Fried v. Seippel

Plaintiffs decedent, Andrew Fried, and defendant Alexander Seippel, both New York residents, had gone on a vacation to Jamaica together. Having secured an "Avis” travel voucher in New York, Fried had leased an automobile from West Indies Car Rental, Ltd. (WICR), a Jamaican concern licensed by Avis Rent-A-Car System, Inc. (Avis), which does business in New York. Fried was killed when the rented vehicle in which he and Seippel were driving crossed onto the other side of the road and hit another vehicle head-on. It is unclear which of the two men was driving at the time of the accident.

Fried’s administratrix brought the present action against Seippel, WICR and Avis, alleging that Seippel had been the negligent driver and that Avis was vicariously liable under Vehicle and Traffic Law § 388 by virtue of its de facto ownership of the vehicle in which the accident had occurred. When Avis moved for summary judgment dismissing the complaint against it on the ground that the vehicle was owned by WICR rather than itself, plaintiff countered by arguing that WICR was merely Avis’s alter ego and that Avis rather than WICR should be deemed the vehicle’s true owner. In support of this contention, plaintiff submitted evidence tending to show a close relationship between Avis and WICR.

On the basis of plaintiff’s submissions, the trial court denied Avis’s motion for summary judgment. The Appellate Division affirmed this aspect of the trial court’s order, holding that "issues of fact exist as to whether Avis, although not the owner of the vehicle, is precluded, by virtue of its relationship with * * * WICR, from disclaiming liability” ( 170 AD2d 303 , 304). Both courts below assumed that if Avis were deemed the vehicle’s owner, Vehicle and Traffic Law § 388 would be applicable. The Appellate Division granted Avis leave to take a further appeal, certifying the following question of law: "Was the order of this Court, which modified the order of the Supreme Court, properly made?”^[1]

Berkrot v National Car Rental

As in Fried, the injured plaintiff in this case, a New York domiciliary, was involved in an automobile accident while vacationing in Jamaica. At the time of the accident, the car

Plaintiffs commenced an action against NCR, arguing that the New York-based rental company was liable under Vehicle and Traffic Law § 388 because its relationship with the Jamaican vehicle owner of record, Greenlight, was such that Green-light should be deemed NCR’s alter ego and Greenlight’s record ownership of the accident vehicle should be attributed to NCR. Plaintiffs also sued the deceased’s husband, Herbert Kalmanoff, both individually and in his capacity as the administrator of her estate.

NCR moved for summary judgment dismissing the complaint against it on the ground that it was an improper party and on the additional ground that Jamaica, rather than New York, was the proper forum for this action. Plaintiffs responded to NCR’s improper party argument by relying principally on the provisions of the licensing agreement between Greenlight and NCR-International, which, in plaintiffs’ view, demonstrated that NCR, either directly or through its licensee NCR-International, was the true controlling force behind Greenlight. Kalmanoff also moved for summary judgment, both on the ground of forum non conveniens and on the separate ground that the complaint did not state a cause of action against him.

The trial court denied the motions for summary judgment dismissing the complaint on the merits, holding that "an issue of fact is presented as to whether Greenlight is [NCR-International’s] agent and whether the international company is defendant’s agent.”^[2] However, the court dismissed the action on forum non conveniens grounds.

On cross appeals by all parties, the Appellate Division agreed that "factual issues exist with respect to [NCR’s] relationship with Green Light” and that summary judgment was therefore improper ( 175 AD2d 80 , 82). The court also

DISCUSSION

In both of these cases, the parties and the courts below focused principally on whether the New York licensors of the Jamaican auto rental agencies should be deemed the "owners” of the accident vehicles for purposes of establishing liability under Vehicle and Traffic Law § 388. To the extent that the parties have discussed the special problem arising from the fact that these accidents occurred in a foreign jurisdiction, they have concentrated their arguments primarily on conflicts-of-laws principles and, more specifically, on whether New York’s "interests analysis”^[3] supports application of New York law in the situations presented here. However, even if New York’s substantive law were held applicable to these lawsuits and even if defendants Avis and NCR were deemed the "owners” of the accident vehicles within the meaning of section 388 of New York’s Vehicle and Traffic Law, a question would remain as to whether these accidents involving vehicles registered and operated in Jamaica fall within the statute’s coverage. It is to this question that we now turn.

