Savage v. Allstate Ins. Co., NO. 2017-CA-0615-MR

CourtCourt of Appeals of Kentucky
Writing for the CourtMAZE, JUDGE
PartiesLAUREN SAVAGE, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF JAMES SAVAGE APPELLANTS v. ALLSTATE INSURANCE COMPANY; PROPERTY & CASUALTY INSURANCE COMPANY OF HARTFORD; CO-PART OF CONNECTICUT, INC.; D/B/A CO-PART AUTO AUCTIONS; WILLIS JOHNSON; PAUL STYER; WILLIAM FRANKLIN; TOM TAYLOR; DANIEL BOND; CHAPA, INC. D/B/A CHAPA AUTO SALES; MARGARITA CHAPA; OSCAR RAMOS; LIBERTY MUTUAL FIRE INSURANCE COMPANY; VENTURA FELIX BARRAZA; AND AUTOS USADOS FELIX APPELLEES
Decision Date15 January 2021
Docket NumberNO. 2017-CA-0615-MR

LAUREN SAVAGE, INDIVIDUALLY AND
AS ADMINISTRATRIX OF THE ESTATE OF JAMES SAVAGE APPELLANTS
v.
ALLSTATE INSURANCE COMPANY;
PROPERTY & CASUALTY INSURANCE COMPANY OF HARTFORD;
CO-PART OF CONNECTICUT, INC.; D/B/A CO-PART AUTO AUCTIONS;
WILLIS JOHNSON; PAUL STYER; WILLIAM FRANKLIN; TOM TAYLOR;
DANIEL BOND; CHAPA, INC.
D/B/A CHAPA AUTO SALES; MARGARITA CHAPA;
OSCAR RAMOS; LIBERTY MUTUAL FIRE INSURANCE COMPANY;
VENTURA FELIX BARRAZA; AND AUTOS USADOS FELIX APPELLEES

NO. 2017-CA-0615-MR

Commonwealth of Kentucky Court of Appeals

JANUARY 15, 2021


TO BE PUBLISHED

APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE FREDERIC J. COWAN, SPECIAL JUDGE
ACTION NO. 12-CI-006824

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OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING

** ** ** ** **

BEFORE: COMBS, DIXON, AND MAZE, JUDGES.

MAZE, JUDGE: Lauren Savage, individually and as Administratrix of the Estate of James Savage (collectively, "the Estate") appeals from a judgment of the Jefferson Circuit Court confirming a jury verdict. The Estate raises multiple issues involving quashing of service on a defendant who is a foreign national; dismissal of its claims against the insurance companies; dismissal of several statutory claims against Co-part of Connecticut, Inc., d/b/a Co-part Auto Auctions (Co-part); denials of motions to file amended complaints; various evidentiary rulings; the denial of its motion for a directed verdict against Co-part; and the granting of a directed verdict on its claim for punitive damages. For the reasons that follow, we affirm the orders and judgment on all matters except as to the claims against Co-part. We conclude that the trial court erred by dismissing several statutory claims and abused its discretion in several evidentiary rulings. Hence, we reverse the judgment in favor of Co-part with respect to those matters, and we remand for a new trial against Co-part.

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I. FACTUAL HISTORY

This is a multi-party action relating to an automobile accident that occurred on March 6, 2012. The underlying facts and relationships among the parties are unique and defy simple explanation. Likewise, the procedural history and complex issues presented would be difficult to imagine if presented as a fact-pattern for an essay question on the bar examination. Therefore, we shall first set out the parties and the factual history of this matter, followed by the procedural history of this action.

Co-part provides online motor vehicle auction services. It maintains facilities throughout the country, and most relevant to this case, has locations in Finksburg, Maryland and Louisville, Kentucky. Co-part is a licensed motor vehicle dealer and auction dealer in both Maryland and Kentucky. Among other things, Co-part contracts to store and sell salvage vehicles on behalf of insurance companies who have acquired them after declaring them a total loss.

Prior to the accident, Allstate Insurance Company (Allstate) acquired title to a totaled 2003 Toyota Tacoma from an insured. Thereafter, Allstate obtained a Maryland salvage title and delivered the vehicle to Co-part's Maryland location. Similarly, Property and Casualty Insurance Company of Hartford (Hartford) acquired title to a totaled 2004 Jeep Wrangler from an insured. Hartford

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delivered the Jeep and the Kentucky salvage title documents to the Co-part location in Louisville.

Under its service agreements with insurance companies, Co-part is required to do a "run and drive" verification and to state in its auction description whether the vehicles are drivable or towable. The service agreements also required Co-part to maintain tires on all vehicles where practicable. The agreements permitted Co-part to refuse to release any vehicle for any reason. Co-part advertised the Toyota as drivable but determined that the Jeep was in a non-run and non-towable condition. Co-part included these descriptions in its online advertising of the vehicles.

Sales and delivery of vehicles are limited only to paid Co-part "members." Members receive a number, which is used to access Co-part auctions. Members also use the number to fund a credit balance for payment of online auction purchases. Co-part facilitates the transfer of title from the insurer to the buyer. Co-part either offers to deliver a purchased vehicle to the buyer for a fee or releases the vehicle to an authorized representative of the buyer. In the case of the latter, the representative must present the buyer identification number and the lot number of the specific vehicle. Upon receipt of this information, Co-part would deliver the vehicle to the buyer at a "bullpen" within Co-part's compound. In the

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case of a salvage or non-drivable vehicle, Co-part would deliver the vehicle to the bullpen using a forklift.

