A Graves Amendment Update -- New York

For all actions commenced on or after August 10, 2005, the "Graves Amendment" provides vehicle renters and lessors with a statutory basis for dismissing vicarious liability claims in motor vehicle accident lawsuits.  This amendment to the Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005: A Legacy for Users ("SAFETEA") provides in relevant part that:

[a]n owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), 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-

(1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and

(2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner).  49 U.S.C. § 30106(a). 

For purposes of the Graves Amendment, section 30102(a)(6) of Chapter 301 of Title 49 of the United States Code, entitled Motor Vehicle Safety, defines "motor vehicle" as "a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways, but does not include a vehicle operated only on a rail line."

Motor vehicle rental and leasing defendants use the Graves Amendment as a tort defense to indirect or vicarious liability under state laws such as New York's Vehicle & Traffic Law § 388.  In pertinent part, that statute provides:

§ 388. Negligence in use or operation of vehicle attributable to owner.

1. Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner. Whenever any vehicles as hereinafter defined shall be used in combination with one another, by attachment or tow, the person using or operating any one vehicle shall, for the purposes of this section, be deemed to be using or operating each vehicle in the combination, and the owners thereof shall be jointly and severally liable hereunder.

2. As used in this section, "vehicle" means a "motor vehicle", as defined in section one hundred twenty-five of this chapter, except fire and police vehicles, self-propelled combines, self-propelled corn and hay harvesting machines and tractors used exclusively for agricultural purposes, and shall also include "semitrailer" and trailer" as defined in article one of this chapter, whether or not such vehicles are used or operated upon a public highway. For the purpose of this section, self-propelled caterpillar or crawler-type equipment while being operated on the contract site, shall not be defined as motor vehicles.

AUTO – GRAVES AMENDMENT – RENTED TRUCK – RESTRICTED DRIVER'S LICENSE – FAILURE TO PRODUCE RENTAL POLICIES AND PROCEDURES PRECLUDES SUMMARY JUDGMENT – NEGLIGENT ENTRUSTMENT THEORY
Byrne v. Collins
(Sup. Ct., Kings Co., decided 11/24/2009)

A Budget franchisee rented a Budget truck to JBG Trucking.  The rental agreement provided that any authorized employee of JBG with a valid driver's license was permitted to operate the vehicle upon presentation of a valid driver's license by the company employee who picks up the vehicle.  Jamie Collins presented a restricted driver's license to the Budget location and, while driving the rented truck, struck and killed the plaintiff's decedent, who was riding a bicycle.  Plaintiff alleged that the Graves Amendment did not apply because the Budget defendants knew or should have known from Collins' presentation of a restricted driver's license that he had a history of drug and/or alcohol related offenses.  In opposition to the Budget defendants' motion to dismiss plaintiff's complaint and for summary judgment, plaintiff argued that the Budget defendants negligently entrusted the rented truck to Collins, and that their negligence precluded application of the Graves Amendment's vicarious liability exemption. 

While agreeing that the presentation of a restricted license "does not, in and of itself, compel a motor vehicle rental agent of average ken to scrutinize the renter", Kings County Supreme Court Justice Francois Rivera ruled that the Budget defendants had not carried their burden of establishing their entitlement to summary judgment because they had not submitted their written rental policies and procedures and established that the Budget franchisee followed those policies and procedures in renting the truck to JBG:

However, at this juncture we cannot find that the moving defendants are entitled to summary judgment as a matter of law. Upon searching the record, the Court finds that triable issues of material fact remain regarding whether Perfect possessed special knowledge of any propensity by Collins to operate the subject truck in an unreasonably dangerous way. Specifically, the moving defendants have not tendered any evidence establishing that Perfect followed the proper policies and procedures required of Budget rental locations before renting vehicles to drivers.^[FN9] Nor does the moving defendants' reply address their failure to produce such documents. Although we decline to impose upon motor vehicle rental agents any obligation to check a renter's driving record beyond verifying that he or she has a valid driver's license, absent further evidence of the unsuitability of the renter and the agent's knowledge thereof, we need also conclude that such precautions are not part of Budget's internal policies and procedures before granting summary judgment to the moving defendants. The moving defendants have not persuaded us of that fact with their showing. Having failed to eliminate all material issues of fact from the case, they do not meet their prima facie burden of establishing that they had no reason to doubt Collins' ability to operate a motor vehicle properly and safely. The Court need not examine the sufficiency of the supporting evidence in plaintiff's opposition papers.

