Florida court rejects car dealership’s Graves Amendment defense for loaner vehicle.

The plaintiff sued the defendant for vicarious liability based on the negligence of a driver of one of its loaner vehicles. The trial court granted summary judgment in favor of the defendant based on the Graves Amendment. The Graves Amendment is a federal statute that generally protects the owner of a motor vehicle (or an affiliate of an owner) from vicarious liability where the owner rents or leases the vehicle if: (1) 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. On appeal, the appellate court reversed, finding that the plain meaning of the phrase “rents or leases” in the Graves Amendment does not encompass a car dealership’s gratuitous provision of a loaner vehicle. 

As demonstrated by Romero, the Graves Amendment leaves several key terms undefined, creating a fertile ground for litigation. In the peer-to-peer car-sharing context, involving apps such as Turo, the vehicle owner (called a “host”) frequently asserts the Graves Amendment as a defense to vicarious liability. Nevertheless, very few courts have addressed the applicability of the Graves Amendment to the car-sharing industry. A key issue is whether the host was “engaged in the trade or business of renting or leasing motor vehicles.” At least one Supreme Court in New York found that the Graves Amendment was applicable to a host. Recently, several states (including Florida and Ohio) also have enacted statutes that expressly recognize the applicability of the Graves Amendment to hosts and car-sharing platforms. However, it remains to be seen how these statutes will be applied. Further, it should be remembered that the Graves Amendment does not protect hosts from direct liability claims.
 

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