Sanders v. Humphrey, Civ. A. No. J88-0648(L).

• Decision Date: 28 August 1989
• Docket Number: Civ. A. No. J88-0648(L).
• Parties: Lena SANDERS, Plaintiff, v. Earl HUMPHREY, Individually and Earl Humphrey D/B/A Humphrey Motors, State Farm Fire and Casualty Company and Jessie Owens, Defendants.
• Court: U.S. District Court — Southern District of Mississippi

720 F. Supp. 575

Lena SANDERS, Plaintiff, v. Earl HUMPHREY, Individually and Earl Humphrey D/B/A Humphrey Motors, State Farm Fire and Casualty Company and Jessie Owens, Defendants.

Civ. A. No. J88-0648(L).

United States District Court, S.D. Mississippi, Jackson Division.

August 28, 1989.

Mark E. McLeod, Jackson, Miss., for plaintiff.

Reeves Jones, Jackson, Miss., for defendants.

Edward J. Currie, Michael Myers, Steen, Reynolds, Dalehite & Currie, Jackson, Miss., for State Farm Fire and Cas. Co.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

On March 31, 1987, Jackie's Auto Sales, a Mississippi used car dealership owned and operated by David Yancey, purchased a 1982 Cadillac Sedan DeVille from Earl Humphrey d/b/a Humphrey Motors, a used car dealership in Bossier City, Louisiana. In exchange for his $5,000 bank draft, Yancey acquired possession of the vehicle and took it to his used car lot in Jackson, Mississippi. Humphrey Motors, however, retained the certificate of title since, pursuant to its sales agreement with Jackie's, it agreed to transfer title to Jackie's only at such time as the bank draft given by Yancey was paid. After Yancey had obtained possession of the Cadillac, Humphrey Motors on several occasions presented Yancey's draft to the bank for payment and each time it was dishonored. When it became apparent that Humphrey Motors would not be able to recover the purchase price of the automobile, Earl Humphrey, on June 12, 1987, sent a representative to Jackson to recover the car from Jackie's. In the meantime, however, Yancey, on April 6, 1987, had sold the automobile to Lena M. Sanders.

Mrs. Sanders had purchased the car with the understanding that it was in need of certain repair work which was to be performed by Jackie's. Subsequent to her acquiring possession of the Cadillac, an employee of Jackie's took the car in for repairs and upon returning it to Sanders informed her that it would have to be taken in again once a part had arrived. On or about June 12, an employee of Jackie's, Jessie Owens, went to Mrs. Sanders' home to obtain the car, explaining that he was taking it in for further repairs. Mrs. Sanders voluntarily entrusted possession of the Cadillac to Owens who thereafter turned the car over to the agent of Humphrey Motors. The car was then taken to Humphrey Motors in Louisiana. When the car was not returned to Mrs. Sanders and she learned that the car had not actually been taken in for repairs, she reported the loss to her automobile insurer, State Farm Fire and Casualty Company (State Farm), as a theft and sought payment under the policy which provided coverage for "theft or larceny." State Farm denied payment of the claim on the basis that the loss was not payable since there had been no theft or larceny of the automobile and further, that the loss was in fact specifically excluded from coverage under the policy.

These events culminated in the filing by Mrs. Sanders of this action against State Farm, Humphreys and Owens seeking recovery of the value of the automobile and additionally demanding punitive damages against State Farm based on her claim that State Farm acted in bad faith in the handling of her claim. The cause is now before the court on cross-motions of Sanders and State Farm for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The court, in deciding the motions, has considered the memoranda of authorities together with attachments submitted by these parties.

Plaintiff asserts that the issue to be determined on this motion is whether she or Humphrey owned the Cadillac and had a right to possession on June 12, 1987, the date it was removed by Humphrey Motors to Louisiana. Although this issue has been extensively briefed by the parties, the court finds it unnecessary to resolve that question as a predicate to a decision on the issue of coverage for Mrs. Sanders' loss under the State Farm policy. This is because regardless of the true ownership of the vehicle, Humphrey Motors, as the uncontroverted facts clearly demonstrate, at the time of the taking of the automobile from Sanders, had a colorable claim that it owned the automobile and was entitled to possession. It is beyond dispute that Humphrey Motors retained the certificate of title on the Cadillac and that, at the time the car was retrieved, it had not received payment of the purchase price from Yancey or Jackie's Auto Sales.

A similar situation was presented for consideration to the Fifth Circuit in Talasek v. Travelers Fire Insurance Company, 242 F.2d 748 (5th Cir.1957). There, Auto Dealers Auction, Inc. of Kansas City, Missouri had agreed to sell an automobile to Hermansen who acquired possession and in turn sold the car to the plaintiff, Talasek. After Hermansen's draft for the purchase price of the car was dishonored, Auto Dealers, which retained the Missouri certificate of title, without any process picked the car up off the streets where Talasek had parked it. The district court held that

the repossession of the automobile by Auto Dealers Auction, Inc., under the circumstances discussed by this record was not a `theft, larceny, or pilferage' within the terms of the policy issued by the defendant. Auto Dealers Auction, Inc. was the owner of the automobile

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