Editor's Note (December 15, 2010) ~~ The Appellate Division, Second Department, reversed this decision on October 19, 2010 and granted the Budget defendants' motion for summary judgment, holding that "[c]ontrary to the plaintiff's contention, the appellants' failure to provide copies of any internal policies as to investigation of potential renters with restricted licenses constitutes an insufficient basis upon which to deny their motion for summary judgment. Even if such a policy had been violated, under the circumstances of this case, such violation would not constitute actionable negligence (see Lambert v Bracco, 18 AD3d 619, 620; Newsome v Cservak, 130 AD2d 637, 638)."

AUTO – GRAVES AMENDMENT – RENTED VEHICLE – NO OBLIGATION TO VERIFY VALID STATUS OF RENTER'S DRIVER'S LICENSE
Tedesco v. Warner
(Sup. Ct., Suffolk Co., decided 12/23/2009)

Elrac, Inc. (Enterprise Rent-A-Car) rented a car to Jennifer Warner on March 10,2006.  Warner presented her driver's license and information regarding her automobile insurance coverage. The car rental agreement that Warner signed included a provision requiring the driver to certify that her driver’s license was valid.  Erlac's regional loss manager testified that although Elrac employees input information appearing on the face of a customer’s driver's license into its computer system, Elrac had no computer system which would have enabled an Elrac employee at a rental location to determine whether a customer's driver’s license was suspended. Elrac argued that its business practice of requiring customers to both present facially valid drivers’ licenses and to confirm that the licenses were valid by having the customer sign the acknowledgment section of the rental agreement satisfied its obligation under Vehicle & Traffic Law § 509(4) ("No person shall knowingly authorize or permit a motor vehicle owned by him or in his charge to be operated [by an unlicensed driver].") to ensure that it rented only to competent drivers.

In granting summary judgment to Elrac, Suffolk County Supreme Court Justice Peter Mayer rejected plaintiff's argument that Elrac violated Vehicle & Traffic Law § 509(4) and held:

Plaintiff's sole cause of action against Elrac is for negligence premised upon its alleged duty to investigate the status of Warner’s driver’s license. The so-called Graves Amendment (USC § 30106[a][1] and [a][2]) provides that an owner of a rental vehicle shall not be liable under state law for harm to persons or property resulting from the use, operation or possession of the vehicle during the rental period.  Plaintiff, by her cause action, seeks to impose a duty upon Elrac to research its customers’ driving histories beyond verifying the existence of a valid driver’s license. Inasmuch as no such obligation exists, plaintiff's complaint, as to Elrac, must be dismissed.

AUTO – GRAVES AMENDMENT – RENTED TRUCK – QUESTION OF FACT ON RENTER'S NEGLIGENCE PRECLUDES SUMMARY JUDGMENT
Ballatore v. Hub Truck Rental Corp.
(Sup. Ct., Suffolk Co., decided 1/4/2010)

Defendant Hub Truck Rental Corp. rented a commercial truck that was involved in a motor vehicle accident.  The Graves Amendment's vicarious liability exemption does not apply if there is negligence or criminal wrongdoing on the part of the rented or leased vehicle's owner or an affiliate of the owner.  In denying defendant's motion for summary judgment pursuant to the Graves Amendment, Suffolk County Supreme Court Justice Peter Fox Cohalan ruled that Hub had failed to carry its initial motion burden of establishing that it was not negligent:

Vicarious liability is not abrogated where the injury or damages results from the negligence of the owner’s employee in the operation or maintenance of the vehicle, nor where it seems the owner was negligent in entrusting the vehicle to the operator (see, Byrne v Collins, 25 Misc 3d 1232 [A]; 2009 NY Slip Op 52395U [2009]; Luma v Elrac, lnc., 19 Misc 3d 1138 [A], 862 NYS2d 81 5 [2008]).

