Rental Car Companies: Off the Hook for Vicarious Liability Under the Federal Graves Amendment
Most drivers who have the misfortune of being injured through the negligence of the driver of a rental car company may not be aware of relatively recent changes to the law which make it virtually impossible to “win” a claim of vicarious liability against a rental car company where the at-fault driver was driving a rental car at the time of the accident. The latest Florida case on the vicarious liability of rental car companies reiterates this point. Blanks v. Enterprise Leasing Co., et al. (Fla. 3d DCA, Sept. 2, 2009).
The Blanks Court held in favor of the defendant rental car company by simply citing two previous opinions on the same issue, Kumarsingh et al., v. PV Holding Corp. and Avis Rent A Car System, Inc., 983 So. 2d 599 (Fla. 3d DCA 2008); and Vargas v. Enter. Leasing Co., 993 So. 2d 614 (Fla. 4th DCA 2008). The purpose of this blog is to provide background on “Graves Amendment” jurisprudence which clearly establishes that car rental companies are off the hook for vicarious liability claims.
In Kumarsingh, the plaintiffs had been seriously injured in an automobile accident caused by the driver of a rental car. The rental car driver had a valid Mexican driver but was uninsured. The plaintiffs filed a lawsuit against the rental car company “alleging vicarious liability as the owners/lessors of the car and negligent entrustment.” See Kumarsingh at 599.
The defendants argued that a federal law, 49 U.S.C. s. 30106, commonly known as the Graves Amendment, pre-empted or “trumped” Florida’s statute imposing vicarious liability of auto lessors up to the limits set forth in section 324.021(9)(b)(2)., Florida Statutes). Section 324.021(9)(b)(2)., Florida Statutes is part of Chapter 324, Florida Statutes entitled “Financial Responsibility.” The purpose of the Chapter 324 is to:
Recognize the existing privilege to own or operate a motor vehicle in the public streets and highways of this state when such vehicles are used with due consideration for others and their property, and to promote safety and provide financial security requirements and provide financial security requirements for such owners or operators whose responsibility it is to recompense others for injury to person or property caused by the operation of a vehicle. Garcia, et al., v. Vanguard Car Rental USA, Inc., 510 F. Supp. 2d 821, 828 (Fla. M.D. 2007) citing Fla. Stat. s. 324.011 (The Kumarsingh opinion cited Garcia.)
As the Garcia Court pointed out, in return for the privilege of operating a motor vehicle in Florida, Chapter 324 requires the operators of motor vehicles in Florida to establish their financial responsibility by “proof of ability to respond in damages for liability on account of crashes arising out of the use of a motor vehicle in the amount of $10,000.00 per person, $20,000.00 per accident for bodily injury and $10,000.00 for property damage per accident.” Fla. Stat. s. 324.021(7).
Section 324.021(9)(b)(2) of Florida’s Financial Responsibility Chapter pertains specifically to the liability of owners/lessors of cars where the motor vehicle lease was for a short term lease (less than 1 year). Under the statute, short term lessors were vicariously liable up to “$100,000 per person and up to $300,000 total for bodily injury and up to $50,000. The short term lessor could also be held liability for up to an additional $500,000 in economic damages if the lessee or the operator of the vehicle was uninsured or had insurance with limits less than $500,000.
See also Garcia at 829.
The Graves Amendment, which became effective on August 10, 2005, has effectively abrogated Florida’s Financial Liability laws as they applied to car rental companies under Section 324.021(9)(b) by providing that “a lessor of a motor vehicle shall not be liable under the law of any state by any reason of being the owner, for harm that arises out of the use of the vehicle during the lease period if the owner is engaged in the trade of renting vehicles and there is no owner negligence or criminal wrong-doing on the owner’s part.”
