Can I Sue The Rental Car Company When The Rental Car Driver Is The Cause Of The Accident?

Can I sue the rental car company when the rental car driver is the cause of the accident?

Normally, when you are in an accident with a person who has rented a car from a rental car company (Avis, Alamo, Thrifty, National, Hertz, Enterprise, Dollar, etc.), your claim is usually against the driver of the car and not against the rental car company.

However, which insurance company pays, depends upon the language in the rental agreement. While a rental car is required to have liability insurance, the rental car liability insurance may be secondary to any liability insurance on a car owned by the person renting the car. If the rental contract provides that the rental car company insurance is secondary to any other valid and collectible insurance, then the liability insurance on the car owned by the renter may be the primary insurance to pay and the rental company may only pay if the primary does not pay or if the rental car insurance amount is in excess of the primary insurance.

In order for the renter’s household insurance to apply, the rental car must be a replacement for the household car. Replacement means a rental for less than 180 days and is being rented to temporarily replace the household vehicle due to an accident or because of breakdown, repair, service, or damage. If the rental contract is silent on this issue or states the rental car insurance is primary, then the rental car insurance is responsible.

Md. Transportation Code Ann. Sec. 18-101 states: In this title, “rent” means to rent or lease for a period not exceeding 180 days.

Md. Transportation Code Ann. Sec. 18-102 states

 (a)  In general. —

  • (1) The Administration may not register any motor vehicle, trailer, or semitrailer to be rented until the owner of the vehicle certifies to the satisfaction of the Administration that the owner has security for the vehicle in the same form and providing for the same minimum benefits as the security required by Title 17-103 of this article for motor vehicles. (30,000.00/60,000.00/15,000.00
  • (2)
    • (i) In this paragraph, “replacement vehicle” means a vehicle that is loaned by an auto repair facility or a dealer, or that an individual rents temporarily, to use while a vehicle owned by the individual is not in use because of loss, as “loss” is defined in that individual’s applicable private passenger automobile insurance policy, or because of breakdown, repair, service, or damage.
    • (ii) Subject to subparagraph (iii) of this paragraph, an owner of a replacement vehicle may satisfy the requirement of paragraph (1) of this subsection by maintaining the required security described in § 17-103 of this article that is secondary to any other valid and collectible coverage and that extends coverage to the owner’s vehicle in amounts required under § 17-103 (b) of this article while it is used as a replacement vehicle.
    • (iii) If an owner of a replacement vehicle provides coverage as provided under subparagraph (ii) of this paragraph, the agreement for the replacement vehicle to be signed by the renter or the individual to whom the vehicle is loaned shall contain a provision on the face of the agreement, in at least 10 point bold type, that informs the individual that the coverage on the vehicle being serviced or repaired is primary coverage for the replacement vehicle and the coverage maintained by the owner on the replacement vehicle is secondary.
  • (b)  Persons to be covered by security. — Notwithstanding any provision of the rental agreement to the contrary, the security required under this section shall cover the owner of the vehicle and each person driving or using the vehicle with the permission of the owner or lessee.

However, the insurance that may be available, whether you collect from the renter’s insurance or from the rental car company insurance may be limited. Rental companies in Maryland are only required to provide the minimum required by Maryland law which is $30,000.00 in coverage. If the renter’s household policy is greater than the minimum then you can collect the difference from their household policy.

Md. Transportation Code Ann. Sec. 17-103 states:

(b)  Required minimum benefits. — The security required under this subtitle shall provide for at least:

    • (1)  The payment of claims for bodily injury or death arising from an accident of up to $ 30,000 for any one person and up to $ 60,000 for any two or more persons, in addition to interest and costs;
    • (2)  The payment of claims for property of others damaged or destroyed in an accident of up to $ 15,000, in addition to interest and costs;

However, there are cases with serious injuries where 30,000.00 will not cover your damages. The obvious question arises, since the rental car company is a huge multimillion dollar company, why can I not sue the rental car company directly? The answer is generally you can’t sue the rental car company unless you can prove negligent entrustment. If you can’t prove negligent entrustment, then you can’t sue the rental car company directly. What is negligent entrustment?

