Source: http://mn.gov/law-library-stat/archive/ctapun/0101/1291.htm
Timestamp: 2017-10-21 22:53:14
Document Index: 681699582

Matched Legal Cases: ['§ 411', '§ 429', '§ 429', '§ 267', '§ 267', '§ 429', '§ 409', '§ 429', '§ 429']

Frank Bagot, Sr. as guardian to Frank Bagot, Jr., Appellant, vs. Airport & Airline Taxi Cab Corporation, Respondent, Ronald Robert Brake, Respondent. C1-00-1291, Court of Appeals Unpublished, January 30, 2001.
C1-00-1291
Frank Bagot, Sr. as guardian to Frank Bagot, Jr.,
Airport & Airline Taxi Cab Corporation,
Ronald Robert Brake,
File No. PI992630
Charles T. Hvass, Jr., Robert J. King, Jr., Hvass, Weisman & King, Chartered, 100 South Fifth Street, Suite 450, Minneapolis, MN 55402 (for appellant)
Gregory A. Zinn, Mahoney, Dougherty & Mahoney, 801 Park Avenue, Minneapolis, MN 55404 (for respondents); and
Douglas B. Altman, Altman & Izek, 1600 Foshay Tower, 821 Marquette Avenue, Minneapolis, MN 55402 (for respondent Airport & Airline Taxi Cab Corporation)
Appellant was a passenger in a taxi involved in a motor vehicle accident in which appellant was injured and the driver of the taxi was killed. The district court granted summary judgment[1] in favor of respondent, determining that the decedent driver was an independent contractor of the taxi owner, who in turn was an independent contractor of the taxi company, and that neither was liable for the negligence of the decedent driver. The district court further rejected appellant’s claim that the taxi company owed a nondelegable duty of care to passengers as a matter of law. The district court also declined to adopt appellant’s alternative theories of liability under the doctrines of joint enterprise and control, and agency by estoppel. We affirm.
On appeal from summary judgment, this court must determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. Offerdahl v. University of Minn. Hosp. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). This court must view the evidence in the light most favorable to the nonmoving party. Id. The nonmoving party, however,
Krogness v. Best Buy Co., 524 N.W.2d 282, 285 (Minn. App. 1994) (citation omitted), review denied (Minn. Jan 25, 1995). In opposing summary judgment, “general assertions” are not enough to create genuine issues of material fact. Nicollet Restoration, Inc. v. City of St. Paul, 533 N.W.2d 845, 848 (Minn. 1995).
Appellant argues that the district court made inappropriate findings of fact in this case. This assertion is incorrect. The facts presented to the district court were undisputed by the parties. The parties differed only as to the legal ramifications of these facts.
I. Brake’s Status as Independent Contractor or Employee
Appellant Frank Bagot, Jr.,[2] was a passenger in a taxi owned by respondent Ronald Brake, driven by Edward Mersey, and dispatched by respondent Airport and Airline Taxi Cab Corporation. On March 10, 1995, respondent Airport Taxi dispatched Brake’s cab, which displayed Airport’s name and colors, to pick up appellant and take him to work. The taxi collided with another vehicle en route to appellant’s place of work. As a result of the accident, appellant sustained a hip injury and Mersey was killed.
Appellant contends that Mersey and respondent Brake were employees of respondent Airport Taxi. On the basis of these alleged employer-employee relationships, appellant argues that Airport Taxi is vicariously liable for Mersey’s actions. Appellant argues that, because it is undisputed that Mersey was driving Brake’s taxi with his permission, Mersey’s liability should be imputed to respondent Brake as well.
In granting summary judgment, the district court concluded that Brake and Mersey were independent contractors, and that Airport Taxi could not, therefore, be vicariously liable for Mersey’s actions. Specifically the district court held that Mersey was an independent contractor of Brake, and Brake was an independent contractor of Airport Taxi. As a general rule, an employer is not liable for the acts of independent contractors. Lamb v. South Unit Jehovah’s Witnesses, 232 Minn. 259, 263, 45 N.W.2d 403, 406 (1950).
The determination of an employment relationship is a mixed question of fact and law. Lakeland Tool & Eng'g, Inc. v. Engle, 450 N.W.2d 349, 352 (Minn. App. 1990). “Cases distinguishing between employees and independent contractors are often factually close.” North Face Exteriors v. Commissioner of Jobs & Training, 457 N.W.2d 778, 780 (Minn. App. 1990). “Once the controlling facts are determined, the question of whether a person is an employee becomes one of law.” Lakeland, 450 N.W.2d at 352.
