Grand Aerie Fraternal Order v. Carneyhan

Decision Date25 August 2005
Docket NumberNo. 2003-SC-0169-DG.,2003-SC-0169-DG.
Citation169 S.W.3d 840
PartiesGRAND AERIE FRATERNAL ORDER OF EAGLES, Appellant v. Marlene CARNEYHAN, Administrator of the Estate of Jamie Lee Carneyhan; William E. Carneyhan, Individually; and Marlene Carneyhan, Individually, Appellees.
CourtUnited States State Supreme Court — District of Kentucky
Opinion of the Court by Justice COOPER.

Appellant, Grand Aerie Fraternal Order of Eagles ("the Grand Aerie"), is a national fraternal organization, with local chapters chartered throughout the United States and Canada. One such chapter, Canton Aerie 4313, was located in Trigg County, Kentucky, a dry territory in which the sale of alcohol is prohibited. KRS 242.230. On the night of April 3, 1994, Jamie Lee Carneyhan, nineteen years of age, consumed alcoholic beverages while attending a social function on premises leased by Aerie 4313. Later that night, she was killed in a single-vehicle collision in Trigg County. The administrator and her parents individually ("the Carneyhans") filed suit against the Grand Aerie, Aerie 4313, and Michael Thomas, a member of Aerie 4313 who allegedly served alcohol to the decedent.

The Trigg Circuit Court granted partial summary judgment in favor of the Grand Aerie, finding that (1) the Grand Aerie's constitution created no contractual obligation for it to directly supervise, control, or regulate its local chapters; and (2) no principal-agent relationship existed between the Grand Aerie and its local chapters as would impose vicarious liability upon the Grand Aerie for Aerie 4313's negligence under a theory of respondeat superior. After the Grand Aerie's dismissal from the action became final, the Carneyhans appealed the partial summary judgment. The Court of Appeals agreed with the trial court that there was no agency relationship between the Grand Aerie and its local chapters, thus concluding that, as a matter of law, the Grand Aerie could not be held vicariously liable for the negligence of Aerie 4313. The Carneyhans do not contest that decision of the Court of Appeals. The Court of Appeals also held, however, that the Grand Aerie created for itself a duty to supervise its local chapters' alcohol sales. The Court of Appeals thus concluded that the Grand Aerie could be liable to the Carneyhans for its own negligent supervision, reversed the partial summary judgment, and remanded the case for further proceedings against the Grand Aerie. We granted discretionary review and now reverse the Court of Appeals and reinstate the summary judgment of the Trigg Circuit Court.

I. SUFFICIENCY OF THE PLEADINGS.

At oral argument, the Grand Aerie's attorney asserted, for the first time, a contention that the Carneyhans had not properly pled a negligent supervision claim against the Grand Aerie. The Carneyhans' verified complaint filed in the Trigg Circuit Court alleged inter alia:

VII. On April 3, 1994 these Defendants [the Grand Aerie, Canton Aerie 4313, and Thomas], were acting as an unlicensed vendor and trafficking in alcoholic beverages in a dry county on the property describe[d] above. Defendants, in a dry territory, unlawfully sold, bartered, loaned, gave procured or furnished another or kept or transported for sale, bartered or loaned, directly or indirectly, alcoholic beverages at the location known as "The Eagles".

VIII. Defendants served alcoholic beverages to Plaintiffs' decedent, Jamie Lee Carneyhan, who was under the legal drinking age of twenty-one (21) years old in violation of KRS 244.080(1). Defendants continued to serve alcoholic beverages to Plaintiffs' decedent, Jamie Lee Carneyhan, although a reasonable person under the same or similar circumstances, should have known, that Plaintiff's decedent was already intoxicated at the time of serving.

IX. Upon leaving the premises owned by Defendants on April 3, 1994, Plaintiffs' decedent, Jamie Lee Carneyhan, then proceeded to operate her 1988 Pontiac Firebird automobile and as a direct and proximate consequence of this over-consumption of alcoholic beverages while at "The Eagles," Plaintiffs' decedent's automobile collided with a utility pole while traveling north on Kentucky 128. Plaintiffs' decedent, Jamie Lee Carneyhan, was killed in the collision.

X. The acts or omissions of the Defendants constitute negligence which was a substantial factor in causing or contributing to cause the wrongful death of Plaintiffs' decedent, Jamie Lee Carneyhan, on April 3, 1994.

