Henderson v. Professional Coatings Corp.

819 P.2d 84, 72 Haw. 387, 1991 Haw. LEXIS 54

• Court: Hawaii Supreme Court
• Decided: October 24, 1991
• Docket: NO. 14541
• Status: Published

Opinions

OPINION OF THE COURT BY

MOON, J.

Plaintiff Mary Kathleen Henderson (Henderson) appeals from an order of the Fifth Circuit Court granting summary judgment to defendants-appellees John Phelps (Phelps) and Professional Coatings Corp. (Professional Coatings). Henderson alleges that Phelps and Professional Coatings are liable for the acts of certain employees that led to an automobile accident in which Henderson was injured. Finding no liability under the theories of respondeat superior, negligent entrustment, or general negligence, we affirm.

I.

In this appeal, we must view the evidence in the light most favorable to Henderson to decide if there are any genuine issues of material fact and whether Professional Coatings and Phelps are entitled to summary judgment as a matter of law. Cuba v. Fernandez, 71 Haw. 627, 631, 801 P.2d 1208, 1211 (1990). In light of this standard of review, we have resolved any disputed facts in favor of Henderson. Based on this premise, the relevant facts are as follows:

On Sunday, May 3, 1987, at approximately 10:25 p.m., while traveling on Kuhio Highway near Princeville, Kauai, Henderson was injured when her automobile was stmck head-on by an automobile driven by defendant Jerald W. Hughes (Hughes). The automobile Hughes was driving was one of two that had been rented by his employer, Professional Coatings, for use by its employees. Hughes and other employees of Professional Coatings, including defendant James McLean (McLean), had flown from Oahu to Kauai with Phelps, a part-owner of Professional Coatings. The employees’ travel expenses were paid for by Phelps. They had flown to Kauai for a painting job that was to begin on Monday, May 4, which was scheduled to last approximately one month.

Before the flight to Kauai, Phelps and the employees drank beer. It was common for the crew to drink beer together. Phelps was aware that both Hughes and McLean were heavy drinkers. Phelps also believed that McLean drank 990 out of 1,000 days and considered McLean to be an alcoholic.

The crew arrived on Kauai on the day before the accident, and drove the rental cars to two condominium units in Poipu that Professional Coatings had rented for their use during the painting job. Several of the employees then used one of the rental cars, with Phelps’s permission, to drive to the north shore of Kauai. The employees took turns driving. While Hughes was driving the car, it had a flat tire and the car became muddy or sandy. Phelps later reprimanded Hughes for this.

On the day of the accident, Phelps gave permission to McLean to use one of the rental cars so McLean could visit a friend in Princeville. Phelps did not accompany the group on their outing. However, Phelps knew that Hughes and two other employees would be going with McLean and that they would be drinking and partying.

McLean drove to Hanalei Beach Park where Hughes met a woman, who accompanied the rest of the group to a barbecue party at the home of McLean’s friend in Princeville. Both McLean and Hughes, as well as the other workers, were drinking a great deal at the party. McLean became so inebriated that he could no longer drive, therefore, he decided to sleep at his friend’s home. At some point early in the evening, McLean, while intoxicated, entrusted Hughes, who was also intoxicated, with the car. Hughes and his female companion went to her home and spent several hours there. When Hughes left to return to the party, the collision with Henderson occurred.

Henderson’s amended complaint included the following allegations against Professional Coatings and Phelps:¹ Count Five - Professional Coatings is liable for the alleged negligent driving of its employee, Hughes, under the theory of respondeat superior, Count Six - Professional Coatings is liable for the alleged negligent entrustment of the vehicle by its employee, McLean, to Hughes, under the theory of respondeat superior, Count Seven - Professional Coatings was the name under which Phelps conducted business and Phelps is thus liable for the negligent acts of his employees in the same manner as Professional Coatings is (i.e., under the theory of respondeat superior)-, and Count Eight - Phelps is liable because he negligently entrusted the vehicle to McLean, which was the proximate cause of the accident.

