Cameron v. Osler

930 N.W.2d 661

Kimberlynn Dawn CAMERON, Plaintiff and Appellant,

v. Jason Adam OSLER, Defendant,andWaste Connections of South Dakota, Inc., Defendant and Appellee.

28751

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS ON APRIL 29, 2019

OPINION FILED June 19, 2019

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.

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 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 N.W.2d 187, 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. , 430 Mich. 473, 424 N.W.2d 478, 480 (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 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. , 175 Ill.2d 176, 222 Ill.Dec. 80, 676 N.E.2d 1284, 1288 (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. Bayhospitalists, LLC , No. 233, CIV., 208 A.3d 720, 725, 2019 WL 1510458, *3 (Del. April 8, 2019). The court further reasoned that treating a dismissal as an adjudication on the merits is "not intended to encompass procedural dismissals that do not adjudicate the wrongfulness of the agent’s conduct." Id. at 728, 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 729, 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 , 273 Va. 45, 639 S.E.2d 302, 304 (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 , 232 Md.App. 647, 161 A.3d 28, 40 (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 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 , 350 Ark. 268, 86 S.W.3d 836,...