Court Opinion

ID: 4200540
Source: CourtListenerOpinion
Date Created: 2017-08-31 19:16:31.460743+00
Date Added: 2024-06-11T14:41:35.755116
License: Public Domain

J-A19038-17

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

NANCY GLASS PRODUCTIONS, INC.,         :      IN THE SUPERIOR COURT OF
                                       :            PENNSYLVANIA
                Appellant              :
                                       :
           v.                          :
                                       :
ERICA ENTERPRISES, INC. AND            :
SYSTEM4 OF PHILADELPHIA, LLC AND       :
SYSTEM4, LLC,                          :
                                       :
           v.                          :
                                       :
KEVIN LUKE                             :           No. 3697 EDA 2016

               Appeal from the Order entered April 30, 2016
          in the Court of Common Pleas of Montgomery County,
                    Civil Division, No(s): 2013-24995

BEFORE: BENDER, P.J.E., DUBOW and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.:                    FILED AUGUST 31, 2017

     Nancy Glass Productions, Inc. (“NGP”) appeals from the Order granting

the Motion for Summary Judgment filed by Erica Enterprises, Inc. (“EEI”)

and System4 of Philadelphia, LLC and System4, LLC (collectively “the

Defendants”). We affirm.

     In its Memorandum and Order, the trial court set forth the relevant

factual and procedural history, which we adopt for the purpose of this

appeal. See Memorandum and Order, 4/30/16, at 1-2.1

1
 Additional defendant, Kevin Luke (“Luke”), was released from the case on
November 29, 2016, when NGP filed a Motion for discontinuance of the
matter against him. Luke is not a party to the instant appeal.
J-A19038-17

     On April 22, 2016, the trial court entered an Order granting summary

judgment in favor of the Defendants. NGP filed a timely Notice of Appeal,

and a court-ordered Pa.R.A.P. 1925(b) Concise Statement of matters

complained of on appeal.

     On appeal, NGP raises the following issues for our review:

     1. Did the trial court erroneously grant summary judgment to
        the [] Defendants on their defense to direct liability for the
        thefts and outrageous misconduct of their cleaning
        employee[,] when a reasonable jury could find that, in the
        exercise of ordinary care, they knew or should have known
        that their employee had an extensive criminal history[,]
        including charges of attempted murder and drug[-]dealing[,]
        that were relevant to both the heightened risk associated with
        inserting an employee into a customer’s premises[,] and to
        the monetary and property damages that [NGP] suffered from
        the employee’s criminal propensities and impulsive,
        outrageous conduct?

     2. Did the trial court erroneously grant summary judgment to
        the [] Defendants on their defense to direct liability for
        punitive damages for the thefts and outrageous misconduct
        that their employee committed when a reasonable jury could
        find their failure to discover, disclose, and respond to Luke’s
        prior misconduct was reckless, and that the [] Defendants
        subjectively appreciated the risk of harm to which they
        exposed [NGP,] but disregarded that risk due to a conflict
        between their duty to the customers and the desire to land a
        fee-paying franchisee?

                                -2-
J-A19038-17

Brief for Appellant at 3-4.2

            Our scope of review of a trial court’s order granting or
      denying summary judgment is plenary, and our standard of
      review is clear: the trial court’s order will be reversed only where
      it is established that the court committed an error of law or
      abused its discretion.
             Summary judgment is appropriate only when the record
      clearly shows that there is no genuine issue of material fact and
      that the moving party is entitled to judgment as a matter of law.
      The reviewing court must view the record in the light most
      favorable to the nonmoving party and resolve all doubts as to
      the existence of a genuine issue of material fact against the
      moving party. Only when the facts are so clear that reasonable
      minds could not differ can a trial court properly enter summary
      judgment.
Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting

Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)).

      As NGP’s claims are related, we will address them together. In its first

issue, NGP contends that the Defendants owed a duty to use ordinary care

to protect NGP from harm by Luke. Brief for Appellant at 33. NGP asserts

that the Defendants’ “system” was to grant privileged access to its

franchisees without any reasonable investigation or ordinary care. Id. NGP

claims that “the dutiful objective of hiring trustworthy cleaners to service

[EEI’s] customers was undercut by the conflicting motive to sell notional

2
  In its brief, NGP attempts to raise an additional issue: that “[t]here is
evidence on which a reasonable jury could find that [EEI] and System4, LLC
had sufficient control [over Luke] to establish employer liability.” Brief for
Appellant at 41-42. However, as this issue was not included in NGP’s
Statement of the Questions Involved, we decline to address it.            See
Pa.R.A.P. 2116 (providing that “[n]o question will be considered unless it is
stated in the statement of questions involved or is fairly suggested
thereby.”).