II.

A. Respondeat Superior

Counts Five, Six, and Seven of the amended complaint are based upon the legal doctrine of respondeat superior. As explained in Kang v. Charles Pankow Associates, 5 Haw. App. 1, 7-8, 675 P.2d 803, 808, cert. granted, 67 Haw. 685, 744 P.2d 781, affd mem. (Haw. Apr. 12, 1984) (No. 8917): “Under this doctrine, ‘the employer is held accountable and liable for the negligent acts of its employees.’ However, recovery under the doctrine requires that the employee’s ‘act complained of must have been within the scope of the employment.’ ” (Citations omitted.) The Restatement (Second) of Agency § 228 (1958), delineates the scope of employment in pertinent part as follows:

(1) Conduct of a servant is within the scope of employment if, but only .if:

(a) it is of the kind he is employed to perform;

(b) it occurs substantially within the authorized time and space limits; [and]

(c) it is actuated, at least in part, by a purpose to serve the master, ....

(2) Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits, or too little actuated by a purpose to serve the master.

Kang, 5 Haw. App. at 8, 675 P.2d at 808.

In Kang, employer Charles Pankow Associates’ employee, Glen Pluid, was involved in an automobile accident on Kauai. Pluid, a resident of Oahu, was on Kauai to work on a construction project for Pankow in Princeville. Pluid’s transportation to Kauai was paid by Pankow and Pluid was given a per diem allowance to cover housing and food expenses. Pluid had shipped his own vehicle to Kauai to use during the construction job, which was for an indefinite period.

One evening, while Pluid was driving his car, he collided with plaintiffs’ vehicle. Plaintiffs claimed that Pankow was vicariously liable under the doctrine of respondeat superior. The circuit court granted summary judgment to Pankow, which the Intermediate Court of Appeals affirmed. The Court of Appeals noted the following:

Pluid was involved in the accident several hours after he had finished work for the day and left the job site. He was neither going to nor coming from the Princeville project work area. In fact, in the intervening period, Pluid had gone to the bank, had a few beers at a restaurant, and returned home. The accident occurred nowhere near the Princeville project. At the time of the accident, Pluid was driving to the Bullshed restaurant to meet friends for a purely social occasion. The Mazda was neither owned nor insured by Pankow. Pankow neither required Pluid to have a car for work purposes nor imposed any restrictions regarding its use.

Kang, 5 Haw. App. at 8-9, 675 P.2d at 808. Based on these facts, the Court of Appeals found that the “only reasonable conclusion” was that Pluid “was not acting within the scope of his employment at the time of the accident.” Id. at 9, 675 P.2d at 808.

Although generally “[wjhether the employee is acting within the scope of his employment is ‘a question of fact to be determined in the light of the evidence of each particular case[,]’... where the facts are susceptible of but one reasonable conclusion, the question may become a question of law for the court.” Kang, 5 Haw. App. at 8, 675 P.2d at 808 (quoting Nordmark v. Hagadone, 1 Haw. App. 487, 489, 620 P.2d 763, 765 (1980)) (other citation omitted). We find that the facts of the case before us lead only to the conclusion that neither Hughes nor McLean was acting within the scope of their respective employments when committing the allegedly negligent acts.

Henderson argues that Kang is inapplicable because of the Court of Appeals’ finding that “[t]he indefinite length of Pluid’s stay on Kauai and Pankow’s lack of even ‘potential’ control over him during the off work hours are crucial distinguishing factors.” 5 Haw. App. at 10, 675 P.2d at 809. Admittedly, the facts of the present case and of Kang differ. In this case, Hughes was driving a car rented by his employer. He was on Kauai for a limited time of one month and lived with his co-workers in a condominium supplied by his employer. Based on these facts, Henderson argues that Professional Coatings had potential control over its employees during off work hours. We do not agree. Instead, we find the following comments from Kang to be instructive: “the liability imposed upon the employer is not open-ended and unlimited. The employer’s liability is limited by the test of whether the employer’s risks are incident to his enterprise, ... or the ‘enterprise theory’ which finds liability if ‘the enterprise of the employer would have benefited by the context of the act of the employee but for the unfortunate injury.’ ” Kang, 5 Haw. App. at 10-11, 675 P.2d at 809 (citations omitted).

