LAUREN HODGE and DELORES MCDANIEL, Plaintiffs, v. STAN KOCH & SONS, TRUCKING, INC. and NICK BRESHEARS, Defendants.

 

Case No. CIV-13-071-KEW

 

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF OKLAHOMA

 

2015 U.S. Dist. LEXIS 6034

 

 

January 20, 2015, Decided

January 20, 2015, Filed

 

 

COUNSEL:  [*1] For Lauren Hodge, Delores McDaniel, Plaintiffs: Timothy R. Haney, LEAD ATTORNEY, Sherman, TX; Jonathan C. Kieschnick, PRO HAC VICE, The Crim Law Firm, PC, Houston, TX.

 

For Stan Koch & Sons Trucking, Inc., Nick Breshears, Defendants: Dan S. Folluo, Lindsay J. McDowell, Rhodes Hieronymus Jones Tucker & Gable, Tulsa, OK.

 

JUDGES: KIMBERLY E. WEST, UNITED STATES MAGISTRATE JUDGE.

 

OPINION BY: KIMBERLY E. WEST

 

OPINION

 

OPINION AND ORDER

This matter comes before the Court on Defendant Stan Koch & Sons Trucking, Inc.’s Motion for Summary Judgment (Docket Entry #37). On February 7, 2011, Plaintiffs were involved in a traffic accident with Defendant Breshears in a tractor trailer owned and operated by Defendant Stan Koch & Sons Trucking, Inc. (“Stan Koch”). In their Petition removed to this Court on February 14, 2013, Plaintiffs allege the accident was as a result of Defendant Breshears’ negligence. Plaintiffs also brought claims for negligence and negligence per se against Defendant Stan Koch for (1) failing to properly screen, test, and qualify drivers, including Defendant Breshears; (2) negligent hiring, employing, and retention of unqualified drivers; (3) filing to properly train and supervise drivers; and (4) failing to properly [*2]  implement and enforce policies, procedures, and protocols to properly screen, test, train, qualify, supervise, and retain drivers to operate motor vehicles. Plaintiffs expressly state in their Petition that their claims against Defendant Stan Koch are based upon vicarious liability for Defendant Breshears’ actions.

In its answer to the Petition, Defendant Stan Koch admitted that Defendant Breshears was acting within the course and scope of his employment at the time of the accident. In so doing, Defendant Stan Koch stipulated to the potential respondeat superior liability for Defendant Breshears’ conduct while in its employ.

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate “if 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 and that the moving party is entitled to judgment as a matter of law.” Universal Money Centers v. A.T. & T., 22 F.3d 1527, 1529 (10th Cir.), cert. denied, 513 U.S. 1052, 115 S. Ct. 655, 130 L. Ed. 2d 558 (1994). The moving party bears the initial burden of showing that there is an absence of any issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” [*3]  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed 2d 202 (1986). In determining whether a genuine issue of a material fact exists, the evidence is to be taken in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Once the moving party has met its burden, the opposing party must come forward with specific evidence, not mere allegations or denials of the pleadings, which demonstrates that there is a genuine issue for trial. Applied Genetics v. Fist Affiliated Securities, 912 F.2d 1238, 1241 (10th Cir. 1990); Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir. 1983).

With regard to the material facts set forth above, this Court finds no significant dispute. In their response to the summary judgment request, Plaintiffs “reluctantly” concedes that Oklahoma law does not permit additional negligence claims when vicarious liability is admitted by the employer.

By virtue of the pending Motion, Defendant Stan Koch contends the Oklahoma Supreme Court has not permitted claims for negligent hiring, supervision, and retention to proceed to trial in the circumstance where an employer has admitted vicarious liability. In support of this proposition, Defendant cites to the seminal case of Jordan v. Cates, 1997 OK 9, 935 P.2d 289 (Okla. 1997). In Jordan, an individual who went to a convenience store to pay off a returned check. Id. at 291. During the course of an alleged altercation with an employee of the store, the individual contended the employee assaulted [*4]  and battered him. Id. He brought suit against the convenience store, as the employer of the offending employee, under the theory of respondeat superior liability for the negligent hiring and retention of the employee. Id.

