Opinion
SC 2254-13
04-24-2014
37 South Fifth Ave Corp., Plaintiff, v. Dimensional Stone & Tile and PENSKE LEASING & RENTAL, Defendants.
37 South Fifth Avenue Corp. Plaintiff pro se Galvano & Xanthakis, P.C. Attorney for Defendant Dimensional Stone & Tile Morris Duffy Alonso & Faley Attorneys for Defendant Penske Leasing & Rental
37 South Fifth Avenue Corp.
Plaintiff pro se
Galvano & Xanthakis, P.C.
Attorney for Defendant Dimensional Stone & Tile
Morris Duffy Alonso & Faley
Attorneys for Defendant Penske Leasing & Rental
, J.
In this small claims action, plaintiff seeks to recover for damages sustained by its vehicle due to the negligence of defendant Dimensional Stone & Tile's employee while driving a rental truck owned by defendant Penske Leasing & Rental. The parties appeared before the Court on January 10, 2014 and a trial was held. Plaintiff provided proof of its damages of $4,371.92. The matter was adjourned for the defendants to submit papers addressing which defendant is responsible for paying for the damages to plaintiff's vehicle.
Defendant Penske Leasing & Rental (hereinafter "Penske") asserts that prior to the date of the accident it entered into a Truck Rental Agreement with defendant Dimensional Stone & Tile (hereinafter "Dimensional"). Penske contends that pursuant to the Truck Rental Agreement Dimensional had the option of either accepting insurance coverage offered by Penske or providing its own coverage and that Dimensional declined the insurance coverage provided by Penske and expressly and voluntarily agreed to obtain its own insurance coverage which was to name Penske as an additional insured. Penske further asserts that Dimensional expressly agreed to indemnify and hold Penske harmless for any and all claims, suits, costs, losses, damages, expenses and liabilities arising out of it's negligence and use or operation of the rented vehicle. Penske further contends that any claim against it is barred by the Graves Amendment. Pursuant to the Graves Amendment, 49 U.S.C. § 30106(a), an owner of a motor vehicle that rents or leases a vehicle to another person cannot be held vicariously liable for damages to persons or property that result or arises out of the use, operation, or possession of the vehicle during the rental or lease period if the owner is engaged in the trade or business of renting or leasing motor vehicles and there is no negligence or criminal wrongdoing on the part of the owner.
The Court notes that the only case cited by defendant Penske in support of its claim that it cannot be held responsible under the Graves Amendment, Pedroli v. Mercedes-Benz,94 AD3d 842 (2nd Dept. 2012), is inapplicable to the facts of the instant case as the vehicle at issue in the Pedroli case was a leased vehicle and not a rental vehicle. Moreover, the Second Department specifically noted in its decision that V.T.L. § 370 did not apply since the vehicle was a leased vehicle.
Defendant Dimensional acknowledges that Penske cannot be held vicariously liable under the Graves Amendment. However, defendant contends that Penske is responsible for the damages in the instant matter under V.T.L. §§ 370(1) and (3) which requires automobile insurance companies to provide their lessees with primary insurance coverage, including a minimum liability coverage of $10,000 for property damage. In ELRAC v. Ward, 96 NY2d 58 (2001), the Court of Appeals held that a rental car company could not circumvent the minimum statutory insurance requirements by contracting away its responsibility and therefore, the rental car company was responsible for the damages resulting from the lessee's use of the rental vehicle. See also Matter of Allstate Ins. Co. v. ELRAC, 26 Misc 3d 1234(A) (Sup. Ct. Kings Cty. 2010). A rental car company may enforce an indemnification clause in its rental agreement only to the extent that its liability exceeds the statutory minimum amount of insurance it is required to maintain. ELRAC v. Russo, 19 Misc 3d 1143(A) (Dist. Ct. Nassau Cty. 2008).
The Court finds that is clear from a review of case law that while Penske cannot be held vicariously liable for plaintiff's damages, Penske is responsible for plaintiff's damages under V.T.L. §§ 370(1) and (3). In the case at bar, the rental truck owned by defendant Penske caused the damage to the plaintiff while it was being operated by an employee of defendant Dimensional pursuant to a rental agreement. As such, the vehicle was required to be covered by Penske, as the vehicle owner, for a minimum amount of $10,000 for property damage pursuant to V.T.L.§§ 370(1) and (3) . The amount of damages sustained by the plaintiff amounts to $4,371.92, which is less than the $10,000 of property damage insurance coverage Penske, as a rental car company, is statutorily required to maintain on its rental vehicle.
Based upon the foregoing, the Court grants judgment to the plaintiff in the amount of $4,371.92 and finds that Penske alone is responsible for paying the plaintiff's damages in the aforementioned amount.
The above constitutes the Decision and Order of the Court.
The Court considered the following papers on this motion:
Memorandum of Law dated February 4, 2014; Memorandum of Law dated February 6, 2014.
Dated: April 24, 2014
Mount Vernon, New York
____________________________
HON. ADAM SEIDEN
Associate City Judge of Mount Vernon