NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4520-18T2
PETER FONTANA and KATHY FONTANA,
Plaintiffs-Respondents,
v.
EXECUTIVE CARS, NEW YORK BLACK CAR.COM, ROYAL DISPATCH SERVICES, INC., KING LEE CHEUNG and TWIN LIGHTS INSURANCE COMPANY, INC.,
Defendants,
and
GLOBAL LIBERTY INSURANCE COMPANY OF NEW YORK,
Defendant-Appellant. ________________________________
Argued telephonically April 20, 2020 – Decided July 15, 2020
Before Judges Ostrer, Vernoia and Susswein. On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1359-11.
Vincent F. Gerbino argued the cause for appellant (Bruno Gerbino & Soriano, LLP, attorneys; Matthew J. Smith, on the briefs).
Robert A. Jones argued the cause for respondents.
PER CURIAM
In our initial decision in this matter, we concluded defendant King Lee
Cheung is not an insured under a commercial liability insurance policy issued
by defendant Global Liberty Insurance Company of New York (Global) to
defendant Royal Dispatch Services, Inc. (Royal). 1 Fontana v. Executive Cars,
No. A-3151-15 (App. Div. Nov. 8, 2017) (slip op. at 23). We found, however,
there is coverage under the policy for Cheung's negligence "if it is determined
that Royal, as the insured, is vicariously liable for Cheung's putative negligence
that resulted in plaintiffs' [Peter Fontana and Kathy Fontana] alleged injuries."
Id. at 22. We reversed orders finding Cheung was an insured under the policy
and remanded for the court to determine if Royal is vicariously liable for
Cheung's alleged negligence. Id. at 23-24.
1 Royal is also referred to as Executive Cars and New York Black Car.com. We refer to the entities collectively as Royal. A-4520-18T2 2 Global appeals from a May 20, 2019 order, entered after the bench trial
following our remand, in which the court found: Royal is vicariously liable for
defendant Cheung's negligence in causing plaintiff's alleged injuries; Royal is
responsible to pay the sums due to plaintiffs in accordance with a February 10,
2016 consent judgment; and the consent judgment remains in full force and
effect, and plaintiffs are entitled to enforce its terms. Having considered the
record and the arguments presented by the parties in light of the applicable law,
we affirm.
I.
Royal operates a transportation services business that its president
describes as a "black car service" and "corporate transportation by Town Cars
car service." It enters into franchise agreements with drivers of passenger
vehicles and dispatches the drivers to provide transportation services to its
customers. Cheung was a party to a franchise agreement with Royal, and Royal
dispatched Cheung to pick up and transport Royal's customers.
On February 24, 2010, Royal dispatched Cheung to transport plaintiff
Peter Fontana (Fontana), an employee of one of Royal's corporate clients,
American International Group, Inc. (AIG), from New York City to Fontana's
A-4520-18T2 3 New Jersey home. Cheung picked up Fontana and, during the trip, was involved
in a single vehicle accident in which Fontana was injured.
Fontana and his wife, plaintiff Kathy Fontana, filed a personal injury
action against Cheung, individually and in his capacity "as the agent, servant,
[or] employee of" Royal. The complaint was later amended to include a claim
for a declaratory judgment that a commercial liability policy issued by Global
to Royal provided coverage for Cheung's negligence.
Following a bench trial on the declaratory judgment claim, the court
entered orders finding Cheung was entitled to liability coverage and
indemnification under the Global policy. The orders were based on the court's
determination Cheung was an insured under the policy because Royal and
Global reasonably expected such coverage was provided under the policy's
terms.
Following entry of the court's orders on the coverage issue, plaintiffs,
Global, and Cheung reached a settlement that was incorporated in the February
10, 2016 consent judgment. In pertinent part, the consent judgment states the
parties "agreed to adjudged damages on consent in the total amount of $750,000
for [p]laintiffs['] personal injury claim against . . . Cheung, arising out of the
February 24, 2010 automobile loss." The consent judgment further provided
A-4520-18T2 4 that $100,000 of the judgment would be paid by Cheung's personal automobile
insurance carrier, and that $650,000 would be paid by Global. The consent
judgment also provided, however, that Global intended to appeal from the
court's orders finding it was required to provide coverage to Cheung , and the
judgment stated that if Global prevailed on its appeal from those orders,
plaintiffs would not receive any monies from Global under the settlement and
plaintiffs would not attempt to enforce the judgment against Cheung's personal
assets.
Global appealed from the court's orders finding Cheung had coverage
under its policy. The issue presented on appeal was whether the court correctly
determined Cheung was entitled to coverage based on its finding he was an
insured under the policy. As noted, we determined the court erred in finding
Cheung was an insured under the policy, but we remanded for the court to
determine if there is coverage under the policy because Royal, which is the
named insured under the policy, is vicariously liable for Cheung's negligence.
See Fontana, slip op. at 23-24. The consent order was included in the record on
appeal, but none of the parties made any arguments based upon it. Instead, all
of the arguments presented focused on whether there was coverage under the
policy for Cheung's negligence.
A-4520-18T2 5 The Remand Court Addresses Global's Claims Under The Consent Judgment
Before the remand court, Global argued that it prevailed on appeal and, as
a result, it had no obligation under the consent judgment to pay the otherwise
agreed upon $650,000 to plaintiffs. 2 Global further contended that because it
prevailed on appeal, the settlement reflected in the consent judgment rendered
it unnecessary to determine the issue for which the remand was ordered; whether
Royal was vicariously liable for Cheung's negligence.
In a written opinion dated March 23, 2018, the court rejected Global's
contention that it "prevailed on the appeal and this action is concluded by the
terms of the consent judgment." The court found Global's position was
"inconsistent with the plain language of both the consent judgment and [our]
remand" order. The court further found Royal was vicariously liable for
Cheung's negligence.
