Meyer v. Nwokedi, No. A08-0250.

• Decision Date: 20 January 2009
• Docket Number: No. A08-0250.
• Citation: 759 N.W.2d 426
• Parties: Nancy M. MEYER, as trustee for the heirs of Margaret Mphosi, deceased, et al., and Nancy M. Meyer, as guardian ad litem for Lucas Mphosi, injured, et al., Appellant, and Bunmi Obembe, et al., intervenors, v. Bibian NWOKEDI, Defendant, Enterprise Rent A Car Co. of Montana/Wyoming, d/b/a Enterprise Rent A Car of the Dakotas/Nebraska, Respondent.
• Court: Minnesota Court of Appeals

759 N.W.2d 426

Nancy M. MEYER, as trustee for the heirs of Margaret Mphosi, deceased, et al., and Nancy M. Meyer, as guardian ad litem for Lucas Mphosi, injured, et al., Appellant, and Bunmi Obembe, et al., intervenors, v. Bibian NWOKEDI, Defendant Enterprise Rent A Car Co. of Montana/Wyoming, d/b/a Enterprise Rent A Car of the Dakotas/Nebraska, Respondent.

No. A08-0250.

Court of Appeals of Minnesota.

January 20, 2009.

Duane A. Lillehaug, Maring Williams Law Office, P.C., Fargo, ND, for appellant.

Theodore J. Smetak, Paul E.D. Darsow, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, MN, for respondent.

Considered and decided by SHUMAKER, Presiding Judge; STONEBURNER, Judge; and STAUBER, Judge.

OPINION

SHUMAKER, Judge.

In this action, arising out of a rental-vehicle accident in which some occupants were killed and some injured, the appellant challenges the district court's grant of summary judgment to respondent rental-vehicle owner, arguing that the court erred by holding that 49 U.S.C. § 30106 abolishes vicarious liability for rental-vehicle owners. We affirm.

FACTS

Respondent Enterprise Rent A Car Co. (Enterprise) engages in the business of renting motor vehicles to members of the public. On June 4, 2004, Maboko Mphosi rented a sports utility vehicle (SUV) from Enterprise in Fargo, North Dakota. The next day while a companion, Bibian Nwokedi, was driving in Minnesota, the SUV left its lane of travel, rolled over, and came to rest in a ditch. Two passengers were killed and others were injured.

In June 2006, appellant Nancy M. Meyer, as trustee for the next of kin of the people killed in the accident, and as guardian ad litem of two injured minors, brought wrongful death and personal injury actions against Enterprise and Nwokedi. Meyer claimed that Enterprise was vicariously liable for damages resulting from the accident.

Arguing that the Graves Amendment, codified at 49 U.S.C. § 30106, abolished vicarious liability of rental-car businesses and preempted all state laws to the contrary, Enterprise moved for summary judgment. The district court granted Enterprise's motion on that issue.

Meyer then agreed to dismiss all claims except that of Enterprise's vicarious liability, and Enterprise agreed to deposit with the court $60,000, the minimum per accident no-fault insurance amount required by statute. This appeal followed.

ISSUES

After some occupants of a rental motor vehicle were killed and others injured in an accident, the rental-vehicle owner was sued under a theory of vicarious liability. The owner claimed that federal law, which abolishes vicarious liability for rental-vehicle owners, preempts Minnesota's vicarious liability laws.

1. Does the Graves Amendment, codified at 49 U.S.C. § 30106, preempt Minn. Stat. § 169.09, subd. 5a, to the extent that the latter may be construed to impose vicarious liability on the owner of a rental motor vehicle?

2. Does the Graves Amendment preempt Minn.Stat. § 65B.49, subd. 5a(i)(2), which establishes monetary "caps" on damages for which rental-vehicle owners may be vicariously liable?

ANALYSIS

Summary judgment is appropriate if there are no genuine issues of material fact for trial and either party is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03; Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). There are no material facts in dispute in this action. Rather, the sole issue is purely a legal question, namely, the nature and scope of the Graves Amendment's preemptive effect on state law. This issue is subject to de novo review. Harbal v. Fed. Land Bank of St. Paul, 449 N.W.2d 442, 446 (Minn.App.1989), review denied (Minn. Feb. 21, 1990).

