Nelson v. Artley

2014 IL App (1st) 121681SECOND DIVISION
June 17, 2014
No. 1-12-1681
DESHAW NELSON, ) Appeal from the
Plaintiff-Appellant, ) Circuit Court of
) Cook County
v. )
) No. 10 L 559
DONALD ARTLEY, )
Defendant ) Honorable
(Enterprise Leasing Company of Chicago, ) Alexander P. White,
Citation Respondent-Appellee). ) Judge Presiding.
JUSTICE SIMON delivered the judgment of the court, with opinion.
Presiding Justice Harris and Justice Pierce concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Deshaw Nelson, appeals from an order of the circuit court of Cook County
granting his petition for turnover against citation respondent, Enterprise Leasing Company of
Chicago (Enterprise), but limiting the amount of the turnover to $25,000. On appeal, plaintiff
contends that the court erred because Enterprise is required to pay the entire $600,000 default
judgment entered against defendant, Donald Artley, in connection with an accident involving a
vehicle owned by Enterprise. Plaintiff also contends that Enterprise is barred by the doctrine of
judicial estoppel from claiming that it is only required to pay $25,000 of the default judgment.
For the reasons that follow, we reverse and remand.
¶2 BACKGROUND
¶3 This case arises from an April 2007 automobile accident involving plaintiff, Artley,
Antoine Ousley, and Renardo Page. The vehicle driven by Artley was owned by Enterprise and
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rented to Suzanne Haney pursuant to a rental agreement. On January 14, 2010, plaintiff filed a
complaint against Artley alleging that Artley committed various negligent acts while operating
the vehicle at issue and that those negligent acts were the proximate cause of the accident and the
injuries plaintiff suffered as a result of the collision. On May 4, 2010, the circuit court entered a
default judgment of $600,000 in favor of plaintiff and against Artley.
¶4 On June 18, 2010, plaintiff initiated citation proceedings against Enterprise in connection
with the default judgment against Artley. On July 13, 2010, Enterprise filed an answer in which
it asserted, inter alia, that it bore a total financial responsibility of $100,000 per occurrence for
the liability of an authorized driver under the rental agreement, the Illinois Vehicle Code (Code)
(625 ILCS 5/1-100 et seq. (West 2006)), and the relevant case law and that it was only required
to pay plaintiff $25,000 of that total because $75,000 had already been expended in payments to
Ousley and Page. Enterprise attached various documents to its answer, including a certificate of
self-insurance issued by the Illinois Department of Insurance and a copy of its rental agreement
with Haney. Paragraph 7 of the rental agreement is titled "Responsibility to Third Parties" and
provides that Enterprise will comply with applicable motor vehicle financial responsibility laws
as a self-insured entity and will not extend any responsibility to the renter, additional authorized
drivers, passengers, or third parties except to the minimum amount set forth in the relevant
financial responsibility laws.
¶5 On September 19, 2011, plaintiff filed a petition against Enterprise for a turnover order
for $600,000, plus interest and costs. The petition asserted that Enterprise's financial
responsibility was not limited to $100,000 per occurrence and that Enterprise represented in its
application for a certificate of self-insurance that it retained a risk of loss for third-party liability
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claims of up to $2 million per occurrence. Enterprise responded that, pursuant to the decision of
the Appellate Court, Fourth District, in Fellhauer v. Alhorn, 361 Ill. App. 3d 792 (2005), the
financial responsibility of a self-insured rental car company such as Enterprise was limited to
$100,000 per occurrence and that if the Code imposed full liability on rental car companies for
judgments against the drivers of their vehicles, the Code would be preempted by federal law.
¶6 On May 10, 2012, the court entered an order in which it granted plaintiff's petition, but
limited the turnover amount to $25,000. In doing so, the court determined that it was required to
follow the Fellhauer decision, under which Enterprise's financial responsibility was limited to
$100,000 per occurrence. Plaintiff now appeals from that order.
¶7 ANALYSIS
¶8 Plaintiff contends that Enterprise is required by the Code to pay the entire $600,000
default judgment entered against Artley and that this court should not follow the Fourth District's
decision in Fellhauer because that case is wrongly decided. Enterprise responds that this court
should adopt the holding in Fellhauer because the Code provides that the minimum financial
responsibility of a self-insured rental car company for its vehicles is $100,000 per occurrence.
