Negligent Entrustment: Lending a Car to a Dangerous Driver

Published June 19, 2015 · Injury Law Basics

The driver who hit you was 19, had a suspended license, and was driving his girlfriend's mother's car. He has no insurance of his own, no assets, and no job. The police report lists him as at fault. Your medical bills are past $60,000 and climbing.

A case like this is where many injured people, and some lawyers, stop looking. The driver is judgment-proof. But the car belonged to someone else, and that someone else made a decision: she handed him the keys. In Ohio, that decision can make her liable for everything he did with them, and her auto policy, and possibly her homeowner's umbrella, are then in play.

The claim is called negligent entrustment. It is older than the interstate system, and it is one of the most useful tools we have for finding coverage when the at-fault driver has none.

The rule

The Ohio Supreme Court laid out the doctrine in Gulla v. Straus, 154 Ohio St. 193 (1950), and the elements have not changed. The owner of a motor vehicle can be held liable for injuries caused by an incompetent or inexperienced driver if the owner "knowingly, either through actual knowledge or through knowledge implied from known facts and circumstances, entrusts its operation to such a driver."

The Court was careful to explain what kind of claim this is. It is not vicarious liability, where an employer answers for an employee's negligence simply because of the relationship. It rests on the owner's own negligence, the act of handing a dangerous instrument to a person the owner knew should not have it, combined with the driver's negligence in the crash. Both have to be proven.

To recover, the injured person must show three things:

1. Permission. The vehicle was driven with the owner's permission and authority.
2. Incompetence. The driver was in fact incompetent, inexperienced, or unqualified to operate the vehicle safely.
3. Knowledge. The owner knew, at the time of the entrustment, that the driver was incompetent, or knew facts and circumstances that would imply that knowledge.

Gulla itself shows how the third element can fail. A furniture dealer lent his truck to a man he had seen working around trucks for a year, to make a delivery a block and a half away in daylight. The man kept the truck, drove it that night on his own errand, and hit a pedestrian. There was no evidence the dealer knew of any prior accidents, any incompetence, or even that the man lacked a license, and the Court held there was nothing to send to the jury. The lesson is that the claim turns entirely on what the owner knew.

What the owner has to know

The Court gave examples of entrustments that supported liability: a father who let his 14-year-old son take the car, a father who let his 15-year-old drive in violation of a city ordinance, and an owner who lent his car to a man he knew to be drinking, to attend a drinking party, knowing the man was in the habit of getting drunk. The common thread is that the driver's unfitness was known or obvious when the keys changed hands.

In our practice, the facts that make an entrustment negligent tend to fall into familiar categories:

• Intoxication. The owner saw the driver drinking, or the driver was visibly impaired, when the car was lent. This overlaps with the claim against a bar that overserved him, which I described in Dram Shop Claims Against Bars.
• Suspended or revoked license. A suspension for drunk driving, for points, or for a prior crash is strong evidence of incompetence. Gulla teaches that the mere absence of a license is not enough by itself; what matters is why the license was taken and whether the owner knew it.
• Known history of reckless driving. Prior crashes, prior tickets, or a reputation in the family for driving badly, if the owner knew about them.
• Age and inexperience. A child too young to drive, or a teenager with a learner's permit driving alone.
• Medical conditions. A driver the owner knows has seizures, dementia, or a vision impairment that prevents safe driving.

The Court in Gulla also addressed what happens when the driver exceeds the permission given. For a driver whose incompetence is obvious, such as a child or an intoxicated person, the owner's responsibility follows the car wherever it goes, because the owner should anticipate that such a driver will not stay within the limits set. That matters in the common case of the drunk friend who was supposed to drive straight home.

Why the claim matters: insurance

The practical significance of negligent entrustment is coverage. A driver with no insurance and no assets cannot pay a serious-injury claim. The owner of the car almost always has an auto liability policy, and that policy generally covers the owner's own negligence in connection with the vehicle. Depending on the policy, it may also cover a permissive driver directly. Owners with umbrella policies have additional limits above the auto policy.

Negligent entrustment therefore turns a worthless claim against an uninsured driver into a claim against an insured owner. Combined with your own uninsured and underinsured motorist coverage, which I explained through a real case in An Ohio UIM Case Study, where the injured family also sued the owner of the car for negligent entrustment, it is often the difference between a recovery that covers the loss and one that does not.

Parents and teen drivers

Ohio has one statute that makes an adult liable for a minor's driving without any proof of knowledge or negligence. Under R.C. 4507.07(B), when a minor under eighteen applies for a probationary license or a temporary instruction permit, the parent or other adult who signs the application becomes jointly liable for any negligence or willful or wanton misconduct the minor commits while driving. The liability is imputed by law. There is an important exception: if the minor has proof of financial responsibility, meaning auto insurance meeting Ohio's minimums, no liability is imputed to the signer. For most families that means the parent's auto policy, which covers the teen, is the source of recovery rather than the parent personally. Teen-driver cases have other wrinkles that deserve their own discussion; the point here is that the signature on a license application is itself a basis for liability, separate from negligent entrustment.

How we investigate an entrustment claim

Because the claim depends on the owner's knowledge, the work is in finding out what the owner knew. That means:

• The driver's complete BMV record, including suspensions and the reasons for them.
• Court records of prior OVI convictions, traffic offenses, and crashes.
• The relationship between the driver and the owner. A parent, spouse, roommate, or employer is presumed to know more than a stranger.
• Statements the owner made to police at the scene or afterward. Owners frequently explain, unprompted, that they "knew he shouldn't have been driving."
• Social media, texts, and witness accounts of the circumstances of the loan, particularly where alcohol was involved.
• Every insurance policy that might apply: the owner's auto policy, any umbrella policy, and the policies of any business that owned or furnished the vehicle.

This investigation has a short shelf life. Witnesses forget, phones are replaced, and owners get lawyers of their own. The claim is strongest when the facts are gathered in the first weeks after the crash.

What this means for you

If you were seriously hurt by a driver who had no insurance, or whose policy was too small to matter, do not assume there is nothing to recover. Ask who owned the car and why that driver had it. In the Dayton area we see this constantly: the borrowed car, the family car, the company truck driven by someone who should never have had the keys. Our hit-and-run and uninsured driver practice and our UM/UIM practice exist to find every available source of compensation, and the owner's policy is one of the first places we look.