Relates to negligence in use or operation of vehicle attributable to owner

To provide protection from liability for new car dealers who loan motor vehicles to persons who are involved in crashes resulting in death or injury to persons or property.

2. Summary of provisions:

Bill section 1 would add a new subdivision 5 to section 388 of the Vehicle and Traffic Law (VTL) to provide that a new car dealer, or an affiliate of such dealer, that loans a motor vehicle, without a fee, shall not be liable or responsible for death or injury to persons or property that results or arises out of the use, operation or, possession of the vehicle during the period of the loan. The shield from liability shall only apply if there is no negligence or criminal wrongdoing on the part new car dealer and the motor vehicle has been loaned out by the new car dealer to a customer while such vehicle is being serviced or repaired by the new car dealer.

The bill would take effect immediately.

3. Existing law:

Under section 388 of the VTL, new car dealers are liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner.

4. Legislative history:

This is a new bill

5. Statement in support:

Section 388 of the VTL provides that every owner of a motor vehicle in New York State shall be liable for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, by any person using or operating the vehicle with the permission of the owner. In 2005, Congress attached the Graves Amendment to the Safe, Accountable, Flexible, Efficient Transportation Equity Act, which essentially eliminated vicarious liability for rental companies. The federal statute provides, in part

"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.. " (49 USC § 304 06)

Courts across the United States have consistently found that the Graves Amendment is constitutional and preempts state laws The Court in Green v. Toyota Motor CreditCorp, 60.5 F. Supp 2d 430 recognized that Congress had a" rational basis for concluding that vicarious liability laws may, in the aggregate, adversely affect the motor vehicle leasing market. Flagler, .538 F.Supp.,2d at .559-60. Vicarious liability regimes can cause leasing companies such as TMCC to cease doing business in states with vicarious liability laws, or to increase the costs of leasing such cars for all consumers--in state and without."

This proposal is consistent with the Graves Amendment in that it provides needed protections for new car dealers who loan motor vehicles to consumers while the consumer's motor vehicle is being repaired. If the loaned vehicle is involved in a crash, the new car dealer should not have to assume the cost of such crash, unless the dealer is negligent or committed wrongdoing. As in the case of the rental companies, shielded by the Graves Amendment, this proposal grants much needed fiscal protection to new car dealers who loan vehicles to consumers.

6. Possible objections:

Unknown.

7. Other State agencies interested:

Department of Financial Services

8. Known position of others:

None known.

9. Budget implications:

None.

10. Local impact: None.