Judge: Stephen P. Pfahler, Case: 21STCV28908, Date: 2023-01-25 Tentative Ruling


Case Number: 21STCV28908    Hearing Date: January 25, 2023    Dept: F49

Dept. F-49

Date: 1-25-23

Case #21STCV28908

Trial Date: Not Set

 

DEMURRER

 

MOVING PARTY: Defendant, Distinct Cars, LLC

RESPONDING PARTY: Plaintiffs, Rose Moroso, et al.

 

RELIEF REQUESTED

Demurrer to the Third Amended Complaint

·         1st Cause of Action: Negligence

·         3rd Cause of Action: Negligent Entrustment

·         5th Cause of Action: Survival Action

 

SUMMARY OF ACTION

On June 24, 2021, a 2020 Ford Transit van owned by defendant Distinct Cars, LLC and operated by defendant Jacob Sanchez collided with motorcycle ridden by Lawrence Moroso. The incident occurred on The Old Road in Newhall, California. Lawrence died as a result of the injuries. Plaintiffs allege Jacob Sanchez was operating the vehicle on behalf of employer, defendant Newegg.

 

On August 5, 2021, Plaintiffs filed a complaint for Negligence, Negligent Hiring, Negligent Entrustment, Negligent Supervision, and Survival Action. On September 9, 2021, Distinct Cars answered the complaint. On September 17, 2021, Newegg Logistic Services answered the complaint and filed a cross-complaint against PDQ Pickup, LLC, for Express Indemnity, Breach of Contract (Duty to Defend), Equitable Comparative Indemnity, Declaratory Relief, Duty to Indemnify, and Declaratory Relief for Duty to Defend. On September 17, 2021, Distinct Cars, LLC filed a cross-complaint against PDQ Pickup, LLC, PDQ Rideshare Rentals, and Rideshare Rentals, Inc. for Implied Indemnity, Contribution and Indemnity, Declaratory Relief, Express Indemnity, and Negligence.

 

On December 8, 2021, the court (Department 32) granted the motion to strike brought by Newegg, Inc. Plaintiffs filed their first amended complaint for Negligence, Negligent Hiring, Negligent Entrustment, Negligent Supervision, and Survival Action on January 3, 2022. On February 2, 2022, the court entered the stipulation of the parties to file the second amended complaint. Plaintiffs filed their second amended complaint for Negligence, Negligent Hiring, Negligent Entrustment, Negligent Supervision, and Survival Action on February 16, 2022.

 

The second amended complaint adds additional allegations regarding the added defendants, as well as new factual claims regarding the existence of a Netradyne dashboard or windshield mounted camera and communication system which monitors vehicle operations, tracks positioning, and provides on board video traffic surveillance as well as other safety features for the vehicle operator. Plaintiffs allege Jacob Sanchez intentionally covered the camera lens(es) prior to the time of the collision. Plaintiff also alleges Jacob Sanchez was convicted for a number of prior traffic infractions, and disposed of “evidence” following the collision prior to the arrival of the police department, thereby delaying the provision of care of Lawrence Moroso.

 

On May 5, 2022, the action was transferred to Department 49. On September 30, 2022, the court sustained the demurrer of Distinct Cars, LLC to the first and fifth causes of action in the second amended complaint with leave to amend. On October 28, 2022, Plaintiffs filed their third amended complaint for Negligence, Negligent Hiring, Negligent Entrustment, Negligent Supervision, and Survival Action.

 

RULING: Sustained without Leave to Amend.

Defendant’s Request for Judicial Notice: Granted.

The court can take judicial notice of out of district case law for purposes of considering persuasive authority.

 

Plaintiff’s Request for Judicial Notice: Granted.

The court can take judicial notice of the filing of the pleading, but not the content for the truth of the matter asserted. The court also takes judicial notice of its prior order of September 30, 2022.

