Appeals Court affirms summary judgment in negligent entrustment case

Background

The case involved a negligent-entrustment claim against a car dealership that retained the certificate of title to a vehicle involved in a motor vehicle collision. In 2017, a consumer signed an installment contract, delivery, and acceptance agreement with Quality Motors to take possession of a red Mazda M31. This agreement included a provision that this consumer would not sell the vehicle, leave it in someone else’s care, or encumber it in any way without the express, written consent of the dealership.

This consumer paid for the plates and registration, made a down payment, and began to make installment payments every two weeks. The consumer took possession and control of the vehicle, and Quality Motors submitted the application for title to the Texas Department of Motor Vehicle for processing. About a month after this purchase, this consumer – who did not have a valid driver’s license – was involved in a collision with plaintiff causing both damage to plaintiff’s vehicle and personal injuries.

In addition to the suit against the consumer, the plaintiff filed against Quality Motors on the basis that Quality Motors: 1) retained ownership of the Mazda at the time of the collision; and 2) had a duty to ensure the consumer was a licensed and competent driver; and 3) they breached that duty. Plaintiff filed a motion for summary judgment, asking the trial court to find that Quality Motors owned the Mazda at the time of the subject motor vehicle accident, in order to establish plaintiff’s negligent entrustment claim against Quality Motors. Stephen Carter and Daniel Buechler filed a cross-motion for summary judgment on behalf of Quality Motors asking the trial court to find that Quality Motors did not: 1) own or control the vehicle at the time of the accident; and 2) have a duty to ensure the consumer was licensed when it sold the vehicle to her. They also asked the trial court to enter summary judgment in Quality Motors’ favor on plaintiff’s claims of negligent training, negligence per se, and gross negligence.

After a hearing, the trial court denied the plaintiff’s motions and granted Quality Motors’s cross-motion. The plaintiff settled with the consumer but appealed the summary judgment regarding Quality Motors on her negligent-entrustment claim only. On appeal, the plaintiff/appellant challenged the trial court’s judgment in grating a motion for summary judgment for defendant/appellee Quality Motors.

Analysis

The elements of negligent entrustment are: 1) entrustment of a vehicle by the owner; 2) to an unlicensed, incompetent, or reckless driver; 3) that the owner knew or should have known to be unlicensed; 4) who was negligent on the occasion in question; and whose negligence proximately caused the accident. A plaintiff must establish that a defendant owned the vehicle in question to recover for negligent entrustment, which the law presumes that the person named on the certificate of title is the owner of the vehicle. However, there are several factors that may rebut that presumption, including payment of consideration, possession, care, management, claim of ownership, exercise of control, and the power to dispose of the vehicle. Furthermore, ownership as established by a complete transfer of possession and a contract of sale will prevail over ownership as established by the certificate of title.

It is undisputed that Quality Motors held naked legal title to the Mazda to retain its security interest in same. While this created a presumption that Quality Motors owned the vehicle, Quality Motors provided uncontroverted evidence to rebut this ownership, including: the deposition testimony of the consumer who believed that she had bought the Mazda and took possession of it; an affidavit of the owner of Quality Motors about the sale; the installment contract with the consumer; and the consumer’s proof of insurance listing the Mazda as a covered vehicle, among others. Despite the limitations Quality Motors placed on the consumer regarding the Mazda, the court found that Quality Motors presented enough evidence to rebut the presumption of ownership at summary judgment and to prove the consumer as a purchaser and not an agent of Quality Motors.

Conclusion

When the accident occurred, Quality Motors, as the naked title owner of the vehicle, had no right to possess or control the Mazda such that it should be held liable for allegedly negligently entrusting it to the consumer. The Appeals Court affirmed the summary judgment granted to Quality Motors.