¶9 Section 9-101 of the Code provides that an entity may only engage in the business of
renting out its vehicles if it first provides the Illinois Secretary of State with proof of its financial
responsibility. 625 ILCS 5/9-101 (West 2006). The purpose behind the financial responsibility
requirements is to provide the public with protection from negligent drivers of rental vehicles
who are without insurance. Fogel v. Enterprise Leasing Co. of Chicago, 353 Ill. App. 3d 165,
176 (2004); Insurance Car Rentals, Inc. v. State Farm Mutual Automobile Insurance Co., 152 Ill.
App. 3d 225, 232 (1987). While chapter 9 only sets forth minimum requirements of financial
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responsibility, and does not limit a company's responsibility in connection with an accident
involving one of its vehicles, this court has held that a company may contractually limit its
financial responsibility in its rental agreements to the amount necessary to satisfy the minimum
requirements. Fogel, 353 Ill. App. 3d at 176; Farm Bureau Mutual Insurance Co. v. Alamo Rent
A Car, Inc., 319 Ill. App. 3d 382, 389 (2000); Hertz Corp. v. Garrott, 238 Ill. App. 3d 231, 239
(1992).
¶ 10 In this case, paragraph 7 of the rental agreement provides that Enterprise's financial
responsibility to third parties is limited "to the applicable state minimum financial responsibility
amounts." As Enterprise is a self-insured entity, we must interpret the Code and determine the
minimum financial responsibility of a self-insured rental car company to ascertain what portion
of the default judgment Enterprise is required pay. Accordingly, this case presents a question of
statutory construction and our review is de novo. JPMorgan Chase Bank, N.A. v. Earth Foods,
Inc., 238 Ill. 2d 455, 461 (2010).
¶ 11 A court's primary objective in construing a statute is to ascertain and give effect to the
intent of the legislature. Ready v. United/Goedecke Services, Inc., 232 Ill. 2d 369, 375 (2008).
The first step in determining legislative intent is to examine the language of the statute, and when
the language is clear and unambiguous, the statute must be given its plain meaning without resort
to further aids of statutory construction. Alvarez v. Pappas, 229 Ill. 2d 217, 228 (2008).
¶ 12 Section 9-102 of the Code provides that a rental car company may give proof of financial
responsibility by filing a bond, an insurance policy, or a certificate of self-insurance issued by
the Director of the Department of Insurance. 625 ILCS 5/9-102 (West 2006). A bond must be in
the sum of $100,000 and conditioned on the rental car company's payment of any judgment
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resulting from the operation of a rental vehicle against the company, the renter, or anyone
driving the car with the consent of the company and the renter. 625 ILCS 5/9-103 (West 2006).
An insurance policy must provide that the insurance carrier will pay any judgment against the
renter or anyone operating the rental vehicle with the renter's consent resulting from the
operation of the vehicle in the minimum amount of $50,000 for an accident involving one other
person and $100,000 for an accident involving more than one other person. 625 ILCS 5/9-105
(West 2006).
¶ 13 While chapter 9 does not set forth any requirements for proof of financial responsibility
by certificate of self-insurance, such requirements are provided in section 7-502 of the Code.
See 92 Ill. Adm. Code 1090.10, amended at 6 Ill. Reg. 12674 (eff. Apr. 26, 1973) ("Proof of
financial responsibility required by Sec. 9-101 of The Illinois Vehicle Code (I.V.C.) may also be
given by filing a certificate of self-insurance issued under Sec. 7-502 of The I.V.C."). Pursuant
to section 7-502, "[a]ny person in whose name more than 25 motor vehicles are registered may
qualify as a self-insurer by obtaining a certificate of self-insurance issued by the Director of the
Department of Insurance." 625 ILCS 5/7-502 (West 2006). The Director may issue a certificate
of self-insurance if "such person is possessed and will continue to be possessed of ability to pay
judgment obtained against such person" and may cancel a certificate if that person fails to pay a
judgment against any person covered by the certificate and arising out of any accident in which a
vehicle covered by the certificate is involved within 30 days of judgment. Id. "Judgment" is
defined as a final judgment "against a person as defendant for damages on account of bodily
injury to or death of any person or damages to property resulting from the operation of any motor
vehicle." 625 ILCS 5/7-100 (West 2006).