2 Based on colloquy during subsequent proceedings, it appears the court's March 23, 2018 letter opinion was issued as the result of issues raised during a case management conference following our remand. The record includes neither a transcript of the case management conference nor any motion papers supporting Global's apparent request that the court determine the consent order barred further proceedings on remand. A-4520-18T2 6 The record on appeal does not include an order entered as a result of the
court's March 23, 2018 opinion. We discern, however, that subsequent to
issuance of its opinion, the court entered an order dismissing plaintiffs'
complaint. That is because on October 15, 2018, a different judge entered an
order reinstating plaintiffs' complaint, noting it had been "dismissed without
prejudice."3
The October 15, 2018 order included two findings. First, it adopted as
"valid" the findings in the court's March 23, 2018 opinion rejecting Global's
claim that it prevailed on the initial appeal under the terms of the consent order,
and that, because it prevailed, further litigation over whether the policy provided
coverage for Cheung's negligence based on Royal's vicarious liability for his
actions was barred under the consent judgment. Second, the October 15, 2018
order vacated the court's finding in the March 23, 2018 opinion that Royal was
vicariously liable for Cheung's negligence; instead, the order scheduled a bench
trial on the issues of negligence and vicarious liability. 4
3 By the time the October 15, 2018 order was entered, the judge who issued the March 23, 2018 opinion had retired. 4 The order noted the parties consented to a bench trial. A-4520-18T2 7 The Remand Trial
At the bench trial, plaintiffs presented Cheung and former Royal employee
Amnon Oberlander as witnesses, and plaintiffs' counsel also read from
deposition and prior trial testimony of Fontana and Royal's president, Turdik
Ozen. Global did not present any witnesses. Royal's counsel read a portion of
Ozen's prior testimony into the record. The parties also introduced various
documents into evidence.
The evidence showed that in 2010, Royal, doing business as Executive
Cars Service, was party to a "Service Agreement" with AIG pursuant to which
Royal agreed to provide "car service" to AIG. In pertinent part, the agreement
required that Royal's "drivers . . . carry automobile liability insurance," and that
Royal maintain a "general liability policy with coverage of $2,000,000." Royal
represented that it would "not subcontract [its services] to any other black car
company without the express written consent of AIG," but Royal reserved the
right to subcontract work "to its own affiliates." Royal also represented that its
"drivers will ensure that AIG riders initial all necessary information for billing
purposes," and that in the event one of Royal's drivers falsified a billing voucher
to AIG, it would "at a minimum" remove the driver from servicing the AIG
A-4520-18T2 8 account, and, "[d]epending upon the circumstances, [the driver] may be
dismissed from" Royal.
On February 24, 2010, Fontana was employed by AIG in its New York
offices. AIG had a policy that if Fontana worked beyond 9:00 p.m., AIG would
pay for a car service to take Fontana home. Fontana understood AIG "had an
exclusive contract with [Royal] to provide cars and drivers to [AIG's] employees
to be driven home," and AIG provided him Royal's phone number and instructed
he could call only that number to arrange for car service. Prior to February 24,
2010, Fontana called Royal to obtain car service from his office in New York to
his home in New Jersey. On that date, he called Royal for a ride home, and the
person answered the phone by stating, "Executive Cars." The person who
answered the phone made the arrangements for the car service and gave Fontana
the number of the car that would provide the requested service.
Fontana understood all the drivers who drove him home as the result of
his calls to Royal were employees of the company. He was never advised
otherwise by any of the drivers. On February 24, 2010, Royal sent Cheung to
pick up Fontana in New York and drive Fontana to his New Jersey home.
When Cheung arrived to pick up Fontana, Cheung told Fontana he was
from Executive Cars. Cheung's car exhibited a sign stating "Executive Cars"
A-4520-18T2 9 and the number Royal assigned to his vehicle. The number matched the one
provided to Fontana when he arranged for the service with Royal. On the rear
of Cheung's car, he had a second sign with "Executive Cars" and his assigned
number printed on it. Royal provided the signs to Cheung and required that he
display them.
When Fontana was in Cheung's vehicle, he completed a voucher for the
service that, in part, indicated he was using a car service provided by Executive
Cars. On the ride that followed, Cheung lost control of the car and was involved
in a single-vehicle collision that caused personal injuries to Fontana.
Cheung testified he began his association with Royal in 2001 when he
responded to an ad in a Chinese-language newspaper. He was directed to Royal's
offices where he was presented with an eighty to a one-hundred-page agreement
that he signed without reading. The agreement is entitled "Franchise
Agreement," and it was admitted in evidence. Cheung testified he was never
given a copy of the agreement he signed.
Cheung explained Royal subsequently trained him how to greet Royal's
customers and how to use a computer he was required to buy from Royal to
obtain the car service assignments. In part, Royal trained Cheung to tell
customers, "something like, I'm from Executive Cars."
A-4520-18T2 10 Royal directed the location and time a customer was picked up. If a
customer asked, Cheung said he was from "Executive Cars." If during a service
his car broke down, Royal sent another driver in another car to pick up the
passenger.
Cheung also explained that in 2010, he worked twenty to thirty hours per
week for Royal, and that Royal did not permit him to provide services for any
other company. Cheung was permitted to select the days and times he chose to
work, but Royal required Cheung work one 4:00 a.m. to 9:00 a.m. shift each
week. If Cheung did not work the shift, he was penalized by Royal.
Cheung owned his vehicle and paid all the expenses related to its
operation, including maintenance, licensing, insurance, and fuel costs. Cheung
testified Royal had numerous rules with which he was required to comply. For
example, Royal required he keep his car washed, be on time for all pick-ups,
and be polite to Royal's customers. Royal also determined how long Cheung
could use a car to provide service to Royal's customers, and Royal could stop
making assignments if Cheung did not get a new car when Royal required him
to do so. Cheung further explained Royal inspected his car and required he wear
a specified uniform.
