Castro v. Budget Rent-a-Car System, Inc., B189140.

• Decision Date: 04 September 2007
• Docket Number: No. B189140.,B189140.
• Citation: 65 Cal.Rptr.3d 430,154 Cal.App.4th 1162
• Court: California Court of Appeals Court of Appeals
• Parties: Mario CASTRO, et al., Plaintiffs and Appellants, v. BUDGET RENT-A-CAR SYSTEM, INC., et al., Defendants and Respondents.

65 Cal.Rptr.3d 430

154 Cal.App.4th 1162

Mario CASTRO, et al., Plaintiffs and Appellants, v. BUDGET RENT-A-CAR SYSTEM, INC., et al., Defendants and Respondents.

No. B189140.

Court of Appeal, Second District, Division 5.

September 4, 2007.

Law Offices of Manuel Hidalgo, Manuel Hidalgo and Rolando Hidalgo, Los Angeles, for Plaintiffs and Appellants.

Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Donald G. Forgey, Heidi M. Yoshioka and Caroline E. Chan, Los Angeles, for Defendants and Respondents.

MOSK, J.

INTRODUCTION

Plaintiff Mario Castro (Castro),¹ a California resident, sustained physical injuries in a traffic collision in Alabama allegedly caused by an overturned truck owned by defendant and respondent Budget Rent-A-Car System, Inc. (Budget).² Prior to the accident, Budget had leased the truck that overturned to defendant Carlos Diaz, doing business as Carlos Diaz Fresh Produce (Diaz). At the time of the accident, Diaz's employee, defendant Jose Lopez (Lopez), was driving Budget's leased truck while allegedly intoxicated.

Plaintiffs sued Budget and others in California state court for negligence and lost consortium. The trial court granted summary judgment in favor of Budget on the grounds that Alabama law—not federal or California law—applied and that under Alabama's common law doctrine governing the permissive use of motor vehicles (permissive user law), Budget was not responsible for the negligence of either Diaz or Lopez. On appeal, plaintiffs contend that federal law or the common law nondelegable duty doctrine should apply, either of which would result in Budget's liability. They argue that at the time of the accident, Budget qualified as a "motor carrier" under applicable federal law,³ and as a consequence is financially responsible for their injuries.

We hold that in connection with the accident, Budget was not a "motor carrier" as that term is defined in the relevant federal statutes, regulations, and case law and therefore is not liable under federal law or the common law nondelegable duty doctrine. As the trial court ruled, Budget's liability to plaintiffs is governed by Alabama's permissive user law that entitled Budget to summary judgment. We therefore affirm the judgment of the trial court.

FACTUAL BACKGROUND

A. Budget's Undisputed Facts

On July 22, 2002, Castro, a California resident, was a passenger in a vehicle that was involved in an accident on Interstate 20 in the State of Alabama. Budget owned the other vehicle involved in the accident and had leased it to Diaz in Alabama. Budget's truck was operated by Lopez at the time of the accident.

B. Castro's Additional Disputed Facts

Budget is in the business of renting or leasing motor vehicles to be operated on the public highways. Budget's truck was leased for commercial use to Diaz to transport produce from Alabama across state lines to Florida. Budget leased the truck to Diaz on July 14, 2002, with knowledge that the truck would be used in the course of Diaz's business, and with the knowledge that the truck might be used to conduct business across state lines. On July 22, 2002, Budget's truck was registered and licensed in the State of California. Budget's truck weighed over 10,000 pounds.

Diaz purchased liability protection from Budget on July 14, 2002, for the business rental of Budget's truck because he did not have insurance. On July 22, 2002, Budget possessed a certificate of self-insurance issued by the State of Alabama.

As of July 22, 2002, Budget was assigned a United States Department of Transportation (DOT) number by the Federal Motor Carrier Safety Administration (FMCSA).⁴ A "Motor Carrier Identification Report" or "Form MCS-150" is used to obtain a DOT number from FMCSA. Form MCS-150 defines "Registrant" as "[a]n entity who registers commercial motor vehicles with a State, but does not operate as a motor carrier. For example, a company that is engaged solely in renting or leasing vehicles, or [a] for-hire operator that always operates under the authority of another company."

