Cates v. Hertz Corp. , 347 F. App'x 2 ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 11, 2009
No. 08-10686 Charles R. Fulbruge III
Clerk
PRISCILLA S CATES, Individually and as the administrator of the Estate of
Bobby Ray Cates
Plaintiff-Appellee
v.
HERTZ CORPORATION
Defendant-Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 7:00-CV-121
Before BARKSDALE, DENNIS, and ELROD, Circuit Judges.
PER CURIAM:*
In this second appeal to our court for this action, Hertz Corporation
challenges the district court’s granting Priscilla Cates’ motion for judgment,
regarding Hertz’ being vicariously liable to Cates under Florida law for an
automobile accident in which, through a trial in 2002, a lessee of a Hertz
automobile was held at fault. Prior to that trial, Hertz had been dismissed from
this action.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-10686
Primarily at issue are: (1) whether the district court determined correctly
that Florida courts would apply that State’s “dangerous instrumentality
doctrine” to this action; and (2) whether, if the doctrine does apply, the action
should be remanded to district court for a trial for Hertz on its vicarious liability
and damages. AFFIRMED.
I.
This action arises out of an automobile accident in Texas. On 29 June
1998, Mr. and Mrs. Creamer, Florida residents, leased a vehicle from Hertz in
Mrs. Creamer’s name in Panama City, Florida. In doing so, they told the Hertz
representatives at the rental facility that they planned to make a 24-hour
journey from Panama City to Spearman, Texas, without stopping, by alternating
driving shifts. That day, the Creamers reached Texas around 11 p.m. Early the
next morning, while driving through Texas, Mr. Creamer fell asleep at the
wheel, causing an accident that severely injured Bobby Cates, a Texas resident.
In June 2000, in the Northern District of Texas, Priscilla Cates, Mr. Cates’
wife, filed this diversity action, in her individual capacity and as guardian of her
severely-injured husband, against the Creamers and Hertz. The Creamers were
sued under Texas law for negligently causing the collision, with damages for
medical expenses and lost wages being sought. Additionally, the action sought
to hold Hertz vicariously liable, under Florida’s dangerous instrumentality
doctrine, for Mr. Creamer’s negligence. Under that doctrine, an owner or lessor
of a vehicle who entrusts it to another is held vicariously liable when that person
operates it negligently.
Hertz moved for summary judgment, maintaining Texas, not Florida, law
controlled. Under Texas law, the only possible claim against Hertz was for
negligent entrustment, and Hertz contended it would not be liable. The district
court agreed that Texas law applied and dismissed Hertz.
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The action against the Creamers was tried in 2002. After a verdict for the
Creamers, in which the jury found no negligence, the district court granted a
new trial. In the second trial that year, the jury found Mr. Creamer 70 percent
at fault. The district court awarded damages, including future damages, in the
amount of $2,156,000, and prejudgment interest of $851,782.47.
Following entry of final judgment, Cates appealed the dismissal of Hertz,
contending that Florida, not Texas, law applied to the vicarious-liability issue.
Mr. Creamer also appealed.
In November 2005, our court affirmed the judgment against Mr. Creamer.
Cates v. Creamer, 431 F.3d 456, 462 (5th Cir. 2005). For the vicarious-liability
issue for Hertz, our court conducted a choice-of-law analysis under Texas law.
Applying the Restatement (Second) of Conflicts of Laws, adopted by Texas, it
conducted both an “interest” analysis under Restatement § 6, as well as a “most
significant relationship” analysis under both § 145 (discussing relationships
generally) and § 174 (involving relationships with regard to vicarious liability
specifically).
Under § 6, our court observed that both Texas and Florida had minimal
interest in seeing their law applied. Id. at 465. When conducting the
relationship-to-the-issue examination under §§ 145 and 174, however, our court
ruled: “Florida clearly has the greater connection to the facts and circumstances
as they relate to the vicarious liability issue”. Id. at 465-66.
In analyzing the various contacts with a State addressed in § 145, our
court noted: “The most relevant relationship is that which arises from the lease
of the automobile. . . . Creamer . . . is a Florida resident and is a party to the
lease. Hertz is the other party to the lease and does its relevant business in
Florida. Florida is the situs where the lease was executed. In short, Florida, not
Texas, has the most significant relationship to the issue of Hertz’s vicarious
liability”. Id. at 465.
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Accordingly, our court held the district court had erred in applying Texas
law to the issue of Hertz’ vicarious liability. It vacated that ruling and
remanded for the district court to determine, under Florida law, Hertz’ liability
vel non for the judgment against Creamer. Id. at 466.