I

The dispositive issue on appeal concerns the preemptive effect of 49 U.S.C. § 30106, also known as the Graves Amendment. Broadly speaking, the Graves Amendment, which was enacted in 2005 as part of a comprehensive transportation bill, "preempts all state statutory and common law to the extent those laws hold owners in the business of renting or leasing motor vehicles vicariously liable for the negligence of drivers, except when there is negligence or criminal wrongdoing on the part of the owner." Beth Bates Holliday, Annotation, Validity, Construction, and Application of Graves Amendment (49 U.S.C.A. § 30106) Governing Rented or Leased Motor Vehicle Safety and Responsibility, 29 A.L.R. Fed.2d 223 (2008). The Graves Amendment provides, in relevant part:

(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—

(1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and

(2) 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—

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

(2) 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.

49 U.S.C. § 30106.

Enterprise contends, and the district court agreed, that the Graves Amendment preempts Minnesota's vicarious-liability laws and thereby eliminates Enterprise's vicarious liability in this case. Challenging this determination, Meyer argues that subsection (b) to the Graves Amendment is a "savings clause," which provides an exception for state financial responsibility and liability insurance requirements, and that Minn.Stat. § 169.09, subd. 5a, and Minn. Stat. § 65B.49, subd. 5a(i)(2), fit within that exception and therefore are not preempted.¹

Federal preemption stems from the Supremacy Clause of the United States Constitution, which provides that the laws of the United States "shall be the supreme Law of the Land ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. "Congressional purpose is `the ultimate touchstone' of the preemption inquiry." In re Estate of Barg, 752 N.W.2d 52, 63 (Minn.2008) (quoting Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978)). Congress can preempt a state law either by express statutory language or by fully occupying the field which the state law governs. Id. In addition, federal law can preempt state law to the extent the two conflict. Id. at 63-64. "Conflict preemption occurs when compliance with both state and federal laws is impossible, or when the state law is an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Id. at 64 (citation and quotation omitted). Nonetheless, preemption is generally disfavored. Martin ex rel. Hoff v. City of Rochester, 642 N.W.2d 1, 11 (Minn.2002). "Whether federal law preempts state law is generally an issue of statutory construction." Id. at 9. "Statutory construction is reviewed de novo." Id.

Before we may construe a statute we must first decide whether the statute is ambiguous, that is, whether it is "subject to more than one reasonable interpretation." Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn.2000) (quotation omitted). If the statute is unambiguous, we consider only "its plain language and presume that language manifests legislative intent." Kasdan v. Berney, 587 N.W.2d 319, 322 (Minn.App. 1999). And if the statute is unambiguous when we apply the rules of ordinary usage and grammar, we have no authority to construe it further, but rather we must apply its plain meaning. Boatwright v. Budak, 625 N.W.2d 483, 485-86 (Minn. App.2001), review denied (Minn. July 24, 2001). Additionally, we must give effect to all of its provisions, and construe it as a whole to avoid conflicting interpretations. Schroedl, 616 N.W.2d at 277.

In Minnesota, a vehicle owner is liable under the rule of respondeat superior for damages from an accident that occurs while a permissive user of the vehicle is driving. Minn.Stat. § 169.09, subd. 5a; Kisch v. Skow, 305 Minn. 328, 332, 233 N.W.2d 732, 734 (1975) (construing Minn. Stat. § 170.54, which has been renumbered as Minn.Stat. § 169.09, subd. 5a (Supp. 2005)). The relevant law provides:

Whenever any motor vehicle shall be operated within this state, by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed the agent of the owner of such motor vehicle in the operation thereof.

Minn.Stat. § 169.09, subd. 5a. This imposes liability on the owner where it would not otherwise exist, thereby giving an injured person more certainty of recovery by encouraging vehicle owners to obtain appropriate liability insurance coverage. Boatwright, 625 N.W.2d at 486. The statute is to be construed liberally to achieve its purpose. Id.

The plain text of the Graves Amendment preempts Minn.Stat. § 169.09, subd. 5a, as it applies to a rental-vehicle owner's vicarious liability. See In re Welfare of E.S.C., 731 N.W.2d 149, 152 (Minn.App.2007) (explaining that we apply the statute's plain meaning if the statute is not ambiguous). The Graves Amendment states that a rental-vehicle owner "shall not be liable ... by reason of being the owner of the vehicle ..., 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 U.S.C. § 30106(a) (emphasis added)....