United States District Court, E.D. Pennsylvania
February 2, 2004.
BUDGET RENT-A-CAR SYSTEM, INC.
NICOLE CHAPPELL and JOSEPH POWELL, III
The opinion of the court was delivered by: STEWART DALZELL, District Judge
Joseph Powell, III rented a car from Budget Rent-A-Car Systems, Inc.
in Michigan and drove it to New York, where he picked up Nicole Chappell.
While Powell was driving through Pennsylvania with Chappell, the car was
involved in an accident, and Chappell suffered serious injuries. Budget
brought this action for a declaratory judgment on the extent of its
vicarious liability for Powell's negligence. The parties' cross-motions
for summary judgment, which raise vexing and consequential choice of law
problems, are now before us.*fn1
[EDITORS NOTE: THIS PAGE IS BLANK.]
While visiting North Carolina in August of 2001, twenty-six year old
Nicole Chappell of New York met Joseph Powell, III, a Michigan resident
who had nearly reached his twenty-first birthday. Simon Decl. Ex. A
("Stip.") ¶ 1, Ex. B ("Chappell Decl.") ¶¶ 2-3. Even after returning to
their homes, Chappell and Powell maintained a friendship through weekly
telephone conversations and occasional reunions. Id. ¶ 3. As Valentine's
Day, 2002, approached, Powell planned to surprise Chappell by driving
from Michigan to New York to deliver roses and a bracelet. Simon Decl.
Ex. D. ("Powell Dep.") at 10. Thus, in late January of 2002, he began his
preparations by arranging for a one week rental of a Ford Explorer from
Budget Rent-A-Car Systems, Inc. ("Budget Systems")*fn2 in Warren,
Michigan. Stip. ¶ 11.
For reasons that will become apparent later, we now consider at length
minutiae that in any other context would be far too arcane to warrant
On January 30, 2002, Nissan North America, Inc. transferred a 2002
Nissan Xterra with Vehicle Identification Number 5N1ED28Y02C532670 (the
"Xterra") to a Nissan dealership in Florida, and the dealership promptly
transferred that vehicle to Budget Systems in Michigan. Simon Decl. Ex.
J. Assuming that
Budget Systems followed its regular procedures, after the Xterra
arrived in Romulus, Michigan, a Budget Systems fleet clerk obtained
Michigan license plate NVQ532 and placed that plate on one of the
Xterra's seats. Simon Decl. Ex. F ("Schenk Dep.") at 3, 5-19; Stip. ¶
12.*fn3 A "lot person" later removed the plate from the Xterra's seat
and affixed it to the vehicle.*fn4 Schenk Dep. at 14, 19. After placing
the plate in the Xterra, the fleet clerk wrote license plate number
"NVQ532" at the top of the vehicle's certificate of origin and took the
certificate to the office of Michigan's Secretary of State. Schenk Dep.
at 21-23; Simon Decl. Ex. J.*fn5 Someone unknown crossed out the fleet
clerk's initial reference to "NVQ532" and wrote "PHS756" next to it.
See Schenk Dep. at 37-38; Simon Decl. Ex. J.
An employee at the Secretary of State's office used the certificate of
origin, including the handwritten annotation for the license plate, to
register the Xterra and to create an Application for Michigan Vehicle
Title for it. Schenk Dep. at 21-29. Because someone had written "PHS756"
on the certificate of origin, the Secretary of State's office registered
the Xterra with Michigan license plate PHS756 and prepared a title
application for the transfer of Michigan license plate PHS756 to the
Xterra. See Simon Decl. Exs. E, K; Schenk Dep. at 39-40.
After the lot person affixed Michigan license plate NVQ532 to the
Xterra, but before the Secretary of State had registered the vehicle,
Budget Systems transported it about thirty miles from Romulus, Michigan
to Warren, Michigan.
