Feb. 16, 2022

Ending Confusion Relating to Dealer Loaner Vehicles

A SPECIAL REPORT by Tripp Scott's Chuck Tatelbaum and Dennis Smith

As Published in the Daily Business Review

As a result of a Jan. 7 opinion from the 5th District Court of Appeal of Florida in the case of Romero v. Fields Motorcars, confusion has reigned concerning whether motor vehicle dealers and vehicle repair facilities will have vicarious liability when providing loaner vehicles to dealership and repair facility customers.

Prior to 2005, if the driver of a leased or rental vehicle or one that is a loaner from a motor vehicle dealership was reckless and caused personal injury and/or property damage while driving the vehicle, not only could the other driver or the injured person make a claim against the driver and the driver’s insurance company, but also the victim could file a claim against the lessor or owner of the vehicle under the legal theory of vicarious liability. As a result of this potential risk of exposure, in some states, such as New York and Connecticut, lessors were unwilling to enter into long-term vehicle leases. This also created uncertainty for vehicle lessors in many of the other states including Florida.

As a result of effective lobbying and the need for legislative change, in 2005, Congress passed what is known as the Graves Amendment that protects the lessors of vehicles from vicarious liability incurred by renters and lessees so long as the state’s minimum insurance requirements are met. The Graves Amendment provides:

(a)In General.—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, if—


the owner (or an affiliate of 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 (or an affiliate of the owner).

(b)Financial Responsibility Laws.—Nothing in this section supersedes the law of any state or political subdivision thereof—


imposing financial responsibility or insurance standards on the owner of a motor vehicle for the privilege of registering and operating a motor vehicle; or


imposing liability on business entities engaged in the trade or business of renting or leasing motor vehicles for failure to meet the financial responsibility or liability insurance requirements under state law.

Thus, Florida lessors of vehicles can obtain immunity from vicarious liability under the Graves Amendment so long as they comply with the financial responsibility laws of Florida. These laws are codified at Section 342.021(9)(b) of the Florida Statutes, with there being a difference for vehicles rented or leased for one year or longer and vehicles rented or leased for less than one year.

This new appellate decision appears to hold that complimentary loaner vehicles are not considered as rental or lease transactions, and, therefore, the Graves Amendment does not apply. Since it has been the prevalent practice of motor vehicle dealers and repair facilities to provide loaner vehicles on a complimentary basis to customers, the holding that the Graves Amendment does not apply the court ruling may leave the dealerships and the repair facilities believing that they may be vulnerable for claims asserted against the recipients of the complimentary loaner vehicles.

The Romero opinion held that because “the plain meaning of the phrase ‘rents or leases’ used in the Graves Amendment does not encompass a dealership’s gratuitous provision of a loaner vehicle, we reverse the judgment in favor of the (dealership”).

However, in 2020 the Florida legislature passed a bill that was signed into law by the governor that appears to contradict what was held in the 5th DCA opinion, as the legislation states that the Graves Amendment is applicable to vehicles that are loaned to customers by motor vehicle dealers as an accommodation without a charge. 

In reviewing the Romero opinion there is a footnote which holds that the accident in question occurred before the 2020 passage of the immunity statute that is codified at Section 324.021(9)(c) of the Florida Statutes, and it appears to say that if the accident occurred today (or after July 1, 2020), there would be no liability on the lessor/loaner of the vehicle. The opinion states:

Had Congress intended the Graves Amendment to include all forms of bailment, including gratuitous bailments, it could have used the word “bailment” in addition to, or included in, the phrase “rents or leases.” It did not. Certainly, it was aware of bailments, as evidenced by its inclusion of “bailee” in the definition of “owner,” but it did not extend protection to gratuitous bailments.

FN – Florida, however, has done so with the amendment to Section 324.021(9)(c)3., Florida Statutes (2020) (eff. July 1, 2020). Section 324.021(9)(c)3.a. states:

A motor vehicle dealer, or a motor vehicle dealer’s leasing or rental affiliate, that provides a temporary replacement vehicle at no charge or at a reasonable daily charge to a service customer whose vehicle is being held for repair, service, or adjustment by the motor vehicle dealer is immune from any cause of action and is not liable, vicariously or directly, under general law solely by reason of being the owner of the temporary replacement vehicle for harm to persons or property that arises out of the use, or operation, of the temporary replacement vehicle by any person during the period the temporary replacement vehicle has been entrusted to the motor vehicle dealer’s service customer if there is no negligence or criminal wrongdoing on the part of the motor vehicle owner, or its leasing or rental affiliate.

The adoption of this new statutory protection for dealerships that otherwise could be held liable for the negligent operation of their loaner vehicles does not apply in this case, having been adopted after the date of the accident and not being remedial in nature. It does demonstrate, however, that gratuitous bailments could have been included in the Graves Amendment had Congress intended to include them. 

As a result, the angst that motor vehicle dealers developed after reports of the Romero decision surfaced appears to be unfounded. Motor vehicle dealers and repair facilities should, nevertheless, consult with legal counsel in order to make certain that all appropriate policies and procedures (including needed documentation) are in place in order to receive the protection from vicarious liability afforded by the Graves Amendment and the Florida Statutes.




By: Charles M Tatelbaum and Corey D. Cohen, Tripp Scott PA

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