A-4520-18T2 11 Cheung received car service assignments from Royal. Cheung was
required to have the customers complete vouchers provided by Royal for the
service provided, and Cheung delivered the vouchers to Royal. The rates
charged for the services were not determined by Cheung but instead were
established between Royal and its customers. Cheung was barred from charging
a different rate unless the route changed after Royal made the service
assignment. Royal collected payments from its customers for the services
provided by Cheung; deducted agreed upon fees, payments, and other costs; and
paid Cheung the balance. Royal did not withhold any federal or state tax or
other deductions from the sums paid to Cheung, and it issued Cheung a 1099
form each year.
Amnon Oberlander testified he was employed by Royal from 1999 to 2017
as its franchisee liaison. He explained Cheung was a Royal franchisee who was
party to the Franchise Agreement. He testified the franchisees drove for
"themselves," but he acknowledged they did not find customers on their own
and drove customers assigned by Royal.
He also acknowledged the Franchise Agreement states there is a
franchisee rule book the franchisees are bound to follow, but he denied Royal
maintained a rule book. He explained there is a committee or board of Royal's
A-4520-18T2 12 franchisees that promulgates the rules for Royal's franchisees and that the board
enforced the rules against Royal's franchisees. He acknowledged the rule book
begins in bold letters with the phrase, WELCOME TO ROYAL DISPATCH
SERVICES, INC. (D/B/A EXECUTIVE CARS), but he asserted Royal has no
control over the rules. He testified, however, that the Franchise Agreement
nonetheless requires that each franchisee comply with the rule book's
requirements.
Oberlander also explained some of the rules in the rule book the
franchisees are bound by the Franchise Agreement to follow. Franchisees must:
follow all instructions given by Royal's dispatchers and if the instructions are
incomplete must get additional instructions from the dispatcher; follow the route
in the navigation system for all pick-ups; and obtain directions from Royal's
dispatcher for pick-ups.
In addition to the requirements of the rules addressed by Oberlander in his
testimony, the rule book to which Cheung was bound under the Franchise
Agreement also requires in part that he: "[a]void arguments or fights with other
drivers"; "get out of [his] car . . . if [the passenger has] any boxes or luggage;"
remain parked outside of "the drop-off point [at night] until [the] passenger is
safely in the house, office or building," and, where a passenger is dropped off at
A-4520-18T2 13 a parking lot at night, "wait . . . in [the] parking lot until he [or she] is in his [or
her] car and gets it started." The rules impose further requirements including,
but not limited to, the following; a franchisee's car must have a "telephone,
reading light, AM/FM radio and cassette, all window and door locks, air-
conditioning and heating, shocks and springs, front lights, tail lights, signals and
flashers" as well as "a pen and a small clipboard for the passenger to use when
signing [Royal's] vouchers."
Moreover, the rules state that an "Executive Cars" magnetic sign "must
always be in [the] vehicle" and must be "placed on the back panel of the vehicle's
trunk and must be visible" when the franchisee is available for assignments "or
on any job assignment." The company's "license plate frames" must "indicat[e]
the compan[y] name[], the [t]elephone number and [the company's] web
address," and they "must be placed on the [vehicle's] front and . . . rear" license
plates.
The rules further provide that if a franchisee "bail[s] out" of a car service
assignment due to traffic conditions, the dispatcher will attempt to get another
franchisee to "cover the call, but if [the dispatcher] is unable to find another unit
within a reasonable [estimated time of arrival], the original [franchisee] will still
be responsible for the job." If the franchisee does not satisfy his or her
A-4520-18T2 14 responsibility for the job, he or she is sanctioned by not receiving any
assignments for three hours. In addition, the rules also provide that franchisees
will be directed on their computers to "check in" at designated locations when
providing car service at airports.
The rules contain many other requirements governing the manner in which
franchisees are required to provide their services to Royal's customers .
Oberlander explained the Franchise Agreement requires a franchisee's
compliance with all the rules in the rule book, including those detailing the
manner in which the franchisee's cars were to be maintained and those requiring
the franchisees submit to random drug and alcohol testing. He emphasized the
rule book was created by the franchisee committee, but he agreed that any
violation of the rules constituted a breach of the Franchise Agreement.
Oberlander explained that when a Royal customer called to book a car
service, the dispatcher provided the customer with the number of the car
assigned by Royal. He testified the cars displayed the numbers and "Executive
Cars" signage so the customer could identify the car when it arrived for a pick -
up. Oberlander testified that placing the assigned number and company signage
on the vehicles was for the purpose of: achieving the result of getting the
customer from the pick-up to the drop-off points; permitting customers like
A-4520-18T2 15 Fontana to identify the car they hired from Royal; protecting Royal's reputation;
and contributing to Royal getting additional business from their customers.
According to Oberlander, Royal did not advise the customers that the drivers of
the vehicles were independent contractors, but Royal was in the business of
providing rides to its customers and it could not do it without the drivers.
The Court's Decision
Following the presentation of the evidence, the court heard summations
and issued a lengthy and detailed opinion from the bench. The court noted at
the outset that the prior judge's March 23, 2018 letter opinion, as adopted in the
October 15, 2018 order, determined Global was obligated to pay Cheung under
the consent judgment if it was determined Royal is entitled to coverage for
Cheung's negligence based on vicarious liability. The court also noted that as a
result of the entry of the consent judgment, the case was dismissed as to Royal
without prejudice, but had been revived against Royal following our remand.
Royal therefore participated in the remand trial.
The court found Royal's business involved obtaining contracts from
businesses pursuant to which Royal provided "rides" to the businesses'
employees, and that the franchisees provided the transportation under the
contracts. The court noted the parties recognized that whether Royal was
A-4520-18T2 16 vicariously liable for Cheung's negligence was dependent on whether there was
a master-servant relationship between Royal and Cheung. The court found that
determination required application of the control test explained by our Supreme
Court in Wright v. State, 169 N.J. 422 (2001), and a consideration of the factors
for determining the existence of a master-servant relationship under Restatement
of Agency § 220 (1958).