The morning of February 12, 2002, Powell arrived at Budget Systems's
Warren, Michigan location to pick up the Ford Explorer that he had
reserved a few weeks before. Because there were no Ford Explorers
available at that time, a Budget Systems rental agent suggested that
Powell take the Xterra instead. Stip. ¶ 13. Powell agreed to the
substitution, signed a Rental Agreement,*fn6 and drove away with the
Xterra. Stip. ¶ 12. As
Powell drove away from Budget Systems's Warren, Michigan location, the
Xterra bore Michigan license plate NVQ532, id., and was not yet
After a short rest, Powell drove the Xterra for eight consecutive hours
and reached Chappell's home around 11:00 p.m. on Tuesday, February 12,
2002. Simon Decl. Ex. D ("Powell Dep.") at 16; Chappell Decl. ¶ 5.
Powell remained in New York for the rest of the week while Chappell
worked. On the evening of Friday, February 15, after Chappell completed
her work week, she and Powell left New York in the Xterra. They planned
to spend the weekend together in Michigan. Chappell Decl. ¶¶ 5-6.
While driving through Pennsylvania early the next morning, Powell fell
asleep at the wheel of the Xterra. The car drifted from the left lane of
Interstate 80, across the right lane, and into the right guardrail,
causing it to roll over. Simon Decl. Ex. H ("Accident Report") at 8.
Powell escaped the crash largely unscathed, but the force of impact
ejected Chappell from the Xterra. Id. at 4. A helicopter transported her
from the scene of the accident to Mercy Hospital in Pittsburgh, where
doctors diagnosed, among other injuries, a broken femur, broken ribs, and
spinal injuries. Simon Decl. Ex. P ("Carfi Decl."). These injuries have
rendered Chappell permanently paraplegic. Id.
Budget Systems initiated this action for a declaratory judgment against
Powell and Chappell and asks us to determine which state's law governs
the extent of its vicarious liability
for Powell's negligence. Compl. at 4. Chappell brought two counterclaims
against Budget Systems*fn7 and a cross-claim against Powell.
Even before this suit began, Budget Group and several of its
subsidiaries, including Budget Systems, had filed a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy Code. Stip.
¶ 5. With Budget Group unable to reorganize itself successfully, United
States Bankruptcy Judge Mary F. Walrath approved an agreement in which,
among other things, Cherokee Acquisition Corporation ("Cherokee") assumed
Budget Systems's liability in this case. Simon Decl. Ex. M §§ 2.2(ii),
2.5(a)(iv). Soon after the transfer, Cherokee changed its name to Budget
Rent-A-Car System, Inc. ("Budget").*fn8 Stip. ¶ 8. We allowed this case
to proceed with Budget as a substitute plaintiff for Budget Systems, and
Budget and Chappell have filed cross-motions for summary judgment on
Budget's claim for a declaratory judgment.
As noted, the parties seek a declaratory judgment as to whether the
law of New York or Michigan governs the extent of Budget's vicarious
liability to Chappell for Powell's negligence.
Like any federal court faced with a choice of law issue, we apply the
choice-of-law rules of the state in which we sit. See Klaxon Co. v.
Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941). Thus, Pennsylvania
choice-of-law rules will determine whether New York or Michigan
substantive law controls the disposition of the declaratory judgment
A. Choice of Law Framework
In Griffith v. United Air Lines, Inc., 203 A.2d 796, 805, 416 Pa. 1, 21
(1964), the Pennsylvania Supreme Court abandoned the traditional lex loci
delicti rule*fn9 "in favor of a more flexible rule which permits
analysis of the policies and interests underlying the particular issue
before the court." Our Court of Appeals has explained that the Griffith
"methodology combines the approaches of both Restatement II (contacts
establishing significant relationships) and `interest analysis'
(qualitative appraisal of the relevant States' policies with respect to
the controversy)." Melville v. American Home Assurance Co., 584 F.2d 1306,
1311 (3d Cir. 1978).
In applying Griffith's "hybrid" approach, we begin with an "interest
analysis" of the policies of all interested states and then based on
the results of that analysis proceed to characterize the case as a true
conflict, false conflict, or
unprovided-for case. Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 &
n.15 (3d Cir. 1991); See also LeJeune v. Bliss-Salem, Inc., 85 F.3d 1069,
1071 (3d Cir. 1996). A true conflict exists "when the governmental
interests of both jurisdictions would be impaired if their law were not
applied." Lacey, 932 F.2d at 187 n.15. On the other hand, there is a false
conflict "if only one jurisdiction's governmental interests would be
impaired by the application of the other jurisdiction's law." Id., at
187. An unprovided-for case arises when neither jurisdiction's interests
would be impaired if their law were not applied.
