HOLLY ANNE OAKLEY v. FLOR-SHIN, INC.
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RENDERED:
March 13, 1998; 10:00 a.m.
TO BE PUBLISHED
NO. 96-CA-002109-MR
HOLLY ANNE OAKLEY
APPELLANT
APPEAL FROM WOODFORD CIRCUIT COURT
HONORABLE DAVID L. KNOX, JUDGE
ACTION NO. 95-CI-0012
v.
FLOR-SHIN, INC.
APPELLEE
OPINION
REVERSING AND REMANDING
*
BEFORE:
*
*
*
*
GUIDUGLI, JOHNSON and SCHRODER, Judges.
JOHNSON, JUDGE:
Holly Anne Oakley (Oakley) appeals from the
judgment of the Woodford Circuit Court entered on June 5, 1996,
which summarily dismissed her tort claim against the appellee,
Flor-Shin, Inc. (Flor-Shin).
We reverse and remand.
During the night of February 18 and 19, 1994, Oakley,
then eighteen (18) years old, was sexually assaulted by William E.
Bayes (Bayes), an area supervisor for Flor-Shin.
The assault
occurred at the K-Mart Department Store in Versailles, Kentucky,
where Oakley was a part-time employee and where Bayes was assigned
to work by Flor-Shin which had a contract with K-Mart to maintain
its floors.
On the evening of the assault, Oakley and Bayes were
the only two employees in the store, a not uncommon arrangement of
which Flor-Shin was aware.
On September 22, 1994, Bayes pled
guilty to the crimes of sexual abuse in the first degree, sexual
misconduct and unlawful imprisonment arising from his assault of
Oakley. He was sentenced to serve a one-year term of imprisonment,
but placed on supervised probation for five years.
Oakley sued both Bayes and Flor-Shin on January 13, 1995.
In
her
complaint
she
sought
damages
from
Bayes
for
assault,
battery, false imprisonment and the intentional infliction of
emotional distress caused by his wrongful conduct. She also sought
damages from Flor-Shin under the theory of vicarious liability
(alleging that Bayes was acting within the scope of his employment
when he assaulted her) and for its negligence in hiring Bayes, a
person she alleged was "incompetent and unfit to perform in the
capacity he was hired" because of his "malicious, dangerous, and
violent nature[.]" She also alleged that Flor-Shin "knew or should
have known that a person in [her] position would be subjected to an
unreasonable risk of harm from Defendant, Bayes," and that FlorShin "was on notice actual and/or constructive that Defendant,
Bayes, was incompetent and unfit[.]"
On June 5, 1996, the trial court granted Flor-Shin's
motion for summary judgment and held that the employer was not
liable as a matter of law under either theory advanced by Oakley.
On July 17, 1996, the trial court entered an agreed order making
the summary judgment final and appealable and abating the trial
against Bayes indefinitely pending the outcome of Oakley's appeal
of the summary judgment.
-2-
The crux of this appeal is whether, as a matter of law,
an employer can be held directly liable for injuries sustained by
a third person caused by the criminal acts of its employee under
the theory of negligent hiring.1
Relying on Central Truckaway
System, Inc. v. Moore, 304 Ky. 533, 201 S.W.2d 725 (1947), FlorShin
argues
that
in
this
jurisdiction,
an
employer
is
never
required to answer to a third person for its lack of care in hiring
or retaining an employee.
The trial court accepted this argument
and in dismissing the action against Flor-Shin reasoned as follows:
In view of the Central Truckaway case,
which this Court believes is the latest pronouncement of law on this subject, this Court
believes that no liability can attach against
Flor-Shin for negligent hiring, retention, or
supervision, since Mr. Bayes's alleged acts
did not result in injury to a fellow servant,
but instead, resulted in injury to a third
party.
Flor-Shin insists that this Court is "compelled" to follow the
"well-settled,"
"good
law"
established
in
Central
Truckaway.
