Bradley v. H,A. Manosh Corp.

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
40 as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 89-202


Kimberlee Bradley                            Supreme Court

     v.                                      On Appeal from
                                             Lamoille Superior Court
H.A. Manosh Corporation
                                             December Term, 1990


Shireen Avis Fisher, J.

Robert D. Rachlin and Margaret H. O'Donnell of Downs Rachlin & Martin and
  Norman R. Blais of Blais, Cain, Keller & Fowler, Burlington, for
  plaintiff-appellee

Michael B. Clapp of Dinse, Erdmann & Clapp, Burlington, for defendant-
  appellant


PRESENT:  Gibson, Dooley and Johnson, JJ., and Peck, J. (Ret.) and Springer,
          D.J. (Ret.), Specially Assigned


     GIBSON, J.   Plaintiff Kimberlee Bradley brought this suit against
defendant H.A. Manosh Corporation, a construction company, for injuries
incurred at defendant's maintenance garage when an automobile defendant's
employee was repairing lurched forward, crushing her leg against another
vehicle.  The jury found plaintiff had suffered damages totaling $245,000,
but awarded only $122,745 after finding plaintiff had been 49.9% negligent
herself.
     Defendant appeals from the trial court's denial of its motions for
directed verdict, for judgment notwithstanding the verdict and for reduction
of damages by the amount of uninsured motorist payments received by plain-
tiff.  Plaintiff appeals the court's denial of her motion for additur or a
new trial on damages.  We affirm the jury's award.
                                    I.
     On a Sunday morning in August 1983, plaintiff visited the garage owned
by defendant.  Randy Manosh was working on his Chevrolet Vega, although the
garage was not open for business that day.  Defendant allowed its employees
to use its facilities in off-hours to work on their automobiles or otherwise
use the equipment in the garage for their own purposes.  Defendant was aware
that Randy had used the garage at such times in the past.  Howard Manosh,
president, chief executive officer and sole shareholder of defendant corpor-
ation, testified that he had the authority to control the employees, includ-
ing Randy, during off-hours when they were using the garage.  Employees did
not have to seek permission to use the garage, and the corporation had no
objection to employees bringing non-employees into the garage during off-
hours.  Howard Manosh also testified that employees were representatives of
the company while using the garage, and had the authority to grant or deny
others access to the garage.
      Plaintiff sat on a roller board in front of Randy's car as he worked.
At one point, Randy told plaintiff that he was about to start the car.  She
asked whether it would move, and Randy told her that it could not move
because the transmission fluid had been drained.  He then started the car by
wiring it from outside the vehicle.  He had forgotten, however, to engage
the emergency brake and disengage the transmission, and the car jumped
forward, crushing plaintiff's leg against another vehicle.  As a result,
plaintiff's lower leg and knee had to be amputated.  Defendant has conceded
that Randy's actions were negligent and led to plaintiff's injuries.
     There was evidence that Randy was a safe and prudent mechanic.  There
was also evidence that Randy had been convicted of careless and negligent
driving in 1978, and of driving while under the influence in April of 1983.
At the time of the accident, Howard Manosh was aware of these convictions.
     The case was tried on the theories of unsafe premises and negligent
supervision and control.  At the close of plaintiff's evidence, the court
directed a verdict for defendant on the issue of unsafe premises.  Plaintiff
does not appeal that ruling.  The issues on appeal concern the sufficiency
of the evidence and the damage award.
                                    II.
     We find that the evidence was sufficient to establish a duty on the
part of defendant to supervise and control its employee, Randy Manosh.  It
is well established that generally "there is no duty to control the conduct
of another in order to protect a third person from harm."  Poplaski v.
Lamphere, 152 Vt. 251, 256, 565 A.2d 1326, 1329 (1989).  We have recognized
certain exceptions to this general rule, however, "'where there is . . . a
special relationship between two persons which gives the one a definite
control over the actions of the other . . . .'"  Peck v. Counseling Service
of Addison County, Inc., 146 Vt. 61, 65, 499 A.2d 422, 425 (1985) (quoting
Harper & Kime, The Duty to Control the Conduct of Another, 43 Yale L.J. 886,
895 (1934)).  In Poplaski, we noted that such a special relationship might
arise when "an off-duty employee's negligent acts occurred on the master's
premises or while using his chattels."  152 Vt. at 257, 565 A.2d  at 1330.
The evidence in this case established that such a relationship did exist
between defendant and Randy Manosh.
     This special relationship is defined in { 317 of the Restatement
(Second) of Torts (1965):

