By Thomas Franz
BridgeTower Media Newswires
DETROIT-A Michigan Court of Appeals panel has ruled in favor of a plaintiff's claim against U-Haul for negligence in leasing a vehicle.
In Estate of Martel Robertson v. Johnson and U-Haul, the COA majority panel of Judges Michael J. Kelly and Patrick M. Meter affirmed a Wayne County Circuit Court ruling that existing case law shows that a short-term motor vehicle lessor is liable for an injury caused by the negligent operation of the leased vehicle.
"The question that presented itself was if a company like U-Haul could not be sued for negligent entrustment, was there some form of negligence that might exist in the case," said plaintiff's attorney Mark Granzotto. "The circuit court said there is a statute that says you can have negligence associated with the renting of a vehicle that's separate and distinct from negligent entrustment."
Judge Colleen A. O'Brien dissented.
Background
The case evolved out of a motor vehicle accident that caused the death of Martel Robertson, who was the passenger in a vehicle that was traveling south on M-39 in Detroit in April 2015.
Ladarius Johnson struck Robertson as he drove a vehicle rented from U-Haul. The vehicle driven by Johnson was originally rented two weeks earlier by Robert Smith.
Smith rented the vehicle at Johnson's request because Johnson knew he wouldn't have been able to rent the vehicle because he didn't have a driver's license, the opinion stated.
Smith gave Johnson total control of the U-Haul vehicle.
Smith originally rented the vehicle for only one day, and he testified he didn't communicate with U-Haul until April 12, 2015, and until that point he said he was under the impression the vehicle was already returned to U-Haul.
The court wrote that Johnson extended the U-Haul contract without Smith's knowledge or consent several times. Most of the extensions were made by phone.
One extension, however, on April 9, 2015, was signed by Smith and showed that U-Haul received $50 in cash.
Smith denied that the signature on that rental extension was his own, but Johnson said his girlfriend went to the U-Haul location to make a cash deposit to keep open the rental agreement.
The court then stated that it's reasonable to infer that Johnson's girlfriend signed Smith's name on the contact extension, but Smith was unaware of the contract extension and didn't give Johnson or Johnson's girlfriend permission to extend the contract.
After the accident that caused Robertson's death, plaintiff brought suit against Johnson and U-Haul. U-Haul filed a motion for summary disposition by claiming it could only be held liable for negligent entrustment of the vehicle. The plaintiff argued the claim didn't involve negligent entrustment, but just ordinary negligence. The trial court agreed, and U-Haul appealed.
COA analysis
In the unpublished opinion, the court wrote that U-Haul argued summary disposition should've been granted because Michigan doesn't recognize a claim for ordinary negligence in connection with a rental transaction where the facts do not support a claim for negligent entrustment.
The majority of the COA panel cited MCL 257.401(3) to show the circumstances when a vehicle lessor like U-Haul would be liable for injuries caused by the negligent operation of the leased vehicle.
"The plain language of MCL 257.401(3) provides that a short-term lessor is liable for 'an injury caused by the negligent operation of the leased motor vehicle only if the injury occurred while the leased motor vehicle was being operated by an authorized driver,' and it provides that there are no monetary limitations on that liability if 'the lessor, or his or her agent, was negligent in the leasing of the motor vehicle,'" the court wrote.
After determining that the plaintiff may sustain a claim for negligent leasing, the court went on to determine if U-Haul owed any legal duty to Robertson since U-Haul argued that it owes no duty to the general public in connection with the leasing process.
The court wrote that one purpose of that statute was to lessen the losses for which lessors were being held responsible when they had no control over the vehicle after it was leased. However, another purpose is to show the circumstances when a lessor would be liable for negligence in the leasing of a vehicle.
The panel added that since the Legislature did not limit damages for negligent leasing, it recognized the public needed additional protection from negligent leasing.
"Thus, a purpose of the statute is to prevent the loss of life caused by negligent operation of a motor-vehicle leased on a short-term basis, which is the exact type of harm that occurred in this case," the court wrote.
Plaintiff's perspective
Granzotto said his side's case was aided by the contract extensions granted by U-Haul.
"The contract was extended four times, three times without any signatures by anybody. The fourth time they extended the contract was 30 some hours after the accident," Granzotto said. "I don't quite know what the U-Haul people were doing in this case, but it looked pretty weird."
A transcript of a phone call from U-Haul also proved to be pivotal in the case in terms of proving that U-Haul should have known someone else besides the original renter was driving the vehicle.
"When they rented the vehicle, there were two phone numbers on the contract. The woman at the counter called days later because the truck had not come back. It was not Mr. Smith. We think it was the guy who was driving it. In the course of that conversation, the U-Haul person represented to a person who she thought was Mr. Smith, 'please tell the person who's driving it around to bring it back,'" Granzotto said.
In the end, Granzotto said the key to the case was the statute cited by the circuit court and Court of Appeals.
"The biggest thing in our favor is the statute that sets the maximum they could be liable for except for a situation involving direct negligence in the renting, which fit perfectly into what we argued," Granzotto said.
Dissent
O'Brien disagreed with the majority's stance that MCL 257.401(3) creates a cause of action.
O'Brien wrote that before the statute was passed, lessors of vehicles were too liable when leasing their vehicles. O'Brien also argues that U-Haul did not have a relationship to the general public giving rise to a duty to Robertson.
"This is not to say that U-Haul was under no duty to the general public when it rented a motor vehicle; an owner or lender of a motor vehicle has a common-law duty 'to refrain from placing it in the hands of a known unfit or incompetent driver for operation on our public highways,'" O'Brien wrote.
O'Brien went on to state that U-Haul owed a duty to the public under a negligent-entrustment theory, which the plaintiff admitted she could not sustain.
Defense attorney Moheeb Murray did not respond to requests for comment on this case.
Published: Thu, Mar 28, 2019