However, we conclude that the issue is not as clear nor as settled
as Flor-Shin contends.
The issue of negligent hiring was not raised in Central
Truckaway.
The injured plaintiff in Central Truckaway sought
damages for injuries he and his wife sustained when one of Central
Truckaway's
trucks,
employees,
collided
operated
with
his
by
one
of
vehicle.
Central
Truckaway's
Central
Truckaway's
employee, Robert Derrett, was intoxicated at the time he drove the
truck
on
top
of
the
plaintiff's
1
vehicle.
Central
Truckaway
Oakley conceded in her response to Flor-Shin's motion for
summary judgment that Flor-Shin was not vicariously liable for
Bayes' behavior.
-3-
attempted to avoid liability on the grounds that (1) Derrett was
not acting within the scope of his employment at the time of the
accident, and (2) that it had used ordinary care in its selection
of Derrett and thus "could not have anticipated that he would be
intoxicated at the time of the accident."
Id. at 726.
In
affirming the verdict in favor of the plaintiff, the Court held (1)
that Derrett was acting in the scope of his employment, and (2)
that Central Truckaway was not entitled to the defense that it used
ordinary care in hiring Derrett, as such it "is not a defense where
liability to a third person is predicated upon negligence of a
servant under the doctrine of respondeat superior."
Id. at 728.
In discussing the latter defense, the Court stated:
Nor are we impressed with the proposition
urged under 1(b), supra, viz., that the master
may exonerate himself from liability for the
negligence of his servant by showing that he
used ordinary care in the selection of the
servant.
This doctrine is a part of the
fellow servant rule, and is succinctly stated
in Ballard's Adm'x v. Louisville & N. R. Co.,
128 Ky. 826, 110 S.W. 296, 297, 33 Ky. Law
Rep. 301, 16 L.R.A., N.S., 1052: "The master
must exercise ordinary care in the selection
of his servants and if he fails to exercise
such care, and one of the servants is injured
by the incapacity of another servant, the
master is liable, but the incapacity of the
fellow servant must relate to the duties
required of him by the master."
But the rule has no application in cases
where the injuries are inflicted by a servant
upon a third person, as is pointed out in 35
Am.Jur., Sec. 548, p. 978, wherein it is said:
"The rule as to the liability of a master on
the ground of want of care in the selection of
competent servants is a part of the fellow
servant rule, and is applicable only in actions by servants against their master for
injuries caused by the negligence of fellow
servants."
-4-
The converse likewise is true, viz., the
exercise of reasonable or ordinary care in the
selection of competent servants is not a
defense where liability to a third person is
predicated upon negligence of a servant under
the doctrine of respondeat superior.
Id. (emphases original).
As an intermediate appellate court, we are acutely aware
of
our
limitations
and
of
our
responsibility
to
follow
the
precedents of our Supreme Court and its predecessor Court. Supreme
Court Rule 1.030(8)(a).
Likewise, we are aware that the legal
holding of a case is to be followed as precedent and not mere
dictum from that case.
We are bolstered in our belief that Central
Truckaway was not a judicial rejection of the theory under which
Oakley seeks redress by the discussion of the tort in Smith's Adm'r
v. Corder, Ky., 286 S.W.2d 512 (1956).
In Corder the estate of a
man killed by an employee of the Stearns Coal and Lumber Company
sought damages against the employer for its negligence in getting
the employee appointed as a police officer when the company had
knowledge that the employee
was "a man of violent and dangerous disposition who drank intoxicants very heavily and
frequently"; that he was "especially dangerous
and violent" when "under the influence of
liquor" and that before he was commissioned as
a special police officer he had "committed
numerous and sundry acts of violence to the
persons of numerous citizens, including the
taking of at least one life."
Id. at 513-514.
The Court described the plaintiff's theory of
negligence as "novel."
Id. at 513.
The ground, it is submitted, is personal fault
in the negligent initiation of a situation or
condition calculated to harm others.