             A master is under a duty to exercise reasonable care
          so to control his servant while acting outside the scope
          of his employment as to prevent him from intentionally
          harming others or from so conducting himself as to
          create an unreasonable risk of bodily harm to them, if

               (a) the servant
                   (i) is upon the premises in possession of
               the master or upon which the servant is
               privileged to enter only as his servant, or
               (ii) is using a chattel of the master, and

               (b)  the master
                   (i) knows or has reason to know that he
               has the ability to control his servant, and
                   (ii) knows or should know of the necessity
               and opportunity for exercising such control.

Where there is such a special relationship, we are satisfied that the risk
of liability should fall upon the employer if its failure to act was
unreasonable.  Bearing this responsibility is inherent in defendant's
business enterprise.  See Carroll v. Station Managers, Inc., 104 Misc. 2d
1014,     , 429 N.Y.S.2d 825, 827 (N.Y. Civ. Ct. 1980).  If the actor is a
servant upon his master's premises, a duty to act reasonably to control that
servant's actions arises if the master has knowledge of (1) ability to
control, (2) need to control, and (3) opportunity to control that servant.
     In this case, Randy Manosh was employed by defendant at the time of
plaintiff's injury.  As such, he was a servant upon his master's premises.
Defendant argues that on the Sunday morning when Randy was in the garage,
he was not a "servant" because he was there during off-hours, and not as an
employee acting within the scope of his employment.  The fact that Randy was
not acting within the scope of his employment is irrelevant, however, to an
analysis of a master's liability for an off-duty employee's negligence.
Defendant granted its employees the privilege of using the maintenance
garage in off-hours, and allowed them use of the garage as a "privilege and
benefit."  In other words, use of the garage was an informal part of the
employment arrangement, and Howard Manosh clearly considered himself to have
authority over his employees' activities in the garage.  It is precisely
this situation that { 317 of the Restatement contemplates:
            [The employer] is required to police his own premises
          . . . to prevent his servant from doing harm to others
          . . . .  This is true although the acts of the servant
          while upon the premises . . . are done wholly for the
          servant's own purposes and are, therefore, outside the
          course of the servant's employment and thus do not
          subject the master to liability under the rules of the
          law of Agency.

