Opinion
No. 2023-50131 Index No. 30210/2020E
02-27-2023
Roger M., Rosalia M.-R., Jacqueline M., and J.M. an infant, by her father and natural guardian Roger M., Plaintiffs, v. American United Transportation, Inc., American United Transportation II Inc., and Gregory Mella, Defendants.
For Plaintiffs: Denny Tang, Esq. Parker Waichman LLP For Defendants American United Transportation Inc. and American United Transportation II Inc.: Rory Mulholland, Esq. Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP For Defendant Gregory Mella [No representation recorded]
Unpublished Opinion
For Plaintiffs: Denny Tang, Esq. Parker Waichman LLP
For Defendants American United Transportation Inc. and American United Transportation II Inc.: Rory Mulholland, Esq. Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP
For Defendant Gregory Mella [No representation recorded]
Hon. VERONICA G. HUMMEL, A.J.S.C.
In accordance with CPLR 2219(a), the decision herein is made upon consideration of all papers filed by the parties in NYSCEF in connection with: (1) plaintiffs' motion (Seq. No. 2) seeking an order, pursuant to CPLR § 3215, granting them default judgment against defendant GREGORY MALLA (" Malla "), setting this matter down for an inquest at the conclusion of the case, and awarding costs, attorneys' fees, and sanctions to plaintiffs; and (2) defendants AMERICAN UNITED TRANSPORTATION, INC.'s (" AUT ") and AMERICAN UNITED TRANSPORTATION II INC.'s (" AUT II "; and, together with AUT," American United ") motion (Seq. No. 3) seeking an order, pursuant to CPLR 3212 and Vehicle and Traffic Law (" VTL ") § 388, granting them summary judgment on the issue of liability and dismissing any and all claims and cross-claims against them.
Motion Sequences 2 and 3 are consolidated herein for purposes of disposition. Oral argument on both motions was heard before the Court virtually via Microsoft Teams on July 26, 2022.
This personal-injury action arises from a motor-vehicle accident that occurred on December 29, 2019, when a vehicle driven by plaintiff ROGER M. was allegedly struck in the rear by a vehicle driven by defendant GREGORY MELLA (" Mella ") and owned by AUT. Plaintiffs ROSALIA M.-R., JACQUELINE M., and J.M. were passengers in plaintiff ROGER M.'s vehicle.
A. Plaintiffs' Default Motion
To prevail on a motion for a default judgment, a plaintiff is required to (1) demonstrate proof of service of the summons and complaint, (2) establish that the defendant is in default, and (3) submit proof of the facts constituting the plaintiff's claims. CPLR § 3215; Clarke v. Liberty Mut. Fire Ins. Co., 150 A.D.3d 1192 (2d Dep't 2017).
Here, Plaintiffs have satisfied all three requirements for entry of a default judgment against Mella:
1. In an Order resolving a prior motion by plaintiffs for substitute service on Mella pursuant to CPLR 308(5), the Court ordered that Mella be served via his insurance carrier, American Country Insurance Company, by ordinary mail and express/overnight mail. [NYSCSEF Doc. 35] Plaintiffs have submitted an affidavit of service demonstrating that service on Mella was completed on June 22, 2021, as ordered by the Court. [ Id. ]
2. Pursuant to CPLR § 3012(c), Mella's answer was due on July 15, 2021. Plaintiff has established that, to date, Mella has failed to file an answer.
3. Plaintiffs have each submitted affidavits setting forth the facts of their claims against defendants. [NYSCEF Doc. 38]
Accordingly, the motion (Seq. No. 2) is GRANTED, without opposition, to the extent that default judgment shall be entered against Mella. An inquest as to the damages owed by Mella, if any, shall take place at the time of trial.
Finally, Plaintiffs' request for costs, attorneys' fees, and sanctions against Mella is DENIED.
B. American United's Summary-Judgment Motion
American United's motion for summary judgment (Seq. No. 3) is based primarily on allegations of lack of permissive use. Specifically, while American United concedes that AUT owned the vehicle driven by Mella, American United contends that Mella was never authorized to operate the vehicle. Thus, American United argues that it cannot be held vicariously liable for Mella's negligence under VTL § 388.
