Buyer with Control of Vehicle Deemed Owner for Insurance Purposes

In Fairmont Specialty v. Estate of Hoohuli, 2009 WL 2252236 (D.Hawaii), defendant Tessie Kotrys signed a contract with South Bay Auto to purchase a used vehicle. She signed a credit contract to finance the purchase through a third party and was given possession of the vehicle. Before Kotrys' financing for the vehicle was approved, she crashed the vehicle in a single-car accident, sustaining injuries and killing her passenger, Hoohuli. Kotrys and the Estate of Hoohuli asserted that South Bay Auto owned the vehicle at the time of the accident such that the vehicle was insured by South Bay Auto's garage policy, provided by plaintiff Fairmont Specialty.

The Hawaii district court examined the plaintiff's motion for summary judgment on Kotrys' claim for liability insurance coverage, plaintiff's motion for summary judgment on defendants' claims for UM/UIM and PIP coverage, and the Estate of Hoohuli's motion for summary judgment on all claims.

The court determined that Kotrys, who had entered into a valid sales agreement and took possession and control of the vehicle, was the owner of the vehicle for insurance purposes at time of accident. Therefore, the vehicle was not covered by South Bay 's garage policy. Consistent with her obligations under the sales agreement, the credit contract, and Hawaii's No Fault Law, Kotrys signed an “automobile insurance statement” affirming to South Bay that her insurance would cover the vehicle. The mere fact that the financing failed and South Bay could have repossessed the vehicle did not, in and of itself, mean that South Bay was the owner where the seller, which retained title, never exercised its option to cancel the sale and retake possession of the vehicle.

Thus, the court granted the plaintiff's motion for summary judgment as to the defendants' claims for UM/UIM and PIP coverage, granted the plaintiff's motion for summary judgment as to the defendant Kotrys' claim for liability insurance coverage, and denied the defendant Estate of Hoohuli's motion for summary judgment as to all claims.