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In re Ferrer

Supreme Court of Colorado, En Banc

February 27, 2017

In Re Jessica Ferrer, Plaintiff
v.
Tesfamariam Okbamicael and Colorado Cab Company, L.L.C. Defendants

         Original Proceeding Pursuant to C.A.R. 21 Denver County District Court Case No. 14CV32745 Honorable Andrew P. McCallin, Judge.

          Attorneys for Plaintiff: Leventhal & Puga, P.C. Benjamin I. Sachs James E. Puga Alex Wilschke Bruce Braley Denver, Colorado.

          The Buxton Law Firm Tim Buxton Colorado Springs, Colorado.

          Attorneys for Defendants: Jaudon & Avery LLP David H. Yun Jared R. Ellis Denver, Colorado.

          Attorneys for Amici Curiae Colorado Defense Lawyers Association and Colorado Civil Justice League: Fennemore Craig, P.C. Troy Rackham Denver, Colorado.

          Taylor Anderson LLP Lee Mickus Denver, Colorado.

          Attorneys for Amicus Curiae Colorado Trial Lawyers Association: Cross & Bennett, L.L.C. Joseph F. Bennett Colorado Springs, Colorado.

          Attorneys for Amicus Curiae Copic Insurance Company: Davis Graham & Stubbs LLP Shannon Wells Stevenson Kyle W. Brenton Denver, Colorado.

          OPINION

          MÁRQUEZ JUSTICE.

         ¶1 In this original proceeding under C.A.R. 21, we address whether an employer's admission of vicarious liability for an employee's negligence in response to a plaintiff's complaint forecloses a plaintiff's additional, direct negligence claims against the employer.

         ¶2 Plaintiff Jessica Ferrer and her companion, Kathryn Winslow, were injured when a taxicab driven by Tesfamariam Okbamicael struck them as they crossed a street in Denver, Colorado. Okbamicael worked for Colorado Cab Company ("Yellow Cab"), which owned the taxicab. Ferrer[1] brought this suit against Okbamicael and Yellow Cab (collectively, "Defendants"), alleging that Okbamicael was negligent and that Yellow Cab was vicariously liable for his negligence under the doctrine of respondeat superior. Ferrer also alleged that Yellow Cab was liable for her injuries suffered in the collision under theories of direct negligence, namely, negligence as a common carrier and negligent entrustment, hiring, supervision, and training.

         ¶3 In an amended answer to the complaint, Yellow Cab admitted that Okbamicael was an employee acting within the course and scope of his employment with Yellow Cab at the time of the accident. Defendants then moved for partial judgment on the pleadings, seeking to dismiss Ferrer's direct negligence claims against Yellow Cab. The trial court granted Defendants' motion, applying the rule articulated in McHaffie v. Bunch, 891 S.W.2d 822 (Mo. 1995), that an employer's admission of vicarious liability for an employee's negligence bars a plaintiff's direct negligence claims against the employer.

         ¶4 Ferrer later moved to amend the complaint to add exemplary damages against both Okbamicael and Yellow Cab. The trial court denied Ferrer's motion because Ferrer failed to allege evidence of willful and wanton conduct by Okbamicael or by Yellow Cab sufficient to establish prima facie proof of a triable issue of exemplary damages, as required by section 13-21-102(1.5), C.R.S. (2016).

         ¶5 Ferrer petitioned for relief under C.A.R. 21, asking this court to vacate the trial court's orders dismissing her direct negligence claims against Yellow Cab and denying her motion to amend the complaint to add exemplary damages against Okbamicael and Yellow Cab. Ferrer likewise sought relief from the trial court's orders denying her motions for reconsideration.

         ¶6 We issued a rule to show cause to review the trial court's orders.[2] We now discharge the rule.

         I. Facts and Procedural History

         ¶7 At approximately 10:40 p.m. on July 15, 2011, Okbamicael struck Ferrer and Winslow with his taxicab as they crossed an intersection in lower downtown Denver. Ferrer sustained significant injuries as a result of the collision.

         ¶8 In July 2014, Ferrer filed suit against Okbamicael and Yellow Cab, seeking damages for the injuries she suffered in the collision. Ferrer asserted claims against Okbamicael for negligence and negligence per se. She also alleged that Yellow Cab was liable for Okbamicael's negligence under the doctrine of respondeat superior. Finally, she asserted direct negligence claims against Yellow Cab, specifically, negligence as a common carrier, negligent entrustment, negligent hiring, negligent retention/ supervision, and negligent training.

