Filed 9/24/26 Galicia-Martinez v. PV Holding Corp. CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
FRANCISCO GALICIA-MARTINEZ B339124
et al.,
(Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. 22STCV18928)
v.
PV HOLDING CORP., INC., et al,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Lee S. Arian, Judge. Affirmed.
Law Office of Kenneth L. Snyder, Kenneth L. Snyder; Gelb
Law and Yisrael Gelb for Plaintiffs and Appellants.
Joseph L. Stark & Associates, Joseph L. Stark and John M.
Bergerson for Defendants and Respondents.
_____________________________
California, like many states, permits vehicle owners to be
held vicariously liable for damages caused by the negligent
operation of their vehicles by third party permissive users. (Veh.
Code,1 §§ 17150–17151.) Congress, in response to the effect of
such vicarious liability statutes on the rental car industry,
enacted what is colloquially referred to as the Graves
Amendment in the Safe, Accountable, Flexible, Efficient
Transportation Equity Act of 2005. (49 U.S.C. § 30106.) The
Graves Amendment preemption clause shields rental car
companies nationwide from such vicarious liability when all other
requirements of the Amendment have been met. The
Amendment also includes a savings clause which exempts
financial responsibility laws from preemption. Plaintiffs contend
sections 17150 and 17151 bring them within the savings clause
because both are “financial responsibility laws” that survive
preemption under the Act. The trial court found defendants had
met all the requirements of preemption and the savings clause
did not relieve plaintiffs from preemption. We agree and affirm.
The parties agree the facts are undisputed. Defendant PV
Holding Company, Inc. does business as defendant Avis Budget
Group, Inc. On August 13, 2020, defendants owned and leased a
2020 Kia Optima to Victasia Dene Washington in the normal
course and scope of their business as a rental car company.
Plaintiffs are husband and wife. On August 15, 2020,
Washington, driving the rented vehicle, collided with plaintiffs’
vehicle. On June 9, 2022, Francisco Galicia-Martinez, who was
injured in the accident, filed an action for negligence, negligent
entrustment, and failure to maintain vehicle safety against
defendants, as owners of the leased vehicle. His wife, Maria
1 Undesignated statutory references are to the Vehicle Code.
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Estevez-Galicia, filed for loss of consortium. Washington, as the
driver, was sued as well, but she never filed an appearance in the
trial court and is not a party to this appeal.
Defendants filed a motion for summary judgment, arguing
that federal law shields rental car companies from vicarious
liability as car owners when the companies are not at fault in
causing the accident. Defendants argued no material fact was in
dispute on the issues of negligent entrustment, negligence,
product defect, failure to maintain vehicle safety, or defendants’
failure to meet their California financial responsibility
obligations pursuant to section 16053. Washington maintained a
valid California driver’s license and did not exhibit any signs of
intoxication when she rented the vehicle. In response, plaintiffs
provided no factual evidence to the contrary. They argued only
that the savings clause in the Graves Amendment allows their
vicarious liability action to proceed against defendants.
Relying on Garcia v. Vanguard Car Rental USA, Inc. (2008)
540 F.3d 1242 (Garcia), the trial court granted summary
judgment in favor of defendants, holding that the Graves
Amendment shields defendants, as a rental car company, from
vicarious liability as owners of the vehicle they leased to
Washington. The trial court ruled the savings clause did not
apply and entered judgment in favor of defendants. Plaintiffs
timely appealed.
DISCUSSION
A. Standard of Review
To prevail on summary judgment, a defendant must show
that one or more elements of the plaintiff’s cause of action cannot
be established or that there is a complete defense to the cause of
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action. (Code Civ. Proc., § 437c, subd. (p)(2); Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 850.) Here defendants
contend that the Graves Amendment provides a complete defense
to plaintiffs’ action.
We review de novo the trial court’s order granting
summary judgment. (Gonzalez v. Mathis (2021) 12 Cal.5th
29, 39; Tavares v. Zipcar, Inc. (2026) 118 Cal.App.5th 219, 227
(Tavares).)
