ASPHALT & CONCRETE SERVICES, INC.
MORAN BURDETTE PERRY
Eyler, Deborah S., Graeff, Reed, JJ.
Moran Perry, appellee, filed a complaint in the Circuit Court for Prince George's County, seeking compensatory damages for injuries he sustained when he was struck by a dump truck while crossing an intersection. He sued Higher Power Trucking, LLC ("Higher Power"), William H. Johnson, II, and appellant, Asphalt & Concrete Services, Inc. ("ACS"), alleging negligence and negligent hiring and supervision. A jury found that Mr. Johnson's negligence in operating his vehicle was the proximate cause of Mr. Perry's injuries, that Mr. Johnson was an employee of ACS, and that ACS was negligent in hiring Mr. Johnson. It awarded Mr. Perry $529, 500 in damages.
On appeal, ACS presents four questions for our review, which we have rephrased slightly, as follows:
1. Did the circuit court err in admitting evidence of Mr. Johnson's suspended driver's license, expired vehicle registration, negative driving record, and lack of liability insurance?
2. Did the circuit court err in denying ACS's motion to dismiss Mr. Perry's initial complaint?
3. Did the circuit court abuse its discretion in permitting Mr. Perry to amend his initial complaint after the statute of limitations had expired?
4. Did the court err in denying ACS's motions for judgment?
For the reasons set forth below, we answer the last three questions in the negative, but we agree with ACS that the circuit court erred in admitting evidence of Mr. Johnson's lack of insurance. Accordingly, we shall reverse the judgment of the circuit court and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
On April 11, 2012, Mr. Perry filed his initial complaint. He alleged that, on April 28, 2009, while he was walking in an intersection with the right of way, Mr. Johnson hit him with the dump truck he was driving, causing Mr. Perry "profound and painful injuries." Mr. Perry alleged that Mr. Johnson was employed by Higher Power, that ACS had hired Higher Power as its agent and/or servant, and that Higher Power was subject to ACS's direction and control.
Count I alleged negligence, asserting that ACS, Higher Power, and Mr. Johnson owed duties of care to Mr. Perry "to lawfully operate the truck in a safe and reasonable manner, " and they breached those duties by negligently operating the vehicle and by operating the vehicle "in violation of Maryland law regarding licensure and insurance." Count II alleged that ACS had negligently hired and supervised Higher Power, and it breached its duties to ensure that Higher Power "utilized properly licensed drivers without reckless propensities and that the vehicles utilized by Higher Power for the benefit of ACS were properly insured as required by law."
On August 30, 2013, after the completion of discovery, ACS filed a Motion for Summary Judgment, asserting that there was no dispute that Mr. Johnson was not an employee of ACS, as he was employed by Higher Power, and therefore, ACS could not be vicariously liable for Mr. Johnson's actions under the doctrine of respondeat superior. It further asserted that, even if ACS and Mr. Johnson did have an employment relationship, and ACS had a duty to ensure that Higher Power used properly licensed and insured drivers, any breach of that duty was not the proximate cause of the accident.
On September 27, 2013, Mr. Perry filed a Motion for Leave to File a First Amended Complaint to "conform the allegations contained in the original Complaint with undisputed evidence developed through discovery." Specifically, Mr. Perry stated that the evidence developed during discovery established that Higher Power "was a forfeited limited liability company and was not in good standing according to the publicly available records of the Maryland State Department of Assessments and Taxation [("SDAT")] at the time of the accident." Accordingly, Mr. Perry asserted, Higher Power was not authorized to do business in Maryland, and Mr. Johnson was unlawfully utilizing the name to operate his dump truck business. Mr. Perry, therefore, sought to dismiss Higher Power as a separate named defendant and amend the complaint to reflect that Higher Power "was simply a trade name under which [Mr. Johnson] was unlawfully operating his dump truck business."
The proposed first amended complaint alleged that ACS employed Mr. Johnson as its agent and/or servant and that Mr. Johnson was subject to ACS's control and direction. It alleged the same counts, negligence and negligent hiring and supervision, but it substituted Mr. Johnson for Higher Power as ACS's agent, servant and/or employee, acting at the direction and control of ACS.
