Green v. Toyota Motor Creditcorp

605 F.Supp.2d 430

Cynthia E. GREEN, Plaintiff, v. TOYOTA MOTOR CREDITCORP, Andre M. Polhill and Loretta S. Polhill, Defendants.

No. 07-CV-524 (ENV)(JO).

United States District Court, E.D. New York.

March 27, 2009.

Arnold E. DiJoseph, III, DiJoseph & Portegello, P.C., New York, NY, for Plaintiff.

Hae Jin Shim, London Fischer LLP, Joanne Filiberti, Leahey & Johnson, P.C., New York, NY, for Defendants.

Andre M. Polhill, West Orange, NJ, pro se.

Loretta S. Polhill, West Orange, NJ, pro se.

MEMORANDUM AND ORDER

VITALIANO, District Judge.

This is a tort action brought by plaintiff Cynthia Green ("Green") against Toyota Motor CreditCorp ("TMCC"), Andre Polhill and Loretta Polhill for personal injuries she allegedly sustained from an automobile accident in Brooklyn. Green claims that TMCC is vicariously liable for injuries she sustained as a result of negligence by a driver of a car owned by and leased from TMCC. The case is here on diversity of citizenship.

TMCC now moves to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, alleging that Green fails to state a claim upon which relief can be granted. Specifically, TMCC argues that the so-called Graves Amendment, 49 U.S.C. § 30106, preempts contrary New York state law and bars actions against motor vehicle leasing companies where the claim is founded upon a vicarious liability theory. TMCC also moves pursuant to Fed.R.Civ.P. 11(b)(2) to sanction plaintiffs counsel for making claims that are not "warranted by existing law or the establishment of new law." For the reasons that follow, the Court grants TMCC's motion to dismiss¹ but denies its motion for Rule 11 sanctions against plaintiff.

BACKGROUND

On or about November 18, 2004, Green was injured in an automobile accident in Brooklyn, New York. Andre Polhill was the driver of the other car, a 2001 Lexus RX300, leased by and registered to Loretta Polhill. TMCC was the lessor and title owner of the vehicle. On May 18, 2006, Green commenced this action against the defendants in New York State Supreme Court, Kings County. The action was thereafter removed to this Court on the basis of diversity jurisdiction. TMCC is a California corporation involved in the business of leasing motor vehicles in several states, including New York. Loretta and Andre Polhill are New Jersey residents. Green is a resident of New York.²

Following removal, TMCC moved to dismiss the complaint on the basis that 49 U.S.C. § 30106 preempted New York state law to the extent New York law allows for recovery against motor vehicle leasing companies on a vicarious liability theory. Collaterally, TMCC sought to sanction plaintiffs counsel for making claims that are not "warranted by existing law or the establishment of new law" and for refusing to voluntarily discontinue the action against TMCC, which "cost unnecessary expenditure of money and time and wasted resources of this court." (Def.'s Mem. 5, July 26, 2007).

DISCUSSION

I. Standard on Motion to Dismiss

Rule 12(b)(6) allows a party to assert by motion the defense of failure to state a claim upon which relief can be granted. However, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984) (internal quotation omitted). The role of the court in considering a motion to dismiss "is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof[,]" Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980), and not to be swayed by the fact that the possibility of ultimate recovery might be remote, Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir.1984). "`The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims[.]'" Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir.1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

II. Preemption of New York Vehicle and Traffic Law § 388 by the Graves Amendment

The background and history of the Graves Amendment has been well-chronicled and will not be reiterated here.³ Enacted on August 10, 2005, this amendment to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ("SAFETEA") provides in relevant part that:

[a]n 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).

49 U.S.C. § 30106(a). The Graves Amendment applies to all actions commenced on or after August 10, 2005, even if the conduct or harm occurred before the enactment date. 49 U.S.C. § 30106(c). Although the car accident at issue in this case occurred on November 18, 2004, Green's action was filed on May 18, 2006. It is undisputed, therefore, that this case is within the ambit of the amendment. Compare, Stampolis v. Provident Auto Leasing Co., 586 F.Supp.2d 88, 93 (E.D.N.Y. 2008) (finding that an action filed December 27, 2007 was "indisputably governed by the federal statute"), and Flederbach v. Fayman, 57 A.D.3d 474, 475, 869 N.Y.S.2d 180, 181 (2d Dep't 2008) (holding that plaintiffs motion to add lessor company as defendant for vicarious liability was not barred by Graves Amendment when action was commenced prior to the Graves Amendment's effective date).

New York's Vehicle and Traffic Law section 388 ("NYVTL § 388") expresses New York's public policy that all motor vehicle owners should be liable for the actions of an operator driving the vehicle with consent, providing in relevant part:

Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner. Whenever any vehicles as hereinafter defined shall be used in combination with one another, by attachment or tow, the person using or operating any one vehicle shall, for the purposes of this section, be deemed to be using or operating each vehicle in the combination, and the owners thereof shall be jointly and severally liable hereunder.

N.Y. Veh. & Tr. Law § 388(1). Prior to the enactment of the Graves Amendment, NYVTL § 388 created a cause of action predicated on a theory of vicarious liability against even remote title owners and lessors such as TMCC. The Graves Amendment clearly intended to preempt such a policy as a matter of federal law and bar recovery against car rental and leasing companies based on vicarious liability. See Flagler v. Budget Rent A Car System, Inc., 538 F.Supp.2d 557, 558 (E.D.N.Y. 2008) ("There is no question but that the Graves Amendment preempts state laws that impose vicarious liability on businesses that rent or lease vehicles") (citing United States v. Locke, 529 U.S. 89, 109, 120 S.Ct. 1135, 146 L.Ed.2d 69 (2000)). And, to the extent TMCC argues that the Graves Amendment preempts NYVTL § 388 upon which the claim against it is founded, its argument is unassailable.

III. Constitutionality of the Graves Amendment

What remains, of course, is Green's argument that the Graves Amendment is unconstitutional; specifically, that the amendment exceeds Congress's authority under Article I, Section 8 of the United States Constitution ("the Commerce Clause"), which is the source of the power of Congress "to regulate Commerce ... among the several states." U.S. Const, art. 1, § 8, cl. 3. In making her argument, Green relies primarily on the New York Supreme Court, Queens County decision Graham v. Dunkley, 13 Misc.3d 790, 827 N.Y.S.2d 513 (N.Y.Sup.Ct, Queens County 2006). It is, however, a decision that was subsequently reversed by the Appellate Division, Second Department. Graham v. Dunkley, 50 A.D.3d 55, 852 N.Y.S.2d 169 (2d Dep't 2008), appeal dismissed, 10 N.Y.3d 835, 859 N.Y.S.2d 607, 889 N.E.2d 484 (2008).

Notwithstanding, this Court is obliged to make its own assessment of constitutionality. To that end, we begin with the identification by the United States Supreme Court of the "three broad categories of activity that Congress may regulate under its commerce power." United States v. Lopez, 514 U.S. 549, 558-59, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995). First, Congress can regulate "the use of the channels of interstate commerce". Id. at 558, 115 S.Ct. 1624. Second, Congress can protect and regulate "the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the threat may come only from intrastate activities". Id. Third, Congress can regulate "those activities having a substantial relation to interstate commerce" provided that there is a rational basis for concluding that these activities are affecting interstate commerce. Id. at 558-89, 115 S.Ct. 1624; see also Gonzales v. Raich, 545 U.S. 1, 22, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005) (finding that where Congress had rational basis for believing that activities, taken in aggregate, would substantially affect interstate commerce, that is sufficient to meet the Lopez's third category for proper regulation under commerce powers).

Even at this date though, there is no...