Opinion
H036641
12-27-2011
DANIEL THIEL, Plaintiff and Appellant, v. MERCURY GENERAL CORPORATION, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County Super. Ct. No. 1-09-CV140148)
After an automobile accident following the purchase of a car by plaintiff Daniel Thiel, the sellers' insurance company, Mercury Casualty Company (Mercury), denied coverage on the ground that plaintiff was not a permissive user under the sellers' policy because they had already relinquished ownership of the vehicle. In plaintiff's ensuing action against Mercury, the superior court found Mercury's position to be correct and granted its motion for summary judgment. Plaintiff appeals, contending that the court erred in determining that the sellers had no ownership liability and thus no insurable interest covering plaintiff for the accident. We agree with the superior court's conclusion and will therefore affirm the judgment.
Plaintiff named Mercury General Corporation and Mercury Insurance Group in his complaint, not the issuing company, Mercury Casualty Company.
Background
Plaintiff bought the subject car, a 2001 BMW, from Eric and Patricia Benford on April 14, 2008. He paid $14,900 in cash and gave the Benfords a check for the balance of $1,400. The bill of sale included the notation, "Title pending check clear." The certificate of title was held by a financing company from which the Benfords had obtained a loan for their purchase of the vehicle. According to plaintiff's deposition testimony, Eric Benford said that when plaintiff's check cleared, they would pay off the loan and send him the title. The $1,400 check was deposited on April 18 and cleared the bank on April 21, 2008.
Eric Benford notified the Department of Motor Vehicles (DMV) of the sale on April 15, 2008 by completing an online "Notice of Transfer and Release of Liability" on the DMV website. The evening before, however, while driving the BMW home, plaintiff was struck by an oncoming car operated by an intoxicated uninsured motorist. Plaintiff, who was not at fault, sustained injuries to his head, chest, and leg, requiring two surgeries on his right leg and continuing physical therapy.
Plaintiff was uninsured at the time of the transaction. The Benfords had an auto accident liability policy, including uninsured motorist coverage, issued by Mercury. Plaintiff submitted a claim to Mercury, which reviewed it and determined that coverage had terminated because the Benfords, having filed the Notice of Transfer and Release of Liability, no longer had any insurable interest in the vehicle.
Plaintiff brought suit against Mercury on April 16, 2009, alleging breach of contract, insurance bad faith, and intentional infliction of emotional distress. Citing Vehicle Code section 5602, subdivision (b), Mercury moved for summary judgment, or alternatively, summary adjudication. Mercury contended that no coverage existed for the accident because the Benfords, once they notified the DMV of the sale, were released from "ownership liability" as of the time of the sale.
All further unspecified statutory references are to the Vehicle Code.
Plaintiff did not oppose summary adjudication of the emotional-distress claim, but he did resist adjudication of the first and second causes of action. The superior court ruled, however, that the Benfords had complied with the notice requirements set forth in sections 5602 and 5900, and therefore "were not considered the owners of the vehicle for purposes of liability" for the accident.
Discussion
1. Appealability
As a preliminary matter, we note that plaintiff filed a notice of appeal from a judgment that did not exist at the time. The notice, filed March 1, 2011, indicated that he was appealing from a judgment entered on February 3, 2011. There is no such document in the record. The order granting summary judgment was filed February 1, and the judgment was not filed until March 2, 2011. Nevertheless, because a judgment was subsequently filed, we will once again exercise our discretion to construe the premature notice of appeal as pertaining to the March 2 judgment. (Cal. Rules of Court, rule 8.104(d)(2).)
2. Standard and Scope of Review
Summary judgment is properly granted "if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) "The purpose of the law of summary judgment is to provide courts with a mechanism to cut through the parties' pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar).) "Summary judgment is an appropriate vehicle to determine coverage under an insurance policy when it appears there is no material issue of fact to be tried and the sole issue before the court is one of law." (Pepper Industries, Inc. v. Home Ins. Co. (1977) 67 Cal.App.3d 1012, 1017; accord, Slater v. Lawyers' Mutual Ins. Co. (1991) 227 Cal.App.3d 1415, 1419; cf. Feldman v. Illinois Union Ins. Co. (2011) 198 Cal.App.4th 1495, 1500.) "There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof." (Aguilar, supra, 25 Cal.4th at p. 850.)