The district court was instructed to “focus particularly on whether the
Florida law of vicarious liability may be applied to benefit non-Florida residents
in a situation such as the case at hand”, id., in which the non-Florida resident
was not injured in Florida. In that regard, the district court was advised it likely
would have to make an Erie guess to determine the issue, “as no Florida
precedent exists to resolve the question”. Id.
Following remand, Mr. Cates died in 2006; his wife continued as the real
party in interest to the litigation as the representative of her husband’s estate.
In October 2006, Mrs. Cates filed a motion for judgment, seeking to have
Florida’s dangerous instrumentality doctrine applied to non-Florida residents
injured outside Florida, and, accordingly, to have Hertz held jointly and
severally liable. Hertz filed a cross-motion for judgment that December,
contending Florida courts would not apply the dangerous instrumentality
doctrine when the plaintiff was an out-of-state resident not injured in Florida.
In 2008, the district court granted Cates’ motion, denied Hertz’, and held
Hertz jointly and severally liable for the 2002 judgment against Creamer.
Noting that “choice of law is no longer an issue before this Court”, Cates v.
Creamer, No. 7:00-CV-0121, 2008 WL 495710, at *2 (N.D. Tex. 25 Feb. 2008)
(unpublished), the district court, in an exhaustive and well-reasoned opinion,
addressed the specific remand issue framed by our court and, in making its Erie
guess, ruled that “the Florida supreme court would apply its dangerous
instrumentality doctrine in a situation such as the case at hand”. Id. at *8.
In so doing, the district court noted the clear policy behind Florida’s
dangerous instrumentality doctrine, as stated by the Florida Supreme Court:
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No. 08-10686
“[The doctrine] is premised upon the theory that one who originates the danger
by entrusting the automobile to another is in the best position to make certain
that there will be adequate resources with which to pay the damages caused by
its negligent operation”. Kraemer v. Gen. Motors Acceptance Corp., 572 So. 2d
1363, 1365 (Fla. 1990). Although recognizing a few statutory and court-created
exceptions, as a general rule, the doctrine enforces the principle that, “the owner
of an instrumentality which [has] the capability of causing death or destruction
should in justice answer for misuse of this instrumentality by anyone operating
it with his knowledge and consent”. Meister v. Fisher, 462 So. 2d 1071, 1072
(Fla. 1984) (quoting Jordan v. Kelson, 299 So. 2d 109, 111 (Fla. Dist. Ct. App.
1974)).
In making its Erie guess, the district court carefully analyzed various
sources, appropriately turning to two decisions from other jurisdictions with
particular instructive value to the case at hand–Stathis v. Nat’l Car Rental Sys.,
Inc., 109 F. Supp. 2d 55 (D. Mass. 2000), and Erickson v. Hertz Corp., No. 05-
1690, 2006 WL 1004385 (D. Minn. 17 Apr. 2006) (unpublished)–as well as
several analogous Florida Supreme Court and Florida appellate court decisions
whose rationales and analyses with regard to related issues provided useful
guidance. After examining the dangerous instrumentality doctrine with the aid
of these decisions, the district court noted that, with respect to the instant facts:
Creamer was authorized by Hertz to operate the vehicle outside of
Florida. Florida’s implementation of the dangerous instrumentality
doctrine was premised upon the idea that it is in the interest of
justice to have the lessor/owner shoulder any financial responsibility
caused by the vehicle’s misuse. . . . Allowing the lessor to escape
liability in situations where the lessee takes the vehicle outside of
Florida and injure[s] a non-Florida resident seems contrary to the
intent and concerns expressed by the Florida supreme court.
Cates, 2008 WL 495710, at *8.
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No. 08-10686
Accordingly, having conducted a thorough Erie analysis, the district court
held: “[W]here the rental transaction is entered into in Florida, the parties to the
contract have ties to Florida, and where the terms of the agreement necessitate
travel on Florida roads, the Florida supreme court would apply its dangerous
instrumentality doctrine to benefit a non-resident”. Id.
II.
Hertz contends the district court erred by extending Florida’s dangerous
instrumentality doctrine to this action. It maintains the public policy of Florida
is concerned only with the protection of Florida residents and visitors to Florida.
It asserts that, at the very least, this issue should be certified to the Florida
Supreme Court.
In the alternative, Hertz contends that, even if Florida’s dangerous
instrumentality doctrine applies, this court should reverse and remand this
action for trial, because: Hertz did not participate in the jury trials of the
Creamers and, therefore, never had the opportunity to defend itself with respect
to any issues of vicarious liability under Florida law; and, as a result of Mr.
