Graves Amendment Requires Payment: Free “Courtesy Vehicles” Are Not “Rented” and Do Not Preempt VTL § 388

1. Introduction

This appeal arises from a pedestrian-vehicle injury action in which Daniel T. O’Hare (through his attorney-in-fact, Kathleen O’Hare) sought damages after being struck by a Mazda driven by defendant Michael A. Eddo and owned by defendant-appellant Towne Ford, Inc. Towne, a dealership group, supplied the Mazda to Eddo through a manufacturer-affiliated “Mazda Courtesy Vehicle Program,” limited to Mazda customers whose vehicles were being serviced.

The central legal issue was whether Towne could avoid New York’s owner-liability statute, Vehicle and Traffic Law § 388, by invoking the federal Graves Amendment (49 USC § 30106). Specifically, the case turned on whether providing a no-charge “courtesy” vehicle constitutes “rent[ing]” within the meaning of the Graves Amendment’s express-preemption safe harbor.

Procedurally, Towne moved for summary judgment to dismiss the claim against it, arguing Graves Amendment preemption. Plaintiff cross-moved for partial summary judgment dismissing Towne’s Graves Amendment affirmative defense. Supreme Court denied Towne’s motion and granted plaintiff’s cross-motion to dismiss that defense; Towne appealed.

2. Summary of the Opinion

The Fourth Department unanimously affirmed. The court held that Towne did not establish Graves Amendment protection because it did not “rent” the vehicle to Eddo as that term is ordinarily understood: a rental requires payment for the use of the vehicle. The record showed Eddo paid no rental charge and no incidental fees (including gasoline). Because Towne did not satisfy the “rents” condition, the court did not reach the separate statutory requirement that the owner be “engaged in the trade or business of renting or leasing motor vehicles.”

3. Analysis

3.1 Precedents Cited

The opinion’s reasoning is built on interpretive canons about statutory meaning and federal preemption, reinforced by both New York and U.S. Supreme Court authority, and it engages directly with conflicting out-of-state decisions on the Graves Amendment.

• Second Child v Edge Auto, Inc.
  The court treated Second Child as the key New York authority on how to read the Graves Amendment: interpret federal statutes by “ordinary, contemporary, common meaning,” and assess meaning by considering language in its specific and broader statutory context. Second Child provided the immediate framework for a plain-meaning analysis of “rents,” and it anchored the court’s willingness to resolve the interpretive dispute at the threshold “rents” element.
• Southwest Airlines Co. v Saxon
  Cited for the principle that statutory words must be interpreted in context, not isolation. It supported the court’s focus on how “rent” is used in the context of personal-property transactions (a motor vehicle), rather than importing expansive, acontextual legal notions of consideration.
• Medtronic, Inc. v Lohr; Rice v Santa Fe El. Corp.; Wos v E.M.A.
  These cases supplied the presumption against preemption: because states traditionally occupy the field of tort remedies and police powers, courts begin with the assumption that Congress did not intend to displace state law unless that purpose is “clear and manifest.” The Fourth Department used these authorities to justify a narrow construction of the Graves Amendment’s preemption clause, especially where a broad reading would eliminate an injured plaintiff’s “viable cause of action.”
• Cipollone v Liggett Group, Inc.; Matter of Petralia v New York State Dept. of Labor
  These authorities reinforced that express preemption clauses must be “narrowly construed,” and matters beyond their scope are not preempted. Petralia is particularly important because it expresses this principle in New York appellate terms, which the Fourth Department then deployed to critique out-of-jurisdiction Graves Amendment cases for construing “rents” too broadly.
• Sutton 58 Assoc. LLC v Pilevsky
  Cited in support of the broader structural point about federalism and the caution courts must exercise when evaluating congressional displacement of state-law causes of action.
• Rosner v Metropolitan Prop. & Liab. Ins. Co.; Wisconsin Bell, Inc. v United States; Delaware v Pennsylvania
  These cases supported the court’s resort to dictionary definitions when statutory terms lack a controlling definition. The Fourth Department used them to justify treating contemporaneous dictionaries as “useful guideposts” to fix the ordinary meaning of “rent” and “rent” (noun) as involving payment.
• Romero v Fields Motorcars of Fla., Inc.; Zizersky v Life Quality Motor Sales, Inc.
  These decisions were cited as aligned authority concluding that a courtesy loaner does not constitute a “rental” for Graves Amendment purposes where the customer pays nothing. Romero supplied persuasive language: a reasonable reader would not view a free loaner given while servicing a vehicle as a “rental situation.”
• Thayer v Randy Marion Chevrolet Buick Cadillac, LLC; Garcia v Steele
  These were the principal contrary authorities relied on by Towne. The Fourth Department rejected them as unpersuasive for two main reasons:
  1. They “immediately resorted” to a legalistic definition from Black’s Law Dictionary, despite the Graves Amendment using “rent” as a verb and the then-current edition not defining the verb form.
  2. They construed the statute broadly by folding in “consideration” in its broadest sense, contrary to the narrow-construction rule for preemption clauses.
  The court further noted that the current Black’s Law Dictionary definition (“[t]o pay for the use of another’s property”) actually accords with the payment-centered reading adopted in this case.
• Jones v Bill
  Cited for the cautionary principle that courts should not infer an expanded application of a law that would deny injured plaintiffs a viable cause of action absent a clearer indication from Congress. This authority functioned as a policy-sensitive interpretive brake consistent with the presumption against preemption.

