McGuire v. Wright ( 1998 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 96-50931
____________________
KEITH MCGUIRE,
Plaintiff-Appellee,
versus
CHRISTOPHER NOLEN WRIGHT, ET AL.,
Defendants,
UNITED STATES OF AMERICA,
Defendant-Appellant.
Appeal from the United States District Court
for the Western District of Texas
(EP-95-CV-99)
March 23, 1998
Before POLITZ, Chief Judge, GARWOOD, and BARKSDALE, Circuit Judges.
PER CURIAM:*
Primarily at issue is whether, in finding negligent
entrustment, the district court erred in holding that the United
States should have known that a military dependent was “reckless”
when he rented its vehicle because it should have known that he was
uninsured. (In order to rent the vehicle, he falsely claimed to
*
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that this opinion should not be published and is not precedent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.
have automobile liability insurance.) We REVERSE that part of the
judgment and RENDER.
I.
The Morale, Welfare and Recreation Agency at Fort Bliss, Texas
(MWRA), is a non-appropriated fund activity of the United States
Government. One activity is renting vehicles to military personnel
and their dependents.
On 29 September 1993, Christopher Wright, a military
dependent, rented a vehicle from MWRA. First, in accordance with
MWRA policy, Wright was required to present a valid driver’s
license, a military dependent identification, and proof of
automobile liability insurance. In so doing, for the latter, he
presented a copy of a document purportedly issued by Texas Low Cost
Insurance, which provided that his insurance was in effect
(current) until December 1994, more than a year later.
The rental agreement required Wright to return the vehicle the
following day; he failed to do so. Numerous telephone calls were
made by MWRA employees to Wright in an unsuccessful attempt to
secure the vehicle’s return. On 17 October 1993, Wright, while
driving the vehicle, hit Keith McGuire’s. After the accident, MWRA
learned that Wright’s proof of insurance had been false.
In this action, McGuire sued Wright for negligence; the United
States, pursuant to the Federal Tort Claims Act (FTCA), 28 U.S.C.
§ 2671 et seq., for negligent entrustment. The district court
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maintained supplemental jurisdiction over the negligence claim,
which was tried to a jury in August 1996. It awarded McGuire
$66,500.
Next, pursuant to the FTCA, 28 U.S.C. § 2402, the district
court ruled against the United States on the negligent entrustment
claim. It held both that Wright was reckless for failing to
maintain automobile liability insurance, which it first ruled was
required by Texas law; and that a “special condition” existed —
MWRA should have known that Wright was reckless because it should
have determined that he was uninsured. The district court treated
the jury verdict against Wright as advisory with respect to damages
against the United States, and entered judgment against the United
States and Wright, jointly and severally, for $66,500.
II.
The United States asserts that the district court erred in
holding both that Wright was a reckless driver, because of his lack
of insurance; and that such lack was a “special condition” of which
MWRA should have been aware, thus making the entrustment negligent.
(The United States also claims error in the award of interest. We
need not reach that issue.)
McGuire urges a clearly erroneous standard of review. “In
FTCA cases the clearly erroneous standard governs our review of
factual determinations, including damages.” Ferrero v. United
States, 603 F.2d 510, 512 (5th Cir. 1979); Sebree v. United States,
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567 F.2d 292 (5th Cir. 1978). But, the United States maintains
that it does not challenge findings of fact. It asserts, instead,
that conclusions of law are at issue, mandating de novo review.
See, e.g., Bartley v. Budget Rent-A-Car Corp., 919 S.W.2d 747, 752
(Tex. App.--Amarillo writ denied 1996).
We need not decide this issue. Even under the more strict
clearly erroneous standard, we find reversible error. Of course,
a trial court’s findings are clearly erroneous only “when, after
reviewing the entire evidence, we are ‘left with the definite and
firm conviction that a mistake has been committed.’” Wakefield v.
United States, 765 F.2d 55, 57 (5th Cir. 1985) (quoting United
States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
It bears repeating that at issue is not whether Wright was
negligent. Instead, at issue is whether the United States
negligently entrusted its vehicle to Wright.
The FTCA, subject to several exceptions,
waives the sovereign immunity of the United
States, making it liable in tort “in the same
manner and to the same extent as a private
individual under like circumstances,” 28
U.S.C. § 2674, for certain damages “caused by
the negligent or wrongful act or omission of
any employee of the Government while acting
within the scope of his office or employment,
under circumstances where the United States,
if a private person, would be liable to the
claimant in accordance with the law of the
place where the act or omission occurred.”
