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Flores v. Enterprise Rent-A-Car Co.

September 28, 2010

JESUS FLORES ET AL., PLAINTIFFS AND APPELLANTS,
v.
ENTERPRISE RENT-A-CAR COMPANY ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from judgments of the Superior Court of Los Angeles County, Robert A. Dukes, Judge. Affirmed. (Los Angeles County Super. Ct. No. KC051847).

The opinion of the court was delivered by: Willhite, Acting P. J.

CERTIFIED FOR PUBLICATION

In Osborn v. Hertz Corp. (1988) 205 Cal.App.3d 703 (Osborn), the court held that: (1) a rental car agency is not liable for negligent entrustment when it rents a car to a validly licensed driver who shows no sign of unfitness to drive (id. at p. 713); (2) an agency has no duty to inquire into the driving record of the renter by asking a series of questions concerning, inter alia, whether the renter has previously been convicted of driving under the influence (id. at p. 710); and (3) absent a legislative declaration that persons convicted of driving under the influence or whose license was previously revoked or suspended are ineligible to rent a vehicle, the rental agency is entitled to rely on the renter's presentation of a valid driver's license as sufficient evidence of fitness to drive (id. at p. 711).

In this case, we consider whether, in light of the availability of electronic driver's license checks, Osborn should be revisited so as to impose on rental car companies the duty to make an electronic search of the driving records of their customers to determine their fitness to drive. We conclude that the rationale of Osborn remains persuasive, and, further, that the subsequent passage of Vehicle Code section 14604*fn1 and the decision of the California Supreme Court in Philadelphia Indemnity Ins. Co. v. Montes-Harris (2006) 40 Cal.4th 151 (Philadelphia) demonstrate that rental car companies have no duty to conduct an electronic search of the driving records of their customers before entrusting a vehicle to them. Rather, as a matter of law, a rental car agency is not liable for negligent entrustment where the agency has fully complied with the requirements of sections 14604 and 14608, and the customer does not appear impaired or otherwise unfit to drive at the time of rental.

Factual and Procedural Background

The Complaint

Plaintiffs Jesus and Concepcion Flores's son died after being struck by a car driven by Alexander Wadsworth Dederer, who had rented the vehicle from defendant Enterprise Rent-A-Car Company of Los Angeles (ERAC-LA). Plaintiffs sued ERAC-LA, as well as Enterprise Rent-A-Car Company (ERACC), alleging (in the operative second amended complaint) causes of action for wrongful death (a survivorship claim), negligent entrustment, and punitive damages.

According to plaintiffs, the standard of practice in the rental car industry is to screen potential renters for past convictions for driving under the influence (DUI) of drugs or alcohol, and to refuse to rent a vehicle if the customer has one conviction within the previous 48 months. Plaintiffs alleged that defendants "knew or should have known that persons with DUI convictions in the past 48 months pose[] an unreasonable risk of harm to those using the California roadways," but defendants nonetheless adopted a corporate policy of not performing electronic driver's license checks because the cost exceeded the cost of paying for losses caused by accidents involving such drivers. Plaintiffs alleged that Dederer had prior DUI convictions in the last 48 months, and that defendants should have known this information and should have declined to rent the vehicle to him.

The Motion for Summary Adjudication Filed by ERAC-LA

ERAC-LA filed a motion for summary adjudication of issues challenging plaintiffs' negligent entrustment cause of action. As here relevant, ERAC-LA presented evidence that through its fictitious business name of Enterprise Leasing Company of Nevada, it owned the car driven by Dederer at the time of the accident. The accident occurred when Dederer, driving the vehicle, looked down to adjust his stereo and the vehicle struck Diego Flores. Dederer presented a valid California driver's license when he rented the car and showed no signs of being under the influence of alcohol. Dederer was not under the influence of alcohol at the time of the accident, and was not charged with driving under the influence of drugs or alcohol.

Relying on Osborn, Philadelphia, and sections 14604 and 14608, ERAC-LA argued that it had no statutory or common law duty to screen Dederer for prior DUI convictions, and no duty to refuse to rent to him because of his prior convictions. ERAC-LA acknowledged, however, that it could still be liable to plaintiffs based on "statutory ownership liability" pursuant to Vehicle Code section 17150.

The Motion for Summary Judgment Filed by ERACC

ERACC asserted it was entitled to summary judgment for two reasons: it was neither the owner of the rental car driven by Dederer nor a party to the rental agreement, and in any event it could not be liable for failure to require ERAC-LA to conduct electronic driver history searches because there is no legal duty to investigate the driving history of a person with a valid driver's license.

Plaintiffs' Opposition to Defendants' Motions

In opposition to defendants' motions, plaintiffs produced evidence regarding ERACC's analysis of the use of electronic driver's history checks, and evidence regarding other rental car companies' practices.*fn2 Based on this evidence, plaintiffs argued that ERACC had considered using electronic drivers' history checks, but decided not to do so for economic reasons, except in the state of New York. Plaintiffs argued that ERACC made this decision despite having determined that other major rental car companies were conducting checks of drivers' histories. Plaintiffs asserted that ERACC controlled the decision whether ERAC-LA, its subsidiary, would conduct driver's license checks.

On the issue of duty, plaintiffs argued that Osborn was inapposite because automated driver's license checks were not then available, that Philadelphia was distinguishable, and that sections 14604 and 14608 do not define, as a matter of law, the duty of due care owed by a rental car agency. Rather, the jury should determine whether ERAC-LA acted as a reasonable and prudent rental car agency by deciding not ...


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