December 5, 2012
RICHARD TAPPEL, AN INCOMPETENT BY HIS GUARDIAN AD LITEM, JANICE TAPPEL AND JANICE TAPPEL, INDIVIDUALLY, PLAINTIFFS-APPELLANTS,
RENSO F. ARANGO, LUIS GAVIRIA, LG TRUCKING, DEFENDANTS,
AND TILCON NEW YORK, INC., DEFENDANT-RESPONDENT.
EDWIN C. JOHNSON, JR., INDEPENDENT EXECUTOR OF THE ESTATE OF EDWIN C. JOHNSON, DECEASED,
RENSO F. ARANGO, LUIS GAVIRIA, LG TRUCKING, DEFENDANTS,
AND TILCON NEW YORK, INC., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5012-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 2, 2012
Before Judges Reisner, Yannotti and Hoffman.
Plaintiffs appeal from the December 9, 2011 Law Division order granting the summary judgment motion filed by defendant Tilcon New York (Tilcon), and the resulting dismissal of their claims against Tilcon. They also appeal from the January 20, 2011 order denying their motion for reconsideration. After careful review, we conclude the record before the trial court presented a genuine issue of material fact regarding the issue of agency. Accordingly, we reverse.
In the early morning hours of August 29, 2006 in Union Township, defendant Renso Arango (Arango) crashed the dump truck he was driving into the back of the vehicle driven by plaintiff Richard Tappel (Tappel) causing serious injuries to Tappel and fatal injures to his passenger, Edwin Johnson.*fn1 At the time of the accident, Arango was employed by a trucking company owned by defendant Luis Gaviria (also the owner of the truck involved in the accident) doing business as LG Trucking. On the day of the accident, Arango was driving from the LG Trucking parking lot to a site in Mount Hope owned and operated by Tilcon in order to pick up and then deliver a load of construction materials.
Tilcon produces construction materials and provides road construction services in New York and New Jersey. It operates quarries, asphalt plants and material recycling facilities at various sites; its construction services include asphalt paving, road construction, and related work. At the Mount Hope location, Tilcon conducts asphalt, aggregate crushed stone, and recycling operations. Tilcon supplies material to its construction crews as well as outside contractors involved in commercial and public works projects.
Tilcon does not utilize its own trucks to deliver construction
material; instead, it uses independent trucking contractors. In 2006,
Tilcon utilized over three hundred such contractors to deliver its
material. Tilcon pays the trucking companies, referred to as
"vendors," on a per delivery basis to haul materials either to a
Tilcon construction site or to an outside Tilcon customer.*fn2
While all of Tilcon's in-house paving crews are supplied
materials by the outside trucking contractors, less than five percent
of external sales are delivered using these vendors.*fn3
In order to haul material for Tilcon, trucking companies must enter into a vending agreement with Tilcon, which outlines Tilcon's terms and conditions, mandatory safety compliance information and insurance requirements. Once a trucking company signs this agreement it becomes eligible to haul from Tilcon facilities. On December 5, 2005, Tilcon and LG Trucking entered into such an agreement, titled Trucking Material Supply Agreement. The agreement required LG Trucking to provide the following insurance coverage: Workers Compensation Coverage with a liability limit of $500,000; Commercial General Liability Coverage with a liability limit of $1,000,000 per occurrence and $3,000,000 in the aggregate; and Business Automobile Liability Coverage with a liability limit of $1,000,000. The agreement further provided:
This Trucking Material Supply Agreement shall not constitute an exclusive arrangement and Tilcon shall remain free to engage persons to perform hauling work including work of the same type then being performed by this Trucking Material Supplier. Trucking Material Supplier acknowledges that its status under this Agreement, and its relationship to Tilcon in all respects, shall be that of an independent contractor, and not an employee, agent, or subcontractor, and Trucking Material Supplier shall not make any commitment nor incur any charges or expenses in the name of Tilcon.