Johnson v. Sawyer, 47 F.3d 716, 727 (5th Cir. 1995) (en banc)
quoting 28 U.S.C. §§ 1346(b), 2674. Accordingly, in FTCA actions,
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issues of liability are determined by state law. See, e.g., Brooks
v. United States, 695 F.2d 984, 987 (5th Cir. 1983). For this
negligent entrustment claim, we look to Texas law.
Under such law, the elements for this claim are: (1)
entrustment of a vehicle by the owner; (2) to an unlicensed,
incompetent, or reckless driver; (3) the owner knew, or should have
known, the driver was unlicensed, incompetent or reckless; (4) the
driver was negligent on the occasion in question; and (5) such
negligence proximately caused injury. E.g., Schneider v. Esperanza
Transmission Co., 744 S.W.2d 595, 596 (Tex. 1987); Bartley, 919
S.W.2d at 749-50; Martin v. Avis Rent-A-Car Sys., Inc., 932 S.W.2d
697, 699 (Tex. App.--Houston [14th Dist.] 1996). (Moreover, in
order to establish that the entrustment was the proximate cause of
the injuries, it must be shown that the entrustor should reasonably
have anticipated “that an injury would result as a natural and
probable consequence of its entrustment.” Schneider, 744 S.W.2d at
596.)
At issue are the second and third elements for negligent
entrustment. Again, the second element is whether Wright was
unlicensed, incompetent or reckless; the third, whether MWRA knew,
or should have known, this.
As for that second element, it is undisputed here that, on
renting the vehicle, Wright presented a valid driver’s license; and
that there is no indication that he was incompetent. But, as
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noted, the district court found that Wright was reckless for
operating a vehicle in violation of Texas law, by failing to
maintain automobile liability insurance; the district court had
first ruled that this failure violated Texas law. As for the third
element, the court found that the MWRA should have known that
Wright was reckless, because it should have known that he was
uninsured.
Under Texas law, as the district court held, an entity engaged
in renting vehicles is required only to verify a valid driver’s
license. TEX. REV. STAT. ANN. art. 6687b § 38; see Nobbie v. Agency
Rent-A-Car, Inc., 763 S.W.2d 590, 592 (Tex. App.--Corpus Christi
1988, writ denied). Therefore, proof of automobile liability
insurance was not a prerequisite for MWRA to lawfully rent the
vehicle to Wright. Id. Accordingly, for rental purposes, MWRA was
not required to verify that the policy Wright presented was valid.
In short, the procedure employed by MWRA for renting vehicles
(requiring not only a valid driver’s license, but also military
identification and proof of liability insurance) exceeded the
requirements of Texas law. Indeed, unless the MWRA knew, or should
have known, that Wright was reckless, it had no duty to investigate
his driving record. See Bartley, 919 S.W.2d at 752.
A.
The United States contends that the district court erred in
finding that Wright was reckless solely because he operated the
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vehicle in violation of the Texas Motor Vehicle Safety
Responsibility Act. When Wright rented the vehicle, the Act
provided: “no motor vehicle may be operated in this State unless
a policy of automobile liability insurance ... is in effect to
insure against potential losses which may arise out of the
operation of that vehicle.” TEX. REV. CIV. STAT. ANN. art. 6701h §
1A(a) (current version at TEX. TRANS. CODE ANN. § 601.051).
The United States asserts that the statute does not apply to
government owned vehicles. On the other hand, the MWRA
nevertheless required proof of insurance. In any event, even
assuming the statute does apply, failing to maintain such insurance
does not per se constitute recklessness for negligent entrustment
purposes, as hereinafter discussed.
Within the context of negligent entrustment, a driver is
reckless when his driving presents a danger to others. See, e.g.,
Green v. Texas Elec. Whol., Inc., 651 S.W.2d 4, 6 (Tex. App.--
Houston [1st Dist] 1982) (“basis of responsibility under the
doctrine of negligent entrustment is the owner’s own negligence in
permitting his motor vehicle to become a dangerous instrumentality
by putting it into a driver’s control with knowledge of the
potential danger existing by reason of the incompetence or reckless
nature of the driver”) (emphasis added); Hines v. Nelson, 547
S.W.2d 378, 384-85 (Tex. Civ. App.--Tyler 1977) (same); Revisore v.
