Court of Appeals allows automobile accident victims to add vicariously liable leasing and rental com

On June 5, 2008, the New York State Court of Appeals handed down an important decision that is adverse to the interests of companies engaged in the business of leasing and renting automobiles. The new decision will expose such companies to vicarious liability claims (in certain, specific instances) that the industry had once thought had been completely eliminated. In Jones v. Bill (2008 N.Y. Slip Op 4950) the Court of Appeals overturned the decision of the New York State Supreme Court, Appellate Division, Second Department, which had held that plaintiffs may not avail themselves of the relation back doctrine to add leasing or renting companies to lawsuits commenced before August 10, 2005. Background Since 1924, New York State Law has mandated that every owner of a motor vehicle operated on the roads of the state is liable and responsible for death, personal injuries and property damage caused by the negligent operation of an automobile by a permissive driver. See, Veh. & Tr. A,? 388 (Consol. 2008). Although the law was initially meant to ensure that innocent victims of automobile accidents had recourse to solvent parties from which to recover, in more recent years, the law had metamorphosed into a tool with which plaintiffs could recover virtually unlimited damages from large leasing companies, rental companies and banking institutions. As a result, many leasing companies abandoned the New York market. To address this economic hardship, the United States Congress passed an amendment to a federal highway spending bill. The Graves Amendment (named for the sponsor of the bill) was codified as 49 U.S.C. A,? 30106 and was signed into law on August 10, 2005. Pursuant to the new federal statute, all state laws imposing vicarious liability on motor vehicle owners for the negligence of a permissive driver were preempted, as long as the owner was a company engaged in the business of leasing or renting automobiles. The Graves Amendment took effect on the date it was signed into law, and all actions that had not yet been commenced were deemed invalid as against a leasing or rental company. In New York, a lawsuit is commenced by filing a complaint with the court. New York, however, also allows additional parties to be added to an action at any time by filing of an amended complaint. In such situations, a claim asserted in the complaint is interposed against the defendant or a co-defendant united in interest with such defendant when the action is commenced. See, CPLR A,? 305(c) (Consol. 2008). This provision of the CPLR allows a plaintiff to name additional parties as defendants after the statute of limitations has expired as long as the new defendant was united in interest with the defendant who was timely sued. Jones v. Bill In the case of Jones v. Bill, the plaintiff was injured in an accident that occurred on July 7, 2005. The plaintiff initially sued the driver of the offending vehicle on August 8, 2005, before the enactment of the Graves Amendment. After the Graves Amendment was signed into law, the plaintiff learned that the offending vehicle was owned by DCFS Trust. On November 1, 2005, the plaintiff filed an amended complaint naming DCFS Trust as an additional defendant. DCFS Trust, an automobile leasing company, moved to dismiss the action based on the applicability of the Graves Amendment, and the trial court granted the motion. The plaintiff appealed to the Appellate Division, Second Department, arguing that the action against DCFS Trust related back to the action against the driver, which was filed before the Graves Amendment was signed into law. The Appellate Division upheld the dismissal of the plaintiffA?a,?a,,?s cause of action against the leasing company, ruling that the relation back doctrine was available to save claims barred by the statute of limitations. The court refused to extend the doctrine to cases barred by enactment of the Graves Amendment. In 2007, the Appellate Division, Fourth Department reached a different conclusion, ruling that the relation back doctrine was available for plaintiffs to add leasing and rental companies as additional defendants in cases commenced before the enactment of the Graves Amendment. See, Williams v. White, 40 A.D.3d 110 (4th DepA?a,?a,,?t 2007); see also, Leuchner v. Cavanaugh, 42 A.D.3d 893 (4th DepA?a,?a,,?t 2007). Thus, a split developed in the Appellate Division between the Second and the Fourth Departments. The Second DepartmentA?a,?a,,?s decision in Jones v. Bill was certified to the Court of Appeals, and the court heard oral arguments on the case in April of 2008. On June 5, 2008, the court reversed the Second DepartmentA?a,?a,,?s decision and denied DCFS TrustA?a,?a,,?s motion to dismiss. Writing for the unanimous court, Chief Judge Judith Kaye stated the new rule announced by the court appropriately limits potential claims against vehicle lessors without unwarranted abridgment of actions already underway. Without clearer indication from Congress, the court saw no reason to infer greater retroactive application of the law that otherwise denies injured plaintiffs a viable cause of action.

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