Court Opinion

ID: 3076796
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:22:08.086726+00
Date Added: 2024-06-11T11:42:00.348416
License: Public Domain

Opinion filed January 16, 2014

                                       In The

        Eleventh Court of Appeals
                                    __________

                                 No. 11-12-00142-CV
                                     __________

               DORA JO MOTLOCH, INDIVIDUALLY
               AND ON BEHALF OF THE ESTATE OF
              JAMES MOTLOCH, DECEASED, Appellant

                                        V.
     ALBUQUERQUE TORTILLA COMPANY, INC., Appellee

                     On Appeal from the 70th District Court
                             Ector County, Texas
                      Trial Court Cause No. A-128,142-A

                      MEMORANDUM OPINION
      Dora Jo Motloch, individually and on behalf of the Estate of James Motloch,
deceased, sued Albuquerque Tortilla Company, Inc., alleging claims for negligent
hiring and various theories of vicarious liability arising out of a fatal accident
between the Motlochs and Johnny Rafael Marmolejo Jr. We affirm.
                              Background Facts
      Albuquerque Tortilla manufactures almost seven million tortillas each week
and distributes its products to retail stores, restaurants, and “mom-and-pop stores”
in five states.   Albuquerque Tortilla sold its products directly to some of its
customers, hired drivers to deliver its products in the Albuquerque area, and
contracted with “eight or nine” independent operator distributors to deliver its
products in the other markets. The distributors worked with each individual store
to set delivery times, rotated the products on the shelf for freshness, and removed
stale products. When the company hired or fired a distributor, it had “no process
of finding a replacement” because “[p]eople would be jumping at the opportunity
to fill it” and “because there are so many operators out there that are better in
running the business.”
      Indeed, when Curtis Lathram, who owned D&D Distributing, heard that
Albuquerque Tortilla lost its distributor in the west Texas and New Mexico
territory, he contacted the company, and they began the negotiation process.
According to the Independent Operators Agreement (IOA) that the parties entered
into, Albuquerque Tortilla required that D&D maintain insurance, adhere to time
frames and the store policies of its retail and restaurant customers, rotate the
product on the shelves in retail stores, and maintain an adequate inventory. The
IOA expressly states that “any personnel employed or otherwise utilized by either”
party will not be an employee but, instead, will be characterized as “contract
labor.”
      D&D was already distributing bakery products in part of the territory under
contract. Lathram made some of the deliveries himself, and he hired Johnny
Marmolejo Sr. to make deliveries in other areas. Johnny Marmolejo Jr. made the

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deliveries during the week while his father was at work at his full-time job, and
when his father was off work, the Marmolejos made deliveries together.
Marmolejo Sr. arranged to use an Enterprise truck to make deliveries, and on at
least one occasion, Marmolejo Jr. used his personal truck to pull a trailer to make
his deliveries.
        One early morning as Marmolejo Jr. was driving to Hobbs, New Mexico, for
a delivery, he rear-ended a vehicle driven by Dora Jo Motloch; she had stopped in
the left lane to make a left-hand turn. Marmolejo Jr. was traveling almost seventy
miles per hour when he struck the vehicle. Dora Jo Motloch was severely injured,
and both passengers, including her husband, were killed. Motloch sued, among
others, the Marmolejos, Lathram, D&D, and Albuquerque Tortilla.
        The trial court rendered summary judgment in favor of Albuquerque
Tortilla, severed those claims, and ordered that they be dismissed with prejudice.
On appeal, Motloch contends that the trial court erred when it granted summary
judgment for Albuquerque Tortilla because it “did not conclusively establish its
right to judgment on [three] of the theories” alleged at trial. In five issues, 1
Motloch challenges the trial court’s judgment on her claims for negligent hiring,
vicarious liability claims arising from a joint enterprise, and vicarious liability
claims under the Texas Motor Carrier Safety Regulations.
        We review a trial court’s ruling on a traditional motion for summary
judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005). We must determine whether the movant established that no genuine issue
of material fact existed and that the movant was entitled to judgment as a matter of
law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,