VTL § 388(1) "makes every owner of a vehicle liable for injuries resulting from negligence in the use or operation of such vehicle... by any person using or operating the same with the permission, express or implied, of such owner." State Farm Fire & Cas. Co. v. Sajewski, 150 A.D.3d 1297, 1297 (1st Dep't 2017) (quoting Murdza v. Zimmerman, 99 N.Y.2d 375, 380 (2003)) (internal quotation marks). Under VTL § 388(1), "there is a presumption that the operator of a vehicle operates it with the owner's permission." Id. (citations omitted). "The presumption may be rebutted by substantial evidence that the owner did not give the operator consent." Id. (citations omitted).
In support of its motion, American United submits three pieces of evidence. The first is the affidavit of Neil Miller, the Chief Operating Officer of AUT, AUT II, and EZ Livery Leasing LLC (" EZ Livery "). [NYSCEF Doc. 45] Initially, Mr. Miller explains that AUT "is a company [that] acquires vehicles and maintains for-hire vehicle licenses" and that EZ Livery "is an affiliate company [that] leases or sells such vehicles on behalf of AUT to qualified operators licensed by the New York City Taxi and Limousine Commission." [ Id. ¶ 2] Mr. Miller goes on to aver that, based on his search of American United's and EZ Livery's records, AUT was the registered owner of the vehicle operated by Mella, which vehicle bears the New York State license plate number T680041C. [ Id. ¶ 4] According to Mr. Miller, on November 13, 2019, EZ Livery, on behalf of AUT, financed the vehicle to nonparty Candelario Glenys (" Glenys ") pursuant to a finance agreement. [ Id. ¶¶ 5-6] As allegedly quoted by Mr. Miller in his affidavit, the finance agreement provides that Glenys "will not permit any other individual to operate said vehicle without the written consent of EZ [Livery]." [ Id. ¶ 6] Mr. Miller avers that EZ Livery "never gave written or any other consent to operate the vehicle to anyone other than [Glenys]." [ Id. ¶ 7] Finally, Mr. Miller avers that AUT II "never owned, operated, maintained, managed, or controlled" the subject vehicle. [ Id. ¶ 9]
American United also submits a copy of the finance agreement between Glenys and EZ Livery. [NYSCEF Doc. 46] The agreement concerns a 2015 Toyota Highlander with VIN number 5TDBKRFH2FS193066. [ Id. at p. 2] Consistent with Mr. Miller's affidavit, the finance agreement provides that the "[s]igner [ i.e., Glenys] will not permit any other individual to operate said vehicle without the written consent of EZ [Livery]." [ Id. ] Glenys's signature on the agreement is digitally stamped as having been applied on November 13, 2019. [ Id. ] Annexed to the agreement is a page that, among other things, lists ways in which Glenys could lose the vehicle, with one such way being simply "Unauthorized driver." [ Id. at 5]
Finally, American United submits a copy of the New York State registration for a 2015 Toyota with VIN number 5TDBKRFH2FS193066 and license plate number T680041C for the period August 12, 2019, through August 31, 2020. [NYSCEF Doc. 47] The registration lists AUT as the owner of the vehicle.
American United argues that the foregoing evidence rebuts VTL § 388(1)'s presumption of permissive use, citing to Murdza, 99 N.Y.2d 375.
Plaintiffs oppose the motion. In their opposition, plaintiffs do not dispute the admissibility or authenticity of American United's submitted evidence. Nor do they dispute that AUT II was not the owner of the vehicle at the time of the accident. Instead, plaintiffs argue that, even if American United's submitted evidence tends to rebut the presumption of permissive use under VTL § 388(1), controlling caselaw holds that the issue then becomes a question of fact for the jury. Plaintiffs' position derives from the fact that American United is a lessor of motor vehicles. According to plaintiffs, the Court of Appeals held in Murdza, 99 N.Y.2d 375, that a restrictive provision in a contract does not immunize, as a matter of law, a lessor of motor vehicles from vicarious liability under § 388(1).
