STATE OF INDIANA TRANSPORTATION COMPENDIUM OF LAW
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1 STATE OF INDIANA TRANSPORTATION COMPENDIUM OF LAW Phil L. Isenbarger Bingham McHale, LLP 2700 Market Tower 10 West Market Street Indianapolis, IN Tel: (317) E mail: pisenbarger@binghammchale.com
2 A. Elements of Proof for the Derivative Claims of Negligent Entrustment, Hiring/Retention and Supervision Under Indiana Law 1. Respondeat Superior (Let the master answer) theory of Respondeat Superior in Indiana? 1 A principal or employer is liable for the tortious acts of its agent or employee when the agent s tortious acts were done within the course and scope of the employment. Clark v. Millikin Mortg. Co, 495 N.E.2d 544 (Ind. Ct. App. 1986); Estate of Mathes v. Ireland, 419 N.E.2d 782, 786 (Ind. Ct. App. 1981). Indiana does not recognize the doctrine of placard liability. The mere fact that [defendant s] name was displayed on the side of the vehicle is wholly insufficient to support any reasonable inference that the driver, whoever it may have been, was an agent or employee of [defendant] and that he was acting within the scope of his employment. State v. Halladay, 374 N.E.2d 51, 53 (Ind. Ct. App 1978) (citing Pace v. Couture, 276 N.E.2d 218 (Ind. Ct. App. 1971). The actions of an independent contractor can result in liability only if the court or jury determines that an employee-employer relationship exists. The biggest factor in this determination is the existence of a mutual belief that an employee-employer relationship exists. Kahrs v. Conley, 729 N.E.2d 191, 194 (Ind. Ct. App. 2000). 2. Negligent Entrustment theory of negligent entrustment in Indiana? Generally, when a person ceases to control an instrumentality, liability does not attach to that person for injuries inflicted by it. Johnson v. Patterson, 570 N.E.2d 93, 96 (Ind. Ct. App. 1991). However, An exception exists where the instrument is entrusted to one who is incompetent or irresponsible or who lacks the capacity to safely use or operate the instrumentality. Id. Liability under a theory of negligent entrustment requires proof of: 1) an entrustment, 2) to an incapacitated person or one who is incapable of using due care, 3) with actual and specific knowledge that the person is incapacitated or incapable of using due care at the time of the entrustment, 4) proximate cause, and 5) damage. Estate of Heck ex rel. Heck v. Stoffer, 752 N.E.2d 192, 1 It is important to note that Indiana law may be preempted in many cases by Federal Motor Carrier Safety Administration regulations. This is especially likely if the truck is involved in interstate commerce. 2
3 200 (Ind. Ct. App. 2001) (quoting Johnson v. Patterson at 97); see also Straley v. Kimberly, 687 N.E.2d 360 (Ind. Ct. App. 1997). 3. Negligent Hiring/Retention theory of negligent entrustment in Indiana? Indiana recognizes both negligent hiring and negligent retention as the same tort. See Levinson v. Citizens Nat. Bank of Evansville, 644 N.E.2d 1264, 1269 (Ind. Ct. App. 1994). An employer will be liable for the tort of negligent hiring and retention if the employer failed to exercise reasonable care. Konkle v. Henson, 672 N.E.2d 450, (Ind. Ct. App. 1996) (citing Frye v. American Painting, 642 N.E.2d 995, 998 (Ind. Ct. App. 1994)). Indiana Courts determine the standard of reasonable care in hiring and retention according to the Restatement (Second) of Torts 317 as the standard for this tort. Id. Section 317 states: A master is under a duty to exercise reasonable care 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. Furthermore, the commentary to 317 states that the master may subject himself to liability under the rule stated in this Section by retaining in his employment servants who, to his knowledge, are in the habit of misconducting themselves in a manner dangerous to others. Restatement (Second) of Torts, 317, Comment (quoted by the Indiana Court of Appeals in Konkle). b. A Caveat Furthermore, if it is determined that the employee was acting within the scope of employment when a tort was committed, liability cannot be predicated on the theory of negligent hiring or negligent retention. Although Indiana law recognizes a separate cause of action for the 3