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¶ 14 As such, the plain language of section 7-502 provides that a certificate of self-insurance
may be issued to an entity that has shown the ability to pay any judgments obtained against itself
as a defendant for damages and that the entity must pay all such judgments in a timely manner in
order to retain its certificate. In this case, no judgment has been entered against Enterprise as a
defendant for damages. Accordingly, Enterprise is not required by the plain language of section
7-502 to pay any portion of the default judgment entered against Artley.
¶ 15 However, a court presumes that the legislature did not intend absurdity, inconvenience, or
injustice (Sandholm v. Kuecker, 2012 IL 111443, ¶ 41) and is not bound by the specific language
of a statute if it will produce a result that is inconsistent with legislative intent or yields absurd or
unjust consequences (In re D.F., 208 Ill. 2d 223, 230 (2003)). To hold that self-insured rental
car companies are not required to pay any portion of a judgment against the drivers of their
vehicles would result in absurdity, as those companies with the financial wherewithal to qualify
for self-insurance would not bear any responsibility for such judgments while other companies
would be required to assume the financial burden of maintaining a bond or insurance policy.
Also, such a holding would be inconsistent with the legislative intent of protecting the public
from uninsured and negligent drivers of rental vehicles because the public would not receive any
protection from uninsured and negligent drivers of vehicles rented from self-insured companies.
Further, Enterprise does not maintain that it is not required to pay any portion of the default
judgment and expressly waived any such claim in its response to plaintiff's petition for a turnover
order. Thus, this court is not bound by the specific language of section 7-502, as adherence to
the plain language of that provision would yield an absurd result that is contrary to legislative
intent.
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¶ 16 "When the meaning of a statute is not clearly expressed in the statutory language, a court
may look beyond the language employed and consider the purpose behind the law." Petersen v.
Wallach, 198 Ill. 2d 439, 444-45 (2002). In construing a statutory provision, a court must read
the statute as a whole and consider words and phrases in light of other relevant provisions in the
statute. In re Detention of Stanbridge, 2012 IL 112337, ¶ 70.
¶ 17 In general, all motor vehicles operated or registered in Illinois must be covered by a
liability insurance policy (625 ILCS 5/7-601(a) (West 2006)), and that policy must provide a
minimum amount of coverage of $20,000 for injuries or death to one person and $40,000 for
injuries or death to more than one person (625 ILCS 5/7-203 (West 2006)). Phoenix Insurance
Co. v. Rosen, 242 Ill. 2d 48, 56-57 (2011). To that extent, the owner of a vehicle shall not permit
another person to operate, register, or maintain registration of the vehicle unless it is covered by
a liability insurance policy that meets the relevant minimum financial requirements. 625 ILCS
5/7-601(a) (West 2006). "The principal purpose of the mandatory liability insurance requirement
is to protect the public by ensuring adequate compensation for damages and injuries sustained in
motor vehicle accidents." Country Preferred Insurance Co. v. Whitehead, 2012 IL 113365, ¶ 30.
However, certain vehicle owners are exempt from that requirement, including owners of vehicles
which are covered by a certificate of self-insurance issued under section 7-502, or which comply
with laws requiring insurance in amounts meeting or exceeding the minimums of $20,000 and
$40,000. 625 ILCS 5/7-601(b)(3), (b)(6) (West 2006).
¶ 18 Thus, under the general mandatory liability insurance requirements, an entity which is
capable of qualifying as a self-insurer has the option of either maintaining liability insurance
policies for its vehicles which meet the minimum statutory amounts of $20,000 and $40,000 or
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obtaining a certificate of self-insurance. If the entity chooses self-insurance, it is then required to
pay all judgments entered against itself pursuant to the plain language of section 7-502. Under
chapter 9, a rental car company may prove its financial responsibility by either maintaining
bonds or insurance policies which meet the minimum statutory amount of $100,000 per
occurrence, as set forth in sections 9-103 and 9-105, or by obtaining a certificate of self-
insurance pursuant to the requirements set forth in section 7-502. Therefore, under both the
general mandatory liability insurance requirements and the rental car company financial
responsibility requirements, the owner of a vehicle must provide the public with a minimum
level of protection against uninsured drivers by obtaining insurance policies or, for rental car
companies, bonds for its vehicles unless the owner has sufficient resources to qualify as a self-
insurer and avails itself of that additional option.