The traditional factors considered in determining employee or independent contractor status are:
Guhlke v. Roberts Truck Lines, 268 Minn. 141, 143, 128 N.W.2d 324, 326 (1964). These are the factors the district court used in making its determination. Although it is necessary to examine the overall relationship between the parties to determine employment status,
the most important factor considered in light of the nature of the work involved is the right of the employer to control the means and manner of performance.
The distinction between an employee and an independent contractor may be said to consist largely in the difference between one who undertakes to achieve a given result under an arrangement with another who has authoritative control over the manner and means in which and by which the result shall be accomplished and one who agrees to achieve a given result but is not subject to the orders of another as to the method or means to be used.
Speaks, Inc. v. Jensen, 309 Minn. 48, 51, 243 N.W.2d 142, 145 (1976) (citation omitted). The label that parties give to their relationship is not determinative, but rather the relationship is determined by what lies behind the label. Id. at 51, 243 N.W.2d at 145.
Corbin v. Commissioner of Revenue, 307 Minn. 237, 242, 240 N.W.2d 809, 812 (1976) (citation omitted). It is not the actual control, but the right of control, that is determinative. Moore Assocs. v. Commissioner of Econ. Sec., 545 N.W.2d 389, 393 (Minn. App. 1996).
Here, the facts are undisputed and point to independent contractor status. Brake entered into an oral agreement with Airport Taxi requiring Brake to pay $230 per week in exchange for dispatch service and insurance under Airport’s commercial insurance policy as an “additional insured.” The agreement was week-to-week, and could be canceled at any time by either party. Appellant acknowledges the existence of this “specific oral contract.” Brake owned the cab and paid for his own gas.
Brake worked when he wanted to work, and at his option if specially requested by Airport Taxi. Brake had no obligation to accept fares. Brake was under no supervision or direction by Airport. Airport had no control over Brake.
Airport carried no worker’s compensation insurance for Brake. Brake was paid through fares from his passengers and did not share this income with Airport. Brake was responsible for paying all of his federal, state, and FICA taxes. Airport issued no paychecks and did not withhold income tax on Brake’s behalf. Airport had no control over the mode of customer payment.
Mersey’s working arrangement with Brake was identical to that between Brake and Airport, as discussed above, except Mersey used Brake’s cab with permission. Brake considered Mersey an independent contractor.
Appellant argues that other undisputed facts weigh in favor of employer-employee status. Appellant points to the fact that Brake’s cab had identification painted on both sides identifying it as an “Airport Taxi Cab” and was maroon in color, which is distinctive to Airport Taxi. But labels are not determinative. Moore, 545 N.W.2d at 393.
Appellant argues that Brake and Mersey received dispatches from Airport Taxi. But Brake and Mersey were paying for this dispatch service from Airport. We find no caselaw that would support finding an employer-employee relationship based upon contracting for dispatch service.
On Brake’s certificate of insurance, “Airport & Airline Taxi Cab Company” is provided as the “NAME OF TAXICAB COMPANY.” Brake and Mersey listed Airport Taxi as his employer on various taxi cab license renewal applications. But as the district court concluded in its memorandum, these applications were pre-printed forms which did not provide a space for “independent contractor.” Some applications simply contained a list of taxi cab company names next to blocks to be checked off. As previously indicated, labels are not determinative.[3]
The element of control is the most important factor in distinguishing between independent contractors and employees. Guhlke, 268 Minn. at 143, 128 N.W.2d at 326. There is no element of control here.
Because there is no genuine issue of material fact in dispute, the question of whether Brake and Mersey were employees versus independent contractors is strictly a legal inquiry. Lakeland, 450 N.W.2d at 352. The undisputed facts of this case, even when viewed in the light most favorable to appellant, clearly establish as a matter of law that Brake and Mersey are independent contractors.
II. Exceptions to Non-liability for Independent Contractors
While, as a general rule, employers are not liable for the negligent acts of independent contractors, there are exceptions. Appellant raises several of these as alternative theories of liability.
A. Non-delegable Duty of Care
Appellant argues that Airport Taxi had a non-delegable duty to him based on Pacific Fire Ins. Co. v. Kenny Boiler & Mfg. Co., 201 Minn. 500, 277 N.W. 226 (1937). In support of this proposition, appellant looks to the following language:
Where one person owes another a contractual duty to act, the law imposes upon the person owing that duty the further duty of acting with due care in the performance of his contract so as not to injure the contractee's person or property. This duty is nondelegable. That is, the performance of the contract may be delegated to another, but this delegation does not relieve the contractor of the duty to act, or of his duty to act with due care. Consequently defendant is subject to liability for damage suffered by the contractee as a result of the negligence of the independent subcontractor.