Suing rental company for negligent entrustment

In order to pursue a negligent entrustment, claim against a rental car company and sue the rental car company directly, it is necessary to prove the rental company violated a relevant provision of Title 18 of the Transportation Article. In Tri-State Truck & Equip v. Stauffer, 24 Md. App. 221 (1975) The Court of Special Appeals indicated the only way to pursue a claim against the rental car company directly is when they have violated a relevant provision of Title 18 of the Transportation Article. 18-105 prohibits renting a vehicle to someone under the influence of alcohol or a controlled dangerous substance. 18-103 requires the rental car company to verify that the renter has a valid driver’s license and to inspect the license to confirm that it matches the renter. Title 18 does not require an inquiry into the driver’s driving record or criminal history so not likely you could bring an action for failure to make an inquiry into the driver’s driving record or criminal history.

Md. Transportation Code Ann. Sec. 18-105 states:

  • (a)  Renter under influence or impaired. — A person may not rent a motor vehicle to any other person if he knows that the other person is under the influence of alcohol, impaired by alcohol, impaired by a drug, a combination of drugs, or a combination of one or more drugs and alcohol, or impaired by a controlled dangerous substance.
  • (b)  Driver under influence or impaired. — A person may not rent a motor vehicle to any other person if the person knows that an individual who will drive the rented vehicle is under the influence of alcohol, impaired by alcohol, impaired by a drug, a combination of drugs, or a combination of one or more drugs and alcohol, or impaired by a controlled dangerous substance.

Md. Transportation Code Ann. Sec. 18-103 states:

  • (a)  License to drive required. — A person may not rent a motor vehicle, trailer, or semitrailer to any other person unless the individual who will operate the rented vehicle:
  • (1) Holds a driver’s license issued under Title 16 of this article, which license authorizes him to drive or tow, as the case may be, vehicles of the class rented;
  • (2) Is a nonresident who:
    • (i) Has with him a license to drive issued to him by the state or country of his residence, which license authorizes him in that state or country to drive or tow, as the case may be, vehicles of the class rented; and
    • (ii) Is at least the same age as that required of a resident to drive or tow, as the case may be, the vehicle rented; or
  • (3) Otherwise is specifically authorized by Title 16 of this article to drive or tow, as the case may be, vehicles of the class rented.
  • (b)  Inspection of license required. — A person may not rent a motor vehicle, trailer, or semitrailer to any other person unless the lessor or his agent:
  • (1) Has inspected the license to drive of the individual who will operate the rented vehicle; and
  • (2) Has compared and verified:
    • (i) The signature on the license with the signature of the individual, as written in the presence of the lessor or agent; and
    • (ii) The physical description on the license with the physical appearance of the individual.
  • (c)  Required records. — Each person who rents a motor vehicle, trailer, or semitrailer to another person shall keep a record of:
  • (1) The registration number of the rented vehicle and, if only a semitrailer or trailer is rented, the registration number of the motor vehicle to be used to tow the trailer or semitrailer;
  • (2) The name and address of the lessee;
  • (3) The number of the license to drive of the individual who will drive or tow, as the case may be, the rented vehicle; and
  • (4) The date and place of issuance of the license to drive.
  • (d)  Inspection of record. — Any police officer or authorized representative of the Administration may inspect the records kept under subsection (c) of this section.

But the rental car has no duty to investigate a customer’s competence to drive unless it knows of facts that put it on notice of the customer’s incompetence.  As the Court of Special Appeals said in Herbert v. Whittle, supra, 69 Md. App at. 291-92: Before one can be required to make any inquiry, he or she must possess knowledge of some facts or circumstances to put him or her on notice.  Only a person who has knowledge of circumstances sufficient to put a prudent person on inquiry of a particular fact, in this case [the entrustees’] inexperience or incompetence, is deemed to have notice of the fact itself where an investigation would in all probability have revealed that fact if it had been pursued.

