INSURER DENIES CAR THEFT CLAIM

410_C232

INSURER DENIES CAR THEFT CLAIM

 

Personal Automobile

Theft

Voluntary Parting

 

 

On March 4, 2008, Barry Byrd parked his 2005 Lamborghini at a car dealership owned by David Jordan. Byrd and Jordan had an established business relationship whereby Jordan would sell cars for Byrd. If Jordan had an interested buyer, Byrd would sell the car to Jordan for an agreed-upon price. He would sign the car title over to Jordan. Jordan would then sell the car to the interested buyer. Jordan’s brother was also in the car dealership business but Byrd never had business dealings with him.

Byrd returned to the dealership and discovered that the Lamborghini was gone. Jordan’s brother told him that he had sold the vehicle. David Jordan followed up with Byrd about a week later and confirmed that the vehicle had indeed been sold. On May 28, Byrd and Jordan agreed to a sale price of $225,000, which was to be paid within 30 days. Also on May 28, Byrd cancelled the automobile policy he had maintained on the Lamborghini. The policy had been issued by United Services Automobile Association (USAA).

Byrd never received the $225,000, and the vehicle was never returned to him. By June 30, 2008, Jordan’s car dealership was closed and neither Jordan nor his brother could be located. The car dealer for the buyer claimed that she had paid Jordan’s brother $225,000 and that he had promised to deliver the title to her. She took possession of the vehicle on May 22, 2008, but she never received the title from Jordan’s brother.

According to Byrd, when Jordan contacted him on May 24, Jordan told him that the buyer had paid only part of the sale price. Byrd deposed that upon filing a theft report with the police in July 2008, he learned the buyer's identity, contacted her, and learned that she had paid more than $200,000 for the vehicle. Byrd stated that he had never agreed to sell the vehicle.

Byrd continued to make payments for the vehicle to the bank that had financed the vehicle and retained the title.

On July 21, 2008, Byrd filed a theft claim with USAA. The insurer denied the claim on the ground that there had been no criminal taking of the vehicle and there was no felonious intent to steal the vehicle. Byrd filed suit against USAA, alleging breach of contract and bad faith. The trial court found in favor of USAA as a matter of law. Byrd appealed.

The relevant portion of the policy stated: “Loss means direct and accidental damage to the operational safety, function, or appearance of, or theft of, your covered auto . . .” On appeal, USAA argued that, while it was undisputed that the proceeds from the sale had been stolen, there was no evidence that the vehicle itself was stolen at the time the policy was in effect. Byrd argued that the loss of his vehicle resulted from theft by taking and theft by conversion, which the policy covered.

The Court of Appeals of Georgia agreed with Byrd. The court noted that there was evidence from which a jury could find the fraudulent intent required to commit theft by conversion. Jordan’s brother allegedly told the buyer’s dealer that Byrd had consented to the sale of the car when in fact he had not. In addition, Jordan allegedly told Byrd he would pay him $225,000 within 30 days but he never did. Finally, there was evidence that by the end of June the dealership was closed and neither Jordan nor his brother could be located.

The court rejected USAA’s argument that Byrd had ratified the sale by agreeing to the sale price. According to the court, by the time Byrd agreed to the sale price, the car was already in the possession of the buyer’s dealer. Based on this evidence, the appeals court decided that the trial court had erred by finding in favor of the insurer as a matter of law. The court concluded that there was a genuine issue of material fact as to whether Jordan’s brother had sold Byrd’s car with the fraudulent intent required to commit theft within the meaning of the policy.

The decision of the lower court was reversed.

Byrd vs. United States Automobile Association-No. A12A001-Court of Appeals of Georgia-June 26, 2012-2012 WL 2384426 (Ga. App.)