Murdza v. Zimmerman

• Decision Date: 18 February 2003
• Citation: 756 N.Y.S.2d 505,786 N.E.2d 440,99 N.Y.2d 375
• Parties: STANLEY MURDZA, Appellant, v. ROBERT ZIMMERMAN, Defendant, and D.L. PETERSON TRUST et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

99 N.Y.2d 375

786 N.E.2d 440

756 N.Y.S.2d 505

STANLEY MURDZA, Appellant, v. ROBERT ZIMMERMAN, Defendant, and D.L. PETERSON TRUST et al., Respondents.

Court of Appeals of the State of New York.

Argued January 14, 2003.

Decided February 18, 2003.

Burgett & Robbins, Jamestown (Mary Speedy Hajdu of counsel), for appellant.

Kenney, Kanaley, Shelton & Liptak, L.L.P., Buffalo (Michael J. Kanaley Jr. and Joanneke K.M. Brentjens of counsel), for respondents.

Chief Judge KAYE and Judges SMITH, CIPARICK, ROSENBLATT, GRAFFEO and READ concur.

OPINION OF THE COURT

WESLEY, J.

Stanley Murdza, a Canadian resident, was injured when struck by a van as he walked across an intersection in Ellicottville, New York. The van, operated by Robert Zimmerman, had been entrusted to his girlfriend Margaret Scicchitano by her employer, Brown and Williamson Tobacco Corporation (B&W). The van was leased to B&W by its owners, D.L. Peterson Trust (the Trust) and PHH Fleet America Corporation (PHH). Although B&W's employee handbook specifically restricted use of company vehicles to employees and their licensed spouses,¹ the agreement leasing the vehicle to B&W contained no use restrictions.

Murdza commenced a negligence action in United States District Court against Zimmerman, B&W, the Trust and PHH and eventually moved for summary judgment (see Murdza v Zimmerman, 2000 WL 1887823, 2000 US Dist LEXIS 18768 [WD NY, Dec. 5, 2000]). The court granted that part of Murdza's motion against Zimmerman asserting his negligent operation of the B&W vehicle. In his motion, Murdza also argued that B&W, the Trust and PHH were owners of the van, as defined by the Vehicle and Traffic Law, and were therefore liable for Zimmerman's negligent operation of the vehicle (see Vehicle and Traffic Law §§ 128, 388). The corporate defendants countered with cross motions for summary judgment. B&W asserted that the restrictions on vehicle use in its employee handbook established that Zimmerman drove the van without B&W's consent. PHH and the Trust argued that, although its lease contained no use limitations, the restriction set forth in B&W's handbook also precluded liability on their part.

The District Court granted the corporate defendants' motion and dismissed the complaint against them. On appeal, the Second Circuit noted that "[s]ection 388 (1) [of the Vehicle and Traffic Law] establishes a rebuttable presumption that a vehicle is operated with the owner's consent" (Murdza v D.L. Peterson Trust, 292 F3d 328, 330 [2d Cir 2002]). Finding, however, that "sources of New York law do not provide clear answers" as to whether the restrictions in B&W's employee handbook fully rebutted this presumption of consent as to B&W, PHH and the Trust, the Circuit Court certified the following questions to us:

"(1) Did the lessee Brown and Williamson effectively rebut the presumption of consent of the owner, so as to make it immune as a matter of law from imposition of owner's liability under Section 388 (1) in these circumstances by reason of the restrictive provision in its employee manual?

"(2) Were the lessors PHH and the Trust immune as a matter of law from imposition of owner's liability under Section 388 (1) in these circumstances by reason of the restrictive provision in Brown & Williamson's employee manual?" (Id. at 330, 333.)

We accepted certification (98 NY2d 686 [2002]) and now answer the first question in the affirmative and the second in the negative.

