Argued: November 6, 2015
Barbera, C.J., Battaglia, Greene, Adkins, McDonald, Watts, Harrell, Jr., Glenn T. (Retired, Specially Assigned), JJ.
In the instant case we are asked to address whether evidence of insurance or lack of insurance is admissible to establish a negligent hiring claim. At the core of this case is whether the admission of this evidence likely influenced the jury's determination of liability for Perry's injuries. Petitioner, Moran Perry ("Perry") filed suit against Respondent, Asphalt Concrete Services, Inc. ("ACS"), Higher Power Trucking, LLC ("Higher Power") and William Johnson, II ("Johnson") for injuries he suffered when he was struck by a dump truck owned by Higher Power and operated by Johnson. The Circuit Court for Prince George's County allowed into evidence witness testimony regarding Johnson's lack of liability insurance coverage at the time of the accident. We conclude that this was legal error. Evidence of lack of insurance coverage had no causal relationship to the injuries suffered by Perry and was thus irrelevant to both the claims of negligent hiring and ordinary negligence.
FACTUAL AND PROCEDURAL BACKGROUND
On April 28, 2009, Perry was crossing the intersection of Opposumtown Pike and Thomas Johnson Drive in Frederick, Maryland when he was struck by a 2007 Kenworth dump truck operated by Johnson, and owned by Higher Power. As a result of the accident, Perry suffered head trauma and rib fractures. ACS had hired Higher Power to haul asphalt and stone to St. John's Regional Catholic Church, where ACS was paving a children's play pad. A preliminary investigation by Officer Joseph Palkovic revealed that neither Johnson nor Higher Power had liability insurance covering the truck because of a lapse in payment on the insurance policy.
On April 11, 2012, Perry filed his initial complaint in the Circuit Court for Prince George's County. Perry alleged negligence against Higher Power, Johnson, and ACS. He also alleged that ACS was negligent in its hiring and supervision of Higher Power. After the completion of discovery, ACS filed a Motion for Summary Judgment on August 30, 2013 contending there was no dispute that Johnson and ACS did not have an employer-employee relationship. ACS also contended that even if it should have known of Johnson's license and insurance status, this was not the proximate cause of the accident. The trial court denied ACS's Motion for Summary Judgment. On September 20, 2013, ACS filed a motion in limine seeking to exclude evidence that Johnson had a suspended license and that the truck was uninsured at the time of the accident. With respect to lack of insurance, ACS argued that it was inadmissible because "[l]iability insurance, based on [Maryland Rule] 5-411, generally speaking can't be admitted  on the issue of proximate cause of an accident or negligence." The court decided to reserve its ruling on this motion until it had "more of a factual basis, " indicating that if the evidence of insurance came in, it would be "strictly [for] the limited purpose of the negligent hiring and whether a reasonable hirer would have determined that and acted accordingly."
On September 27, 2013, Perry filed a "Motion for Leave to File First Amended Complaint" to reflect that Higher Power "was not in good standing according to the publicly available records of the Maryland State Department of Assessments and Taxation at the time of the accident." Thus, Perry sought to dismiss Higher Power as a separately named defendant because Higher Power "was simply a trade name under which [Johnson] was unlawfully operating his dump truck business." The proposed first amended complaint alleged the same counts of negligence and negligent hiring but substituted Johnson for Higher Power in the negligent hiring count. The court granted Perry's motion. The first amended complaint contained the following assertions:
COUNT I (Negligence – All Defendants)
11. Johnson, as the operator of the truck which struck Perry, at all times material to this Complaint, was the agent, servant and/or employee of ACS, acting at the direction and control of ACS and for the financial benefit of ACS. As such, ACS and Johnson owed duties of care to Perry and members of the public at large to lawfully operate the truck in a safe and reasonable manner.
12.On or about April 28, 2009, ACS and Johnson breached the duties of care owed to Perry by (1) failing to operate the vehicle in a reasonably safe manner; (2) failing to travel at a safe speed; (3) failing to stop or avoid Perry while he was a pedestrian; (4) operating the vehicle in violation of Maryland law regarding registration, licensure and insurance; and (5) being otherwise careless while operating his vehicle.
13.As a result of ACS's and Johnson's breaches of the duties of care owed to Perry, he sustained substantial damages.
