Assume that a driver rents a moving truck from a local vehicle leasing agent, such as Ryder or U-Haul, and subsequently causes a truck wreck. Is either the leasing company, or the local franchise agent, liable for the plaintiff’s damages?
This scenario comes up quite a bit in South Central Texas, and under a common application of established third-party liability principles, the answer appears to be “yes.” But, a seemingly-inconsequential amendment to the federal Safe, Accountable, Flexible, and Efficient Transportation Equity Act, the answer is probably “no.”
The Graves Amendment
The history of 49 U.S.C. 30106 goes back all the way to 1998, when Steven Lombardi’s Acura crashed into the back of Judith Olivera’s parked Subaru in Providence, Rhode Island. The fireball collision left Ms. Olivera a paraplegic. Since Mr. Lombardi was driving a rented vehicle, she later sued Chase Manhattan Auto Finance Corporation (CMAF), the company that owned the vehicle. Four years after the wreck, a jury awarded Ms. Olivera over $28 million in compensatory and punitive damages. CMAF subsequently ceased operations in a number of states.
A few years later, Congress began debating what would become the cleverly-named SAFETE Act. Apparently motivated by a fear that exposing leasing companies to liability would drive franchisees out of business, Missouri Republican Sam Graves introduced the amendment that bears his name. That law provides that an owner of a leased vehicle, or an owner’s affiliate, cannot be held liable for the negligence of a driver, as long as:
- The owner or agent “is engaged in the trade or business of renting or leasing motor vehicles,” and
- There is no “negligence or criminal wrongdoing” on the part of the owner or agent.
What it Means
Victims like Ms. Olivera may still be able to sue the rental car owner, in some situations, in spite of the Graves Amendment.
Under current law, a rental agent must only visually inspect a person’s driver’s license, and as long as it is facially valid, the person can rent a vehicle. However, it is the stated policy of some car rental companies (here is an example) to verify driving records prior to rental. If the company has such a policy, the renter’s driving record included an at-fault accident, a driver’s license suspension, or other unfavorable activity, and the agent gave the renter the keys to the vehicle, both the company and the agent may be liable under the theory of negligent entrustment.
Additionally, the owner or agent must be a car dealership, auto mechanic, or other entity that does not lease vehicles as a primary line of business.
Despite unfavorable law, third-party liability may still apply in a rental car or truck crash. For a free consultation with an experienced New Braunfels personal injury attorney, contact our office. We do not charge upfront legal fees in a personal injury matter.