Question of Fact on Whether Rental Car Company Verified Facial Validity of Renter's Driver's License Precludes Summary Judgment on Graves Amendment

AUTO – GRAVES AMENDMENT – RENTAL COMPANY'S NEGLIGENCE – FACIALLY VALID DRIVER'S LICENSE
Palacios v. Aris, Inc.
(EDNY, decided 3/11/2010)

On November 4, 2007, Aris, Inc., rented a 2007 Toyota Camry to Bursztyn and Azriel.  Azriel had asked Bursztyn to help him rent a car because Azriel did not have a credit card with insurance and thus lacked the ability to rent a car by himself.  Bursztyn's license was already on file at Aris from prior rentals, so he was not required to present a license at the time of rental. When Aris rented the car to Bursztyn, Bursztyn informed Aris that Azriel would be driving the vehicle.  Because he would be driving the vehicle, Azriel provided Aris with a paper that was asserted to be an Israeli driver's license that was in Hebrew and contained no photograph.  Upon being shown that document, Aris rented the vehicle to Bursztyn and Azriel. Azriel left with the Camry, but Bursztyn departed separately.

Later that same day, while Azriel was driving the Camry, there was a collision between the Camry and another vehicle.  The impact of the collision caused one of the cars to land on the nearby sidewalk on top of a pedestrian, plaintiff Palacios.

At the scene, Azriel was issued a ticket for being an "unlicensed operator." Azriel did not appear in court to answer the ticket, and on June 16, 2008, the New York State Department of Motor Vehicles suspended Azriel's privilege to operate a motor vehicle in New York State for his failure to appear in court.  On October 21, 2009, Azriel appeared in court to answer the "unlicensed operator" charge against him and pled guilty to the charge. Plaintiff asserted in this action that as of November 4, 2007, the date of the accident, Azriel's privilege to operate a motor vehicle in New York State had been suspended six times on five different dates.

Aris moved for summary judgment based on the Graves Amendment, a federal statute which exempts vehicle lessors and renters from liability for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if the owner is engaged in the trade or business of renting or leasing motor vehicles and there is no negligence or criminal wrongdoing on the part of the vehicle's owner.  49 U.S.C. § 30106(a)

In opposition to Aris's motion, plaintiff argued that Aris was negligent because it failed in its statutory duty not to rent a vehicle to an individual who did not have a valid driver's license or did not have the privilege to drive in New York State under Vehicle & Traffic Law § 250.  

In denying Aris's motion, United States District Court Judge Joseph Bianco held that

with respect to Aris's reliance on the Graves Amendment, plaintiff has presented evidence that Azriel, when renting the car from Aris, presented a document purporting to be an Israeli driver's license that was in Hebrew and contained no photograph. No other identification was presented. Moreover, there is a factual dispute as to whether the Israeli license presented by Azriel was valid. The Court recognizes there is no duty under New York law for rental car companies, once they determine that the lessee has a facially valid driver's license, to conduct an investigation of the renter, including his or her driving history. However, after reviewing the record in the light most favorable to plaintiff, the Court concludes that plaintiff has raised genuine issues of material fact as to whether the license was valid, whether Aris was negligent in failing to determine whether the purported Isareli license was valid on its face, and whether, given the lack of a photograph, the license presented belonged to the person who was seeking to rent the vehicle. Thus, under the particular circumstances of this case, summary judgment under the Graves Amendment is unwarranted.

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Although foreign drivers may operate vehicles in the United States, "[a]n entity can be held liable for knowingly allowing an unlicensed driver to operate a vehicle." Pacho v. Enterprise Rent-A-Car Co., 572 F. Supp. 2d 341, 352 (S.D.N.Y. 2008). Thus, even though the Graves Amendment may allow a rental car company to escape vicarious liability for another's negligence, by the Graves Amendment's very terms, the rental car company will still be liable if the company itself is negligent. Accordingly, a rental company may be liable if it allows an unlicensed driver, or a driver without a valid license, to operate a vehicle.  Although this obviously requires that rental car companies assess the facial validity of a driver's license before renting to that driver or otherwise allowing that driver to operate a vehicle, this duty does not require the company to investigate a renter's driving record where that renter has presented a valid driver's license. See, e.g., Sigaran v. Elrac, Inc., 22 Misc. 3d 1101[A], 875 N.Y.S.2d 824, 2008 NY Slip Op 52569[U], 2008 WL 5381494, at *6 [N.Y. Sup. Ct. 2008] (finding failure to state a cause of action when "[p]laintiffs failed to cite any legal authority that ELRAC was under an obligation to check Fernandez's driver's record beyond verifying that he had a valid driver's license"); Vedder v. Cox, 18 Misc. 3d 1142[A], 859 N.Y.S.2d 900, 2008 NY Slip Op 50408[U], 2008 WL 595857, at *1-2, 4 [N.Y. Sup. Ct. 2008] finding no evidence or legal basis from which to conclude that rental company had a duty to investigate the driving record of a defendant who had a "history of suspended driving privileges," particularly without proof that the company rented the vehicle to the defendant "during a time that his driving privileges were suspended"); accord Barksdale v. Nat'l Bank of Detroit, 186 Mich. App. 286, 463 N.W.2d 258, 260-61 (Mich. App. 1990); Osborn v. Hertz Corp., 205 Cal. App. 3d 703, 710, 252 Cal. Rptr. 613 (Cal. App. 1988). However, if Aris was negligent in failing to exercise reasonable care to determine that the license was facially valid and belonged to Azriel, then the Graves Amendment would not protect Aris from liability.

Interestingly, the court also denied Bursztyn's motion for summary judgment, who argued that he had only assisted Azriel in renting the car and owed no duty to the plaintiff:  

Under the particular circumstances of this case, the Court cannot determine as a matter of law on summary judgment whether Bursztyn negligently entrusted this vehicle to an unsafe or unlicensed driver.  At Aris, in the presence of Bursztyn, Azriel presented a temporary license that was written in Hebrew and lacked a photograph of its holder. There is a material issue of fact regarding whether, in light of the circumstances of this transaction--the fact that Bursztyn had just met Azriel that day, was unaware whether Azriel had a valid driver's license, and saw Azriel procure a temporary foreign license without a photograph on it--Bursztyn should have been reasonably concerned about entrusting Azriel with a vehicle and was negligent in doing so.  Based on the information in the record, it cannot be determined on summary judgment as a matter of law whether Bursztyn knew, or should have known in the exercise of reasonable care, that permitting Azriel to drive the vehicle "represented an unreasonable risk of harm to that person or to others because of [Azriel's] incompetence to handle it safely." See Good, 564 N.Y.S.2d at 952. Viewing these facts in a light most favorable to the plaintiff and drawing all reasonable inferences therefrom, plaintiff has put forth sufficient evidence to survive summary judgment on this issue.

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