COUNT II (Negligent Hire and Supervision – ACS)
15.At all times material to this Complaint, ACS hired Johnson to act for its financial benefit and Johnson was subject to ACS's direction and control. As such, ACS owed Perry and members of the public at large [a duty] to take reasonable measures, both at the time it hired Johnson and throughout its employment of Johnson, to ensure that Johnson conducted himself in [a] lawful and prudent manner while operating vehicles on behalf of ACS. Those duties include, but are not limited to, ACS's duty to make sure that Johnson was a properly licensed driver, operating a lawfully registered and insured vehicle.
16.On or about April 28, 2009, ACS breached the duties of care it owed to Perry by employing Johnson, who was not a properly licensed driver and was unlawfully operating an unregistered and uninsured dump truck which struck Perry.
17. As a result of ACS's breaches of the duties of care owed to Perry, he sustained substantial damages.
Trial began on October 7, 2013. Perry was the first witness. He testified about the extent of his injuries, the effect the injuries had on his everyday activities, and his medical treatment following the accident. After Perry's testimony, in a conversation with the court that occurred outside the presence of the jury, ACS repeated the argument it made in its September 20, 2013 motion in limine that evidence of lack of insurance through the testimony of Officer Joseph Palkovic should not be admitted:
[THE COURT]: Well, one of the problems I have had in thinking this through is this. I think part of what you said is a hundred percent correct because really before the jury can reach a verdict on the negligent hiring they first have to reach a verdict on the negligence. If the jury finds [Johnson] was not negligent in the operation of that vehicle then obviously . . . . how could there be a negligent hiring. But the two are being tried together . . . . So that's the issue I have is that I think it's relevant to the hiring count, the negligent hiring count, but not particularly to the negligence.
[DEFENSE COUNSEL]: May I? Your Honor, you're way ahead. The issue first is whether or not he's our employee or an independent contractor.
[THE COURT]: Well, yeah, that's of course the big issue.
[DEFENSE COUNSEL]: That's the prime - - yeah, that's the huge issue. And if we get in evidence through a police officer that says this guy was uninsured, the bell's rung, the prejudice is done, and we've got a mistrial on our hands . . . .
[THE COURT]: Well, no you don't get - - you wouldn't get a mistrial granted because that's what I was just about to say. I mean there might be a curative instruction right now . . . . I mean it's only admissible against [ACS] - - if they find that Johnson, II was an agent or an employee, only then is it admissible for the negligent hiring.
[DEFENSE COUNSEL]: Right. But there's no basis - - there's no foundation for that to be introduced at this point.
[THE COURT]: What do you mean?
[DEFENSE COUNSEL]: There's no evidence that he was our employee. So the jury's going to hear it and assume that - - you know, it was introduced that he's our driver and - -
[THE COURT]: Well, I assume they'll tie it up, that there will be evidence that it (sic) was the employee.
[DEFENSE COUNSEL]: I mean - - Your Honor?
[THE COURT]: I understand you say he's not, but their evidence - - because they say he is . . . . I mean the rule or the principle exists to prevent the jury from knowing that there is insurance on the theory that it would encourage - -so what is the point of not having insurance . . . . [Perry is] trying to get in the opposite[, ] that there was no insurance.
[DEFENSE COUNSEL:]: Right. In the effort to show that we are the insured party . . . . Which is totally inadmissible . . . . the implication is that if [Johnson] doesn't that we do.
[THE COURT]: Well, no that's . . . [t]o say someone didn't have it doesn't mean to say everyone else has it . . . . That's not a logical inference.
[DEFENSE COUNSEL]: In this case he [Johnson] actually did have a policy of insurance. That's I guess the big issue. There was a policy of insurance. He did have one through Progressive, and it covered this accident. It just simply lapsed for nonpayment a month before. What does the fact that he - -the insurance lapsed for nonpayment have to do with any issue in this case?
[THE COURT]: When was he hired to do this?
[PLAINTIFF'S COUNSEL]: This particular job? Two weeks before April 28th. They had an ongoing relationship.
[THE COURT]: So a check would have revealed the insurance had lapsed.
[DEFENSE COUNSEL]: Wait a minute. How would a check reveal that his insurance had lapsed? To us? I can't check your insurance to ...