        1
         Although Motloch presents five issues on appeal, only four were argued, and the numbering is
inconsistent. The first issue presented generally challenges the trial court’s grant of summary judgment;
Issues 2 through 5 were argued as Issues 1 through 4. Also, Issues 2 and 5 (as presented, but Issues 1 and
4 as argued) attack different elements (duty and causation) of the same claim.
                                                    3
548–49 (Tex. 1985); Apcar Inv. Partners VI, Ltd. v. Gaus, 161 S.W.3d 137, 139
(Tex. App.—Eastland 2005, no pet.). To be entitled to summary judgment, a
defendant must either negate an element of each of the plaintiff’s causes of action
or establish an affirmative defense as a matter of law.      Am. Tobacco Co. v.
Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).
      We consider the summary judgment evidence in the light most favorable to
the nonmovant and indulge all reasonable inferences and resolve all doubts in
favor of the nonmovant. Am. Tobacco, 951 S.W.2d at 425; Nixon, 690 S.W.2d at
548–49.   “When the trial court does not specify the basis for its summary
judgment, the appealing party must show it is error to base it on any ground
asserted in the motion.” Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex.
1995). We consider only the grounds that “the movant actually presented to the
trial court” in its motion. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625
(Tex. 1996).
      In her second issue on appeal, Motloch contends that the trial court erred
when it granted summary judgment in favor of Albuquerque Tortilla on its claim
for negligent hiring. Motloch does not challenge D&D’s status as an independent
contractor but argues that Albuquerque Tortilla owed a duty to the general public
to “assess the drivers delivering its products” and “to adopt and enforce policies
with respect to its drivers’ qualifications” because it exercised control over the
details of the work to be performed. Albuquerque Tortilla argues that “there is no
established legal duty that would have required [it] to investigate the
employment/retention policies or procedures utilized by an independent
contractor.” In its motion for summary judgment, it argued that there was no
ongoing duty to supervise D&D’s hiring activities “absent some evidence, which is
not present here, of retained control or the actual exercise of control by

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[Albuquerque Tortilla] over [D&D’s] work, activities, and responsibilities.” We
agree.
         Texas recognizes a claim for negligent hiring. That claim arises when there
is a lack of the use of ordinary care when hiring an independent contractor.
Wasson v. Stracener, 786 S.W.2d 414, 422 (Tex. App.—Texarkana 1990, writ
denied); see also King v. Assocs. Commercial Corp., 744 S.W.2d 209, 213 (Tex.
App.—Texarkana 1987, writ denied); Jones v. Sw. Newspapers Corp., 694 S.W.2d
455, 458 (Tex. App.—Amarillo 1985, no writ). If the performance of the contract
requires driving a vehicle, the person employing the independent contractor is
required to investigate the independent contractor’s competency to drive. See
Wasson, 786 S.W.2d at 422. But when the negligence arises out of the activity
being performed under the contract, the duty to see that work is performed in a safe
manner “is that of the independent contractor” and not that of the party who hired
the independent contractor. Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex.
1985) (quoting Abalos v. Oil Dev. Co. of Tex., 544 S.W.2d 627, 631 (Tex. 1976)).
         However, when the hiring party exercises control over the independent
contractor’s work, “he may be liable unless he exercises reasonable care in
supervising” the independent contractor’s work.          Id.   Texas has adopted the
following rule from the Restatement (Second) of Torts:
                One who entrusts work to an independent contractor, but who
         retains the control of any part of the work, is subject to liability for
         physical harm to others for whose safety the employer owes a duty to
         exercise reasonable care, which is caused by his failure to exercise his
         control with reasonable care.