XI. At all times mentioned herein, the Defendant, Grand Aerie Fraternal Order of Eagles, was directly supervising, controlling and regulating the actions or omissions of the local branch of the Fraternal Order of Eagles, Canton Aerie 4313 that was in existence on April 3, 1994.

Civil Rule (CR) 8.01 requires pleadings to contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." It is not necessary to state a claim with technical precision under this rule, as long as a complaint gives a defendant fair notice and identifies the claim. Cincinnati, Newport & Covington Transp. Co. v. Fischer, 357 S.W.2d 870, 872 (Ky.1962). This principle fully applies to negligent supervision claims:

As for actions based on the direct negligence of the employer, as long as the complaint generally alleges an employer's negligence, it does not have to individually identify the employees upon whose negligence the employer's liability is based. Otherwise, the plaintiff must allege that the defendant knew or had reason to know of the employee's harmful propensities; that the employee injured the plaintiff; and that the hiring, supervision, or retention of such an employee proximately caused the plaintiff's injuries.

27 Am.Jur.2d Employment Relationship § 401 (2004).

Applying these principles to the case sub judice, we conclude that the Carneyhans' complaint sufficiently alleged a theory of negligent supervision. The complaint alleged that the Grand Aerie had reason to know of Aerie 4313's harmful propensities; indeed, Paragraphs VII and VIII of the complaint alleged that the Grand Aerie participated with Aerie 4313 in the ostensibly unlawful and negligent activities. Paragraph IX, and subsequent paragraphs alleging damages, stated that Aerie 4313 injured the Carneyhans by causing the decedent's over-consumption of alcohol and, proximately, her collision and death. Finally, the allegations in Paragraphs VII and VIII discussed above, when added to Paragraph XI's allegation that the Grand Aerie supervised Aerie 4313's actions and Paragraph X's general allegations of causation and negligence, were sufficient to state a claim that the Grand Aerie's supervision and retention of Aerie 4313 proximately caused the Carneyhans' injuries. "All that our procedure presently requires is that the Complaint set out `facts or conclusions ... sufficiently to identify the basis of the claim.'" Natural Res. and Env't. Prot. Cabinet v. Williams, 768 S.W.2d 47, 51 (Ky.1989) (quoting Clay, Kentucky Practice, 3d ed., Rule 8.01, at 133-34). The Carneyhans' complaint was sufficient, under CR 8.01 and our decisions applying it, to allege a negligent supervision theory.

II. DUTY TO SUPERVISE.

Several former members of Aerie 4313 testified in their depositions that the Grand Aerie chartered Aerie 4313 in 1991. As is the case with each of the Grand Aerie's local chapters, Aerie 4313 operated with a high degree of autonomy. The Grand Aerie, in its constitution, disclaimed responsibility for the acts and omissions of its local chapters and, in its by-laws, disclaimed supervision and control of its local chapters. While the Grand Aerie required payment of a "per capita tax," and gave general guidelines about the organization of chapters and the qualifications of members, local chapters could otherwise charge dues, operate, and admit members, as they saw fit. The former members of Aerie 4313 testified that this autonomy included operation of its "social room." Aerie 4313 held social events at the discretion of its members, and the proceeds from these events remained with the local chapter. The Grand Aerie owned no interest in the property on which these events were held. Three members of Aerie 4313 owned the property and leased it to the local chapter.

It is undisputed that Aerie 4313 unlawfully sold alcoholic beverages in Trigg County at least until local law enforcement officials raided the chapter in October 1992. Thereafter and on April 3, 1994, the chapter, according to its former members, operated on a "bring your own bottle" basis, selling only ice and materials for mixed beverages and charging a fee for bringing alcohol onto the premises. However, several witnesses who were present with the decedent on the night in question testified that they purchased alcohol from members or employees of Aerie 4313. As this case is on appeal from a grant of summary judgment to the Grand Aerie, we view this disputed fact in a light most favorable to the Carneyhans. Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky.1991).

The Carneyhans' theory of liability is that the Grand Aerie's failure to exercise reasonable care in supervising Aerie 4313 allowed the local chapter to unlawfully sell alcohol in a dry county, to unlawfully serve alcohol to the underage decedent, and to negligently serve alcohol to the already-intoxicated decedent. To establish that the Grand Aerie had a legal duty to exercise reasonable care in supervising Aerie 4313's alcohol-related activities, the Carneyhans rely upon our precedent regarding a "universal duty of care," and upon provisions of the Grand Aerie's constitution and statutes, as well as materials distributed by the Grand Aerie to its local chapters. We will first address the Grand Aerie's constitutio...

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