Cameron v. Osler , 2019 S.D. 34 ( 2019 )

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2019 S.D. 34IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
KIMBERLYNN DAWN CAMERON, Plaintiff and Appellant,
v.
JASON ADAM OSLER Defendant,
and
WASTE CONNECTIONS OF
SOUTH DAKOTA, INC., Defendant and Appellee.
****
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
****
THE HONORABLE CRAIG A. PFEIFLE
Judge
****
MICHAEL W. STRAIN of
Strain Morman Law Firm
Sturgis, South Dakota Attorneys for plaintiff and
appellant.
CASSIDY M. STALLEY of
Lynn, Jackson, Shultz
& Lebrun, P.C.
Rapid City, South Dakota Attorneys for defendant and
appellee.
****
CONSIDERED ON BRIEFS ON
APRIL 29, 2019
OPINION FILED 06/19/19
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WILBUR, Retired Justice
[¶1.] After being injured in a car accident, Kimberlynn Cameron brought
suit against Jason Osler. She subsequently filed an amended summons and
complaint, adding a claim for vicarious liability and naming Osler’s employer,
Waste Connections of South Dakota, Inc., as a defendant. However, Cameron failed
to timely serve Osler, and he was dismissed from the suit, leaving only Waste
Connections as a defendant. Waste Connections filed a motion to dismiss, asserting
Cameron’s failure to timely serve Osler precluded suit against Waste Connections.
The circuit court agreed and granted Waste Connections’ motion to dismiss.
Cameron appeals. We reverse.
Background
[¶2.] Osler and Cameron were in an automobile accident on September 23,
2014. When the accident occurred, Osler was operating a vehicle owned by his
employer, Waste Connections. Cameron claimed she was injured as a result of the
accident and that Osler was at fault. On August 29, 2017, she filed a summons and
complaint against only Osler. She delivered the summons and complaint to the
local sheriff’s office to be served upon Osler. However, Osler was never served with
the summons and complaint because he could not be located.
[¶3.] Cameron obtained new counsel and, shortly before the statute of
limitations expired on her claim, she filed an amended summons and complaint.
She named Waste Connections as a defendant and added a claim of vicarious
liability against Waste Connections based on Osler’s negligence. Cameron timely
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served Waste Connections with the amended summons and complaint, but she did
not timely serve Osler. The suit against Osler was ultimately dismissed.
[¶4.] Waste Connections, in its answer to Cameron’s suit, asserted the
statute of limitations as a defense. It also filed a motion to dismiss, arguing that it
could not be held vicariously liable for Osler’s conduct because Osler had been
adjudicated not negligent based on the suit being dismissed against him with
prejudice. In response, Cameron argued that dismissal of Osler did not affect her
suit against Waste Connections because Osler was not a necessary party. In her
view, she needed only to prove Osler acted negligently and did so within the scope of
his employment, not that Osler could be held personally liable.
[¶5.] After a hearing and after considering the parties’ briefs, the circuit
court granted Waste Connections’ motion to dismiss. Cameron appeals, asserting
the circuit court erred. We review de novo whether the circuit court erred in
granting the motion to dismiss. Wojewski v. Rapid City Reg’l Hosp. Inc., 2007 S.D.
33, ¶ 11, 730 N.W.2d 626, 631.
Analysis
[¶6.] Waste Connections’ liability, if any, arises from the doctrine of
respondeat superior. “The ancient doctrine of respondeat superior is well
established as ‘holding an employer or principal liable for the employee’s or agent’s
wrongful acts committed within the scope of the employment or agency.’” Kirlin v.
Halverson, 2008 S.D. 107, ¶ 12, 758 N.W.2d 436, 444 (quoting Black’s Law
Dictionary (8th ed. 2004)). The employer’s liability is merely a derivative of the
employee’s. See Estate of Williams v. Vandeberg, 2000 S.D. 155, ¶ 12, 620
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N.W.2d187, 190. Therefore, we have held that a plaintiff cannot proceed against an
employer when the negligent employee has been released via a settlement with the
plaintiff. Id. This is because “the release of the culpable party extinguishes any
liability of the non-guilty principal.” Id. ¶ 14 (citing Theophelis v. Lansing Gen.
Hosp., 424 N.W.2d 478, 480 (Mich. 1988)).
[¶7.] Here, however, there has been no settlement and release of Osler.
Rather, Cameron’s suit against Osler has been dismissed because the statute of
limitations expired on her claim against Osler. We have not before examined
whether a plaintiff can proceed against an employer when the plaintiff’s suit
against the employee has been dismissed as time barred. According to Osler,
multiple courts have held that such suit is permissible because the employee is not
a necessary party to a vicarious liability claim and the employee’s negligence can be
determined in the employee’s absence. In response, Waste Connections identifies
contrary authority and contends that suit against an employer is precluded because
the employee has been adjudicated not negligent via a dismissal with prejudice.
