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.”
The Graves Amendment, does not, however, supercede any state law that imposes minimum financial responsibility on the owner of a rental car company for the privilege of “owning and operating a motor vehicle or that imposes liability on entities engaged in renting motor vehicles for failure to meet insurance standards.” Kumarsingh at 600. Indeed the trial court in Kumarsingh had found that the defendants were liable up to the limits of the statutory limits of $10,000.00 as provided for in Florida Statute 324.021(7). Kumarsingh at 600.
Plaintiffs have tried to get around the limitations of the Graves Amendment by arguing that the Graves Amendment is unconstitutional. See, e.g., Garcia at 833. "The Graves Act was enacted pursuant to Congress’ power under the Commerce Clause of the U.S. Constitution to “ 'regulate for economic or social purposes, the passage of interstate commerce of either people or goods.' ” Garcia at 834. The Garcia Court held that the “Graves Amendment is a permissible exercise of Congress’ Commerce Clause powers.” Garcia at 837. The Garcia decision was affirmed by the 11th Circuit Court of Appeals in Garcia v. Vanguard Car Rental, USA, Inc., 540 F.3d 1242 (11th Cir. 2008).
Plaintiffs who have tried to avoid the claim-preclusion impact of the Graves Amendment by arguing that the car rental company was negligent have also been unsuccessful in circumventing the reach of the Graves Amendment. For example, in Sigaran v. ELRAC, a 2008 New York case, the plaintiffs alleged that the rental vehicle company had negligently entrusted the rental vehicle to the lessee by failing to check his driving history. The Court held that the rental car company has no further obligation than to verify that the renter has a valid driver’s license in order to qualify for the protections of the Graves Amendment. 2008 NY Slip Op. 52569(U) (Sup. St. Bronx Co., decided December 23, 2008).
To date, all of Florida’s intermediate appellate state courts that have addressed the issues raised in Garcia have reached the same conclusion as the Garcia Court. Besides Kumarsingh and Blanks (both Fla. 3d DCA cases), see, e.g., St. Orange v. White, 988 So. 2d 59 (Fla. 1st DCA 2008); Vargas v. Enterprise Leasing Co., 993 So. 2d 614 (Fla 4th DCA 2008); and Karling v. Budget Rent A Car System, 2 So. 3d 354 (Fla 5th DCA 2008).
The recent, succinct opinion by the Third DCA in Blanks should certainly drive home the point that the Graves Amendment is here to stay. Moreover, other court decisions also suggest that the exceptions provided in the Graves Amendment will be of little use in establishing the vicarious liability of vehicle rental companies absent clearly negligent conduct by rental car owners (for example, for failing to verify that the renter has a valid driver's license).
So what is an injured person(s) to do if the at-fault driver of a rental vehicle does not have automobile insurance? The injured person should still put the vehicle rental company on notice because the car rental companies may still have some degree of “damages” responsibilities under Florida Statute 324.021(7) if the renter was the at-fault driver. Also, the injured person will hopefully have uninsured (UM)/under-insured (UIM) motorists coverage through his/her own insurance company as we have discussed in a previous blog. Should you be injured because of the negligence of the driver of a rental car, you may wish to consult a personal injury attorney to discuss your rights in light of the Graves Amendment.
Disclaimer: The foregoing is not legal advice, nor should you consider it as such. You should consult with an attorney of your choosing before taking an actions which have legal actions.
