Opinion ID: 2626433
Heading Depth: 3
Heading Rank: 1

Heading: Managerial Capacity

Text: {24} A corporation may be liable for punitive damages for the wrongful acts of employees who are acting within the scope of employment and who are employed in a managerial capacity. Albuquerque Concrete Coring Co., 118 N.M. at 144-45, 879 P.2d at 776-77. This theory of liability derives from the Restatement (Second) of Torts Section 909(c) (1979) and the Restatement (Second) of Agency Section 217(C)(c) (1958), which we adopted in Albuquerque Concrete Coring Co., 118 N.M. at 145, 879 P.2d at 777. The trial court concluded that Pike, Lancaster, Gifford, and Kasprzyk were acting within the course and scope of their employment at all times material to the transaction with Plaintiffs. Fleetwood does not challenge these findings, and there is ample evidence in the record that these employees' acts were fairly and naturally incidental to the business Fleetwood assigned them and were done while engaged in Fleetwood's business with the view of furthering Fleetwood's interest. See UJI 13-407 NMRA; Narney v. Daniels, 115 N.M. 41, 48, 846 P.2d 347, 354 (Ct.App. 1992) (Generally, whether an employee is acting in the course and scope of employment is a question of fact.). The question remains whether any of these participants possessed managerial capacity. {25} An employee has managerial capacity if he or she has the discretion or authority to speak and act independently of higher corporate authority. Brashear v. Baker Packers, 118 N.M. 581, 583, 883 P.2d 1278, 1280 (1994). In Albuquerque Concrete Coring Co., we noted how [i]n the modern world of multinational corporations, corporate control must be delegated to managing agents who may not possess the requisite upper-level executive authority traditionally considered necessary to trigger imposition of corporate liability for punitive damages, and we rejected the traditional standard requiring wrongful acts committed by an employee with the whole executive power of the corporation. 118 N.M. at 146, 879 P.2d at 778. Instead, we noted that [c]orporate liability for punitive damages should depend upon corporate responsibility for wrongdoing, not corporate ability to insulate top executives from daily, hands-on management. Id. Therefore, we concluded that [j]ob titles, in and of themselves, are not necessarily dispositive. Id. at 145, 879 P.2d at 777. The key in determining whether an agent acts in a managerial capacity is to look at the nature of what the agent is authorized to do by the principal and whether the individual has discretion regarding both what is done and how it is done. Id. {26} Fleetwood argues that it is not liable for punitive damages because Lancaster was not employed in a managerial capacity. We disagree. Lancaster was employed by Fleetwood as the general manager of its Las Cruces office at the time that he and Pike sold the mobile home to Plaintiffs. Fleetwood general managers were responsible for the financing of mobile homes, and the evidence indicates that Lancaster dealt directly with GreenPoint regarding Plaintiffs' financing without oversight from upper-management. General managers were also responsible for advertising and for determining the value of trade-ins. When asked in his deposition how Lancaster was able to get away with his misconduct without it being detected sooner, Jim Gifford replied: Any paperwork coming through would look simply normal as far as if a garage was going to be put on. I mean, you can't oversee, on a daily basis, every deal. That's why you have a general manager in a store. That is his responsibility, to put business together. Gifford also discussed how Fleetwood depends on general managers providing the company with correct information, and Kasprzyk testified that he confronted Lancaster instead of Pike regarding the nonexistent garage and decks because the whole deal was Bob Lancaster's responsibility as general manager of that store. Finally, Kasprzyk indicated that he did not fire Lancaster immediately upon learning of his fraudulent activity because of Lancaster's elevated status as a general manager. We conclude that Lancaster had sufficient discretionary authority regarding both what is done and how it is done to bind Fleetwood for punitive damages. Id. {27} The evidence also indicates that Kasprzyk and Gifford were employed in a managerial capacity. Vice-president Gifford was responsible for Fleetwood's operations and expansion in Arizona, Colorado, Nevada, and New Mexico, and he described himself as the chief cook and bottlewasher for the region. Gifford had the authority to repurchase Plaintiffs' $82,688.75 loan from GreenPoint without seeking corporate approval or authorization. Gifford's zone district manager, Kasprzyk, was the day-to-day supervisor for approximately 13 stores between New Mexico, Arizona and Colorado. Kasprzyk, who had trained Pike and Lancaster, was the direct supervisor of the general managers of each store in his region and was also physically responsible for all the actions of each individual store that [he] was supervising. {28} Fleetwood concedes that Kasprzyk and Gifford were employed in a managerial capacity but argues that they were not involved in defrauding Plaintiffs. The evidence indicates otherwise. After GreenPoint discovered that a garage and decks had not been installed on Plaintiffs' land, GreenPoint notified Gifford that Fleetwood had falsely certified the construction of the garage and decks and requested that Fleetwood repurchase the loan. With this knowledge of fraud, Gifford placed Kasprzyk in charge of rectifying the situation. Kasprzyk confronted Lancaster in Las Cruces and asked, Bob, do you understand what you've just done here? You've closed on a loan . . . and defrauded our lender. Instead of firing Lancaster in accordance with Fleetwood's Call to Integrity policy, which required immediate dismissal for falsification of information, Kasprzyk continued to leave Lancaster in charge. {29} In addition, because a garage could not be placed on the property, GreenPoint authorized a substitution of a fence of similar value in place of the garage and decks. Without Plaintiffs' permission, Fleetwood erected a fence worth $1,000 as a substitute for the promised $9,500 in garage and decks. In their depositions, Kasprzyk and Gifford blamed each other for the substitution of the fence. Gifford said he left Kasprzyk in charge of remedying the situation and denied his involvement with the fence. However, Kasprzyk testified in his deposition that Mr. Gifford and Vangie out of the zone office were also involved in that transaction, in regards to the fence issue and that they had just told me that they were going to take and move forward and put a fence in for the value. At trial, Kasprzyk testified again that the fence issue was being handled through the zone office directly with GreenPoint Credit and the store itself. Kasprzyk denied any personal involvement with the fence substitution and testified that he left Lancaster in charge of remedying the consequences of the fraud. Gifford disputed Kasprzyk's claims when he testified that Mr. Kasprzyk told me we were putting a fence on the property. Problem solved, as far as I was concerned. The trial court was at liberty to accept or reject their testimony, and we believe the evidence is sufficient to find that Pike, Lancaster, Kasprzyk, and Gifford each participated to some extent in defrauding Plaintiffs and GreenPoint. Therefore, Fleetwood is liable for punitive damages under a managerial capacity theory.