Galicia-Martinez v. PV Holding Corp. CA2/8

Opinion

Filed 9/24/26 Galicia-Martinez v. PV Holding Corp. CA2/8 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

FRANCISCO GALICIA-MARTINEZ B339124 et al., (Los Angeles County Plaintiffs and Appellants, Super. Ct. No. 22STCV18928) v. PV HOLDING CORP., INC., et al, Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County, Lee S. Arian, Judge. Affirmed.

Law Office of Kenneth L. Snyder, Kenneth L. Snyder; Gelb Law and Yisrael Gelb for Plaintiffs and Appellants.

Joseph L. Stark & Associates, Joseph L. Stark and John M. Bergerson for Defendants and Respondents.

_____________________________ California, like many states, permits vehicle owners to be held vicariously liable for damages caused by the negligent operation of their vehicles by third party permissive users. (Veh. Code,1 §§ 17150–17151.) Congress, in response to the effect of such vicarious liability statutes on the rental car industry, enacted what is colloquially referred to as the Graves Amendment in the Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005. (49 U.S.C. § 30106.) The Graves Amendment preemption clause shields rental car companies nationwide from such vicarious liability when all other requirements of the Amendment have been met. The Amendment also includes a savings clause which exempts financial responsibility laws from preemption. Plaintiffs contend sections 17150 and 17151 bring them within the savings clause because both are “financial responsibility laws” that survive preemption under the Act. The trial court found defendants had met all the requirements of preemption and the savings clause did not relieve plaintiffs from preemption. We agree and affirm. The parties agree the facts are undisputed. Defendant PV Holding Company, Inc. does business as defendant Avis Budget Group, Inc. On August 13, 2020, defendants owned and leased a 2020 Kia Optima to Victasia Dene Washington in the normal course and scope of their business as a rental car company. Plaintiffs are husband and wife. On August 15, 2020, Washington, driving the rented vehicle, collided with plaintiffs’ vehicle. On June 9, 2022, Francisco Galicia-Martinez, who was injured in the accident, filed an action for negligence, negligent entrustment, and failure to maintain vehicle safety against defendants, as owners of the leased vehicle. His wife, Maria 1 Undesignated statutory references are to the Vehicle Code.

2 Estevez-Galicia, filed for loss of consortium. Washington, as the driver, was sued as well, but she never filed an appearance in the trial court and is not a party to this appeal. Defendants filed a motion for summary judgment, arguing that federal law shields rental car companies from vicarious liability as car owners when the companies are not at fault in causing the accident. Defendants argued no material fact was in dispute on the issues of negligent entrustment, negligence, product defect, failure to maintain vehicle safety, or defendants’ failure to meet their California financial responsibility obligations pursuant to section 16053. Washington maintained a valid California driver’s license and did not exhibit any signs of intoxication when she rented the vehicle. In response, plaintiffs provided no factual evidence to the contrary. They argued only that the savings clause in the Graves Amendment allows their vicarious liability action to proceed against defendants. Relying on Garcia v. Vanguard Car Rental USA, Inc. (2008) 540 F.3d 1242 (Garcia), the trial court granted summary judgment in favor of defendants, holding that the Graves Amendment shields defendants, as a rental car company, from vicarious liability as owners of the vehicle they leased to Washington. The trial court ruled the savings clause did not apply and entered judgment in favor of defendants. Plaintiffs timely appealed. DISCUSSION A. Standard of Review To prevail on summary judgment, a defendant must show that one or more elements of the plaintiff’s cause of action cannot be established or that there is a complete defense to the cause of 3 action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) Here defendants contend that the Graves Amendment provides a complete defense to plaintiffs’ action. We review de novo the trial court’s order granting summary judgment. (Gonzalez v. Mathis (2021) 12 Cal.5th 29, 39; Tavares v. Zipcar, Inc. (2026) 118 Cal.App.5th 219, 227 (Tavares).) B. Applicable Law Under California law, car owners who permit third parties to operate their vehicles are vicariously liable for the negligence of the permissive users. (§§ 17150–17151.) Section 17150 provides: “Every owner of a motor vehicle is liable and responsible for death or injury to person or property resulting from a negligent or wrongful act or omission in the operation of the motor vehicle, in the business of the owner or otherwise, by any person using or operating the same with the permission, express or implied, of the owner.” (§ 17150.) “ ‘Liability arises solely from the owner’s status as owner of the vehicle, not from any independent fault or wrongdoing on the owner’s part.’ ” (Tavares, supra, 118 Cal.App.5th at p. 236; CACI 720.) Such vicarious liability is limited to $15,000 for the death of or injury to one person in any one accident, $30,000 for the death of or injury to more than one person in any one accident, and $5,000 for damage to property of others in any one accident. (§ 17151, subd. (a).) The statutory limitation under section 17151, subdivision (a) does not apply to an owner’s own common law negligence, as distinguished from the owner’s statutory vicarious liability for the operator’s negligence. (Fremont Comp. Ins. Co. v. Hartnett (1993) 19 Cal.App.4th 669, 675–676.)