Section 388 (1) of the Vehicle and Traffic Law provides that "[e]very owner of a vehicle used or operated in this state shall be liable and responsible for death or 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.” The statute imposes vicarious liability on vehicle owners for the negligence of anyone using or operating their vehicles with permission. As is evident from the underscored language, however, the literal statutory terms do not impose such liability on owners of

It has been suggested that the import of the above-cited limiting language has been modified by this Court’s opinion in Farber v Smolack ( 20 NY2d 198 ), in which we explicitly held for the first time that Vehicle and Traffic Law § 388 may be applicable even though the accident in question occurred in another State (cf., Macey v Rozbicki, 18 NY2d 289 [section 388 applied to Ontario accident without mention of extraterritoriality problem]). The Farber Court, however, did not go so far as to hold that liability under section 388 may be premised on ownership of a vehicle that was neither registered nor ever operated or used in New York. To the contrary, the Court was careful to note that, although the accident had occurred in North Carolina, the accident vehicle had been registered in New York, had been used in New York before the accident and had been on its way back to New York after a brief sojourn to Florida at the time the accident occurred ( 20 NY2d, at 202, 203 ). Indeed, the holding in Farber has little bearing on the statutory construction problem presented here, since, by virtue of its prior "use * * * or operation] in this state,” the accident vehicle in Farber was indisputably within section 388’s substantive coverage and the only question was whether, as a matter of judicially established cdhflicts principles, New York had a sufficient interest in the controversy to apply its own law. Here, in contrast, it is the substantive applicability of section 388 to these particular accident vehicles that is itself in issue.

Inasmuch as neither Farber nor any of the subsequent cases that the parties have cited suggests that section 388’s in-State use-or-operation requirement should be construed other than in accordance with its common or ordinary meaning,^[4] we conclude that the vicarious liability imposed by section 388 (1) does not extend to owners of vehicles that have never been registered, used, operated or intended for use within this State. Indeed, a contrary interpretation would make little

Vehicle and Traffic Law § 388 is part of the legislatively prescribed system for protecting innocent victims of automobile accidents by assuring that there will be a financially responsible party who is available to answer in damages (see, Continental Auto Lease Corp. v Campbell, 19 NY2d 350 ). In addition to making the owner of a vehicle vicariously liable for the negligence of anyone driving it with permission, the statute requires that all vehicle owners procure insurance to cover the liability it creates (see, Vehicle and Traffic Law § 388 [1], [4]). This linkage of an owner’s vicarious liability to an owner’s obligation to maintain adequate insurance coverage suggests that the Legislature’s goal was to ensure that owners of vehicles that are subject to regulation in New York "act responsibly” with regard to those vehicles (Boxer v Gottlieb, 652 F Supp 1056 , 1065; accord, Johnson v Hertz Corp., 315 F Supp 302 , 304-305). Such a goal would not be advanced by imposing vicarious liability for vehicles having no connection with New York other than the fortuitous circumstance that their owners may be New York residents (cf., Klippel v U-Haul Co., 759 F2d 1176 , 1182 [New York "has little or no legitimate interest in providing additional security for * * * New York residents who are injured in other (jurisdictions) while riding in vehicles having no connection with New York”]; see also, Herzog, Conflict of Laws, 27 Syracuse L Rev 17 , 29-31 [criticizing Cunningham v McNair ( 48 AD2d 546 ) and suggesting that due process would forbid applying New York law in these circumstances]).

Thus, Vehicle and Traffic Law § 388 does not provide a basis for holding Avis or NCR liable in these cases, since, regardless of any theoretical possibility that Avis and NCR were the de facto owners of the accident vehicles, the vehicles were registered, operated and used exclusively on the island of Jamaica, far from New York’s borders. Consequently, they were beyond the statute’s intended reach. Accordingly, the complaints against Avis and NCR should have been dismissed.^[5]

We reach a different conclusion with respect to the claim