Judge Michelle C. Kim, Case Number: 21STCV35328, Date: 2023-05-10 Tentative Ruling

Plaintiffs Sierra Jasmine French-Myerson and Geoffrey Russell Walters (collectively, “Plaintiffs”) filed this action against defendant Gina Carty Tashkoff (“Tashkoff”) Michael Chiranian (“Chiranian”), and Precision Rent A Car, LLC (“Precision”) for damages arising from a motor vehicle accident vs. pedestrians accident. Plaintiffs allege that Tashkoff ran a redlight and hit Plaintiffs while they were crossing the street. Plaintiffs allege that Precision negligently permitted Tashkoff to drive the vehicle, which was owned by Chiranian. The operative First Amended Complaint asserts causes of action for motor vehicle against Tashkoff and Chiranian, negligence against Tashkoff and Chiranian, negligent entrustment against Precision, and general negligence against Precision.

Defendants Chiranian and Precision (collectively, “Defendants”) now move for summary judgment. Plaintiffs oppose the motion, and Defendants filed a reply.

This matter was last set for hearing for April 26, 2023, but was continued to May 10, 2023, for Defendants to give proper notice of the hearing. Defendants were ordered to give notice of the continuance. On April 27, 2023, Defendants filed a notice of continuance of the hearing date with proof of service on Plaintiff.

Defendants provide that Tashkoff rented the vehicle she was operating from Precision, which is owned by Chiranian. Defendants argue they are entitled to summary judgment because 49 U.S.C. § 30106- the Graves Amendment- precludes liability against Defendants as the rental company and owner of the rental car involved in the subject accident. Defendants contend that there is no evidence to support an independent theory of liability against them, including for negligent entrustment. Defendants aver that the only basis for Defendants’ involvement in this action is based on their ownership of the rental company and vehicle- a 2021 Lexus ES 350 (the “Lexus”)- rented to Tashkoff.

Plaintiffs assert that Chiranian initially dropped off a different vehicle for Tashkoff to use than the Lexus, but after Tashkoff explained that she was dissatisfied with first vehicle, Tashkoff returned the first vehicle to Chiranian. Plaintiffs assert that despite noticing that the first vehicle was damaged, Chiranian brought Tashkoff the Lexus for her use. Plaintiffs contend that Chiranian negligently entrusted Tashkoff to drive the Lexus. Further, Plaintiffs argue that the Graves Amendment does not apply to Chiranian and applies only to Precision. Plaintiffs, however, assert that regardless of the whether the Graves Amendment applies in this case, Defendants are still liable under a theory of negligent entrustment, and that Chiranian is still liable in the sum of $30,000 under Vehicle Code § 17150 because the Graves Amendment does not preempt California’s financial responsibility law.

In Plaintiffs’ Separate Statement submitted with their opposition, Plaintiffs make objections to certain facts asserted therein without referencing the specific evidence objected to and seemingly argue how certain facts should be interpreted. Objections to material facts, as opposed to evidence, and arguments about how the Court should interpret the facts, are improper. (Cal. Rules of Court, Rule 3.1354(b).) The Court, therefore, declines to rule on the purported objections in the Separate Statement. However, the Court will address Plaintiffs’ separately filed objections to Defendants’ evidence, which complies with the California Rules of Court Rule 3.1354’s formatting requirements.

Plaintiffs further submit six objections to Chiranian’s declaration filed with the moving papers. Objections 1-6 are overruled in their entirety.

On March 27, 2023, Plaintiffs filed an objection to Defendants’ reply brief and an evidentiary objection to the declaration of Christina Michael (“Michael”) filed with the reply. Plaintiffs contend that Defendants improperly make new arguments and submit new evidence for the first time on reply. In particular, Defendants submitted a business license and the full deposition transcript of Chiranian. In analyzing the motion below, the Court did not consider this evidence. Therefore, the Court declines to rule on the objections to the evidence filed with the reply brief. (CCP § 437c(q).)

Summary judgment is proper “if all the papers submitted 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.” (Code Civ. Proc. §437c(c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) A defendant moving for summary judgment must show either (1) that one or more elements of the cause of action cannot be established or (2) that there is a complete defense to that cause of action. (Id. at §437c(p).) A defendant may discharge this burden by furnishing either (1) affirmative evidence of the required facts or (2) discovery responses conceding that the plaintiff lacks evidence to establish an essential element of the plaintiff's case. If a defendant chooses the latter option, he or she must present evidence “and not simply point out that plaintiff does not possess and cannot reasonably obtain needed evidence….” (Aguilar, supra, 25 Cal.4^th at 865-66.)