4 Congress enacted the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub.L. No. 109-59 (Aug. 10, 2005) 119 Stat. 1144), codified at section 30106 of title 49 of the United States Code. Included in this legislation is the Graves Amendment, after Representative Graves, a principal proponent of the bill. The Graves Amendment preempts all state vicarious liability schemes that impose liability on lessors of motor vehicle where the vehicle is involved in an accident through no fault of the lessor. There are two operative provisions, a preemption clause (subdivision (a)) and a savings clause (subdivision (b)): “(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 5 “(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.) Under the Graves Amendment a state may not hold rental car companies vicariously liable for the negligence of their lessees as long as both subsections (a)(1) and (a)(2) are satisfied. And states may still require insurance or its equivalent as a condition of licensing or registration and may enforce the requirement of insurance or its equivalent by suspending licenses or registrations, or imposing other penalties, for failure to meet such requirements (under the savings clause in subsection (b)). The Graves Amendment preempts state laws, such as section 17150, which impose vicarious liability on the owners of leased or rented vehicles based solely on their ownership. (Tavares, supra, 118 Cal.App.5th at pp. 236–237.; Garcia, supra, 540 F.3d at p. 1249.) The Graves Amendment applies when the defendant shows (i) it was “engaged in the trade or business of renting or leasing motor vehicles;” (ii) there was “no negligent or criminal wrongdoing on the part of the” defendant; and (iii) the defendant rented the vehicle to the plaintiff. (49 U.S.C. § 30106(a).) There is no dispute that defendants here have satisfied these criteria. So we turn to the savings clause. C. Analysis On appeal, plaintiffs do not pursue their claim that defendants are liable on the grounds of negligent entrustment, failure to maintain the vehicle, or criminal negligence. Plaintiffs contend only that sections 17150 and 17151 imposing vicarious liability on vehicle owners for the negligence of their permissive 6 users are “financial responsibility” laws because they assign liability to motor vehicle owners for personal injury or property damage occasioned by a permissive operator’s use of the vehicle. “[S]ections 17150–17151 are not part of the Financial Responsibility Laws” of California. (Goodson v. Perfect Fit Enterprises, Inc. (1998) 67 Cal.App.4th 508, 514 (Goodson).) California’s Financial Responsibility Laws are set out in section 16000 et seq. (Id. at p. 512; see Tavares, supra, 118 Cal.App.5th at p. 237.) Just because sections 17150–17151 establish liability of owners for the negligence of permissive users does not render them financial responsibility laws. Liability and financial responsibility in this context are two different concepts. Indeed, “the primary purpose of the Financial Responsibility Act, and the express policy of this state, [is] that ‘those owning or operating motor vehicles on the streets or highways of this state shall be financially capable of providing monetary protection to those suffering injury to their person or property . . . and further, that such capability shall be deemed a concurrent responsibility of such motor vehicle ownership or operation.’ ” (Dowell v. Department of Motor Vehicles (1990) 220 Cal.App.3d 1567, 1569 (Dowell), first italics added; Stats. 