B. Applicable Law
Under California law, car owners who permit third parties
to operate their vehicles are vicariously liable for the negligence
of the permissive users. (§§ 17150–17151.) Section 17150
provides: “Every owner of a motor vehicle is liable and
responsible for death or injury to person or property resulting
from a negligent or wrongful act or omission in the operation of
the motor vehicle, in the business of the owner or otherwise, by
any person using or operating the same with the permission,
express or implied, of the owner.” (§ 17150.) “ ‘Liability arises
solely from the owner’s status as owner of the vehicle, not from
any independent fault or wrongdoing on the owner’s part.’ ”
(Tavares, supra, 118 Cal.App.5th at p. 236; CACI 720.) Such
vicarious liability is limited to $15,000 for the death of or injury
to one person in any one accident, $30,000 for the death of or
injury to more than one person in any one accident, and $5,000
for damage to property of others in any one accident. (§ 17151,
subd. (a).) The statutory limitation under section 17151,
subdivision (a) does not apply to an owner’s own common law
negligence, as distinguished from the owner’s statutory vicarious
liability for the operator’s negligence. (Fremont Comp. Ins. Co. v.
Hartnett (1993) 19 Cal.App.4th 669, 675–676.)
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Congress enacted the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
(Pub.L. No. 109-59 (Aug. 10, 2005) 119 Stat. 1144), codified at
section 30106 of title 49 of the United States Code. Included in
this legislation is the Graves Amendment, after Representative
Graves, a principal proponent of the bill. The Graves
Amendment preempts all state vicarious liability schemes that
impose liability on lessors of motor vehicle where the vehicle is
involved in an accident through no fault of the lessor. There are
two operative provisions, a preemption clause (subdivision (a))
and a savings clause (subdivision (b)):
“(a) IN GENERAL.—An 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).
“(b) FINANCIAL RESPONSIBILITY LAWS.—Nothing in
this section supersedes the law of any State or political
subdivision thereof—
“(1) imposing financial responsibility or insurance
standards on the owner of a motor vehicle for the privilege
of registering and operating a motor vehicle; or
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“(2) imposing liability on business entities engaged in
the trade or business of renting or leasing motor vehicles
for failure to meet the financial responsibility or liability
insurance requirements under State law.”
(49 U.S.C. § 30106.)
Under the Graves Amendment a state may not hold rental
car companies vicariously liable for the negligence of their lessees
as long as both subsections (a)(1) and (a)(2) are satisfied. And
states may still require insurance or its equivalent as a condition
of licensing or registration and may enforce the requirement of
insurance or its equivalent by suspending licenses or
registrations, or imposing other penalties, for failure to meet such
requirements (under the savings clause in subsection (b)). The
Graves Amendment preempts state laws, such as section 17150,
which impose vicarious liability on the owners of leased or rented
vehicles based solely on their ownership. (Tavares, supra, 118
Cal.App.5th at pp. 236–237.; Garcia, supra, 540 F.3d at p. 1249.)
The Graves Amendment applies when the defendant shows
(i) it was “engaged in the trade or business of renting or leasing
motor vehicles;” (ii) there was “no negligent or criminal
wrongdoing on the part of the” defendant; and (iii) the defendant
rented the vehicle to the plaintiff. (49 U.S.C. § 30106(a).) There
is no dispute that defendants here have satisfied these criteria.
So we turn to the savings clause.
C. Analysis
On appeal, plaintiffs do not pursue their claim that
defendants are liable on the grounds of negligent entrustment,
failure to maintain the vehicle, or criminal negligence. Plaintiffs
contend only that sections 17150 and 17151 imposing vicarious
liability on vehicle owners for the negligence of their permissive
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users are “financial responsibility” laws because they assign
liability to motor vehicle owners for personal injury or property
damage occasioned by a permissive operator’s use of the vehicle.
“[S]ections 17150–17151 are not part of the Financial
Responsibility Laws” of California. (Goodson v. Perfect Fit
Enterprises, Inc. (1998) 67 Cal.App.4th 508, 514 (Goodson).)