[¶8.] In Krekelberg v. City of Minneapolis, No. CIV. 13-3562, 2018 WL
3621031 (D. Minn. July 30, 2018), a federal district court examined whether a
plaintiff’s liability claim against the city could proceed even though suit against the
negligent employees had been dismissed. The court acknowledged that a dismissal
with prejudice because of an expired statute of limitations acts as an adjudication
on the merits. Id. at *3. The court, however, found “a meaningful distinction
between a dismissal that actually confronts the merits of the agent’s liability and a
dismissal for some other purely procedural or tactical reason.” Id. The court also
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considered that a plaintiff need not bring suit against the employee before bringing
suit against the employer based on respondeat superior. Id.; accord Leow v. A & B
Freight Line, Inc., 676 N.E.2d 1284, 1288 (Ill. 1997). Therefore, the district court
“rejected the notion that an ‘on-the-merits’ dismissal of an agent plainly disposed of
the corresponding vicarious liability claim against the principal.” Krekelberg, 2018
WL 3621031, at *5.
[¶9.] The Iowa Supreme Court reached the same result in Brosamle v.
Mapco Gas Products, Inc., 427 N.W.2d 473, 475–76 (Iowa 1988). The Iowa court,
however, focused on the underlying purpose of the doctrine of respondeat superior.
In particular, the court observed that the doctrine is intended to hold the master
liable for the servant’s negligence, and “[t]he right of an injured party to sue and
hold the employer liable is, in effect, a direct or primary right.” Id. The court
recognized that a dismissal of an employee with prejudice constitutes an
adjudication on the merits, and “the master has no liability unless the servant is
liable.” Id. However, because an employee’s negligence is not actually adjudicated
and because an employee is not a necessary party, the court held that a dismissal
would not summarily terminate litigation against the employer. Id. at 476; Cohen
v. Alliant Enters., Inc., 60 S.W.3d 536, 538–39 (Ky. 2001).
[¶10.] Similarly relying on principles attendant to the doctrine of respondeat
superior, the Delaware Supreme Court emphasized that “the employer’s liability
hinges upon the employee’s culpability—as distinguished from the employee’s
liability.” Verrastro v. Bayhosptialists, LLC, No. 233, CIV. 2019 WL 1510458, *3
(Del. April 8, 2019). The court further reasoned that treating a dismissal as an
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adjudication on the merits is “not intended to encompass procedural dismissals that
do not adjudicate the wrongfulness of the agent’s conduct.” Id. at *5. Ultimately,
the court held that “in a negligence action against a principal based on the doctrine
of respondeat superior, the dismissal of the agent on a defense personal to the agent
does not automatically eliminate the principal’s vicarious liability.” Id. at *6. The
court also overruled a previous case to the extent that it could be read “to eradicate
otherwise timely claims against a principal because claims based on the same facts
would be time-barred if made against the principal’s agent[.]” Id. (overruling Greco
v. Univ. of Delaware, 619 A.2d 900 (Del. 1993)).
[¶11.] Focusing particularly on the lack of an actual adjudication on the
merits, the Virginia Supreme Court held that a suit against the employer may
proceed even though the suit against the employee is time barred. Hughes v. Doe,
639 S.E.2d 302, 304 (Va. 2007). The court observed that “the crux of respondeat
superior liability is a finding that the employee was negligent.” Id. In the court’s
view, therefore, there must be an “affirmative finding that [the employee] was not
negligent” to preclude suit, rather than a dismissal that merely terminated the
plaintiff’s ability to hold the employee personally liable. Id.; accord Cohen, 60
S.W.3d at 539.
[¶12.] In a similar vein, a Maryland appellate court determined “context
matters.” Women First OB/GYN Assoc. LLC v. Harris, 161 A.3d 28, 40 (Md. Ct.
App. 2017). The court examined the conflicting views of other courts and found
“that an ‘adjudication on the merits’ may not have the same meaning procedurally
as it does substantively.” Id. at 39. Rather, “[t]he dismissal with prejudice is
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simply the procedural mechanism to permanently remove the agent as a defendant
in the case when it was not necessary to include him as a defendant in the case to
begin with.” Id. at 46. The court also considered the lack of risk of double recovery,
namely that the plaintiff received nothing of value from the dismissed employee.
Ultimately, the court held that suit would not be barred against the employer
unless dismissal of the employee is “given in exchange for consideration and the
merits of the tort claim against the agent [has] actually been adjudicated before the
dismissal[.]” Id. at 45.
