Glass, N. Productions v. Erica Enterprises

J-A19038-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
NANCY GLASS PRODUCTIONS, INC., : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
ERICA ENTERPRISES, INC. AND :
SYSTEM4 OF PHILADELPHIA, LLC AND :
SYSTEM4, LLC, :
:
v. :
:
KEVIN LUKE : No. 3697 EDA 2016
Appeal from the Order entered April 30, 2016
in the Court of Common Pleas of Montgomery County,
Civil Division, No(s): 2013-24995
BEFORE: BENDER, P.J.E., DUBOW and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED AUGUST 31, 2017
Nancy Glass Productions, Inc. (“NGP”) appeals from the Order granting
the Motion for Summary Judgment filed by Erica Enterprises, Inc. (“EEI”)
and System4 of Philadelphia, LLC and System4, LLC (collectively “the
Defendants”). We affirm.
In its Memorandum and Order, the trial court set forth the relevant
factual and procedural history, which we adopt for the purpose of this
appeal. See Memorandum and Order, 4/30/16, at 1-2.1
1
Additional defendant, Kevin Luke (“Luke”), was released from the case on
November 29, 2016, when NGP filed a Motion for discontinuance of the
matter against him. Luke is not a party to the instant appeal.
J-A19038-17
On April 22, 2016, the trial court entered an Order granting summary
judgment in favor of the Defendants. NGP filed a timely Notice of Appeal,
and a court-ordered Pa.R.A.P. 1925(b) Concise Statement of matters
complained of on appeal.
On appeal, NGP raises the following issues for our review:
1. Did the trial court erroneously grant summary judgment to
the [] Defendants on their defense to direct liability for the
thefts and outrageous misconduct of their cleaning
employee[,] when a reasonable jury could find that, in the
exercise of ordinary care, they knew or should have known
that their employee had an extensive criminal history[,]
including charges of attempted murder and drug[-]dealing[,]
that were relevant to both the heightened risk associated with
inserting an employee into a customer’s premises[,] and to
the monetary and property damages that [NGP] suffered from
the employee’s criminal propensities and impulsive,
outrageous conduct?
2. Did the trial court erroneously grant summary judgment to
the [] Defendants on their defense to direct liability for
punitive damages for the thefts and outrageous misconduct
that their employee committed when a reasonable jury could
find their failure to discover, disclose, and respond to Luke’s
prior misconduct was reckless, and that the [] Defendants
subjectively appreciated the risk of harm to which they
exposed [NGP,] but disregarded that risk due to a conflict
between their duty to the customers and the desire to land a
fee-paying franchisee?
-2-
J-A19038-17
Brief for Appellant at 3-4.2
Our scope of review of a trial court’s order granting or
denying summary judgment is plenary, and our standard of
review is clear: the trial court’s order will be reversed only where
it is established that the court committed an error of law or
abused its discretion.
Summary judgment is appropriate only when the record
clearly shows that there is no genuine issue of material fact and
that the moving party is entitled to judgment as a matter of law.
The reviewing court must view the record in the light most
favorable to the nonmoving party and resolve all doubts as to
the existence of a genuine issue of material fact against the
moving party. Only when the facts are so clear that reasonable
minds could not differ can a trial court properly enter summary
judgment.
Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting
Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)).
As NGP’s claims are related, we will address them together. In its first
issue, NGP contends that the Defendants owed a duty to use ordinary care
to protect NGP from harm by Luke. Brief for Appellant at 33. NGP asserts
that the Defendants’ “system” was to grant privileged access to its
franchisees without any reasonable investigation or ordinary care. Id. NGP
claims that “the dutiful objective of hiring trustworthy cleaners to service
[EEI’s] customers was undercut by the conflicting motive to sell notional
2
In its brief, NGP attempts to raise an additional issue: that “[t]here is
evidence on which a reasonable jury could find that [EEI] and System4, LLC
had sufficient control [over Luke] to establish employer liability.” Brief for
Appellant at 41-42. However, as this issue was not included in NGP’s
Statement of the Questions Involved, we decline to address it. See
Pa.R.A.P. 2116 (providing that “[n]o question will be considered unless it is
stated in the statement of questions involved or is fairly suggested
thereby.”).
