Evidence of Reported Theft Found Insufficient to Overcome Presumption of Permissive Use

UM – STOLEN VEHICLE – EVIDENCE NEEDED TO OVERCOME PRESUMPTION OF PERMISSIVE USE – FRAMED-ISSUE HEARING
State Farm Mut. Auto. Ins. Co. v. Taveras
(1st Dept., decided 3/30/2010)

Alison Taveras allegedly was injured when a vehicle owned by Richard Cruz struck her.  Cruz's auto insurer denied liability coverage based on Cruz's report that his vehicle had been stolen and was being operated without his permission.  Taveras made a uninsured motorists (UM) claim to her own auto insurer, State Farm, which commenced this special proceeding pursuant to CPLR § 7503(b) for a permanent stay of Taveras' UM arbitration, naming Cruz and his auto insurer as additional respondents. 

Bronx County Supreme Court (Edgar G. Walker, J.) conducted a framed-issue hearing on the issue of whether the striking vehicle was in fact stolen or was being operated with Cruz's permission and ruled that Cruz and his auto insurer failed to submit sufficient evidence to overcome the presumption of permissive use that derives from New York Vehicle & Traffic Law § 388.  In reaching its decision, the hearing court found it significant that Cruz had delayed in calling the police to report the alleged theft, and only called after Cruz and his friends were allegedly assaulted by an angry mob. 

In AFFIRMING Supreme Court's order granting State Farm's petition to permanently stay Taveras' UM arbitration, the First Department noted that a fact-finding court's decision should not be disturbed on appeal unless it is obvious that its conclusions could not be reached under any fair interpretation of the evidence:

Additional respondents, the owner and insurer of the offending vehicle, assert that the vehicle was uninsured at the time of the accident because it was being driven by an unknown thief. No basis exists to disturb the court's finding, after a framed-issue hearing, that the evidence of such theft and nonpermissive use was insufficient to overcome the presumption of permissive use (see Murdza v Zimmerman, 99 NY2d 375, 380 [2003] ["substantial" evidence needed to overcome presumption of permissive use]; Thoreson v Penthouse Intl., 80 NY2d 490, 495 [1992] [fact-finding court's decision should not be disturbed on appeal unless it is "obvious" that its conclusions could not be reached under any fair interpretation of the evidence, especially where findings of fact largely rest on witness credibility]). In so finding, the hearing court properly took into account the owner's failure to adequately explain his substantial delay in calling the police to report the alleged theft, which call immediately followed an alleged assault on the owner and his friends by a mob of angry people (see Minaya v Horner, 279 AD2d 333 [2001]). There being no dispute that the burden of proof was initially on additional respondents to prove nonpermissive use, it does not avail them that the hearing court also rejected as incredible the testimony of one of the victims, called by petitioner, that he had seen the owner sitting in the passenger side of the car in the seconds before the car jumped the curb and knocked him down. 

Notice that in a special proceeding to stay a UM arbitration where the striking vehicle's insurer has denied liability coverage based on its insured's report that the vehicle was stolen, the initial burden of establishing the striking vehicle's nonpermissive use falls on the additional respondent insurer and owner of the striking vehicle, not conversely on the petitioning UM insurer.