         ¶9 Yellow Cab initially denied allegations in Ferrer's complaint that Okbamicael was an employee and instead asserted that he operated the taxicab as an independent contractor. Defendants later filed an amended answer, however, to admit that Okbamicael was an employee and that he was operating the taxicab within the course and scope of his employment with Yellow Cab at the time of the accident.

         ¶10 After filing their amended answer, Defendants moved in December 2014 for partial judgment on the pleadings, seeking dismissal of the direct negligence claims against Yellow Cab (negligence as a common carrier, negligent entrustment, negligent hiring, negligent retention/supervision, and negligent training). Defendants argued that under the McHaffie rule followed in other jurisdictions, direct negligence claims against an employer are barred where the employer has acknowledged the employee was acting within the course and scope of his employment at the time of the alleged tort.

         ¶11 On March 6, 2015, the trial court granted Defendants' motion for partial judgment on the pleadings and dismissed Ferrer's direct negligence claims against Yellow Cab. It simultaneously entered a protective order to preclude discovery regarding Okbamicael's hiring, supervision, retention, and training. The trial court noted that although no Colorado appellate court had addressed this issue, it was persuaded by several rulings by state and federal trial courts applying the McHaffie rule.

         ¶12 Ferrer moved for reconsideration, arguing that the McHaffie rule is inapplicable in a comparative fault jurisdiction such as Colorado. The trial court denied Ferrer's motion, reasoning that Ferrer "failed to demonstrate how the [trial court's] ruling is inconsistent with Colorado's adoption of comparative negligence."

         ¶13 Five months later, in August 2015, Ferrer moved to amend the complaint to add exemplary damages against both Okbamicael and Yellow Cab under section 13-21-102. As evidence of Defendants' willful and wanton conduct, Ferrer alleged that at the time of the collision, Okbamicael was driving in excess of the speed limit, was talking on his cell phone in violation of company policy, and had been driving more than ten hours in violation of Public Utilities Commission ("PUC") regulations. In addition, Ferrer alleged that Yellow Cab knew before the incident that Okbamicael was a "habitual hours of service violator"; that Yellow Cab intentionally destroyed its drivers' trip sheets; and that Yellow Cab "forced" its drivers to use cell phones by not using a dispatch system at the airport. Ferrer indicated that she would request a spoliation instruction regarding Yellow Cab's destruction of the trip sheets.

         ¶14 Defendants opposed Ferrer's motion to amend as untimely, [3] and argued that Ferrer's late amendment to the complaint would significantly prejudice Defendants by requiring additional discovery and further delaying trial. Defendants also objected on grounds that Ferrer failed to set forth prima facie proof of a triable issue of exemplary damages, as required by section 13-21-102(1.5)(a).

         ¶15 Following a hearing, the trial court denied Ferrer's motion to amend the complaint to add exemplary damages. The trial court reasoned that Ferrer's allegations that Okbamicael was speeding and talking on his cell phone did not constitute willful and wanton conduct justifying punitive damages. The court further concluded that Ferrer's allegations that Yellow Cab destroyed Okbamicael's time sheets and that Okbamicael exceeded a ten-hour-maximum-driving-time rule on the day of the accident failed to establish prima facie evidence of willful and wanton conduct by Yellow Cab. Because PUC regulations require trip sheets to show the hours a driver was on duty, not his actual driving time, the missing trip sheets would not have shed light on Ferrer's contention that Okbamicael drove more than ten hours on the day of the accident. The trial court observed that Ferrer's allegations against Yellow Cab required "a lot of leaps of faith and a lot of connecting of inferences" and concluded that Ferrer had failed to establish prima facie proof of a triable issue of exemplary damages. The court therefore denied Ferrer's motion for leave to amend the complaint, and later denied Ferrer's motion for reconsideration.

         ¶16 Ferrer petitioned for relief under C.A.R. 21, asking this court to vacate the trial court's orders granting Defendants' motion for partial judgment on the pleadings and dismissing Ferrer's direct negligence claims against Yellow Cab, denying Ferrer's motion for leave to amend the complaint to add exemplary damages claims, and denying reconsideration of those rulings. We issued an order to show cause and now discharge the rule.