RESTATEMENT (SECOND)         OF   TORTS § 414 (1965); Redinger, 689 S.W.2d at 418.
We apply this rule “when the employer retains some control over the manner in
which the independent contractor’s work is performed, but does not retain the
degree of control which would subject him to liability as a master.” Redinger, 689
5
S.W.2d at 418. “The employer’s role must be more than a general right to order
the work to start or stop, to inspect progress or receive reports.” Id.
      In addition to the IOA, the summary judgment evidence shows that
Albuquerque Tortilla did not dictate when deliveries were made; D&D
“negotiate[d] dock and door times with each individual store.” To comply with its
requirement to “maintain an adequate inventory,” D&D determined what was
adequate to “keep the shelves full based on the amount of space within each
individual store.” D&D determined what products and what quantities that it
would need to order from Albuquerque Tortilla, and there were no minimum prices
or quantities. If there were any complaints about the products or the service, D&D
was not obligated to relay this information to Albuquerque Tortilla. Albuquerque
Tortilla never required D&D to adopt or comply with hiring procedures, and D&D
determined how it made the deliveries in its distribution territory.
      Lathram, the owner of D&D, testified that he was not aware of whether
Albuquerque Tortilla knew whether he was making deliveries himself or knew if
D&D had hired drivers, and when asked whether they talked about it, he said, “No.
They could care less.” Lathram testified that he had “very little” contact with
Albuquerque Tortilla after he signed the contract. Chris Martinez, who represented
Albuquerque Tortilla in a pretrial deposition, explained that some distributors
deliver the product and some hire a driver. When asked about D&D specifically,
Martinez said, “It’s not my business to know if he has drivers or not.” He further
explained, “I can’t tell them what to do with their drivers. We are not associated
other than manufacturer to distributor.”
      Although Motloch contends that Albuquerque Tortilla’s “duty emanates
from the control” that it retained over the details of the work, we find no such
evidence after a review of the summary judgment evidence. Motloch does not
explain how Albuquerque Tortilla exercised control over the hiring of drivers or
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the manner of delivery, nor does she direct us to any evidence showing such
control. Moreover, Motloch’s argument relative to breach of this alleged duty—
that Albuquerque Tortilla “should have required D&D to adopt and enforce
policies with respect to its drivers’ qualifications”—further indicates that
Albuquerque Tortilla did not exercise control over D&D’s hiring or its distribution
operations. We conclude that Albuquerque Tortilla had no duty to supervise the
actions of D&D because it did not exercise the requisite control. Therefore, the
trial court did not err when it concluded that Albuquerque Tortilla was entitled to
judgment as a matter of law on Motloch’s negligent hiring claim. Motloch’s
second issue is overruled.
      In her fifth issue, Motloch contends that Albuquerque Tortilla proximately
caused the accident because of its negligent hiring and retention practices.
Because we conclude that Albuquerque Tortilla did not have a duty in this regard,
we need not address whether breach of that duty was the proximate cause of the
accident. Motloch’s fifth issue is overruled.
      In her fourth issue on appeal, Motloch argues that Albuquerque Tortilla was
not entitled to summary judgment on her joint enterprise claim because, of the two
elements challenged below, Albuquerque Tortilla “did not conclusively establish it
was entitled to judgment as a matter of law on either point.”
      “The theory of joint enterprise is to make each party thereto the agent of the
other and thereby to hold each responsible for the negligent act of the other.”
