McGrew v. Stone

• Court: Supreme Court of Kentucky
• Writing for the Court: Stumbo
• Citation: McGrew v. Stone, 998 S.W.2d 5 (Ky. 1999)
• Decision Date: 26 August 1999
• Docket Number: No. 97-SC-50-DG.,97-SC-50-DG.
• Parties: David McGREW, Appellant, v. Tonella STONE, Appellee.

Page 5

998 S.W.2d 5

David McGREW, Appellant, v. Tonella STONE, Appellee.

No. 97-SC-50-DG.

Supreme Court of Kentucky.

August 26, 1999.

Michael T. Connelly, Susan M. Meschler, Louisville, for Appellant.

Bill V. Seiller, Michael C. Bratcher, Seiller & Handmaker, LLP, Louisville, for Appellee.

STUMBO, Justice.

In November of 1992, Appellant was involved in an automobile accident when his car collided with an uninsured vehicle owned by Appellee and driven by a third person, Ailene Carter. Appellee had earlier loaned her car to one Booker Miles, who had a suspended operator's license. Miles had been drinking and asked Carter to drive him home in Stone's car. It was during that trip that the collision occurred.

Appellant filed the instant action in the Jefferson District Court to recover the damages to his automobile. He sued both Stone and Carter and was granted a default judgment against Carter. Under a theory of negligent entrustment, as well as asserting certain provisions of the Kentucky Motor Vehicles Reparation Act (hereinafter referred to as "MVRA"), Appellant sought to hold Stone liable for the damages arising from Carter's use of her uninsured vehicle. The District Court granted Stone summary judgment on the issue of liability and the action was dismissed.

On appeal, the Jefferson Circuit Court reversed the summary judgment as to the negligent entrustment theory, but affirmed as to the MVRA argument. The Court of Appeals affirmed the latter holding and we granted discretionary review.

The precise issue presented for our consideration by this case is whether the MVRA may be construed to impose vicarious liability on the owner of an uninsured vehicle for property damage caused by the alleged negligence of a subpermittee driver.

As Appellant notes, the primary purpose of the MVRA is "[t]o require owners ... of motor vehicles ... to procure insurance covering ... legal liability arising out of ownership, operation or use of such motor vehicles." KRS 304.39-010. See also Crenshaw v. Weinberg, Ky., 805 S.W.2d 129, 131 (1991). By enacting the MVRA, the legislature intended to create a comprehensive compulsory insurance system that requires owners to provide vehicle security covering basic reparation benefits and that imposes legal liability on vehicle owners for damages or injuries arising out of ownership of or use of the vehicle. KRS 304.39-010; KRS 304.39-080(5). It is Appellant's contention here that when Appellee violated the MVRA and permitted the use of her vehicle without purchasing liability insurance, she chose to be a de facto self-insurer of her car. He contends she should not escape liability for the property damage caused by her car by virtue of the fact that she broke the law, but rather should be held accountable for damages to the same extent as if she had complied with the law.

In accordance with the purpose of the MVRA, this Court has steadfastly denied any exclusions that would dilute or eliminate the minimum security required by the Act. Beacon Ins. Co. of America v. State Farm Mut. Ins. Co., Ky., 795 S.W.2d 62, 63 (1990). Additionally, we note that the MVRA, when adopted, was designed specifically "[t]o correct the inadequacies of the present reparation system...." KRS 304.39-010(8).

Appellee responds by pointing out that KRS 304.39-050(2) provides that "If there is no security covering the vehicle, any contract of basic reparation insurance under which the injured person is a basic reparation insured shall apply." Appellee contends that, while this provision is not directly applicable to property damage, it demonstrates the legislature intended that one who suffers loss by an uninsured vehicle must first look to his own insurer, not the tortfeasor, for redress of his loss.

Having considered the arguments set forth by Appellee, we reject them and their implications. First, it is clear that KRS 304.39-050(2) is limited by its terms to personal injury and does not encompass property damage. KRS 304.39-050(1); KRS 304.39-020(2). Second, under Appellee's construction, one without proper liability insurance would only be liable for the property damage caused by his or her vehicle if she, the owner, were found to have negligently entrusted that vehicle to the driver, whereas one who is properly insured covers the losses of her permittee users regardless of her lack of fault in entrusting the vehicle to another. KRS 304.39-010; KRS 304.39-080(5). Therefore, had Appellee obtained the legally required coverage for her vehicle, Appellant would only have been required to prove that Appellee gave the permittee permission to use her vehicle and that the user's negligence resulted in the damages sought recovered. In sum, we do not believe the legislature, in enacting the MVRA, intended to make it more difficult for an injured party to recover under the circumstances presented in this case than if the law had been obeyed. Indeed, the simplicity of proving only permission to use the vehicle and negligence on the part of the permittee user relieves the injured party of a significant burden that previously existed and corrects one of the inadequacies of the prior system, just as the legislature intended.