 

Defendant Distinct Cars, LLC (“Distinct Cars”) brings the subject demurrer to the first, third, and fifth causes of action for negligence and survival action in the third amended complaint on grounds of uncertainty and insufficient legal basis of support. Distinct Cars contends the plain language of the operative complaint only supports an indirect rental relationship without a basis of liability above and beyond federal statutory proections. Plaintiff in opposition counters that the negligence, negligent entrustment, and survival actions are well pled against Distinct Cars based on both extensive citation to the operative complaint, and an argument that the operative complaint alleges a claim based on a failure to comply with California Vehicle code requirements for the verification of a drivers license by the vehicle operator, as well as other restrictions, and an agency theory of liability. Federal law is therefore preempted. Distinct Cars in reply denies any claims involving direct liability.

 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

 

1st Cause of Action: Negligence

Distinct Cars contends federal law preempts any claims based on negligent operation of a vehicle simply based on ownership liability. The relied upon section provides:

 

(a) In general -- 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).

(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.

(c) Applicability and effective date – Notwithstanding any other provision of law, this section shall apply with respect to any action commenced on or after the date of enactment of this section without regard to whether the harm that is the subject of the action, or the conduct that caused the harm, occurred before such date of enactment.

(d) Definitions--In this section, the following definitions apply:

(1) Affiliate--The term “affiliate” means a person other than the owner that directly or indirectly controls, is controlled by, or is under common control with the owner. In the preceding sentence, the term “control” means the power to direct the management and policies of a person whether through ownership of voting securities or otherwise.

(2) Owner--The term “owner” means a person who is--

(A) a record or beneficial owner, holder of title, lessor, or lessee of a motor vehicle;

(B) entitled to the use and possession of a motor vehicle subject to a security interest in another person; or

(C) a lessor, lessee, or a bailee of a motor vehicle, in the trade or business of renting or leasing motor vehicles, having the use or possession thereof, under a lease, bailment, or otherwise.

(3) Person--The term “person” means any individual, corporation, company, limited liability company, trust, association, firm, partnership, society, joint stock company, or any other entity.

 

49 U.S.C.A. § 30106

 

The court accepts the representation of Distinct Cars regarding the lack of any state or Ninth Circuit authority interpreting the statute, thereby allowing the court to consider the federal authority on a persuasive basis. “[T]he decisions of the lower federal courts, while persuasive, are not binding on us. (Citation.) Thus, in the absence of a controlling United States Supreme Court [or California Supreme Court] opinion, we make an independent determination of federal law. … In short, the presence or absence of a decision by the Ninth Circuit on this issue is not determinative.” (Forsyth v. Jones (1997) 57 Cal.App.4th 776, 782–783; Thurston v. Midvale Corp. (2019) 39 Cal.App.5th 634, 640.)

 

Distinct Cars contends the federal statute preempts any state statutes imposing liability on a rental car agency. Distinct Cars also challenges any factual claims regarding a basis of liability strictly as the owner of the vehicle.

 

Plaintiffs allege Distinct Cars’ status as the owner of the van, and rental agency operator. [Third Amend. Comp., ¶¶ 50-51.] Plaintiffs offer no challenge to the plain language of the statute preempts any claims against a rental car agency liability based simply on the provision of a vehicle without further control of the vehicle or operator (e.g. no negligence or criminal wrongdoing). (49 U.S.C.A. § 30106(a)(2).) The court finds the Federal Circuit authority interpreting the statute persuasive as well, and agrees with the preemptive effect on negligence claims arising simply from ownership of a vehicle without any further undertaking of duty to insure the safe operation of the vehicle via driver vetting or vehicle controls. (Carton v. General Motor Acceptance Corp. (8th Cir. 2010) 611 F.3d 451, 457; Garcia v. Vanguard Car Rental USA, Inc. (11th Cir. 2008) 540 F.3d 1242, 1249.) The court therefore finds the federal statute preempts liability in California absent a showing of an exception.

 

Plaintiffs seek to establish an exception on grounds that Distinct Cars operated as a “sham” entity identified as PDQ-10, thereby concealing its true identity of the registered vehicle owner in violation of the Vehicle Code section 4453.5. Furthermore, because the “sham” entity failed to verify the drivers license of the vehicle operator, or insure proper vehicle registration display information, Distinct Cars violated Vehicle Code sections 14604, 14608, 14609, and 34507.5. [Third Amend. Comp., ¶¶ 52-58.]  The impact of the allegations and argument in opposition seeks to establish that the violation constitutes a “wrongdoing” exception under subdivision (a)(2) with an agency allegation linking the sham entities to Distinct Cars.

