Opinion ID: 1590463
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Heading Rank: 4

Heading: Kiesau's Appeal.

Text: Citing Graves v. Iowa Lakes Community College, the district court dismissed Kiesau's claims of negligent hiring, supervision, and retention because these causes of action do not extend to cases such as this where there are no physical injuries. 639 N.W.2d 22, 25 (Iowa 2002). Kiesau asks us to overrule Graves. At this point in our analysis, it is important to review our cases discussing the torts of negligent hiring, supervision, and retention. We first recognized these causes of action in Godar v. Edwards, 588 N.W.2d 701, 709 (Iowa 1999). These claims are based on Restatement (Second) of Agency § 213 (1957). Section 213 provides as follows: A person conducting an activity through servants or other agents is subject to liability for harm resulting from his conduct if he is negligent or reckless: .... (b) in the employment of improper persons or instrumentalities in work involving risk of harm to others; (c) in the supervision of the activity; or (d) in permitting, or failing to prevent, negligent or other tortious conduct by persons, whether or not his servants or agents, upon premises or with instrumentalities under his control. These causes of action are separate and distinct from those based on respondeat superior liability, which imposes strict liability on employers for the acts of their employees committed within the scope of their employment. Van Horne v. Muller, 185 Ill.2d 299, 235 Ill.Dec. 715, 705 N.E.2d 898, 905 (1998). A cause of action based on negligent hiring, supervision, or retention allows an injured party to recover where the employee's conduct is outside the scope of employment, because the employer's own wrongful conduct has facilitated in some manner the tortious acts or wrongful conduct of the employee. Island City Flying Serv. v. Gen. Elec. Credit Corp., 585 So.2d 274, 278 (Fla.1991). In Schoff v. Combined Insurance Co. of America, we decided a necessary element of a claim for negligent hiring, supervision, or retention is an underlying tort or wrongful act committed by the employee. 604 N.W.2d 43, 53 (Iowa 1999). Thus, an injured party must show the employee's underlying tort or wrongful act caused a compensable injury, in addition to proving the negligent hiring, supervision, or retention by the employer was a cause of those injuries. Godar, 588 N.W.2d at 708. In other words, the injured party must prove a case within a case. After deciding Godar and Schoff, we decided Graves. In Graves, we affirmed the dismissal of a negligent supervision claim because the plaintiff failed to assert any physical injuries. 639 N.W.2d at 25. Apparently, we did not consider our holding in Schoff when deciding Graves because a physical-injury requirement is inconsistent with our broad characterization in Schoff of the required employee conduct. On reexamining our decision in Graves, we believe the requirement of physical injury is an improper statement of the law in light of our prior decision in Schoff and the Restatement (Second) of Agency section 213 upon which Schoff and Godar were based. A plain reading of section 213 of the Restatement (Second) of Agency reveals no requirement that an injured party must sustain physical injury to recover under a claim of negligent hiring, supervision, or retention. Graves relied on Minnesota and Texas law to reach the conclusion that recovery for negligent supervision extends only to physical injuries. Minnesota still requires either the threat of or actual physical injury to sustain a claim for negligent supervision and retention. See, e.g., St. Hilaire v. Minco Prods., Inc., 288 F.Supp.2d 999, 1010 (D.Minn.2003). A federal district court, however, has now determined under Texas law, if an employee commits an actionable tort causing a legally compensable injury based on negligent hiring, supervision, or retention, physical injury is not necessary to sustain the cause of action. See, e.g., Verhelst v. Michael D's Rest. San Antonio, Inc., 154 F.Supp.2d 959, 968 (W.D.Tex. 2001). At least two other federal courts applying state law have also adopted the rule that the underlying tort or wrongful conduct determines the compensability of the injury in a cause of action against an employer for negligent hiring, supervision, or retention. In Grego v. Meijer, Inc ., the federal district court applying Kentucky law stated, [T]he tort of negligent supervision does not necessarily derive from employees' torts that cause physical injury.... 187 F.Supp.2d 689, 694 (W.D.Ky. 2001). Likewise, in Hays v. Patton-Tully Transportation Co., the federal district court applying Tennessee law allowed a claim of negligent supervision when the underlying tort committed by the employee was intentional infliction of emotional distress. 844 F.Supp. 1221, 1223-24 (W.D.Tenn.1993). This rule is consistent with our prior holding in Schoff, which requires the injured party to prove the underlying tort or wrongful conduct was a cause of the party's compensable damages. 604 N.W.2d at 53. Thus, in a cause of action against an employer for negligent hiring, supervision, or retention, the employer's liability arises from the employer's own tortious conduct; the underlying tort or wrongful conduct is simply a link in the causal chain leading to compensable damages. To hold otherwise would lead to absurd results. Under the rule of Graves, if an employer's negligent hiring, supervision, or retention caused the employee to batter one person but assault another in the same incident, only the victim of the battery would be able to recover any legally compensable damages for the negligence of the employer. There is no logical explanation as to why the battered victim can recover but the assault victim cannot. Although we acknowledge stare decisis as a venerable doctrine that lends stability to the law, this doctrine does not prevent the court from reconsidering, repairing, correcting, or abandoning past judicial announcements when error is manifest.... Miller v. Westfield Ins. Co., 606 N.W.2d 301, 306 (Iowa 2000). More important, the doctrine of stare decisis should not deprive a litigant of a legal right or defense because of a clearly erroneous past decision. Henriksen v. Younglove Constr., 540 N.W.2d 254, 260 (Iowa 1995); Kersten Co. v. Dep't of Soc. Servs., 207 N.W.2d 117, 121 (Iowa 1973); State v. Johnson, 257 Iowa 1052, 1056, 135 N.W.2d 518, 521 (1965); Stuart v. Pilgrim, 247 Iowa 709, 714, 74 N.W.2d 212, 216 (1956). Therefore, to the extent Graves holds a negligent hiring, supervision, or retention claim requires physical injury, we overrule it. The district court should not have granted Davis's and the County's motion for summary judgment on the ground Kiesau did not suffer any physical injury.
The County is immune for any claim for punitive damages. Iowa Code § 670.4(5) (2001). Davis, however, is liable for punitive damages in the performance of his duty upon showing actual malice or willful, wanton, and reckless misconduct. Id. § 670.12. For purposes of Iowa Code section 670.12, [a]ctual malice is characterized by such factors as personal spite, hatred, or ill will. Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 396 (Iowa 2001). The willful, wanton, and reckless misconduct standard under section 670.12 is the same as the willful and wanton disregard for the rights of another standard found in section 668A.1(1)( a ). Vlotho v. Hardin County, 509 N.W.2d 350, 356 (Iowa 1993). Therefore, willful, wanton, and reckless misconduct under section 670.12 occurs when an actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences. Id. ; accord Fell v. Kewanee Farm Equip. Co., 457 N.W.2d 911, 919 (Iowa 1990). In viewing the record in the light most favorable to Kiesau, she has failed to show the existence of a genuine issue of material fact as to whether Davis's conduct constituted actual malice. Under this same standard, however, a genuine issue of material fact exists as to whether Davis's conduct met the willful, wanton, and reckless misconduct standard under section 670.12. Davis received numerous complaints regarding Bantz from the highest-ranking officers in his department. On more than one occasion, these officers recommended Davis should begin termination procedures against Bantz. Furness criticized Bantz for his lack of honesty, integrity, and good judgment. On more than one occasion, Bantz's superiors warned Davis that Bantz was a lawsuit waiting to happen. Despite these complaints, Davis failed to take any meaningful disciplinary action against Bantz. A fact finder could find Davis intentionally failed to take any action against Bantz because Bantz was his son-in-law. A fact finder could also find Bantz posed a known or obvious risk to third parties that was so great as to make it highly probable that harm would follow from Davis's failure to take any action against Bantz. A fact finder could further find Davis's conduct as a conscious indifference to the consequences of his failure to act. For these reasons, we must reverse the district court's decision granting Davis's motion for summary judgment on the issue of punitive damages.