We conclude that here, as in Kang, the only reasonable result is that the employer is not vicariously liable for the acts of its employees. Neither the act of McLean in entrusting the car to Hughes so that he could spend time with a female acquaintance, nor the act of Hughes in driving the car to return to the party after spending time with the woman in question, was within the course and scope of their respective employments. The acts involved were not of the kind that Hughes or McLean were employed to perform, did not occur within authorized work hours, and were not actuated, even in part, by a purpose to serve their employer, Professional Coatings. There was no intention to act in the employer’s interest, nor was there any direct benefit to the employer. See Kang, 5 Haw. App. at 8, 675 P.2d at 808; Costa v. Able Distribs., Inc., 3 Haw. App. 486, 490, 653 P.2d 101, 105 (1982). We share the reservations expressed by the Court of Appeals concerning the broad application of the respondeat superior doctrine:

We do not believe that the respondeat superior doctrine is so pliant that where an employee is hired in one locality and relocated to another by his employer for an indefinite period of time, any act of the employee before, during, or after his working hours is one within the scope of his employment as long as he works for the employer in the latter locality.

Kang, 5 Haw. App. at 9, 675 P.2d at 809. In the present case, there is no evidence to support Henderson’s assertion that Professional Coatings had the potential, or even the desire, to control the behavior of its employees outside of work hours. The fact that the period of employment on Kauai was limited and that the employer rented the car involved in the accident does not alter the analysis under Kang. We hold that summary judgment was properly granted on Counts Five and Six, which were based on respondeat superior.

Under Count Seven, Phelps’s liability is contingent upon a finding of liability on the part of Professional Coatings. Since we have found that Professional Coatings is not liable, we hold that summary judgment was also properly granted as to this count.

B. Negligent Entrustment

Unlike the counts alleging vicarious liability, Count Eight of the amended complaint alleges:

COUNT EIGHT — CLAIM AGAINST JOHN PHELPS — NEGLIGENT ENTRUSTMENT

33. The vehicle involved driven by JERALD HUGHES and involved in the collision with Plaintiff had been entrusted by Defendant PHELPS to Defendant McLEAN.

34. Defendant PHELPS was negligent in entrusting ■ the vehicle to McLEAN.

35. Defendant PHELPS ’ negligence appproximately [sic] caused the damages to Plaintiff as aforesaid.

Under the common law action of negligent entrustment, “the plaintiff claims that the defendant was negligent in entrusting potentially dangerous automobiles to an incompetent driver. In order to recover under this theory there must be a showing that the facts giving rise to the alleged incompetency were known or should have been known to the entrustor at the time of the entrustment.” Abraham v. S.E. Onorato Garages, 50 Haw. 628, 633, 446 P.2d 821, 824 (1968) (citations omitted). Under the test recited in Onorato, the plaintiff must show that the entrustee’s alleged incompetent or irresponsible behavior was known or was foreseeable to the entrustor. “The test [of foreseeability] is whether ‘there is some probability of harm sufficiently serious that [a reasonable and prudent person] would take precautions to avoid it.’ ” Knodle v. Waikiki Gateway Hotel, Inc., 69 Haw. 376, 388, 742 P.2d 377, 385 (1987) (citations omitted). It “does not mean foreseeability of any harm whatsoever, and it is not sufficient that injury is merely possible.” 65 CJ.S. Negligence § 5(5) (1966) (footnotes omitted).