-3-
J-A19038-17
franchises to persons willing to pay the [Defendants] for the opportunity to
work for less than minimum wages.” Id. at 34. NGP contends that “a jury
could reasonably find that the [Defendants] had every incentive not to
conduct investigations that might spoil franchise sales.” Id. (emphasis in
original). NGP asserts that “the very risks that should have been disclosed
had the [D]efendants exercised ordinary care were realized when Luke, who
had a long career of crime, stole property from [NGP].” Id. NGP claims that
EEI did not do any screening when selling a franchise to Luke, did not check
his references, conducted no background check, and did not ask about his
criminal history or level of education. Id. at 35; see also id. (noting that
EEI estimated that its interviews with potential franchisees lasted an hour).
NGP contends that a jury could reasonably have found that EEI had a duty to
investigate and conduct a background check on Luke, thereby creating a
genuine question of material fact precluding summary judgment. Id. at 39.
In its second issue, NGP contends that the Defendants owed a
heightened duty of care to NGP to hire honest cleaners of trustworthy
character. Id. at 43. NGP asserts that the Defendants breached that duty
when they “intentionally and as a matter of settled practice,” did not
perform a background check on Luke or ask him if he had ever been
convicted of a crime. Id. at 43-44. NGP claims that, under these facts, a
jury could find that the Defendants “willfully and recklessly turned a blind
-4-
J-A19038-17
eye to potential disqualifying information that might have spoiled a franchise
sale.” Id. at 44.
In its Memorandum and Order, the trial court addressed NGP’s issues
and determined that, although reasonable minds could differ as to whether
Luke was an employee or an independent franchisee, the issue was
ultimately of no moment because (1) if Luke was found to be an employee,
employer liability would not attach because Luke’s actions were outside the
scope of his employment;3 and (2) if Luke was a franchisee, then vicarious
liability would not attach. See Memorandum and Order, 4/30/16, at 3. The
trial court further reasoned that, interpreting NGP’s claim as one for
negligent hiring, EEI was not directly liable to NGP because Luke’s “prior
convictions for aggravated assault and possessing an instrument of crime
are unakin to theft and inappropriate sexual activity such that it would be
wrong to impute notice of Luke’s proclivities to engage in such conduct.” Id.
at 5-6. Viewing the record in the light most favorable to NGP, as the non-
moving party, we agree with the trial court’s determination, which is
supported by the record and free of legal error. Accordingly, we affirm the
trial court’s entry of summary judgment in favor of the Defendants. See id.
at 3, 5-6.
Order affirmed.
3
On appeal, NGP concedes that Luke’s actions were outside the scope of his
employment. See Brief for Appellant at 41 n.7.
-5-
J-A19038-17
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/31/2017
-6-
IN THE COURT OF COMMON PLEAS OF
MONTGOMERY·COUNTY, PENNSYLVANIA
CIVIL DIVISION
NANCY GLASS PRODUCTIONS, INC. No. 2013-24995
.
v. .
ERICA ENTERPRISES, INC. d/b/a
SYSTEM4 OF PIULADELPIUA,
SYSTEM4, LLC .
.
v.
.
KEVIN LUKE .
MEMORANDUM AND ORDER
Before the Court is a Motion for Summary judgment filed by Erica Enterprises , Inc.
d/b/a System4 of Philadelphia and System4, LLC ("Moving Defendants"). Because this court
finds that the non-moving party has not shown that a genuine issue of material fact exists on the
claims asserted by Plaintiff, the entry of summary judgment in favor of the Moving Defendants
is warranted.
FACTS
Defendant System4, LLC is a company that sells janitorial franchises across the country
to regional franchisors. The regional franchisors typically sell the franchises to unit franchisees,
who provide the actual cleaning services to customers. Defendant Erica Enterprises, Inc., d/b/a
System4 of Philadelphia ("Erica Enterprises") is a regional franchisor that purchased System4
franchises from System4, LLC. Erica Enterprises sold a unit franchise to Defendant Kevin Luke
("Luke"). As a franchisee, Luke operated a cleaning business under the System4 brand pursuant
to a franchise agreement between him and Erica Enterprises.
l
2013-24995-0122 Opinion, Page 3
In late 2011. Plaintiff Nancy Glass Productions, Inc., a television production company,
entered into a contract with Erica Enterprises to provide janitorial services at Plaintiff's office.
Erica Enterprises offered the cleaning account for Plaintiff's office to franchise to unit franchisee
Kevin Luke, who accepted the account. That agreement provided that the cleaning services
would be performed by an independent franchisee, in this case, Luke.
On or around February 7, 2012. Luke and members of his cleaning crew allegedly
engaged in theft and sexual activity on Plaintiff's property. Luke admits to having sex on one
occasion but denies any allegations of theft.
