NEW JERSEY CITIZENS UNITED, RECIPROCAL EXCHANGE AS SUBROGEE OF TRACY WEINSTEIN v. MARIO HERNANDEZ

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4060-04T54060-04T5

NEW JERSEY CITIZENS UNITED,

RECIPROCAL EXCHANGE AS

SUBROGEE OF TRACY WEINSTEIN,

Plaintiffs-Respondents,

v.

MARIO HERNANDEZ,

Defendant-Appellant,

and

MARIA FLORES AND JOSE ALVAREZ,

Defendants.

________________________________________________________________

 

Submitted February 27, 2006 - Decided March 20, 2006

Before Judges Holston, Jr. and Gilroy.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-3096-02.

Andril & Espinosa, attorneys for appellant, Mario Hernandez (Antonio R. Espinosa, on the brief).

Respondents have not filed a brief.

PER CURIAM

Defendant, Mario Hernandez, appeals the Law Division's March 22, 2005 order for money judgment in favor of plaintiff, New Jersey Citizens United Reciprocal Exchange (NJCURE), as subrogee of its insured, Tracy Weinstein, and against defendant in the amount of $2,969.77. We reverse.

In this subrogation action, plaintiff instituted suit against Hernandez, the registered owner of a 1988 two door Nissan automobile, Alvarez, a prospective purchaser of the vehicle, and Flores, the operator of the Nissan, when it struck the lawfully parked motor vehicle owned by Weinstein. Plaintiff sought compensatory damages for the property damage to Weinstein's vehicle in the amount of $2,969.77.

The trial judge found defendant liable to plaintiff on the basis of agency and negligent entrustment. The court stated, "I find that the defendant has not overcome the presumption of agency called for by the case law cited by the plaintiff in the plaintiff's brief. And furthermore I find that there has been a negligent entrustment of the vehicle by Mr. Hernandez to Mr. Alvarez."

During the bench trial conducted by the judge, the only person who testified was Hernandez. Hernandez testified that he had made an oral agreement to sell his vehicle to Alvarez for the sum of $400. He delivered possession of the vehicle to Alvarez and gave him the keys to keep pending payment. The vehicle was delivered to a parking spot designated by Alvarez. Hernandez knew Alvarez was a licensed driver but told Alvarez not to drive the vehicle until Alvarez paid Hernandez the $400 and the transaction was complete. Hernandez allowed the insurance on the vehicle to lapse and he explained to Alvarez that it was uninsured. Hernandez left the license plates on the vehicle.

Hernandez testified that he does not know, but assumes, that Alvarez knew Flores and allowed her to operate the vehicle. However, Hernandez did not know Flores and he was not aware that she was operating the vehicle at the time of the accident. Additionally, Flores was neither employed by Hernandez nor given permission to drive the Nissan, and she was not on a mission for him when she struck Weinstein's vehicle.

Plaintiff sought to hold Hernandez vicariously liable as the principal/owner of the vehicle for the negligence of Flores. Plaintiff claimed that Flores was Hernandez's agent at the time of the accident and that he negligently entrusted the vehicle to Alvarez who in turn entrusted it to Flores.

The judge questioned the credibility of Hernandez's testimony that he was in the process of selling the vehicle to Alvarez. However, without any evidence to contradict Hernandez's testimony, the judge determined that the presumption of agency had not been overcome and found that Flores was, therefore, driving the vehicle as an agent of Hernandez and that Hernandez had also been negligent as a result of entrusting the vehicle to Alvarez.

In Carter v. Reynolds, 175 N.J. 402 (2003), the Supreme Court stated,

Although as a general rule of tort law, liability must be based on personal fault, the doctrine of respondeat superior recognizes a vicarious liability principle pursuant to which a master will be held liable in certain cases for the wrongful acts of his servants or employees. The theoretical underpinning of the doctrine of respondeat superior has been described as follows: that one who expects to derive a benefit or advantage from an act performed on his behalf by another must answer for any injury that a third person may sustain from it.

Under respondeat superior, an employer can be found liable for the negligence of an employee causing injuries to third parties, if, at the time of the occurrence, the employee was acting within the scope of his or her employment. To establish a master's liability for the acts of his servant, 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. . . . If no master-servant relationship exists, no further inquiry need take place because the master-servant relationship is sine qua non to the invocation of respondeat superior. . . .

Like forty-four of our sister states, we recognize section 220 of the Restatement (Second) of Agency as the touchstone for determining who is a servant. Section 220 provides:

(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.

[Id. at 408-09 (citations omitted) (footnote omitted).]

The Court further explained:

Our model jury charge regarding the definition of a servant is identical to Restatement section 220 with the addition of one line: "[S]uch other factors as may be reasonably considered in determining whether the employer has control or right to control the person employed." Model Jury Charges (Civil) 4.22(A) (June 1979) (emphasis added). As that charge intimates, "control by the master over the servant is the essence of the master-servant relationship on which the doctrine of respondeat superior is based." Wright [v. State, 169 N.J. 422, 436, (2005)] (quotation marks and citation omitted); see [Prosser and Keeton on the Law of Torts 70 at 501 (5th ed. 1984)] ("The traditional definition of a servant is that he is a person employed to perform services in the affairs of another, whose physical conduct in the performance of the service is controlled, or is subject to a right of control, by the other." (emphasis added) (footnote omitted)).