                                  -3-
J-A19038-17

franchises to persons willing to pay the [Defendants] for the opportunity to

work for less than minimum wages.” Id. at 34. NGP contends that “a jury

could reasonably find that the [Defendants] had every incentive not to

conduct investigations that might spoil franchise sales.”   Id. (emphasis in

original). NGP asserts that “the very risks that should have been disclosed

had the [D]efendants exercised ordinary care were realized when Luke, who

had a long career of crime, stole property from [NGP].” Id. NGP claims that

EEI did not do any screening when selling a franchise to Luke, did not check

his references, conducted no background check, and did not ask about his

criminal history or level of education. Id. at 35; see also id. (noting that

EEI estimated that its interviews with potential franchisees lasted an hour).

NGP contends that a jury could reasonably have found that EEI had a duty to

investigate and conduct a background check on Luke, thereby creating a

genuine question of material fact precluding summary judgment. Id. at 39.

     In its second issue, NGP contends that the Defendants owed a

heightened duty of care to NGP to hire honest cleaners of trustworthy

character. Id. at 43. NGP asserts that the Defendants breached that duty

when they “intentionally and as a matter of settled practice,” did not

perform a background check on Luke or ask him if he had ever been

convicted of a crime. Id. at 43-44. NGP claims that, under these facts, a

jury could find that the Defendants “willfully and recklessly turned a blind

                                 -4-
J-A19038-17

eye to potential disqualifying information that might have spoiled a franchise

sale.” Id. at 44.

      In its Memorandum and Order, the trial court addressed NGP’s issues

and determined that, although reasonable minds could differ as to whether

Luke was an employee or an independent franchisee, the issue was

ultimately of no moment because (1) if Luke was found to be an employee,

employer liability would not attach because Luke’s actions were outside the

scope of his employment;3 and (2) if Luke was a franchisee, then vicarious

liability would not attach. See Memorandum and Order, 4/30/16, at 3. The

trial court further reasoned that, interpreting NGP’s claim as one for

negligent hiring, EEI was not directly liable to NGP because Luke’s “prior

convictions for aggravated assault and possessing an instrument of crime

are unakin to theft and inappropriate sexual activity such that it would be

wrong to impute notice of Luke’s proclivities to engage in such conduct.” Id.

at 5-6. Viewing the record in the light most favorable to NGP, as the non-

moving party, we agree with the trial court’s determination, which is

supported by the record and free of legal error. Accordingly, we affirm the

trial court’s entry of summary judgment in favor of the Defendants. See id.

at 3, 5-6.

      Order affirmed.

3
 On appeal, NGP concedes that Luke’s actions were outside the scope of his
employment. See Brief for Appellant at 41 n.7.

                                 -5-
J-A19038-17

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/31/2017

                          -6-
                         IN THE COURT OF COMMON PLEAS OF
                        MONTGOMERY·COUNTY,      PENNSYLVANIA
                                   CIVIL DIVISION

NANCY GLASS PRODUCTIONS,                INC.                                   No. 2013-24995
                                                       .
                       v.                              .
ERICA ENTERPRISES, INC. d/b/a
SYSTEM4 OF PIULADELPIUA,
SYSTEM4, LLC                                           .
                                                       .
                       v.
                                                       .
KEVIN LUKE                                             .
                                MEMORANDUM AND ORDER

        Before the Court is a Motion for Summary judgment filed by Erica Enterprises , Inc.

d/b/a System4 of Philadelphia and System4, LLC ("Moving Defendants"). Because this court

finds that the non-moving party has not shown that a genuine issue of material fact exists on the

claims asserted by Plaintiff, the entry of summary judgment in favor of the Moving Defendants

is warranted.

        FACTS
       Defendant System4, LLC is a company that sells janitorial franchises across the country

to regional franchisors. The regional franchisors typically sell the franchises to unit franchisees,

who provide the actual cleaning services to customers. Defendant Erica Enterprises, Inc., d/b/a

System4 of Philadelphia ("Erica Enterprises") is a regional franchisor that purchased System4

franchises from System4, LLC. Erica Enterprises sold a unit franchise to Defendant Kevin Luke

("Luke"). As a franchisee, Luke operated a cleaning business under the System4 brand pursuant

to a franchise agreement between him and Erica Enterprises.

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                                                                            2013-24995-0122       Opinion, Page 3

            In late 2011. Plaintiff Nancy Glass Productions, Inc., a television production company,

entered into a contract with Erica Enterprises to provide janitorial services at Plaintiff's office.

Erica Enterprises offered the cleaning account for Plaintiff's office to franchise to unit franchisee

Kevin Luke, who accepted the account. That agreement provided that the cleaning services

would be performed by an independent franchisee, in this case, Luke.

