I am saddened by the deaths of two innocent people who were killed last Sunday in Louisville when a high performance vehicle (Dodge Challenger) was speeding during a test drive.
I am also saddened by the fact that some law firms were blogging away on this story seemingly within hours regarding potential legal liability and potential wrongful death lawsuits arising from this tragedy.
However, I am also concerned that the brevity of these blawg posts may be providing incomplete legal analysis as they focus on actions of the employee of the dealer in the car at the time of the crash to the near exclusion of the applicable law. Although I also believe these law firm blogs may be treading on dangerous or at least unchartered territory involving tragedies, disasters, advertising, and solicitation which may be inappropriate and insensitive in the least and violative of the advertising rules at the worst. Even so, these latter points may be the topic of future posts. Today, we will address the applicable law on the liability of a dealership to people who get hit by during a test drive of the dealer's car with an employee accompanying the test driver.
Kentucky law is pretty clear on the dealership's liability when the employee is in the car at the time of the accident. In fact, just three months ago the Kentucky Supreme Court addressed legal issues pertaining to the dealer's liability for injuries to innocent third parties caused during a test drive of one of its cars when the employee salesperson was supposed to be in the car with the customer. A close reading of this decision (footnotes!) contain a hint that the Supreme Court may be receptive to changing the law.
The Kentucky Supreme Court held in Morgan v. Scott on May 19, 2009 that the dealership did not, by adopting and then failing to follow its in-house rule requiring an employee to accompany customers on a test drive, assume a duty of ordinary care to another motorist when injured when she was hit by the dealership's car during the test drive.
However, two footnotes in this case address long-standing Kentucky law which must be addressed and considered. Although the recent news stories about the protestations of the salesman to slow down have been questioned for potential bian and also seem to be presented in the media as a factor in severing the dealership's liability, the fact that the employee/salesman was in the car at the time of the accident is a critical element of dealer liability under the current state of the law.
The Kentucky Supreme Court in a footnote that is clearly dicta, however did offer a hint that the issue may be revisited in another case in the future. Consequently, the actions of the salesman in the car is not critical to the issue of liability today, but may be critical if the issue is revisited in subsequent decisions and thus must be addressed now and will most certainly be a distinguishing point should the insurance company for the dealership appeal an adverse verdict or ruling at trial. For example, what are the salesman's obligations regarding discouraging or prohibiting the excessive speed and what affect will the law of joint venture have regarding dealership liability versus a simple bailment of property.
As the Kentucky Supreme Court noted:
It has long been the law in this Commonwealth that a vehicle's owner, such as a dealership, is not liable for injuries sustained by a third party during a test drive if the vehicle's owner or a representative of the owner, such as a salesperson, is not present in the vehicle during the test drive. On the other hand, a vehicle's owner may potentially be liable for injuries sustained by a third party if the owner or his or her representative is present during the test drive.FN5 Our holdings on those issues appear to be in accord with the general rule in these types of cases.FN6 (emphasis added).
The footnotes explain the issues further:
FN5. See, e.g., Wayne's Adm'x v. Woods, 275 Ky. 477, 121 S.W.2d 957 (1938) (“In Wilhelmi v. Berns, 274 Ky. 618, 119 S.W.2d 625, we held a dealer liable to a third person for injuries received where the car was being driven by a customer, accompanied by one of the dealer's salesmen. There, of course, it could with propriety be said that the car was actually within the control or custody of the salesman. The great weight of authority recognizes the liability of the dealer in such a situation. On the other hand, the authorities are unanimous, so far as we can discover, in holding that a dealer is not responsible, in the absence of a statute to the contrary, for injuries received by third persons where an automobile is loaned to a prospective purchaser, who is a competent driver, for trial. Clearly, the customer was acting for the dealer only in a restricted sense. It was not the purpose of the transaction to affect the dealer's relationship with third persons. Such benefit as might accrue to the dealer arose from the reactions of the customer himself, and not from dealings between the customer and third persons.”) (citations omitted); Johnson-Kitchens Ford Corp. v. Shifflett, 462 S.W.2d 430, 432 (Ky.1970). (emphasis added)
FN7. Although our precedent appears to be based upon the theory that a passenger may have some control over the operation of a vehicle, we recognize that, although distinguishable from the case at hand, at least one state appellate court has opined that “[i]t is unrealistic to hold, in the present day uses of motor vehicles when heavy traffic is the rule and not the exception, that the occupant of a motor vehicle has factually any control or right of control over the driving of the operator.” Gaspard v. LeMaire, 245 La. 239, 158 So.2d 149, 154 (1963). Although also distinguishable, another state court has held that the imputation of negligence to a passenger because of the driver's negligent conduct based upon a theory that the passenger had control over the vehicle is a “legal fiction....” Watson v. Regional Transportation District, 762 P.2d 133, 138 (Colo.1988).
Also, an argument could be made that holding an automobile dealer liable for injuries resulting from a test drive only where the dealer had an employee present during the test drive could serve as a disincentive for dealers to have an employee accompany prospective purchasers on test drives. Such a diminution in the number of dealer-accompanied test drives would not appear to have the socially desirable goal of furthering public safety, since implicit in the theory that a dealer should only be liable when it has a representative present is an assumption that test drivers will operate vehicles more carefully when a representative of the dealer is present (based upon the now-disputed belief that the dealer's representative would have at least some theoretical control over the test driver's operation of the vehicle).
So, in a proper case, we perhaps should re-examine our earlier holdings pinning liability on a car dealer or other vehicle owner for injuries occurring during a test drive only if a representative of the dealer or other vehicle owner is physically present in the car during the test drive. But we need not explore further that interesting issue in this opinion because the Scotts have not challenged our holdings in this area, many of which are based upon bailment doctrine. (emphasis added).
In the rush to get a post out during the early days following this accident, the legal analysis by some may have fallen short by ignoring a Supreme Court decision so recent as three months ago containing cues and clues for potential changes in the law and portents of what may come.
As most lawyers know, this is extremely complicated as there are potential punitive damages against the driver and/or the dealership depending on the actions of the salesmen in the car and/or by permitting a prospective purchaser who was charged with speeding in 2005, which was amended to careless driving, but has no criminal history in Louisville to get behind the wheel of a "muscle" car.
Insurance coverage issues relative to limits of liability, exclusions for certain acts may come into play under the commercial general liability policy. Potential sources of insurance coverage include liability policy on the driver, the commercial general liability or garage policy of the dealer; underinsured motorist benefits and personal injury protection benefits for those who died.
Two other topics come into play for a later post or posts.
Firstly, what is the legal propriety of a law firm blogging in its firm's web site or a blog closely associated with or "mirroring" its web site on recent s,news stories involving potential cases. The lines between solicitation, advertising, commercial speech, and public speech and public commentary might need some clarification by the Kentucky Bar Association as the number of law blogs increase with little or no specific guidance beyond controlling commercial solicitation and advertising. In fact, my post may even come under their scrutiny in spite of my contention that this is a legal publication for lawyers.
Secondly, is there much difference between posts on tragedies in the news and the 30 day window prohibiting certain advertisements and solicitations following "disasters" such as what followed the Conair Crash at Lexington? The use of an embedded web page law blog (or even one that is not part and parcel of the site but closely associated with the firm's web site) to discuss recent accidents and potential lawsuits sounds like another area that the Bar Association may need to also address.
Here are some links to the stories in the Courier Journal.
Car involved in fatal crash was on test drive from auto dealership
Sunday Aug 23, 2009
Driver topped 100 mph in fatal collision, police report
Monday Aug 24, 2009
Dealer says driver told to slow down
Tuesday Aug 25, 2009