Recognizing the required elements to confer respondeat superior liability, the employer stipulated that the altercation occurred while its employee was acting within the course and scope of his employment and that it would be liable for any damages awarded by a jury. Id. at 292. As a result, the trial court granted the employer summary judgment, dismissing the claims of negligent hiring and retention, in light of the employer’s admission that it’s employee was acting within the scope of his employment during the altercation. Id.

The Oklahoma Supreme Court reviewed the controlling prior case authority and concluded

 

that the theory of negligent hiring and retention is available in a nonvicarious liability case or in a case where vicarious liability has not been established. In the case at bar, vicarious liability has been established through stipulation.

* * *

Our holding today is limited to those situations where the employer stipulates that liability, if any, would be under the [*5]  respondeat superior doctrine, thereby making any other theory for imposing liability on the employer unnecessary and superfluous. Because vicarious liability can include liability for punitive damages, the theory of negligent hiring and retention imposes no further liability on employer.

 

 

Id. at 293 (emphasis in original).

The same court recognized this legal limitation in the later case of N.H., a minor v. Presbyterian Church (U.S.A.), 1999 OK 88, 998 P.2d 592, 600 (Okla. 1999)(“In Oklahoma, the theory of recovery [employer negligence] is available if vicarious liability is not established.”) The defendant church did not admit vicarious liability in that case, however, causing the court to also consider whether the defendant church was put on sufficient notice of the propensity for its employee to molest so as to confer liability upon the church. The law appears clearly established in Oklahoma that once an employer, such as Defendant Stan Koch in this case, has admitted vicarious liability for its employee’s actions, no further theory of negligence associated with the particular incident may be maintained against the employer.

After conceding the holding in Jordan, Plaintiffs contend in a section of their responsive brief entitled “Plaintiffs’ Public Policy Point” [*6]  that Defendant Stan Koch maintains a corporate policy which allegedly demonstrates a “willful and deliberate refusal … to review the preventability of collisions that could minimize the risk of repeat occurrences.” This argument does not alter the Jordan rationale. Such claims remain barred by the admission of vicarious liability by Defendant Stan Koch.

IT IS THEREFORE ORDERED that Defendant Stan Koch & Sons Trucking, Inc.’s Motion for Summary Judgment (Docket Entry #37) is hereby GRANTED. As a result, Plaintiffs’ claims for negligence and negligence per se associated with the hiring, training, supervision, retention, and policies and procedures established by Defendant Stan Koch are hereby DISMISSED.

IT IS SO ORDERED this 20th day of January, 2015.

/s/ KImberly E. West

KIMBERLY E. WEST

UNITED STATES MAGISTRATE JUDGE

NATIONAL CASUALTY COMPANY, Plaintiff, v. THOMAS & SONS TRUCKING, L.L.C., CLAUDE CRAWFORD, AND PENNY CRAWFORD, Defendants.

 

Case No. 14-4023-CM

 

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

 

2015 U.S. Dist. LEXIS 6601

 

 

January 21, 2015, Decided

January 21, 2015, Filed

 

 

COUNSEL:  [*1] For National Casualty Company, Plaintiff: Michael K. Seck, LEAD ATTORNEY, Fisher, Patterson, Sayler & Smith, LLP – Overland Park, Overland Park, KS; Scott W. McMickle, LEAD ATTORNEY, PRO HAC VICE, McMickle Kurey & Branch, LLP, Alpharetta, GA.

 

For Penny Crawford, Defendant: Nathan T. Mattison, LEAD ATTORNEY, Neustrom & Associates, PA, Salina, KS.

 

For Thomas & Sons Trucking, L.L.C., Defendant: Kevin L. Diehl, LEAD ATTORNEY, Ralston, Pope & Diehl LLC, Topeka, KS.

