Rental Car + Rental Truck Accident -- "Graves Amendment" Not Applicable

AUTO – GRAVES AMENDMENT – RELATION BACK DOCTRINE
Tirado v. Elrac Inc.
(1st Dept., decided 8/5/2008)

Because vicarious liability of vehicle lessors continues to impact liability coverages available to respond to third-party injuries and damages, cases involving the "Graves Amendment" (see, Graham v. Dunkley, 50 AD3d 55 [2nd Dept. 2008], appeal dismissed __ NY3d __ [2008]), continue to be of interest to insurer and tort practitioners. In this case, the First Department reminds that all actions commenced prior to the effective date of that federal law -- August 10, 2005 -- fall outside its preemptive reach, regardless of the joinder or substitution of a lessor into an action after that date.

On November 9, 2004, Tirado was injured while riding as a passenger in an Elrac (Enterprise) rental car, which collided with a U-Haul rental truck. On July 29, 2005, Tirado filed a verified complaint against the driver of the rental car, Elrac, the driver of the rental truck, and U-Haul, Inc (UHI). U-Haul Co. of New York (UHNY) filed an answer in lieu of UHI, presuming it was the intended defendant. It was later discovered (or revealed) that the truck was actually owned by U-Haul Co. of Arizona (UHAZ).

On February 6, 2006 (still within the 3-year SOL), UHNY moved for summary judgment on the ground that UHAZ, not UHNY, owned the truck, and that UHI was an inactive New York corporation that did not, on November 9, 2004, operate any rental outlets in New York State. UHNY also argued that any attempt by plaintiff to amend the complaint to add UHAZ should be denied because the amended action would be commenced subsequent to the effective date of the Graves Amendment.

Plaintiff, while admitting that the wrong company had been sued, crossmoved to amend the complaint pursuant to CPLR § 3025(b) to add UHAZ, arguing that under CPLR § 203(a), such amendment should "relate back" to the original commencement date of the action, which preceded the effective date of the Graves Amendment. Plaintiff argued that a claim against UHAZ would be based on the same occurrence as the claim against UHNY, and UHAZ was "united in interest" with UHNY.

In REVERSING Bronx County Supreme Court's granting of UHNY's motion, the First Department held:

The Court of Appeals has recently addressed the issue of when an action is "commenced" for the purpose of applying the preemption provisions of the Graves Amendment. Pursuant to CPLR 304, an action is "commenced" by filing a summons and complaint or summons with notice. "Thus, under the statute's plain language, any action filed prior to August 10, 2005 has been commenced' and therefore removed from the federal statute's pre-emptive reach" (Jones v Bill, 10 NY3d 550, 2008 NY LEXIS 1474, *4, 2008 WL 2276211, *3). In addressing the very situation that this case presents, the Court discussed New York's statutory scheme regarding interposition of claims against a "defendant or a co-defendant united in interest" (CPLR 203[c]), and the requirement that joinder of additional parties and interposition of claims against those parties must occur within the context of an existing action, holding that "[n]othing in the language of the Graves Amendment suggests that it bars vicarious claims asserted in an amended pleading in an action commenced prior to its effective date" (10 NY3d at __, 2008 NY LEXIS 1474 at *5-6, 2008 WL 2276211 at *3).
Therefore, since the action herein was commenced 12 days prior to the effective date of the Graves Amendment, it was removed from the pre-emptive reach of the statute, and plaintiff's motion should have been granted.

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