[A] defendant may simply show the plaintiff cannot establish an essential element of the cause of action “by showing that the plaintiff does not possess, and cannot reasonably obtain, needed evidence.” (Id. at p. 854.) Thus, rather than affirmatively disproving or negating an element (e.g., causation), a defendant moving for summary judgment has the option of presenting evidence reflecting the plaintiff does not possess evidence to prove that element. “The defendant may, but need not, present evidence that conclusively negates an element of the plaintiff's cause of action. The defendant may also present evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence—as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing” to support an essential element of his case. (Aguilar, supra, at p. 855.) Under the latter approach, a defendant's initial evidentiary showing may “consist of the deposition testimony of the plaintiff's witnesses, the plaintiff's factually devoid discovery responses, or admissions by the plaintiff in deposition or in response to requests for admission that he or she has not discovered anything that supports an essential element of the cause of action.” (Lona v. Citibank, N.A., supra, 202 Cal.App.4th at p. 110.) In other words, a defendant may show the plaintiff does not possess evidence to support an element of the cause of action by means of presenting the plaintiff's factually devoid discovery responses from which an absence of evidence may be reasonably inferred. (Scheiding v. Dinwiddie Construction Co. (1999) 69 Cal.App.4th 64, 83.)

Thus, a moving defendant has two means by which to shift the burden of proof under the summary judgment statute: “The defendant may rely upon factually insufficient discovery responses by the plaintiff to show that the plaintiff cannot establish an essential element of the cause of action sued upon. [Citation.] [Or a]lternatively, the defendant may utilize the tried and true technique of negating (‘disproving’) an essential element of the plaintiff's cause of action.” (Brantly v. Pisaro (1996) 42 Cal.App.4th 1591, 1598.)

Until the moving defendant has discharged its burden of proof, the opposing plaintiff has no burden to come forward with any evidence. Once the moving defendant has discharged its burden as to a particular cause of action, however, the plaintiff may defeat the motion by producing evidence showing that a triable issue of one or more material facts exists as to that cause of action. (Id. at §437c(p)(2).) On a motion for summary judgment, the moving party's supporting documents are strictly construed and those of his opponent liberally construed, and doubts as to the propriety of summary judgment should be resolved against granting the motion. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 21.)

(a) In general. An owner of 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 vehicles; and

(b) Financial responsibility laws. 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.

No published California appellate court decision has addressed whether the Graves Amendment preempts California tort law Vehicle Code §§ 17150 and 17151, while other jurisdictions have already adopted the federal law and concluded that it preempts their own state vicarious liability statutes for lessors or renters of vehicles. (See Garcia v. Vanguard Car Rental USA, Inc. (11th Cir. 2008) 540 F.3d 1242; see also Carton v. General Motors Acceptance Corp. (8th Cir. 2010) 611 F.3d 451.)

Traditionally, California courts have applied California Vehicle Code §§ 17150 and 17151 in allowing plaintiff's recovery from vehicle owners based on vicarious liability. Vehicle Code § 17150 provides that “[e]very 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 … by any person using or operating the same with the permission, express or implied, of the owner.” However, under Vehicle Code § 17151, where the basis for liability is permissive use and the relationship between the owner and the driver is not that of principal and agent or master and servant, the owner's liability is limited by statute to $15,000 per person, not to exceed $30,000 per accident.

In this case, Plaintiffs allege they were pedestrians walking in a crosswalk when they were hit by a vehicle being operated by Tashkoff. (Mot. Undisputed Material Facts (“UMF”) 1.) Chiranian is the owner of Precision, which is in the business of renting vehicles to the general public. (Id. at 6-7.) Defendants assert that Chiranian is a registered owner of the subject Lexus Tashkoff was driving, and that he is in the business of renting and leasing motor vehicles. (Id. at 8.) Defendants state that Chiranian leased the Lexus to Precision, along with other vehicles, as part of Precision’s rental fleet. (Id. at 9.) Defendants assert that as part of Chiranian’s vehicle rental business, Precision rented the Lexus to Tashkoff. (Id. at 10.) At the time of the subject accident, Tashkoff was operating the vehicle rented from Chiranian’s business, Precision. (Id. at 14-15.) The only business arrangement between Chiranian’s vehicle rental business, Precision, and Tashkoff was the rental of the Lexus to Tashkoff pursuant to the rental agreement. (Id. at 16.)