In Onorato, plaintiff sustained injuries in an accident while a passenger in a vehicle operated by Everett McCoy on December 18, 1964. The owner of the vehicle had left it with McCoy’s employer, Onorato, who was engaged in the business of storing vehicles at his garage in Honolulu. The accident occurred in the early morning hours prior to commencement of garage business. At the time of the accident, without Onorato’s permission, McCoy was operating the vehicle with several passengers, including the plaintiff. Plaintiff sued Onorato under several theories, including negligent promotion (of McCoy to the position of manager) and negligent entrustment.

McCoy was first employed by Onorato on July 13, 1961 as a parking attendant at Onorato’s San Francisco garage. On March 4, 1963, McCoy was promoted to manager. He was then transferred to Honolulu on October 12, 1964 to manage the Honolulu garage. Unknown to Onorato at the time of initial hire in 1961 were McCoy’s criminal convictions for joyriding as a juvenile, seventeen years earlier; assault and battery, four years earlier; and a hit and run of a parked vehicle, nine months earlier. During his employment with Onorato, McCoy’s license had been suspended at various times. Shortly before his transfer to Honolulu, he was convicted in California for driving while his license was suspended. There was some evidence that Onorato knew McCoy was without a valid license when he transferred to Honolulu; however, there was no evidence to show that Onorato knew the license had been suspended as opposed to merely lapsing. Nor was there evidence to indicate that Onorato knew that McCoy obtained a Hawaii license without advising the authorities that his California license was still suspended.

While McCoy was only authorized to drive stored vehicles for repairs or polishing when customers requested such services, the evidence showed that plaintiff had observed McCoy operate the vehicle in question on at least six separate occasions prior to the accident, one of which involved a drag race. Further, McCoy admitted driving the vehicle without permission at least two times prior to the accident. However, there was no evidence to show that Onorato knew of these unauthorized usages of the vehicle.

In affirming the grant of summary judgment in favor of the employer on the theories of negligent promotion and negligent entrustment, this court determined that in order to recover under either theory, there must be a showing that Onorato knew or should have known 1) that McCoy was incompetent to perform the job to which he was promoted, and 2) that McCoy was incompetent to drive an automobile. Relying on identical reasons in affirming the summary judgment on both theories, we held that there was no evidence to show that Onorato had any knowledge of facts which purportedly demonstrated McCoy’s incompetency to perform the job as manager or to drive. There apparently was some confusion as to whether Onorato knew of the hit and run conviction, which occurred prior to McCoy being hired. However, we explained:

Indeed, even if the hit and run conviction were known or imputed to the employer [Onorato], we are not convinced that this single accident occurring some four years prior to the promotion to manager would be sufficient to permit a jury to decide that a driver was incompetent to such a degree that his retention in service would be at the employer’s risk.

Onorato, 50 Haw. at 633, 446 P.2d at 825-26 (citation omitted). This court held as a matter of law that the evidence was insufficient to permit a jury to find Onorato negligent.

Negligent entrustment is a specific cause of action. This court has determined that “it is clear ‘that [the] negligent entrustment [of an automobile] is irrelevant unless the person to whom [it] is entrusted acts in a negligent manner (creates an unreasonable risk) and in fact inflicts injury as the result of such conduct.’ ” Hawaiian Ins. & Guar. Co. v. Chief Clerk of the First Circuit Court, 68 Haw. 336, 340-41, 713 P.2d 427, 431 (1986) (quoting Bankert v. Threshermen’s Mut. Ins. Co., 110 Wis. 2d 469, 476, 329 N.W.2d 150, 153 (1983) (other citation omitted and emphasis added). As explained by the Wisconsin Supreme Court in Bankert:

For liability to ensue, the negligence of the entruster and the entrustee must result in injury____“ ‘In such a case of mere permissive use, the liability of the [entruster] would rest.. . upon the combined negligence of the [entruster] and the [entrustee]; negligence of the [entruster] in intrusting the machine to an incompetent [entrustee], and [negligence] of the [entrustee] in its operation.’ ” Hence, it is the negligent use and operation of the vehicle by the entrustee which makes the negligent entrustment relevant at all.

