Vehicle Leasing: Graves Amendment Held Inapplicable to Leased Trailers

But, as the General Trading Grocery and Dairy employee testified, a tractor is defined as the “front [truck] part” of the tractor-trailer and a trailer is defined the back container part, the part with “no motor.” Here, the leased equipment at issue was “just a trailer,” the part without the motor. Thus, the court concluded that because Jiffy Trucking was not “engaged in the business of renting or leasing motor vehicles,” the Graves Amendment did not apply. The court stated that “[t]here no indication in the language or legislative history of the statute, that requires the Graves Amendment to be applied to 'delivery equipment' that does not contain a motor.”

Adam J. Schlagman is editor-in-chief of this newsletter.

If you or your clients are in the business of leasing the trailer portions of tractor-trailers take note, a New York County trial court judge has ruled that 49 U.S.C. ' 30106, (“the Graves Amendment”), does not pre-empt actions alleging vicarious liability with respect to “delivery equipment” that does not contain a motor. See Lee v. Rivera, No. 107547/07, New York County Supreme Court, Justice Paul Wooten (July 31, 2009).

The Facts

The plaintiff was injured in a collision with the trailer portion of a tractor-trailer. The tractor, operated by defendant Angel A. Cordonar, was carrying a trailer owned by defendant General Trading Grocery and Dairy. General Trading Grocery and Dairy is the parent company of defendant Jiffy Trucking Company. Jiffy Trucking Company operates as the leasing company for General Trading Grocery and Dairy. Jiffy Trucking Company leased a trailer to defendants Ponce Dynasty Corporation and Jose L. Benitez, the independent owners of the tractor that was involved in this accident. Ponce Dynasty Corporation and Jose L. Benitez are the employers of Angel A. Cordonar, the operator of said tractor, that Jiffy's trailer was attached to, at the time of the subject accident.

As a result of the accident, the plaintiff brought two separate actions. The first, based upon vicarious liability, was against the tractor-trailer operator and the tractor-trailer owners pursuant to New York Vehicle and Traffic Law. The second action, which is the subject of this legal issue, sought the same relief against the same defendants as the first action, but added the leasing company, Jiffy Trucking Company, as a defendant. Jiffy Trucking moved to dismiss the complaint, pursuant to CPLR ' 3211 (a) and 49 U.S.C.
' 30106, (“the Graves Amendment”). In support of its motion, Jiffy alleged that plaintiff's claim was barred by operation of the Graves Amendment, which pre-empts the state law on vicarious liability, for businesses that are “engaged in the trade or business of renting or leasing motor vehicles” (49 U.S.C. ' 30106).

The Court's Decision

The court referred the issue of the applicability of the Graves Amendment to a special referee who recommended that the Graves Amendment was not applicable to these facts. The referee relied upon the testimony of a General Trading Grocery and Dairy employee who testified that Jiffy Trucking Company was created by General Trading Grocery and Dairy for the purpose of “delivering General Trading's groceries” and that Jiffy Trucking Company's tractors are leased only for the purpose of delivering groceries to General Trading Grocery and Dairy's customers. A tractor cannot be rented from Jiffy Trucking Company for any other purpose. Consequently, the referee found that Jiffy Trucking is not merely in the business of leasing and/or renting motor vehicles; thus, the Graves Amendment is inapplicable.

The court sustained the referee's conclusion that the Graves Amendment is inapplicable here, but its conclusion was based on a more succinct interpretation of the Graves Amendment: Because a trailer has no motor, the Graves Amendment does not apply. The Graves Amendment states:

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).

The court noted that the New York Vehicle and Traffic Law ' 388 imposes vicarious liability upon the lessor of a vehicle for the negligence of the driver. In certain circumstances, the Graves Amendment pre-empts the Vehicle and Traffic Law ' 388. By application of the Supremacy Clause of Article IV of the U.S. Constitution, the New York State Court of Appeals has held that the pre-emption of Vehicle and Traffic Law ' 388 by the Graves Amendment is constitutional (U.S.C.A. Const. Art. VI cl. 2; Hernandez v. Sanchez, 836 NYS2d 577 (1 Dept 2007); Graham v. Duckley , 852 NYS2d 169 (2 Dept 2008), appeal dismissed , 10 NY3d 835 (2008); Johnson v. Kling , 854 NYS2d 648 (2 Dept 2008), reversed on other grounds , 10 NY3d 887 (2008); Kuryla v. Halabi , 835 NYS2d 230 (2 Dept 2007); Jones v. Bill , 825 NYS2d 508 (2 Dept 2006), reversed on other grounds , 10 NY3d 550 (2008)).

But, as the General Trading Grocery and Dairy employee testified, a tractor is defined as the “front [truck] part” of the tractor-trailer and a trailer is defined the back container part, the part with “no motor.” Here, the leased equipment at issue was “just a trailer,” the part without the motor. Thus, the court concluded that because Jiffy Trucking was not “engaged in the business of renting or leasing motor vehicles,” the Graves Amendment did not apply. The court stated that “[t]here no indication in the language or legislative history of the statute, that requires the Graves Amendment to be applied to 'delivery equipment' that does not contain a motor.”

Adam J. Schlagman is editor-in-chief of this newsletter.