In so holding, we acknowledge that the courts of other states have held otherwise when confronted with this issue. See, e.g., West v. Collins, 251 Kan. 657, 840 P.2d 435, 443 (1992) (Kansas Automobile Injury Reparations Act does not automatically impose liability on owner/insured for accident between covered permittee driver and uninsured motorist). However, because those states also differ from Kentucky's approach to no-fault automobile liability insurance in other respects, and considering the great lengths Kentucky has traveled to simplify coverage and recovery for injured parties, we see no need to delve too deeply into those cases. We simply hold that one who chooses to ignore the requirements of the MVRA is not thereby entitled to place additional roadblocks to recovery in the way of those injured by use of his or her vehicle. The decision of the Court of Appeals is hereby reversed and this matter is remanded to the Jefferson Circuit Court for proceedings in accordance with this opinion.

LAMBERT, Chief Justice; and JOHNSTONE and WINTERSHEIMER, JJ., concur.

COOPER, J., dissents by separate opinion, in which GRAVES and KELLER, JJ., join.

COOPER, Justice, dissenting.

Today, we create the new tort of "no insurance." In so doing, the majority opinion ignores the distinction between the law of torts, which determines when a person is liable for damage or injury to another, and the law of insurance, which determines when that person is insured for a liability imposed upon him by the law of torts.

I. FACTS.

On October 24, 1992, Appellant David McGrew's 1984 Ford Mustang automobile was damaged in a collision with a 1978 Chevrolet pickup truck being driven by Ailene Carter. Carter told McGrew that she was driving the vehicle because the male passengers in the truck were intoxicated and unable to drive. One of those passengers, presumably Booker T. Miles, told McGrew that Carter was his girlfriend and that "they" had borrowed the truck from Miles's aunt, Appellee Tonella Stone. According to Stone, Miles gave her the money to purchase the vehicle and she relinquished control of it to Miles immediately after the purchase with the understanding that Miles would transfer its title to his own name. However, when the accident occurred, the title was still in Stone's name and the vehicle was uninsured. Stone denied any knowledge that Miles was an inexperienced, careless or reckless driver. The records of the Jefferson District Court reveal that Miles had a history of minor criminal offenses, including three convictions for operating a vehicle without insurance and an appearance on October 6, 1992 for failure to surrender a revoked operator's license. The record does not reflect whether Miles's license was revoked before or after Stone gave him possession of the vehicle. McGrew sued Carter and Stone (but not Miles) in the Jefferson District Court to recover $3,200.00 for damages to his automobile. His Complaint stated the following as his cause of action against Stone:

That the Defendant, Tenella (sic) Stone, negligently entrusted said automobile to the Defendant Ailene Carter and/or said Ailene Carter was operating said automobile within the scope of the family purpose of Tenella (sic) Stone.

A default judgment was entered against Carter. In response to Stone's motion for summary judgment, McGrew asserted that permitting her automobile to be driven without insurance was evidence of Stone's "own negligence," i.e., evidence of negligent entrustment. Stone's motion for summary judgment was granted.

It was not until McGrew filed his notice of appeal to the Jefferson Circuit Court that he first advanced a theory that the compulsory insurance provision of Kentucky's Motor Vehicle Reparations Act (MVRA), KRS 304.39-080(5), creates a cause of action against the owner of an uninsured vehicle for damages caused by the negligence of its operator. McGrew did not claim even then that the failure to provide liability insurance makes the owner liable for the driver's negligence. Rather, he claimed that the failure to provide liability insurance violated KRS 304.39 — 080(5) and that such violation was actionable under KRS 446.070. The Circuit Court rejected that argument, but held that there was sufficient evidence to avoid summary judgment on the claim of negligent entrustment and remanded the case to the Jefferson District Court for a trial on that issue. Thus, McGrew won in the Circuit Court on the only issue he had raised in the District Court. Nevertheless, he appealed the Circuit Court's decision to the Court of Appeals; and it was during that appeal that he first advanced the theory now adopted by this Court, i.e., that the owner of an uninsured vehicle is liable for the negligence of anyone driving the...