* Pursuant to 5TH CIR. R. 47.5, the Court has determined

that this opinion should not be published and is not precedent

except under the limited circumstances set forth in 5TH CIR. R.

47.5.4.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 96-50931

____________________

KEITH MCGUIRE,

Plaintiff-Appellee,

versus

CHRISTOPHER NOLEN WRIGHT, ET AL.,

Defendants,

UNITED STATES OF AMERICA,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Texas

(EP-95-CV-99)

Before POLITZ, Chief Judge, GARWOOD, and BARKSDALE, Circuit Judges.

PER CURIAM:*

Primarily at issue is whether, in finding negligent

entrustment, the district court erred in holding that the United

States should have known that a military dependent was “reckless”

when he rented its vehicle because it should have known that he was

uninsured. (In order to rent the vehicle, he falsely claimed to
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have automobile liability insurance.) We REVERSE that part of the

judgment and RENDER.

I.

The Morale, Welfare and Recreation Agency at Fort Bliss, Texas

(MWRA), is a non-appropriated fund activity of the United States

Government. One activity is renting vehicles to military personnel

and their dependents.

On 29 September 1993, Christopher Wright, a military

dependent, rented a vehicle from MWRA. First, in accordance with

MWRA policy, Wright was required to present a valid driver’s

license, a military dependent identification, and proof of

automobile liability insurance. In so doing, for the latter, he

presented a copy of a document purportedly issued by Texas Low Cost

Insurance, which provided that his insurance was in effect

(current) until December 1994, more than a year later. 

The rental agreement required Wright to return the vehicle the

following day; he failed to do so. Numerous telephone calls were

made by MWRA employees to Wright in an unsuccessful attempt to

secure the vehicle’s return. On 17 October 1993, Wright, while

driving the vehicle, hit Keith McGuire’s. After the accident, MWRA

learned that Wright’s proof of insurance had been false.

In this action, McGuire sued Wright for negligence; the United

States, pursuant to the Federal Tort Claims Act (FTCA), 28 U.S.C.

§ 2671 et seq., for negligent entrustment. The district court
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maintained supplemental jurisdiction over the negligence claim,

which was tried to a jury in August 1996. It awarded McGuire

$66,500.

Next, pursuant to the FTCA, 28 U.S.C. § 2402, the district

court ruled against the United States on the negligent entrustment

claim. It held both that Wright was reckless for failing to

maintain automobile liability insurance, which it first ruled was

required by Texas law; and that a “special condition” existed —

MWRA should have known that Wright was reckless because it should

have determined that he was uninsured. The district court treated

the jury verdict against Wright as advisory with respect to damages

against the United States, and entered judgment against the United

States and Wright, jointly and severally, for $66,500.

II.

The United States asserts that the district court erred in

holding both that Wright was a reckless driver, because of his lack

of insurance; and that such lack was a “special condition” of which

MWRA should have been aware, thus making the entrustment negligent.

(The United States also claims error in the award of interest. We

need not reach that issue.)

McGuire urges a clearly erroneous standard of review. “In

FTCA cases the clearly erroneous standard governs our review of

factual determinations, including damages.” Ferrero v. United

States, 603 F.2d 510, 512 (5th Cir. 1979); Sebree v. United States,
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567 F.2d 292 (5th Cir. 1978). But, the United States maintains

that it does not challenge findings of fact. It asserts, instead,

that conclusions of law are at issue, mandating de novo review.

See, e.g., Bartley v. Budget Rent-A-Car Corp., 919 S.W.2d 747, 752

(Tex. App.--Amarillo writ denied 1996).

We need not decide this issue. Even under the more strict

clearly erroneous standard, we find reversible error. Of course,

a trial court’s findings are clearly erroneous only “when, after

reviewing the entire evidence, we are ‘left with the definite and

firm conviction that a mistake has been committed.’” Wakefield v.

United States, 765 F.2d 55, 57 (5th Cir. 1985) (quoting United

States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).

It bears repeating that at issue is not whether Wright was

negligent. Instead, at issue is whether the United States

negligently entrusted its vehicle to Wright.

The FTCA, subject to several exceptions,

waives the sovereign immunity of the United

States, making it liable in tort “in the same

manner and to the same extent as a private

individual under like circumstances,” 28

U.S.C. § 2674, for certain damages “caused by

the negligent or wrongful act or omission of

any employee of the Government while acting

within the scope of his office or employment,

under circumstances where the United States,

if a private person, would be liable to the

claimant in accordance with the law of the

place where the act or omission occurred.”