When interest analysis identifies a false conflict or an unprovided-for
case, resolving the choice-of-law issues becomes relatively
straightforward. In false conflicts, the Court applies the law of the
only interested jurisdiction. See e.g., Kuchinic v. McCrory, 222 A.2d 897,
899-900, 422 Pa. 620, 623-24 (1966) (applying Pennsylvania law when
Georgia was not a "concerned jurisdiction"); Griffith v. United Air
Lines, Inc., 203 A.2d 796, 807, 416 Pa. 1, 25 (1964) (applying
Pennsylvania law when Pennsylvania had an interest in having its law
applied but Colorado had no such interest). Lex loci delicti, however,
continues to govern unprovided-for cases. See, e.g., Miller v. Gay,
470 A.2d 1353, 1355-56 (Pa. Super. 1983) (applying Delaware law by
default when automobile accident occurred in Delaware and neither
Delaware nor Pennsylvania had interests in
application of their law). True conflicts are much more complex.*fn10
To resolve the choice-of-law questions raised here, we first determine
the extent of Budget's vicarious liability for Chappell's negligence
under the laws of each of the relevant states. Only then may we classify
this case as a true conflict, false conflict, or unprovided-for case.
B. Sources of Law
Chappell argues that New York law should control the resolution of this
case. See Def.'s Mem. Supp. Mot. Summ. J. at 1. Budget, on the other
hand, insists that Michigan law governs. See Pl.'s Mem. Supp. Mot. Summ.
J. at 4. By advancing these positions, the parties agree that no other
state's law should apply,*fn11 so we limit our analysis to the laws of
New York and Michigan.
1. New York
At common law, the owner of an automobile who allowed another to drive
it was not always vicariously liable for the driver's negligence. See
Selles v. Smith, 151 N.E.2d 838, 840 (N.Y. 1958). Although the owner
could be vicariously liable for the driver's negligence if the driver was
her employee or she could be liable for her own negligent entrustment of
the vehicle to an unsafe driver, ownership alone was not enough to
establish vicarious liability. See Gochee v. Wagner, 178 N.E. 553, 553
(N.Y. 1931). By depriving plaintiffs of a cause of action against an
automobile's owner, the common law failed to compensate victims of
To mitigate the perceived shortcomings of the common law, New York's
legislature enacted a new statute, which in
its current form provides that "[e]very owner of a vehicle used or
operated in this state shall be liable and responsible for . . . injuries
to person . . . resulting from negligence in the use or operation of such
vehicle. . . ." N.Y. Veh. & Traf. Law § 388(1) (Consol. 2003). The New
York legislature passed Section 388 because it "intended that the injured
party be afforded a financially responsible insured person against whom to
recover for injuries." Plath v. Justus, 268 N.E.2d 117, 119 (N.Y. 1971).
Whether Section 388 applies here depends upon whether the Xterra was "a
vehicle used or operated" in New York, within the meaning of the
statute. At first glance, the Xterra seems to be such a vehicle because
Powell did indeed operate it in New York. Still, we cannot ignore that an
expansive interpretation one which applied Section 388 to any vehicle
that was ever operated in New York could lead to absurd results.*fn12
New York's legislature could not have intended for Section 388 to apply
whenever a vehicle has ever been driven in New York, that state's highest
court has repeatedly held that the legislature did intend for Section 388
to apply in some situations where the accident occurred outside of New
In Farber v. Smolack, 229 N.E.2d 36 (N.Y. 1967), for example, Robert
Smolack loaned his automobile to his brother, Arthur, so that he could
drive his family to Florida and back. While in North Carolina, Arthur's
negligent decision to continue driving at an unsafe speed while the car
was "pulling" caused an accident in which his wife was killed and his two
sons were injured. All of the parties were New York residents and the car
was registered in New York. Representatives of the wife's estate and of
the children sued Robert under Section 388, but the trial court dismissed
the claim. When the case reached the New York Court of Appeals, it held:
[W]hen a fatal accident occurs out of State and
New York is . . . the jurisdiction having "the
most significant relationship" with the issue
presented, [Section 388] determines the rights of
the victim's survivors. To the extent that earlier
decisions declined to give extraterritorial effect
to the statute, they are overruled.
