Judge: Lee S. Arian, Case: 22STCV18928, Date: 2024-02-01 Tentative Ruling

Case Number: 22STCV18928    Hearing Date: February 1, 2024    Dept: 27

Francisco Galicia-Martinez, et al. v. Victasia Dene Washington, et al.

CASE NUMBER: 22STCV18928

[OPPOSED]

Motion – Defendants PV Holding Corp, Inc., and Avis Budget Group Inc.’s Motion for Summary Judgment

TENTATIVE

            Defendants PV Holding Corp, Inc., and Avis Budget Group Inc.’s Motion for Summary Judgment is GRANTED.

Background

            This case stems from an automobile collision that occurred on August 15, 2020. Francisco Galicia-Martinez and Maria Estevez-Galicia (collectively Plaintiffs) allege that their vehicle was struck by driver Victasia Dene Washington (Washington). (Complaint, ¶ MV-1.) Washington had rented her vehicle on August 13, 2020 from an Avis Budget Group Inc. car rental location. (Declaration of Jeannine Klein, ¶ 3.) Avis Budget Group Inc., a subsidiary of PV Holding Corp. (collectively, Defendants) are two of the parties charged with the following causes of action: (1) motor vehicle negligence and (2) general negligence.

            Defendants filed the motion before the Court, the Motion for Summary Judgment (Motion). Plaintiffs opposed the Motion, and Defendants have filed a reply.  

Discussion

Legal Standard

            The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP Section 437c(c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 

            “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.) As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

            Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. 

To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Analysis

            Because Defendants were not the drivers, but are owners of the vehicle, both causes of action are based on three theories of liability: (1) liability via the permissive user statute as against the owner of the vehicle involved in the collision with Plaintiff; (2) negligent entrustment of a motor vehicle, (3) and negligent maintenance.

            Here, there are no facts in dispute. The parties contentions lie solely with whether the Graves Amendment preempts California’s Vehicle Codes, thereby barring any liability against Defendants. Plaintiffs argue that although the Graves Amendment preempts state law, there is an exception for “insurance-like” financial responsibility laws, specifically California Vehicle Codes (VEH) §§ 17150 and 17151. Defendants argue that neither VEH §§ 17150 nor 17151 are financial responsibility laws, and that therefore, because these laws do not count as exceptions for “insurance-like” financial responsibility laws, there is nothing stopping the application of statutory preemption. As explained below, although VEH § 17151 qualifies as an “insurance-like” financial responsibility law, it does not confer liability for tort upon Defendants. VEH § 17150 is not a financial responsibility law at all, and is therefore not an exception to preemption.

            Next, Per the Graves Amendment, in order for a company in the trade of renting motor vehicles to be liable, they must be found to have engaged in negligence or criminal wrongdoing. Defendants assert there was no negligence nor wrongdoing, and Plaintiffs fail to demonstrate a triable issue of material fact as to this assertion, therefore, the Motion is granted.

a.      The Graves Amendment (49 U.S.C. § 30106)

            The Graves Amendment (“Graves Amendment” or “Graves”) was enacted on August 10, 2005, as part of a comprehensive transportation bill called the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The Graves Amendment in relevant part reads as follows:

“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).” (49 U.S.C. § 30106(a) – 49 U.S.C. § 30106(a)(2).)  

            Graves generally preempts all state statutory laws and common law to the extent those laws hold owners in the business of renting or leasing motor vehicles vicariously liable for the negligence of drivers, except when there is negligence or criminal wrongdoing on the part of the owner. (29 A.L.R. Fed. 2d 223.) However, not all state statutes are preempted.

b.      Financial Responsibility Laws (FRLs)

            Within the Graves Amendment are exceptions as to laws Graves cannot preempt. Titled “Financial Responsibility Laws” (FRLs), Graves does not supersede state laws regarding insurance requirements. The pertinent portion reads:

“Nothing in this section supersedes the law of any State or political subdivision thereof—

(1) imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating a motor vehicle; or

(2) imposing liability on business entities engaged in the trade or business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under State law.” (49 U.S.C. § 30106(b) – 49 U.S.C. § 30106(b)(2), also known as the “Savings Clause”.)  

            Although the parties agree on the material facts, whether the applicable statues in California’s Vehicle Code are preempted is where the parties diverge. The parties contend that the relevant vehicle codes are VEH §§ 17150 and 17151. Therefore, the first task before the Court is to determine whether the Graves Amendment preempts these two sections.  

                                                                                   i.         Tort Liability is Preempted, FRLs are not.

            As both parties note, there is little case law within California that directly addresses the inquiry of whether VEH §§ 17150 and 17151 are preempted by the Graves Amendment. Therefore, the Court may look to persuasive case law elsewhere, in addition to the cannons of statutory construction. If statutory language permits more than one reasonable interpretation Courts may consider the statute’s purpose, legislative history and public policy. However, If the language of a statute is clear, courts must generally follow its plain meaning unless a literal interpretation would result in absurd consequences the legislature did not intend. (In re N.R. (2023) 15 Cal.5^th 520.)          

            First, the Court looks to case law. Graves does not define what constitutes an FRL. However, courts in other states have interpreted 49 U.S.C. § 30106(a) – 49 U.S.C. § 30106(a)(2), otherwise known as the “Savings Clause,” to mean that laws imposing insurance standards on vehicle owners and business entities in the trade of renting vehicles are not preempted. 