Cates’ death in 2006, the circumstances underlying the 2002 judgment for future
damages against Creamer changed substantially between that trial and the 2008
judgment against Hertz.
A.
The district court’s determination of Florida law, based on its Erie
analysis, is reviewed de novo. E.g., Am. Reliable Ins. Co. v. Navratil, 445 F.3d
402, 404 (5th Cir. 2006). Cates, of course, maintains the district court was
correct in determining the Florida Supreme Court would apply the dangerous
instrumentality doctrine to the instant action, especially in the light of the
choice-of-law analysis performed by our court in the prior appeal having
determined Florida’s interest in having its law applied. Therefore, Cates
opposes certification.
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Essentially for the reasons stated in the district court’s well-reasoned and
thorough opinion, we hold Florida courts would apply the dangerous
instrumentality doctrine in this instance.
Although not discussed in the district court opinion, the Creamers’
explicitly informing the Hertz representative who rented their automobile that
they would be driving without stopping for 24 hours lends further support to
that court’s conclusion. As noted supra, the principle behind the dangerous
instrumentality doctrine is that one who owns an instrumentality “capab[le] of
causing death or destruction should in justice answer for misuse of this
instrumentality by anyone operating it with his knowledge and consent”.
Meister, 462 So. 2d at 1072 (quoting Jordan, 299 So. 2d. at 111). Allowing the
Creamers to operate the rental vehicle, while knowing they would be doing so
in a manner in which the risk of negligence or misuse was increased, only
strengthens the holding that the dangerous instrumentality doctrine is
applicable in this action.
Further, with the passage in August 2005 of the Graves Amendment, 49
U.S.C. § 30106, which applies only prospectively, 49 U.S.C. § 30106(c), Florida
courts will seldom confront this issue in the future. The Graves Amendment
preempted state law in the area of vicarious liability for owners engaged in the
business of renting or leasing motor vehicles, absent a showing of negligence or
criminal wrongdoing on the part of the owner. See Garcia v. Vanguard Car
Rental USA, Inc., 540 F.3d 1242, 1253 (11th Cir. 2008) (holding that the Graves
Amendment is a permissible exercise of Congress’ Commerce Clause powers
under the Constitution in affirming the district court’s judgment that the
amendment preempted all vicarious-liability claims against the lessor, a Florida
rental-car company, in an action in which the company was neither negligent
nor criminally liable for the lessee’s automobile accident). Generally, for future
incidents similar to the instant action, federal law will apply.
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No. 08-10686
Of course, infrequency of future occurrence is not a determinative factor
in a court’s Erie analysis; but, it does mean that our decision likely will not
influence any developing Florida law on this issue, because there will be little,
if any, future development. This, combined with Hertz’ being on notice the
Creamers were more likely to operate the automobile negligently, given their
stated travel plans, provides additional support for the district court’s already
well-reasoned analysis holding the dangerous instrumentality doctrine applies
in this instance. Accordingly, Hertz’ alternative certification request is also
denied.
B.
In contending that, if the dangerous instrumentality doctrine applies, our
court should nonetheless remand to allow Hertz the opportunity to defend itself
under Florida law, Hertz presents two claims: (1) in the underlying trial in 2002,
Cates never proved Hertz knowingly gave consent to Mr. Creamer to drive the
automobile–rented in Mrs. Creamer’s name–as Hertz claims is required under
the dangerous instrumentality doctrine; and (2) Mr. Cates’ having died in 2006,
the district court abused its discretion by entering judgment against Hertz for
the future damages awarded in the 2002 trial. Regarding the second claim,
Hertz maintains the future-damages award was based upon the estimate that
Mr. Cates would live for another ten to 15 years.
1.
Hertz maintains judgment cannot be entered against it without remanding
for a new trial, because Cates never proved in the 2002 trial, as against Hertz,
that Hertz knowingly gave consent to Mr. Creamer to drive (instead, Cates
claimed this while proving the negligence claim against the Creamers). In this
regard, as discussed supra, because Hertz had been dismissed, it did not
participate in that trial.
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No. 08-10686
Hertz admitted in its summary-judgment motion, however, that “it owned
the [rented vehicle] at the time of the incident at issue and that it had rented the
vehicle to Mrs. Creamer in Panama City”. Under Florida law, as discussed
below, that is sufficient to establish knowledge and consent for purposes of
vicarious liability, even if Mr. Creamer was not specifically mentioned in the
rental contract.
