate was responsible for obtaining a salvage title for the truck which it failed to do. After a bench trial the trial court entered judgment in favor of Larkin, and Allstate now appeals raising several issues for our review. We restate one issue which is dispositive: under provisions of the Salvage Motor Vehicles Act, is an insurance company required to apply for a certificate of salvage title for a wrecked automobile even though the company never obtained ownership of the automobile? We think not and therefore reverse. ¹

The essential facts are these. In September 1990 Jeffrey Springer was involved in an automobile collision with Edward Becker who was insured by Allstate Insurance Company. Springer submitted a claim to Allstate concerning damage done in the collision to his 1988 Toyota truck. Allstate investigated the claim and determined the cost of repair exceeded the truck's fair market value. Essentially Allstate concluded the truck was a total loss. As a result Allstate issued Springer a settlement check in the amount of $5,486.93. The check represented the fair market value of the truck less $500.00 in salvage value. Springer kept the truck and its certificate of title. Thereafter Springer sold the truck to Larkin. Larkin made repairs on the truck, sold it to Kathy Andruniak for use by her son Nathan Andruniak, and gave her a certificate of title. At no time did the certificate of title indicate that the truck was a salvage vehicle, nor was the certificate of title ever forwarded to the Indiana Bureau of Motor Vehicles to be re-issued as a salvage title.

Shortly after purchase the Andruniaks began experiencing difficulty with the truck. Among other things the frame was bent causing rapid tire wear, and the drive shaft was bent and positioned dangerously close to the gas tank. In May 1992 Kathy Andruniak filed a complaint against Larkin. Essentially the complaint alleged that Larkin failed to disclose that the truck was a salvage vehicle, and that Larkin did not comply with applicable provisions of the Salvage Motor Vehicles Act which required Larkin to obtain a certificate of salvage title for the truck. Larkin answered the complaint and also filed a third party action against Nathan Andruniak, Jeffrey Springer, and Allstate Insurance Company. The claim against Nathan was based on negligence for allegedly operating the truck in an unsafe manner; the claim against Springer was based on fraud for allegedly failing to disclose that the truck had been declared a salvaged vehicle; and the claim against Allstate was one for indemnity predicated on the theory that Allstate was responsible for procuring a certificate of salvage title for the truck.

After motions for summary judgment were first granted and then denied upon reconsideration, the case proceeded to trial before the court. At conclusion the trial court entered judgment which was later amended when the parties filed motions to correct errors. Ultimately the trial court entered judgment in favor of Kathy Andruniak on her complaint against Larkin and entered judgment in favor of Larkin on its third-party indemnity claim against Allstate. As for the remainder of Larkin's third party claims, the trial court entered judgment in favor of Jeffrey Springer and Nathan Andruniak. Allstate now appeals.

At the heart of this appeal is the interpretation of certain provisions of Ind.Code § 9-22-3-3 et seq., the Salvage Motor Vehicles Act, which provides in part:

(a) A certificate of salvage title is required for a motor vehicle, motorcycle, semitrailer or recreational vehicle that meets either of the following criteria:

(1) An insurance company has determined that it is economically impractical to repair the wrecked or damaged motor vehicle, motorcycle, semitrailer, or recreational vehicle and has made an agreed settlement with the insured or claimant.

(2) The cost of repairing the wrecked or damaged motor vehicle, motorcycle, semitrailer, or recreational vehicle exceeds seventy percent (70%) of the fair market value immediately before the motor vehicle, motorcycle, semitrailer, or recreational vehicle was wrecked or damaged.

I.C. § 9-22-3-3(a). The foregoing section applies to "[a]n insurance company or other person that has acquired a wrecked or damaged motor vehicle, motorcycle, semitrailer, or recreational vehicle that meets at least one (1) of the criteria set forth [above]." Ind.Code § 9-22-3-11(a). (emphasis added).

In this case there is no question concerning the applicability of section one (1) of I.C. § 9-22-3-3(a). Allstate determined that it was economically impractical to repair the 1988 Toyota truck, a motor vehicle, and thus entered into an agreed settlement with the claimant, Jeffrey Springer. The debate is joined over the question of whether Allstate ever "acquired" the damaged truck as the term is used in Ind.Code § 9-22-3-11(a). According to Allstate the term "acquire" denotes ownership and possession. Therefore, the argument continues, because Allstate never obtained ownership of the truck, it never acquired the truck. Larkin counters that once Allstate determined the truck was totaled and tendered a settlement check for it, the company constructively possessed the truck thereby acquiring it and thus had a duty to obtain a salvage title.

When called upon to interpret a...