On October 2, 2013, ACS filed a motion to dismiss Mr. Perry's initial complaint and a response in opposition to the Motion for Leave to File an Amended Complaint. With respect to the initial complaint, ACS asserted that it failed to state a claim upon which relief could be granted. It asserted that Mr. Johnson was an employee of Higher Power, not ACS, and therefore, it could not be liable for Mr. Johnson's negligent actions under the theory of respondeat superior, and it had no duty to ensure that Higher Power's employees were properly licensed and insured. With respect to Mr. Perry's motion for leave to amend, ACS argued that the motion should be denied, asserting that the proposed amended complaint introduced "new material facts and new causes of actions against [ACS], " and, because the statute of limitations on new causes of action arising out of the incident had expired on April 30, 2012, the amended complaint was time-barred.
On October 4, 2013, the court held a hearing on ACS's motion for summary judgment, ACS's motion to dismiss, and Mr. Perry's motion for leave to amend. ACS argued that there was no allegation in the original complaint that Mr. Johnson was ACS's employee, and therefore, the complaint failed to state a claim on which relief could be granted. Mr. Perry responded that, although the initial complaint indicated his intent to hold ACS responsible for the actions of Higher Power, he learned during discovery that Higher Power was not a legal entity, but instead, it was a trade name under which Mr. Johnson operated. He further argued that there was ample evidence from which a jury could conclude that Mr. Johnson was ACS's employee and that ACS had actual or constructive knowledge of Mr. Johnson's incompetence. In support of the latter contention, Mr. Perry argued that ACS was aware that Mr. Johnson did not have a valid license or insurance, and he was operating an unregistered vehicle.
The court denied ACS's motions. It granted Mr. Perry's motion, stating that "he just wants to conform the complaint to reflect that Higher Power Trucking, LLC was simply a trade name."
On October 7, 2013, trial began. At the start of trial, ACS requested that the court grant a thirty-day postponement so it could file an answer to Mr. Perry's first amended complaint and a third-party claim against Higher Power. Mr. Perry argued that the operative facts had not changed because the complaint ultimately alleged that ACS was responsible for Mr. Johnson's conduct. Summarizing Mr. Perry's response as an argument that "there's no difference between Higher Power and [Mr.] Johnson, " the court denied the motion.
ACS then filed a motion to dismiss the first amended complaint on the ground that it was filed beyond the three-year limitations period. It argued that the original complaint against Higher Power, as an agent of ACS, was a nullity because a complaint filed against a forfeited corporation is a nullity, which does not toll the statute of limitations. Counsel for Mr. Perry argued that the original complaint identified both Higher Power and Mr. Johnson as defendants, and that the only fact that had changed was the discovery that Higher Power was "nothing more than a trade name." The court denied ACS's motion.
The court next heard arguments on ACS's motions in limine, which sought to preclude evidence that, at the time of the accident, Mr. Johnson had a suspended driver's license and the vehicle was uninsured. Counsel for ACS proffered that Mr. Johnson's license was suspended, not for a moving violation, but for failing to appear in court. He argued that "whether or not Mr. Johnson's license was suspended does not speak to his ability to operate a motor vehicle safely, " and there was no evidence that ACS knew his license was suspended. Counsel began to argue its motion with respect to the lack of insurance, but the court stated that it would reserve on its ruling until it had "more of a factual basis."
During opening statements, counsel set forth their opposing theories for the jury. Counsel for Mr. Perry stated that the evidence would show that Mr. Johnson was acting as an employee of ACS when he struck Mr. Perry, and therefore, ACS was responsible for Mr. Johnson's negligence. Counsel for ACS responded that Higher Power, who was absent from trial, was Mr. Johnson's employer, and ACS was merely a customer of Higher Power's delivery service and should not be held responsible for Higher Power's actions. Counsel stated that ACS was only a party in the case because Mr. Perry "couldn't find Higher Power."
Mr. Perry was the first witness. He testified that, on April 28, 2009, he was walking to a Weis Market near his home to purchase groceries. When he arrived at the intersection of Opossumtown Pike and Thomas Johnson Drive, he stopped at the crosswalk. After observing that the lights were green and there was no traffic turning onto Thomas Johnson Drive in either direction, Mr. Perry stepped into the crosswalk. Mr. Perry recalled starting to cross the street, and the next thing he remembered was waking up in the hospital.
Mr. Perry spent several days at Kernan Hospital in Baltimore in the brain trauma center. He suffered numerous injuries, including a head injury, rib fractures, and a shoulder injury. After he left Kernan, he was transferred to College View Nursing Center in Frederick, where he stayed for approximately one month. At College View, he had therapy on his legs and arms. At the time of trial, Mr. Perry still had numbness in his left leg, and he suffered frequent headaches.