Id. at 40 (citations omitted). Subsequent decisions confirmed that
Section 388 could apply to accidents that occurred outside of New York.
See, e.g., Sentry Ins. Co. v. Amsel, 327 N.E.2d 635, 637 (N.Y. 1975)
("The legislative history of section 388 of the Vehicle and Traffic Law
indicates that the Legislature intended to enlarge the vehicle owner's
vicarious liability and not to draw the line at the border.").
Despite its holdings that Section 388 covered some extraterritorial
accidents, the Court of Appeals has recognized that the law's reach is
not unlimited. In Fried v. Seippel, 599 N.E.2d 651 (N.Y. 1992), Avis,
which operated in New York, owned the Jamaican car rental company that
rented a vehicle of Jamaican registry to Seippel, a New York resident.
While Seippel was driving in Jamaica, he negligently caused a head-on
collision by crossing the dividing line of a two-lane, two-way road.
Fried, Seippel's passenger and also a New York resident, died in the
accident. The representative of Fried's estate sued Avis under Section
388, and the trial court denied Avis's motion for summary judgment based
on the Jamaican company's ownership of the vehicle. Putting aside the
issue of whether Avis could be held vicariously liable when its affiliate
actually owned the vehicle, the Court of Appeals held that "vicarious
liability imposed by section 388(1) does not extend to owners of vehicles
that have never been registered, used, operated or intended for use
within this State." Id. at 654.
Read together, Farber and Fried explain that Section 388 applies
extraterritorially in some situations, but within limits. These limits
focus solely on the vehicle itself and not on other factors that may
influence a choice-of-law analysis, such as the parties' residence.*fn13
Fried presents an example of a vehicle that was radically disconnected
from New York; it was not registered in New York, and it had never been
driven in New York. By contrast, Farber involved a car that was
registered in New York and that became involved in an out-of-state
accident during one of the brief periods when it was not operated
in-state. The facts here fall in the middle ground between Farber and
Fried because the Xterra was not registered in New York but Powell did
drive it there.
We have not found any cases that address the precise question presented
here: whether Section 388 imposes vicarious liability on the owner of a
vehicle involved in an accident outside of New York when the vehicle was
not registered in New York but was briefly operated in New York before
Faced with the choice between two interpretations of its law one
finding that it covered a vehicle whose only connection with the state
was its brief presence therein and another holding that the statute did
not reach so far we predict that the New York Court of Appeals would
recognize that the United States Supreme Court has held that due process
forbids states from regulating extraterritorial activities with which
they have "slight" or "casual" connection. See Hartford Accident &
Indem. Co. v. Delta & Pine Land Co., 292 U.S. 143, 150 (1934); See also
Home Ins. Co. v. Dick, 281 U.S. 397 (1930). To avoid the serious
constitutional questions that interpreting Section 388 to cover the facts
of this case would raise, the New York courts would conclude that the New
York legislature did not intend for Section 388's reference to
"vehicle[s] used or operated" in New York to cover vehicles that are
registered outside of New York and that were not being used or operated
in New York at the time of an accident. See, e.g., Atkinson v. City of
New York, 751 N.E.2d 455, 456 (N.Y. 2001) (choosing "to interpret the
[statute in question] to avoid . . . constitutional concerns").
Because the Xterra was not registered in New York at the time that the
Pennsylvania accident occurred, Section 388 would not impose vicarious
liability on its owner. As there is
no other basis for the imposition of such liability on Budget, we
conclude that, under New York law, Budget is not vicariously liable to
As in New York, the common law of Michigan did not mechanically hold an
automobile's owner vicariously liable for the driver's negligence. See
Hartley v. Miller, 130 N.W. 336, 337 (Mich. 1911). In certain cases for
example, when the driver operated the vehicle as an employee of the owner
within the course of his employment the owner could be liable for the
driver's negligence, but liability depended on facts other than mere
ownership. See, e.g., Riley v. Roach, 134 N.W. 14, 18-19 (Mich. 1912)
(refusing to hold vehicle's owner liable for negligence of his chauffeur
when the chauffeur drove the vehicle against the owner's orders). The
upshot of the common law rule was that "generally the driver of the
commercial motor vehicle whose negligence caused the accident was
financially irresponsible and the financially responsible owner escaped
liability." Kalinowski v. Odlewany, 287 N.W. 344, 349 (Mich. 1939).