PROCEDURAL BACKGROUND

Plaintiffs' first amended complaint asserted, inter alia, causes of action for motor vehicle negligence, general negligence, and negligence per se against Budget. Plaintiffs alleged that Castro was injured in a traffic accident in Alabama caused by Budget. They further alleged that Lopez was operating Budget's truck in the course and scope of his employment with Diaz at the time of the accident, and that Lopez was intoxicated when he lost control of the truck and overturned it in the middle of the roadway, blocking both lanes of traffic. According to plaintiffs, Lopez's "negligent and reckless operation of his truck while intoxicated, and his subsequent abandonment thereof, created an ultra-hazardous condition which resulted in the unavoidable crash of [Castro's] truck ... [and] severe bodily injuries [to Castro]."

Budget filed a motion for summary judgment on the grounds that Alabama law applied and that under Alabama's permissive user law, Budget was not liable for the negligence of either Diaz or Lopez. Plaintiffs opposed the motion, arguing that Budget was a "motor carrier" subject to the federal statutes and regulations governing interstate motor transportation and therefore responsible for plaintiffs' damages. In support of their opposition to the motion, plaintiffs filed the declaration of an expert who opined that Budget was a motor carrier subject to federal regulation, including the regulatory provisions that require minimum insurance coverage of $750,000.

The trial court ruled that the federal statutes and regulations upon which plaintiffs relied did not apply to Budget, that Alabama law controlled the liability issue, and that Budget was entitled to summary judgment. The trial court subsequently entered judgment in favor of Budget and against plaintiffs. Plaintiffs timely appealed.

DISCUSSION

A. Standard of Review

"We review the grant of summary judgment de novo. (Szadolci v. Hollywood Park Operating Co. (1993) 14 Cal.App.4th 16, 19 .) We make `an independent assessment of the correctness of the trial court's ruling, applying the same legal standard as the trial court in determining whether there are any genuine issues of material fact or whether the moving party is entitled to judgment as a matter of law.' (Iverson v. Muroc Unified School Dist. (1995) 32 Cal.App.4th 218, 222 .) A defendant moving for summary judgment meets its burden of showing that there is no merit to a cause of action by showing that one or more elements of the cause of action cannot be established or that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).) Once the defendant has made such a showing, the burden shifts back to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or as to a defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849, 853 [107 Cal.Rptr.2d 841, 24 P.3d 493].)" (Moser v. Ratinoff (2003) 105 Cal.App.4th 1211, 1216-1217, 130 Cal. Rptr.2d 198.)

"In performing our de novo review, we view the evidence in the light most favorable to plaintiffs as the losing parties. [Citation.] In this case, we liberally construe plaintiffs' evidentiary submissions and strictly scrutinize defendants' own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiffs' favor." (Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142, 12 Cal. Rptr.3d 615, 88 P.3d 517.) "`Regardless of how the trial court reached its decision, it falls to us to examine the record de novo and independently determine whether that decision is correct.'" (Carries v. Superior Court (2005) 126 Cal.App.4th 688, 694, 23 Cal.Rptr.3d 915.)

B. Budget Was Not a Motor Carrier

Plaintiffs contend that Budget is a motor carrier subject to the "control and responsibility" requirements of federal law (49 U.S.C. § 14102(a)(4); 49 C.F.R. § 376.12(c)(1) (2006); see Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems (1975) 423 U.S. 28, 29, 96 S.Ct. 229, 46 L.Ed.2d 169) and is therefore liable for Diaz's negligent operation of Budget's truck. In support of this contention, plaintiffs rely on the federal statute and regulations that require motor carriers to maintain specified levels of financial responsibility in the form of insurance or self-insurance. (49 U.S.C. § 31139; 49 C.F.R. § 387.1, et seq. (2006).) According to plaintiffs, Budget, through self-insurance, voluntarily complied with the minimum financial responsibility requirements under federal law, thereby demonstrating that Budget is a motor carrier subject to those requirements. The issue therefore is whether Budget, as a lessor of the vehicle involved in the accident, qualifies as a motor carrier in connection with that incident, so as to be subject to the federal "control and responsibility" requirements upon which plaintiffs rely.

"During the first half of the twentieth century, interstate motor carriers attempted to immunize themselves from liability for negligent drivers by leasing trucks and nominally classifying the drivers who operated the trucks as `independent contractors.' [Citations.] In order to protect the public from the tortious conduct of the often judgment-proof truck-lessor operators, Congress in 1956 amended the Interstate Common Carrier Act to require interstate motor carriers to assume full direction and control of the vehicles that they leased `as if they were the owners of such vehicles.' [Citations.] The purpose of the amendments to the Act was to ensure that interstate motor carriers would be fully responsible for the maintenance and operation of the leased equipment and the supervision of the borrowed drivers, thereby protecting the public from accidents, preventing public confusion about who was financially responsible if accidents occurred, and providing financially responsible defendants."...