¶ 19 Based on this statutory scheme, we see no reason to treat rental car companies differently
than any other self-insured entity. Just as an entity which exempts itself from the insurance
requirement of section 7-601(a) by obtaining a certificate of self-insurance must assume the risk
of having to pay all judgments entered against itself under section 7-502, a rental car company
which chooses to prove its financial responsibility by a certificate of self-insurance instead of a
bond or insurance policy should assume a similar risk. If a rental car company does not want to
assume that risk, it may meet its financial responsibility obligations through bonds or insurance
policies that comply with the minimum requirements in sections 9-103 and 9-105. Accordingly,
we conclude that a self-insured rental car company's minimum responsibility to pay judgments is
not limited to $100,000 per occurrence or any other amount.
¶ 20 In addition, by holding that a self-insured rental car company's financial responsibility is
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not limited to $100,000, we are interpreting the statute in a manner which is consistent with the
underlying legislative purpose that the financial responsibility requirements are meant to provide
the public with protection from negligent drivers of rental vehicles who are without insurance.
Fogel, 353 Ill. App. 3d at 176; Insurance Car Rentals, 152 Ill. App. 3d at 232. Brushing aside
the policy of protecting the public, Enterprise maintains that limiting a self-insured rental car
company's financial responsibility to $100,000 favors public policy because it creates savings
which can be passed on to consumers by providing companies with risk-certainty and allowing
them to avoid the cost of purchasing bonds or insurance policies. However, as set forth in the
financial statements tendered to the Director, Enterprise "retained the risk of loss up to $2
million on a per occurrence basis" for third-party automobile liability and, while not mentioned
in the briefs, that Enterprise was insured up to $250 million. Thus, there is nothing which shows
that any proposed savings would be passed to the consumers or, rather, whether those savings
would simply be retained by Enterprise.
¶ 21 In sorting out these colliding thoughts, we refuse to abandon the policy behind the
financial responsibility requirements designed to protect the public from uninsured drivers of
rental vehicles rather than protect rental car companies or their customers from higher costs or
prices. By specifying minimum amounts of financial responsibility for bonds and insurance
policies, but declining to do so for self-insured companies, the legislature requires a minimum
level of protection for the public of $100,000 per occurrence while allowing for greater
protection in the event rental car companies that are financially able to do so choose self-
insurance. To the extent Enterprise claims that limiting a self-insured rental car company's
financial responsibility to $100,000 per occurrence would benefit society at large by making the
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rental car business more efficient and reducing the prices for rental car customers, such a
balancing of interests is to be undertaken by the legislature, and not this court. In this case, it
appears from a consideration of the Code as a whole that the legislature has chosen to prioritize
protecting the public from uninsured drivers of rental vehicles without any mention of reducing
the price of renting a car.
¶ 22 In reaching this conclusion, we have considered the Fourth District's Fellhauer decision,
but are not persuaded by the reasoning set forth therein. In Fellhauer, 361 Ill. App. 3d at 793,
the plaintiff obtained a $450,000 default judgment against the defendant on the basis of a
negligence claim arising from an automobile accident in which the uninsured defendant was
driving a vehicle rented from Enterprise. The court rejected the plaintiff's claim that Enterprise
was required to pay the entire default judgment pursuant to section 7-502 and stated that a rental
car company was not a negligent lessee's alter ego or guarantor and that the only connection
between the plaintiff and Enterprise was the financial responsibility statute, which was enacted to
provide the public with some, but not necessarily total, protection from uninsured drivers of
rental cars. Id. at 797. The court stated that it was unlikely that the legislature intended for self-
insurers not to be governed by the provisions of chapter 9 and concluded that Enterprise was
only required to pay $50,000 of the default judgment because "common sense dictates that the
legislature did not intend to treat self-insurers differently and expose them to unlimited liability
when their counterparts, who chose to be covered by a traditional insurance policy, have only a
$50,000 exposure." Id. at 798. In doing so, the court looked to other jurisdictions for guidance
and found its approach to be consistent with that taken by other states, some of which included
language in their respective financial responsibility statutes specifying that a self-insurer will pay
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judgments in the same amount as a traditional insurer. Id. at 798-99.
