Graves Amendment Confirmed in Lending Vehicle Leasing – Legal and Legislative [Boss Insurance]

Graves Amendment Confirmed In Lending Vehicle Leasing - Legal And Legislative

The court found that the Graves Amendment prevented rental and leasing companies from being held liable for customers’ accidents while driving their vehicles.


In Massachusetts, dealers who lend a courtesy car to customers while their car is being repaired are federally protected from liability if the courtesy car is involved in an accident. That protection overrides a state law that holds the car owner liable, according to the Massachusetts Supreme Judicial Court (SJC).

The SJC ruled that a dealer offering a courtesy vehicle is not subject to state law (§ 85A) that presumes that the owner of a vehicle is liable for accidents caused by the driver. Instead, the court ruled that the Graves Amendment, a federal law, prevents car rental and leasing companies from being held vicariously liable for torts committed by customers while driving. of their vehicles.

The SJC found that even without a separate charge for the use of the vehicle, the car dealership is protected from vicarious liability, Insurance Journal reported.

In this case, a New Jersey automobile dealership provided a courtesy vehicle to a customer, Kolawole Oke, because maintenance work on his automobile was expected to take more than three hours. MBF Auto owned and registered the courtesy vehicle, which was one of 125 cars in the dealership’s “loaner fleet”.

Oke signed documents that showed he had a valid driver’s license and understood that:

  • Would be the sole driver of the car;
  • The vehicle was limited to use within 100 miles of the dealership; And
  • Would be liable for all third party claims arising from his use of the courtesy vehicle.

Although Oke signed the paperwork, he drove the vehicle beyond the authorized 100-mile radius in Massachusetts. While in Boston, he left the vehicle illegally parked on a crosswalk with the key in the ignition and the engine running to run an errand leaving his then-wife, Shanitqua Steele, in the vehicle. When a parking attendant demanded that the illegally parked car be moved, Steele, who knew she was not authorized to drive it, got into the driver’s seat anyway. While trying to turn off the turn signal, she accidentally drove the car through a red light and hit Maria Blanca Elena Garcia, who was crossing the street. Garcia suffered serious injuries.

Garcia and his wife sued MBF Auto, Oke and Steele, accusing Steele and the dealership of negligence and Oke of negligent warrant.

The dealer and Oke obtained summary judgment from a Superior Court judge, but the plaintiffs appealed by transferring the case to the SJC.

The SJC’s decision affirms MBF Auto’s summary judgment, finding that it was protected by the federal Graves Amendment. However, the court overturned Oke’s summary judgment and determined that a jury could find he was negligent in giving Steele control of the vehicle.