 

JUDGES: CARLOS MURGUIA, United States District Judge.

 

OPINION BY: CARLOS MURGUIA

 

OPINION

 

MEMORANDUM AND ORDER

Plaintiff National Casualty Company filed this action seeking declaratory judgment against defendants Thomas & Sons Trucking, L.L.C., Claude Crawford, and Penny Crawford regarding insurance coverage issues. (Doc. 1.) The case is before the court on Defendant Thomas & Sons Trucking, L.L.C.’s Motion to Stay These Proceedings or in the Alternative to Dismiss this Declaratory Judgment Action (Doc. 20) and Defendant Penny Crawford’s Motion to Dismiss or in the Alternative Stay the Declaratory Judgment Action until Resolution of the Contemporaneous State Action (Doc. 22). Defendants ask the court to stay or dismiss this case in light of a related personal injury [*2]  action in Mitchell County, Kansas District Court. According to defendants, the state court action could decide whether defendant Penny Crawford–the injured party–was acting in the course of employment at the time of her injuries.

It is within the district court’s discretion whether to exercise jurisdiction over an action under the Declaratory Judgment Act. Wilton v. Seven Falls Co., 515 U.S. 277, 282, 289 (1995); St. Paul Fire & Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1168 (10th Cir. 1995). But a district court “should not entertain a declaratory judgment action over which it has jurisdiction if the fact-dependent issues are likely to be decided in another pending proceeding.” Kunkel v. Cont’l Cas. Co., 866 F.2d 1269, 1276 (10th Cir. 1989). The Tenth Circuit has set forth five factors that a court should evaluate in determining whether to exercise jurisdiction over a declaratory judgment action:

 

(1) whether a declaratory action would settle the controversy; (2) whether it would serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory remedy is being used merely for the purpose of procedural fencing or to provide an arena for a race to res judicata; (4) whether use of declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy [*3]  which is better or more effective.

 

 

United States v. City of Las Cruces, 289 F.3d 1170, 1187 (10th Cir. 2002) (quoting State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir. 1994)) (recognizing the factors of Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942), but applying the Mhoon factors). The court need not first evaluate whether the state court and federal court actions are parallel, but should inquire as to the similarity between the two proceedings as part of the Mhoon factor analysis. Id. at 1183. The degree of identity of the parties and issues are “only factors in the analysis; they are not determinative.” Id. The court therefore analyzes all of the Mhoon factors.

The first Mhoon factor weighs slightly in plaintiff’s favor. This declaratory action would settle the insurance coverage issues raised in the case. On the other hand, this action would leave outstanding the underlying liability issues, which are being litigated in state court.

The second Mhoon factor also weighs in plaintiff’s favor. The Declaratory Judgment Act “enables parties uncertain of their legal rights to seek a declaration of rights prior to injury.” Kunkel, 866 F.2d at 1274 (citation omitted). Declaratory judgment actions are appropriate to clarify legal relations before final adjudication of an underlying action because an insurer has a duty to defend, conduct settlement negotiations, and pay any judgment or settlement [*4]  amount entered against its insured. Id. at 1275; Nationwide Mut. Ins. Co. v. Smith, No. 11-1266-JAR-GLR, 2014 WL 806183, at *2 (D. Kan. Feb. 28, 2014). A declaratory judgment from this court relating to the coverage issues presented would serve a useful purpose in clarifying the parties’ legal relations and resolving uncertainty surrounding plaintiff’s obligations.