To
underline the point, the appellant expressly
disavows any claim of defendant's liability on
-5-
the ground of imputed fault resting
Corder's agency or under the doctrine
respondeat superior.
Id. at 514.
on
of
If Central Truckaway indeed settled the issue of the
viability of the tort of negligent hiring by third persons, it
would not have been considered a "novel" issue nine years later.
Nor, we believe, would the Court in Corder have gone to the trouble
to analyze the tort and address the merits of the complaint if
recovery under any set of facts was impermissible as a matter of
law.
Although the summary judgment in favor of the employer was
affirmed in Corder, the ruling was not premised on Kentucky's
failure to recognize a claim for negligent hiring by a third
person.
The employer was absolved of any responsibility for its
negligence, if any, as the homicide of plaintiff's decedent did not
occur on the employer's property and the employee's appointment
"was confined to the company's premises."
declined
to
hold
the
employer
liable
Id. at 515.
for
wrongful
The Court
acts
not
committed on its property reasoning that "there were too many
intervening inconsequent events and imponderable facts to attach
legal liability for the homicide upon the defendant company."
Id.
Oakley makes a compelling argument that the tort of
negligent hiring comports with those tort principles emanating from
recent pronouncements of our appellate courts.
Specifically, she
relies upon Waldon v. Housing Authority of Paducah, Ky.App., 854
S.W.2d 777 (1993), Grayson Fraternal Order of Eagles, Aerie No.
3738, Inc. v. Claywell, Ky., 736 S.W.2d 328 (1987), and M & T
Chemicals, Inc. v. Westrick, Ky., 525 S.W.2d 740 (1974).
These
cases have emphatically affirmed that "[e]very person owes a duty
-6-
to every other person to exercise ordinary care in his activities
to prevent any foreseeable injury from occurring to such other
person."
Westrick, supra at 741; Waldon, supra at 778; and
Grayson, supra at 332.
Our research reveals that most jurisdictions recognize
the
tort
of
negligent
hiring.
See
Carlsen
v.
Wackenhut
Corporation, 73 Wash.App. 247, 868 P.2d 882 (1994) (teen-age girl
sexually assaulted by security guard at rock concert permitted to
sue guard's employer for negligent hiring even though there was no
evidence that employer knew of prior criminal record); Evan v.
Hughson United Methodist Church, 8 Cal.App.4th 828, 10 Cal.Rptr.2d
748 (1992) (child sexually molested by pastor entitled to proceed
against church and church conference on theory of negligent hiring
of pastor where pastor had been censored for inappropriate sexual
behavior at previous employment); J. v. Victory Tabernacle Baptist
Church, 236 Va. 206, 372 S.E.2d 391 (1988) (mother of ten-year-old
raped by church employee allowed to pursue claim of negligent
hiring against church and its pastor where defendants knew or
should have known of employee's recent conviction of sexual assault
on a young girl and nevertheless "entrusted [him] with duties that
encouraged him to come freely into contact with children" and gave
him "keys that enabled him to lock and unlock all of the church's
doors"); Copithorne v. Framingham Union Hospital, 401 Mass. 860,
520 N.E.2d 139 (1988) (rape victim allowed to pursue claim against
hospital for its negligence in extending staff privileges to doctor
where hospital was aware of other allegations of past sexual
misconduct by the doctor); Ponticas v. K.M.S. Inv., 331 N.W.2d 907
-7-
(Minn. 1983) (tenant raped by manager of apartment complex allowed
to maintain action for negligent hiring because landlord/employer
failed to make an adequate investigation of manager's employment
background before entrusting manager with pass key); and Joiner v.