Bankert, 329 N.W.2d at 153 (quoting Berry on Automobiles § 1040, at 410 (3d ed.) (emphasis added)).

In the present case, Henderson argues that summary judgment was improperly granted on this claim because a question of fact exists as to whether Phelps knew or should have known, based on McLean’s drinking habits, that McLean was incompetent to drive the vehicle or that McLean would permit Hughes to drive. Phelps’s knowledge of McLean’s drinking habits is irrelevant here because there can be no cause of action for negligent entrustment against Phelps where the entrustee, McLean, did not negligently operate the entrusted vehicle and cause Henderson’s injuries. Id.

However, under a general negligence theory, which Henderson appears to be asserting in her brief, a closer review of the facts of this case is required. Henderson takes issue with Phelps’s assertion that negligent entrustment “is ‘irrelevant’ here because McLean was not driving the car at the time of the collision.” Henderson submits that “Phelps clearly misinterprets the general law of negligence, however, which finds negligence where one in control of a car permits another to use it under circumstances where he knows or should know that such use may create an unreasonable risk of harm to others.'” (Emphasis added.) While we acknowledge that Henderson does not specifically argue that Count Eight, which is labeled “negligent entrustment,” may be interpreted as stating a theory under the “general law of negligence,” we will assume that it does for the purpose of the following discussion. See Island Holidays, Inc. v. Fitzgerald, 58 Haw. 552, 574 P.2d 884 (1978) (pleadings should not be construed technically when determining what the pleader is attempting to set forth but should be construed liberally so as to do substantial justice). Moreover, whether the theory asserted is labeled “negligent entrustment” or “general negligence,” we accept Henderson’s position that the issue is, like in Onorato, one of foreseeability, that is, whether Phelps knew or should have known at the time he loaned the vehicle to McLean, that McLean would act unreasonably by loaning the vehicle to persons such as Hughes, who in turn would negligently operate the vehicle and cause injury to others.

Ordinarily, issues of negligence, including foreseeability, are not susceptible to summary adjudication. However, where the facts are undisputed or are susceptible of only one reasonable interpretation or conclusion, the trial court is under a duty to pass upon the question of negligence as a matter of law. Pickering v. State, 57 Haw. 405, 557 P.2d 125 (1976).

Henderson asserts that Phelps was negligent because he loaned the vehicle to McLean “knowing that McLean was an alcoholic prone to act unreasonably.” However, Henderson offers no competent evidence to support this blatant assertion. Henderson’s untenable position is based on Phelps’s deposition testimony that he was aware that McLean was a heavy drinker, that Phelps believed McLean drank 990 out of 1,000 days, and that Phelps considered McLean to be an alcoholic. However, under Hawaii Rules of Civil Procedure (HRCP) 56(e), such “evidence” is insufficient to raise a genuine issue of material fact.

HRCP 56(e) provides (emphasis added):

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

A party opposing a motion for summary judgment cannot discharge his or her burden by alleging conclusions, “nor is he entitled to a trial on the basis of a hope that he can produce some evidence at that time.” 10A Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2727 (2d ed. 1983).

Characterizing a person as a “heavy drinker” and an “alcoholic” are merely conclusions or opinions of McLean’s drinking habits that are without any foundational evidence. Such conclusionary statements or opinions would be inadmissible in evidence because their “probative value is substantially outweighed by the danger of unfair prejudice... or misleading the jury____” Hawaii Rules of Evidence (HRE) 403. Nor would such lay opinions be “helpful to a clear understanding of the witnesses] testimony or the determination of a fact in issue” under HRE 701.

There is also a total lack of foundational evidence to support Phelps’s “statistics” that McLean drank 990 out of 1,000 days. More importantly, even if the foundation could be laid to show that Phelps’s statistics are accurate, there is simply no evidence as to what Phelps knew about McLean when he drank on those 990 days. There is a complete absence of any evidence that Phelps ever observed McLean in an intoxicated condition or that Phelps knew that McLean would become intoxicated to the point of acting negligently or recklessly whenever he drank.