Shoemaker v. Estate of Whistler, 513 S.W.2d 10, 14 (Tex. 1974).            “A joint
enterprise signifies a legal relationship between two or more parties that imposes
the responsibility upon each party for the negligent acts of the others while acting
in furtherance of their common undertaking.” Ramirez v. Garcia, 413 S.W.3d 134,
154 (Tex. App.—Amarillo 2013, no pet. h.) (citing Seaway Prods. Pipeline Co. v.
Hanley, 153 S.W.3d 643, 651–52 (Tex. App.—Fort Worth 2004, no pet.)).
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      Texas has adopted the definition of joint enterprise from the Restatement of
Torts. Shoemaker, 513 S.W.2d at 14; see also St. Joseph Hosp. v. Wolff, 94
S.W.3d 513, 526 (Tex. 2002). To prevail on its claim that Albuquerque Tortilla
and D&D were engaged in a joint enterprise, Motloch was required to show the
following elements: (1) an express or implied agreement among the members; (2) a
common purpose; (3) community of pecuniary interest in the purpose; and (4) an
equal right to a voice in the direction of the enterprise, which gives an equal right
of control. Tex. Dep’t of Transp. v. Able, 35 S.W.3d 608, 613 (Tex. 2000) (quoting
RESTATEMENT (SECOND)      OF   TORTS § 491 cmt. c (1965)). Albuquerque Tortilla
challenged only the “community of pecuniary interest” and “equal right of control”
elements in its motion for summary judgment, so we must determine whether it
negated either element to be entitled to judgment as a matter of law.
      To show a community of pecuniary interest, the supreme court has focused
“upon evidence showing pooling of efforts and monetary resources between
entities to achieve common purposes, namely reduction in costs and contemplation
of economic gain by approaching the project as a joint undertaking.” Blackburn v.
Columbia Med. Ctr. of Arlington Subsidiary, 58 S.W.3d 263, 276 (Tex. App.—
Fort Worth 2001, pet. denied) (citing Able, 35 S.W.3d at 614). The “monetary
interest must be common among the members of the group—it must be one ‘shared
without special or distinguishing characteristics.’” St. Joseph, 94 S.W.3d at 531
(quoting Ely v. Gen. Motors Corp., 927 S.W.2d 774, 779 (Tex. App.—Texarkana
1996, writ denied)).
      Motloch argues that there was a joint enterprise “between two different
entities whose common purpose was the distribution and sale of [Albuquerque
Tortilla] products in West Texas and Eastern New Mexico.” Motloch argues on
appeal that “the very essence of a community interest” is when “[n]either party
makes money in the absence of sales, and both parties make money upon
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consummation of a transaction.” Motloch reasons that “[b]oth parties benefitted
financially if products sold; neither party benefitted if products did not sell. Both
parties benefitted if the customer base expanded; both parties suffered if the
customer base contracted.”
      Motloch’s argument misconstrues the law of joint enterprise just as the trial
court in St. Joseph did in its charge to the jury. 94 S.W.3d at 528. In St. Joseph,
the court’s charge required the jury to determine whether the parties had a
“common business or pecuniary interest,” and the supreme court clarified that this
“is not the same [thing] as whether they have a ‘community of pecuniary interest.’”
Id. The court explained:
      Instructing the jury that it may find a joint enterprise based in part on
      a finding of a “common business or pecuniary interest” opens to
      vicarious liability parties who may have business or pecuniary
      interests in the activities of others, but whose interests in those
      activities are not held in community with those others because they
      are not shared without special or distinguishing characteristics. This
      is contrary to the requirements of the Restatement and Shoemaker.
      Such a charge thus misstates Texas law regarding joint enterprise.