Here, Hub has failed to establish its entitlement to judgment as a matter of law. In his October 26, 2007 EBT testimony, Hayes Conn, Ill., Hub’s vice president of maintenance, stated that, prior to renting the subject truck to Nuzzolese on August 3, 2005, a pre-trip inspection including brakes was conducted on the truck and that one of Hub’s employees would check “air pressure leaks” in the brake system and would walk around the truck to make sure that all requirements of the inspection were properly performed. In his May 7, 2008 EBT Butler testified that, prior to the impact with the plaintiffs’ vehicle, he “put [his] foot onto the brake” and knew that he “wasn’t going to stop” because the truck he was operating had “no brakes.” There are triable issues of fact as to whether the accident was caused by the alleged brake failure and thus as to Hub’s possible contribution to the accident (see, Suitor v Boivin, 219 AD2d 799, 631 NYS2d 960 [1995]). Hub has failed to sustain its initial burden of establishing a prima facie entitlement to judgment as a matter of law.

AUTO – GRAVES AMENDMENT APPLICABLE TO LEASED TRAILER
Yoon Young Lee v. Rivera
(Sup. Ct., New York Co., decided 1/26/2010)

In Zawatsky v. Barker Materials, Ltd., 22 Misc 3d 1132(A) (Sup. Ct., Suffolk Co., 1/29/2009), the court ruled that the Graves Amendment's vicarious liability exemption applies to leased trailers.  This decision concludes the same.

In rejecting the special referee's post-hearing report and recommendation and granting Jiffy Trucking Company's motion for summary judgment, New York County Supreme Court Justice Paul Wooten held:

In support of its motion to renew and reargue defendant Jiffy Trucking Company argues that under 49 U.S.C.A.§ 13102, the term motor vehicle is defined as a: 

vehicle, machine, tractor, trailer, or semi-trailer, propelled or drawn by mechanical power...

Defendant Jiffy Trucking Company argues that at the time of the subject accident, Jiffy Trucking Company’s trailer was attached to Ponce Dynasty Corporation’s tractor, thus being “drawn by mechanical power”.  As such, the trailer is a motor vehicle pursuant to 49 U.S.C.A.§ 13102 and the Graves Amendment is applicable.  

In opposition, plaintiff argues, inter alia, that Jiffy Trucking Company’s “delivery equipment” does not qualify as a trailer as defined under the Graves Amendment.  Accordingly, defendant Jiffy Trucking Company is not in the business of leasing motor vehicles and is not afforded the protection under the Graves Amendment.

It is undisputed that Jiffy Trucking Company is an affiliate of General Trading Company Grocery and Dairy and is the owner and lessor of the trailer, that was leased to defendant Ponce Dynasty Corporation and attached to the tractor that was operated by defendant Rivera, at the time of the subject accident. Thus, pursuant to 49 U.S.C.A. § 13102, defendant Jiffy Trucking Company’s trailer qualifies as a motor vehicle and Jiffy Trucking Company is an “affiliate of the owner of the tractor-trailer, engaged in the business of renting or leasing motor vehicles” (49 U.S.C. § 30106).

Accordingly, the plaintiffs claims against Jiffy Trucking are “barred by operation of the Graves Amendment” and the case must be dismissed as to defendant Jiffy Trucking Company (Berkan v. Penske Truck Leasing Can., Inc., 535 F. Supp. 2d 341, 345-346 [WDNY 2008]; see Flagler v Budget Rent A Car System, Inc., 538 F. Supp. 2d 557 [EDNY 2008] ).

The question I have about this and the Zawatsky decision, which is light on analysis, is this:  does the definition of "motor vehicle" found in section 13102(16) of Chapter 131 of Part B of Subtitle IV of Title 49 of the United States Code, which includes a reference to a trailer, override or supersede the definition of "motor vehicle" found in section 30102(a)(6) of Chapter 301 of Part A of Subtitle VI Title 49 of the United States Code -- the Chapter in which the Graves Amendment (49 USC § 30106) appears -- which does not mention trailers?  Was Congress' omission of any reference to trailers or semi-trailers in section 30102(a)(6) deliberate, since it included those terms in section 13102(6)?  Why the different definitions in the same title, but different subtitles?  Or, is it enough that a leased or rented trailer be "drawn by mechanical power" to qualify it as a "motor vehicle" under section 30102(a0(6) and the Graves Amendment?  Or, still yet, does it not matter because New York Vehicle & Traffic Law § 388(2) includes semitrailers and trailers within the ambit of that statute?  I'm not sure this issue is settled in New York.

To read most posts about New York cases involving the Graves Amendment, click here.