TRALA Applauds Michigan Supreme Court Ruling to Vacate Lower Court Decision
In a significant decision for TRALA and its membership, the Michigan Supreme Court has vacated the Robertson vs. U-Haul of Michigan decision by the state Court of Appeals.
While the move by the court is a victory, it may only be a temporary one. The court decision found that U-Haul was entitled to summary disposition because the complaint did not contain any allegations against U-Haul, but the court also stated it should be without prejudice to the plaintiff's leave to amend. What this means is that the court is potentially delaying an ultimate decision on the question of whether there can in fact be a claim for negligent leasing, because the complaint in this case was so inadequate it could not have formed a basis for the state court of appeals' decision.
The plaintiff now has 21 days to file a motion for reconsideration, which TRALA's counsel believes is highly unlikely to be successful. The next step would be to then have an order submitted to the Circuit Court granting U-Haul's motion for summary disposition based on this order. After that, TRALA will wait to see if the plaintiff moves for leave to amend and if he were to do this then U-Haul and TRALA will once again meet to review and brief the issue again but our industry would likely be in a better position and we'd be able to get a more proper sense of the claims.
The most important point of this move by the Michigan Supreme Court is that the Court of Appeals decision is vacated so future litigants should not be able to rely on it, protecting TRALA members and really anyone that rents equipment of any kind.
As a reminder about the case, on January 22, 2019 the Michigan Court of Appeals issued an unpublished decision in the Robertson v. U-Haul Company of Michigan case. The case involved a rental customer who rented a U-Haul truck and then subsequently, without the knowledge of U-Haul, allowed that truck to be driven by a friend who did not have a valid driver's license. That friend was operating the vehicle when he hit a vehicle stopped partially on the highway and tragically killed a passenger in the stopped vehicle and then fled the scene.
The plaintiff filed suit against U-Haul as the owner of the vehicle, even though U-Haul was not liable using traditional negligent entrustment nor negligent maintenance as an argument. Instead, the plaintiff cited “general negligence,” the idea that a rental company has a duty to the general public to prevent bad acts from occurring when it rents a vehicle. The argument of general negligence should have been protected by the Graves Amendment, the Michigan owner's liability statute, and common law.
The trial court denied U-Haul Company of Michigan's motion to dismiss, and it sought and received permission for an interlocutory appeal. The appellate court affirmed the trial court's order in a 2-1 decision. Rather than adopt plaintiff's general negligence argument, the majority created a new cause of action based on the Michigan owner's liability statute, MCL 257.401, which limits liability of a rental company unless the lessor was negligent in the leasing of the motor vehicle. The court further found that MCL 257.401 imposed on a duty on lessees of short-term vehicle rentals to the general public, finding that the statute was “designed to protect the general public from the risk of harm created by the negligent leasing of a motor-vehicle.”
Following this decision by the Michigan Court of Appeals, the only recourse left was to appeal to the State Supreme Court. TRALA began working on a strategy to build both rental and leasing industry support but also a broader business support for the State Supreme Court to take up the case and ultimately strike down the general negligent leasing duty. TRALA reached out to partners in the trucking and rental and leasing industries to gain support for an amicus brief to the Michigan Supreme Court. Additionally, TRALA worked with the U.S. Chamber of Commerce to gain support for the Chamber to submit their own amicus brief in coordination with TRALA.
On September 12, 2019 TRALA submitted an amicus brief to the Michigan Supreme Court. In its amicus brief, TRALA, along with the American Car Rental Association, the American Trucking Associations, the Detroit Auto Dealers Association, and the Michigan Auto Dealers Association, all encouraged the State Supreme Court to review and overturn the case. Specifically, TRALA argued that it would place owners at risk for liability and would completely change the business model of renting a vehicle in the state and go against long-standing precedent.
You may view the Michigan State Supreme Court's decision to vacate by clicking here.
TRALA will continue to coordinate with its allies and members on this issue as it moves to the next stage and make its members aware of any movement in the coming several weeks.
If you have questions about the latest developments in this case, please contact Jake Jacoby at firstname.lastname@example.org