"[T]o place the risk of damage or injury upon the person who has the
ultimate control of the vehicle," Roberts v. Posey, 194 N.W.2d 310, 312
(Mich. 1972), the Michigan legislature supplemented the common law with a
new statute. As currently codified, that statute declares that:
The owner of a motor vehicle is liable for an injury
caused by the negligent operation of the motor vehicle
whether the negligence consists of a violation of a
statute of this state or the ordinary care standard
required by common law. The owner is not liable unless
the motor vehicle is being driven with his or her
express or implied consent or knowledge.
Mich. Comp. Laws § 257.401(1) (2003) ("Subsection 1"). The Michigan
Supreme Court has interpreted this language to impose vicarious liability
on a vehicle's owner when the driver's negligence causes an accident in
another state so long as the owner-driver relationship was centered in
Michigan. See Sexton v. Ryder Truck Rental, Inc., 320 N.W.2d 843 (Mich.
In response to car rental companies' complaints that Subsection 1 was
"inhibiting the growth of the industry and threatening to drive some
companies out of the state," the Michigan legislature amended the law in
June of 1995. Dehart v. Joe Lunghammer Chevrolet, Inc., 607 N.W.2d 417,
420 (Mich. Ct. App. 1999). A new subsection provides that:
[A] person engaged in the business of leasing motor
vehicles who is the lessor of a motor vehicle under a
lease providing for the use of the motor vehicle by
the lessee for a period of 30 days or less is liable
for an injury caused by the negligent operation of the
leased motor vehicle only if the injury occurred while
the leased motor vehicle was being operated by an
authorized driver under the lease agreement. . . .
Unless the lessor, or his or her agent, was negligent
in the leasing of the motor vehicle, the lessor's
liability under this subsection is limited to
$20,000.00 because of bodily injury to or death of 1
person in any 1 accident and $40,000.00 because of
bodily injury to or death of 2 or more persons in any
Mich. Comp. Laws § 257.401(3) (2003) ("Subsection 3"). Michigan's
intermediate appellate court has held that Subsection 3's cap on rental
car companies' vicarious liability is constitutional. Phillips v.
Mirac, Inc., 651 N.W.2d 437 (Mich. Ct. App. 2002).
Budget insists that Subsection 3 limits its vicarious liability to
Chappell to $20,000.00. See Pl.'s Mem. Supp. Mot. Summ. J. at 13.
Chappell, however, argues that Budget may not receive the benefit of the
cap because Budget is not a "lessor of a motor vehicle under a lease,"
within the meaning of Subsection 3. According to this argument, the
Rental Agreement between Budget and Powell is not a legally valid "lease"
because Budget allowed Powell to drive the Xterra even though it did not
bear the license plate that the Secretary of State had assigned to it.
See Def.'s Mem. Supp. Mot. Summ. J. at 11-19.
At the time of the accident, it was a misdemeanor for "an owner
knowingly [to] permit to be operated, upon any highway, a vehicle
required to be registered . . . unless there is attached to and displayed
on the vehicle . . . a valid registration plate issued for the vehicle."
Mich. Comp. Laws § 257.255(1), (2) (2001).*fn15 Whether Budget committed
a misdemeanor by leasing the Xterra to Powell while it bore license
NVQ532 depends on two factors: (1) whether license plate NVQ532 was
a valid registration plate issued for the Xterra; and (2) whether Budget
acted with the requisite state of mind.