Id. at 503, 277 N.W.2d at 228 (citation omitted). Respondent correctly points out that Pacific Fire involved a contractual relationship, and is thus distinguishable from the present case. The Pacific Fire court also noted:
By contracting to attach the plates, defendant was under an absolute duty to perform its contract. It was not relieved of its duty to act by delegating the work of attaching the plates to an independent subcontractor; in legal contemplation the acts of the subcontractor constituted defendant's performance of his contractual duties.
Id. (citing 2 Williston on Contracts, §§ 411, 411A, (Rev. Ed.)).[4] Here, there is no evidence that appellant entered into any type of contractual relationship with Airport Taxi. The district court agreed. A contract would have to be inferred solely on the basis of the Airport Taxi’s dispatch of Brake’s cab. There are no reported Minnesota cases that have inferred such a contract between a taxicab dispatcher and a potential taxicab passenger. We decline to do so here.
B. Joint Enterprise and Control
Appellant argues that a joint enterprise existed between Brake and Airport and that, as a matter of pubic policy, liability should be imputed to the taxi cab company regardless of the legal relationship between the parties, citing Jasinuk v. Lombard, 189 Minn. 594, 250 N.W. 568 (1933).
Appellant asserts that Jasinuk supports this theory of liability because it stands for the proposition that ownership of the cab is immaterial if the taxi cab company “was a party, in a responsible sense, to its operation.” Id. at 598, 250 N.W. at 569. As a threshold question, a review of the record reveals that this theory was not raised in or argued to the district court. Issues not presented to or decided by the district court are generally not considered by this court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
But even if we address this issue, Jasinuk is not helpful to appellant because that case involved a situation in which the district court determined that the taxi cab company was attempting to escape liability
through an alleged oral agreement made with the driver, Lombard, shortly before the accident whereby the car became the absolute property of Lombard [and where] [t]he evidence as to that transfer of ownership [was] of such a nature as not to compel belief.
Jasinuk, 189 Minn. at 598, 250 N.W.2d at 569. Here there is no dispute as to the ownership of Brake’s cab, and Jasinuk is distinguishable on this basis alone.
Appellant, to establish joint enterprise, must prove (1) that respondents had a mutual understanding for a common purpose and (2) that each respondent had a right to a voice in the direction and control of the means used to carry out the common purpose. Dang v. St. Paul Ramsey Med. Ctr., Inc., 490 N.W.2d 653, 657 (Minn. App. 1992), review denied (Minn. Dec. 15, 1992); see also Weber by Sanft v. Goetzke, 371 N.W.2d 611, 616 (Minn. App. 1985) (observing that “[w]hether joint enterprise exists is question of law”), review denied (Minn. Sept. 16, 1985). Because there are no facts in the record establishing either a mutual purpose or control, appellant’s argument for joint enterprise fails.
C. Restatement (Second) of Torts § 429
Appellant argues that Airport Taxi cannot escape liability even if Brake and Mersey were independent contractors. In support of this proposition, appellant looks to the Restatement (Second) of Torts, § 429 (1965), which provides:
The district court acknowledged a similarity between section 429 and the present case, but concluded that
Minnesota has not explicitly or implicitly adopted Section 429. Plaintiff has failed to articulate a case to extend current Minnesota law, and as such, the Court finds that Section 429 of the Restatement of Torts is inapplicable.
While strong public policy arguments can be made both for and against adoption of the restatement principle, we agree with the district court that there is simply no precedential authority to support appellant’s position.
D. Ostensible Agency and Restatement (Second) of Agency § 267
The doctrine of ostensible agency is set out in the Restatement (Second) of Agency § 267 (1958), which provides that:
Appellant argues that a person hailing a cab naturally assumes the driver is somehow representing the cab company whose name is painted on the outside of the vehicle and thus ostensible agency applies. While this argument is not unreasonable as a matter of public policy, appellant supplies no authority for the application of section 267 to Minnesota theories of recovery and we have found none. We decline to extend Minnesota law by applying section 267 as requested by appellant.
I respectfully dissent. Because I believe Restatement (Second) of Torts § 429 (1965) should be applied to the facts of this case, I would reverse the district court’s grant of summary judgment and remand for trial.
