For its part, HLT argued that the federal Graves Amendment, 49 U.S.C. § 30106, preempted any state statute imposing vicarious liability on HLT as the title owner of the vehicle Ms. LaPierre had been driving when the collision occurred.

The Puerinis objected, arguing that, because Rhode Island has “enacted financial responsibility laws” aimed at making sure an individual hurt on Rhode Island highways had an “avenue of recovery against a lessor,” the Graves Amendment was not applicable.

The trial court granted summary judgment in favor of HLT, and the dispute reached the Rhode Island Supreme Court.

The Graves Amendment

The Graves Amendment 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. . . .

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

(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.

Rhode Island Law

General Laws 1956 § 31-34-4 provides:

Any owner of a for hire motor vehicle or truck who has given proof of financial responsibility under this chapter or who in violation of this chapter has failed to give proof of financial responsibility, shall be jointly and severally liable with any person operating the vehicle for any damages caused by the negligence of any person operating the vehicle by or with the permission of the owner.

The Rhode Island Supreme Court's Decision

The court affirmed.

In its decision, the court explained that the Graves Amendment was part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (“SAFETEA-LU”), signed into law by President George W. Bush in August 2005. The SAFETEA-LU was a “comprehensive transportation bill” and “included [the Graves Amendment] in the act as a tort reform measure intended to bar recovery against car rental and leasing companies on the basis of vicarious liability,” the court added.

The court pointed out that many courts that have had the opportunity to construe the language and effect of the Graves Amendment have concluded that it preempted state laws imposing vicarious liability on car rental or leasing agencies for the negligent acts of these agencies' lessees while preserving the states' authority both to impose mandatory insurance – or insurance-like – requirements as a condition of operating as a rental or leasing agency and to provide consequences for failure to comply with such insurance requirements.

The court then ruled that Section 31-34-4, which established vicarious liability for the title owner of a motor vehicle when the vehicle operator's negligence caused damage, “clearly” conflicted with the Graves Amendment because it imposed liability on “[a]ny owner of a for hire motor vehicle or truck” for the negligence of the vehicle's operators regardless of whether proof of financial responsibility had been provided.

Accordingly, the court held that Section 31-34-4 was preempted by the Graves Amendment.

The court added that because HLT was engaged in the general business of leasing motor vehicles and because there was no dispute with respect to whether HLT had complied with the mandatory insurance requirement that it furnish proof of financial responsibility as a condition of operating as a lessor of motor vehicles, HLT was entitled to summary judgment on the Puerinis' claims that it was vicariously liable for their injuries.

The case is Puerini v. LaPierre, No. 2016-335 (R.I. June 4, 2019). Attorneys involved include: For Plaintiffs: Lauren E. Jones, Esq., Manuel Andrews, Esq. For Defendants: Annette G. Hasapidis, Pro Hac Vice, Howard A. Fried, Pro Hac Vice, Faith A. LaSalle, Esq., Paul R. Crowell, III, Esq.