While the label of “heavy drinker” or “alcoholic” may conjure images of a person who is untrustworthy, has a devil-may-care attitude, or exhibits reckless, unruly, intoxicated or drunken behavior, it is common knowledge that many who may be considered heavy drinkers or may suffer from alcoholism are law abiding citizens who hold responsible positions in society. Many own their own vehicles, which they operate in a safe manner. Many are financially self-supporting and are otherwise respected members of our community. It is also common knowledge that the judgment and behavior of heavy drinkers or alcoholics may vary depending on the person’s level of tolerance to alcohol, which may be dependent on such factors as body size, weight, and metabolism. The level of consumption may also vary when they drink at home, at work, or at social events. What may be heavy or excessive drinking to one may be de minimis to another. Thus, one cannot presume that “heavy drinker” or “alcoholic” equates to “unreasonable or irresponsible behavior.”

Here, our review is restricted to the evidence as presented in the record. There is no evidence that McLean was involved in any accidents, automobile or otherwise, during the two to three years that he was employed with Professional Coatings or Phelps prior to the accident. There is also no evidence that McLean was ever involved in any drunk driving incidents, or exhibited drunken or negligent behavior of any kind at any time, on or off the job, during the same time period. Under the state of the evidence as presented, we cannot and will not indulge in speculating as to what the evidence might have revealed had there been inquiry regarding Phelps’s knowledge of McLean’s behavior when he drank, his level of tolerance to alcohol, his driving or accident history, or any other facts which may have supported Henderson’s assertion that Phelps knew or should have known that McLean was “prone to act unreasonably” or irresponsibly.

In its analysis, the minority relies on Phelps’s conclusions and opinions as well as the fact that Phelps knew that all the workers drank together, that Hughes was a heavy drinker, that some of the workers, including Hughes and McLean were going to a party where there would be drinking, and that Hughes had in fact driven the car the day before the accident. The minority then concludes that at the time of entrustment, Phelps knew that McLean “was likely to become intoxicated.” Clearly, the minority’s use of the term “intoxicated,” without any evidence of the degree of intoxication, is as vague and ambiguous as “heavy drinker” or “alcoholic,” and is subject to the identical criticism expressed in our foregoing discussion. The minority’s determination that there exists a genuine issue of material fact in this case is premised on the acceptance of Phelps’s conclusions and opinions without any foundational evidence, which is in total disregard of the requirements of HRCP 56(e). The minority seemingly misunderstands the issue. The issue is not whether McLean was likely to become intoxicated. The issue is whether he was likely to become intoxicated to the point of acting unreasonably or irresponsibly.

Alan Van Etten (Diane D. Hasten of Damon, Key, Bocken, Leong & Kupchak, and Kenneth J. Kopicki of Seattle, Washington, with him on the brief) for plaintiff-appellant. John S. Nishimoto (Patricia T. Fujii with him on the brief of Libkuman, Ventura, Ayabe, Chong & Nishimoto) for defendantsappellees John Phelps and Professional Coatings Corp.

We find that the facts as presented in this case support only one reasonable conclusion, that is, it was not reasonably foreseeable to Phelps that allowing McLean to use the rental car would pose an unreasonable risk of harm. Pickering v. State, 57 Haw. 405, 557 P.2d 125 (1976). Thus, we hold that the trial court was correct in finding that the state of the evidence in this case was insufficient as a matter of law to raise any genuine issues of material fact.

III.

Based on the foregoing, we find no vicarious or direct liability against defendants-appellees John Phelps and Professional Coatings Corp., and affirm summary judgment in their favor.

1 The first two causes of action, against Hughes, allege negligence and gross negligence, respectively. The third and fourth causes of action respectively allege that McLean negligently entrusted the vehicle in question to Hughes, and that McLean was grossly negligent in doing so.