In July 2001, Gaviria started the corporation LG Trucking, which primarily hauled materials for Tilcon.*fn4 In August 2006, the corporation operated two trucks, one driven by Gaviria and the other driven by Arango. Arango began working for LG Trucking about one to three months before the accident and continued at LG Trucking for about two and a half years after the accident. Arango currently works for Leo's Trucking, another trucking contractor that performs hauling services for Tilcon. Before his employment with LG Trucking, Arango worked for multiple other trucking contractors that did work for Tilcon over a period of several years. He initially met Gaviria while both were hauling from Tilcon's Mount Hope facility.
Each morning, Arango arrived at the Mount Hope Tilcon site between 5 and 6 a.m., where he would report to the Tilcon dispatcher. The dispatcher would direct him to his first delivery, would require that he return after the delivery, and would then direct him to his next delivery. The Tilcon dispatcher also controlled when Arango left work for the day. For safety, Tilcon required Arango to wear safety boots, a helmet and a reflective vest, as well as to stay up to date on Tilcon's safety procedures.
Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). The determination of whether there is a genuine issue of material fact should be made viewing all relevant evidence and reasonable inferences "in the light most favorable to the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). The proper standard of review for summary judgment is de novo. Simonetti v. Selective Ins. Co., 372 N.J. Super 421, 427 (App. Div. 2004).
Typically, the determination of whether an employer-employee relationship exists is a factual issue for the jury to decide and is rarely determined as a matter of law. Bennett v. T & F Distrib. Co., 117 N.J. Super. 439, 441 (App. Div. 1971). However, if there are no disputed facts or inferences that may be drawn from undisputed facts regarding the employment relationship, a judge may properly grant summary judgment to the moving party. Marion v. Public Service Electric & Gas Co., 72 N.J. Super. 146, 157-58 (App. Div. 1962). A trial judge should only make an agency determination where the facts and inferences are completely one-sided, and a rational jury could not possibly come to an alternate conclusion. Mangual v. Berezinsky, 428 N.J. Super. 299, 308 (App. Div. 2012).
"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." Carter v. Reynolds, 175 N.J. 402, 408 (2003) (emphasis omitted). "The employer, having 'set the whole thing in motion, should be held responsible for what has happened.'" Galvao v. G.R. Robert Constr. Co., 179 N.J. 462, 467 (2004) (quoting W. Page Keeton, et al., Prosser and Keeton on Torts § 69, at 500 (5th ed. 1984)).
"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." Carter, supra, 175 N.J. at 408-09 (emphasis omitted) (citing Lehmann v. Toys 'R' Us, Inc., 132 N.J. 587, 619 (1993)). "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." Id. at 409. The focus of whether a master-servant relationship exists, more recently referred to as the employer-employee relationship, turns on the nature of the relationship between both parties. Ibid.
"The relationship of master and servant is not capable of an exact definition . . . [and] must be determined in the light of the totality of the facts surrounding the relationship." Gilborges v. Wallace, 153 N.J. Super 121, 132 (App. Div. 1977) (citing Andryishyn v. Ballinger, 61 N.J. Super. 386, 391 (App. Div. 1960)). "[O]rdinarily where a person engages a contractor, who conducts an independent business by means of his own employees . . . he is not liable for the negligent acts of the contractor in the performance of the contract." Mavrikidis v. Petullo, 153 N.J. 117, 131 (1998) (quoting Majestic Realty Associates, Inc. v. Toti Contracting Co., 30 N.J. 425, 430-31 (1959) (no agent relationship where contractor supervises to ensure work is completed, but does not supervise the manner in which work is completed)).
In determining whether agency exists, New Jersey applies the standard set forth in section 220 of the Restatement (Second) of Agency. Carter, supra, 175 N.J. at 409. 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. (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;
(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. [Restatement (Second) of Agency § 220 (1958).]
Furthermore, New Jersey has provided an additional "catch-all" factor, stating that courts should consider "such other factors as may be reasonably considered in determining whether the entity for which the services are being performed controls, or has the right to control, the entity performing the services." Model Jury Charges (Civil) 5.10I(A)(11) (2011); see Carter, supra, 175 N.J. at 410.
