Florida Court Rejects Vicarious Liability

The Florida Supreme Court has ruled that motor vehicle leasing companies in the state cannot be held liable for accidents with their rented vehicles they did not cause.

The state’s high court agreed with lower state courts and a federal ruling that a federal law shields car leasing firms from so-called “vicarious” liability by preempting a state law that holds some leasing firms responsible for damages up to $500,000.

Vicarious liability theory holds a party liable even when it is not involved in an accident. A 2005 federal law, known as the Graves Amendment because it was sponsored by Rep. Samuel Graves, R-Mo., prohibits a state from imposing vicarious liability on rental car companies. However, it exempts from this prohibition any leasing firms that fall under a state “financial responsibility” law.

Florida has a law holding short-term rental car companies vicariously liable in some situations. A short-term lessor (less than one year) is considered the owner of the motor vehicle for determining liability up to $100,000 per person and up to $300,000 per incident for bodily injury and up to $50,000 for property damage. If the lessee or the operator of the motor vehicle is uninsured or has insurance with limits less than $500,000 combined property damage and bodily injury liability, then the short-term leasing company shall be liable for up to an additional $500,000 in economic damages only.

Lawyers for an accident victim argued that this state law qualified as a financial responsibility law for purposes of the Graves Amendment exemption and thus short-term lessors in Florida could not benefit from the federal prohibition on vicarious liability.

However, lawyers for a car leasing firm argued that the state law did not qualify as a true financial responsibility law. Thus the state law was not exempted and the leasing firm was protected by the federal prohibition. The state’s high court agreed.

The case is Rafael Vargas v. Enterprise Leasing Co.