4 negligent hiring of an employee, that theory is of no value where an employer has stipulated that his employee was within the scope of his employment. The doctrine of respondeat superior provides the proper vehicle for a direct action aimed at recovering the damages resulting from a specific act of negligence committed by an employee within the scope of his employment. Tindall v. Enderle, 320 N.E.2d 764, 768 (Ind. Ct. App. 1974). See also Shipley v. City of South Bend, 372 N.E.2d 490, 493 (Ind. Ct. App. 1978). 4. Negligent Supervision theory of negligent supervision in Indiana? B. Defenses Liability for negligent supervision requires that a special relationship exists between the defendant and the party whose behavior ought to have been controlled. Estate of Heck ex rel. Heck v. Stoffer 752 N.E.2d 192, 203 (Ind. Ct. App. 2001). This relationship exists where There is a dependency, that is, a person in need of special supervision or protection from someone who is in a superior position to provide it. Id. Indiana Courts generally follow the Restatement (Second) of Torts to determine whether a relationship at question creates a duty to control a third person to prevent the third person from causing physical harm to another. Id.; See also Bowling v. Popp, 536 N.E.2d 511, 515 (Ind. Ct. App. 1989). The restatement dictates that a master has an affirmative duty to control the conduct of his servants. Id. 1. Admission of Agency If an employer admits or stipulates the agency relationship between itself and the employee thus admitting to liability under a theory of respondeat superior, it is likely that no other theory of negligence will be accepted by Indiana Courts. The doctrine of respondeat superior provides the proper vehicle for a direct action aimed at recovering the damages resulting from a specific act of negligence committed by an employee within the scope of his employment. Tindall v. Enderle, 320 N.E.2d 764, 768 (Ind. Ct. App. 1974). 2. Traditional Tort Defenses Depending on the facts of a specific case, traditional tort defenses, such as comparative fault, failure to mitigate damages, superseding and intervening cause, etc. may apply. 4
5 C. Punitive Damages 1. Is evidence supporting a derivative negligence claim permissible to prove an assertion of punitive damages? In Indiana, the right to punitive damages requires more than proof that a tort was committed. Williams v. Younginer, 851 N.E.2d 351, 358 (Ind. Ct. App. 2006) (citing Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 520 (Ind. 1993)). Punitive damages may be awarded only if there is clear and convincing evidence that defendant acted with malice, fraud, gross negligence, or oppressiveness which was not the result of a mistake of fact or law, honest error or judgment, overzealousness, mere negligence, or other human failing. Id. (citing Erie Ins. Co v. Hickman). Since an award of punitive damages requires more than proof by a preponderance of the evidence that a tort occurred, the trial court can determine as a threshold matter whether the jury should even consider a claim for punitive damages and enter a judgment on such a claim. Id.; see also Plohg v. NN Investors Life Ins. Co., Inc., 583 N.E.2d 1233 (Ind. Ct. App. 1992). Indiana Code limits the amount of punitive damages that may be awarded to three (3) times the amount of compensatory damages or fifty thousand dollars ($50,000), whichever is greater. Further, plaintiffs are discouraged from seeking punitive damages because Indiana law requires that seventy-five per cent (75%) of the punitive damages awarded be put into the state s violent crime victim compensation fund. The plaintiff receives only twenty-five per cent (25%) of the punitive damages award. Ind. Code This Compendium outline contains a brief overview of certain laws concerning various litigation and legal topics. The compendium provides a simple synopsis of current law and is not intended to explore lengthy analysis of legal issues. This compendium is provided for general information and educational purposes only. It does not solicit, establish, or continue an attorney-client relationship with any attorney or law firm identified as an author, editor or contributor. The contents should not be construed as legal advice or opinion. While every effort has been made to be accurate, the contents should not be relied upon in any specific factual situation. These materials are not intended to provide legal advice or to cover all laws or regulations that may be applicable to a specific factual situation. If you have matters or questions to be resolved for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practice law in the state for which you are investigating and/or seeking legal advice. 5
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