The court observed that Global and Royal claimed the Franchise
Agreement established Royal did not exercise sufficient control over Cheung to
support a finding it had a master-servant relationship with Cheung. The court,
however, found that although the Franchise Agreement attempts to portray
Cheung as an independent contractor, Royal actually exercised control over
almost all aspects, manners, and means of the service Cheung provided his
passengers.
The court noted that Cheung owned his own vehicle and was responsible
for paying all the costs associated with its operation and maintenance, and that
he was generally able to determine the days and times he worked. The court
found Royal exercised control over Cheung's provision of services to his
passengers in his vehicle by: designating the kind of car with which Cheung
was required to transport his passengers; requiring the cars be only of a certain
A-4520-18T2 17 age; performing inspections on Cheung's vehicle; defining the insurance Cheung
was required to maintain and the place from which he purchased it; training
Cheung as to the manner in which he was required to interact with his
passengers; imposing punishment if Cheung refused an assignment from Royal;
requiring Cheung work a 4:00 a.m. to 9:00 am shift each week and penalizing
him if he refused the assignment; requiring Cheung follow the route on the GPS
to transport his passengers; requiring Cheung communicate with Royal if the
passenger wanted Cheung to take a route different than the one on the GPS;
retaining the right to require that Cheung replace his vehicle; and requiring that
Cheung follow instructions from Royal's dispatcher.
The court further found Royal controlled the manner in which Cheung
provided services to his passengers through its adoption of the rule book, which
imposed innumerable standards and requirements on Cheung that he was
required to follow in providing service to his passengers. The court noted
Cheung was not free to "make his own rules" as to how he provided his services
to his passengers; instead, Cheung was contractually bound to Royal to follow
each and every rule in the rule book.
The court found Cheung's testimony to be credible, and it viewed
Oberlander's testimony with "great suspicion" due to the manner in which he
A-4520-18T2 18 responded to the questions and his apparent agenda to convince the court Cheung
did not have a master-servant relationship with Royal. The court accepted
Cheung's testimony that Royal prohibited him from using his vehicle "to work
or pick up passengers on his own" or charge "any rate different from the rate
that had been contracted" between the passenger and Royal. The court noted
that Cheung did not set the rate for the services he provided to his passengers;
all the rates were established for him by Royal.
The court further found that under Royal's contract with AIG, Royal was
obligated to provide a vehicle and driver to transport the passenger, and that
Royal did so for Fontana by sending Cheung "to drive the vehicle on behalf of
Royal or Executive" Cars. Moreover, the court found Royal required that
Cheung identify himself as being from Executive Cars; "represent that he was
driving on behalf of Executive Cars"; and exhibit "a sign in his car that said he
was Executive Cars."
The court concluded Royal "had complete control, not only [of how to]
drive here to there; but, how to drive from []here to there, what to wear, what
kind of car that [the franchisee] needed to have, how [the franchisee] needed to
dress, even down to the details of what [the franchisee] could say . . ." to the
A-4520-18T2 19 passengers. The court also found it did not "know how much more control . . .
there could be."
Beyond the issue of control, the court found Cheung performed a service
identical to that which Royal's business supplied. As its president explained,
Royal was in the black car service business, and Cheung drove a black car and
provided that service. Cheung did not have any other profession, and "he only
could do it in the manner in which [Royal] described it and the businesses,
themselves, are so merged and [enmeshed], that they could[] [not] be . . .
separate."
The court found that Cheung's services did not require any particularly
special skill, and that Cheung provided all of the instrumentalities required to
provide the service. The court noted, however, that Royal required Cheung use
only certain approved vehicles, and that Royal required Cheung use a
proprietary computer he purchased from Royal to accept his assignments and
perform his duties.
The court further determined the length of time anticipated for the
performance of Cheung's services supports a finding of a master-servant
relationship because the performance of all his services was intertwined with
Royal and under Royal's control. The court, however, found the method of
A-4520-18T2 20 payment to Cheung "was set up for the purposes of being independent" and
supported Global's claim Cheung was an independent contractor.
The court also determined Royal's contract with AIG, pursuant to which
Royal assigned Cheung to transport Fontana, supports a finding Cheung was
Royal's servant. The court noted the agreement indicated Royal would provide
its "drivers" to provide the car service, and it never mentioned franchisees or
independent contractors.
In sum, after weighing all the factors, the court determined that under the
control test, Cheung was in a master-servant relationship with Royal when he
transported Fontana on February 24, 2010. The court concluded Royal was
therefore vicariously liable for Cheung's negligence when the single car
collision that caused Fontana's injuries occurred.
The court also determined Royal was vicariously liable for Cheung's
negligence under the doctrine of apparent authority. The court found Fontana
called the number for Executive Cars; was told he called Executive Cars; and
booked the car service with Executive Cars. He was told to look for a car bearing
an "Executive Cars" sign with a particular number, and Royal sent Cheung in a
car with that sign and number to provide the requested service. The court found
A-4520-18T2 21 Fontana would not have entered Cheung's car without a reasonable belief that
he was being driven by an Executive Cars employee or agent.
The court found Royal took every action possible to communicate to its
customers that the cars and drivers it dispatched were its employees or agents ,
including the manner in which the requests for service were received and
booked, the signage on the cars, the voucher for payment required and provided,
and the requirement that the drivers, such as Cheung, identify themselves as
being from Executive Cars. Thus, the court determined there was sufficient
evidence supporting a reasonable inference that Fontana entered the vehicle
reasonably relying on Cheung's status as Royal's agent and employee.
The court entered an order finding Royal vicariously liable for Cheung's
negligence, and further finding Global's policy provided coverage for Cheung's
negligence. The order also provided that the consent judgment remains in full
force and effect and, subject to a stay pending the exhaustion of any appellate
remedies sought by Global, plaintiffs could take appropriate action to enforce
the consent judgment. This appeal followed.
II.