West, 450 S.W.2d 361, 364 (Tex. Civ. App. 1970, no writ)
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(“[r]eliance is generally placed upon evidence of previous traffic
violations, previous habits or intemperance in efforts to establish
incompetence or recklessness in negligent entrustment cases.”);
Broesche v. Bullock, 427 S.W.2d 89, 93 (Tex. Civ. App.--Houston
[14th Dist.] 1968, writ refused n.r.e.) (issue is whether by virtue
of the driver’s habits, he is reckless to the extent that he cannot
safely operate the vehicle).
Failure to maintain the insurance is most imprudent, to say
the least. But, as the United States urges, for negligent
entrustment purposes, it does not define per se a driver’s ability
to safely operate a vehicle. For a vehicle rental transaction,
the fact that [a driver] held and exhibited a
valid, unrestricted driver’s license [to the
rental agency] was prima facie evidence of his
competency to drive a motor vehicle and,
absent any evidence to the contrary at the
time he rented the truck, conclusively negated
the element that [the rental agency] then knew
or should have known that [the driver] was an
incompetent or reckless driver.
Bartley, 919 S.W.2d at 752.
B.
Arguably, because the Wright-was-reckless finding is clearly
erroneous, our inquiry should be at an end. But, the district
court seemed to also base recklessness, and the requisite knowledge
of it, on a “special condition” — that the insurance expiration
date should have caused MWRA to become aware that Wright was
uninsured and, therefore, reckless. Again, there is negligent
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entrustment only if MWRA knew, or should have known, that Wright
was reckless.
1.
There is no evidence that MWRA knew Wright’s proof of
insurance was false and he was, as a result, uninsured. Indeed, he
presented a valid driver’s license and military dependent
identification, and, in fact, had been a regular MWRA customer
earlier that year. Moreover, the district court noted that, on all
prior occasions, Wright had presumably complied with the rental
contract and timely returned the vehicles. In fact, there is
testimony from the MWRA employee who rented the vehicle to Wright
that, on at least two prior occasions in 1993, Wright rented
vehicles and complied with MWRA policies, including presenting
proof of insurance. Moreover, there is testimony that, if a
customer presented proof of insurance that was current (that is,
not outside the expiration date, as it was not in this case), it
was not MWRA policy to telephone the insurer to verify the validity
of the policy.
2.
Accordingly, we turn to whether MWRA should have known of
Wright’s recklessness, resulting solely from his being uninsured.
Along this line, as stated, the district court found that Wright’s
uninsured status was a “special condition” of which MWRA should
have been aware. It ruled: “In the exercise of reasonable
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diligence, the employees of the MWR[A] could have and should have
recognized that the insurance document presented by Wright was
‘fishy’”, because the expiration date was more than a year away.
In this regard, the court stated: “It is common knowledge in Texas
that automobile insurance policies are issued for periods of six
months or one year, but never longer.”
In finding this special condition, the district court relied
on Revisore, 450 S.W.2d at 364, for the proposition that, in
establishing recklessness, in addition to a driving record,
credence may be given to the condition of the entrustee at the time
the vehicle is provided to him. Id. This is certainly correct;
but, in Revisore, the entrustee had been drinking, and was a
stranger in the city where he was driving. Id. The special
condition referred to in Revisore focused on whether, at the time
of entrustment, the entrustee is “physically or mentally
incapacitated, intoxicated or for any reason lacking in judgment or
perception.” Id.; see also Louis Thames Chevrolet Co. v. Hathaway,
712 S.W.2d 602, 604 (Tex. App.--Houston [1st Dist.] 1986)
(condition at time of entrustment did not reveal that entrustee had
been drinking, was ill, or had any physical or mental impairment).
McGuire has not cited any authority, nor have we found any,
holding that the absence of automobile liability insurance, even if
known to an entrustor, is a special condition upon which negligent
entrustment may be based. Pursuant to the finding that automobile
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liability policies in Texas are never issued for a period greater
than a year, it may well be that the greater-than-a-year-expiration
date presented by Wright should have been a red flag to MWRA. But,
for negligent entrustment purposes, and as discussed supra, this
simply cannot translate into finding that MWRA should have known
Wright was reckless. To so find was clearly erroneous.
III.
The district court clearly erred in holding the United States
liable. Accordingly, that portion of the judgment is REVERSED,
with judgment RENDERED for the United States.
REVERSED in PART and RENDERED
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