 

The court examines the cited Vehicle Code sections for context with the claims.

 

“(a) In the case of leased vehicles, the lessor and the lessee shall be shown on the registration card as the owner and the lessee of a vehicle, and the department shall designate their relationships upon the card and the ownership certificate by the words ‘lessor’ and ‘lessee’ and, at the election of the lessor, the department may designate thereon either the address of the lessor or the lessee.

“(b) Transfers of ownership involving vehicles registered as provided in subdivision (a) shall only be effected upon the signature release of the lessor. …”

 

(Veh. Code, § 4453.5.)

 

The operative complaint specifically alleges improper registration of the vehicle [Third Amend. Comp., ¶¶ 52-53], yet Exhibit B to the third amended complaint shows Distinct Cars LLC as the registered owner of the vehicle on the 2022 registration card. The attached exhibit supersedes any allegations. The court finds no violation of Vehicle Code section 4453.5 for purposes of the subject demurrer.

 

Plaintiff also cites to Vehicle Cod section 34507.5 regarding motor carriers, but it’s not clear from the complaint or opposition how Distinct Cars, LLC operates as a motor carrier, or if the vehicle even qualifies as a vehicle subject to the statute. The court therefore declines to further consider this argument, due to the lack of support.

 

Notwithstanding the lack of a basis for Vehicle Code sections 4453 or 34507.5, the court considers the other cited sections for purposes of determining whether wrongful conduct is sufficiently alleged in order to establish an exception to the federal statute.

 

“(a) No owner of a motor vehicle may knowingly allow another person to drive the vehicle upon a highway unless the owner determines that the person possesses a valid driver's license that authorizes the person to operate the vehicle. For the purposes of this section, an owner is required only to make a reasonable effort or inquiry to determine whether the prospective driver possesses a valid driver's license before allowing him or her to operate the owner's vehicle. An owner is not required to inquire of the department whether the prospective driver possesses a valid driver's license.

“(b) A rental company is deemed to be in compliance with subdivision (a) if the company rents the vehicle in accordance with Sections 14608 and 14609.”

 

Veh. Code, § 14604

 

“(a) A person shall not rent a motor vehicle to another person unless both of the following requirements have been met:

“(1) The person to whom the vehicle is rented is licensed under this code or is a nonresident who is licensed under the laws of the state or country of his or her residence.

“(2) The person renting to another person has inspected the driver's license of the person to whom the vehicle is to be rented and compared either the signature thereon with that of the person to whom the vehicle is to be rented or the photograph thereon with the person to whom the vehicle is to be rented. …”

 

Veh. Code, § 14608

 

“(a) Every person renting a motor vehicle to another person shall keep a record of the registration number of the motor 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.

“(b) If the person renting the vehicle is a nondriver pursuant to subdivision (c) of Section 14608, the record maintained pursuant to this section shall include the name and address of the person renting the vehicle and, if applicable, his or her identification card number, the jurisdiction that issued the identification card, and the expiration date of the identification card. The record shall also include the name and address of the licensed driver, his or her driver's license number, and the expiration date of his or her driver's license.”

 

Veh. Code, § 14609

 

Plaintiffs’ argument regarding violations of the subject sections rely on Exhibit C of the third amended complaint, which contains a picture of a document identified as “Vehicle Rental Agreement,” which Plaintiffs allege constitutes a “lease” agreement. The court finds the descriptions equivalent for purposes of interpreting the application of the various statutes in the presented circumstances of the instant action. The language of the agreement identifies the owner of the vehicle as “Distinct Vans,” the renter as “PDQ 10,” and Rideshare Car Rentals, LLC as the “Platform.” The “Platform” is described as “a third party facilitating the transaction between car owners and car drivers by providing a platform.”