Our standard of review from the trial court's findings following a bench
trial is limited. We defer to "those findings of the [court] which are substantially
A-4520-18T2 22 influenced by [its] opportunity to hear and see the witnesses and to have the
'feel' of the case, which a reviewing court cannot enjoy." State v. Locurto, 157
N.J. 463, 471 (1999) (quoting State v. Johnson, 42 N.J. 146, 161 (1964)). We
will "not disturb the factual findings and legal conclusions of the trial [court]
unless we are convinced that they are so manifestly unsupported by or
inconsistent with the competent, relevant[,] and reasonably credible evidence as
to offend the interests of justice[.]" Seidman v. Clifton Sav. Bank, S.L.A., 205
N.J. 150, 169 (2011) (quoting In re Trust Created by Agreement Dated
December 20, 1961, ex. rel. Johnson, 194 N.J. 276, 284 (2008)). We owe no
deference to the court's interpretation of the law or its application of the law to
the facts. Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366,
378 (1995).
Royal argues the court erred in finding it is vicariously liable for Cheung's
negligence under the doctrine of respondeat superior. More particularly, Royal
argues the court misapplied the control test for determining liability under the
doctrine of respondeat superior to the facts established by the trial evidence.
Royal also contends the court erred by finding Royal vicariously liable under
the doctrine of apparent authority because there was no evidence Fontana
justifiably relied on any representation by Royal that Cheung was its agent.
A-4520-18T2 23 Royal last contends the appeal should be dismissed because it prevailed in the
initial appeal under the terms of the consent judgment. We consider Royal's
arguments in turn.
A.
We summarize the legal principles defining vicarious liability based on
the doctrine of respondeat superior. "Ordinarily, an employer that hires an
independent contractor is not liable for the negligent acts of the contractor in the
performance of the contract." Bahrle v. Exxon Corp., 145 N.J. 144, 156 (1996).
However, "[t]here is perhaps no doctrine more firmly imbedded in the law than
the principle that liability follows tortious wrongdoing and that employers or
principals, individual or corporate, are responsible for that wrongdoing when
committed by agents and employees acting within the scope of the employment."
McAndrew v. Mularchuk, 33 N.J. 172, 190 (1960). "The responsibility of the
master or principal for the negligent acts of a servant or agent, committed while
performing his [or her] delegated tasks," "creates an incentive to be careful in
the selection, instruction[,] and supervision of such persons[,]" and "the master
is better able to bear the burden of the losses resulting from such tortious acts
by absorbing them as an incident of the operation of his enterprise." Id. at 191-
92.
A-4520-18T2 24 To establish liability under the doctrine of respondeat superior, a plaintiff
must prove: "(1) that a master-servant relationship existed and (2) that the
tortious act of the servant occurred within the scope of that employment." Carter
v. Reynolds, 175 N.J. 402, 409 (2003). The first prong of the standard is
centered on the relationship of the parties. 5 Ibid. If no master-servant
relationship exists, no further inquiry is necessary. Ibid.
"[C]ontrol by the master over the servant is the essence of the master -
servant relationship on which the doctrine of respondeat superior is based."
Wright, 169 N.J. at 436 (quoting N.J. Prop. Liab. Ins. Guar. Ass'n, 195 N.J.
Super. 4, 8 (App. Div. 1984)); see also Majestic Realty Assocs., Inc. v. Toti
Contracting Co., 30 N.J. 425, 430-31 (1959) (explaining one exception to the
"doctrine that ordinarily . . . a person engages a contractor, who conducts an
5 To find vicarious liability under the doctrine of respondeat superior where a master-servant relationship is established, a plaintiff must also prove the alleged tortious conduct took place within the scope of that relationship. See ibid. Royal challenges the court's finding a master-servant relationship existed between Cheung and Royal. It does not argue that, if such a relationship existed, plaintiff failed to prove Cheung's tortious conduct occurred with the scope of that relationship. See Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011) (holding that an issue not briefed on appeal is deemed waived); Jefferson Loan Co. v. Session, 397 N.J. Super. 520, 525 n.4 (App. Div. 2008) (same). We therefore limit our discussion of the court's finding Royal is vicariously liable for Cheung's negligence to whether the court correctly determined there was a master-servant relationship between Royal and Cheung.
A-4520-18T2 25 independent business, . . . is not liable for the negligent acts of the contractor in
the performance of the contract" is "where [the person] retains control of the
manner and means of the doing of the work which is the subject of the contract").
To distinguish employees from independent contractors, the control test "'is
grounded in the common law master-servant relationship'" and requires "the
factfinder consider[] the extent of the employer's right to control the work of the
employee." Estate of Kotsovska, ex rel. Kotsovska v. Liebman, 221 N.J. 568,
592 (2015) (quoting Lowe v. Zarghami, 158 N.J. 606, 615-16 (1999)).
To determine whether sufficient control is exercised to find a master-
servant relationship, a court is required to consider the following factors set forth
in the Restatement (Second) of Agency § 220:
(1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control.
(2) In determining whether one acting for another is a servant or an independent contractor, the following matters of facts, among others, are considered:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
A-4520-18T2 26 (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant; and
(j) whether the principal is or is not in business.
[Carter, 175 N.J. at 409-10 (quoting Restatement (Second) of Agency § 220 (Am. Law Inst. 1958)).]
Here, the court made detailed findings of fact addressing each of the
factors relevant to Royal's actual control over the performance of Cheung's
services and its right to control the performance of his services. On appeal,
Royal does not challenge the court's factual findings, and our independent
review of the record confirms the findings are supported by substantial evidence
the court found credible. We defer to, and accept, each of the judge's factual
A-4520-18T2 27 findings. See Seidman, 205 N.J. at 169. Included amongst those findings is the
court's determination that Royal exercised almost complete control over every
aspect of the services Cheung provided to his passengers.
Global's challenge to the court's order finding Royal is vicariously liable
for Cheung's negligence based on their master-servant relationship is founded
primarily on the contention that, in a series of cases cited by Global, other courts
presented with similar circumstances have found no master-servant relationship.