Vehicle and Traffic Law § 388 (1) makes every owner of a vehicle liable for 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."² The statute altered the common-law rule that a vehicle owner could only be held liable for the negligence of a permissive driver under agency or respondeat superior theories (see Morris v Snappy Car Rental, 84 NY2d 21, 27 [1994]).

Public policy concerns surrounding the enactment of section 388 have long informed its application. We have acknowledged that this section "expresses the policy that one injured by the negligent operation of a motor vehicle should have recourse to a financially responsible defendant" (Continental Auto Lease Corp. v Campbell, 19 NY2d 350, 352 [1967]). Indeed, section 388 was designed to "remove the hardship which the common-law rule visited upon innocent persons by preventing `an owner from escaping liability by saying that his car was being used without authority or not in his business'" (Morris, 84 NY2d at 27, quoting Mills v Gabriel, 259 App Div 60, 61-62 [2d Dept 1940]).

An equally important policy reflected in section 388 is the heightened degree of care owners are encouraged to exercise when selecting and supervising drivers permitted to operate their vehicles.³ Thus, section 388 simultaneously increases the likelihood of compensation for those injured in motor vehicle accidents and decreases the probability of such accidents by encouraging an owner's prudent selection of drivers. Proof of consent can, however, often depend on the testimony of a hostile party—the owner. Recognizing this, we have held that "proof of ownership of a motor vehicle creates a rebuttable presumption that the driver was using the vehicle with the owner's permission, express or implied" (Leotta v Plessinger, 8 NY2d 449, 461 [1960]). Once the plaintiff meets its initial burden of establishing ownership, "a logical inference of lawful operation with the owner's consent may be drawn from the possession of the operator" (see St. Andrassy v Mooney, 262 NY 368, 371 [1933]). This presumption may be rebutted, however, by substantial evidence sufficient to show that a vehicle was not operated with the owner's consent (see Leotta, 8 NY2d at 461

). In this context, we have noted that where "substantial evidence established that permission was conditioned upon driving in a certain locality only or conditioned upon instructions not to allow any riders, the owner was exonerated from liability when an accident occurred subsequent to a breach of the restriction" (id. [citations omitted]).

As the Circuit Court noted, our resolution of the questions before us requires us to examine the reach of Motor Veh. Acc. Indem. Corp. v Continental Natl. Am. Group Co. (35 NY2d 260 [1974]). There, we deemed a car rental agency to have "constructively" consented to a third-party driver's operation of its rental vehicle despite a lease provision restricting use of the vehicle to the lessee and his immediate family. Because there was constructive consent, we held the car rental agency was subject to statutory liability under section 388 for permissive use of the vehicle.

Our finding of constructive consent—despite the owner's restrictions—rested, in part, on the public policy concerns surrounding the large number of vehicles placed on the road by businesses that rent cars to others for profit, and the inevitability that these vehicles will "become involved in their fair share of accidents" (id. at 263). Unlike restrictions placed on the use of an individual's vehicle by a friend, we reasoned that restrictions by car rental agencies implicate more serious concerns as they affect the use of a large number of vehicles on our roads over potentially long time periods. Noting that any departure from such lease restrictions could leave an injured victim without the "recourse to a financially responsible defendant" contemplated by section 388, we found that "[t]he restrictions sought to be imposed by [the insurer] violate the public policy of this State" (id. at 264). Thus, the agency "knew or should have known that the probabilities of the car coming into the hands of another person were exceedingly great and in these circumstances they are to be charged with constructive consent, which satisfies the requirements of section 388 of the Vehicle and Traffic Law" (id. [emphasis added]). Constructive consent is an attempt to balance the policy goals of the statute and the realities of an automobile-based society.

The linchpin to our finding of constructive consent in Motor Vehicle was the third-party driver's permissive use vis-à-vis the lessee. Only because the lessee "gave his consent to [the third-party driver] to operate the rental vehicle [did] we find that he was operating it with the constructive consent of [the lessor] and, perforce, with the `permission' envisioned by the provisions of ...