[Id. at 410.]

The trial judge in finding Hernandez liable relied upon the rule of law that the use of an automobile upon a public highway by one who is not its owner raises a presumption of agency between the operator and the owner. In Harvey v. Craw, 110 N.J. Super. 68 (App. Div.), certif. denied, 56 N.J. 479 (1970), we explained the agency presumption and the means by which it can be rebutted by a defendant-vehicle owner. We first indicated in Harvey that the liability of the owner, Craw, to the plaintiff could only be established if Walker, the driver of the vehicle was, in fact, acting as Craw's agent. Id. at 73. We explained:

To prevent the issue of agency from reaching the [trier of fact], the owner must show by uncontradicted testimony that no employer-employee or principal-agent relationship existed, or, if one did exist, that the employee or agent had transgressed the bounds of his authority.

. . . .

The cases in this State - as indeed in most of the others - involve primarily two fact situations. Either the vehicle is owned by a parent and is being operated by a member of his family or the driver is actually employed by defendant owner and the question involves deviation from the scope of that employment.

[Id. at 73-74 (citations omitted).]

In Harvey, we concluded that

there existed only the naked presumption of agency. There was no family relationship present, nor any situation of regular employment. Nor was there any evidence from which the fact of agency could be inferred.

All of the evidence pointed to the contrary. The relationship between Craw and Walker was exclusively a social one. The situation was simply one where Craw had loaned his automobile to a friend to use for his own purpose.

The temporary, mutual exchange of cars did not create an agency relationship for the reason that each was pursuing his own interest. In Walker's case that interest was in attending a party with others whom he invited along.

[Id. at 74.]

We determined in Harvey that the uncontradicted evidence only permitted the conclusion that there was no agency. Id. at 76-77. We made clear that although a car owner's credibility is always in issue, because he has an interest in overcoming the presumption of agency arising from another's use of his automobile, nonetheless, when there are no contradictory facts presented on the issue of whether an agency relationship existed between the owner and driver of the vehicle responsible for the accident, then there is no basis in the evidence to find the existence of an agency relationship. Ibid. We concluded,

Aside from the bare presumption, the facts in this case failed to reveal even the possibility of any agency relationship. No contention was made that the facts on that issue were not as Craw said they were. . . . In the absence of any contradictory proof, this evidence was sufficient to rebut the presumption.

[Ibid. See also Kauffman v. Gullace, 252 N.J. Super. 467 (App. Div. 1991).]

In this case, the facts were undisputed that Flores was not Hernandez's employee nor was she on a mission for Hernandez at the time of the accident. Hernandez was not able to control Flores' conduct nor could he exercise a right of control over her. Indeed, the uncontradicted evidence is that he did not know her. We are satisfied that the presumption of agency was overcome and that Flores was not acting as Hernandez's agent, servant or employee at the time of this accident.

Nor can Hernandez be held liable under the principle of negligent entrustment. Under this theory, plaintiff alleges in its complaint that Hernandez "failed to properly supervise the automobile and/or Jose Alvarez to make sure that Alvarez would not use the vehicle on the roadway or permit other unauthorized persons to operate the vehicle."

Negligent entrustment is defined as:

It is negligence to permit a third person to use a thing or to engage in an activity which is under the control of the actor, if the actor knows or should know that such person intends or is likely to use the thing or to conduct himself in the activity in such a manner as to create an unreasonable risk of harm to others.

[Restatement (Second) of Torts 308 (1965). See also Lombardo v. Hoag, 269 N.J. Super. 36 (App. Div. 1993), certif. denied, 135 N.J. 469 (1994).]

In an action based on the theory of negligent entrustment, the plaintiff generally must prove that:

(1) the entrustee was incompetent, unfit, inexperienced, or reckless;

(2) the entrustor knew (in some jurisdictions "actually" knew), should have known, or had reason to know of the entrustee's condition or proclivities;

(3) there was an entrustment of the dangerous instrumentality;

(4) the entrustment created an appreciable risk of harm to others; and

(5) the harm to the injury victim was "proximately" or "legally" caused by the negligence of the entrustor and the entrustee.

[57A Am. Jur. 2d Negligence 318 (2005).]

Hernandez never entrusted his vehicle to Flores; he never even knew her. We are convinced that there is a complete absence of evidence that Hernandez knew or should have known that Alvarez was going to permit the vehicle to be driven by someone who he knew was likely to drive the vehicle in a manner so as to create an unreasonable risk of harm to others. Negligent entrustment, therefore, was not proved, and the agency presumption was overcome.

 
Reversed.

Co-defendants, Maria Flores and Jose Alvarez, have defaulted. It is unclear whether a proof hearing was held and a default judgment entered against either or both of them. Neither of them is a party to this appeal.

Plaintiff paid Weinstein $2,469.77. The additional $500 in damages represents Weinstein's collision coverage deductible under her automobile insurance policy with plaintiff.

(continued)

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A-4060-04T5

March 20, 2006