As the parties recognize, Murdza does indeed govern the outcome of this motion. In that case, the plaintiff was struck by a van while crossing an intersection. D.L. Peterson Trust (" D.L. ") and PHH Fleet America Corporation (" PHH ") owned the van and had leased it to Brown and Williamson Tobacco Corporation (" B & W "). B & W, in turn, had entrusted the van to an employee. When the accident occurred, however, the van was being driven by that employee's boyfriend. "Although B & W's employee handbook specifically restricted use of company vehicles to employees and their licensed spouses, the agreement leasing the vehicle to B & W contained no use restrictions." Murdza, 99 N.Y.2d at 377.
The Court of Appeals ultimately determined that the restrictive provision contained in B & W's employee handbook was sufficient to rebut VTL § 388(1)'s presumption of permissive use as to B & W only. In reaching that determination, the Court of Appeals examined the reach of its previous decision in Motor Vehicle Accident Indemnification Corp. v. Continental National American Group, 35 N.Y.2d 260 (1974) [hereinafter MVAIC ]. There, because the lessee of a motor vehicle gave his consent to the third-party driver involved in the underlying accident, the Court of Appeals "deemed [the] car rental agency to have 'constructively' consented to [the] third-party driver's operation of its rental vehicle despite a lease provision restricting use of the vehicle to the lessee and his immediate family." Murdza, 99 N.Y.2d at 380. The Court of Appeals' decision in MVAIC "rested, in part, on the public policy concerns surrounding the large number of vehicles placed on the road by businesses that rent cars to others for profit, and the inevitability that these vehicles will become involved in their fair share of accidents." Id. (internal quotation marks and citation omitted). Explaining why the same public-policy concerns did not apply to B & W, the Court of Appeals wrote in Murdza:
While it is foreseeable that a rented vehicle would come into the hands of any number of operators by the very nature of the quasi-ownership relationship created by a lease, the bailment of a vehicle to an employee spawns a markedly different relationship with its own set of expectations. Indeed, an at-will employment relationship and the frequent contact between an employee and employer demand compliance with restrictions on vehicle operation placed on the employee. As a result of this relationship, it is reasonable for an employer to expect employees to comply with its use restrictions. Thus, allowing an employer explicitly to restrict those who may operate its vehicles, while simultaneously restricting its liability as an owner under Vehicle and Traffic Law § 388, encourages careful selection of operators-the curative policy underpinning of the section.Id. at 381-82.
In the Court of Appeals' view, however, D.L. and PHH, as commercial lessors, remained subject to vicarious liability under VTL § 388(1) despite the restrictive provision in B & W's employee handbook:
Unlike B & W's role as a bailor-employer, however, PHH and [D.L.] are lessors of the van and therefore fall squarely within the public policy considerations discussed in [ MVAIC ] . As such, they may not benefit as a matter of law from restrictions adopted by their lessee that they themselves could not use to limit their ownership liability under section 388 .Id. at 382-83 (emphasis added). The emphasized sentence from Murdza clearly indicates that D.L. and PHH could not have immunized themselves from vicarious liability under VTL § 388(1) by including in their vehicle lease the same type of restriction on use that was contained in B & W's employee handbook.
Here, American United fails to distinguish AUT and EZ Livery from D.L. and PHH. Indeed, both sets of defendants appear to be similarly situated in terms of the concerns animating the Court of Appeals' decision in Murdza. Initially, neither AUT nor EZ Livery claim to be Glenys's employers. Rather, they freely concede that the vehicle at issue here was, for all intents and purposes, leased to Glenys. American United has not submitted any evidence tending to show that such lease was the result of anything other than an arms-length commercial transaction or that AUT or EZ Livery maintained contact with or exercised any control over Glenys during the operation of the lease (other than through the terms of the finance agreement itself). Thus, American United fails to demonstrate that AUT or EZ Livery had, at the time of the accident, the "at-will employment relationship and the frequent contact" between themselves and Glenys that the Murdza Court found "would demand compliance with restrictions on vehicle operation placed" on Glenys. 99 N.Y.2d at 381. Just like D.L. and PHH, AUT and EZ Livery are, by essentially their own admission, commercial lessors who "fall squarely within the public policy considerations discussed in [ MVAIC ]." Id.
