Engler v. Gulf Interstate Eng'g, Inc.

• Decision Date: 09 July 2012
• Docket Number: No. CV–11–0273–PR.,CV–11–0273–PR.
• Citation: 280 P.3d 599,230 Ariz. 55
• Parties: Aaron ENGLER, an unmarried man, Plaintiff/Appellant, v. GULF INTERSTATE ENGINEERING, INC., a corporation, Defendant/Appellee.
• Court: Arizona Supreme Court

230 Ariz. 55

280 P.3d 599

Aaron ENGLER, an unmarried man, Plaintiff/Appellant,

v.GULF INTERSTATE ENGINEERING, INC., a corporation, Defendant/Appellee.

No. CV–11–0273–PR.

Supreme Court of Arizona, En Banc.

July 9, 2012.

Don B. Engler, P.C., By Donald B. Engler, Yuma, and Aboud & Aboud, P.C., By Michael J. Aboud, Tucson, Attorneys for Aaron Engler.

Holloway Odegard & Kelly, P.C., By Peter C. Kelly, II, Charles M. Callahan, Michelle N. Ogborne, Phoenix, Attorneys for Gulf Interstate Engineering, Inc.

OPINION

BERCH, Chief Justice.

¶ 1 In this case, we address whether an employer can be held vicariously liable for an after-work accident caused by an employee who was on an extended away-from-home assignment. We hold that because the employee was not subject to his employer's control, he was not acting within the scope of his employment at the time of the accident and the employer is therefore not liable for his actions.

I. FACTS AND PROCEDURAL BACKGROUND

¶ 2 Ian Gray worked for Gulf Interstate Engineering, Inc. (“Gulf”), a Texas-based energy consulting company. In 2007, Gray worked on the design and construction of a natural gas compressor for Gulf in Los Algodones, Mexico. Gray lived in Houston and flew each week from Houston to San Diego, where he rented a car and drove to Yuma. He stayed in a hotel in Yuma and commuted each day to the worksite in Mexico.

¶ 3 Gulf reimbursed Gray's business expenses, including the cost of his lodging, rental cars, and meals. In addition, Gulf paid Gray for his travel to and from the job site because his work required him to cross an international border each day, which often entailed significant delays, especially when returning to Yuma. Gulf considered Gray's work day to begin when he left the hotel in Yuma and to conclude when he returned there. During after-work hours, Gulf did not attempt to supervise Gray or control his activities.

¶ 4 On December 11, 2007, after a day of work in Mexico, Gray returned to his hotel at approximately 7:30 p.m. Shortly thereafter, Gray and a co-worker left the hotel in Gray's rental car to go to a restaurant. On the way back to the hotel after dinner, Gray made an improper left turn and hit a motorcycle driven by Aaron Engler, who sustained serious injuries.

¶ 5 Engler sued Gray and Gulf for his injuries, alleging Gray's negligence and Gulf's vicarious liability. Gulf moved for summary judgment, arguing that it could not be held vicariously liable because Gray was not acting in the course and scope of his employment when the accident occurred. Engler filed a cross-motion, urging the court to find that all of Gray's activities while in Yuma were undertaken “solely to serve the business purposes of Gulf Interstate until he returned” to Houston. The trial court granted Gulf's motion. Thirteen days later, however, the court of appeals issued its opinion in McCloud v. Kimbro ( McCloud II ), 224 Ariz. 121, 125 ¶ 17, 228 P.3d 113, 117 (App.2010), which held “that an employee on out-of-town travel status is within the course and scope of his employment and subjects his employer to vicarious liability while traveling to and from a restaurant for a regular meal.” Engler filed a motion for a new trial, but the trial court distinguished McCloud II and denied the motion.

¶ 6 Engler appealed. The court of appeals affirmed, holding that an employee on out-of-town travel status is not acting within the course and scope of his employment while traveling to or from a restaurant for a regular meal, a holding inconsistent with the holding in McCloud II. See Engler v. Gulf Interstate Eng'g, Inc., 227 Ariz. 486, 258 P.3d 304 (App.2011). Engler petitioned this Court for review.

¶ 7 We granted review to resolve the apparent conflict between McCloud II and Engler. We have jurisdiction under Article 6, Section 5(3) of the Arizona Constitution and A.R.S. § 12–120.24 (2003).

II. DISCUSSION

¶ 8 This case was decided on cross-motions for summary judgment. The parties agree to the material facts, but disagree as to the legal conclusion to be drawn from them. We review de novo the superior court's grant of summary judgment and construe the facts and reasonable inferences in the light most favorable to Engler, the non-prevailing party. See Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12, 69 P.3d 7, 11 (2003).

¶ 9 “The doctrine of respondeat superior generally holds an employer vicariously liable for the negligent work-related actions of its employees.” Tarron v. Bowen Mach. & Fabricating, Inc., 225 Ariz. 147, 150 ¶ 9, 235 P.3d 1030, 1033 (2010). But an employer is vicariously liable for such acts only if the employee is acting “within the scope of employment” when the accident occurs. E.g., State v. Super. Ct. ( Rousseau ), 111 Ariz. 130, 132, 524 P.2d 951, 953 (1974).

