In a January 16, 2018 published opinion, the Court of Appeals addressed the issue of whether, under a negligent entrustment theory, liability may be imposed on someone who is not the owner of a vehicle negligently operated.

In Bennett v Carrie Russell, ___ Mich App ___; ___ NW2d ___ (1/16/18), plaintiffs were stopped at the intersection of Chalmers and Vernor in the City of Detroit when their vehicle was struck by a white Chrysler 300. The traffic crash report indicated the driver of the Chrysler 300 was defendant Carrie Russell. However, during the course of discovery, plaintiffs learned Russell was not in fact involved in the accident. Instead, the actual driver of the Chrysler 300 was Latasha Phillips, who falsely identified herself as Russell when speaking with the police. The Chrysler 300 was owned by Enterprise Leasing Company of Detroit, and leased to defendant Dennis Hogge. Almost immediately after Hogge rented the vehicle from Enterprise, Hogge turned it over to Latasha Phillips, asserting that he was lending it to Phillips so she could drive home and that she would return it to Enterprise the following day.  Other evidence presented suggested that Phillips may have been intoxicated at the time of the accident, and that she may not have had a valid driver’s license.

Plaintiffs amended their complaint, adding negligence claims against Enterprise and Hogge, arguing they were liable for injuries plaintiffs sustained in the accident under the owner’s liability statute, MCL 257.401. Hogge then moved for summary disposition, claiming he could not be held liable for Phillips’ negligence because he was not an “owner” of the rental vehicle, as defined in the Michigan Vehicle Code, MCL 257.1, et seq. Plaintiffs argued there was a question of fact as to whether Hogge negligently entrusted the vehicle to Latasha. Plaintiffs also conceded however, at oral argument, that plaintiffs’ complaint did not allege negligent entrustment against Hogge.  Plaintiffs argued that in spite of that, the pleadings should be allowed to conform to the proofs.  The trial court determined that Hogge did not meet the statutory definition of an owner under MCL 257.37, granting summary disposition in favor of Hogge. The trial court reasoned that Hogge’s lack of ownership was dispositive as to plaintiffs’ claim under the owner’s liability statute or common-law negligent entrustment theory.

On appeal, plaintiffs argued the trial court erred by granting Hogge’s motion because the common law tort of negligent entrustment imposes liability on one who negligently supplies a chattel to another, therefore, whether Hogge met the statutory definition of an owner was not dispositive. The Court of Appeals agreed.  The Court discussed at length the Michigan Supreme Court decision in Perin v Peuler, 373 Mich 531; 130 NW2d 4 (1964), noting that read in full, Perin makes clear the tort of negligent entrustment imposes liability on the basis of the defendant’s negligence in permitting the use of chattel by a person who is likely to handle it in a manner that will cause harm to others. Thus, liability may arise regardless of ownership of the chattel. Under this reading of Perin, the Court of Appeals determined the trial court’s decision to dismiss plaintiffs’ claim against Hogge solely on the basis of Hogge’s  lack of ownership constituted plain error.

The Court of Appeals then determined that a question of fact existed as to whether Hogge knew or should have known that Phillips was not licensed or otherwise unfit to drive.  The evidence presented suggested that Hogge completed the rental of the vehicle at 7:24 AM, then drove to his home and gave the keys to Phillips, but Hogge failed to include Phillips as an additional driver in the rental agreement, such that he knew she was an unfit driver. Russell observed that Phillips was visibly intoxicated at 8:00 AM, almost immediately after Phillips took control of the vehicle from Hogge.  Thus, the Court noted that a fact-finder could infer that Hogge knew Phillips had been drinking and was therefore unfit to safely operate a vehicle at the time he turned over control of the vehicle to her, given the brief timeline in which the relevant events occurred.  Based on these facts, the Court concluded Hogge was not entitled to judgment as a matter of law on the issue of negligent entrustment.

The Court further determined, however, that plaintiffs’ first amended complaint alleged only a single count of negligence against Hogge, premised on the statutory liability of an owner under MCL 257.401.  Yet, plaintiffs’ never filed a proper motion to amend their complaint, instead relying on an oral statement that the pleadings should conform to the proofs.  The Court noted it was unclear whether the trial court would otherwise have granted plaintiffs leave to further amend their complaint, given that the court’s decision to grant summary disposition in favor of Hogge was based upon a mistake of law. Thus, the Court of Appeals found the matter should be remanded to the trial court for it to decide whether plaintiffs should be allowed to further amend their complaint.