Mitchell County Hospital Authority, 125 Ga.App. 1, 186 S.E.2d 307,
309 (1971) (affirmed at 229 Ga. 140, 189 S.E.2d 412 (1972))
(plaintiff allowed to proceed against hospital on allegations that
it
was
licensed
negligent
and
in
selection
recommended
by
of
other
physician,
doctors
that
on
doctor
staff
did
was
"not
overcome the averments that the hospital was negligent in failing
to exercise care in determining his professional competency"). See
also
Janet
E.
Goldberg,
Problems--Workplace
Employees
Security
and
with
Mental
and
Implications
Emotional
of
State
Discrimination Laws, The Americans with Disabilities Act, The
Rehabilitation Act, Workers' Compensation, and Related Issues, 24
Stetson L. Rev. 201, 215-222 (1994).
In addition to sections 302 B and 449 of the Restatement
(Second) of Torts discussed in Waldon, supra, the parameters of the
tort are defined in Restatement (Second) of Agency ยง 213 (1958), as
follows:
"A person conducting an activity through servants or
other agents is subject to liability for harm resulting from his
conduct if he is negligent or reckless: . . . (b) in the employment
of improper persons or instrumentalities in work involving risk of
harm to others[.]"
Accordingly, we agree with Oakley that the
established law in this Commonwealth recognizes that an employer
can be held liable when its failure to exercise ordinary care in
hiring or retaining an employee creates a foreseeable risk of harm
-8-
to a third person.
See Waldon, 854 S.W.2d at 779.
See generally
Sheehan v. United Services Automobile Assoc., Ky.App., 913 S.W.2d
4 (1996); and Estep v. B. F. Saul Real Estate Investment Trust,
Ky.App., 843 S.W.2d 911 (1992).
Thus, under the standard articulated in Steelvest, Inc.
v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476 (1991), we
have examined the record to determine whether there is a genuine
issue of material fact as to whether Flor-Shin knew, or reasonably
should have known, that (1) Bayes was unfit for the job for which
he was employed, and (2) whether his placement or retention in that
job created an unreasonable risk of harm to Oakley.
such an issue of fact exists in this case.
We believe
Thus, the issue of
Flor-Shin's liability is for a jury to decide.
The
following:
evidence
upon
which
Oakley
relies
includes
the
(1) Bayes had an extensive criminal record prior to
being hired by Flor-Shin which included convictions for burglary,
theft and bail jumping, (2) in 1991 Bayes was arrested for criminal
attempt to commit rape in the first degree and for carrying a
concealed deadly weapon, (3) Flor-Shin had knowledge of Bayes'
criminal background by virtue of his relationship to Charles Martin
(brother-in-law by marriage), Flor-Shin's regional manager who
hired Bayes, or should have known of Bayes' criminal background had
it
conducted
a
criminal
background
check
pursuant
to
its
established policy and agreement with K-Mart, and (4) Flor-Shin
knew that Bayes would be locked inside the K-Mart store with a
single
-9-
K-Mart employee.
Flor-Shin relies on Smith's Adm'r v. Corder,
supra, for its argument that the above recitation of facts was
insufficient as a matter of law to allow Oakley to proceed to
trial.
However, as discussed earlier, Corder was resolved in the
employer's favor because its employee's criminal acts did not occur
on or near the employer's premises, and not because it was not
foreseeable that he would injure someone.
That distinction is
critical, as in the instant case, it was Flor-Shin's knowledge of
Bayes' criminal propensities, coupled with its knowledge that he
would literally be locked inside the work place with one other
person, that creates, in our opinion, an issue of fact for the
jury.
Accordingly, the judgment of the Woodford Circuit Court
is reversed and the matter is remanded for further proceedings
consistent with this Opinion.
ALL CONCUR.
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BRIEFS AND ORAL ARGUMENT FOR
APPELLANT:
BRIEF FOR APPELLEE:
Hon. Robert E. Wier
Lexington, KY
Hon. Ronald L. Green
Hon. E. Holt Moore, III
Lexington, KY
ORAL ARGUMENT FOR APPELLEE:
Hon. Ronald L. Green
Lexington, KY
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