Budget concedes that it did not follow the regular procedures for
registering the Xterra, see Mich. Comp. Laws § 257.217(1), but it
maintains that it complied with an alternative procedure described as
If a vehicle is delivered to a purchaser or lessee who
has valid Michigan registration plates that are to be
transferred to the vehicle, and an application for
title, if required, and registration for the vehicle
is not made before delivery of the vehicle to the
purchaser or lessee, the registration plates shall be
affixed to the vehicle immediately, and the dealer
shall provide the purchaser or lessee with an
instrument in writing, on a form prescribed by the
secretary of state, which shall serve as a temporary
registration for the vehicle for a period of 15 days
from the date the vehicle is delivered.
Mich. Comp. Laws § 257.217(6)(2003). Through this procedure, a purchaser
of a vehicle acquires a "temporary registration" when it transfers a
license plate from one of its vehicles to a newly acquired vehicle.
Unfortunately for Budget, however, the alternative procedure does not
permit a purchaser to transfer a plate from a vehicle that it does not own
to another vehicle that it does. Here, Team Fleet owned the Ford to which
license plate NVQ532 was registered, but Budget Systems attached the
plate to its own Xterra. Because Budget Systems and Team Fleet are
distinct corporate entities, affixing license plate NVQ532 to the
Xterra did not effect a temporary registration.*fn16
observed neither the regular nor the alternative registration
procedures, and thus we find that, at the time that Budget permitted
Powell to drive it, the Xterra did not bear a "valid registration plate
issued for the vehicle."
Still, Budget System's conduct would have amounted to a misdemeanor
only if it "knowingly" permitted Powell to drive the Xterra while license
plate NVQ532 was attached to it. This issue need not detain us long
because Budget Systems prepared the Rental Agreement that specifically
identifies the Xterra's license plate as Michigan license plate NVQ532.
See Simon Decl. Ex. C. In view of this evidence, we hold that no
reasonable jury could conclude that Budget did not "knowingly" permit
Powell to drive the Xterra with an invalid license plate.
By leasing him the Xterra, Budget Systems knowingly permitted Powell to
operate it without a valid registration plate, and Michigan law made such
conduct a misdemeanor at the time it occurred. See Mich. Comp. Laws §
257.255(2)(2001). In similar situations, the Michigan Supreme Court
consistently has held that "all contracts which are founded on an act
prohibited by a statute under a penalty are void, although not expressly
declared to be so." Shattuck v. Watson, 129 N.W. 196, 199 (Mich. 1910);
See also Bayer v. Jackson City Bank & Trust Co., 55 N.W.2d 746, 749
(Mich. 1952) ("[F]ailure to comply in any transaction
with statutory requirements, when noncompliance is declared unlawful and
subject to penalty, renders the transaction void.").
Here, the lease between Budget Systems and Powell was "founded on" a
misdemeanor Budget Systems's grant of permission to operate the
Xterra without a valid license plate so the lease is void. Since
Michigan law treats the lease as a nullity, Budget Systems was not a
"lessor of a motor vehicle under a lease," and Subsection 3's cap on car
rental companies' vicarious liability does not apply to the facts of this
We conclude, therefore, that Michigan law imposes unlimited vicarious
liability on Budget for Powell's negligence. See Mich. Comp. Laws §
C. The Chosen Law
Having explained the relevant principles of New York and Michigan law,
we must examine these states' interests so that we may classify this case
as a true conflict, a false conflict, or an unprovided-for case.
New York's law expresses an interest in its residents receiving
compensation for injuries they sustain from automobile accidents. See
N.Y. Veh. & Traf. Law § 388(1) (Consol. 2003). In this case, however,
applying New York law would not advance
that interest because New York statutory law does not protect New
York residents who suffer injuries in out-of-state accidents like the
one here and New York common law does not permit New York residents to
recover from a vehicle's owner. Thus, New York has no interest in the
application of its own law.
Michigan, too, has an interest in ensuring that its residents receive
compensation for the torts that they suffer, but applying Michigan law
would neither advance nor inhibit that interest because the tort victim,
Chappell, is not a resident of Michigan. Subsection 3 demonstrates that
Michigan also has an interest in protecting car rental companies that
comply with the law from unlimited vicarious liability. Such an
interest, however, is not implicated here because Budget Systems violated
Michigan's motor vehicle code, so Michigan would not protect it. In
short, Michigan like New York has no interest in the application of
its own law.