California’s Financial Responsibility Laws are set out in section
16000 et seq. (Id. at p. 512; see Tavares, supra, 118 Cal.App.5th at
p. 237.) Just because sections 17150–17151 establish liability of
owners for the negligence of permissive users does not render them
financial responsibility laws. Liability and financial responsibility
in this context are two different concepts. Indeed, “the primary
purpose of the Financial Responsibility Act, and the express policy
of this state, [is] that ‘those owning or operating motor vehicles on
the streets or highways of this state shall be financially capable of
providing monetary protection to those suffering injury to their
person or property . . . and further, that such capability shall be
deemed a concurrent responsibility of such motor vehicle ownership
or operation.’ ” (Dowell v. Department of Motor Vehicles (1990)
220 Cal.App.3d 1567, 1569 (Dowell), first italics added; Stats. 1974,
ch. 1409, § 1.) Imposing liability is separate and distinct from
requiring proof of ability to pay for the consequences of liability.
The Graves Amendment does not define “financial
responsibility laws,” and neither side has pointed to any other
provision of the SAFETEA-LU which defines this term. Plaintiffs
seemingly contend the term “financial responsibility” is equivalent
to the term “liability.” As set out above, we disagree.
Further, California has a set of statutes at section 16000 et
seq., entitled “Financial Responsibility Laws,” that fits squarely
within the language of the savings clause of the Graves
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Amendment. Section 16000 requires the operator of a motor
vehicle involved in an accident resulting in bodily injury to a
person or property damage in excess of $1,000 to report the
accident to the Department of Motor Vehicles within 10 days.
(§ 16000, subd. (a).) Section 16004 mandates suspension of the
“driving privilege” of any person who fails, refuses or neglects to
make the report required by section 16000. That suspension “shall
remain in effect until terminated by receipt of the report of the
accident or upon receipt of evidence that financial responsibility as
provided in Section 16021 is in effect.” (§ 16004, subd. (b).)
Section 16020, subdivision (a) provides that “[a]ll drivers and
all owners of a motor vehicle shall at all times be able to establish
financial responsibility pursuant to Section 16021, and shall at all
times carry in the vehicle evidence of the form of financial
responsibility in effect for the vehicle.” (§ 16020, subd. (a).)
Section 16021 then sets out the showing that can be made to
establish evidence of financial responsibility. “The plain meaning
of these provisions . . . is that financial responsibility for the
vehicle is established, and the vehicle is insured as required by the
Financial Responsibility Laws, if the owner or the driver has
insurance that covers the driver for his or her operation of the
vehicle involved in an accident. Although the vehicle owner
generally will satisfy these requirements by personally
maintaining insurance for the vehicle, section 16021 provides that
financial responsibility is established so long as the driver is
covered, under either the owner’s automobile policy or the driver’s
own.” (Goodson, supra, 67 Cal.App.4th at pp. 512–513.) As one
court put it, “ ‘The intent of the Legislature in passing the
[financial responsibility] act is unambiguous. The operation of the
statute is simple. Furthermore, the operation of the law is without
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regard to fault. Thus, where such a driver is unable to prove one of
the specified forms of financial responsibility, the law mandates
that the DMV shall suspend the driver’s license.’ ” (Dowell, supra,
220 Cal.App.3d at p. 1570, italics omitted.)
We conclude that California’s Financial Responsibility Laws,
as set out in section 16000 et seq., ensure only that once found
liable for injury and damage due to the operation of a vehicle,
judgment debtors must show they are capable of paying for the
consequences of their liability. Sections 17150 and 17151 are not
within this ambit as they do not address or mandate financial
responsibility. Instead, sections 17150 and 17151 are precisely the
type of law the Graves Amendment was designed to preempt. (See
Tavares, supra, 118 Cal.App.5h at pp. 236–237.) The tort claim at
issue here is within the Amendment’s preemption clause and not
within its savings clause.
The “import of the Graves Amendment is clear. States may
require insurance or its equivalent as a condition of licensing or
registration, or may impose such a requirement after an accident
or unpaid judgment. 49 U.S.C. § 30106(b)(1). They may suspend
the license and registration of, or otherwise penalize, a car owner
who fails to meet the requirement, or who fails to pay a judgment
resulting from a collision. 49 U.S.C. § 30106(b)(2). They simply
may not impose such judgments against rental car companies
based on the negligence of their lessees. 49 U.S.C. § 30106(a).”
(Garcia, supra, 540 F.3d at p. 1249.)
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DISPOSITION
The judgment is affirmed. Costs are awarded to
respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, P. J.
We concur:
WILEY, J.
VIRAMONTES, J.
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