Rental car companies do not have a legally cognizable duty to perform driving record searches — and even criminal background checks — on every one of its customers, and then deny the rental to those customers whose records are, by some unstated standard, sufficiently bad.  Such a rule would impose a large burden on rental car companies, and an even larger burden on the harried personnel who would have to decide how to follow it. The appropriate rule is that, absent a legislative dictate, the rental car company does not have a duty to “investigate the driving record of a prospective customer who presents a facially valid driver’s license and does not otherwise appear to be incompetent.”  Cowan v. Jack, 922 So.2d 559, 569 (La. Ct. App. 2005).  See also Young v. U-Haul Company of D.C., 11 A.3d 247 (D.C. 2011).

In Flores v. Enterprise Rent-A-Car, 188 Cal. App. 4th 1055, 116 Cal. Rptr. 3d 71 (2010), a California intermediate appellate court held that, as a matter of law, a rental car agency is not liable for negligent entrustment if it satisfied its statutory screening obligations and if the customer did not appear impaired or otherwise unfit to drive at the time of the rental.  Id., 188 Cal. App. 4th at 1059, 116 Cal. Rptr. 3d at 73.  Earlier, in Brown v. Fields, 83 P.2d 144 (Or. 1938), a case in which a prospective customer of a car dealership was involved in a collision while on a test drive of one of the dealer’s cars, the Supreme Court of Oregon said: “Unless there are facts and circumstances which might reasonably put the dealer on inquiry, he is not obliged to test the competency and skill of his customer before entrusting him with an instrumentality which, even though it may become highly dangerous by reason of its improper use and operation, is not inherently dangerous.” .

Tri-State Truck and Equipment Company, Inc. v. Franklin E. Stauffert  24 Md. App. 221, 330A.2d. 680 (1975) this case involves a rental truck company that did not perform it’s required statutory duty to insure the renter was properly licensed. The issue presented was whether the rental truck company could be sued personally under the theory of negligent entrustment. The court then discussed the requirements of Md. Transportation Code Ann. Sec. 18-103.which reads as follows:”Renting motor vehicles to another.

(a) To be rented to licensed person only. — No person shall rent a motor vehicle or trailer to any person for operation unless the person who will operate the rented motor vehicle or trailer is duly licensed hereunder or, in the case of a nonresident, duly licensed under the laws of the state of his residence; provided that state requires an examination for qualification to operate a motor vehicle and in which state residents of Maryland are given the same privilege.

(b) Inspection of driver’s license. — No person shall rent a motor vehicle or trailer to any other person for operation until the person in possession of the motor vehicle or trailer to be rented has inspected the driver’s license of the person by whom the motor vehicle or trailer is to be operated and compared and verified the signature thereon with the signature of the person written in his presence and compared and verified the physical description thereon with the physical description of the person.

In almost classic understatement the brief of appellant  declares: “Appellant admits that this evidence was sufficient, if believed, to allow the jury to conclude that appellant did not fulfill the requirements of Md. Transportation Code Ann. Sec. 18-103, which required that vehicles be rented to drivers who present proof of a valid driver’s license.”

Tri-State contends that its violation of Md. Transportation Code Ann. Sec. 18-103 was not a proximate cause of the harm sustained by Stauffer. The question whether a particular negligent act constitutes a proximate cause of harm is an issue that has long perplexed the Courts.

In Prosser, Law of Torts, Ch. 7, § 41 (4th Ed. HB, 1971) it is said at 236:”An essential element of the plaintiff’s cause of action for negligence, or for that matter for any other tort, is that there be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered. This connection usually is dealt with by the courts in terms of what is called `proximate cause,’ or `legal cause.’ “`Proximate cause’ — in itself an unfortunate term — is merely the limitation which the courts have placed upon the actor’s responsibility for the consequences of his conduct.

* * *P. 241 “On the issue of the fact of causation, as on other issues essential to his cause of action for negligence, the plaintiff, in general, has the burden of proof. He must introduce evidence which affords a reasonable basis for the conclusion that it is more likely than not that the conduct of the defendant was a substantial factor in bringing about the result. A mere possibility of such causation is not enough; and when the matter remains one of pure speculation or conjecture, or the probabilities are at best evenly balanced, it becomes the duty of the court to direct a verdict for the defendant.