We review an order granting summary judgment de novo, by independently reviewing the record and applying the same rules and standards as the trial court. (Id. at p. 860.) If the material facts are undisputed, as in this case, the motion may be resolved as a matter of law in accordance with the general principles governing summary judgment. (Adams v. Paul (1995) 11 Cal.4th 583, 592.)
3. The Summary Judgment Motion
Because it is the pleadings that define the issues addressed in a summary judgment proceeding, the usual first step on appeal is to examine the allegations of the operative complaint. Here, however, plaintiff has not seen fit to designate his complaint as part of the appellate record. At best we have the representation of plaintiff in his opening brief and the points and authorities supplied to the court below in Mercury's motion for summary judgment. As related by Mercury, plaintiff asserted three causes of action: breach of contract and the covenant of good faith and fair dealing, insurance bad faith, and intentional infliction of emotional distress, all presumably based on Mercury's denial of coverage under the Benfords' policy.
Section 5602 provides two alternative ways for a private seller of a vehicle to avoid liability for accidents involving that vehicle. If he or she has made a "bona fide sale" of the vehicle and has delivered possession of it to the buyer, the seller is released from liability "thereafter" if he or she also either (a) endorses and delivers the certificate of ownership, or (b) delivers or mails to the DMV any of the documents specified in the statute. Among those documents is the "notice as provided in subdivision (b) of . . . Section 5900 . . . . ." (§5602, subd. (b)(1).) Because the first option, delivery of the certificate of ownership, was not accomplished until sometime after the accident, Mercury's motion was premised on the second option, through compliance with section 5900. (§ 5602, subd. (b)(1).)
Section 5602 provides, in full, "An owner who has made a bona fide sale or transfer of a vehicle and has delivered possession of the vehicle to a purchaser is not, by reason of any of the provisions of this code, the owner of the vehicle so as to be subject to civil liability or criminal liability for the parking, abandoning, or operation of the vehicle thereafter by another when the selling or transferring owner, in addition to that delivery and that bona fide sale or transfer, has fulfilled either of the following requirements: [¶] (a) He or she has made proper endorsement and delivery of the certificate of ownership as provided in this code. [¶] (b) He or she has delivered to the department or has placed in the United States mail, addressed to the department, either of the following documents: [¶] (1) The notice as provided in subdivision (b) of Section 4456 or Section 5900 or 5901. [¶] (2) The appropriate documents and fees for registration of the vehicle to the new owner pursuant to the sale or transfer."
Section 5900 provides, in pertinent part, "(a) Whenever the owner of a vehicle registered under this code sells or transfers his or her title or interest in, and delivers the possession of, the vehicle to another, the owner shall, within five calendar days, notify the department of the sale or transfer giving the date thereof, the name and address of the owner and of the transferee, and the description of the vehicle that is required in the appropriate form provided for that purpose by the department."
Plaintiff argued below that section 5900 was inapplicable. Instead, he relied on section 5600, which identifies two ways to make a transfer of interest in a vehicle effective. One is by delivering the certificate of title to the transferee; Mercury readily acknowledges this method to be inapplicable here. Alternatively, a transfer may be made effective if "[t]he transferor has delivered to the department or has placed in the United States mail addressed to the department the appropriate documents for the registration or transfer of registration of the vehicle pursuant to the sale or transfer except as provided in Section 5602." (§ 5600, subd. (a)(2).) Plaintiff maintained that the Benfords were not released from liability because they had not delivered the certificate of title in accordance with section 5600.
On appeal, plaintiff adheres to this position. In his view, a seller who relies on the Notice of Transfer and Release of Liability must have posted that notice before an accident occurs. He insists that a seller who has not delivered title to the buyer must deliver the "appropriate documents" to the DMV under section 5600, subdivision (a)(2), notwithstanding the phrase "except as provided in Section 5602" in that subdivision. That phrase, according to plaintiff, "is only a method of giving notice to the public of a transfer in ownership of the vehicle," but it has no effect on liability unless a valid transfer has already occurred. Thus, "the seller must deliver a Certificate of Title to the purchaser or to the DMV before an accident to avoid liability." Without that delivery there has been no compliance with section 5600 and any notice of transfer under section 5900 must be deemed "void."
