Titleholder is not vehicle “owner”

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“Owner” is an ambiguous term that does not necessarily include a vehicle’s titleholder.

As a result of that holding in an Aug. 21 decision from the Wisconsin Court of Appeals, Laura Young, who was injured in a motorcycle accident can seek benefits from her automobile insurer, even though she was the titleholder to the motorcycle, and her auto policy contained a “drive other car” exclusion.

Young purchased a motorcycle and titled it in her name, even though she did not have a motorcycle license and had no intention of driving it. Instead, her boyfriend, Jeffrey Ramczyk, drove the cycle, and insured it.

According to the court opinion, the reason for this arrangement was that Ramczyk was going through a divorce, and didn’t want the motorcycle to become marital property.

Three weeks later, Young was riding as Ramzyk’s passenger when the couple was involved in an accident and Young was seriously injured.

Young recovered the policy limit of $100,000 on Ramczyk’s liability policy, then sought coverage from West Bend Mutual Insurance Company, which insured her automobile.

The automobile policy contained a standard “drive other car” exclusion, stating that West Bend “do[es] not provide Underinsured Motorists Coverage for ‘bodily injury’ sustained … by an ‘insured’ while ‘occupying’ … any motor vehicle owned by that ‘insured’ which is not insured for this coverage under this coverage form.”

Dodge County Circuit Court Judge John R. Storck dismissed the action, relying on the exclusion.

The Court of Appeals reversed, in a decision by Judge Paul B. Higginbotham.

The court acknowledged that, in Duncan v. Ehrhard, 158 Wis.2d 252, 461 N.W.2d 822 (Ct.App.1990), it equated “owner” and “titleholder.”

However, Higginbotham cited two other cases holding that a person who is not the titleholder may, in some circumstances, be the owner. Continental Casualty v. Transport Indemnity Co., 16 Wis. 2d 189, 114 N.W.2d 137 (1962); and Loewenhagen v. Integrity Mut. Ins. Co., 164 Wis. 2d 82, 473 N.W.2d 574 (Ct. App. 1991).

Accordingly, the court looked to the purpose of the “drive other car” exclusion to determine whether ownership is defined by the title, and concluded that it is not.

Quoting Westphal v. Farmers Ins. Exch., 2003 WI App 170, 266 Wis.2d 569, 669 N.W.2d 166, the court stated that the purpose is not to deny coverage “to the insured when he or she has infrequent or casual use of a vehicle other than the one described in the policy” but “to exclude coverage of a vehicle that the insured owns or frequently uses for which no premium has been paid.”

The court concluded that, were it to apply the narrow definition of “owner” from Duncan, the exclusion would be inapplicable whenever title to an insured’s “other car” is held by someone else, even if the insured drives the “other car” regularly, contrary to the exclusion’s purpose.

The court also concluded it would be contrary to the exclusion’s purpose to deny coverage to persons whose “other car” is theirs in title alone.

Furthermore, since “owner” is ambiguous, it should be interpreted against the insurer, and in favor of the insured.

Accordingly, the court held that the motorcycle’s title is not conclusive evidence of ownership, and remanded the case to the circuit court for factfinding on the issue.

Analysis

The court’s rationale reaches a conclusion that is not supported by its own assumptions and premises.

The court states that, if it were to determine that holding title to a vehicle equated to ownership, then, the exclusion would not apply “whenever title to an insured’s ‘other car’ is held by someone else, even if the insured drives the ‘other car’ regularly.”

The court states that this would be contrary to the purpose of the exclusion — “to exclude coverage of a vehicle that the inured owns or frequently uses for which no premium has been paid.”

However, the court’s conclusion is valid only if one accepts that a vehicle can only have one owner.

In this case, Young could be said to “own” the motorcycle, and Ramczyk be said to “frequently use” it.

There is no reason why both Young and Ramczyk cannot be deemed “owners” of the motorcycle within the meaning of the policy. Such an interpretation would be wholly consistent with the purpose of a “drive other car” exclusion, as set forth in Westphal.

The court also determines that, because an interpretation of “owner” based on title alone would deny coverage to those in Young’s situation, therefore, such a interpretation is inconsistent with the purpose of the exclusion.

However, this ignores that Young’s situation is not that of a wholly blameless injured third party.

According to the facts as stated in the opinion, the unusual ownership arrangement arose as a result of Ramczyk’s attempt to perpetrate fraud on the divorce court and his soon-to-be ex-wife. Young’s situation can be considered the result of her participation in that scheme.

The court cites Continental Casualty for the principle that, “The word ‘owner’ has no fixed meaning, but must be interpreted in its context and according to the circumstances in which it is used.”

Yet, the court ignores the less-than-innocent circumstances of this case.

If a wholly innocent third party’s recovery depended on interpreting “owner” to exclude Young, then doing so would be consistent with the holding in Continental Casualty.

However, Young does not fall in that category. Had she refused to participate in Ramczyk’s scheme, she would indisputably be entitled to UIM benefits under her policy.

Perhaps, her participation in a fraud should not be dispositive of the issue. But, it should at least be a “circumstance” that the court considered to weigh against recovery of benefits.