In New York, a vehicle owner is generally liable for injuries or property damage resulting from the negligent use or operation of the vehicle by a person who has express or implied permission to use or operate it. New York Vehicle & Traffic § 388. Federal law, however, prevents this state law from applying to vehicle owners who are in the business of leasing or renting vehicles. A federal law known as the Graves Amendment provides that a vehicle owner that is in the business of renting or leasing vehicles will not be vicariously liable under state or local owner liability laws for personal injuries or property damage resulting or arising out of the use, operation, or possession of a vehicle that the owner has rented or leased to another person, as long as neither the owner nor its affiliate has engaged in negligence or criminal wrongdoing. 49 U.S.C. § 30106. A car rental company or a dealer who leases out vehicles, therefore, will not be liable for injuries resulting from accidents that occur while the vehicle is rented or leased.
The New York Appellate Division, First Department, recently applied the Graves Amendment to a case involving a rented U-Haul vehicle. In Villa-Capellan v. Mendoza, the plaintiff’s vehicle was involved in a collision with a vehicle owned by defendant U-Haul Company of Arizona and driven by the other defendant. The defendant driver had rented the vehicle on the day of the collision and returned it the next day.
Although the plaintiff had speculated that the defendant owner was negligent in maintaining the vehicle, the appellate division found that the defendant owner had sufficiently shown that the accident was not caused by negligent maintenance. In fact, there was evidence that the defendant driver was offered cash to cause the accident. Finding that the Graves Amendment applied, the appellate division held that the defendant owner was entitled to summary judgment.
Unfortunately, the plaintiff in this case may have been the victim of some sort of fraudulent scheme involving automobile collisions. Most automobile accidents, however, are not intentionally caused. While it certainly places significant limits on the liability of vehicle owners who are in the business of leasing or renting vehicles, the Graves Amendment does not necessarily prohibit all recovery in an automobile accident involving a rented or leased vehicle. The driver remains liable for his or her own negligence and may have insurance that will cover the accident. Even when there is no insurance, a driver may have other assets. The owner also remains liable for its own negligence. Furthermore, the Graves Amendment applies only to leased or rented vehicles and to owners who are in the business of leasing or renting vehicles. If either of those elements is not met, the Graves Amendment immunity will not apply.
If you have been injured in an automobile accident with a leased or rented vehicle, a knowledgeable New York automobile accident attorney can evaluate your case to determine all sources of potential recovery.
The Law Offices of Nicholas Rose, PLLC offers free consultations. Call 1-877-313-7673.
Villa-Capellan v. Mendoza, January 16, 2015, Supreme Court of the State of New York, Appellate Division, First Judicial Department
More Blog Entries:
Marble v. Faelle – Pedestrian Injury Case Challenges Graves Amendment Defense, June 14, 2014, New York City Injury Lawyer Blog