To save money when they move, many people either forgo moving companies altogether or hire movers that only help load and unload. These moves nearly always involve rented moving trucks from Ryder, U-Haul, and other companies. These drivers frequently cause crashes, because these large vehicles typically require commercial drivers’ licenses to operate and, in most cases, their drivers are in unfamiliar territory.
Under traditional third-party liability theories, the vehicle owner is normally responsible for the plaintiff’s damages if the owner negligently allows a third person to operate said vehicle. But the federal Graves Amendment specifically prohibits such actions, and South Carolina law disfavors them. Is third-party liability available in these situations given this legal environment?
The Graves Amendment
In the early 2000s, some states began adopting vicarious liability statutes which held commercial vehicle owners liable for damages if they allowed someone else to drive their cars or trucks and those drivers caused car crashes. By 2005, twelve states (not including South Carolina) had adopted such laws. Many Congressional lobbyists, mostly from vehicle rental and insurance companies, opposed these laws on the basis that they assigned liability based on ownership status and not on fault.
At about this same time, a Connecticut jury ordered a vehicle rental company to pay millions of dollars in damages after a person driving a rented car caused a deadly fireball collision; that company immediately threatened to stop doing business in Connecticut and several other states.
Faced with the possibility of “unnecessary lawsuits” and job losses, Congress added 49 USC §30106 to an omnibus bill in 2005. Like many such provisions, there is essentially no legislative history. No Congressional committee held pre-vote hearings on the law, the House of Representatives debated the provision for less than a half-hour, and the Senate apparently adopted the measure without any discussion whatsoever.
The Graves Amendment makes it illegal for victims to file lawsuits against commercial vehicle rental or leasing companies due to the “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.” But, there are some very large loopholes.
Under subsection (a)(1), the provision only applies to companies that are “engaged in the trade or business of renting or leasing motor vehicles (emphasis added).” This phrase is not really defined in the law, but in ordinary usage, it implies that the entity derives most of its income from a certain activity. For example, a supermarket is in the food-selling business, even though it sells many non-food items.
Under this definition, many truck rental companies may not be in the “trade or business” of renting vehicles. First and foremost, they are moving companies. They rent storage spaces, sell moving supplies, and perform other related services. These companies may have a truck or two in the parking lot available for rental, but they are not truck rental companies in the ordinary sense of the word.
Secondly, the Graves Amendment is inapplicable if the owner or agent was otherwise negligent. Oftentimes in these cases, the underlying act is negligently entrusting a vehicle to an unqualified driver. In 2005, it was essentially impossible for store clerks to verify that the drivers’ licenses that customers presented were not suspended and not forged. But technology has advanced considerably since then, and a number of companies, including Avis, Dollar, Budget, and Thrifty, require their agents to perform DMV checks on customers’ drivers’ licenses to determine if they are valid. In court, violation of a written policy is evidence of negligence, so if the agent fails to perform the check and the customer crashes the rental truck, arguably the company is responsible for damages.
There is legal guidance as well. A California court ruled that if the customers’ licenses are suspended, the company is negligent if it proceeds with the rental transaction. If the customers have poor driving records but their licenses are still valid, there is a presumption of negligence.
The Graves Amendment and South Carolina Law
In the recent past, courts have refused to recognize the negligent entrustment doctrine in cases that do not involve alcohol consumption. But the winds may be changing, largely in light of the changing legal and technological environment.
Actually, state courts of appeal have consistently adopted Sections 308 and 390 of the Restatement on Torts (negligent entrustment). The intransigence comes from the Supreme Court, in a line of cases beginning with Lydia v. Horton (2003). That case involved a vehicle owner (Mr. Horton) who loaned his vehicle to an intoxicated person (Mr. Lydia); Mr. Lydia was paralyzed in a single-car accident and sued Mr. Horton, alleging that he should not have loaned his car to an intoxicated person.
With almost no discussion, the Supreme Court promptly disregarded the negligent entrustment claim, citing “policy considerations.” What the court probably meant is that people who drive drunk and injure themselves or others should not be able to legally blame other people, or other companies for that matter, for their situations. Later, in a concurring opinion, Chief Justice Costa Pleicones argued that the Supreme Court should endorse non-alcohol negligent entrustment actions, at least in some cases.
If the situation comes up again, victims can certainly make good-faith arguments that negligent entrustment claims against vehicle lessors are at least facially valid in the Palmetto State, because of the way these companies do business and because of the current trend in South Carolina law.
Contact a Zealous Attorney
Despite the Graves Amendment, vehicle rental companies may be legally responsible for car crash damages in South Carolina. For a free consultation with an determined auto accident attorney in Charleston, contact the David Aylor Law Offices. We do not charge upfront legal fees in personal injury cases.