On August 6, 2013, Plaintiff sued Moving Defendants claiming that they were
responsible for the intentional torts committed by Luke while on the Plaintiff's premises. Against
Moving Defendants. Plaintiff pled direct negligence, 1 vicarious liability, breach of contract,
conversion, and punitive damages. On December 13, 2013, Moving Defendants joined Luke as
an additional defendant, asserting that Luke was solely liable or jointly and severally liable.
Moreover. Moving Defendants asserts that Luke is obligated to indemnify Moving Defendants
on the claims asserted against them by Plaintiff. On October 26, 2015, Moving Defendants filed
the instant Motion for Summary Judgment. seeking dismissal of all claims made against them.
Alternatively, Moving Defendants request dismissal only of Plaintiff's claims for punitive
damages,
DISCUSSION
I. Summary Judgment Standard
Summary judgment may be granted only where the evidence of record creates no issue of
material fact, when viewed in the light most favorable to the non-moving party, and where the
movant is entitled to judgment as a matter of law. Pa.RC.P. I 035.2; Davis v. Pennzoil, 264 A.2d
I
See Section 3, i'lfra.
2
2013-24995-0122 Opinion, Page 4
597 (Pa. 1970); Rohrer v. Pope, 918 A.2d 122 (Pa Super. Ct. 2007). After movant has set forth
in the motion the necessary elements warranting summary judgment, the non-moving party must
demonstrate that there is a genuine issue for trial and may not rest on the avennents set forth in
pleadings. Accu-Weather, Inc. v. Prospect Comms., Inc. 644 A.2d 1254 (1994); Ertel v. Patriot-
News Co, 674 A.2d I 038 (Pa. 1996).
l. Plaintiff's Vicarious Liability Claims
Moving Defendants make two arguments in their Motion in regards to vicarious liability.
First, Moving Defendants claim that because Luke was an independent franchisee, they as
franchisors are not vicariously liable for his conduct. Second, Moving Defendants contend that
even if Luke is classified as an employee, his conduct fell outside of the scope of his
employment, thereby dissolving vicarious liability.
a. Moving Defendants are Not Vicariously Liable for Luke's Actions if Luke
is Determined to be an Independent Franchisee
In regards to the first argument, we find that reasonable minds could differ on whether
Luke was an employee or an independent franchisee. However, as discussed infra, this issue is
ultimately ofno moment. If Luke was an independent franchisee, Moving Defendants are not
vicariously liable. Drexel v. Union Prescription Centers, Inc.• 582 F.2d 781, 785 (3d Cir.1978).
If,on the other hand, Luke is found to be an employee, then Moving Defendants are still not
vicariously liable because his conduct would have fallen outside the scope of his employment, as
will be more fully discussed below.
b. If Luke Was an Employee of Moving Defendants, His Conduct Fell
Outside the Scope of His Employment
This court agrees with Moving Defendants that they are not vicariously liable for Luke's
alleged wrongdoing because even if Luke was an employee, Luke's conduct grossly deviated
3
J
2013-24995-0122 Opinion, Page 5
from the scope of his employment. Luke's conduct fell so far outside the scope of what he was
engaged to do that Moving Defendants ace entitled to summary judgment as a matter of law as to
vicarious liability.
It is well settled that an employer may be held vicariously liable for the negligent acts of
an employee that causes injuries to a third party. provided that such acts were committed during
the course of and within the scope of employment. Fitzgerald v. McCutcheon, 410 A.2d 1270,
1271 (Pa. Super. Ct. 1978). Conduct falls within the scope of employment if: ( l) it is of a kind
and nature that the employee is employed to perform; (2) it occurs substantially within the
authorized time and space limits of the job; and (3) it is actuated, at least in part, by a purpose to
serve the employer. R.A. v. First Church of Christ, 748 A.2d 692, 699 (Pa. Super. Ct. 2000).
In certain circumstances, liability of the employer may also extend to intentional or
criminal acts committed by the employee. Costa v. Roxborough Mem 'I Hosp., 708 A.2d 490, 493
(Pa. Super. Ct. 1998). The determination of whether a person was acting within the scope of
employment is typically a question for the jury. Id. However, our courts have carved out
exceptions to this factfinding rule when the employee's act was so excessive as to be totally
without responsibility or reason. Id. This exception arises out of the third prong of the test set
forth in R.A., namely that the offending conduct is actuated, at least in part, by a purpose to serve
the employer. R.A., 748 A.2d at 699. In that case, the Superior Court affirmed the entry of
summary judgment for defendant church on a vicarious liability claim stemming from allegations
of sexual abuse of a minor. The court concluded that "(n)othing about [defendant's) sexual abuse
of [minor] had any connection to the kind and nature of his employment as a minister." Id. at
700.
