Appeals Court Affirms Graves Law Preemption of Vicarious Liability in GMAC Lawsuit

The U.S. Court of Appeals for the Eighth Circuit invoked Graves Law on July 13, ruling that a vehicle lessor could not be held vicariously liable on the sole basis of vehicle ownership.

The court's decision in the lawsuit Carton v. GMAC (General Motors Acceptance Corporation) upholds an earlier ruling of the United States District Court for the Northern District of Iowa which ruled against the appellants' vicarious liability claims as well as their negligent entrustment claims. The U.S. Court of Appeals upheld the authority of the Graves Law in preempting vicarious liability and also found that there was no negligent entrustment on the part of GMAC.

In the lawsuit, the appellants were motorcyclists who sued GMAC for injuries they sustained when they were struck by a leased vehicle driven by Tiffany Gannon. GMAC held the lease on the vehicle. The appellants sued the company, alleging that as owner of the vehicle it was vicariously liable for Gannon's negligence, and directly liable for negligently entrusting the vehicle to Gannon, failing to repossess the vehicle after Gannon missed lease payments, and failing to discover Gannon was impaired and uninsured.

The U.S. District Court, citing earlier cases, ruled that the appellants' negligent entrustment claims were also barred by the Graves Law provision that limits the protections under the law to cases in which "there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner)." The district court interpreted this savings clause to only apply to claims of negligent maintenance.

The appellate court subsequently disagreed with the district court's narrow interpretation of the savings clause of the Graves Law. However, the appellate court nevertheless found that the appellants' claims of negligent entrustment did not have merit.

To see a copy of the ruling from the U.S. Court of Appeals for the Eighth Circuit, click here.

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