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.

Parking Garage Found Not Liable for Injuries Caused by Stolen Vehicle

 AUTO – INJURIES FROM STOLEN VEHICLE INJURED – NEGLIGENCE – VEHICLE & TRAFFIC LAW § 1210(A)
Baldwin v. Garage Mgt. Corp.
(Sup. Ct., Kings Co., decided 1/7/2008), 
aff'd 66 AD3d 818 (2d Dept., decided 5/19/2009)

Although a bit dated, this decision just posted to the New York Official Reports yesterday, so I'll throw it up here.  Not strictly an insurance coverage case, but it involves a statute New York auto insurers occasionally  encounter in injury claims -- Vehicle & Traffic Law § 1210(a), commonly referred to as the "key in the ignition law", a violation of which renders an owner or bailee of a vehicle that is stolen liable to third parties for damages occasioned by the stolen vehicle's use. 

After stealing a vehicle from defendant's parking garage, Walker collided with Baldwin, injuring her and her son.  Baldwin sued the parking garage for her and her son's injuries, alleging causes of action based on negligence, violation of V&T § 1210, and breach of bailment obligations.

New York Vehicle & Traffic Law § 1210(a) provides:

§ 1210. Unattended motor vehicle. (a) No person driving or in charge of a motor vehicle shall permit it to stand unattended without first stopping the engine, locking the ignition, removing the key from the vehicle, and effectively setting the brake thereon and, when standing upon any grade, turning the front wheels to the curb or side of the highway, provided, however, the provision for removing the key from the vehicle shall not require the removal of keys hidden from sight about the vehicle for convenience or emergency.

Vehicle & Traffic Law §1100(a) provides that §1210 applies "upon public highways, private roads open to public motor vehicle traffic and any other parking lot." V&T § 129-b defines a "parking lot" as:

any area or areas of private property near or contiguous to and provided in connection with premises having one or more stores or business establishments, and used by the public as a means of access to and egress from such stores and business establishments and for the parking of motor vehicles of customers and patrons of such stores and business establishments.

 In granting the garage defendants' motion and denying plaintiffs' cross motion for summary judgment, Kings County Supreme Court Justice Gloria Dabiri held:

1. Negligence:  "The GMC defendants have demonstrated their entitlement to judgment on plaintiffs' common-law negligence claim in that it is undisputed that Walker operated the vehicle without the permission or consent of GMC (see Manning v Brown, 91 NY2d 116, 122 [1997]; Vehicle and Traffic Law §388[1]). Plaintiffs' injuries were the result of the intervening acts of the car thief and, therefore, GMC is not liable at common-law (Epstein v Mediterranean Motors, 109 AD2d 340, 344-345 [1985], affd 66 NY2d 1018 [1985]).
2. Vehicle & Traffic Law § 1210(a):  "The statute is inapplicable in this instance, as the vehicle was not stolen from a 'parking lot' as defined by Vehicle and Traffic Law §129-b . . . GMC's garage was not an 'area . . . of private property . . . provided in connection with premises having one or more stores or businesses,' or used as a means of access to and from such businesses (VTL §129-b), as in the case of the parking lot of a strip mall or shopping center. To the contrary, the GMC garage is located in the lower level of a residential building, on a street consisting of residential buildings. Thus, plaintiffs fail to meet their prima facie burden of demonstrating that the location from which the vehicle was stolen falls within the statute's definition of 'parking lot' (see Albouyeh v County of Suffolk, 62 NY2d 681, 683 [1984]).  In addition, the vehicle was not left 'unattended' as required by section 1210[a]. Rather, the deposition testimony of GMC's witness is that the key to Dr. O'Cain's vehicle was removed from a keylock and given to Mr. Walker in the mistaken belief that Walker was the vehicle's owner (see Banellis v Yarkel, 49 NY2d 882 [1980]; Merchants Ins. Group v Haskins, 11 AD3d 694 [2004]; Poss v Feringa, 241 AD2d 877 [1997])."
3. Breach of Bailment Obligation:  "[A] promisor under a contract is not liable in tort to non-contracting third-parties for negligent performance of its contractual duty (Church v Callanan Industries, Inc., 99 NY2d 104, 110-111 [2002], citing H.R. Moch Co. v Rensselaer Water Co., 247 NY 160 [1928])."

As a defense attorney, I had to smile at the decision's reference to plaintiffs' having included a request in their cross motion for sanctions against the garage defendants under 22 NYCRR § 130-1.1 for having made a frivolous motion for summary judgment.  So frivolous that the motion was granted in all respects and the complaint dismissed.  So frivolous that the Second Department unanimously affirmed the award of summary judgment to the garage defendants, with one bill of costs.  One of the reasons I like to litigate in federal court.  Rule 11 sanctions frivolous sanction requests.