¶ 10 To determine the course and scope of employment, Arizona courts have long considered the extent to which the employee was subject to the employer's control. See, e.g., Consol. Motors, Inc. v. Ketcham, 49 Ariz. 295, 305, 66 P.2d 246, 250 (1937); Rousseau, 111 Ariz. at 132, 524 P.2d at 953 (noting that the “basic test” in tort actions arising out of vehicular accidents is whether the employee is “subject to the employer's control or right to control” at the time of the accident); Tarron, 225 Ariz. at 150 ¶ 12, 235 P.3d at 1033.

¶ 11 This approach is endorsed by the Restatement of Agency. E.g., Ketcham, 49 Ariz. at 306, 66 P.2d at 250 (citing Restatement (First) of Agency § 220 (1933)); Santiago v. Phx. Newspapers, Inc., 164 Ariz. 505, 508–09, 794 P.2d 138, 141–42 (1990) (citing Restatement (Second) of Agency (“Restatement (Second)”) § 220 (1958)). Several sections of the Restatement (Second) identify relevant factors for determining whether the employer exercised actual control or retained the right to control the employee's conduct when the negligent act occurred. See Restatement (Second) §§ 219(2), 220(2), 228(1), 229(2). These factors include the previous relations between the employer and the employee and whether the act (a) was the kind the employee was hired to perform, (b) was commonly done by the employee, (c) occurred within the employee's working hours, and (d) furthered the employer's purposes or fell outside the employer's “enterprise.” See Higgins v. Assmann Elec., Inc., 217 Ariz. 289, 297 ¶¶ 29–32, 173 P.3d 453, 461 (App.2007) (citing Restatement (Second) § 229); Anderson v. Gobea, 18 Ariz.App. 277, 280, 501 P.2d 453, 456 (1972) (citing Restatement (Second) § 228).

¶ 12 Applying these factors in previous cases to evaluate an employee's away-from-work conduct, we have not found the requisite employer control when the employee maintained the right to choose where, when, and how to travel, and by what route. See Rousseau, 111 Ariz. at 132–33, 524 P.2d at 953–54. Nor has reimbursement of travel expenses or “payment of a travel allowance, without more” subjected the employer to liability. Id. at 133, 524 P.2d at 954 (citing Lundberg v. State, 25 N.Y.2d 467, 306 N.Y.S.2d 947, 255 N.E.2d 177, 179 (1969)); see also Robarge v. Bechtel Power Corp., 131 Ariz. 280, 284, 640 P.2d 211, 214 (App.1982) (citing Lundberg ).

¶ 13 Although this case presents a fact pattern not confronted in our previous cases—negligent driving by an employee on out-of-town travel status—the same analysis applies: An employee's tortious conduct falls outside the scope of employment when the employee engages in an independent course of action that does not further the employer's purposes and is not within the control or right of control of the employer. Robarge, 131 Ariz. at 283–84, 640 P.2d at 213–14. This test also comports with the Restatement (Third) of Agency (“Restatement (Third)”) § 7.07, which consolidates the “treatment of topics covered in several separate sections of [the] Restatement Second, Agency, including §§ 219, 220, 228, 229, 230, 231, 232, 233, 234, 235, 236, 237, and 267.” ¹ Restatement (Third) § 7.07 (Reporter's Note (a) (2006)). We agree with the court of appeals that the Restatement (Third) § 7.07 sets forth the appropriate test for evaluating whether an employee is acting within the scope of employment, and we adopt it here. See Tarron, 225 Ariz. at 152–53 ¶¶ 24–28, 235 P.3d at 1035–36 (following control test from Restatement (Third) § 7.03).

¶ 14 Applying the Restatement (Third) test, Gulf did not exercise any control over Gray at the time of the accident. Gray was not serving his employer's interests in traveling to and from the restaurant during his off hours, and Gulf did not control where, when, or even if Gray chose to eat dinner. Once Gray returned to his hotel at the end of the work day, he was free to do as he wished. That he ate dinner with a work colleague after work hours did not transform the social occasion into a business activity. See Pham v. OSP Consultants, Inc., 992 P.2d 657, 659 (Colo.App.1999) (finding employee's patronage of bar with co-worker during after-work hours unrelated to employer's business) (citing Hynes v. Donaldson, 155 Colo. 456, 395 P.2d 221, 222–23 (1964)). Because the accident occurred while Gray engaged in an independent course of action not intended to serve his employer's work purposes, Gulf is not vicariously liable.

¶ 15 Rather than focusing on the employer's right to control, Engler urges us to view scope of employment broadly, applying workers' compensation principles. Workers' compensation is a no-fault system for compensating injured employees that focuses on whether the employee was injured while working or performing a work-related activity. Robarge, 131 Ariz. at 282, 640 P.2d at 213. Workers' compensation laws are liberally construed and applied to benefit the injured employee. See Grammatico v. Indus. Comm'n, 211 Ariz. 67, 72 ¶ 23, 117 P.3d 786, 791 (2005). In McCloud II, the court of appeals recognized that workers' compensation principles may provide guidance in vicarious liability cases. 224 Ariz. at 123–24 ¶ 10, 228 P.3d at 115–16 (citing Ander...