            For example, in an Eleventh Circuit case from Florida, a rental car company filed a summary judgment motion arguing that the Graves Amendment preempted the wrongful death cause of action the plaintiffs had brought against the rental car company. (Garcia v. Vanguard Car Rental USA, Inc. (2008) 540 F.3d 1242. (“Garcia”.) The Eleventh Circuit affirmed the lower court’s grant of summary judgment in favor of the rental car company stating that not only does Graves preempt tort liability, but that the term “financial responsibility law” denotes state laws which impose insurance-like requirements on owners or operators of vehicles. (Garcia, supra, at 1247.)

            In 2019, the Supreme Court of Rhode Island ruled similarly when a married couple brought a negligence action against several defendants, including the driver who struck them, and the rental car company that leased the vehicle to the driver. (Puerini v. LaPierre (2019) 208 A.3d 1157, 1160. “Puerini”.) Rhode Island’s Supreme Court ruled that Graves preempted liability as to negligence, but that the rental company could still be held liable for failing to meet state financial responsibility requirements. (Puerini, supra at 1165.)

            Finally, in Subrogation Division Inc. v. Brown (2020) 446 F.Supp.3d 542 (“Brown”), the District Court followed the lead of Garcia and Puerini, stating that the rental car company being sued could only be held liable to the extent it did not carry the required amount of insurance. However, to the extent that South Dakota law attempted to hold the rental car company liable for tort, it would be preempted by Graves. (Brown, supra, at 551-552.)  

            Simply put, both vehicle owners and rental car companies must abide by state laws requiring insurance. However, Graves preempts any state law that extends tort liability from a defendant driver to a rental car company.

c.       VEH § 17151 is an FRL, VEH § 17150 is not.

                        Defendants argue that VEH § 17150 does not impose insurance obligations on those businesses engaged in the trade of renting or leasing vehicles. Plaintiffs counter arguing that both VEH §§ 17150 and 17151 do. As the Court explains below, only VEH § 17151 is a FRL.

                                                                                    i.            VEH § 17151

             With the aforementioned case law as guidance^[1], the Court now looks to the statutes, and starts by giving each its ordinary meaning. The plain language of VEH § 17151 is apparent:

“The liability of an owner…imposed by this chapter…is limited to the amount of fifteen thousand dollars ($15,000) for the death of or injury to one person in any one accident and, subject to the limit as to one person, is limited to the amount of thirty thousand dollars ($30,000) for the death of or injury to more than one person in any one accident and is limited to the amount of five thousand dollars ($5,000) for damage to property of others in any one accident.” (VEH § 17151.) 

            The primary purpose of the section is financial responsibility and insurance. Defendants not only agree that VEH § 17151 is a FRL, but one that they were required to, and indeed did comply with. However, Defendants argue that Plaintiffs’ argument that tort liability can be based on VEH § 17151 must fail. The Court agrees. The Court does not read VEH § 17151 to impose tort liability; to the extent that it does, Brown counsels that the Graves Amendment preempts it. The Court finds Brown’s reasoning persuasive.

            Plaintiffs argue that the California Supreme Court in Wildman v. Government Employees Ins. Co. (1957) 48 Cal.2d 31, 39-40 (“Wildman”) held that public policy requires vehicle owners to be financially responsible to those injured in accidents and that Vehicle Code 402 was the predecessor statute to both VEH §§ 17150 and 17151. Plaintiff’s reasoning is that because the predecessor to VEH §§ 17150 and 17151 was a financial responsibility law, so too should be its successors. The Court disagrees for two reasons. First, Wildman addressed the sufficiency of insurance policies, not tort liability. Second, Wildman does not discuss the Graves Amendment because Graves was enacted in 2005, while Wildman was ruled on in 1957. Plaintiffs present no other authority by which this Court could hold Defendants liable under VEH § 17151, nor is the Court aware of any.    

                                                                                  ii.            VEH § 17150

            Plaintiffs additionally argue that VEH § 17150 falls within the Graves Amendment’s Savings Clause because VEH § 17150 too, is an FRL. The Court is not persuaded.

“Every owner of a motor vehicle is liable and responsible for death or injury to person or property resulting from a negligent or wrongful act or omission in the operation of the motor vehicle, in the business of the owner or otherwise, by any person using or operating the same with the permission, express or implied, of the owner.” (VEH § 17150.)

            Looking to the plain meaning of the statute, nothing in VEH § 17150 indicates it is aimed at financial responsibility nor insurance. Rather, the statute is aimed at holding vehicle owners liable for death or injury. In the case at bar, Plaintiffs argue that this statute is sufficient to place liability on Defendants. However, not only is VEH § 17150 not an FRL, but it is also the exact type of statue that falls directly within the crosshairs of the Graves Amendment and is preempted.  

d.      Defendants meet initial burden

            Here, there is a second question to be answered by the Court. Graves preempts state law only when there is no negligence or criminal wrongdoing. (49 U.S.C. § 30106(a)(2).) To the extent that Plaintiffs can demonstrate a dispute as to material facts regarding negligent entrustment with leasing the vehicle, or negligence in maintaining the vehicle, Defendants could be held liable. However, in their moving papers, Defendants put forth evidence showing that they were presented with a facially valid driver’s license by Washington (Declaration of Jeannine Klein, Exh. I), and that the car was in working order (Declaration of John Bergeson, Exhs. C-H.) Plaintiffs are silent as to both these points in their opposition papers. Therefore, Defendants have met their burden as to the issues of negligence and negligent entrustment. Plaintiffs fail to carry theirs.   

Conclusion

            Accordingly, Defendants PV Holding Corp, Inc., and Avis Budget Group Inc.’s Motion for Summary Judgment is GRANTED.

Moving party is ordered to give notice.