Id.
      Motloch’s argument fails because we must distinguish between a common
business purpose and a common pecuniary interest in that purpose. According to
the terms of the IOA, Albuquerque Tortilla “retained [D&D] as an Independent
Operator for the exclusive distribution of Albuquerque Tortilla Company
products.” D&D paid $3,000 for an exclusive distribution territory and received
twenty-two percent of the net sales in that territory.       D&D would have the
exclusive rights for one year “[u]nless terminated earlier.” Although it provided
for a one year term, the IOA also stated that D&D “shall be [an] Independent
Operator of Albuquerque Tortilla Company only for so long as Albuquerque
Tortilla Company, in its sole discretion, determines that such activity shall
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continue.” In addition, the IOA provided that “[n]either party, nor any employee
or agent of such party, shall have the right to make any representation on behalf of
or otherwise bind the other party.”       Additionally, D&D was prohibited from
distributing “like items” within the territory.
      Other summary judgment evidence also shows there was no pooling of risk,
resources, or effort but, rather, an allocation of such. Albuquerque Tortilla bore
the loss that occurred as a result of a manufacture’s defect, but D&D bore the loss
of unsold and returned product. The operating agreement did not provide for the
pooling of        expenses. Instead, Albuquerque Tortilla absorbed         its own
manufacturing and delivery costs, and D&D paid for the distribution costs. D&D
used its own trucks and equipment to deliver the product, and Albuquerque Tortilla
used its own equipment to manufacture products and its own vehicles to deliver the
product to D&D’s warehouse. Although D&D could increase its commissions by
acquiring new retailers in its territory, its profits would always be limited to
twenty-two percent of the net sales of Albuquerque Tortilla Company products
because D&D was prohibited “from delivering products that competed with
Albuquerque Tortilla Company products.” Any increase in value to the territory
would be realized by Albuquerque Tortilla, who could charge more for the
exclusive rights to the territory or realize the value through a sale of the company.
D&D’s monetary interest, however, was limited to the commission it earned from
the deliveries.
      Even if Albuquerque Tortilla and D&D have a common business purpose in
the “distribution and sale of [Albuquerque Tortilla] products in West Texas and
Eastern New Mexico,” as alleged by Motloch, the summary judgment evidence
shows that the parties have different pecuniary interests in that purpose. The
evidence shows that D&D used its own vehicles and drivers to haul Albuquerque
Tortilla products and that D&D was paid a set percentage of net sales. The
                                           10
evidence demonstrates that D&D was an independent contractor and shows
“[n]othing more than limited evidence of mere convenience to the parties arising
from the arrangement and a shared general business interest,” which does not
establish that the parties were engaged in a joint enterprise. See Blackburn, 58
S.W.3d at 277; Ramirez, 413 S.W.3d at 156. Although Albuquerque Tortilla and
D&D shared a common business interest in distributing tortillas and other products
in west Texas and eastern New Mexico, their pecuniary interest is not “shared
without special or distinguishing characteristics.” See St. Joseph, 94 S.W.3d at
531; see also Harris v. Houston Livestock Show & Rodeo, Inc., 365 S.W.3d 28, 35
(Tex. App.—Houston [1st Dist.] 2011, pet. denied) (holding no “community of
pecuniary interest” exists when one party’s interest was calculated differently from
the other’s). Accordingly, summary judgment was proper on Motloch’s claim
under the joint enterprise theory. Motloch’s fourth issue is overruled.
      Motloch also sought to impose liability upon Albuquerque Tortilla under the
principal of “statutory employment” set forth in the federal motor carrier safety
regulations as adopted in Texas. In her third issue, Motloch challenges the trial
court’s grant of summary judgment on this claim.
      In response to motor carriers’ attempts to immunize themselves from
liability by leasing trucks and characterizing drivers as independent contractors,
Congress enacted the Interstate Common Carrier Act that “require[s] interstate
motor carriers to assume full direction and control of the vehicles that they leased
‘as if they were the owners of such vehicles.’” Morris v. JTM Materials, Inc., 78
S.W.3d 28, 38 (Tex. App.—Fort Worth 2002, no pet.). The Interstate Commerce
Commission promulgated the Federal Motor Carrier Safety Regulations (FMCSR),
which impose vicarious liability upon interstate motor carriers for the negligence
of their drivers who are statutory employees. Id. at 38–39. The Texas Department
of Public Safety has adopted a majority of the FMCSR, including the definition of
                                         11
“employee” and “employer.” 37 TEX. ADMIN. CODE ANN. § 4.11(a) (2013) (Tex.
Dep’t of Pub. Safety, Gen. Applicability & Definitions).
      An “employer” under the FMCSR is “any person engaged in a business
affecting interstate commerce who owns or leases a commercial motor vehicle in
connection with that business, or assigns employees to operate it.” 49 C.F.R.
§ 390.5 (2013). An “employee” is defined as any person “who is employed by an
employer and who in the course of his or her employment directly affects
commercial motor vehicle safety.” Id. This includes an independent contractor
who is “in the course of operating a commercial motor vehicle.” Id. In addition, a
motor carrier is deemed to be a statutory employer when (1) the carrier does not
own the vehicle; (2) the carrier operates the vehicle, under an “arrangement” with
the owner, to provide transportation subject to federal regulations; and (3) the
carrier does not literally employ the driver. John B. Barbour Trucking Co. v. State,
758 S.W.2d 684, 688 (Tex. App.—Austin 1988, writ denied).
      The summary judgment evidence in this case negates the second element.
The record shows that Albuquerque Tortilla contracted with Lathram, who owned
D&D. Albuquerque Tortilla delivered its products to Lathram’s warehouse. D&D
contracted with Johnny Marmolejo Sr., and Marmolejo Sr. hired Marmolejo Jr.
The Marmolejos negotiated their delivery schedule with each customer; the
deliveries were not set by Albuquerque Tortilla.
      Although he was paid seventeen percent by D&D, Marmolejo Sr. testified
that he did not know what Albuquerque Tortilla paid D&D.             Marmolejo Jr.
testified that he did not have a contract with Lathram or D&D, that he never picked
up products from the warehouse without his father, that his dealings with Lathram
never went beyond “small talk,” and that he never had any direct dealings with
Albuquerque Tortilla. In fact, when questioned about the process for getting the
products and invoicing, Marmolejo Jr. explained that he drove and that his “father
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handled mostly all of that.” Because this evidence negates the second element,
which requires an “arrangement” between Albuquerque Tortilla and the owner of
the vehicle, the trial court did not err when it granted summary judgment on this
claim. Motloch’s third issue is overruled.
      We affirm the judgment of the trial court.

                                                   JIM R. WRIGHT
                                                   CHIEF JUSTICE

January 16, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.

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