¶ 23 To the extent the court in Fellhauer decided that section 7-502 of the Code did not apply
because a self-insured rental car company's financial responsibility requirements were governed
by chapter 9, we disagree. Section 9-102 provides that a rental car company may give proof of
its financial responsibility by filing "[a] certificate of self insurance issued by the Director." 625
ILCS 5/9-102 (West 2006). Section 7-502 directs that the requirements for obtaining a
certificate of self-insurance issued by the Director of the Department of Insurance are provided
therein. 625 ILCS 5/7-502 (West 2006). In addition, the Illinois Administrative Code provides
that "[p]roof of financial responsibility required by Sec. 9-101 of The Illinois Vehicle Code
(I.V.C.) may also be given by filing a certificate of self-insurance issued under Sec. 7-502 of The
I.V.C." 92 Ill. Adm. Code 1090.10, amended at 6 Ill. Reg. 12674 (eff. Apr. 26, 1973). Thus, the
requirements for the issuance and maintenance of a certificate of self-insurance sufficient to
prove a rental car company's financial responsibility under section 9-102 are governed by section
7-502.
¶ 24 Because a self-insured rental car company's financial responsibility requirements are not
set forth in their entirety in chapter 9 of the Code, it is necessary to consider the Code as a whole
to determine the manner in which section 7-502 operates with regard to rental car companies.
The Fellhauer court only looked at chapter 9 and, while disregarding section 7-502 and relying
on its "common sense" as authority, determined that a self-insured rental car company should
only be required to provide the same level of coverage as would be required of an insurance
policy. However, contrary to the Fellhauer court's reliance on common sense, an examination of
the operation of section 7-502 with regard to entities that are not rental car companies evidences
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that the legislature intended to require self-insured entities to provide coverage beyond the
specific statutory minimums set forth elsewhere in the Code. The Code, when considered as a
whole, provides that a self-insured rental car company is treated the same as any other self-
insured entity with regard to the Code's financial responsibility requirements.
¶ 25 Although the Fellhauer court found its approach to be consistent with that taken in other
jurisdictions, our review does not reveal a clear consensus as to whether a self-insured rental car
company's financial responsibility is limited to the same minimum amounts as those required of
an insurance policy. To the extent the Fellhauer court cited to statutory provisions from other
states which specify that a self-insurer " 'will pay the same judgments and in the same amounts
that an insurer would have been obligated to pay under an owner's motor vehicle liability policy
if it had issued such a policy to said self-insurer' " (Fellhauer, 361 Ill. App. 3d at 799 (quoting
Mo. Ann. Stat. § 303.160(1)(4) (West 2003), and citing Wis. Stat. Ann. § 344.30(4) (West 2006)
and Tex. Transp. Code Ann. § 601.124(c) (Vernon 1999))), the Illinois legislature could have
included such language in the Code, but did not. Thus, cases which rely upon those statutes
(Boatright v. Spiewak, 570 N.W.2d 897 (Wis. Ct. App. 1997); Millers National Insurance Co. v.
City of Milwaukee, 516 N.W.2d 376 (Wis. 1994)) or other statutes with similar provisions (Li v.
Zhang, 2005 UT App 246, ¶¶ 10-12, 120 P.3d 30; Kiernan v. Agency Rent A Car, Inc., 940 F.2d
917, 919-20 (4th Cir. 1991)) are of diminished persuasive value. While two decisions cited by
the Fellhauer court found the minimum financial responsibility requirements of a self-insured to
be the same as the minimum requirements for an insurance policy (McSorley v. Hertz Corp., 885
P.2d 1343, 1350 (Okla. 1994); Southern Home Insurance Co. v. Burdette's Leasing Service, Inc.,
234 S.E.2d 870, 872 (S.C. 1977)), another case only mentioned the extent of a self-insured's
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responsibility in the context of holding that a self-insured must comply with the relevant
statutory minimum requirements (ELRAC, Inc. v. Ward, 748 N.E.2d 1 (N.Y. 2001)). The issue
in this case is not whether Enterprise must comply with the statutory financial requirements, but
how much of the judgment it must pay to meet its obligations. In answer to that question, courts
in New Jersey (Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., 575 A.2d 416, 421-22 (N.J.