Johnson v. Sawyer, 47 F.3d 716, 727 (5th Cir. 1995) (en banc)

quoting 28 U.S.C. §§ 1346(b), 2674. Accordingly, in FTCA actions,
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issues of liability are determined by state law. See, e.g., Brooks

v. United States, 695 F.2d 984, 987 (5th Cir. 1983). For this

negligent entrustment claim, we look to Texas law.

Under such law, the elements for this claim are: (1)

entrustment of a vehicle by the owner; (2) to an unlicensed,

incompetent, or reckless driver; (3) the owner knew, or should have

known, the driver was unlicensed, incompetent or reckless; (4) the

driver was negligent on the occasion in question; and (5) such

negligence proximately caused injury. E.g., Schneider v. Esperanza

Transmission Co., 744 S.W.2d 595, 596 (Tex. 1987); Bartley, 919

S.W.2d at 749-50; Martin v. Avis Rent-A-Car Sys., Inc., 932 S.W.2d

697, 699 (Tex. App.--Houston [14th Dist.] 1996). (Moreover, in

order to establish that the entrustment was the proximate cause of

the injuries, it must be shown that the entrustor should reasonably

have anticipated “that an injury would result as a natural and

probable consequence of its entrustment.” Schneider, 744 S.W.2d at

596.)

At issue are the second and third elements for negligent

entrustment. Again, the second element is whether Wright was

unlicensed, incompetent or reckless; the third, whether MWRA knew,

or should have known, this. 

As for that second element, it is undisputed here that, on

renting the vehicle, Wright presented a valid driver’s license; and

that there is no indication that he was incompetent. But, as
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noted, the district court found that Wright was reckless for

operating a vehicle in violation of Texas law, by failing to

maintain automobile liability insurance; the district court had

first ruled that this failure violated Texas law. As for the third

element, the court found that the MWRA should have known that

Wright was reckless, because it should have known that he was

uninsured.

Under Texas law, as the district court held, an entity engaged

in renting vehicles is required only to verify a valid driver’s

license. TEX. REV. STAT. ANN. art. 6687b § 38; see Nobbie v. Agency

Rent-A-Car, Inc., 763 S.W.2d 590, 592 (Tex. App.--Corpus Christi

1988, writ denied). Therefore, proof of automobile liability

insurance was not a prerequisite for MWRA to lawfully rent the

vehicle to Wright. Id. Accordingly, for rental purposes, MWRA was

not required to verify that the policy Wright presented was valid.

In short, the procedure employed by MWRA for renting vehicles

(requiring not only a valid driver’s license, but also military

identification and proof of liability insurance) exceeded the

requirements of Texas law. Indeed, unless the MWRA knew, or should

have known, that Wright was reckless, it had no duty to investigate

his driving record. See Bartley, 919 S.W.2d at 752.

A.

The United States contends that the district court erred in

finding that Wright was reckless solely because he operated the
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vehicle in violation of the Texas Motor Vehicle Safety

Responsibility Act. When Wright rented the vehicle, the Act

provided: “no motor vehicle may be operated in this State unless

a policy of automobile liability insurance ... is in effect to

insure against potential losses which may arise out of the

operation of that vehicle.” TEX. REV. CIV. STAT. ANN. art. 6701h §

1A(a) (current version at TEX. TRANS. CODE ANN. § 601.051).

The United States asserts that the statute does not apply to

government owned vehicles. On the other hand, the MWRA

nevertheless required proof of insurance. In any event, even

assuming the statute does apply, failing to maintain such insurance

does not per se constitute recklessness for negligent entrustment

purposes, as hereinafter discussed.

Within the context of negligent entrustment, a driver is

reckless when his driving presents a danger to others. See, e.g.,

Green v. Texas Elec. Whol., Inc., 651 S.W.2d 4, 6 (Tex. App.--

Houston [1st Dist] 1982) (“basis of responsibility under the

doctrine of negligent entrustment is the owner’s own negligence in

permitting his motor vehicle to become a dangerous instrumentality

by putting it into a driver’s control with knowledge of the

potential danger existing by reason of the incompetence or reckless

nature of the driver”) (emphasis added); Hines v. Nelson, 547

S.W.2d 378, 384-85 (Tex. Civ. App.--Tyler 1977) (same); Revisore v.