In February, the vehicles were sold to Ventura Felix Barraza d/b/a Autos Usados Felix (AUF), a used auto and parts dealer located in Los Mochis, Sinaloa, Mexico.1 AUF sent Oscar Ayon Ramos (Ramos) to pick up the vehicles. On his way to pick up the vehicles, Ramos obtained two Arizona Restricted Use Three-Day Permits2 through Chapa Auto Sales (Chapa), a used car-dealer located in El Paso, Texas. Ramos then proceeded to Maryland to pick up the Toyota.

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Following the online sales, Co-part, on Allstate's behalf, executed an assignment and warranty of title on the Toyota's Certificate of Salvage in favor of AUF. Similarly, Co-part, on Hartford's behalf, executed a transfer of the Jeep's Kentucky Salvage title to AUF. AUF directed Co-part to deliver the title document to the Jeep to "Ramon Martar Bubio," and Co-part's records indicate that it did so on March 2, 2012.

On March 5, 2012, Ramos appeared at Co-part's Maryland facility. He provided the AUF member number and lot number of the Toyota. Co-part then delivered the Toyota to Ramos. Co-part also gave Ramos the Toyota's Certificate of Salvage, which it had executed on behalf of Allstate.

Ramos then affixed the Arizona Permit to the Toyota and drove the vehicle to Co-part's Louisville facility. On March 6, he arrived at the Louisville facility, where he presented the AUF member number and lot number of the Jeep. As with the Toyota, Co-part executed the dealer assignment portion of the Jeep's title on Hartford's behalf. At the direction of AUF, the title was delivered to Bubio on March 2.

Upon receipt of the documentation, Co-part delivered the Jeep to Ramos. Ramos then affixed the Arizona Permit to the Jeep and attached a tow bar between the Toyota and the Jeep. Ramos then left the Co-part facility with the Jeep being towed by the Toyota.

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Several hours later,3 while driving on I-65 in Louisville, Ramos lost control of the vehicles while changing lanes. James Savage was riding a motorcycle in the same vicinity. There was testimony that another vehicle had lost a load of wooden pallets, requiring other drivers to swerve to avoid them. There was also testimony that Savage struck one of the pallets and was thrown from his motorcycle. Ramos' vehicles side-swiped a tractor-trailer truck, and then ran over Savage, who was lying in the roadway. Savage was killed at the scene. Additional facts will be set forth below as necessary.

II. PROCEDURAL HISTORY

Subsequently, Lauren Savage qualified as Administratrix of the Estate of James Savage. On December 27, 2012, the Estate and Lauren Savage individually filed a complaint asserting claims arising from the accident. The complaint named: (1) Allstate, as owner of the Toyota; (2) Hartford, as owner of the Jeep; (3) Ramos; (4) Co-part; (5) Co-part founder and Chief Executive Officer Willis Johnson; (6) Co-part general counsel and Executive Vice-President Paul Styer; (7) Co-part Chief Financial Officer and Executive Vice-President William Franklin; (8) Tom Taylor, manager of Co-part's Louisville facility; (9) Daniel

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Bond, employee of Co-part's Louisville facility; and (10) Chapa, Inc. d/b/a Chapa Auto Sales, the El Paso dealership which obtained the Restricted Use Permits for Ramos, and Margarita Chapa, owner of Chapa Auto Sales (collectively, "Chapa").

The Estate attempted to serve Ramos through the Kentucky Secretary of State's office, using the address listed on Ramos' Mexican driver's license. Ramos appeared specially to contest the sufficiency of service on him, arguing that he was not properly served as a foreign national. The trial court agreed and entered an order on September 24, 2013, quashing service on Ramos. As discussed below, the Estate attempted a second service on Ramos through Chapa after the trial in this matter.

Subsequently, Co-part filed a third-party complaint naming AUF and Ramos. Service of that complaint was never effected on Ramos. Barraza, on behalf of AUF, filed a pro se response using an address in Mooresville, Indiana. However, all subsequent attempts at service using that address were returned as undeliverable.

Margarita Chapa filed an answer to the complaint but did not otherwise participate in the proceedings. Since Chapa did not respond to any of

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the requests for admission, they were deemed admitted. Among these included an admission that Ramos was acting as an employee or agent of Chapa.4

The Estate asserted that Allstate remained the owner of the Toyota and Hartford remained the owner of the Jeep for insurance purposes. The Estate also asserted that Co-part should be considered an owner of both the Toyota and the Jeep for insurance purposes because it failed to obtain proof of insurance prior to releasing the vehicles to Ramos.

Separately, the Estate asserted claims against Co-part for negligence, negligent entrustment, and violations of its statutory duties as an auto dealer. The Estate also asserted claims against Co-part executives Johnson, Styer, and Franklin for negligent hiring, supervision, and training of Co-part employees. And the Estate asserted claims against Louisville Co-part employees Taylor and Bond for their actions in releasing the Jeep to Ramos. Liberty Mutual, the insurance carrier for Co-part,...

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