It is, of course, well settled in Maryland that the violation of a statute regulating the use and operation of motor vehicles is evidence of negligence and if such violation causes or contributes to the injuries complained of, it constitutes actionable negligence. Ford v. Bradford 213 Md. 534,132 A.2d. 488.

In Volkswagen of America v. Young, 272 Md. 201, 218, 321 A.2d 737, 746, it was said: “Legislative or administrative requirements that persons or businesses conduct their operations in a particular manner, and adhere to specified standards, have never been viewed as supplanting tort liability. On the contrary, such statutory or regulatory requirements are deemed to furnish standards by which courts or juries determine, along with other circumstances, whether or not conduct is negligent. Failure to adhere to those standards is evidence of negligence for the court or jury to consider.”

“Under a statute making it unlawful to rent a motor vehicle without first ascertaining that the driver had an operator’s license, an owner renting an automobile to a person who had no license, without making inquiry as to the ability or competence of such person, may be held liable to a person injured by the driver.”

231*231 Harper & James, The Law of Torts, Vol. 2, subscribes to the same view with respect to the effect of statutes similar to § 8-103 (114), saying at 1120-21:”Where the car is entrusted to an unlicensed driver, or where defendant himself drives it without a license, a similar question is presented (if the licensing statute is thought to have safety in mind and not exclusively revenue, or some other unrelated purpose), namely, did the harm result from the want of a license, or (more accurately) because of the risk of unskilled driving which the licensing statute sought to prevent? If the car was driven with all the skill and care the law requires, then the harm did not proceed from such a risk; if the car was negligently driven, then it did. *

The question whether the violation of a statute prohibiting knowing permission to an unlicensed driver to use a motor vehicle will support an action for damages against the owner of such vehicle has been presented in two Maryland cases. The question was left unanswered in both. 232*232 In State use of Weaver v. O’Brien, 140 F. Supp. 306, (U.S.D.C., D. Md., 1956) Chief Judge Rozel C. Thomsen referred to Article 66 1/2, § 111, providing that, “No person shall authorize or knowingly permit a motor vehicle owned by him or under his control to be driven upon any highway of this State by any person who is not authorized to operate such motor vehicle under this Article.” and stated at 309-10:

“Under Maryland law the mere violation of a statute does not support an action for damages, but it is evidence of negligence, and where such violation is the proximate cause of an injury, a right of action accrues to the party injured. Hopper, McGaw & Co. v. Kelly, 145 Md. 161, 169, 125 A. 779; .

Although the comments in Blashfield and Harper & James, supra, would seem to make the issue quite simple, there are decisional differences upon the question of the proximate cause of such a prohibitory rental statute. We shall cite but two cases representative of the respective rationale.

The case of Mundy v. Pirie-Slaughter Motor Co., 206 S.W.2d 587, (Supreme Ct. of Tex. 1947) espouses the rule that violation of such a statute by the entrustor when coupled with proof of the negligence of the entrustee, gives rise to a jury question upon the issue of probable cause.

“Mere proof that the defendant’s agents were guilty of negligence per se or that they were guilty of negligence in fact, does not, of course, establish liability on the defendant’s part. Plaintiff must go further and prove that such negligence was the proximate cause of the collision in which he was injured. Waterman Lumber Co. v. Beatty, 110 Tex. 225, 218 S.W. 363. In order to establish proximate causation, plaintiff must show that Dickson operated the automobile negligently (that is, in a manner that was negligent regardless of the lack of a driver’s license) and that such negligence was a proximate cause of the collision. The purpose of the statute which defendant is alleged to have violated is to prevent the lending of automobiles to persons not shown by examination and license to be competent to drive, and the danger anticipated and intended to be prevented by the statute is that such persons, if given the opportunity to drive, will do so  negligently and will cause damage to other persons. If, after the automobile is entrusted to such driver, he operates it negligently, and thereby causes damages to a third person, the causal connection is shown between the negligence of the owner in lending him the automobile and the damage to the third person.”

