Senate Bill S5992

                                BILL NUMBER:S5992

TITLE OF BILL:  An act to amend the vehicle and traffic law, in
relation to negligence in the operation of a motor vehicle which is
attributable to an owner

1. Purpose:

To provide protection from liability for new car dealers who loan
motor vehicles to persons who are involved in crashes resulting in
death or injury to persons or property.

2. Summary of provisions:

Bill section 1 would add a new subdivision 5 to section 388 of the
Vehicle and Traffic Law (VTL) to provide that a new car dealer, or an
affiliate of such dealer, that loans a motor vehicle, without a fee,
shall not be liable or responsible for death or injury to persons or
property that results or arises out of the use, operation or,
possession of the vehicle during the period of the loan. The shield
from liability shall only apply if there is no negligence or criminal
wrongdoing on the part new car dealer and the motor vehicle has been
loaned out by the new car dealer to a customer while such vehicle is
being serviced or repaired by the new car dealer.

The bill would take effect immediately.
              

3. Existing law:

Under section 388 of the VTL, new car dealers are liable and
responsible for death or injuries to person or property resulting from
negligence in the use or operation of such vehicle, in the business of
such owner or otherwise, by any person using or operating the same
with the permission, express or implied, of such owner.

4. Legislative history:

This is a new bill

5. Statement in support:

Section 388 of the VTL provides that every owner of a motor vehicle in
New York State shall be liable for death or injuries to person or
property resulting from negligence in the use or operation of such
vehicle, by any person using or operating the vehicle with the
permission of the owner. In 2005, Congress attached the Graves
Amendment to the Safe, Accountable, Flexible, Efficient Transportation
Equity Act, which essentially eliminated vicarious liability for
rental companies. The federal statute provides, in part

"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.. " (49 USC § 304 06)


Courts across the United States have consistently found that the
Graves Amendment is constitutional and preempts state laws  The Court
in Green v. Toyota Motor CreditCorp, 60.5 F. Supp  2d 430 recognized
that Congress had a" rational basis for concluding that vicarious
liability laws may, in the aggregate, adversely affect the motor
vehicle leasing market. Flagler, .538 F.Supp.,2d at .559-60.
Vicarious liability regimes can cause leasing companies such as TMCC
to cease doing business in states with vicarious liability laws, or to
increase the costs of leasing such cars for all consumers--in state
and without."

This proposal is consistent with the Graves Amendment in that it
provides needed protections for new car dealers who loan motor
vehicles to consumers while the consumer's motor vehicle is being
repaired. If the loaned vehicle is involved in a crash, the new car
dealer should not have to assume the cost of such crash, unless the
dealer is negligent or committed wrongdoing. As in the case of the
rental companies, shielded by the Graves Amendment, this proposal
grants much needed fiscal protection to new car dealers who loan
vehicles to consumers.

6. Possible objections:

Unknown.

7. Other State agencies interested:

Department of Financial Services

8. Known position of others:

None known.

9. Budget implications:

None.

10. Local impact:  None.