As a result of his injuries, Mr. Perry could not walk very far. Due to his diminished reflexes, Mr. Perry also lost his confidence to drive a car, and he gave up his cabinetwork hobby. Mr. Perry depended on friends, family, and neighbors to help him run errands. Mr. Perry recalled meeting Mr. Johnson in a courthouse and hearing him say that he was responsible for the accident.
After Mr. Perry testified, counsel for ACS again argued that evidence of Mr. Johnson's suspended driver's license and the lack of insurance on the vehicle should not be admitted because it was not relevant, and it was prejudicial. Mr. Perry argued that this evidence was relevant on the negligent hiring claim because ACS violated its own policies by failing to check whether Mr. Johnson had a valid driver's license or liability insurance before hiring him. Counsel for ACS argued, among other things, that the evidence of Mr. Johnson's lapse in insurance for nonpayment and his suspended license for a failure to appear was not relevant to the negligent driving claim because it did not indicate that Mr. Johnson would operate a vehicle negligently.
The circuit court agreed that the evidence was not relevant to the negligence count. With respect to the negligent hiring count, however, it found that the evidence was relevant, but only if there was evidence that Mr. Johnson was ACS's agent or employee. The court stated that there were "too many factual disputes here, " and before it would address the issue, Mr. Perry should call ACS's employees to establish the requisite evidentiary foundation.
Mr. Perry called Burt Maggio, President of ACS at the time of the accident. Mr. Maggio testified that ACS used dump trucks to complete work projects, i.e., to remove materials from a job site and bring materials to a job site. At one time, ACS owned its own dump trucks, but that was "very expensive, " and it became more cost effective for ACS to hire truck operators to assist ACS with hauling materials for jobs.
Mr. Maggio testified that Blake Wood was the ACS employee responsible for calling truck operators to assist ACS with projects. Before Mr. Wood would hire a truck operator to assist with a project, the truck operator would contact ACS's bookkeeper and office manager "to register their vehicle and identify the company and submit all the necessary background information regarding . . . who we paid, what's the company name, tax purposes, insurance purposes." Before using a truck operator, ACS would verify that the truck operator had a tax identification number, certificates of insurance, and evidence of a license. Mr. Maggio stated that ACS would "not be allowed to" hire truck operators who did not produce proper tax identification or insurance information, noting that, "because of the nature of the work" they did, any truck operator used by ACS "had to go through this preliminary paperwork."
ACS required proof of insurance for people or companies working on its jobs because it was often asked by its customers to provide proof of insurance. Before working at ACS, Mr. Maggio had been president of O'Leary Asphalt, another paving and concrete business. O'Leary also required individuals working on job sites to provide proof of insurance, for the same reasons ACS required proof of insurance.
On April 28, 2009, ACS was working on a play pad at St. John's Regional Church. For that job, and any other job, ACS would keep a separate file for each truck operator, with certificates of insurance or "whatever was required." On April 3, 2009, twenty-five days prior to the accident, ACS requested that Higher Power provide a revised W-9 and certificate of liability insurance to "satisfy the responsibility to make sure that they had insurance." Higher Power, however, did not provide that information, even after a second request.
ACS compensated Higher Power on an hourly basis. Mr. Maggio explained that a truck operator's starting time is "when they get to the plant . . . as soon as the supplier puts the material in their vehicle and they leave to come up to the job site, their clock starts then." A truck operator was not permitted to bring the materials from the plant to ACS's job site "whenever he . . . likes." Rather, the truck operator was expected to take direction from the superintendent or the dispatcher. After delivering a load to the ACS work site, the superintendent or dispatcher might instruct the truck operator to return to the plant to retrieve another load and return to the site, or to return to the plant "and just sit there and I'll call you if I need you."
Mr. Maggio identified copies of checks from ACS to Higher Power. The checks indicated that the addressee was Higher Power, William Johnson, and the address was 13306 Waterfowl Way, Upper Marlboro, Maryland 20774. Mr. Johnson's motor vehicle records, which were admitted into evidence, listed that as his address. Mr. Maggio, who signed the checks, did not know who negotiated the checks, although he knew they were sent to the address on the checks.
On cross-examination, Mr. Maggio testified that, in April 2009, ACS had fifteen employees. Mr. Johnson was not an employee. Rather, he worked for Higher Power. ACS employees received a salary, health care benefits, 401(k) participation, paid holidays, and other perks. Mr. Johnson did not receive any of those benefits from ACS.