Although each factor should be considered based on the totality of the circumstances, the primary and oftentimes determinative factor considered by courts is whether the employer exercised control over the individual in question. See Galvao, supra, 179 N.J. at 467. ("The traditional 'essence' of vicarious liability based on respondeat superior relies on the concept of employer 'control' over an employee." (emphasis omitted)). Control is determined where the employer has "'the right to direct the manner in which the business shall be done, as well as the result to be accomplished, or in other words, not only what shall be done, but how it shall be done.'" Wright v. State, 169 N.J. 422, 436-37 (2001); see also Majestic, supra, 30 N.J. at 431 ("The supervisory interest relates to the result to be accomplished, not to the means of accomplishing it.").
In New Jersey, control can be established where the employer has either "broad control" or "on-spot control." Galvao, supra, 179 N.J. at 472. "Broad control" exists where the employer has such a broad influence over the entire project that the court may infer the employer's right to control the employee. Ibid. Some factors to consider when determining "broad control" are the method of payment, which party furnishes equipment, and whether the employer has right of termination. Ibid. On the other hand, "on-spot control" refers to the employer's actual control over the employee's day to day work, such as directing the individual's activities while working, providing a supervisory role or having responsibility for an employee's safety. Ibid.
Because this determination often involves the complex application of numerous factors, there is no "consistent definition of what is meant by the notion of 'control.'" Id. at 469 (citing Devone v. Newark Tidewater Terminal Inc., 14 N.J. Super. 401, 406-407 (App. Div. 1951) (Schettino, J.S.C., concurring)). As a result, circumstances will often arise where two employers could potentially be subject to vicarious liability, because both have exerted control over the employee. Id. at 474. Therefore, the status of employer is not exclusive and where two employers exert some level of control over an employee, "'commonly both employers have a measure of control and the business of both is being done.'" Id. at 469 (quoting 5 Fowler V. Harper et al., The Law of Torts § 26.11, at 68 n. 14 (2d ed. 1986)). In such cases, both would be subject to vicarious liability under the doctrine of respondeat superior.
According to the trial court, "Tilcon and LG Trucking were engaged in distinct businesses. Tilcon's regular business was mining and crushing raw materials for sale to third parties. LG Trucking was engaged in the business of hauling and trucking." The trial court failed to note, however that Tilcon also engages in construction services. It does not appear the court considered this important fact in deciding to grant Tilcon's summary judgment motion.
We are satisfied that the record before the motion judge established genuine issues of material fact as to whether Tilcon had either broad or on-spot control over its trucking contractors. First, Tilcon arguably had broad control over the its construction projects, and it can be reasonably inferred that such control extended to the delivery of materials by contractors such as LG Trucking. Tilcon controlled the worksite where the materials were picked up for delivery and where drivers reported. Most of the time, haulers delivered to Tilcon construction sites, which meant Tilcon controlled the delivery destination sites and remained the owner of the materials transported. In fact, in those situations, Tilcon controlled virtually every aspect of the entire process, from the initial production of materials to the final construction work.
Additionally, Tilcon maintained substantial on-spot control over its trucking contractors. Although Tilcon did not supervise the drivers during the actual transportation of construction materials, Tilcon directed which deliveries were to be taken, as well as where and when. It supervised both the loading and unloading of the materials and Tilcon dispatchers told drivers when they could depart each day.
We note that the Court in Galvao emphasized that circumstances may arise that justify holding more than one employer liable for the actions of an employee under the respondeat superior test. Galvao, supra, 179 N.J. at 474. Therefore, the fact that LG Trucking has an employer-employee relationship with Arango does not preclude Tilcon from also engaging in such a relationship. Tilcon may also be held liable if, applying the factors listed above, the jury determines that Tilcon exerted the requisite level of control to establish an employer-employee relationship with Arango. Ibid.
Disputed inferences regarding the employment relationship should generally be decided by the finder of fact and preclude entry of summary judgment. See Marion, supra, 72 N.J. Super. at 157-58.
Like in Mangual, "[w]e do not determine that no rational jury could arrive at the same conclusions from these facts, but only that a rational jury could as readily conclude the opposite." Mangual, supra, 428 N.J. Super. at 308. Additionally, although the facts in Mangual were substantially undisputed, we found that "the inferences that may be drawn from these facts vary greatly." Ibid. Accordingly, we concluded that the determination of whether an employer-employee relationship existed between the two parties should properly be made by a jury. Id. at 309.