Restatement (Second) of Torts { 317 comment b.  Thus, for purposes of this
analysis, Randy Manosh was a servant on his master's premises that Sunday
morning.
     The evidence also established that defendant knew it had the ability
and the opportunity to control its off-duty employees in the garage.  Howard
Manosh so testified, and he had at least once earlier exercised that control
by asking Randy to remove his car from the garage, which Randy did.
     The more difficult question comes with the test of whether the employer
knew of the need to exercise control.  As proof of this knowledge, plaintiff
submitted evidence that defendant was aware of Randy Manosh's convictions of
careless and negligent driving and driving while under the influence.
Defendant complains that this evidence was not probative of defendant's need
to control Randy.  We conclude, however, that the evidence was relevant and
sufficient to allow the jury to find that Randy Manosh was predisposed to
careless behavior when dealing with automobiles.  Plaintiff was not limited
to evidence of prior negligence in repairing automobiles to prove that Randy
posed a danger.  A reasonable person may fairly conclude that a person con-
victed of driving while intoxicated and of careless and negligent driving is
not sufficiently alert to the need for care around automobiles.  Cf.
McCarson v. Foreman, 102 N.M. 151, 156, 692 P.2d 537, 542 (N.M. Ct. App.
1984) (conviction for possession of cocaine held relevant to issue of
negligent entrustment of automobile, even though no conviction for driving
while under the influence of drugs).
     It was not the convictions alone, however, that gave rise to the need
to control in this case.  Defendant's garage housed water-well equipment,
plumbing trucks, hoists, welding equipment, and plumbing and painting
equipment.  Defendant allowed its employees to use the garage and equipment
during off-hours without asking permission.  Defendant estimated that over
half of its fifty employees had keys to the garage.  It allowed friends and
family members to accompany employees into the garage, but had no system for
supervising use of the garage during off-hours.  In view of all the facts,
it is reasonable to conclude that defendant knew or should have known of the
need to control Randy's actions.  Because defendant exercised no control
over Randy that Sunday morning, the jury could reasonably have found that
defendant had breached its duty to exercise reasonable control.  The court
properly denied defendant's motions for directed verdict and for judgment
notwithstanding the verdict.
                                   III.
     The remaining issues concern the damage award.  Defendant contends
that the trial court should have reduced the award by the amount plaintiff
had received from her father's uninsured motorist (UM) insurance carrier.
Plaintiff argues that the jury award was inadequate, and that the trial
court should have granted a new trial on the damage issue.  We find both
arguments without merit.
     At the time of the accident, plaintiff was covered by her father's UM
policy.  Randy Manosh was an uninsured motorist.  In a pretrial settlement
agreement, the UM carrier agreed to pay plaintiff $200,000, provided it
would receive reimbursement up to $200,000 out of any recovery from defend-
ant, whom it agreed to sue jointly with plaintiff.  If the recovery were
less than $250,000, plaintiff was to receive the difference between $250,000
and the amount of the recovery, not to exceed $50,000.  Thus, plaintiff
would receive $50,000 out of the award herein, and the UM carrier would
receive the balance, $72,745.
     Defendant argues that its liability should be eliminated by subtracting
from the jury award the amount plaintiff was paid by the UM carrier, under
the theory that the UM payment was the equivalent of a settlement with a
joint tortfeasor.  See Slayton v. Ford Motor Co., 140 Vt. 27, 29, 435 A.2d 946, 947 (1981) ("[A] damage award against one tortfeasor must be reduced by
the amount of a settlement between the plaintiff and another tortfeasor.")
We disagree.
     UM coverage is required by statute "for the protection of persons
insured thereunder who are legally entitled to recover damages, from owners
or operators of uninsured . . . motor vehicles . . . ."  23 V.S.A. { 941(a)
(emphasis added).  In other words, UM insurance payments compensate accident
victims for damages caused by uninsured motorists who are found or are con-
ceded to have been negligent.  In a case where an accident victim looks to
her carrier for UM coverage, the carrier stands "'jointly liable with the
uninsured motorist, or in his stead, to the extent specified in the statute
. . . .'"  Muir v. Hartford Accident & Indem. Co., 147 Vt. 590, 594, 522 A.2d 236, 238 (1987) (quoting Rhault v. Tsagarakos, 361 F. Supp. 202, 206
(D.Vt. 1973)).  From this, it might seem that a tortfeasor, such as defend-
ant, ought to be allowed to subtract from a damage award any settlement the
plaintiff receives from an insurer standing jointly liable with an uninsured
motorist. (FN1) Such a result cannot be justified, however.
     First, the purpose of the statute requiring UM coverage is "to benefit
an insured who has provided protection for others, to obtain protection
himself."  Rhault, 361 F. Supp.  at 206.  "Neither the statute nor the policy
is designed for the benefit of the uninsured motorist. . . .  [The coverage]
is in the nature of a limited type of accident insurance rather than the
usual indemnity contract."  Id. at 207.  Although the liability of the UM
carrier is measured, to the limits of the policy, by the negligence of the
uninsured motorist, the carrier is not otherwise linked to the motorist.
The carrier stands "jointly liable" with the uninsured motorist, Muir, 147
Vt. at 594, 522 A.2d  at 238, and is obligated to pay damages for which the
uninsured motorist is found liable, but the carrier has no authority to
represent or control the uninsured motorist during the course of any
litigation.  See Rhault, 361 F. Supp.  at 206.
     Thus, the UM carrier has a status different from that of insurance
carriers who represent other tortfeasors.  Their contractual obligation is
to persons allegedly at fault, whereas the contractual obligation of the UM
carrier is to the injured party.  It would be inequitable to allow a
tortfeasor to escape liability whenever a plaintiff receives timely payment
from her UM carrier.  "A person committing a tort cannot set up in miti-
gation of damages that somebody else, with whom he had no connection, has
either in whole or in part indemnified the party injured."  Weber v. Morris
& Essex R.R., 36 N.J.L. 213, 215 (1873) (quoted in Northeastern Nash
Automobile Co. v. Bartlett, 100 Vt. 246, 258, 136 A. 697, 701 (1927)).
     Second, the obligation of a UM carrier is to provide UM coverage up to
the limits of its policy, for the portion of the accident victim's total
judgment that is unsatisfied by recovery from other sources.  Muir, 147 Vt.
at 594, 522 A.2d  at 238-39.  A UM carrier is therefore entitled to reim-
bursement for payments it makes to an accident victim to the extent the
victim's total recovery from all sources exceeds his or her damages; the
carrier is entitled to no reduction of UM coverage, however, where the
victim is not fully compensated.  Thus, tortfeasors jointly liable with an
uninsured motorist may not reduce their liability by the amount of payments
made under UM coverage because any potential windfall to the plaintiff will
instead pass through to the UM carrier as reimbursement for payments already
made.
     Both the UM statute, 23 V.S.A. { 941(e), and most policies, including
that of plaintiff's father herein, require that any recovery from a person
legally responsible for an accident involving an uninsured motorist be
passed on to the UM carrier to the extent of its payments. (FN2) These pro-
visions have been construed strictly by Vermont courts in cases -- unlike
this one -- where the plaintiffs have had to battle for payment from their
UM carriers.  See, e.g., Rhault, 361 F. Supp. 202; Muir, 147 Vt. 590, 522 A.2d 236.  In Muir, the UM carrier was not allowed to reduce its payment
where the accident victim had not been compensated fully, 147 Vt. at 592,
522 A.2d  at 238, and reimbursement was restricted under the provisions of {
941(e) to recoveries from uninsured motorists only. Id. at 594, 522 A.2d  at
239.
     The instant case, however, is unlike Muir in that the sum of the
victim's UM payments and her jury award exceeds the monetary damages
determined by the jury.  Under these facts, the UM carrier's reimbursement
from a tortfeasor other than the uninsured motorist is proper so that the
victim is not overcompensated.  If such reimbursement is allowed, the pur-
pose of UM coverage -- that victims be compensated as if uninsured drivers
were insured -- is achieved without allowing double recovery.  See Milbank
Mutual Ins. Co. v. Kulver, 302 Minn. 310, 313, 225 N.W.2d 230, 232 (1974)
("It would be absurd to permit [the victim] to recover double damages and it
is just as absurd to permit [reimbursement] . . . where she has not been
fully compensated.")
     We realize that plaintiff will receive a small windfall in that she
will recover $250,000 for damages the jury found to total $245,000 and for
which the jury found her partly responsible. (FN3) This result, however, stems
only from the terms of plaintiff's settlement agreement with her UM carrier.
She is entitled to the benefit of this bargain, which has not been chal-
lenged.  Further, UM carriers should be encouraged to pay claims promptly
once the liability of an uninsured motorist has been established; accident
victims should not have to wait to be compensated until the fault of all
parties has been determined whenever an uninsured motorist is involved.
     Finally, we reject plaintiff's claim that the jury award was
inadequate.  "[F]irst the jury, and then the court in ruling on the motion
to set aside, have the liberty of broad discretionary judgment" in deter-
mining the adequacy of the damage award.  Kerr v. Rollins, 128 Vt. 507,
510, 266 A.2d 804, 806 (1970).  The parties stipulated to medical and
hospital expenses of $26,501.25.  The remainder of the $245,000 total
damages found by the jury was compensation for pain and suffering.  We are
not persuaded that the trial court abused its discretion in denying plain-
tiff's motions for additur and new trial.
     Affirmed.

