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In a lawsuit filed by the co-guardians of John Czajkowski, Kerns v. National Union Fire Insurance Company of Pittsburgh, Civil Action No. 16-cv-01245-MSK-CBS, (D. Colo. Sept. 13, 2017). the United States District Court D of Colorado determined the answer to this question.

On October 20, 2013, John and Dorothy Czajkowski’s (“Czajkowskis”) vehicle was rear-ended by a 2006 Jeep Liberty driven by 17-year old, intoxicated Thomas Huntley (“Huntley”). The accident caused both Czajkowskis to suffer severe and permanent physical injuries. The Czajkowskis sued Huntley in state court, and obtained a jury verdict in their favor of approximately $4.84 million.

The Czajkowskis then turned to a new party, the Larry H. Miller Group (“Miller”). Miller, an auto dealer, bought the Jeep Liberty from a private seller on or about October 12, 2013, approximately a week before the accident. On October 15, 2013, Miller sold the Jeep to David Huntley, Thomas Huntley’s father. Claiming the sale to David Huntley was never fully completed, the Czajkowskis contend that Miller remained the legal owner of the vehicle at the time of the accident. Thus, they sought payment of the judgment from Miller’s insurers. Zurich, Miller’s primary insurer, tendered its full policy limits of $50,000. The Czajkowskis then turned to Defendant National Union Fire Insurance Company (“National”), Miller’s excess insurer. Proceeding by Writ of Garnishment, the Czajkowskis sought judgment against Miller’s excess policy with National. National answered the writ by denying that the Miller policy constitutes property belonging to Huntley.

National moved for summary judgment, wanting the Court to find that the policy issued by Miller does not insure the losses caused by Huntley. National raises three primary arguments in support of its motion: first, its policy insures only those drivers who operate the vehicle with Miller’s permission, and Miller’s sale of the vehicle to David Huntley terminated Miller’s ability to grant permission to anyone to use the vehicle; second, the judgment amount does not satisfy the $5 million threshold for triggering National’s coverage; and third, even if the accident was otherwise covered by National’s policy, Huntley’s criminal conduct in driving while intoxicated triggers a policy exclusion that negates any coverage.

In this case, the Czajkowskis chose an unorthodox approach, suing with a Writ of Garnishment. In a money judgment, summary judgment is an appropriate means for determining whether there is basis for the garnishor to reach assets in the possession of the garnishee.

The question is whether Huntley was driving the Jeep with Miller’s permission, but the parties’ argument focuses on a different question: the date when Miller surrendered the ability to exercise control over who could operate the Jeep. National contends that the sale was effective upon the transfer of physical possession of the Jeep to David Huntley, a date five days prior to the accident. The Czajkowskis contend that the sale was not effective until the formal transfer of title paperwork from Miller to David Huntley, which did not happen until after the accident.

Miller acquired the Jeep from a seller on October 12, but the seller did not provide title to the Jeep to Miller on that date. Title was not transferred from that seller to Miller until November 7 (after the accident had already occurred). Miller sold the car to David Huntley on October 15, according to a written “Wholesale Purchase Agreement” that identified the vehicle and set a sale price. No money immediately changed hands, owing to Miller and David Huntley’s prior business relationship. The Wholesale Purchase Agreement acknowledged that Miller would retain a security interest in the vehicle until full payment was made.

National argues the Colorado UCC rules: unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes…physical delivery of the goods…even though a title is to be delivered at a different time or place. The Czajkowskis rely on the Colorado Certificate of Title Act, which says a person shall not sell or otherwise transfer a vehicle to a purchaser…without delivering…a certificate of title to the vehicle. The courts of Colorado have not applied those statutes in the way that Czajkowskis would like. In the controlling case, the facts are almost identical, and the Court decided non-delivery of the certificate of title does not prevent a change of ownership for insurance purposes.

The security interest retained by Miller is shown on the Wholesale Purchase Agreement form. Miller’s retained interest was solely the right to retake possession of the Jeep if David Huntley were to default on the parties’ agreement regarding payment of the purchase price. Because Miller possessed no right to control the use of the Jeep as of the time of the accident, it has no ability to authorize Thomas Huntley to drive it. Thus, Huntley’s use did not render him an insured under the Zurich policy issued to Miller, nor did it render him an insured under National’s policy.

The Court grants National’s Motion for Summary Judgment. The Plaintiffs’ Writ of Garnishment is dismissed.

The Metier Law Firm is committed to assisting people with personal injury claims throughout Colorado, Wyoming and Nebraska, and we frequently serve as co-counsel to law firms nationwide. Tom Metier recently secured the largest personal injury verdict in Colorado

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