Vicarious Liability and the Beneficial Ownership Exception

Published October 2014 by Ted Babbitt

In Christensen v. Bowen, 39 Fla. L. Weekly S214 (Fla. April 10, 2014), the Supreme Court discussed both vicarious liability in the context of a motor vehicle accident and the beneficial ownership exception.

In that case a wrongful death action was brought regarding a vehicle co-owned by a couple who were divorced shortly after the purchase of the vehicle.  When the vehicle was purchased, both defendants signed, under penalty of perjury, an application for a certificate of title asking that the title be issued to them as co-owners.  After the couple divorced, the husband no longer had a key to the vehicle, did not reside with his ex-wife nor have access to the vehicle but the title remained in his name as the co-owner.  Nearly two years later the wife struck and killed plaintiff’s decedent.

At the trial of the motor vehicle accident case, plaintiff moved for directed verdict against the husband on the basis of vicarious liability which motion was denied.  The jury found that the husband was not liable because he did not have beneficial ownership with the right of control over the use of the vehicle.  The Fifth District reversed in Bowen v. Taylor-Christensen, 98 So. 3d 136 (Fla. 4th DCA 2012) and found that as a matter of law, the husband, whose name was still on the title, was vicariously liable for his wife’s negligence since he still retained an ownership interest in the vehicle and had given her permission to drive.

The Supreme Court took jurisdiction based upon a certified question and discussed the beneficial ownership exception to vicarious liability first recognized in Palmer v. R.S. Evans Jacksonville, Inc., 81 So. 2d 635 (Fla. 1955).  That case was an action against a car dealership which had sold a vehicle to the driver defendant who had submitted a down payment and signed a conditional sales contract and taken possession of the vehicle.  In Palmer the Court held that the car dealership had merely bare legal paper title but no longer had any authority over use of the vehicle.  As a result, the Court held that the rationale for imposing vicarious liability under the dangerous instrumentality doctrine no longer existed because the dealership had no right of control over the use of the vehicle.

The doctrine was extended by the Supreme Court in McAfee v. Killingsworth, 98 So. 2d 738 (Fla. 1957).  In that case, a vehicle was put up for sale by the title holder and a prospective buyer took the vehicle after paying a down payment and got in an accident before the title could actually be transferred.  The Supreme Court held that that was an effective sale of the vehicle and the title had transferred notwithstanding that the paper title had not changed hands.

Subsequently in Metzel v. Robinson, 102 So. 2d 385 (Fla. 1958), the Supreme Court declined to extend the beneficial ownership exception, holding that absent a conditional sales agreement, the conditions under which a defendant whose name was on the title would not be vicariously liable were extremely limited.  The Court in Metzel  held that if the title owner had any ability to exert dominion and control over the vehicle there was an ownership interest as a matter of law and thus vicarious liability.  In Aurbach v. Gallina, 753 So. 2d 60 (Fla. 2000), the Supreme Court held that the ability to exercise dominion and control of the vehicle by itself is not sufficient for vicarious liability.  Rather it is the combination of the title ownership and the ability to control which results in liability under the dangerous instrumentality doctrine.  Where there is such an ownership interest combined with some ability to control the use of the vehicle, the beneficial ownership exception only applies where a conditional sales agreement exists or the vehicle has been sold and possession has been transferred.

Thus, in Christian, supra, the Supreme Court holds that a joint titleholder has statutorily conferred legal rights to the vehicle and is, thus, in a position to exercise authority or control over the vehicle.  This is true whether or not the titleholder actually exercises any right of control and regardless of whether the titleholder intended to be an owner or titleholder of the vehicle.  The fact that the titleholder intentionally placed his or her name on the title certificate under circumstances other than the limited beneficial ownership exception is sufficient to confer vicarious liability.

The analysis of the above-cited cases requires an inquiry into what evidence of objective steps exist wherein the titleholder attempted to transfer interest in the vehicle.  It is not the subjective intent of the titleholder that is important but rather whether there was an objective attempt to rid the titleholder of an interest in the vehicle by removing his or her name from the title.  To hold otherwise, would result in every case involving vehicle ownership being subject to litigation on the basis of the owner’s intent.  It is the legal right to exercise control over a vehicle which imposes vicarious liability, not the actual exercise of control.  A titleholder has a legal right to sell or take possession of a vehicle and thus has legal ownership.  Absent evidence that the titleholder made efforts to sell the vehicle or otherwise effectively remove the legal rights conferred through title ownership, the owner remains an owner and has legal liability for the use of the vehicle.

 

NOTE:  BECAUSE A NUMBER OF PEOPLE HAVE REQUESTED COPIES OF PAST ARTICLES, A COMPILATION OF THESE ARTICLES IS NOW AVAILABLE TO MEMBERS OF THE PALM BEACH COUNTY BAR ASSOCIATION, FREE OF CHARGE, BY CALLING (561) 684-2500.  THEY ARE ALSO AVAILABLE ON THE BAR’S WEBSITE.