Opinion
No. 62138-6-I.
August 31, 2009.
Appeal from a judgment of the Superior Court for Snohomish County, No. 08-2-01713-1, Linda C. Krese, J., entered July 14, 2008.
Reversed by unpublished opinion per Appelwick, J., concurred in by Becker and Lau, JJ.
The trial court declared that Phelps is the legal owner of a 2003 Jaguar purchased in California. Davies perfected title to the vehicle in California after Phelps acquired possession. However, because Phelps was a bona fide purchaser, it is entitled to possession. We affirm.
FACTS
The State of California issued a certificate of title for a 2003 Jaguar to Carolyn Ko on August 30, 2006. At the time the title was issued, Ko was married to Brian Davies. Their marriage was nullified on November 29, 2006. On January 16, 2007, a California court ordered Ko to transfer title to the Jaguar into both parties' names. The property, however, remained uncharacterized as separate, community, or otherwise. Ko did not transfer the title into both parties' names.
Ko released her interest in the Jaguar on April 8, 2007. Phelps Autobrokers, LLC, a Washington car dealership, claims it bought the Jaguar from Ko. Phelps is not a licensed California car dealer, and therefore is prohibited from purchasing or selling vehicles as a dealer from or to consumers in California.
On May 19, 2007, Phelps sold the Jaguar to David Eaton, a resident of Mukilteo, Washington. On August 22, 2007, Eaton obtained a vehicle title and registration certificate from the Washington Department of Licensing.
An amended nullity judgment was filed on October 29, 2007, awarding Davies sole and separate ownership of three cars, including the 2003 Jaguar. Pursuant to this judgment, the State of California issued a certificate of title for the Jaguar to Davies. On December 11, 2007, the Washington Department of Licensing sent a letter to Eaton explaining that his certificate of ownership would be cancelled in 15 days, because Davies possessed a more current title. Eaton could prevent the cancellation by providing evidence of a release of ownership from Davies or a court order. On March 15, 2008, Eaton transferred the Jaguar back to Phelps.
Phelps filed a complaint seeking a declaratory judgment stating that it was a bona fide purchaser of the Jaguar, and is therefore the lawful owner of the vehicle. The trial court entered an order to show cause. On April 24, 2008, Phelps filed a memorandum of authorities regarding plaintiff's motion to show cause. On May 14, the trial court ruled on the motion to show cause, finding that on April 8, 2007, Ko, the registered owner, sold the Jaguar to Phelps. The trial court found: that Davies' interest, if any, in the Jaguar arose after the sale of the Jaguar to Phelps; Phelps's interest was therefore superior to Davies' interest; and that Davies' interest was at best voidable. Davies sought reconsideration, which the trial court denied.
On June 19, 2008, Davies filed a motion to dismiss. On July 3, 2008, Phelps filed a cross motion in opposition to defendant Davies' motion to dismiss.
On July 14, 2008, the trial court issued an order pertaining to Davies' motion to dismiss and Phelps's cross motion and judgment. The court awarded all right, title, and interest in the Jaguar to Phelps. The judgment required Davies to surrender his California Certificate of Property, endorsed by him, and indicating that he releases any and all interest in the vehicle (as the registered and legal owner) to Phelps. Davies appeals.
DISCUSSION
In the context of appellate review of a declaratory action under RCW 7.24.070, "[a]ll orders, judgments and decrees under this chapter may be reviewed as other orders, judgments and decrees."
Davies argues that the trial court erred, because his California title is superior to any interest Phelps holds. Davies argues that under California law, Ko did not sell her interest in the Jaguar, because Phelps failed to perfect title under California law.
The trial court made no findings of fact regarding whether Phelps perfected its title nor whether title passed to the buyer by estoppel.
The transfer of title to a vehicle registered in California is accomplished under Cal. Veh. Code § 5600 (2001):
(a) No transfer of the title or any interest in or to a vehicle registered under this code shall pass, and any attempted transfer shall not be effective, until the parties thereto have fulfilled either of the following requirements:
(1) The transferor has made proper endorsement and delivery of the certificate of ownership to the transferee . . . and the transferee has delivered to the department . . . the certificate. . . .
(2) The transferor has delivered to the department . . . the appropriate documents for the registration or transfer of registration of the vehicle. . . .
Phelps concedes that it did not register the title with California, but asserts such a registration was not needed, because it is a car dealer and thus exempt from the vehicle registration code. Cal. Veh. Code § 5906 (2009) states:
When the transferee of a vehicle is a dealer who holds the same for resale and operates or moves the same upon the highways under special plates, the dealer is not required to make application for transfer, but upon transferring his title or interest to another person he shall comply with this division.
However, we need not resolve whether Phelps is exempt from this requirement.
Phelps is not licensed as a California automobile dealer. The California Department of Motor Vehicles sent Phelps a letter stating:
California Vehicle Code (CVC) 11700 requires that individuals involved in the acquisition and re-sale of motor vehicles for profit first obtain an occupational license issued by the Department of Motor Vehicles. . . .
Information in our possession revealed that you purchased a vehicle in California from a California consumer without benefit of a California vehicle dealer license.
. . .
If you are engaged in purchasing or selling vehicles to consumers in California you are behaving as an unlicensed car dealer . . . subject to criminal prosecution under California Vehicle Section 11700.
Phelps does not challenge this characterization of his activities in California. Phelps has not provided authority that an unlicensed dealer, engaged in what the California regards as illegal activity, can benefit from the dealer exception.
California courts have rejected a literal application of § 5600 as a means to invalidate a sale between a buyer and a seller. Brasher's Cascade Auto Auction v. Valley Auto Sales Leasing, 119 Cal. App. 4th 1038, 1064-65, 15 Cal. Rptr. 3d 70 (2004) ("`It has long been established . . . that a transfer of the property interest in a motor vehicle is effective as between the immediate parties even though they have not complied with the registration statute.'") (quoting Sec. Pac. Nat'l Bank v. Goodman, 24 Cal. App.3d 131, 136, 100 Cal. Rptr. 763 (1972)). Regardless of whether Phelps was required to register the title to the Jaguar in California, the transaction between Ko and Phelps is not void for lack of registration. Davies has failed to establish a superior claim to the vehicle as a matter of California vehicle law.
The trial court's unchallenged findings of fact were that Phelps purchased the Jaguar in the ordinary course of business from Ko, who was listed as the registered owner. The sale was for value, and Phelps had no knowledge of any defect in the condition of title. Further, the trial court concluded that the sale extinguished any community property rights or interest Davies had or may have had. The sale predated the judgment awarding Davies an interest in the vehicle. The trial court concluded that Davies had no interest in the vehicle. Finally, it concluded that Phelps was a bona fide purchaser who had received valid title. The unchallenged findings adequately support the trial court's conclusions. The trial court did not err in awarding ownership to Phelps.
We affirm.
WE CONCUR: