Opinion ID: 1058597
Heading Depth: 1
Heading Rank: 4

Heading: Negligent Entrustment and Vicarious Liability

Text: The principal issue in this appeal and a question of first impression for this Court is whether the Court of Appeals erred in concluding that the owner-entrustor could not be held vicariously liable for the actions of the driver-entrustee and, accordingly, reinstating the trial court's initial judgment. This issue presents a question of law, which we review de novo without a presumption of correctness to the conclusions reached below. Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn.1993). Plaintiff Ali argues that one who negligently entrusts a chattel to another is vicariously liable for the consequences of any foreseeable tortious acts that the entrustee commits. She reasons that vicarious liability for negligent entrustment is derivative of the entrustee's negligence because there is no cause of action for negligent entrustment unless there is negligence by the entrustee. On the other hand, defendant Scheve contends that the Court of Appeals correctly held that he was not vicariously liable for Fisher's conduct because negligent entrustment is an independent tort based upon the negligence of the entrustor rather than the entrustee. Scheve also argues that there was no relationship between him and Fisher upon which vicarious liability could otherwise be imposed and that the trial court's amended judgment violated the principles of Tennessee's comparative fault-based tort system. Finally, Scheve argues that the trial court's decision to impose vicarious liability was prejudicial because he had prepared for trial in reliance on the trial court's pre-trial ruling that damages would be apportioned based upon the jury's allocation of fault under comparative fault principles. We begin our analysis by reviewing the familiar principles of comparative fault established in McIntyre v. Balentine, 833 S.W.2d 52 (Tenn.1992). In McIntyre , we adopted a system of modified comparative fault by which a plaintiff who is less than fifty percent (50%) at fault may recover damages in an amount reduced by the percentage of fault assigned to the plaintiff. Id. at 57. At the same time, we abandoned the concept of joint and several liability of tortfeasors and replaced it with a fault-based system of liability whereby a tortfeasor would be liable only to the extent of the percentage of fault assigned by the jury. Id. at 58. Despite these settled principles requiring the allocation of fault among the parties, Ali contends that Scheve was vicariously liable for Fisher's negligence based on his negligent entrustment. Although negligent entrustment requires proof that a chattel was entrusted to one incompetent to use it with knowledge of the incompetence, and that its use was the proximate cause of injury or damage to another, see Restatement (Second) of Torts § 390 (1964), this Court has never specifically addressed the issue of whether a claim of negligent entrustment results in the entrustor's vicarious liability for the negligent acts of the entrustee. See Woodson v. Porter Brown Limestone Co., 916 S.W.2d 896, 907 (Tenn.1996). [3] The Court of Appeals has, however, addressed related issues in its negligent entrustment cases. In Mathis v. Stacy, 606 S.W.2d 290 (Tenn.Ct.App.1980), for example, the Court of Appeals stated that an automobile owner's liability does not rest on imputed negligence but is based on his own negligence in entrusting his automobile to an incompetent driver. Id. at 292. The intermediate court clarified that [t]he issue of the owner's negligence is ... independent from the issue of the driver's negligence. Id. (citations omitted). Similarly, in Harper v. Churn, 83 S.W.3d 142 (Tenn.Ct.App.2001), the Court of Appeals observed that a claim of negligent entrustment requires (1) an entrustment of a chattel, (2) to a person incompetent to use it, (3) with knowledge that the person is incompetent, and (4) that is the proximate cause of injury or damage to another. Id. at 146. After concluding that the evidence was insufficient to impose liability for negligent entrustment, the court separately addressed the issue of whether the defendant was liable based on vicarious liability. Id. at 146-48. In other words, the court did not treat negligent entrustment as a theory of vicarious liability. Id. Because Tennessee courts have not addressed the specific issue presented in this case, we examine decisions in other jurisdictions. For example, the Kansas Supreme Court has addressed this precise issue and has held that fault in a negligent entrustment case must be apportioned between the entrustor and an entrustee. In McCart v. Muir, 230 Kan. 618, 641 P.2d 384 (1982), the jury found that the father of the negligent driver was liable to the plaintiffs for negligently entrusting his son with the car used in the accident. [4] Id. at 387. In concluding that the trial court erred in failing to instruct the jury on comparative fault, the Kansas Supreme Court said: [L]iability in a negligent entrustment case is not founded upon the negligence of the driver of the automobile but upon the primary negligence of the entruster in supplying the chattel, an automobile, to an incompetent and reckless driver. The nature and extent of negligence of the entruster and of the entrustee are separate and distinct. The percentages of fault may be different in amount and should be determined separately. Id. at 389. The Kansas Supreme Court therefore held that the liability of a negligent entrustor should be determined according to the principles of comparative fault and that the negligent entrustor's fault must be compared to the entrustee's level of fault. Id. The Kansas Supreme Court's conclusion is consistent with numerous later decisions holding that negligent entrustment does not necessarily create vicarious liability. For example, the Court of Appeals of Maryland has concluded that a cause of action for negligent entrustment does not rest on a theory of vicarious liability; it may be maintained against a person who, because he or she entrusts personal property to a known `reckless' individual, is directly negligent. Neale v. Wright, 322 Md. 8, 585 A.2d 196, 199 (1991). Similarly, in Broadwater v. Dorsey, the Maryland Court of Special Appeals observed that [negligent entrustment] does not rest on any vicarious liability  on imputing to the supplier the negligence of the entrustee  but rather on the direct negligence of the supplier in supplying the chattel in the first place. 107 Md.App. 58, 666 A.2d 1282, 1287 (1995), rev'd on other grounds, 344 Md. 548, 688 A.2d 436 (1997). Likewise, in Dubus v. McArthur, the Florida Court of Appeals held that a complaint cannot state a cause of action for negligent entrustment and vicarious liability because the elements require a showing of different facts that must be separately pleaded. 682 So.2d 1246, 1247 (Fla.Dist.Ct.App. 1996). [5] In contrast, the plaintiff relies on Loom Craft Carpet Mills, Inc. v. Gorrell, 823 S.W.2d 431 (Tex.App.1992), in which the Court of Appeals of Texas concluded that negligent entrustment liability is derivative in nature and that the entrustor may be held liable for the entrustee's negligence. The court reasoned: If the owner is negligent, his liability for the acts of the driver is established, and the degree of negligence of the owner would be of no consequence. When the driver's wrong is established, then by negligent entrustment, liability for such wrong is passed on to the owner.... We believe the better rule is to apportion fault only among those directly involved in the accident, and to hold the entrustor liable for the percentage of fault apportioned to the driver. Id. at 432 (citation omitted). In our view, the plaintiff's arguments, and the analysis in Gorrell , are not persuasive and are at odds with the numerous authorities recognizing that the tort of negligent entrustment does not create vicarious liability. [6] In addition, we believe the Kansas Supreme Court's application of comparative fault principles as illustrated in McCart reflects the better-reasoned approach for several reasons. First, the allocation of fault by the jury between the entrustor and the entrustee is entirely consistent with the principal goal of comparative fault under McIntyre , i.e., to link one's liability to one's degree of fault in causing harm. McIntyre, 833 S.W.2d at 58. Moreover, the allocation of fault among the parties promotes the fairness that underlies the system of comparative fault. Id. Second, the analysis in McCart is consistent with decisions that have explicitly or implicitly recognized that negligent entrustment does not necessarily create vicarious liability. The act of negligent entrustment and the act of negligent operation of a vehicle are separate and distinct. The tort of negligent entrustment is committed when control of the entrusted chattel is relinquished by the entrustor to a person the entrustor knows to be incompetent to use it. Harper, 83 S.W.3d at 146; see also Broadwater, 666 A.2d at 1287 (entrustor's conduct must be viewed as of the time of the entrustment, not as of the time the entrustee improperly uses the entrusted chattel). Accordingly, the argument that a negligent entrustment claim does not arise until the entrustee's negligence causes harm does not alone make negligent entrustment derivative of the entrustee's negligence. [7] Third, the McCart analysis is consistent with the fact that we have only rarely departed from the allocation of fault required under the system of comparative fault we adopted in McIntyre . One exception is that negligent tortfeasors cannot seek to have their fault compared to that of intentional tortfeasors where the intentional conduct is the foreseeable risk created by the negligent tortfeasor. Turner v. Jordan, 957 S.W.2d 815, 823 (Tenn.1997). A second exception is where vicarious liability is based on an agency relationship between a principal and the principal's negligent agent, such as the family purpose doctrine or respondeat superior. Browder v. Morris, 975 S.W.2d 308, 311-12 (Tenn.1998). These exceptions are clearly not applicable to the circumstances of the present case. Accordingly, we hold that negligent entrustment does not create vicarious liability and that the jury must allocate the fault between the defendants as provided in McIntyre . In this case, the jury correctly allocated fault between Scheve and Fisher, and the Court of Appeals correctly reinstated the trial court's original judgment that apportioned liability for damages based on the jury's findings.