In his opposition to the summary judgment motion plaintiff also argued that there could be no "bona fide sale" until the certificate of title was transferred. He repeats this assertion in his opening brief on appeal. We cannot agree. "Whether there has been a 'bona fide' sale of a vehicle between the seller and buyer depends not on compliance with the owner liability law, but rather on 'the nature of the agreement between the parties to the transaction.' " (Springmeyer v. Ford Motor Co. (1998) 60 Cal.App.4th 1541, 1572, quoting Hidalgo v. Anderson (1978) 84 Cal.App.3d 378, 381-383.) In this sense of the term, a bona fide sale clearly occurred here. Plaintiff's suggestion that "[t]here is no bona fide sale of a vehicle until the Certificate of Title is transferred" lends a circular interpretation to the statutory language and is unsupported by any authority he cites.
In the superior court, plaintiff suggested another reason no bona fide sale occurred: the Benfords had "[r]eserved [o]wnership" in the car until plaintiff's check cleared the bank, seven days after the transaction. He did not develop this argument, however, and on appeal he does not renew the assertion beyond a single cursory statement, accompanied by no citation of authority.
In the superior court Mercury emphasized the phrase "except as provided in section 5602" in subdivision (a)(2) of section 5600. We agree with Mercury that this language enables a seller to bypass the second requirement of section 5600 (delivery to the DMV of "appropriate documents") by instead meeting the conditions of section 5602. As section 5602 releases a transferor of liability by giving notice to the DMV under section 5900, a transfer of ownership is not ineffective merely because the DMV has not yet received the "appropriate documents" referred to in section 5600. By filing the Notice of Transfer and Release of Liability within five days of a "bona fide sale," as permitted by sections 5900 and 5602, a seller is released from liability "thereafter"—that is, after the sale. (§ 5602, subd. (b)(1).)
Somerville v. Providence Washington Indem. Co. (1963) 218 Cal.App.2d 237, on which plaintiff has continued to rely, does not instruct otherwise. The liability for the accident in that case remained with the seller because he had not "immediately" notified the DMV as the predecessor to section 5900 then required. There was also a factual dispute as to whether the certificate of ownership had been given to the buyer at the time of the sale. In those circumstances, summary judgment was held to have been improperly granted.
California State Automobile Ass'n v. Foster (1993) 14 Cal.App.4th 147 and Harbor Ins. Co. v. Paulson (1955) 135 Cal.App.2d 22 are noteworthy only for the point (emphatically made in plaintiff's brief) that the transfer procedures set forth in the Vehicle Code must be followed before a sale will release a seller from ownership liability. Here the Benfords did follow these statutory procedures: They delivered possession of the vehicle to plaintiff and notified the DMV within five days of the transaction, thereby fulfilling the conditions outlined in sections 5900, 5602, and 5600.
We thus conclude that the Benfords, having sold their car in an unconditional, bona fide transaction, were then released from liability under section 5602, subdivision (b)(1), because they provided the notice identified in section 5900 within the prescribed five-day period. Accordingly, Mercury was not obligated to cover plaintiff as a permissive user under the auto policy the Benfords had purchased for that car.
Plaintiff alternatively suggests that Mercury policy remained in effect until the company cancelled it two days after the accident. As plaintiff does not explain how the timing of the cancellation affected the policy's specific coverage provisions in light of the release of the insureds' ownership liability, we cannot address this undeveloped issue.
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Plaintiff does not offer any legal or factual grounds for finding unfairness or bad faith by Mercury in handling his claim other than his conviction that Mercury denied the claim contrary to "settled legal principles of liability coverage." However, because Mercury was justified in determining that plaintiff was not covered as a permissive user under the Benfords' policy, there was no viable basis on which Mercury could have been found to have acted in bad faith on the undisputed facts presented. (See Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 36 [absent right to insurance benefits, "the implied covenant has nothing upon which to act as a supplement" to an express contractual promise]; Rios v. Scottsdale Ins. Co. (2004) 119 Cal.App.4th 1020, 1027 [absent coverage for loss, claim of bad faith against insurer cannot be maintained]; cf. Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199 Cal.App.4th 1132, 1156 [denial of title insurance claim].) Summary judgment was properly granted.
Disposition
The judgment is affirmed.
ELIA, J.
WE CONCUR:
RUSHING, P. J.
PREMO, J.