4
2013-24995-0122 Opinion, Pag¢ 6
Pennsylvania courts have come to the same conclusion in cases where the offending
conduct was far less egregious. In He" v. Simplex Box Corporation, 198 A. 309 (Pa. 1938), the
Plaintiffs clothing, on which gasoline was accidentally spilled, was ignited after a factory
employee standing nearby struck a match to light a cigarette. Plaintiff sued the factory under a
theory of vicarious liability. Our Supreme Court reversed a verdict for the plaintiff because the
striking of the match for the purpose of lighting a cigarette was sufficiently unrelated to the job
the factory employee was tasked with performing. Id. at 310. "[Ijn striking the match the servant
was doing nothing in furtherance on in connection with his employer's business." Id
In the case before us, Luke and/or members of his crew are alleged to have converted
property and engaged in sexual activity on the job site. Neither of these activities in any way
could have been actuated for any purpose other than a purely personal one. Even though the
alleged malfeasance occurred within the office Luke and his crew were supposed to clean; the
conduct fell so far afield of his contractual duties that his putative employer cannot be held
vicariously liable for damages arising therefrom.
3. Moving Defendants are Not Directly Liable for Negligent Hiring or Negligent
Supenri!ion
In Count IV of the Complaint, Plaintiff avers that System4 of Philadelphia "negligently
supervised their employees or representatives they retained to perform the Cleaning Services."
(Compl. 173). Even though the Count is couched in "Negligence and Vicarious Liability," we
read this Count to include claims for direct liability for negligent supervision and negligent
hiring. We find no merit in either claim.
An employer owes a duty to "exercise reasonable care in selecting, supervising and
controlling employees." R.A., 748 A.2d at 697. To establish liability, plaintiff must show that the
employer "knew or, in the exercise of ordinary care, should have known of the necessity for
5
i
I
2013-24995-0122 Opinion, Page 7
I
i
!
exercising control of his employee." Dempsey v. Wa/so Bureau, Inc .• 246 A.2d 418, 422 (1968).
In other words, a plaintiff seeking to recover must show that 1) the employer knew or should
have known of the propensity of the employee and 2) such employment creates a situation in
which a third party may be banned. Coatb v. Jones. 419 A.2d l 249, 1250 (Pa. Super. Ct. 1980).
In Harris v. KFC US. Properties, Inc; 2012 WL 2327748 (E.D.Pa. 2012) the Eastern
District Court granted summary judgment for KFC in a case arising out of the employee's on-
the-job assault of a customer. A basic background check would have uncovered prior convictions
for theft, but no convictions for violent crimes. Id. at •1. Even ifKFC had conducted a
background check, KFC would have had no notice that the employee was predisposed to engage
in assaultive behavior. The federal trial court found that because it was not foreseeable that the
employee would assault a customer, the employer was absolved of direct liability.
Plaintiff claims that Moving Defendants should not have engaged Luke because of his
criminal background. It is admitted that Luke has a criminalbackground, but his prior
convictions for aggravated assault and possessing an instrument of crime are unakin to theft and
inappropriate sexual activity such that it would be wrong for the court to impute notice of
Luke's proclivities to engage in such conduct. Accordingly, assuming arguendo that Luke is an
employee, see supra Section 2. Moving Defendants are not directly liable for negligent hiring or
negligent supervision.
4. Claims for Punitive Damages Must Fail Because the Underlying Claims Fail
Punitive damages are collateral or ancillary to a tort claim and are only recoverable upon
a showing of'outrageous' conduct on the part of the defendant," Baker v. Pa. Nat'l Mui. Cas.
Ins. Co., 559 A.2d 914, 916 (Pa. 1989).
6
2013-24995-0122 Opinion, Page 8
Plaintiffs seek punitive damages against Moving Defendants. However, this claim fails
because, as discussed above, Moving Defendants are not liable for outrageous conduct.
CONCLUSION
Defendants System4, LLC and Erica Enterprises are entitled to summary judgment as a
matter of law as to vicarious liability arising from the alleged misconduct of Defendant Luke
and/or his crew. All claims and cross-claims directed to 1) Erica Enterprises, Inc. d/b/a System4
of Philadelphia and 2) System 4, LLC are dismissed. Plaintiff's case to proceed against Luke as a
result of the joinder of Luke within the applicable statute of limitations.
7