When neither jurisdiction has an interest in the application of its
law, Pennsylvania courts classify the lawsuit as an unprovided-for case
and apply the lex loci delicti, the law of the place where the injury
occurred. See, e.g., Miller v. Gay, 470 A.2d 1353, 1355-56 (Pa. Super.
1983); Melville v. American Home Assurance Co., 443 F. Supp. 1064, 1103-04
(E.D. Pa. 1977) (Becker, J.), rev'd on other grounds, 584 F.2d 1306 (3d
Cir. 1978). Here, the accident occurred in Pennsylvania, so we hold that
Pennsylvania law determines the extent of Budget's vicarious liability.
Pennsylvania has never modified the common
law rule that, absent an employer-employee relationship, an automobile's
owner is not vicariously liable for the negligence of the driver. See
Solomon v. Commonwealth Trust Co., 256 Pa. 55, 100 A. 534 (1917). Thus,
Budget is not vicariously liable to Chappell for Powell's negligence.
Following Pennsylvania's choice-of-law methodology, we have concluded
that Pennsylvania law controls the resolution of the issues in this
case. Because Chappell's motion for summary judgment requests that we
apply New York law, we shall deny her motion. Budget's complaint seeks a
declaratory judgment about which jurisdiction's law controls its
liability to Chappell. We shall grant summary judgment to Budget on the
claims in its complaint and declare that, under Pennsylvania law,
Chappell may not recover from Budget for Powell's negligence.
Although these rulings dispose of Budget's claims, we must also address
Chappell's counterclaims against Budget and her cross-claim against
Powell. We shall dismiss Chappell's Section 388 counterclaim because it
fails to state a claim upon which relief may be granted under
Pennsylvania law, see Fed.R.Civ.P. 12(b)(6), but her counterclaim for
Budget's negligent entrustment of the Xterra to Powell may proceed. As
for the cross-claim, we note that Chappell's attorney is also Powell's
attorney-of-record. The identity of counsel suggests that Chappell never
served the cross-claim on Powell,*fn18 so we shall dismiss the
cross-claim for failure to serve unless Chappell or her counsel promptly
files an affidavit stating that she or he has served copies of the
cross-claim and this Memorandum and Order.
AND NOW, this 2nd day of February, 2004, upon consideration of
plaintiff's motion for summary judgment (docket entry #23), defendant
Nicole Chappell's opposition thereto, Chappell's motion for summary
judgment (docket entry #24), plaintiff's reply, Chappell's motion for
leave to file a reply (docket entry #28), plaintiff's motion for leave to
file a reply (docket entry #30), and Chappell's motion for leave to file
a surreply (docket entry #31), and in accordance with the accompanying
Memorandum, it is hereby ORDERED that:
1. Chappell's motion for leave to file a reply is GRANTED;
2. The Clerk shall DOCKET Chappell's reply, which is attached hereto,
as docket entry #32;
3. Plaintiff's motion for leave to file a reply is GRANTED;
4. The Clerk shall DOCKET plaintiff's reply, which is attached hereto,
as docket entry #33;
5. Chappell's motion for leave to file a surreply is GRANTED;
6. The Clerk shall DOCKET Chappell's surreply, which is attached
hereto, as docket entry #34;
7. Chappell's motion for summary judgment is DENIED;
8. Plaintiff's motion for summary judgment is GRANTED IN PART; and
9. It is hereby DECLARED that Pennsylvania law governs Budget
Rent-A-Car System, Inc.'s vicarious liability for Joseph Powell, III's
10. It is hereby DECLARED that, pursuant to the law of Pennsylvania,
Budget Rent-A-Car System, Inc. is not liability to Nicole Chappell for
Joseph Powell, III's negligence;
11. Chappell's first counterclaim is DISMISSED;
12. By February 6, 2004, Chappell or her counsel shall FILE an
affidavit stating that she or he has served copies of the cross-claim and
this Memorandum and Order upon Joseph Powell, III, or we shall dismiss
the cross-claim; and
13. Joseph Powell, III shall FILE a response to the cross-claim by
February 23, 2004.