The general rule is that an employer is not liable for the acts or omissions of an independent contractor or its agents. Lamb v. South Unit Jehovah's Witnesses, 232 Minn. 259, 263, 45 N.W.2d 403, 406 (1950); Restatement (Second) of Torts § 409 (1965). The Minnesota Supreme Court, however, has “recognized the erosion of the general rule by a multitude of exceptions.” Conover v. Northern States Power, 313 N.W.2d 397, 403 (Minn. 1981). While the majority states that there is simply no precedential authority to apply 429 of the Restatement, this state’s supreme court has recognized its application in dicta when it stated that “[t]hese exceptions are collected in sections 416 to 429 of the Restatement.” Id. at 404. These exceptions
rest on the policy grounds that an employer should not be permitted to escape a direct duty of care for the personal safety of another by delegating that responsibility to the independent contractor for the proper conduct of certain types of work.
The Restatement (Second) of Torts § 429 declares:
One who employs an independent contractor to perform services for another which are accepted in the reasonable belief that the services are being rendered by the employer or his servants, is subject to liability for physical harm caused by the negligence of the contractor in supplying such services, to the same extent as though the employer were supplying them himself or by his servants.
The majority states that strong public policy arguments can be made both for and against use of the restatement. I believe the stronger public policy requires respondeat superior negligence liability for those who create a reasonable belief that they are employers in a publicly regulated business.
The undisputed facts of this case show: (1) appellant called Airport Taxi and asked for a pickup; (2) respondent Airport Taxi dispatched a taxi to pick up appellant; (3) the taxi displayed Airport Taxi’s name and colors; (4) respondent Brake had an agreement with Airport Taxi requiring Brake to pay $230 per week in exchange for dispatch service and insurance under Airport Taxi’s commercial insurance policy; (5) “Airport & Airline Taxi Cab Company” is provided as the “NAME OF THE TAXICAB COMPANY” on Brake’s insurance certificate; and (6) Brake and Mersey listed Airport Taxi as the employer on various taxi cab license renewal applications. These facts raise a genuine question of whether respondent created a public perception that it was an employer and that appellant could reasonably conclude that the driver of the cab was an employee of Airport Taxi.
The facts of this case support the permissible inference that people who get into an “Airport Taxi Cab” generally assume the status of the taxi driver to be an employee of Airport Taxi. The Restatement (Second) of Torts § 429 includes the following illustration:
A’s wife faints. He hails a taxicab, which is so labeled as to indicate that it is operated by the B Taxicab Company, although the arrangement between the taxicab company and the driver is such as to make the driver an independent contractor. A puts his wife in the cab and accompanies her home. Through the careless driving of the taxicab driver a collision occurs in which A and his wife are hurt, as is also C, the driver of another car. The rule stated in this Section subjects the B Company to liability to A and his wife but not to C.
As this illustration demonstrates, liability follows the public claim of responsibility, rather than the private arrangement between cab company and drivers.
The restatement’s application here supports two eminently fair public policy principles: (1) a party wishing to obtain a financial benefit by representing it is a responsible party cannot obtain that benefit and then disclaim the responsibility by an independent contractor arrangement; (2) because the regulatory authorities for taxicabs have license and insurance requirements, parties who publicly represent that they are responsible parties for taxicab operations by evidence of insurance and employer status on license applications, should not be allowed to secretly arrange for independent contractor status and thereby eliminate this same responsibility.
Based on the facts of this case and the public policy involved, I would reverse and remand.
[1] The court later amended its order granting summary judgment, certifying the order as a final judgment as to the liability of Airport Taxi.
[2] This appeal is brought by Frank Bagot, Sr., as guardian of Frank Bagot, Jr.
[3] Appellant makes reference to an unpublished opinion of this court, Bennett v. McColl, No. C1-90-2616, 1991 WL 75258 (Minn. App. 1991), arguing that it is analogous to the present case. But Bennett is distinguishable on at least two important points. In Bennett, the taxi company owned the cabs and assigned them to drivers. Id. at *1. Here, Brake owns his cab. In Bennett, the taxi company determined the shifts and hours that its drivers would work. Id. Here, Brake and Mersey worked when they chose to work.
[4] Appellant also cites Theissen-Nonnemacher, Inc. v. Dutt, 393 N.W.2d 397, 401 (Minn. App. 1986). That case, however, merely cites to Pacific Fire for the same proposition.