We do not find Global's argument persuasive because although the cases
cited by Global share some facts with those presented by the record here, this
case presents different and additional facts from those presented in the cited
cases. In addition, the trial court's findings otherwise support its determination
Royal not only exercised actual control, but it also had a contractual right to
exercise control, over the manner in which Cheung provided services to his
For example, Global relies on Abouzeid v. Grgas, where the court
determined the defendant company, which operated a "for hire vehicle base
station," was not vicariously liable for the negligence of its franchisee driver
who owned and operated the vehicle that was involved in an accident. 743
N.Y.S.2d 165, 166-67 (App. Div. 2002). The court briefly cited to the trial
A-4520-18T2 28 record, noting it showed the driver was dispatched by the company to provide
the service, the driver owned the vehicle and paid all expenses related to the
vehicle, and the driver set his own hours. Id. at 166.
The court found that record supported the trial court's determination the
plaintiff did not allege sufficient facts to support a finding of vicarious liability
based on a master-servant relationship between the company and the driver. Id.
at 166-67. Importantly, the court also recognized what Global ignores here; a
determination whether there is a master-servant relationship turns on the
particular facts of each case. Id. at 167.
Here, the court considered the totality of many more and different facts
following the trial than those before the court in Abouzeid, which was decided
on a summary judgment motion record. Id. at 166. Additionally, the record in
Abouzeid showed the drivers were free to reject dispatches, ibid., but Royal
exercised control over Cheung by penalizing him if he did so. In Abouzeid, the
drivers were free to work for other services, ibid., but the court found Royal
prohibited Cheung from doing so. In Abouzeid, the drivers retained cash
payments made directly to them, ibid., but the court found Royal controlled the
rates and payments for Cheung's services. Thus, the court's holding in Abouzeid
A-4520-18T2 29 is inapposite here because it was based on wholly different facts and
circumstances.
The other cases cited by Global are inapposite for the same reason. In the
court's single paragraph decision in Irrutia v. Terrero, it reversed a trial court
order finding the undisputed facts established a driver for a car service was an
employee. 642 N.Y.S.2d 328, 329 (App. Div. 1996). The court noted the
company's rules and regulations, which are not detailed or described, "related to
largely incidental matters and constituted the exercise . . . of only general
supervisory powers," and the court supported its determination the driver was
not an employee in part because the driver "retained their own fares." Ibid.
The court's holding in Irrutia is based on a limited record and very
different facts than those before the remand court here. As we have explained,
the court made detailed findings based on a robust record, and it concluded
Royal actually, and as a matter of fact, exercised control over the means and
manner of Cheung's provision of services. The Irrutia court had no similar
record before it.
Global last relies on Chaouni v. Ali, where the court found the trial court
should have dismissed a complaint against a car service company, finding it
could not be liable for the driver's conduct because the driver was an
A-4520-18T2 30 independent contractor and not an employee. 963 N.Y.S.2d 27, 28 (App. Div.
2013). The court found the driver owned and paid all the costs associated with
his vehicle, could select the days he worked, was free to accept or reject
assignments, and could work for other "livery base stations." Ibid.
Again, the facts supporting the court's decision are more limited and
different than those presented here. Cheung was not free to accept or reject
assignments; he was penalized by Royal for refusing an assignment. Cheung
was also not free to work for other services. In addition, the court in Chaouni
noted, as indicia of the driver's status as an independent contractor, that the
company did not impose hours of work or require that the driver wear a uniform,
ibid., but Royal mandated Cheung cover one early morning shift per week and
required he wear a uniform meeting its specifications.
In sum, the cases relied on by Global do not require a reversal of the trial
court's findings or legal conclusions. Instead, they undermine Global's position
because they establish that any finding of the control necessary to establish
vicarious liability based on a master-servant relationship requires an analysis of
the totality of the circumstances.
As we have explained, the trial court considered all the circumstances
present and found Royal exercised sufficient control over Cheung to support its
A-4520-18T2 31 determination they were in a master-servant relationship. We discern no basis
to reverse the court's detailed findings, and Global offers none. We affirm the
court's order finding Royal is vicariously liable for Cheung's negligence on that
basis.
B.
Global also contends the court erred by finding Royal is vicariously liable
for Cheung's negligence under the separate, but equally dispositive, doctrine of
apparent authority. We reject Global's contention because substantial credible
evidence supports the court's determination that Cheung drove Fontana with the
apparent authority he did so on Royal's behalf. Thus, even assuming the court
erred by finding there was a master-servant relationship between Royal and
Cheung, Royal is vicariously liable for Cheung's negligence under the doctrine
of apparent authority.
"Imputation of liability based on apparent authority prevents a principal
from 'choos[ing] to act through agents whom it has clothed with the trappings
of authority and then determin[ing] at a later time whether the consequences of
their acts offer an advantage.'" Estate of Cordero, ex rel. Cordero v. Christ
Hosp., 403 N.J. Super. 306, 312 (App. Div. 2008) (alterations in original)
(quoting Restatement (Third) of Agency, § 2.03 cmt. c (Am. Law Inst. 2006)).
A-4520-18T2 32 Thus, "a principal is vicariously liable for its agent's tortious conduct 'when
actions taken by [an] agent with apparent authority constitute the tort . . . . '"
Ibid. (quoting Restatement (Third) of Agency, § 7.08 (Am. Law Inst. 2006)).
Apparent authority "arises when a principal 'acts in such a manner as to
convey the impression to a third party that the agent has certain power which he
may or [may] not possess.'" LoBiondo v. O'Callaghan, 357 N.J. Super. 488, 497
(App. Div. 2003) (quoting Rodriguez v. Hudson Cty. Collision Co., 296 N.J.
Super. 213, 220 (App. Div. 1997)). The doctrine of '[a]pparent authority
imposes liability on the principal not as a result of an actual contractual
relationship, but because the principal's actions have misled a third-party into
believing that a relationship of authority in fact exists.'" Mercer v.
