August 21, 2019

Colorado Court of Appeals: Test Drive Constituted Joint Venture Between Driver and Dealership

The Colorado Court of Appeals issued its opinion in American Family Mutual Insurance Co. v. AN/CF Acquisition Corp. on Thursday, September 10, 2015.

Summary Judgment—Vicarious Liability for Negligence—Joint Venture in Operating an Automobile.

Hart asked to test drive a car she was interested in buying from defendant Go Courtesy Ford, a car dealership. A salesman accompanied Hart as a passenger on the test drive. The salesman chose the route and told her where to turn. During the drive, Hart negligently attempted to turn left in front of oncoming traffic and collided with a car driven by Kelly.

Kelly filed a claim with her insurer (American Family) for damages. American Family paid the claim and then filed this negligence action as Kelly’s subrogee against Hart and Go Courtesy Ford to recover the amount it had paid and the deductible. Hart did not defend, and the court entered a default judgment against her. She did not appeal.

Cross-motions for summary judgment were filed. American Family argued the test drive was a joint venture between Go Courtesy Ford and Hart, making Go Courtesy Ford vicariously liable for Hart’s negligence. Go Courtesy Ford argued the test drive was not a joint venture because the participants had adverse financial interests. The district court granted Go Courtesy Ford’s motion and denied American Family’s.

The sole issue on appeal was whether, as a matter of law, the test drive constituted a joint venture. For a joint venture to exist in the operation of an automobile, “two or more persons must unite in pursuit of a common purpose” and “each person must have a right to control the operation of the automobile in question.” This doctrine has been used to hold defendant passengers vicariously liable for drivers’ negligence for nearly a century. No published Colorado case has considered the joint venture doctrine in the context of a test drive. The majority rule in other jurisdictions is that when a dealer’s representative is a passenger during the test drive, the dealer is liable for the prospective purchaser’s negligence.

The Court found the district court erred in finding that Go Courtesy Ford and Hart did not share a common purpose. The test drive itself constituted a common purpose. Further, Go Courtesy Ford’s salesman had a right to control the car because the dealership owned it. Therefore, the test drive constituted a joint venture and, as a matter of law, Go Courtesy Ford was liable for Hart’s negligence during the test drive. The judgment was reversed and the case was remanded with directions.

Summary and full case available here, courtesy of The Colorado Lawyer.

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