In Susco Car Rental System of Florida v. Leonard, 112 So. 2d 832, 835-36
(Fla. 1959), the Florida Supreme Court held: “[W]hen control of [] a vehicle is
voluntarily relinquished to another, only a breach of custody amounting to a
species of conversion or theft will relieve an owner of responsibility for its
misuse”. Later, in Kraemer, the Florida Supreme Court affirmed that Susco
extended the dangerous instrumentality doctrine “to hold the lessor responsible
for damages resulting from the operation of the vehicle by someone other than
the person to whom it was rented even though the operation was contrary to the
express terms of the lease”. 572 So. 2d at 1365.
Accordingly, in the light of Hertz’ admission in its summary-judgment
motion that it had rented the vehicle to Mrs. Creamer, and without any
allegation, much less evidence, that Mr. Creamer stole the vehicle, the requisite
factual basis was established for applying the dangerous instrumentality
doctrine to Hertz before its summary-judgment dismissal.
Moreover, Hertz’ non-participation in the trial was entirely a consequence
of its own actions. It opted to seek dismissal before trial, rather than litigate, at
trial, the issue of its vicarious liability. It cannot now, after years of litigation,
receive a second bite at the apple, especially when the requisite facts to find it
vicariously liable were established before its dismissal.
Also of note is that the district court’s mandate on remand was to decide
only the legal question of whether the dangerous instrumentality doctrine would
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No. 08-10686
apply in a situation such as the one at hand. The district court, accordingly, did
not err in entering judgment against Hertz once it found the doctrine did apply.
2.
Hertz contends the district court abused its discretion by entering
judgment against it for the damages awarded at the 2002 trial. It rests this on
Mr. Cates’ death in 2006, and the damages estimate in the 2002 trial having
been based on his life expectancy of between ten to 15 years. To this end, Hertz
filed a Rule 59(e) Motion to Alter or Amend Judgment, contending that, with this
“important factual development” and “change of circumstances”, it would be
clear error and manifestly unjust to hold it liable for the full judgment.
The district court recognized correctly that a Rule 59(e) motion is “not the
proper vehicle for rehashing evidence, legal theories, or arguments that could
have been offered or raised before the entry of judgment”, Templet v.
HydroChem, Inc., 367 F.3d 473, 479 (5th Cir. 2004), but rather, it “serve[s] the
narrow purpose of allowing a party to correct manifest errors of law or fact or to
present newly discovered evidence”, id. (quoting Waltman v. Int’l Paper Co., 875
F.2d 468, 473 (5th Cir. 1989)). Accordingly, the district court denied the motion
because: (1) Hertz neglected to raise this damages contention until its reply brief
in a round of supplemental briefing on the cross-motions for judgment; (2) Mr.
Cates’ death was not “newly discovered evidence”, as Mrs. Cates filed her motion
of substitution and suggestion of death on 23 October 2006, and Hertz did not
raise this issue until 30 August 2007; and (3) there was no manifest error to
correct, because:
To hold that a plaintiff’s death following a jury verdict is the sort of
“substantial injustice” requiring the reopening of cases or award of
new trials . . . would be to invite a morass of appeals from
defendants in cases where the plaintiffs did not survive an
“acceptable” amount of time following the entry of judgment. . . . The
fact that a plaintiff dies even a second after judgment is entered
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No. 08-10686
does not render evidence regarding an expected life span “false” nor
the judgment invalid.
Cates v. Creamer, No. 7:00-CV-0121-O (N.D. Tex. 27 June 2008) (Order Denying
Motion to Alter, Amend, or Vacate Judgment ) (quoting Davis by Davis v. Jellico
Cmty. Hosp., Inc., 912 F.2d 129, 135 (2d Cir. 1990) (emphasis in original)).
The denial of a Rule 59(e) motion is reviewed for abuse of discretion. E.g.,
Coliseum Square Ass’n, Inc. v. Jackson, 465 F.3d 215, 247 (5th Cir. 2006). The
ruling should not be disturbed unless the district court “clearly abused its
discretion in determining that [the] motion neither established a manifest error
of law or fact nor presented newly discovered evidence”. Id.
The district court thoroughly analyzed whether Hertz’ motion presented
newly discovered evidence or established manifest error on the basis of Mr.
Cates’ death. Essentially for the reasons stated in its well-reasoned denial of the
motion, the district court did not abuse its discretion in so ruling.
III.
For the foregoing reasons, the judgment is AFFIRMED.
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