1974, ch. 1409, § 1.) Imposing liability is separate and distinct from requiring proof of ability to pay for the consequences of liability. The Graves Amendment does not define “financial responsibility laws,” and neither side has pointed to any other provision of the SAFETEA-LU which defines this term. Plaintiffs seemingly contend the term “financial responsibility” is equivalent to the term “liability.” As set out above, we disagree. Further, California has a set of statutes at section 16000 et seq., entitled “Financial Responsibility Laws,” that fits squarely within the language of the savings clause of the Graves 7 Amendment. Section 16000 requires the operator of a motor vehicle involved in an accident resulting in bodily injury to a person or property damage in excess of $1,000 to report the accident to the Department of Motor Vehicles within 10 days. (§ 16000, subd. (a).) Section 16004 mandates suspension of the “driving privilege” of any person who fails, refuses or neglects to make the report required by section 16000. That suspension “shall remain in effect until terminated by receipt of the report of the accident or upon receipt of evidence that financial responsibility as provided in Section 16021 is in effect.” (§ 16004, subd. (b).) Section 16020, subdivision (a) provides that “[a]ll drivers and all owners of a motor vehicle shall at all times be able to establish financial responsibility pursuant to Section 16021, and shall at all times carry in the vehicle evidence of the form of financial responsibility in effect for the vehicle.” (§ 16020, subd. (a).) Section 16021 then sets out the showing that can be made to establish evidence of financial responsibility. “The plain meaning of these provisions . . . is that financial responsibility for the vehicle is established, and the vehicle is insured as required by the Financial Responsibility Laws, if the owner or the driver has insurance that covers the driver for his or her operation of the vehicle involved in an accident. Although the vehicle owner generally will satisfy these requirements by personally maintaining insurance for the vehicle, section 16021 provides that financial responsibility is established so long as the driver is covered, under either the owner’s automobile policy or the driver’s own.” (Goodson, supra, 67 Cal.App.4th at pp. 512–513.) As one court put it, “ ‘The intent of the Legislature in passing the [financial responsibility] act is unambiguous. The operation of the statute is simple. Furthermore, the operation of the law is without 8 regard to fault. Thus, where such a driver is unable to prove one of the specified forms of financial responsibility, the law mandates that the DMV shall suspend the driver’s license.’ ” (Dowell, supra, 220 Cal.App.3d at p. 1570, italics omitted.) We conclude that California’s Financial Responsibility Laws, as set out in section 16000 et seq., ensure only that once found liable for injury and damage due to the operation of a vehicle, judgment debtors must show they are capable of paying for the consequences of their liability. Sections 17150 and 17151 are not within this ambit as they do not address or mandate financial responsibility. Instead, sections 17150 and 17151 are precisely the type of law the Graves Amendment was designed to preempt. (See Tavares, supra, 118 Cal.App.5h at pp. 236–237.) The tort claim at issue here is within the Amendment’s preemption clause and not within its savings clause. The “import of the Graves Amendment is clear. States may require insurance or its equivalent as a condition of licensing or registration, or may impose such a requirement after an accident or unpaid judgment. 49 U.S.C. § 30106(b)(1). They may suspend the license and registration of, or otherwise penalize, a car owner who fails to meet the requirement, or who fails to pay a judgment resulting from a collision. 49 U.S.C. § 30106(b)(2). They simply may not impose such judgments against rental car companies based on the negligence of their lessees. 49 U.S.C. § 30106(a).” (Garcia, supra, 540 F.3d at p. 1249.)

9 DISPOSITION The judgment is affirmed. Costs are awarded to respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

STRATTON, P. J.

We concur:

WILEY, J.

VIRAMONTES, J.