The foregoing is sufficient to meet Defendants’ moving burden to show that they cannot be held vicariously liable for Plaintiffs’ claims under the Graves Amendment. The burden thus shifts to Plaintiffs to raise a triable issue of material fact in this regard.

Plaintiffs, in opposition, argue that while Chiranian is the registered owner of the Lexus, Chiranian did not rent the Lexus to Tashkoff. Plaintiffs aver that Precision, which is separate and distinct from Chiranian, rented the Lexus to Tashkoff, so Chiranian was not the lessor of the Lexus. Plaintiffs argue that the Graves Amendment therefore applies only to Precision, not Chiranian.

The evidence shows that Chiranian was the registered owner of the Lexus, and Precision is the entity that rented the Lexus to Tashkoff. It is undisputed that Precision is in the business of renting vehicles to the general public, but Plaintiffs contend that there is a dispute as to whether Chiranian is in the business of renting and leasing motor vehicles. Plaintiffs assert that Precision is the only lessor identified on the rental agreement with Tashkoff, that Chiranian admitted to not having a license for renting or leasing motor vehicles, and that Chiranian admitted that there was no business arrangement between him and Tashkoff at any point. (Opp. UMF 8.) Additionally, Plaintiffs assert that nowhere in Precision’s paperwork is it noted that Chiranian’s vehicles would be rented out to the public via Precision. (Pl.’s Additional UMF 6.)

Plaintiffs are correct that a “limited liability company is an entity separate and distinct from its members.” (Cal. Corp. Code § 17701.04(a).) Nonetheless, Chiranian is the owner of Precision and is the registered owner of the Lexus. (Mot. Chiranian Decl. ¶¶ 2, 4.) Chiranian declares that he leased the Lexus to Precision, along with about 35 other vehicles, for Precision’s rental fleet. (Id. at ¶ 4.) Furthermore, Chiranian personally conducted the rental vehicle transaction with Tashkoff and inspected Tashkoff’s license at the time. (Id. at ¶¶ 6-7.) Chiranian allowed Tashkoff to use the Lexus as a rental from Chiranian’s business, and there is no indication that Chiranian would have allowed Tashkoff to use the Lexus if Tashkoff was not paying for a rental from Precision. While Plaintiffs contend that Chiranian did not have any licenses for renting or leasing motor vehicles, Plaintiffs cite no authority holding that any type of licenses are required for a person to be engaged in the business of renting or leasing motor vehicles. Similarly, Plaintiffs cite no authority stating that the rental agreement was required to be between Chiranian and Tashkoff for the Graves Amendment to apply to Chiranian as the owner of the rental vehicle. Plaintiffs’ evidence, thus, does not effectively dispute the evidence showing that Chiranian is the owner of the vehicle rented to and driven by Tashkoff at the time of the accident, and that Chiranian “is engaged in the trade or business of renting or leasing motor vehicles.” (49 USC § 30106(a)(1).)

Plaintiffs further contend that whether or not the Graves Amendment applies, the Graves Amendment does not preempt California’s financial responsibility laws and Chiranian is still liable under California Vehicle Code § 17150. This provision provides, “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.” (Ibid.) California Vehicle Code § 17151 then imposes statutory limits on the liability of the vehicle owner.[1]

The Graves Amendment's savings clause states that it does not supersede state laws imposing “financial responsibility” on the owner for the privilege of registering and operating a motor vehicle. (49 U.S.C. § 30106(b)(1).) While the Graves Amendment does not define “financial responsibility” itself, the Eleventh Circuit interpreted that phrase to mean “state laws which impose insurance-like requirements on owners or operators of motor vehicles, but permit them to carry, in lieu of liability insurance per se, its financial equivalent, such as a bond or self-insurance.” (Garcia, 540 F.3d at 1247.) This Court similarly finds it reasonable to interpret the savings clause to “save” only such laws that impose insurance-like requirements and not “save” state laws that impose vicarious liability on a rental car company- that is liability based on ownership, not direct liability based upon the company's own negligence- such as Vehicle Code § 17150.