West, 450 S.W.2d 361, 364 (Tex. Civ. App. 1970, no writ)
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(“[r]eliance is generally placed upon evidence of previous traffic

violations, previous habits or intemperance in efforts to establish

incompetence or recklessness in negligent entrustment cases.”);

Broesche v. Bullock, 427 S.W.2d 89, 93 (Tex. Civ. App.--Houston

[14th Dist.] 1968, writ refused n.r.e.) (issue is whether by virtue

of the driver’s habits, he is reckless to the extent that he cannot

safely operate the vehicle).

Failure to maintain the insurance is most imprudent, to say

the least. But, as the United States urges, for negligent

entrustment purposes, it does not define per se a driver’s ability

to safely operate a vehicle. For a vehicle rental transaction,

the fact that [a driver] held and exhibited a

valid, unrestricted driver’s license [to the

rental agency] was prima facie evidence of his

competency to drive a motor vehicle and,

absent any evidence to the contrary at the

time he rented the truck, conclusively negated

the element that [the rental agency] then knew

or should have known that [the driver] was an

incompetent or reckless driver.

Bartley, 919 S.W.2d at 752.

B.

Arguably, because the Wright-was-reckless finding is clearly

erroneous, our inquiry should be at an end. But, the district

court seemed to also base recklessness, and the requisite knowledge

of it, on a “special condition” — that the insurance expiration

date should have caused MWRA to become aware that Wright was

uninsured and, therefore, reckless. Again, there is negligent
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entrustment only if MWRA knew, or should have known, that Wright

was reckless.

1.

There is no evidence that MWRA knew Wright’s proof of

insurance was false and he was, as a result, uninsured. Indeed, he

presented a valid driver’s license and military dependent

identification, and, in fact, had been a regular MWRA customer

earlier that year. Moreover, the district court noted that, on all

prior occasions, Wright had presumably complied with the rental

contract and timely returned the vehicles. In fact, there is

testimony from the MWRA employee who rented the vehicle to Wright

that, on at least two prior occasions in 1993, Wright rented

vehicles and complied with MWRA policies, including presenting

proof of insurance. Moreover, there is testimony that, if a

customer presented proof of insurance that was current (that is,

not outside the expiration date, as it was not in this case), it

was not MWRA policy to telephone the insurer to verify the validity

of the policy.

2.

Accordingly, we turn to whether MWRA should have known of

Wright’s recklessness, resulting solely from his being uninsured.

Along this line, as stated, the district court found that Wright’s

uninsured status was a “special condition” of which MWRA should

have been aware. It ruled: “In the exercise of reasonable
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diligence, the employees of the MWR[A] could have and should have

recognized that the insurance document presented by Wright was

‘fishy’”, because the expiration date was more than a year away.

In this regard, the court stated: “It is common knowledge in Texas

that automobile insurance policies are issued for periods of six

months or one year, but never longer.”

In finding this special condition, the district court relied

on Revisore, 450 S.W.2d at 364, for the proposition that, in

establishing recklessness, in addition to a driving record,

credence may be given to the condition of the entrustee at the time

the vehicle is provided to him. Id. This is certainly correct;

but, in Revisore, the entrustee had been drinking, and was a

stranger in the city where he was driving. Id. The special

condition referred to in Revisore focused on whether, at the time

of entrustment, the entrustee is “physically or mentally

incapacitated, intoxicated or for any reason lacking in judgment or

perception.” Id.; see also Louis Thames Chevrolet Co. v. Hathaway,

712 S.W.2d 602, 604 (Tex. App.--Houston [1st Dist.] 1986)

(condition at time of entrustment did not reveal that entrustee had

been drinking, was ill, or had any physical or mental impairment).

McGuire has not cited any authority, nor have we found any,

holding that the absence of automobile liability insurance, even if

known to an entrustor, is a special condition upon which negligent

entrustment may be based. Pursuant to the finding that automobile
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liability policies in Texas are never issued for a period greater

than a year, it may well be that the greater-than-a-year-expiration

date presented by Wright should have been a red flag to MWRA. But,

for negligent entrustment purposes, and as discussed supra, this

simply cannot translate into finding that MWRA should have known

Wright was reckless. To so find was clearly erroneous.

III.

The district court clearly erred in holding the United States

liable. Accordingly, that portion of the judgment is REVERSED,

with judgment RENDERED for the United States.

 REVERSED in PART and RENDERED