Vicarious Liability of Car Owners & Lessors

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August 15, 2009

Generally at common law, the owner of a motor vehicle is not liable for injuries caused by the negligence of another person driving the vehicle (i.e., vicariously liable) unless the driver was acting as an employee or agent of the owner.[1] Both English and U.S. common law have traditionally relied on a tort system based on fault.[2]

The legislatures of Connecticut, New York, Rhode Island[3] and many other states have overturned this common law principle with statutes that create owner liability so that innocent victims of negligence could receive compensation for their injuries from a financially responsible insured person. In other words, the statutes were developed to take advantage of the "deep pockets" of the insured car owner. Commentators were discussing "vicarious liability" as a " 'deep pockets' practice" as far back as 1916, and the practice influence tort law through the early 1980s.[4]

Until 2003, Connecticut had an unlimited vicarious liability statute[5] dating back to the 1797 Act to Regulate Stage and other Carriage Drivers.[6] The Connecticut Supreme Court concluded that the statute's purpose was to "protect the public from unsafe drivers," and that "the legislature [was] free to conclude that costs associated with rentals to unsafe drivers should be borne by the enterprise that affords such drivers access to the highways, without requiring the injured party to show the negligence of the enterprise itself."[7] In 2003, the Connecticut Legislature amended the statute limiting liability so that lessors would not be vicariously liable if the lease of a private passenger car was for one year or more, and the car was insured for bodily injury for at least $100,000 per person and $300,000 per occurrence.[8]

In 2005, Congress passed, and the President signed, a multi-billion dollar transportation act that contained the Graves Amendment, which prohibits any state from holding those in the business of renting or leasing cars liable for injuries caused by those cars, absent any negligence on their part. If Congress has the authority to enact this law, it arises from its Commerce Clause power.[9]

The Act, officially known as the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users or SAFETEA-LU,[10] is a highway funding measure that included billions of dollars for transportation projects throughout the United States. The relevant section was an amendment to the bill sponsored by Representative Sam Graves, a Republican from Missouri, where the car rental company Enterprise Rent-a-Car is based. The Grave Amendment as enacted is called "Rented or leased motor vehicle safety and responsibility," and provides:

(a) An owner or a motor vehicle that rents or leases the vehicle to a person ... shall not be liable under the law of any State ... by reason of being the owner of the vehicle ... 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 -

(1) the owner ... is engaged in the trade or business of renting or leasing motor vehicle; and

(2) there is no negligence or criminal wrongdoing on the part of the owner.[11]

Both the Connecticut Supreme and Appellate Courts have acknowledged that this federal statute presumptively preempts Conn. Gen. Stat. § 14-154a, the Connecticut law which permits vicarious liability claims against leasing companies solely by virtue of the companies' ownership of the vehicle. See, e.g., Farmers Texas County Mutual V. Hertz Corp., 282 Conn. 535, 544 (2007) ("The amicus also notes, however, that this reasoning is effectively defeated by 49 U.S.C. § 30106, which became effective on actions commencing after the date of its enactment on August 10, 2005 (and therefore does not apply to the present case), and presumptively eliminated the vicarious liability imposed by § 14-154a); Moncrease v. Chase Manhattan Auto Finance Corp., 98 Conn. App. 665, 668 (2006) ("We note that as of August 10, 2005, federal law preempts the state law and abolishes claims of vicarious liability against lease companies. 49 U.S.C. § 30106").

All of the Connecticut Superior Court cases that have addressed this issue have held that 49 U.S.C. § 30106 preempts claims based solely on lessor liability under Conn. Gen. Stat. § 14-154a. See Maysonet v. Cogdell, 2009 Conn. Super. LEXIS 1555, which has an exhaustive listing, in footnote 3, of the Superior Court cases on this issue.

[1] See, e.g., Morris v. Snappy Car Rental, Inc., 84 N.Y. 2d 21, 27 (1994).

[2] See Gary T. Schwartz, The Hidden and Fundamental Issue of Vicarious Liability, 69 S. Call. L. Rev. 1739, 1746 (1996).

[3] See Kenneth J. Rojc & Kathleen E. Stendahl, Vicarious Liability of Motor Vehicle Lessors, 59 Bus. Law, 1161, 1166 (2004).

[4] See, e.g., Gary T. Schwartz, The Hidden and Fundamental Issue of Vicarious Liability, 69 S. Call. L. Rev. 1739, 1744 (1996) (citing Thomas Baty, Vicarious Liability 146-54 (1916).

[5] Conn. Gen. Stat. § 14-154a provides "(a) Any person renting or leasing to another any motor vehicle owned by him shall be liable for any damage to any person or property caused by the operation of such motor vehicle while so rented or leased, to the same extent as the operator would have been liable if he had also been the owner."

[6] See Cesar A. Noble, Connecticut Rental Car Liability Survey and Commentary, 74 Conn. B.J. 313 (2000).

[7] Gionfriddo v. Avis Rent A Car Sys., 192 Conn. 280 (1984).

[8] Conn. Gen. Stat. § 14-154a.(b)(1).

[9] See U.S. Const. art. I, § 8.

[10] Pub. L. No. 109-59, 119 Stat. 1144 (2005).

[11] 49 U.S.C. § 30106(a)(1)-(2).