Plaintiffs contend that California Vehicle Code § 17150 is part of the financial responsibility laws because it imposes vicarious responsibility and responsibility on vehicle owners for the operation of their vehicles, even when they are in the car rental business. However, such a reading would render the Graves Amendment as a whole meaningless. If those Vehicle Code sections were considered “financial responsibility” laws and, therefore, could still hold owners, including lessors and rental car companies, vicariously liable, then it would thwart the principal intent of Congress and the purpose of the Graves Amendment to preclude vicarious liability solely based on ownership. (See Lyles v. Sangadeo-Patel (2014) 225 Cal. App. 4th 759, 764-765 (the court is required to construe a provision “with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness” [citation] and to avoid an interpretation that renders language a nullity [citation].”).)

Furthermore, the Graves Amendment’s text refers to “financial responsibility or insurance standards” and “financial responsibility or liability insurance requirements” when it refers to the financial responsibility laws that are preserved. (49 USC §§ 30106(b)(1), (b)(2).) Such financial responsibility laws are codified in Vehicle Code § 16050 et seq. regarding proof of insurance coverage. On the contrary, Vehicle Code §§ 17150 and 17151, the statutes upon which Plaintiffs rest their liability theory, set forth a means by which a victim in an automobile accident may seek to recover damages vicariously from the owner of a vehicle driven by a permissive user.

Therefore, Vehicle Code § 17150 is not part of “financial responsibility law” within the meaning of the Graves Amendment.

Based on the foregoing, the Graves Amendment precludes Plaintiffs’ claims against Chiranian and Precision to the extent Plaintiffs seek to hold Defendants liable for owning and renting the Lexus to Tashkoff.

“ ‘ “It is generally recognized that one who places or entrusts his [or her] motor vehicle in the hands of one whom he [or she] knows, or from the circumstances is charged with knowing, is incompetent or unfit to drive, may be held liable for an injury inflicted by the use made thereof by that driver, provided the plaintiff can establish that the injury complained of was proximately caused by the driver's disqualification, incompetency, inexperience or recklessness.” ‘ [Citation.]” (Flores v. Enterprise Rent-A-Car Co. (2010) 188 Cal.App.4th 1055, 1063 quoting Osborn v. Hertz Corp. (1988) 205 Cal.App.3d 703, 708.)[2] However, “as a matter of law, a rental car agency is not liable for negligent entrustment where the agency has fully complied with the requirements of [Vehicle Code] sections 14604 and 14608, and the customer does not appear impaired or otherwise unfit to drive at the time of rental.” (Flores, 188 Cal.App.4th at 1059.)

“CACI No. 724 outlines the elements of the tort of negligent entrustment of a motor vehicle: ¶ ‘1. That [name of driver] was negligent in operating the vehicle; ¶ ‘2. That [name of defendant] [owned the vehicle operated by [name of driver]/had possession of the vehicle operated by [name of driver] with the owner's permission]; ¶ ‘3. That [name of defendant] knew, or should have known, that [name of driver] was incompetent or unfit to drive the vehicle; ¶ ‘4. That [name of defendant] permitted [name of driver] to drive the vehicle; and ¶ ‘5. That [name of driver]'s incompetence or unfitness to drive was a substantial factor in causing harm to [name of plaintiff].’ [Footnote omitted.]” (McKenna v. Beesley (2021) 67 Cal.App.5th 552, 565–566.)

In Flores, the Court of Appeal addressed the question of rental cars and potential liability for rental car companies. The Flores Court held that a rental car agency was not liable for negligent entrustment where the rental agency had complied with the requirements of Vehicle Code sections 14604 [an owner of a motor vehicle allowing another person to drive the vehicle must make a reasonable effort or inquiry to determine the person possesses a valid driver’s license], 14608 [a person shall not rent a motor vehicle to another person unless the person to whom the vehicle is rented is licensed and the person renting out the vehicle has inspected the driver’s license and compared the signature or photograph to the person renting the vehicle], and 14609 [a person renting out the vehicle has kept a record of the registration number of the vehicle rented, the name and address of the person to whom the vehicle is rented, his or her driver’s license number, the jurisdiction that issued the driver’s license, and the expiration date of the driver’s license] and the customer did not appear impaired or otherwise unfit to drive at the time of rental. (Flores, supra, 188 Cal.App.4th at 1062-69.) The Court of Appeal further held that the rental car company was not required to check DMV records to investigate the driving history that may be relevant to that license status. (Id.)