Weyerhaeuser Co., 324 N.J. Super. 290, 317 (App. Div. 1999): accord
LoBiondo, 357 N.J. Super. at 497. "[T]he doctrine generally presupposes the
existence of a principal-agent relationship, [but] such a relationship is not
necessary to its application." Ibid.
A claim of apparent authority requires a court determine "whether the
principal has by [its] voluntary act placed the agent in such a situation that a
person of ordinary prudence, conversant with business usages and the nature of
the particular business, is justified in presuming that such agent has authority t o
A-4520-18T2 33 perform the particular act in question . . . ." LoBiondo, 357 N.J. Super. at 497
(quoting Legge, Indus. v. Kushner Hebrew Acad., 333 N.J. Super. 537, 560
(App. Div. 2000)). A party relying on the apparent authority of an agent must
establish:
(1) that the appearance of authority has been created by the conduct of the alleged principal and it cannot be established alone and solely by proof of [conduct by] the supposed agent; (2) that a third party has relied on the agent's apparent authority to act for a principal; and (3) that the reliance was reasonable under the circumstances.
[AMB Prop., LP v. Penn Am. Ins. Co., 418 N.J. Super. 441, 454 (App. Div. 2011). (alteration in original) (quoting Mercer, 324 N.J. Super. at 318).]
"[A] court must examine the totality of the circumstances to determine whether"
the facts support a finding of apparent authority. Ibid. (quoting Sears Mortg.
Corp. v. Rose, 134 N.J. 326, 338 (1993)).
Global does not dispute plaintiffs met their burden of establishing Royal
created an appearance that Cheung acted on Royal's behalf, and the evidence
overwhelmingly supports the court's finding plaintiff proved that element of
their apparent authority claim. Indeed, Royal did all that it could to convey that
Cheung acted on Royal's behalf and with its authority.
A-4520-18T2 34 As its president explained, Royal was in the car service business and it
provided that service only through its employment of franchisees, such as
Cheung. When customers called Royal to schedule the service, they were not
informed it would be provided by an entity or person independent of Royal.
Instead, the customers were told that a car bearing an "Executive Cars" sign and
number would pick them up, and Royal's president explained the signs were also
employed to enhance Royal's branding and reputation. In other words, Royal
used the signage to not only let customers know that an Executive Cars's vehicle
was present with a driver to provide the requested service, but also to enhance
Royal's branding and business reputation. Royal intended that each car and
driver be identified as being provided by Executive Cars because, in that way,
it inured to Royal's business. The same message was conveyed by Royal's
requirements that Cheung identify himself as being from Executive Cars, and
that each customer complete an Executive Cars's voucher for the service.
Although Global concedes plaintiffs proved the appearance of Cheung's
authority to act on Royal's behalf was created by Royal's conduct, see LoBiondo,
357 N.J. Super. at 497, it contends there was no evidence showing Fontana
reasonably relied on Cheung's apparent authority to act on Royal's behalf. We
A-4520-18T2 35 find the argument is without sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E). We add only the following brief comments.
Fontana utilized Royal's car service on occasions prior to February 24,
2010, and he again called Royal to obtain a car service for that evening. In
response to his request for car service, Royal informed Fontana it would provide
a vehicle and driver, and it dispatched Cheung in a vehicle with two signs Royal
required he install identifying the vehicle as being from Executive Cars. The
signs, which included the vehicle number Royal provided to Fontana, identified
the vehicle as the one Royal informed Fontana it would send to provide the
requested car service. One purpose of the signs and Royal's provision of the
vehicle number to Fontana was to ensure he got into the precise vehicle Royal
dispatched to provide the car service. It can be reasonably inferred Fontana
entered Cheung's vehicle because it bore the signage and number Royal advised
him would identify the vehicle and driver providing the requested car service.
Thus, based solely on the information supplied by Royal, Fontana entered the
car driven by Cheung to obtain the service Royal said it would provide. In
addition, in accordance with Royal's requirements, Cheung identified himself to
Fontana as being from Executive Cars, and Cheung provided Fontana with a
voucher indicating the car service was provided by Executive Cars.
A-4520-18T2 36 In sum, every action taken by Royal to book Fontana's car service, and all
the requirements it imposed on Cheung, were for the purpose of convincing its
customers that Cheung was an Executive Cars's driver providing car service on
behalf of Executive Cars. Fontana requested the car service provided by
Executive Cars, and Royal sent Cheung, bearing Executive Cars's signage and
vouchers and announcing he was from Executive Cars's, to provide the service.
Those facts amply support the court's determination Fontana reasonably relied
on Cheung's apparent authority to act—that is, drive the vehicle—for Royal on
February 24, 2010. That is the precise service Fontana requested Royal provide.
The trial court therefore correctly determined plaintiffs proved Royal is
vicariously liable for Cheung's negligence under the doctrine of apparent
authority.
C.
Global also contends that in its March 23, 2018 written decision, the court
erred by finding Royal did not prevail on its initial appeal. Global asserts it
prevailed on the appeal because we rejected the trial court's reasoning supporting
its coverage determination and remanded for the court to determine if there was
coverage under the policy under a different theory—that there was coverage
because Royal is vicariously liable for Cheung's negligence. Global claims that,
A-4520-18T2 37 since it prevailed on the appeal, under the consent judgment it has no obligation
to pay plaintiffs the otherwise agreed upon $650,000, and the issue litigated in
accordance with our remand order—whether Royal is vicariously liable for
Cheung's negligence—is moot under the consent judgment's terms.
We again note that no issues related to the meaning of the consent
judgment were presented on the initial appeal. The appeal required only a
determination of whether the trial court, in the first instance, correctly
determined Cheung was entitled to coverage as an insured under the policy. In
addressing that issue, we were not presented with, or required to determine, any
issues related to the consent judgment or the impact, if any, of our decision on
the parties' agreement embodied in the consent judgment.