We have no doubt that Md. Transportation Code Ann. Sec. 18-103  was intended to provide statutory standards for those engaged in the automobile and truck rental business. Nor do we doubt that such standards were imposed for the protection of the public from the negligent operation of motor vehicles. There was an abundance of evidence that Tri-State violated the statute Subsection (a)

In Herbert v. Whittle 69 Md App. 273, 517 A.2d.273 (1986) the owner of the car lets an inexperienced driver, drive her car because she assumed without asking that the driver was properly licensed and experienced. There was no discussion about Ms. Whittle’s driving experience or whether she had a permit to drive prior to Ms. Whittle’s taking over operation of the Mustang. In reality, while not licensed, had completed a driver education course. The accident itself was the fault of the inexperienced driver.

In Rounds v. Phillips, 166 Md. 151, 166-67, 170 A. 532 (1934), the Court of Appeals recognized the tort of negligent entrustment in Maryland. This tort, as embodied in the Restatement (Second) of Torts § 390 (1965), has been applied in cases subsequent to Rounds. Section 390 provides:”One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them.”

The cause of action for negligent entrustment is based on the requisite knowledge of the supplier of the chattel. If the supplier knows or should know of the entrustee’s propensities to use the chattel in an improper or dangerous manner, the entrustor owes a duty to foreseeable parties to withhold the chattel from the entrustee. “[T]he principal features of the tort lie in the knowledge of the supplier concerning the dangerous propensities of the entrustee and in the foreseeability of harm.” Kahlenberg, 290 Md.497  at 488, 431 A.2d 76.

In the context of supplying an automobile to an incompetent driver, the Court of Appeals in Morrell v. Williams , 279 Md. 497 at 503-04, 366 A.2d 1040, stated:

“[T]he doctrine requires scienter and has been applied in cases involving automobiles where the owner knew or should have known that the use of the entrusted car by the entrustee would likely involve unreasonable risk.

In Curley v. General Valet Service, 270 Md. 248, 311 A.2d 231 (1973),, the Court of Appeals did recognize “that the entrustor is only responsible for the subsequent negligent acts of the entrustee if a reasonable man could have foreseen the negligent acts.…” 270 Md. at 267, 311 A.2d 231 (emphasis added). Similarly, in  Kahlenberg, 290 Md. at 488, 431 A.2d 76, the Court again asserted that the liability of the entrustor is based “upon the negligent entrustment when it operates as a concurrent cause with the negligence of the entrustee.” 290 Md. at 488, 431 A.2d 76 (emphasis added).

As we stated, proof of the entrustor’s knowledge is an essential element of this cause of action. The entrustor may be charged not only with what he or she actually knew, but with what he or she should have known. Morrell, 279 Md. at 503, 366 A.2d 1040. Additionally, if the circumstances suggested that further inquiry was appropriate and, despite such circumstances, the entrustor failed to make a reasonable investigation, the entrustor may be liable. Tri-State Truck & Equip. Co. v. Stauffer, 24 Md. App. 221, 241, 330 A.2d 680, cert. denied, 275 Md. 757 (1975). Finally, an entrustment not negligent in its origin may become so if allowed to persist after the entrustor has learned or has had reason to learn that the entrustee was not qualified to use the chattel. General Valet Serv. v. Curley, 16 Md. App. 453, 298 A.2d 190, rev’d on other grounds, 270 Md. 248, 311 A.2d 231 (1973).

Comment b to the Restatement rule states in pertinent part:”[O]ne who supplies a chattel for the use of another who knows its exact character and condition is not entitled to assume that the other will use it safely if the supplier knows or has reason to know that such other is likely to use it dangerously, as where the other belongs to a class which is notoriously incompetent to use the chattel safely, or lacks the training and experience necessary for such use, or the supplier knows that the other has on other occasions so acted that the supplier should realize that the chattel is likely to be dangerously used, or that the other, though otherwise capable of using the chattel safely, has a propensity of fixed purpose to misuse it.” (Emphasis added.)Restatement (Second) of Torts § 390 Comment b (1965).