                                        FOR THE COURT:


                                        _________________________________
                                        Associate Justice





FN1.    Defendant relies on a California decision, Waite v. Godfrey, 106 Cal. App. 3d 760, 163 Cal. Rptr. 881 (1980), as authority for such an out-
come.  Waite involved a chain reaction accident where the driver of the
first car to cause impact left the scene.  Based on the conceded negligence
of the absent driver, the court allowed the two defendant drivers to deduct
from the damage award the plaintiff's recovery from her UM carrier.  Waite
has not been followed, and we find it unpersuasive, primarily because UM
carriers are entitled to be reimbursed when accident victims are fully com-
pensated.  See test, infra.

FN2.    23 V.S.A. {941(e) provides:
     If payment is made under uninsured motorist coverage, and subject
     to the terms of that coverage, to the extent of that payment, the
     insurer is entitled to the proceeds of any settlement or recovery
     from any person legally responsible for the damage or personal
     injury, as to which payment was made . . . ."
The UM policy covering plaintiff provides:
     If we make any payment and the insured recovers from another
     party, the insured shall hold the proceeds in trust for us and pay
     us back the amount we have paid.

FN3.    The jury measured plaintiff's negligence against that of defendant
only.  The jury was not asked to measure plaintiff's negligence against that
of Randy Manosh.