         II. Original Jurisdiction

         ¶17 Original relief under C.A.R. 21 is an extraordinary remedy limited in purpose and availability. People v. Darlington, 105 P.3d 230, 232 (Colo. 2005). Our exercise of this extraordinary jurisdiction is discretionary. Fognani v. Young, 115 P.3d 1268, 1271 (Colo. 2005). We have exercised original jurisdiction to review pretrial orders issued by trial courts that "will place a party at a significant disadvantage in litigating the merits of the controversy." People v. Dist. Court, 664 P.2d 247, 251 (Colo. 1983) (quoting Sanchez v. Dist. Court, 624 P.2d 1314, 1316 (Colo. 1981)). We also generally exercise original jurisdiction under C.A.R. 21 in cases that raise issues of first impression and are of significant public importance. Stamp v. Vail Corp., 172 P.3d 437, 440 (Colo. 2007).

         ¶18 This court has not addressed whether an employer's admission of vicarious liability for an employee's negligence in response to a plaintiff's complaint forecloses a plaintiff's additional, direct negligence claims against the employer. Because this case presents an important issue of first impression, we conclude that exercise of our original jurisdiction pursuant to C.A.R. 21 is appropriate.

         III. Analysis

         ¶19 We adopt the rule articulated in McHaffie v. Bunch and hold that where an employer acknowledges vicarious liability for its employee's negligence, a plaintiff's direct negligence claims against the employer are barred.

         A. The McHaffie Rule

         1. The Development of the McHaffie Rule

         ¶20 To provide context for our holding, we begin by discussing the development of the rule that a plaintiff cannot maintain direct negligence claims against an employer once the employer acknowledges respondeat superior liability[4] for its employee's alleged negligence.

         ¶21 Maryland first articulated this rule in Houlihan v. McCall, 78 A.2d 661 (Md. 1951). In that case, plaintiffs who were injured in a traffic accident sued both the truck driver involved and the driver's employer for negligent hiring or retention. Id. at 664. Before trial, the employer acknowledged an agency relationship with the truck driver. Id. The trial court admitted evidence of the driver's driving record at trial, and the jury ultimately found for the plaintiffs. Id. Maryland's highest court reversed. Id. at 666. The court reasoned that because the employer admitted the driver was its agent, "it was quite unnecessary to pursue the alternative theory [of negligence] in order to hold the corporate defendant [liable]." Id. at 665. The court therefore concluded the trial court erred by admitting the driver's record because where agency is admitted, an employee's driving record "can serve no purpose except to inflame the jury." Id. at 666.

         ¶22 Three years after Houlihan, California applied the same rationale to a negligent entrustment claim in Armenta v. Churchill, 267 P.2d 303, 308-09 (Cal. 1954). There, a roadside worker was killed when a dump truck backed over him. Id. at 305. The decedent's family sued the truck driver for negligence and his employer for negligent entrustment. Id. at 308. The employer admitted that the driver was acting in the course of his employment and acknowledged vicarious liability for all damages sustained by the plaintiffs in the event the driver was found negligent. Id. Relevant here, the California Supreme Court affirmed the trial court's exclusion of evidence of the driver's driving history. Id. at 309. The court reasoned that the allegations of direct negligence against the employer (for negligent entrustment) represented merely an alternative theory under which plaintiffs sought to impose upon the employer the same liability as might be imposed upon the employee-driver. Id. Because the employer's admission of vicarious liability removed any issue of her liability for the alleged tort, there remained no material issue to which the evidence of the employee's driving history could be legitimately directed. Thus, the California Supreme Court concluded that the trial court properly excluded this evidence. Id.

         ¶23 The most frequently cited case articulating this rule is McHaffie v. Bunch, 891 S.W.2d 822 (Mo. 1995). McHaffie was a passenger in a vehicle that crossed a highway median and collided with a tractor-trailer. Id. at 824. McHaffie's guardian (the plaintiff) brought negligence claims against the driver of the vehicle and the driver of the tractor-trailer; the plaintiff also brought vicarious liability claims against the owner-lessor and the operator-lessee of the tractor-trailer for its driver's alleged negligence. Id. The operator-lessee of the tractor-trailer admitted vicarious liability for the tractor-trailer driver's alleged negligence, conceding the driver was acting in the course and scope of his employment at the time of the collision.[5] Id. The plaintiff also claimed that the operator-lessee of the tractor-trailer negligently hired and supervised the tractor-trailer driver and presented evidence that the operator-lessee did not require the driver to have adequate experience, testing, training, and medical evaluations before driving its trucks. Id. The jury assessed fault to the various parties, including ten percent collectively to the driver, the owner-lessor, and the operator-lessee of the tractor-trailer based on the driver's negligence and the owner-lessor's and operator-lessee's vicarious liability, as well as ten percent to the operator-lessee based on negligent hiring.[6] Id. at 825. On appeal, defendants argued that it was improper to permit claims against the operator-lessee based on both respondeat superior liability and negligent hiring. Id.