Attributable Knowledge

Appellees also assert that even if the evidence were not sufficient to establish that Ms. Herbert knew of Ms. Whittle’s inexperience and incompetence, the evidence was sufficient to establish that Ms. Herbert should have known of Ms. Whittle’s incapabilities.

Inquiry

In Morrell and Bauman, the Court of Appeals ruled that employers were entitled to rely on the representations of competence made by their employees. In Morrell, the Court noted that after the entrustee told the entrustor “that he had a driver’s license, that he had driven automobiles in Maryland before going into the army, that after entering the Army in 1968 he had undergone driver’s training at Fort Dix, that he had driven army vehicles at Fort Dix, that he had driven army trucks in Vietnam for nearly a year, and that after returning to Fort Meade in Maryland, he had driven army vehicles on Maryland highways,” there was insufficient evidence of negligent entrustment. 279 Md. at 504, 366 A.2d 1040 (footnote omitted).

Similarly, in Bauman, the Court ruled that the employer was entitled to rely on the representation of the entrustee’s competence when the entrustee “advertised his services by word of mouth and held himself out as being capable of doing the work he undertook to do.” 244 Md. at 217-18, 223 A.2d 364. If in Morrell and Bauman the Court held that employers who hire drivers who regularly travel on the public roadways were not required to check into the abilities of their employees, surely Ms. Herbert was entitled to rely on Ms. Whittle’s implication that she could drive for this one particular occasion on lightly trafficked roads.

Before one can be required to make any inquiry, he or she must possess knowledge of some facts or circumstances to put him or her on notice. Only a person who has knowledge of circumstances sufficient to put a prudent person on inquiry of a particular fact, in this case Ms. Whittle’s inexperience or incompetence, is deemed to have notice of the fact itself where an investigation would in all probability have revealed that fact if it had been pursued. Williams v. Skyline Dev. Corp., 265 Md. 130, 164, 288 A.2d 333 (1972); see, e.g., Rounds v. Phillips, 168 Md. 120, 126, 177 A. 174 (1935).

In Rounds v. Phillips, 168 Md. 120, 126, 177 A. 174 (1935), a directed verdict in favor of the entrustors was improper where the evidence established that the parents of an entrustee entrusted an automobile to their minor son with actual knowledge of the son’s habit of intoxication and habitual and negligent use of automobiles. Evidence was presented that the father knew that his son had been seriously injured in a previous accident when the vehicle he was driving struck a stationary automobile wholly off the roadway; that his son had a conviction for driving a vehicle while intoxicated; and that he had a reputation as a fast and reckless driver. In addition, the record disclosed that the father knew that the son’s driving permit and registration for his car had been revoked for driving while intoxicated. Rounds, 168 Md. at 125-26, 177 A. 174.

In Snowhite, 243 Md. at 315, 221 A.2d 342, the Court of Appeals held that an employer was liable for negligent entrustment because he knew the entrustee driver frequently used the company truck for personal use; knew he had four moving violations in a two and one-half year period; knew he was involved in one automobile accident; and also knew of his habit of drinking heavily for two years prior to the automobile collision in question. In fact, the entrustor would go to a local bar to retrieve the driver, and with knowledge that he had been drinking, send the driver in a gasoline truck out on deliveries. 243 Md. 291, 297-99, 221 A.2d 342 (1966).

In Curley, sufficient knowledge was found on the part of an entrustor who knew of six serious moving violations on the entrustee driver’s part within a five-year period prior to the accident, four of which were of the same nature as that which caused the automobile accident in that case. 270 Md. at 252-53, 311 A.2d 231. In examining the sufficiency of that evidence, the Court of Appeals stated:

“We think [the entrustee’s] particular record of moving violations, known to [the entrustor] at the time it employed him, considered in light of the type of vehicle he was driving [a van] and area in which he was known to be driving it [heavily populated and trafficked urban areas] constitutes evidence which, though meager, was legally sufficient in the circumstances of this case to permit the jury to rationally find that [the entrustee’s] failure to heed traffic control devices was habitual and as a consequence rendered him an incompetent driver whose use of the van entrusted to him by [the entrustor] posed an unreasonable risk of physical harm to others.”

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