Here, Chiranian conducted the rental vehicle transaction with Tashkoff on June 18, 2020, and captured Tashkoff’s driver’s license number on the rental agreement. (Mot UMF 11.) Chiranian personally inspected Tashkoff’s driver’s license to determine and ensure it was facially valid at the time of the rental transaction. (Id. at 12.) Defendants provide that Chiranian did not observe Tashkoff to be impaired, incompetent, or unfit to operate a vehicle at the time of the rental transaction. (Id. at 13.) The only business arrangement between Chiranian’s vehicle rental business, Precision, and Tashkoff was the rental of the Lexus to Tashkoff pursuant to the rental agreement. (Id. at 16.)

Defendants argue they cannot be held liable under a negligent entrustment theory because Tashkoff presented a facially valid driver’s license at the time of the renal transaction, and there was no indication that Tashkoff was unfit to operate the Lexus. This evidence is sufficient to meet Defendants’ moving burden.

In opposition, Plaintiffs do not present any evidence to suggest Defendants failed to comply with its obligations under any Vehicle Code section. Rather, Plaintiffs contend there is a triable issue of fact as to whether Defendants knew or should have known that Tashkoff was unfit to drive the Lexus. Plaintiffs asserts that after first renting a Mazda from Precision, Tashkoff crashed into a wheel stop by failing to stop in time. That same day, and after Tashkoff allegedly requested a faster vehicle, Precision rented the Lexus to Tashkoff despite the damage present on the first vehicle. Plaintiffs provide that Tashkoff then drove the Lexus for five days prior to the subject accident occurring.

The issue presented is thus whether Tashkoff’s damage to the first vehicle she rented involving the wheel stop made it so that Defendants knew or should have known that Tashkoff was unfit to drive the Lexus.

In arguing that it does, Plaintiffs rely primarily on Tashkoff’s and Chiranian’s deposition testimony. Tashkoff testified regarding how the incident involving the wheel stop occurred, “At the market I went a little up to it and so it scraped a little bit of the bottom.” (Opp. Compendium of Evid. Exh. 4 at p. 23:8-10.) During his deposition, Chiranian stated regarding the damage on the first car, “Because when we went there to pick it up the vehicle on the day of the pickup … my driver noticed there was scrapes underneath the car.” (Id. at Exh. 3 at p. 60:3-5.) Chiranian further stated that he believed Tashkoff regarding how incident occurred involving the wheel stop, and Chiranian confirmed that the damage looked like it was indeed caused by a wheel stop. (Id. at Exh. 3 at pp. 84:18-25.) Given the evidence, it is not clear how Tashkoff scraping the bottom of the first vehicle’s bumper against a parking wheel stop would give Defendants’ notice that Tashkoff was unfit or incompetent to drive the Lexus at the time of the rental. Moreover, Plaintiffs do not establish that scraping the bottom of a bumper against a wheel stop makes a person incompetent or unfit to drive, nor do Plaintiffs provide any evidence concerning the subject accident as to show that Tashkoff’s alleged incompetence or unfitness was a substantial factor in causing the accident. There is insufficient evidence presented to show that there is a reasonable inference that Tashkoff scraping the wheel stop charged Defendants with knowing that Tashkoff was unfit to drive and could cause an accident.

Therefore, Plaintiffs fail to raise a triable issue of fact as to whether Defendants can be held liable under a theory of negligent entrustment.

Defendants Chiranian’s and Precision’s motion for summary judgment is granted.

Hon. Michelle C. Kim

Judge of the Superior Court

[1] California Vehicle Code § 17151 states, “The liability of an owner, bailee of an owner, or personal representative of a decedent imposed by this chapter and not arising through the relationship of principal and agent or master and servant 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.”

[2] “In Osborn v. Hertz Corp. (1988) 205 Cal.App.3d 703, 252 Cal.Rptr. 613 (Osborn), the court held that: (1) a rental car agency is not liable for negligent entrustment when it rents a car to a validly licensed driver who shows no sign of unfitness to drive (id. at p. 713, 252 Cal.Rptr. 613); (2) an agency has no duty to inquire into the driving record of the renter by asking a series of questions concerning, inter alia, whether the renter has previously been convicted of driving under the influence (id. at p. 710, 252 Cal.Rptr. 613); and (3) absent a legislative declaration that persons convicted of driving under the influence or whose license was previously revoked or suspended are ineligible to rent a vehicle, the rental agency is entitled to rely on the renter's presentation of a valid driver's license as sufficient evidence of fitness to drive (id. at p. 711, 252 Cal.Rptr. 613).” (Flores v. Enterprise Rent-A-Car Co. (2010) 188 Cal.App.4th 1055, 1059.)