Mr. Maggio explained ACS's process for hiring "vendor[s] like Higher Power trucking." ACS would determine how many trucks it needed to complete a job and how many hours per day it needed the trucks to operate. The superintendent would then instruct the dispatcher to call hauling companies to ask whether they were available. If they were, ACS would instruct them what to do or where to go on what day. ACS used ten to fifteen hauling companies on a regular basis, based on their availability. Large hauling companies usually were not available on short notice, but the smaller companies often would "just go and they'd line up at the [plants] in hopes that companies like [ACS] would be calling to use them to move materials to a job site." ACS did not instruct hauling companies what route they should take to get to a job site. If a truck operator wanted to go to McDonald's for lunch, take a cigarette break, or decide to do another job before ACS's job, that was up to the truck operator. The only instruction ACS gave to truck operators was where to put their material once they reached the job site. If the material delivered satisfied ACS's requirements for the day, the truck operator would be paid for the time it took to get the material from the plant to the job site, and he or she would be done for the day.
Mr. Maggio explained, however, that if a truck operator took too much time delivering material to a job site, ACS would dock the hourly pay. He gave an example of a truck driver parked at a McDonald's with an active load, in which case ACS would not pay for that time.
Mr. Perry then requested to call Officer Joseph Palkovic, a member of the City of Frederick Police Department. Counsel for ACS objected to evidence regarding "the insurance and the licensing, " asserting that there still was not enough evidence to generate a jury question as to Mr. Johnson's status as an employee of ACS. The court denied the objection.
Officer Palkovic testified that he responded to the accident scene on April 28, 2009. Mr. Johnson identified himself as the driver who struck the pedestrian in the intersection. Officer Palkovic asked Mr. Johnson what happened, and Mr. Johnson responded: "'I didn't even see him.'" Upon further questioning, Officer Palkovic determined that Mr. Johnson had a suspended driver's license, and he did not have a valid vehicle registration. Mr. Johnson did produce evidence of insurance, but Officer Palkovic's investigation revealed that the vehicle was not validly insured because of a lapse in payment. The truck that Mr. Johnson was driving was owned by Higher Power.
Mr. Wood, the project manager for ACS on the St. Johns play pad project in April 2009, testified next. In his capacity as project manager, Mr. Wood ensured that the work crew went to the right job and understood what the job entailed. He also arranged for trucking services to haul the stone and asphalt necessary to complete the project, as ACS did not own its own trucks to haul materials. When Mr. Wood did business with a trucking service, he required a certificate of insurance and a driver's license.
Prior to contacting Higher Power to haul materials for the play pad project, Mr. Wood had worked with Mr. Johnson "[q]uite a bit, " i.e., "[m]ore than a dozen jobs." Mr. Wood believed that he had requested Mr. Johnson's certificate of insurance and driver's license, but the office manager would have received any paperwork in that regard. If Mr. Johnson did not provide the requested information, Mr. Wood expected that the office manager would report that information to him. Mr. Wood stated that he would not hire Mr. Johnson for work if he did not have a valid driver's license because that would be illegal and unsafe. He would not hire Mr. Johnson without a certificate of insurance because insurance is "required, " and it would be illegal for Mr. Johnson not to have it.
Mr. Wood recalled that he called Higher Power, Mr. Johnson's company, to request a truck operator for the play pad project. He selected Higher Power for the project because it required only a four-hour minimum, as opposed to the six-hour minimum that other haulers required.
Mr. Wood called Mr. Johnson and told him what time he needed to be at Lafarge quarry to pick up stone. ACS, not Mr. Johnson, determined how much stone to pick up. Once Mr. Johnson picked up the materials, he was to bring them directly to ACS's job site.
After Mr. Johnson returned to the job site with a load of stone, he was required to follow the instructions of the on-site ACS employees in terms of how and where to distribute the load. Mr. Wood then instructed Mr. Johnson that he needed to go back to the quarry to pick up an additional load. Mr. Wood's expectation was that Mr. Johnson would bring the second load directly back to the job site. Mr. Johnson, who was paid on an hourly basis, was "on the clock" from the time he picked up the first load until the job was completed. Mr. Wood reserved the right to reduce the hours indicated on a driver's ticket if he felt that the driver took too long to deliver the materials to the job site.
At some point, Mr. Johnson called Mr. Wood and told him that he had been in an accident. Mr. Wood never saw Mr. Johnson work on another ACS job.
Diane Moses, a claims specialist with Progressive Insurance, testified that, on March 14, 2009, Higher Power's insurance policy on the 2007 Kenworth dump truck that Mr. Johnson was driving had been canceled for non-payment. Ms. Moses did not see any ...