Source: http://nycoveragecounsel.blogspot.com/2010/06/graves-amendment-held-to-exempt-car.html
Timestamp: 2017-12-11 09:20:22
Document Index: 713505321

Matched Legal Cases: ['§ 388', '§ 30106', '§ 388', '§ 388', '§ 388', '§ 128', '§ 388', '§ 388']

Coverage Counsel: Graves Amendment Held to Exempt Car Sharing Company from Vicarious Liability
PERSONAL AUTO – GRAVES AMENDMENT – VICARIOUS LIABILITY – VEHICLE & TRAFFIC LAW § 388
Minto v. Zipcar New York, Inc.
(Sup. Ct., Queens Co., decided 6/15/2010)
For all actions commenced on or after August 10, 2005, the "Graves Amendment" provides persons or companies engaged in the trade or business of renting or leasing motor vehicles 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-
(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.
This case addresses the question of whether a car sharing business, such as Zipcar, can be said to be "engaged in the trade or business of renting or leasing motor vehicles" within the meaning of the Graves Amendment. In the opinion of Queens County Supreme Court Justice Roger Rosengarten, it can and it is.
This personal injury action arose from a May 25, 2009 motor vehicle collision, in which plaintiff Leslie Minto alleged that his vehicle was rear-ended while stopped at a red light by a vehicle driven by defendant Dale Douglas. Douglas had the use and possession of his vehicle pursuant to his membership in defendant Zipcar New York, Inc. Zipcar is a membership-based business that, after an application process and pursuant to a “membership contract,” provides cars to its members for an hourly or daily charge. Gas and insurance are included in the hourly or daily charge. Zipcar had leased the vehicle Douglas was driving from its title owner, non-party Union Leasing.
Plaintiff moved for summary judgment on the issue of liability against both Douglas and Zipcar. In opposition to plaintiff's motion, Zipcar initially argued that it could not be held vicariously liable under New York Vehicle & Traffic Law § 388 because it was not the "owner" of that vehicle, as that term is defined in Vehicle and Traffic Law § 128. The court rejected that argument, finding that Zipcar had obtained exclusive use of the vehicle from Union Leasing pursuant to the vehicle's lease. In the opinion of the court, the fact that Zipcar relinquished exclusive use of the vehicle to its members did not alter that conclusion.
Zipcar also argued that the Graves Amendment applied to exempt it from vicarious liability under Vehicle & Traffic Law § 388 because it was in the "business of renting or leasing motor vehicles". In response to that argument, plaintiff pointed out that Zipcar's own website distinguishes its vehicles from "traditional rental cars", telling prospective customers that being a Zipcar member is “more convenient, cost-effective and more fun than renting” and “you could rent a car (but that would be silly)”. On that point, the court found, however, that "these marketing statements do not resolve the question presented by Plaintiff’s motion. That Zipcar advertises itself by drawing contrasts to 'traditional rental cars,' does not foreclose the possibility that it is nevertheless also in the rental car business, although not of a traditional sort."
Turning to the question of whether Zipcar's car sharing business could be said to be the "renting or leasing vehicles" within the meaning of the Graves Amendment, Justice Rosengarten held:
In determining whether the Graves Amendment applies to a car-sharing company such as Zipcar, the Court begins with the statutory text. Maraia v. Orange Regional Med. Center, 63 A.D.3d 1113 [2d Dept. 2009]. The Graves Amendment does not define “the trade or business of renting or leasing motor vehicles,” or its constituent terms “renting” and “leasing.” The consistent and established understanding of “leasing” is the “transfer of the right to possession and use of goods for a term in return for consideration.” UCC 2-A-103(j); see also First Franklin Sq. Assocs., LLC v. Franklin Sq. Prop. Account, 15 A.D.3d 529, 532 [2d Dept. 2005] (“The central distinguishing characteristic of a lease is the surrender of absolute possession and control of property to another party for an agreed-upon rent.”); Black’s Law Dictionary (8th Ed., 2004) (“To grant the possession and use of (land, buildings, rooms, movable property, etc.) to another in return for rent or other consideration.”) Black’s Law Dictionary defines “rent,” used as a noun, as the “[c]onsideration paid, usu. periodically, for the use or occupancy of property (esp. real property).” (8th Ed., 2004.) “When used as verbs, the words ‘lease’ and ‘rent’ are synonymous.” Zizersky v. Life Quality Inc., 21 Misc. 3d 871, 878 [N.Y. Sup. 2008] (citing Richards v. Princeton Ins. Co., 178 F Supp 2d 386, 395 [SD NY 2001]). Zipcar’s contract with Douglas allowed him to “use Zipcar’s vehicles, to the extent available, in accordance with the terms of this Contract and subject to paying the corresponding fees.” (Supp. Opp., Exh. C.) This bargain – use of a car in exchange for a fee – appears little different from “traditional rental car[ ]” companies, notwithstanding Zipcar’s marketing statements that contrast it with those companies. The Court finds that Zipcar is in “the trade or business of renting or leasing motor vehicles” as those words are traditionally and plainly understood.
The court also found that the allegation in plaintiff's complaint that Zipcar was negligent “in the manner they rented their vehicles to the people” did not preclude summary judgment from being granted to Zipcar. While acknowledging that the Graves Amendment does not preempt such claims of direct negligence, the court noted that plaintiff did not attempt to offer any evidence or argument in support of these allegations in its moving papers:
The only relevant evidence offered is by Zipcar, which states in a sworn affidavit from a company official that its policies require a valid driver’s license for at least one year and no record of an alcohol violation for at least seven years prior to renting, and that these policies were followed before renting to Douglas. (Zipcar Opp. Exh. A.) With the record containing no conflicting evidence, the Court finds Plaintiff’s claim for direct negligence cannot withstand summary judgment.
In light of the plaintiff's attempted use of Zipcar's marketing statements to disqualify it from the Graves Amendment's vicarious liability exemption in this case, will Zipcar change its website statements to distance itself less from traditional car rental businesses?
To read more Coverage Counsel posts about New York cases involving the Graves Amendment, click here.
Posted by Roy A. Mura at 11:20 AM
Labels: Auto, Graves Amendment, Rental Car, Vehicle and Traffic Law § 388