Super Lawyers
William C. Altreuter

Thursday, May 11, 2006

Effective August 10, 2005, Section 30106 of the Safe, Accountable, Flexible, efficient Transportation Equity Act eliminated vicarious liability of owners of vehicles engaged in renting or leasing motor vehicles for "harm to persons" or property damage "arising out of the use, operation or possession of the vehicle during the period of the rental or lease," provided that there is, "no negligence or criminal wrongdoing on the part of the owner." Before that, in New York (and, I guess, in a couple of other places) GMAC Leasing, or Hertz could be held liable as owners, for torts committed by renters or lessees. I never had a problem with this concept, and, in fact, a nice portion of our practice was devoted to the representation of car rental companies-- one more example of a practice area snatched away from us with the stroke of a pen by an uncaring and capricious government.

New York's Civil Practice Law Article 16 is one of those "Law of Unintended Consequences" statutes that are so popular with tort reformers. In New York joint tortfeasors are jointly and severally liable-- except in situations enumerated in Article 16. That means that if one wrongdoer is 99% at fault, but has no money to respond to the plaintiff in damages, the tortfeasor who is 1% at fault has to pay the plaintiff the entire damages amount. Although this seems unfair to Mr. 1%, the idea is that the innocent injured plaintiff shouldn't be made to suffer because one wrongdoer cannot make him whole.

Article 16 changes this in certain circumstances. Sometimes, if a defendant is 50% or less responsible, that defendant is only responsible for the apportioned amount of the non-economic damages (pain and suffering, mostly). In the example used above, Mr. 1% would only be responsible for 1% as long as the case did not fall into one of the exceptions.

I know, it's confusing, mostly because the statute is written in the negative, but also because the exceptions mostly swallow the rule. There are a bunch of them-- actions against municipalities, and products liability actions and you name it. One of the biggest exceptions happens to be Section 1602(6) which provides that the exception to the rule of joint and several liability shall "not apply to any person held liable by reason of his use, operation, or ownership of a motor vehicle...."

A reason for this exception is that in automobile cases the ability of a defendant to respond in damages -- or carry sufficient insurance, really-- varies greatly. The legislature wanted to make wrongdoers responsible to innocent injured plaintiffs, and it didn't want to create an exception to the rule of joint and several liability in the most common sort of accident litigation-- particularly because insurance is universal. This means that society has assigned this risk to the insurance industry, which specializes in finding ways to spread risk around economically.

Interestingly, (to me, anyway) the new federal rule seems to create a hole in Article 16. Liability that is fault-based-- for example, negligent maintenance, or negligent entrustment-- is not the same as vicarious liability for mere ownership, and is arguably not "use or operation" either. As I read it, a lessor or rental company found liable in tort is now not covered by the 1602 exception, and is now no longer jointly or severally liable. It is hard to say if this is a good thing or a bad thing, but it is certainly different from the original purpose of the statute.

Thinking about stuff like that is how I spend my days, and what I trained for years to do. Gosh, I love my job.

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