On remand, for the first time the court was presented with issues
concerning the meaning of the consent judgment. The court issued its March
23, 2018 opinion rejecting Global's claims the consent judgment precluded
further litigation of the coverage issue on remand and that Global prevailed on
the initial appeal under the terms of the consent judgment.
Following issuance of the court's March 23, 2018 opinion, and the
apparent dismissal of the action in the Law Division, a different judge entered
an October 15, 2018 order adopting the court's March 23, 2018 findings Global
A-4520-18T2 38 did not prevail on the appeal within the meaning of the consent judgment and
the consent judgment did not preclude a determination of whether Global was
required to provide coverage for Cheung's negligence because Royal was
vicariously liable for Cheung's actions.
In its brief on appeal, Global argues plaintiffs' coverage claim should be
dismissed pursuant to the consent judgment, or, in the alternative, Global should
not be bound by the consent judgment and is entitled to litigate the issue of
Cheung's negligence and damages. The arguments are premised on the assertion
Global prevailed on the initial appeal under the terms of the consent judgment.
Global's claim it prevailed on the initial appeal was addressed and rejected
in the court's March 23, 2018 opinion, as later adopted in the court's October 15,
2018 order. During the remand trial that followed entry of the order, there was
no evidence presented concerning the parties' entry into the consent judgment.
In pertinent part, the court's final May 20, 2019 order following the
remand trial provides only that the consent judgment remains in full force and
effect; that Global shall pay the sums due in accordance with its "terms,
conditions[,] and limitation"; and that plaintiffs shall take no action to enforce
the consent judgment's terms until Global's appeals have been exhausted. The
A-4520-18T2 39 trial court on remand did not provide any interpretation of the consent judgment
or make any findings as to its meaning.
Global's arguments concerning the meaning and interpretation of the
consent judgment are unrelated to the May 20, 2019 order. Global does not
claim the remand trial court erred by finding the consent judgment remains in
full force and effect or that it should not be enforced according to its terms. To
the contrary, Global relies on the validity and effectiveness of the consent
judgment for its argument that it is entitled to a dismissal of plaintiffs' coverage
claim and, if not, to litigate Cheung's negligence and the issue of damages
following the remand court's vicarious liability determination.
Global's challenge on appeal concerning the consent judgment is therefore
limited to the court's October 15, 2018 order adopting the findings concerning
the consent judgment in its March 23, 2018 opinion. We reject Global's
arguments concerning the October 15, 2018 order's findings concerning the
consent judgment for the following reasons.
First, Global does not appeal from the court's October 15, 2018 order. It
opted to appeal solely from the court's May 20, 2019 order. Rule 2:5-1(f)(3)
requires the notice of appeal "shall designate the judgment, decision, action or
rule, or part thereof appealed from," and Global's notice of appeal does not
A-4520-18T2 40 include the October 15, 2018 order. 6 "[I]t is only the judgment or orders
designated in the notice of appeal which are subject to the appeal process and
review," and, therefore, Global "has no right to our consideration" of his
arguments concerning the validity of the October 15, 2018 order. 1266
Apartment Corp. v. New Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div.
2004); see also Park Crest Cleaners, LLC v. A Plus Cleaners & Alterations,
Corp., 458 N.J. Super. 465, 472 (App. Div. 2019) (explaining "[a] party's failure
to seek review of cognizable trial court orders or determinations – by identifying
them in the notice of appeal – is largely fatal"). For that reason alone, we reject
Global's arguments challenging the court's determinations, embodied in the
October 15, 2018 order, concerning the meaning and effect of the consent
judgment.
Moreover, Global's arguments concerning the consent judgment appear to
be a reprise of those expressly rejected by the court in the October 15, 2018
order. Global argues the consent judgment should have been interpreted to
either preclude further litigation on the vicarious liability issue following our
remand or to allow Global to litigate the issues of Cheung's negligence and
6 Global's Case Information Statement on appeal also fails to identify the October 15, 2018 order as one from which its appeal is taken. A-4520-18T2 41 Fontana's damage following the remand. Those claims, however, were
expressly rejected in the court's March 23, 2018 opinion, which was adopted by
the court's October 15, 2018 order, because they were inconsistent with the
consent judgment's plain language.
Even if Global had chosen to appeal from the October 15, 2018 order, its
claims concerning its purported understanding of the agreement must be rejected
because they are unsupported by any evidence. See R. 1:6-6. Global's argument
on appeal is premised on claims it "consented to the entry of a judgment
following [the court's initial coverage decision] . . . upon the belief that
[p]laintiffs were waiving any other theories of liability other than [the initial
trial court's] determination Cheung was an insured under the policy"; the
"consent judgment did not anticipate a remand following the appeal"; and it
"never intended to waive [its] right" "to try the issue of Cheung's putative
negligence" "if the consent judgment did not constitute a waiver of claims on
vicarious liability theories." Those assertions are untethered to any competent
evidence in the record, see R. 1:6-6; see also Baldyga v. Oldman, 261 N.J. Super.
259, 265 (App. Div. 1993) (finding the purpose of Rule 1:6-6 is in part to
"eliminate the presentation of facts which are not of record by unsworn
statement[s] of counsel made in briefs and oral arguments"), and Global fails to
A-4520-18T2 42 include in the record on appeal the evidence, if any, presented to support its
arguments before the remand court, see, e.g., Cmty. Hosp. Grp., Inc. v. Blume
Goldfaden Berkowitz Donnelly Fried & Forte, PC, 381 N.J. Super. 119, 127
(App. Div. 2005) (explaining appellate courts are not "obliged to attempt review
of an issue when the relevant portions of the record are not included" in the
record on appeal). For those reasons, we would otherwise reject Global's
arguments concerning the consent judgment if it had opted to appeal from the
October 15, 2018 order in the first instance.
Affirmed.
A-4520-18T2 43