In Angela Cooke, et al v Ford Motor Co, __ Mich App __; __ NW2d __ (2020), plaintiffs asserted two theories of liability, the owner’s liability statute and vicarious liability, relative to a single-vehicle accident involving a car leased by Ford Motor Company to its employee. The lease of the involved vehicle was part of a product testing and evaluation program available to upper level Ford employees. As part of the program, the lessee was encouraged to permit others to drive the vehicle for periods of up to three days. The employee let her 18 year old daughter, co-plaintiff Ockerman, drive the vehicle to a concert with her friends. Ockerman asked one of the friends, Strong, to drive the vehicle home after the concert. Strong lost control and struck a tree. He and another passenger died as a result of the accident. Ockerman and the third passenger were seriously injured.
Plaintiffs, the estate of the deceased passenger and both injured passengers, brought suit against Ford Motor Company alleging that it was liable for Strong’s negligence as an owner of the vehicle and vicariously liable because the vehicle’s use benefited Ford. Ford filed for summary disposition arguing that it was not a statutory owner because it was engaged in the business of leasing vehicles and had leased the involved vehicle for a period greater than 30 days. Accordingly, Ford asserted that this classified it as an exempt lessor under MCL 257.401 and 257.401a and as determined by Ball v Chrysler Corp, 225 Mich App 284; 570 NW2d 481 (1997). As for the vicarious liability count, Ford claimed that it could not be liable for the actions of the driver because there was no employer-employee relationship between Ford and Strong. The trial court denied the motion on both counts and Ford appealed.
Plaintiffs brought forth some creative counter-arguments, asserting that the proper standard for determining whether an entity was engaged in a particular business was found in Catalina Mktg Sales Corp v Dep’t of Treasury, 470 Mich 13; 678 NW2d 619 (2004), which was about a coupon program at a grocery store and the applicability of the sales tax versus use tax to that program. Plaintiffs asserted that in order for Defendant to be “engaged in the business” of leasing vehicles through this program, the program had to be more than incidental to Ford’s primary business of selling automobiles.
Plaintiffs further argued that under Montgomery v State Farm Mut Auto Ins Co, et al, unpublished per curiam opinion of the Court of Appeals, issued May 22, 2007 (Docket No. 272862), Defendant could be found vicariously liable for Strong’s actions even though he wasn’t Defendant’s employee. That case dealt with a systems analyst for Ford who injured another motorist in a collision while operating a vehicle she had leased under an almost identical product testing and evaluation lease agreement.
The Court of Appeals analyzed the question of whether Ford was an exempt lessor by reviewing Ball and found that opinion to be particularly on point as it explored a similar set of facts and application of the same statute, unlike the Catalina case that analyzed an entirely different type of program and an entirely different statute. As in Ball, the Court of Appeals concluded that nothing in MCL 257.401 requires that the lessor’s primary business be in retail leasing, or that the lease be profitable. Likewise, the statute does not prohibit the lessee from benefiting from the lease by paying a discounted rate. The evidence presented established that Ford leased approximately 15,000 vehicles a year and thus, Ford engaged in the business of leasing vehicles as contemplated by the statute.
The Court further found that the unpublished Montgomery opinion which was cited by Plaintiffs, and found to be persuasive by the trial judge, was too factually dissimilar to be applicable. In Montgomery, Defendant was a systems analyst for Ford and had leased a vehicle under an almost identical lease agreement to the lease in Cookeexcept that it required the vehicle to be primarily used for product testing and evaluation. The Defendant further testified that she was always evaluating the vehicle, every time she drove it. She was operating the vehicle and was on her way to work at Ford when the collision with Plaintiff occurred, resulting in Plaintiff’s injuries.
In Cooke, however, the employee was not even in the vehicle at the time of the accident. The vehicle was being operated by a friend of the employee’s daughter who was not employed by Ford, and was not being used for the purpose of evaluating the vehicle and its performance so its use did not benefit Ford. Consequently, Ford could not be held vicariously liable for Strong’s negligence.
Check out our News & Events page to see what’s happening at GLM and find out about our upcoming seminars.
Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com