[¶13.] In contrast to the above authorities, other courts have held that an
employer cannot be held vicariously liable unless a viable cause of action exists
against the employee. In Stephens v. Petrino, 86 S.W.3d 836, 843 (Ark. 2002), the
Supreme Court of Arkansas determined that any liability against an employer is
eliminated when an employee has been released or dismissed and the employer has
been sued solely on the theory of vicarious liability. A previous Arkansas case
explained the basis for that conclusion, namely that suit against the employer
cannot be had because a dismissal of the suit against the employee with prejudice
constitutes an adjudication on the merits. Hartford Ins. Co. v. Mullinax, 984
S.W.2d 812, 816 (Ark. 1999).
[¶14.] Michigan likewise precludes a suit against the employer when the suit
against the employee has been dismissed with prejudice. Al-Shimmari v. Detroit
Med. Ctr., 731 N.W.2d 29, 37 (Mich. 2007). Although initially recognizing that
“[n]othing in the nature of vicarious liability . . . requires that a judgment be
rendered against the negligent agent[,]” see id. at 36, the Supreme Court of
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Michigan ultimately concluded that “the dismissal of the claims against [the
employee] prevents plaintiff from arguing the merits of the negligence claim against
[the employee]” because the dismissal acts as an adjudication on the merits. Id. at
37. If the employee is considered not negligent, then the “[p]laintiff consequently is
unable to show that [the employer is] vicariously liable for the acts of [the
employee].” Id.; accord Law v. Verede Valley Med. Ctr., 170 P.3d 701, 705 (Ariz.
Dist. Ct. 2007) (holding there is no fault to impute to the employer when the suit
against the employee has been dismissed with prejudice).
[¶15.] New York’s highest court also requires a valid cause of action against
the employee to proceed against the employer based on respondeat superior.
Karaduman v. Newsday, Inc., 416 N.E.2d 557 (N.Y. 1980). In Karaduman, the
court held that “it is manifest that there can be no vicarious liability on the part of
the employer if the employee himself is not liable[.]” Id. Thus, if the employee’s
liability has been “effectively extinguished” when the statute of limitations expired,
“any vicarious liability that [the employer] might have had in consequence of its
employees’ alleged misconduct must similarly be deemed extinguished.” Id. at 546.
See also Buettner v. Cellular One, Inc., 700 So. 2d 48, 48 (Fla. Dist. Ct. App. 1997)
(The court held, without elaboration, that a dismissal of the suit against an
employee on an expired statute of limitations “exonerated” the employee; therefore,
the plaintiffs could not proceed against the employer.).
[¶16.] Having considered the differing views, we find more reasoned the
approach that considers the context of the dismissal before precluding suit against
the employer for vicarious liability. Respondeat superior “is a legal fiction designed
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to bypass impecunious individual tortfeasors for the deep pocket of a vicarious
tortfeasor.” Bass v. Happy Rest, Inc., 507 N.W.2d 317, 320 (S.D. 1993). The
employer’s vicarious liability “is a function of status and stems entirely from the
tortious conduct of the [employee], not from any tortious conduct by the [employer.]”
Women First, 161 A.3d at 45; accord Kocsis v. Harrison, 543 N.W.2d 164, 169 (Neb.
1996). Therefore, “[i]t is the negligence of the servant that is imputed to the
master, not the liability.” Cohen, 60 S.W.3d at 538 (emphasis added). Indeed, we
have previously recognized: “[I]t is self-evident, because the master and servant are
severally liable in such circumstances, that the right of plaintiff, at his option, to
sue them separately would remain.” Melichar v. Frank, 78 S.D. 58, 62, 98 N.W.2d
345, 347 (1950).
[¶17.] Nevertheless, Waste Connections claims it “cannot be independently
held liable on a theory of vicarious liability” because Cameron chose to name Osler
as a party and Osler was dismissed. We disagree. First, Waste Connections directs
this Court to no law in support of this proposition. Second, while “the foundation of
the action against the employer is still negligence,” see Verrastro, 2019 WL 1510458,
at *2, liability is imposed because the plaintiff brought suit against the employer
and put on evidence that the employee committed a tort within the scope of
employment, see Women First, 161 A.3d at 45. Therefore, contrary to Waste
Connections’ view, Osler’s culpability can be established even though Osler has no
civil liability to Cameron. See 2A C.J.S. Agency § 463 (June 2019 update) (“[T]he
fact that an agent is able to escape liability because the statute of limitations has
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run as to the agent will not necessarily insulate the principal from vicarious
liability.”).
[¶18.] Here, the dismissal of Osler was purely procedural and available to
Osler because Cameron failed to serve him within the time limit allowed by the
statute of limitations. The dismissal did not examine or determine Osler’s
culpability, and there has been no release of Cameron’s claim or an exchange of
value. Because Cameron properly initiated suit against Waste Connections prior to
the expiration of the statute of limitations, the circuit court erred when it held that
the dismissal of Osler terminated Cameron’s suit against Waste Connections.
[¶19.] Reversed.
[¶20.] GILBERTSON, Chief Justice, and KERN, JENSEN, and SALTER,
Justices, concur.
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