Vicarious Liability Dispute Gets Vicious

DaimlerChrysler Services joined GMAC and Ford Credit in taking severe action in four states that regard lessors as liable for damages and injuries involving leased vehicles.

DC's financial arm says its fees would rise to $1,000 per lease, unless legislatures in Connecticut, Kentucky, New York and Rhode Island drop so-call unlimited “vicarious liability” laws.

GMAC, Ford Credit and American Honda Finance Corp. earlier gave the states notice they would cease leasing new vehicles if the laws remained on the books.

The issue stems from a Rhode Island civil awarding $26 million in damages against J.P. Morgan Chase & Company in connection with an accident involving a leased vehicle.

Juergen Walker, president and CEO of DC Services North America, declares that the acquisition fee raises are “not a viable long-term business solution” to the problem of vicarious liability. “State legislation in these four states will need to change.”

DC Services' $1,000 lease fee is about double that of other auto financial institutions. “Given this hostile leasing environment, American Honda Finance Corp. simply cannot offer leases in these states until the laws are changed,” says Steve Smith, senior vice president-American Honda Finance.