 

While the court accepts the allegation of PDQ 10 as a sham entity, nothing in the opposition establishes that the identification of the entity as the renter establishes violations of Vehicle Code sections 14608 and 14609. The statutory language itself only addresses rentals to a “person.” The court assumes PDQ 10 in and of itself constitutes an entity incapable of obtaining an individual drivers license, and therefore not a “person” within the statute. Nothing in the sections bars the rental of the vehicle to a non-human entity either way. The opposition otherwise lacks any argument or authority declaring the rental/lease agreement invalid on legal incapacity of the renter. In other words, barring allegations and exhibits consistent with the argument of a violation of the direct rental to an unlicensed driver, the court finds no violation of the statutes whether PDQ 10 operates as a sham entity of Distinct Cars or not.

 

Without an established violation of said sections or any other basis to declare the rental wrongful in some capacity, the court finds no basis of liability against Distinct Cars, LLC. Even assuming the establishment of a statutory violation however, the court finds Plaintiffs continue to lack support for the argument that upon the rental of the vehicle to an entity, the rental car company retains an obligation to maintain surveillance and control of the subsequent assignment of the vehicle to any and all potential vehicle operators.

 

Such an argument in fact specifically contradicts the public policy behind the statute, as interpreted by the leading cases. Absent a showing of the owner’s direct negligence or criminal wrongdoing, “the Graves Amendment prohibits vicarious liability claims against owners of leased vehicles.” (Carton v. General Motor Acceptance Corp., supra, 611 F.3d at p. 457.) While state laws can create exceptions to the general bar on liability, claims arising in negligent entrustment must find specific state law support requiring a safe driving record. (Ibid.) Other cases considering the statute and public policy are in accord. (Garcia v. Vanguard Car Rental USA, Inc. (11th Cir. 2008) 540 F.3d 1242, 1249; Green v. Toyota Motor CreditCorp (E.D.N.Y. 2009) 605 F.Supp.2d 430, 436; Dupuis v. Vanguard Car Rental USA, Inc. (M.D. Fla. 2007) 510 F.Supp.2d 980, 984; Johnson v. Agnant (D.D.C. 2006) 480 F.Supp.2d 1, 3-4; Meyer v. Nwokedi (Minn. 2010) 777 N.W.2d 218, 223-224; see Berkan v. Penske Truck Leasing Canada, Inc. (W.D.N.Y. 2008) 535 F.Supp.2d 341, 345.) Again, the court finds no support under Plaintiffs’ provided authority.

 

The demurrer is therefore sustained. The subject ruling is strictly limited to Distinct Cars, LLC as a rental car company and in no other ways considers potential liability arguments for the allegedly improper provision of the vehicle to an unlicensed driver, or the possible role of Rideshare Car Rentals, LLC as a “platform” operator. The inquiry is strictly limited to the lack of any exception within the indisputably binding federal statute as to car rental car agencies.

 

3rd Cause of Action: Negligent Entrustment

For the reasons stated in the first cause of action, the court finds no basis for a negligent entrustment cause of action against Distinct Cars, LLC. The demurrer is sustained.

 

5th Cause of Action: Survival Action                                                 

To the extent the survival cause of action depends on the negligence and/or negligent entrustment cause(s) of action, the demurrer is also sustained with leave to amend.

 

The demurrer is therefore sustained without leave to amend as Distinct Cars, LLC only. Plaintiffs provide no request for leave to amend, and the court otherwise finds no basis for leave in order to successfully allege a cause of action. If Plaintiffs elect to request leave at the time of the hearing, the court provides the following advisement regarding the amendment limit.

 

“In response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. The three-amendment limit shall not include an amendment made without leave of the court pursuant to Section 472, provided the amendment is made before a demurrer to the original complaint or cross-complaint is filed.” (Code Civ. Proc., § 430.41, subd. (e)(1).) Plaintiff may therefore consider a fourth amended complaint, given the first amended complaint was filed under section 472, and the second amended complaint was the result of a stipulation. The court only first reviewed the action following the filing of the second amended complaint.

 

Nevertheless, the statute applies to any and all parties. Furthermore, if Plaintiffs elect to amend, Plaintiffs may only add facts and theories of liability in support of the pled claims, including the agency claims. Plaintiff may NOT add any new causes of action. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

 

Motion to Strike set for March 30, 2023.

 

Distinct Cars to provide notice to ALL parties.