Readers often ask where I find “Legal Files” column ideas. Many times, they come from suggestions from SCMers, so if you spot something interesting, feel free to email a tip. This story came from my first and most loyal reader, Publisher Martin. Not usually a man of few words, his email contained just a link to a news report and the question, “Who owns this car now?”

Setting the stage

Picture yourself living happily in a $15 million, 12,643-square-foot mansion on an acre and a half in Atherton, CA. If you’ve never heard of it, Atherton is about 30 miles south of San Francisco, near Stanford University. It is one of the wealthiest neighborhoods in the United States. You are in the midst of a big landscaping project when the excavation crew tells you that they found something buried, something big. Closer investigation reveals that it is a Mercedes-Benz 560SL.

The police arrive and quickly bring in the crime lab to take over. Next come the cadaver dogs, who make some “slight hits,” suggesting there may be human remains present, but this turns out to be a false alarm. All they find is an intact 560SL, filled with a number of bags of unused concrete, all buried four to five feet underground.

Identifying the culprit

KTVU, the local Fox TV affiliate, reported that the Mercedes had been there for about 30 years, so the current homeowners were not suspected of any involvement in its burial. A little research discovered that the house was built by Johnny Bocktune Lew in 1990. Apparently, Lew had a “checkered” past.

He was raised in Hong Kong and served as a police officer there for a time before moving to the U.S. in 1959. In 1961, he married a cousin, and they lived in San Francisco and then Los Angeles.

In 1964, while enrolled in junior college in L.A., he became romantically involved with a fellow student. The next year, the 21-year-old woman died from a gunshot wound in Lew’s apartment. Lew claimed it was a suicide, but he was convicted of her murder. Three years later, he was released from prison when his conviction was overturned by the California Supreme Court on the basis that inadmissible hearsay evidence had been used to convict him. It does not appear that he was retried.

In 1977, Lew was convicted of the 1970 murder of his girlfriend and the attempted murder of her father. Lew fled the country after the shootings, reportedly for Hong Kong. The Royal Canadian Mounted Police identified him after he enrolled at the University of Manitoba in 1976, and he was extradited to the U.S., where he was convicted. He spent three years in jail for those crimes.

Then in 1999, he was accused of hiring some men to take his 56-foot boat “out west of the Golden Gate Bridge into international waters and put it on the bottom” so he could claim the insurance money. He reportedly paid them $50,000 — $30,000 in cash and $20,000 in gold watches — and reported the boat stolen. The henchmen turned out to be undercover cops, who hid the boat and told Lew they had sunk it. Lew was arrested for insurance fraud; however, it does not appear that he was convicted.

Lew’s daughter told the San Francisco Chronicle that the family had lived in the Atherton house in the 1990s, but that Lew had moved to Washington state and died there in 2015.

What about the car?

It appears that Lew owned the Mercedes when it was buried. It carried a customized plate that was linked to him, and he reported it stolen to his insurance company in 1992. Lew collected about $87,000 from the insurance company for the loss. The police believe the Mercedes was buried on the site at the time that it was reported stolen.

Although burying your car in your yard might violate some local land-use and trash-dumping ordinances, it’s not likely to be a crime. Reporting it stolen to collect the insurance money is a crime, of course, but everyone wonders if there was something more going on. The most confusing part is the presence of the bags of unused concrete. It’s not like the car needed to be weighed down to keep it from floating. Unfortunately, Lew is no longer here to explain if anything more than insurance fraud was involved.

Since the insurance company paid the theft claim, it probably acquired ownership of the Mercedes. That is the usual — although not the universal — result, and depends upon the terms of the policy and the relevant state law.

Insurance policies frequently provide that if a total loss occurs and the insurance company pays the claim, it acquires the salvage rights to the car. The same result can arise under general legal principles of subrogation.

Modern specialty policies usually contain provisions that require the insurer to offer the recovered property back to the owner by refunding the amount you were paid. But this is an older policy and probably does not have such a provision. Even without such a contractual obligation, insurers have often offered the recovered property back to the owner as a courtesy. But fat chance of that when the owner is the one who committed the fraud.

It seems pretty clear that the current homeowners have no claim to the car even though it was buried on their property. They probably don’t care, as after having been buried for 30 years, the Mercedes isn’t really worth owning. It would be a much more interesting question if the car were a rare vintage Ferrari or something similar.

But top of mind for the homeowners is probably what to do with their yard. They already have a swimming pool, so who is going to fill that 560SL-sized hole? That’s going to take a lot of expensive fill dirt.

Unfortunately, it isn’t going to be the car insurance company. They didn’t bury the car there — Lew did. And it’s too late to bring a claim against Lew’s estate. It is possible, although perhaps not probable, that their homeowner’s insurance will provide coverage. If not, they would seem to be spending their own money.

Lesson learned

Crime did pay here, if only because Lew died before anyone found out what he did. But that isn’t the lesson.

Rather, we should all take a moment to think about our theft coverage on our collector cars. If your car is stolen and not recovered, will your policy fully compensate you for your loss?

Most collector-car policies use an agreed value for the car. If it suffers a total loss, they pay the agreed value without any questions. That’s great when the agreed value is accurate, but if it’s an outdated value that is below market, you’re stuck. For that reason, it’s critical to be sure that your agreed values are market-correct. Some collector-car policies build in automatic increases, which can be a lifesaver in a rising market. But those escalators can still be inadequate.

You should also consider what happens with the salvage. If it goes to the insurance company, that can be a double whammy if the agreed value is below the current market. Some insurance policies allow you to keep the salvage rights, but that may result in a lower loss payment.

Both of these terms become critical after the theft occurs. But at that point, there is nothing to be done about undesirable policy terms. Now is the time to make any necessary adjustments. ♦

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