             On or around February 7, 2012. Luke and members of his cleaning crew allegedly

engaged in theft and sexual activity on Plaintiff's property. Luke admits to having sex on one

occasion but denies any allegations of theft.

             On August 6, 2013, Plaintiff sued Moving Defendants claiming that they were

responsible for the intentional torts committed by Luke while on the Plaintiff's premises. Against

Moving Defendants. Plaintiff pled direct negligence, 1 vicarious liability, breach of contract,

conversion, and punitive damages. On December 13, 2013, Moving Defendants joined Luke as

an additional defendant, asserting that Luke was solely liable or jointly and severally liable.

Moreover. Moving Defendants asserts that Luke is obligated to indemnify Moving Defendants

on the claims asserted against them by Plaintiff. On October 26, 2015, Moving Defendants filed

the instant Motion for Summary Judgment. seeking dismissal of all claims made against them.

Alternatively, Moving Defendants request dismissal only of Plaintiff's claims for punitive

damages,

            DISCUSSION

            I. Summary Judgment Standard

            Summary judgment may be granted only where the evidence of record creates no issue of

material fact, when viewed in the light most favorable to the non-moving party, and where the

movant is entitled to judgment as a matter of law. Pa.RC.P. I 035.2; Davis v. Pennzoil, 264 A.2d

I
    See Section 3, i'lfra.

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                                                                              2013-24995-0122      Opinion, Page 4

    597 (Pa. 1970); Rohrer v. Pope, 918 A.2d 122 (Pa Super. Ct. 2007). After movant has set forth

    in the motion the necessary elements warranting summary judgment, the non-moving party must

    demonstrate that there is a genuine issue for trial and may not rest on the avennents set forth in

    pleadings. Accu-Weather, Inc. v. Prospect Comms., Inc. 644 A.2d 1254 (1994); Ertel v. Patriot-

    News Co, 674 A.2d I 038 (Pa. 1996).

           l. Plaintiff's Vicarious Liability Claims

           Moving Defendants make two arguments in their Motion in regards to vicarious liability.

    First, Moving Defendants claim that because Luke was an independent franchisee, they as

    franchisors are not vicariously liable for his conduct. Second, Moving Defendants contend that

    even if Luke is classified as an employee, his conduct fell outside of the scope of his

    employment, thereby dissolving vicarious liability.

                   a. Moving Defendants are Not Vicariously Liable for Luke's Actions if Luke
                      is Determined to be an Independent Franchisee

           In regards to the first argument, we find that reasonable minds could differ on whether

    Luke was an employee or an independent franchisee. However, as discussed infra, this issue is

    ultimately ofno moment. If Luke was an independent franchisee, Moving Defendants are not

    vicariously liable. Drexel v. Union Prescription Centers, Inc.• 582 F.2d 781, 785 (3d Cir.1978).

    If,on the other hand, Luke is found to be an employee, then Moving Defendants are still not

    vicariously liable because his conduct would have fallen outside the scope of his employment, as

    will be more fully discussed below.

                   b. If Luke Was an Employee of Moving Defendants, His Conduct Fell
                      Outside the Scope of His Employment

           This court agrees with Moving Defendants that they are not vicariously liable for Luke's

    alleged wrongdoing because even if Luke was an employee, Luke's conduct grossly deviated

                                                     3

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                                                                            2013-24995-0122       Opinion, Page 5

from the scope of his employment.      Luke's conduct fell so far outside the scope of what he was

engaged to do that Moving Defendants ace entitled to summary judgment as a matter of law as to

vicarious liability.

        It is well settled that an employer may be held vicariously liable for the negligent acts of

an employee that causes injuries to a third party. provided that such acts were committed during

the course of and within the scope of employment. Fitzgerald v. McCutcheon, 410 A.2d 1270,

1271 (Pa. Super. Ct. 1978). Conduct falls within the scope of employment if: ( l) it is of a kind

and nature that the employee is employed to perform; (2) it occurs substantially within the

authorized time and space limits of the job; and (3) it is actuated, at least in part, by a purpose to

serve the employer. R.A. v. First Church of Christ, 748 A.2d 692, 699 (Pa. Super. Ct. 2000).

        In certain circumstances, liability of the employer may also extend to intentional or

criminal acts committed by the employee. Costa v. Roxborough Mem 'I Hosp., 708 A.2d 490, 493

(Pa. Super. Ct. 1998). The determination of whether a person was acting within the scope of

employment is typically a question for the jury. Id. However, our courts have carved out

exceptions to this factfinding rule when the employee's act was so excessive as to be totally

without responsibility or reason. Id. This exception arises out of the third prong of the test set

forth in R.A., namely that the offending conduct is actuated, at least in part, by a purpose to serve

the employer. R.A., 748 A.2d at 699. In that case, the Superior Court affirmed the entry of

summary judgment for defendant church on a vicarious liability claim stemming from allegations

of sexual abuse of a minor. The court concluded that "(n)othing about [defendant's) sexual abuse

of [minor] had any connection to the kind and nature of his employment as a minister." Id. at

700.