Under the third Mhoon factor, the court must consider whether the declaratory remedy is being used for procedural fencing. This factor weighs slightly in defendants’ favor. “‘In looking at whether the declaratory judgment action is being used in order to gain a procedural advantage, the court considers the timeliness of the actions at issue.'” Ortiz v. Biscanin, 190 F. Supp. 2d 1237, 1246 (D. Kan. 2002) (quoting Bd. of County Comm’rs v. Cont’l W. Ins. Co., 184 F. Supp. 2d 1117, 1121 (D. Kan. 2001)). Plaintiff did not timely file this action to clarify its obligations under the policy after defendant Penny Crawford made demands. Instead, plaintiff filed this action two weeks after the related state court action was filed. Defendant Penny Crawford asserts that plaintiff forum-shopped by purposefully failing in state court to raise affirmative defenses. But plaintiff is not named in the state court action. In state court, plaintiff is only paying for defendant Thomas & Sons’ defense under a complete reservation of rights. In any event, [*5]  the state court action was filed first. If plaintiff first obtains a judgment in this court, the federal judgment may impact the outcome of the first-filed state court case. This court is hesitant to risk such interference.

The fourth factor is particularly significant to the court, and weighs in defendants’ favor. This action involves key factual issues that are also before the state court. The issue to be decided in this declaratory judgment action is whether defendant Penny Crawford was acting in the course of her employment at the time of the accident, making the employee exclusion in the policy applicable. Defendant Penny Crawford’s employment status at the time of her injuries is relevant to the underlying state court proceedings. Whether her injury arose in the course of her employment is intertwined with the questions raised in the state court action–how the accident occurred, who was at fault, and whether there are any defenses to fault. Where state court actions involve questions of affirmative defenses to fault regarding whether an employee is acting within the course of employment, and thus affecting insurance coverage issues, courts find that staying the declaratory actions [*6]  is appropriate. See, e.g., Nationwide, 2014 WL 806183, at *3 (citing Schering Corp. v. Griffo, 872 F. Supp. 2d 1220, 1243 (D.N.M. 2012)). While no affirmative defenses regarding acting in the course of employment are presently raised in the initial state court answer, the defendants in the state court action reserved the right to raise additional defenses. (Doc. 23-2.) Because factual issues with respect to the defendants’ potential affirmative defenses in state court could overlap with the issues in this case, the court finds that a determination of the issue in this case could encroach upon state court jurisdiction and possibly cause friction between federal and state courts. The fourth Mhoon factor supports a stay.

The fifth and final Mhoon factor is neutral. “Declaratory judgment actions are particularly appropriate for situations in which insurance companies seek a declaration of their liability.” Cont’l W. Ins. Co., 184 F. Supp. 2d at 1122. “Courts have ‘expressly recognized that one of the primary functions of the [Federal Declaratory Judgment] Act is to provide the [insurer] . . . such a forum.'” Id. (quoting Horace Mann Ins. Co. v. Johnson, 953 F.2d 575, 579 (10th Cir. 1991)). Here, no alternate remedy will resolve the insurance coverage issues. The state action will resolve only the liability and damage issues, and plaintiff is not a party to that action. However, staying this case [*7]  until the state tort action is resolved is a more efficient treatment of the case. This lawsuit involves key factual issues regarding defendant Penny Crawford’s employment status at the time of the accident, which could be addressed in the state court action. In deciding the state tort claims, the state court is going to become intimately familiar with the facts surrounding the accident. While not all of these facts will be relevant to determine if defendant Penny Crawford’s injuries constitute a covered loss, some facts may be. Moreover, the outcome of the state court action could ultimately moot this case.

This court determines the balance of the Mhoon factors weighs in favor of staying this declaratory judgment action pending the resolution of the state tort action.

IT IS THEREFORE ORDERED that defendant Thomas & Sons Trucking, L.L.C.’s Motion to Stay These Proceedings or in the Alternative to Dismiss this Declaratory Judgment Action (Doc. 20) and defendant Penny Crawford’s Motion to Dismiss or in the Alternative Stay the Declaratory Judgment Action until Resolution of the Contemporaneous State Action (Doc. 22) are denied in part and granted in part. The court denies the requests [*8]  to dismiss but grants the requests to stay.

IT IS FURTHER ORDERED that the case is stayed. Defendants are directed to notify the court within thirty days of the resolution of the state court case.

Dated this 21st day of January, 2015, at Kansas City, Kansas.

/s/ Carlos Murguia

CARLOS MURGUIA

United States District Judge