1990)) and Michigan (Enterprise Leasing Co. of Detroit v. Sako, 590 N.W.2d 617, 618-19
(Mich. Ct. App. 1998)) have held that a self-insured's responsibility is not limited to a specific
dollar amount.
¶ 26 Enterprise cites to another case from New York, Guercio v. Hertz Corp., 358 N.E.2d 261(N.Y. 1976), for the proposition that a judgment against the driver of a rental vehicle is different
from a judgment against the rental car company itself. That proposition, however, only supports
our earlier determination that the plain language of section 7-502 does not require Enterprise to
pay any portion of the judgment against Artley and that we must then consider section 7-502 in
light of other provisions in the Code and the purpose behind the law. Further, the court's
statement that "self-insurance is not insurance but an assurance – an assurance that judgments
will be paid," supports our conclusion that self-insured entities do not share the same minimum
financial responsibility amounts as insurance carriers.
¶ 27 Thus, while it is clear that some jurisdictions have limited the financial responsibility of a
self-insured rental car company to the same minimum amounts as are required of an insurance
policy, some states have done so by setting clear limitations in the relevant statutes and others
have not set any limits at all. Decisions from other jurisdictions are not binding on this court (In
re Hannah E., 372 Ill. App. 3d 251, 258 (2007)), and we do not find the interpretation of foreign
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statutes in the above-cited authorities to be sufficiently compelling to overcome our conclusion
that the Code does not limit a self-insured rental car company's financial responsibility to the
same minimum amounts that are required of an insurance policy.
¶ 28 Enterprise also asserts that the Fellhauer decision is supported by legislative history and
cites to portions of Senate discussions regarding two amendments to the Code which, Enterprise
maintains, indicate that the legislature did not intend to impose different financial responsibility
requirements for self-insured rental car companies and insurance policies. We now address the
legislative history cited by Enterprise, as it may be an aid in interpreting an ambiguous statute.
Krohe v. City of Bloomington, 204 Ill. 2d 392, 398 (2003).
¶ 29 While discussing a bill to amend the Code to increase the insurance requirement for
leasing companies and taxicab firms to $50,000 per claim, Senator Course stated that most such
companies already provided insurance coverage of $50,000 and that "[t]here are 46 companies
that are self-insured and the majority of them have $50,000 coverage right now." 77th Ill. Gen.
Assem., Senate Proceedings, June 21, 1972, at 92 (statements of Senator Course). Although
Enterprise claims that this passage shows that the legislature did not object to allowing a self-
insured company to limit its potential liability, the statement of Senator Course merely articulates
his belief that it would be fair to increase the minimum insurance requirement for leasing
companies and taxicab firms to a level which most self-insured companies were already able to
cover.
¶ 30 Senator Berman, while discussing a bill to change the type of insurance a rental car
company could sell to a customer, asked if he was correct in understanding that "as it applies to
liability coverage, Rent-A-Cars-short-term rentals are still at 50/100 on liability coverage," and
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Senator Berkhausen responded that he was correct. 86th Ill. Gen. Assem., Senate Proceedings,
June 30, 1989, at 79-80 (statements of Senator Berman and Senator Berkhausen). While this
exchange shows that the senators believed that rental car companies were required to maintain
liability coverage in the minimum amounts of $50,000 and $100,000, as provided in section 9-
105, nothing indicates whether the senators believed those minimums only applied to coverage
through an insurance policy or applied to self-insured entities as well.
¶ 31 As Enterprise admits in its brief, the statements contained in the cited legislative history
are not fully responsive to the issues in this case. Thus, the limited and inconclusive legislative
history cited by Enterprise is not sufficiently compelling to alter our conclusion that the Code
does not limit a self-insured rental car company's financial responsibility to the same minimum
amount required of an insurance policy.
¶ 32 Enterprise further asserts that a self-insured rental car company's financial responsibility
must be limited to $100,000 per occurrence because the Code would otherwise be preempted by
the Graves Amendment of the Safe, Accountable, Flexible, Efficient Transportation Equity Act:
A Legacy for Users, a federal law. See 49 U.S.C. § 30106 (2006). Federal law preempts state
law when a state action actually conflicts with federal law. Carter v. SSC Odin Operating Co.,
237 Ill. 2d 30, 39-40 (2010).
¶ 33 The Graves Amendment provides that a rental car company may not be held liable for
harm to persons or property arising from the use, operation, or possession of one of its rental
vehicles if there is no negligence or criminal wrongdoing on the part of the company. 49 U.S.C.