3.2 Legal Reasoning

The court’s reasoning proceeded in a structured sequence typical of express-preemption analysis:

• (a) Identify the statutory conditions for Graves Amendment immunity.
  Under 49 USC § 30106(a), an owner is shielded from vicarious liability under state law if: (i) the owner “rents or leases” the vehicle; (ii) the owner is in the business of renting/leasing motor vehicles; and (iii) there is no owner negligence or criminal wrongdoing. The court observed that several elements were undisputed (Towne owned the car; the injury arose from use during the relevant period; plaintiff did not claim Towne’s direct negligence; Towne did not contend there was a “lease”).
• (b) Decide the threshold “rents” element using ordinary meaning, in context.
  Because the Graves Amendment does not define “rents,” the court applied plain-meaning interpretation. Using contemporaneous dictionaries, it concluded “rent” (verb) commonly means allowing use in return for payment, and “rent” (noun) is the amount paid for use. This anchored a rule: to “rent” under § 30106(a), the owner must receive payment for use of the vehicle.
• (c) Apply the narrow-construction rule for preemption clauses.
  Even though the Graves Amendment is an express-preemption provision, the court emphasized that its scope must be narrowly construed, particularly where it would displace a traditional state tort remedy (VTL § 388). This canon reinforced the court’s reluctance to stretch “rents” to include indirect or non-monetary benefits.
• (d) Reject “consideration in the widest sense” as an improper expansion of “rents.”
  Towne argued the exchange of value consisted of (i) the opportunity to service Eddo’s Mazda and (ii) manufacturer incentive payments for program participation. The court rejected this as inconsistent with ordinary meaning and as a broad construction at odds with preemption canons. It preferred the “reasonable reader” approach articulated in Romero: free loaners during service are not “rental situations.”
• (e) End the analysis at the failed statutory condition.
  Having held that Towne did not “rent” the vehicle, the court declined to decide whether Towne was “engaged in the trade or business of renting or leasing motor vehicles.” This makes the decision a focused precedent on the meaning of “rents,” not a comprehensive ruling on dealership status as a rental business.

3.3 Impact

The opinion’s practical and doctrinal implications are significant for New York tort practice and for dealership “loaner” programs:

• Revives or preserves VTL § 388 exposure for free courtesy vehicles.
  Where a dealership or similar owner provides a loaner at no charge, O'Hare sharply limits the ability to invoke Graves Amendment immunity in the Fourth Department. Plaintiffs may more confidently plead and pursue vicarious-liability claims against vehicle owners under VTL § 388 in such scenarios.
• Creates a payment-centered line between “rental” and “loaner.”
  The decision supplies a relatively administrable test: if the driver pays nothing for the vehicle’s use (and no incidental usage fees), the “rents” condition is not met—regardless of the owner’s indirect business benefits or manufacturer incentives.
• Contributes to an emerging split in how “rents” is construed nationally.
  By expressly rejecting the broader approach of Thayer v Randy Marion Chevrolet Buick Cadillac, LLC and Garcia v Steele, and aligning with Romero v Fields Motorcars of Fla., Inc. and Zizersky v Life Quality Motor Sales, Inc., the decision deepens an interpretive divide that could invite further appellate attention in other jurisdictions.
• Likely operational changes for dealerships.
  Dealerships may reassess program structures (e.g., charging a nominal fee, recharacterizing transactions, or shifting risk contractually through insurance requirements). However, the opinion’s emphasis on ordinary meaning and narrow preemption suggests courts may scrutinize nominal-payment strategies designed solely to trigger federal immunity.
• Limits of the holding: “business of renting” unresolved.
  Because the court did not decide whether Towne was in the “trade or business” of renting/leasing, future cases may still litigate that condition where payment exists. Thus, O'Hare is strongest as precedent on the “rents” element.

4. Complex Concepts Simplified

• Vicarious liability (VTL § 388): A New York rule that can make a vehicle owner liable for injuries caused by someone driving the owner’s car with permission, even if the owner did nothing wrong personally.
• Graves Amendment (49 USC § 30106): A federal law that, in certain qualifying rental/lease situations, blocks states from imposing owner vicarious liability solely because of ownership. It is not automatic; the owner must satisfy the statute’s conditions.
• Express preemption: When Congress explicitly states that federal law overrides certain state laws. Even then, courts often read the preemption language narrowly to avoid displacing state authority more than Congress clearly intended.
• Presumption against preemption: A background rule that courts assume Congress did not intend to override traditional state powers (like tort law) unless Congress clearly says so.
• Summary judgment: A procedure to win (or narrow) a case without trial when there are no material disputed facts and the law favors the moving party.
• “Rent” vs. “consideration”: The court distinguished everyday meaning (“pay to use”) from the broader contract-law idea of consideration (any bargained-for benefit). For this preemption statute, the court required the everyday, payment-based meaning.

5. Conclusion

O'Hare v. Eddo establishes a clear interpretive rule in the Fourth Department: for Graves Amendment immunity, an owner “rents” a vehicle only when the user pays for its use; a free courtesy loaner—despite indirect business advantages or manufacturer incentive payments—does not qualify. The decision is grounded in plain-meaning interpretation, a strong presumption against preemption, and a directive to construe express preemption clauses narrowly. Practically, it preserves VTL § 388 as a meaningful remedy for injured plaintiffs in New York when accidents involve complimentary dealership loaner vehicles.