American United's argument that AUT's leasing of vehicles only to drivers licensed by the Taxi and Limousine Commission essentially alleviates the public-policy concerns articulated in MVAIC and Murdza is unconvincing. Although American United's counsel asserts in his affirmation in reply that "AUT carefully selects drivers," American United has not presented any evidence as to how it selects drivers to whom to lease vehicles other than the mere fact of their licensure by the Commission. Nor does American United even attempt to explain what such licensure entails or how it would demand a driver's compliance with any use restrictions contained in EZ Livery's finance agreements to any greater degree than the lessees at issue in the Murdza decision.
As with D.L. and PHH, AUT's vicarious liability pursuant to VTL § 388(1) depends entirely on constructive consent, which in turn depends on whether Glenys permitted Mella to drive the vehicle at issue. See id. at 381-82 ("The linchpin to our finding of constructive consent in [ MVAIC ] was the third-party driver's permissive use vis-à-vis the lessee."). Neither party has submitted any evidence relevant to that question, however, as neither Mella nor Glenys have, as of the motion's filing, been deposed. Therefore, there exists a material question of fact that precludes the granting of the motion as to AUT at this time.
VTL § 388(1), to the extent that it imposes vicarious liability on bona fide commercial lessors of motor vehicles, has been preempted by the so-called Graves Amendment, 49 U.S.C. § 30106. Green v. Toyota Motor CreditCorp, 605 F.Supp.2d 430, 433-34 (E.D.NY 2009); see also Hall v. Elrac, Inc., 52 A.D.3d 262 (1st Dep't 2008). The Graves Amendment was enacted in 2005, subsequent to the Murdza decision. American United, despite submitting evidence that it is in the business of leasing motor vehicles, has not moved for relief pursuant to the Graves Amendment.
Notwithstanding the denial of the motion as to AUT, there does not appear to be any dispute that AUT II was not the owner of the vehicle at the time of the accident. Accordingly, the motion is granted as to AUT II.
The Court has considered the additional contentions of the parties not specifically addressed herein. To the extent that any relief requested by the movant was not addressed by the Court, it is hereby denied.
Accordingly, it is hereby:
ORDERED that plaintiffs' motion (Seq. No. 2) seeking an order, pursuant to CPLR § 3215, granting them default judgment against defendant GREGORY MALLA, setting this matter down for an inquest at the conclusion of the case, and awarding costs, attorneys' fees, and sanctions to plaintiffs is GRANTED to the extent that default judgment shall be entered against defendant MALLA and an inquest as to damages shall be held at the time of trial in this action; and it is further
ORDERED that plaintiffs shall serve a copy of this Order on defendant GREGORY MELLA and his insurer, American Country Insurance Company, by first-class mail and overnight mail on or before March 10, 2023, and plaintiffs shall upload proof of service to NYSCEF within seven (7) days of the completion of such service; and it is further
ORDERED that defendants AMERICAN UNITED TRANSPORTATION, INC.'s and AMERICAN UNITED TRANSPORTATION II INC.'s motion (Seq. No. 3) seeking an order, pursuant to CPLR 3212 and Vehicle and Traffic Law § 388, granting them summary judgment on the issue of liability and dismissing any and all claims and cross-claims against them is GRANTED as to defendant AMERICAN UNITED TRANSPORTATION II INC. and DENIED, with leave to renew upon the completion of all discovery in this action, as to defendant AMERICAN UNITED TRANSPORTATION, INC.; and it is further
ORDERED that the Clerk shall enter judgment accordingly; and it is further
ORDERED that the Clerk shall mark the motions (Seq. Nos. 2 & 3) disposed in all Court records.
This constitutes the Decision and Order of the Court.