         ¶24 The McHaffie court agreed. It adopted the "majority view" that once an employer admits respondeat superior liability for a driver's negligence, it is improper to allow a plaintiff to proceed against the employer on other theories of imputed liability. Id. at 826. The court observed that direct negligence claims such as negligent entrustment and negligent hiring are forms of imputed liability, just as respondeat superior is a form of imputed liability, because the employer's duty is dependent on and derivative of the employee's conduct. Id. The court reasoned that to allow multiple theories for attaching liability to a single party for the negligence of another "serves no real purpose, " unnecessarily expends the "energy and time of courts and litigants, " and risks the introduction of potentially inflammatory, irrelevant evidence into the record. Id. The court also explained that once an employer concedes it is vicariously liable for any negligence of its employee, the employer becomes strictly liable to the plaintiff for damages attributable to the employee's conduct, regardless of the percentage of fault as between the employer and the employee. Id.

         ¶25 Several state supreme courts have adopted the rule articulated in McHaffie, [7] and numerous intermediate appellate courts[8] and federal district courts[9] in other jurisdictions have applied the McHaffie rule as well. But see, e.g., James v. Kelly Trucking Co., 661 S.E.2d 329, 332 (S.C. 2008) (holding that a plaintiff's direct negligence claims against an employer are not precluded by the employer's admission of respondeat superior liability). Although this case presents an issue of first impression for this court, we note that at least one federal district court order and three state trial court orders in Colorado have applied the McHaffie rule.[10]

         2. Rationales for the McHaffie Rule

         ¶26 We adopt the McHaffie rule because we agree with those courts that hold that where an employer has conceded it is subject to respondeat superior liability for its employee's negligence, direct negligence claims against the employer that are nonetheless still tethered to the employee's negligence become redundant and wasteful.

         ¶27 Direct negligence claims provide an alternate means of recovery when vicarious liability is unavailable against an employer because the tortfeasor-employee was not acting within the scope of his employment at the time of his alleged negligence. See Richard A. Mincer, The Viability of Direct Negligence Claims Against Motor Carriers in the Face of an Admission of Respondeat Superior, 10 Wyo. L. Rev. 229, 232-33 & n.9 (2010) (citing Plains Res., Inc. v. Gable, 682 P.2d 653, 662 (Kan. 1984) ("The application of the theory of independent negligence in hiring or retaining an employee becomes important in cases where the act of the employee either was not, or may not have been, within the scope of his employment.")).

         ¶28 But where the employer has already conceded it is subject to respondeat superior liability for any negligence of its employee, direct negligence claims become superfluous. Importantly, to prevail on direct negligence claims against the employer, a plaintiff still must prove that the employee engaged in tortious conduct. That is, tortious conduct by an employee is a predicate in direct negligence claims against the employer. See, e.g., Raleigh v. Performance Plumbing & Heating, Inc., 130 P.3d 1011, 1016 (Colo. 2006) (in negligent hiring cases, the employee's "intentional or non-intentional tort is the predicate for the plaintiff's action against the employer, so proof in the case involves both the employer's and the employee's tortious conduct"); McHaffie, 891 S.W.2d at 825 (elements of negligent entrustment include proof that "the negligence of the entrustor concurred with the negligence of the entrustee to harm the plaintiff"); Rodgers v. McFarland, 402 S.W.2d 208, 210 (Tex. App. 1966) (in a negligent entrustment action, "[t]he driver's wrong . . . first must be established, then by negligent entrustment liability for such wrong is passed on to the owner"). Direct negligence claims effectively impute the employee's liability for his negligent conduct to the employer, similar to vicarious liability.

         ¶29 An employer's negligent act in hiring, supervision and retention, or entrustment is not a wholly independent cause of the plaintiff's injuries, unconnected to the employee's negligence. A plaintiff has no cause of action against the employer for negligent hiring, for ...


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