                                                  4
                                                                           2013-24995-0122        Opinion, Pag¢ 6

        Pennsylvania courts have come to the same conclusion in cases where the offending

conduct was far less egregious. In He" v. Simplex Box Corporation, 198 A. 309 (Pa. 1938), the

Plaintiffs clothing, on which gasoline was accidentally spilled, was ignited after a factory

employee standing nearby struck a match to light a cigarette. Plaintiff sued the factory under a

theory of vicarious liability. Our Supreme Court reversed a verdict for the plaintiff because the

striking of the match for the purpose of lighting a cigarette was sufficiently unrelated to the job

the factory employee was tasked with performing. Id. at 310. "[Ijn striking the match the servant

was doing nothing in furtherance on in connection with his employer's business." Id

        In the case before us, Luke and/or members of his crew are alleged to have converted

property and engaged in sexual activity on the job site. Neither of these activities in any way

could have been actuated for any purpose other than a purely personal one. Even though the

alleged malfeasance occurred within the office Luke and his crew were supposed to clean; the

conduct fell so far afield of his contractual duties that his putative employer cannot be held

vicariously liable for damages arising therefrom.

       3. Moving Defendants are Not Directly Liable for Negligent Hiring or Negligent
          Supenri!ion

       In Count IV of the Complaint, Plaintiff avers that System4 of Philadelphia "negligently

supervised their employees or representatives they retained to perform the Cleaning Services."

(Compl. 173). Even though the Count is couched in "Negligence and Vicarious Liability," we

read this Count to include claims for direct liability for negligent supervision and negligent

hiring. We find no merit in either claim.

       An employer owes a duty to "exercise reasonable care in selecting, supervising and

controlling employees." R.A., 748 A.2d at 697. To establish liability, plaintiff must show that the

employer "knew or, in the exercise of ordinary care, should have known of the necessity for

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                                                                          2013-24995-0122       Opinion, Page 7
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                                                                                                            !

exercising control of his employee." Dempsey v. Wa/so Bureau, Inc .• 246 A.2d 418, 422 (1968).

In other words, a plaintiff seeking to recover must show that 1) the employer knew or should

have known of the propensity of the employee and 2) such employment creates a situation in

which a third party may be banned. Coatb v. Jones. 419 A.2d l 249, 1250 (Pa. Super. Ct. 1980).

        In Harris v. KFC US. Properties, Inc; 2012 WL 2327748 (E.D.Pa. 2012) the Eastern

District Court granted summary judgment for KFC in a case arising out of the employee's on-

the-job assault of a customer. A basic background check would have uncovered prior convictions

for theft, but no convictions for violent crimes. Id. at •1. Even ifKFC had conducted a

background check, KFC would have had no notice that the employee was predisposed to engage

in assaultive behavior. The federal trial court found that because it was not foreseeable that the

employee would assault a customer, the employer was absolved of direct liability.

        Plaintiff claims that Moving Defendants should not have engaged Luke because of his

criminal background. It is admitted that Luke has a criminalbackground,     but his prior

convictions for aggravated assault and possessing an instrument of crime are unakin to theft and

inappropriate sexual activity such that it would be wrong for the court to impute notice of

Luke's proclivities to engage in such conduct. Accordingly, assuming arguendo that Luke is an

employee, see supra Section 2. Moving Defendants are not directly liable for negligent hiring or

negligent supervision.

       4. Claims for Punitive Damages Must Fail Because the Underlying Claims Fail

       Punitive damages are collateral or ancillary to a tort claim and are only recoverable upon

a showing of'outrageous'   conduct on the part of the defendant," Baker v. Pa. Nat'l Mui. Cas.

Ins. Co., 559 A.2d 914, 916 (Pa. 1989).

                                                 6
                                                                              2013-24995-0122   Opinion, Page 8

       Plaintiffs seek punitive damages against Moving Defendants. However, this claim fails

because, as discussed above, Moving Defendants are not liable for outrageous conduct.

       CONCLUSION

       Defendants System4, LLC and Erica Enterprises are entitled to summary judgment as a

matter of law as to vicarious liability arising from the alleged misconduct of Defendant Luke

and/or his crew. All claims and cross-claims directed to 1) Erica Enterprises, Inc. d/b/a System4

of Philadelphia and 2) System 4, LLC are dismissed. Plaintiff's case to proceed against Luke as a

result of the joinder of Luke within the applicable statute of limitations.

                                                  7