§ 30106(a) (2006). The Graves Amendment also provides that it does not supersede any state
laws "imposing financial responsibility or insurance standards on the owner of a motor vehicle
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for the privilege of registering and operating a motor vehicle." 49 U.S.C. § 30106(b)(1) (2006).
Various courts have held that the Graves Amendment preempts vicarious liability laws against
rental car companies. Garcia v. Vanguard Car Rental USA, Inc., 540 F.3d 1242, 1249 (11th Cir.
2008); Green v. Toyota Motor CreditCorp, 605 F. Supp. 2d 430, 436 (E.D.N.Y. 2009); Meyer v.
Nwokedi, 759 N.W.2d 426, 430 (Minn. Ct. App. 2009).
¶ 34 Enterprise maintains that if the Code requires a self-insured rental car company to pay all
judgments entered against the drivers of its vehicles, then the Code essentially imposes vicarious
liability on self-insured rental car companies and is preempted by the Graves Amendment. In
this case, we are not holding that Enterprise is vicariously liable for Artley's actions, but only
that it bears the responsibility to pay the default judgment against Artley because it has chosen to
comply with the financial responsibility requirements in chapter 9 of the Code by obtaining a
certificate of self-insurance. If Enterprise wants to avoid the risks associated with self-insurance,
it can choose to meet its financial responsibility obligations through bonds or insurance policies.
Thus, the Code does not impose any liability on a rental car company by reason of its ownership
of its vehicles and only imposes financial responsibility requirements with which the company
may choose to comply by filing a bond, insurance policy, or certificate of self-insurance. Based
on the foregoing and the Graves Amendment's guarantee that it does not supersede any state laws
"imposing financial responsibility or insurance standards on the owner of a motor vehicle" (49
U.S.C. § 30106(b)(1) (2006)), we find that the Graves Amendment is not applicable and does not
preempt the Code.
¶ 35 We also note that although Enterprise maintains that this court's interpretation of the
Code will expose self-insured rental car companies to full indemnification of all drivers of their
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vehicles regardless of their relationship with the drivers, or lack thereof, such an outcome is not
mandated by the Code. As section 7-601(a) only provides that a vehicle owner shall not permit
another person to operate an automobile that is not covered by a liability insurance policy (625
ILCS 5/7-601(a) (West 2006)), an owner would not be in violation of that provision if the
vehicle was used without the owner's permission, such as if the car was stolen. Similarly, section
9-103 only requires that a bond be conditioned on the payment of a judgment against the
company, the renter, or a person driving the car with the consent of the company and the renter
(625 ILCS 5/9-103 (West 2006)) and section 9-105 only requires that an insurance policy must
provide that the insurance carrier will pay a judgment against the company, the renter, or a
person driving the car with the consent of the renter (625 ILCS 5/9-105 (West 2006)). Thus,
while a company may not evade its statutory financial responsibility obligations through contract
(Garrott, 238 Ill. App. 3d at 238), the Code does not extend a rental car company's financial
obligations to all drivers of its vehicles. In this case, Enterprise stated in its answer to plaintiff's
citation to discover assets that it was not required to pay any portion of the default judgment
because Artley may have stolen the vehicle at issue but then expressly waived that claim in its
response to plaintiff's petition for a turnover order. Also, there is no evidence in the record
showing that the car was stolen and, as such, the possible theft of the vehicle by Artley is not at
issue.
¶ 36 CONCLUSION
¶ 37 For the foregoing reasons, we reverse the order limiting the turnover amount to $25,000
and remand the matter to the circuit court for the entry of a turnover order in favor of plaintiff in
an amount sufficient to cover the entire default judgment entered against Artley. Having
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concluded that Enterprise is required by the Code to pay the entire default judgment, we need not
consider plaintiff's additional claim that Enterprise is barred by the doctrine of judicial estoppel
from claiming that it is only required to pay $25,000. We also note that while we reverse the
order of the circuit court, we are not criticizing the circuit court's decision, as it was required to
follow the Fellhauer decision at the time it entered its order. Delgado v. Board of Election
Commissioners, 224 Ill. 2d 481, 488 (2007).
¶ 38 Reversed and remanded.
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