Similarly, the facts of the instant case are substantially undisputed. However, the inferences that can be drawn after applying the numerous factors vary significantly and a rational jury could potentially come to the opposite conclusion than that of the trial judge.
As discussed above, the greater the degree of control an entity exercises over a worker, the greater the likelihood that an employer-employee relationship will be found to exist. There is sufficient evidence in the record from which a jury could reasonably infer that Tilcon exercised broad control over Arango and LG Trucking in the delivery of the materials to its construction sites. According to the contracting agreement, Tilcon has very little control. The contract expressly allows both LG Trucking and Tilcon to do business with other similarly situated entities, names LG Trucking as an independent contractor, and provides no set schedule for work. The only requirements under Tilcon's boilerplate contracting agreement for vendors are that trucking contractors must obtain insurance coverage and that drivers must follow the company's safety guidelines. Additionally, Tilcon has alleged that trucking contractors were not required to work a set number of hours, that it did not take part in the training or hiring of drivers, that it did not have any direct contact with drivers prior to a delivery, that it did not issue any materials to the drivers, and that it did not supervise or direct drivers as to the means and method of delivery.
On the other hand, Arango testified that he arrived at Tilcon between 5 and 6 a.m. as part of a set schedule. Arango's routine was to arrive at Tilcon each day; he did not contact LG Trucking for instructions prior to arriving at the Tilcon worksite, nor did he contact Tilcon to determine whether deliveries were available. LG Trucking only contacted Arango to give instructions in the morning if an unexpected change to the usual schedule arose. Upon arrival, Arango would report to a Tilcon dispatcher. The dispatcher would assign Arango his first delivery, where it needed to go, and it was understood that Arango would return after the delivery for further instruction. The Tilcon dispatcher also controlled when Arango was finished with work each day. The record does not establish the extent of direction and supervision given by Tilcon to drivers loading and unloading materials, but Tilcon representatives clearly exerted some level of control during this process and Tilcon was responsible for ensuring that drivers met the company's safety regulations while working at the sites.
The record also indicates that LG Trucking was economically dependant on Tilcon, as it did not have any business or customers besides Tilcon, which is suggestive of control. Conversely, LG Trucking was only one of 300 hauling firms utilized by Tilcon. Finally, Tilcon controlled the vast majority of worksites involved in the deliveries, which could potentially support the inference that it had the right to control any individuals working on its projects, including outsourced drivers from trucking contractors. See Galvao, supra, 179 N.J. at 472.
It is noteworthy that the issue of control represents the most determinative factor in this test. Id. at 467. Thus, the disputed inferences that can be drawn here are of particular consequence when determining whether a rational jury could come to an opposite conclusion than that of the trial judge.
If an employee's occupation is distinct from that of the employer, the result is that the employee is more likely to be considered an independent contractor. The evidence is not so one-sided as to permit the trial court to determine as a matter of law that LG Trucking was an independent contractor. Tilcon contends that trucking is a distinct occupation from its usual course of business, which is primarily mining, not truck driving. Tilcon does not own any trucks equipped to transport large loads of materials, it does not directly employ the drivers, and it does not keep employment files for drivers. Tilcon analogizes its trucking contractors to any other outsourced delivery service hired to transport materials.
On the other hand, plaintiffs argue that the trucking companies fulfill an essential part of Tilcon's business activity by transporting the construction materials that Tilcon has produced to the worksites where Tilcon uses these materials in its construction work. Tilcon engages in the business of manufacturing raw materials and then using these materials to complete construction projects. As an integral part of this business, Tilcon must transport the materials it produces to its construction worksites. According to plaintiffs, the trucking contractors perform a function that is part of Tilcon's everyday business activity and therefore should not be considered distinct.
Due to the genuine issues of material fact presented in the record, the determination of whether an employer-employee relationship existed between Tilcon and Arango should have been decided by a jury. Thus, the trial court inappropriately entered summary judgment.
Reversed and remanded.