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GRAVES AMENDMENT- THE CHANGES IN LESSOR LIABILITY IN NEW YORK STATE
By Thomas P. McDaid, Esquire and Richard Gash, Esquire
Pursuant to Vehicle and Traffic Law §388, an owner of a motor vehicle is held jointly and severally liable, together with the operator, for the negligent use or operation of the vehicle. Prior to August 10th, 2005, an Owner under Vehicle and Traffic Law §128 included any Lessor. Therefore, under Vehicle and Traffic Law §388, the liability of the Lessor and the Lessee of a motor vehicle was joint and several (See , Location Auto Leasing Corp. v. Lembo Corp., and Accelerated Trucking Corp. v. McLean Trucking Co.).
However as of August 10th, 2005, 14 of the Federal Transportation Equity Act of 2005, 49 U.S.C.A. §30106, also known as the Graves Amendment eliminates Lessors from vicarious liability in States where it previously existed, such as New York. Section 30106 of the United States Code states plainly and unambiguously the following:
an 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 (1) the owner (or an affiliate of the owner) is engaged
in the trade or business of renting or leasing motor vehicles: and
(2) there is no negligence or criminal wrongdoing on the part of the
owner (or an affiliate of the owner).
As a result, pursuant to Section 30106, States, (i.e New York) are required to acknowledge that during a rental or lease period, owners (or an affiliate of the owner), like that of dealerships, who lease or rent a vehicle through ordinary course of business will not be held to vicarious liability for any harm to person or property that arises from the use, operation or possession of the vehicle during that lease period.
Since the Graves Amendment's enactment, Courts have held that 49 U.S.C.A. § 30106 applies to all actions commenced after August 10, 2005. The statute "provides that an owner engaged in the trade or business of renting or leasing motor vehicles shall not be liable for damages in the absence of any negligence or criminal wrongdoing. Thus, an action based solely on vicarious liability is barred." See Murphy v. Pontillo, citing Infante v. U-Haul.
Therefore if you are defending an action in New York for a Lessor and plaintiff's only cause of action(s) against the Lessor is/are based solely Vehicle and Traffic Law
§ 388, then summary judgment may be warranted. In this situation a Lessor is not liable for the alleged injuries claimed by a Plaintiff as Plaintiff is precluded from bring an action against the Lessor, by section 14 of the Federal Transportation Equity Act of 2005, 49 U.S.C.A. § 30106, also known as the Federal Highway Law-Graves Amendment.
Also note that this provision eliminates Lessors from vicarious liability in ALL STATES where it previously existed. Therefore if prior to August 10, 2005, your State held Lessors vicariously liable for the acts of their Lessee's then now under the Graves Amendment, Lessors can not be held vicarious liable for the acts of their Lessee(s).
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