J & J Timber Co. v. Broome, No. 2004-IA-01914-SCT.

• Decision Date: 04 May 2006
• Docket Number: No. 2004-IA-01914-SCT.
• Citation: 932 So.2d 1
• Parties: J & J TIMBER COMPANY, A Mississippi Corporation v. Rembert J. BROOME, Son and Next Friend of James C. Broome, Deceased, and Rembert J. Broome, Father and Next Friend of Sarah M. Broome, a Minor, Deceased.
• Court: Mississippi Supreme Court

Page 1

932 So.2d 1

J & J TIMBER COMPANY, A Mississippi Corporation v. Rembert J. BROOME, Son and Next Friend of James C. Broome, Deceased, and Rembert J. Broome, Father and Next Friend of Sarah M. Broome, a Minor, Deceased.

No. 2004-IA-01914-SCT.

Supreme Court of Mississippi.

May 4, 2006.

William W. McKinley, Jr., Jackson, Dorrance Aultman, Hattiesburg, attorneys for appellant.

T. Jackson Lyons, Jackson, attorney for appellee.

Before SMITH, C.J., CARLSON and DICKINSON, JJ.

DICKINSON, Justice, for the Court.

¶ 1. This wrongful death suit arises out of an accident between a log truck and a bus. As part of a settlement, the plaintiffs released the driver of the log truck from all liability and agreed to indemnify him against third-party claims. The question presented is whether the plaintiffs' settlement with the driver of the log truck precludes recovery against his employer under a vicarious liability theory. While the Appellant raises two additional issues, the disposition of this initial question renders the remaining two moot.

BACKGROUND FACTS AND PROCEEDINGS

¶ 2. Jim Smith Trucking ("Smith"), a business engaged in hauling logs from timber vendors' yards to timber mills, hired Brent Galatas ("Galatas") to drive its hauling truck. Approximately three to four months before the accident at issue, Smith contracted with J & J Timber Company ("J & J Timber") to haul its logs. J & J Timber specified the species, type, length, cut, and amount of timber to be hauled to particular mills by Smith's driver, Galatas.

¶ 3. On November 27, 1999, Galatas delivered two loads of J & J Timber's logs to its specified timber yard. After hauling and unloading the second load, Galatas was driving back to Smith's house in the unloaded truck when he collided with a bus occupied by a family of gospel singers on their way to perform a concert. The collision disintegrated the front of the bus, and two people, James C. Broome ("James") and Sarah M. Broome ("Sarah"), were killed.

¶ 4. Prior to instituting litigation, the wrongful death beneficiaries of James and Sarah, including the Appellee Rembert J. Broome ("Broome"), reached a settlement with Galatas and Smith. The settlement included two documents entitled, "RECEIPT, RELEASE AND INDEMNITY AGREEMENT," representing the respective interests of James' and Sarah's beneficiaries. Both agreements contained similar language, quoted in relevant part below:

The term "RELEASED PARTIES" as used in this RECEIPT, RELEASE AND INDEMNITY AGREEMENT, shall include the following: James "Jim" Smith, Brent Galatas, and American Reliable Insurance Company . . . .

[The wrongful death beneficiaries] . . . do hereby RELEASE, ACQUIT AND FOREVER DISCHARGE, all of the said RELEASED PARTIES, collectively and individually, from any and all actions and/or causes of action . . . [resulting] from injuries and/or damages we received . . . [in the incident] . . . .

[The wrongful death beneficiaries] . . . do understand that this Agreement effects a RELEASE AND DISCHARGE of all our claims . . . arising out of, or in any way related to the accident. . . .

Notwithstanding anything else contained herein to the contrary, it is agreed, understood, and stipulated that [the wrongful death beneficiaries] . . . are specifically and expressly reserving, and not releasing, any and all claims we may have of any kind and type whatsoever relating to the incident against J & J Timber . . . .

[The wrongful death beneficiaries] do warrant that we are the only parties entitled to claim and recover damages or otherwise make any recovery whatsoever resulting from or arising out of [the incident] and we agree to defend, indemnify, and hold harmless the Releasees from any and all claims and damages, including third-party claims for damages resulting from or in any way arising out of the injuries, damages, and/or death of [the deceased persons] which may be made by any other person(s), party(s), entity(s), or concern(s), whatsoever. . . .

(Emphasis added).

¶ 5. On November 27, 2001, Broome filed a wrongful death action against J & J Timber, charging it with vicarious liability for the negligence of its employee, Galatas. At the conclusion of testimony, the issue submitted to the jury was whether J & J Timber could be held vicariously liable for Galatas' negligence in causing the crash. To reach that issue, the jury was first required to determine whether Galatas was J & J Timber's employee.

¶ 6. The jury returned a unanimous verdict in favor of J & J Timber. However, the trial court granted Broome a new trial, stating it had misinstructed the jury and improperly restricted Broome by forcing him to abandon what the trial court concluded was a viable dual employment theory of liability. On October 22, 2004, we granted interlocutory appeal and stayed further proceedings.

¶ 7. Of the three issues presented by J & J Timber, we shall address only the first,¹ which we find dispositive of the case. The issue presented is whether, as a matter of law, the release of a tortfeasor also serves as a release of the tortfeasor's employer from claims of vicarious liability, despite an attempt by the releasor to preserve the right² to pursue such claims.

DISCUSSION

¶ 8. When reviewing issues of law, this Court engages in de novo review. Sealy v. Goddard, 910 So.2d 502, 506 (Miss.2005) (citing Ellis v. Anderson Tully Co., 727 So.2d 716, 718 (Miss.1998)); Ostrander v. State, 803 So.2d 1172, 1174 (Miss.2002) (citing Dep't of Human Servs. v. Gaddis, 730 So.2d 1116, 1117 (Miss. 1998)).

¶ 9. J & J Timber argues that Broome's release of Galatas and agreement to indemnify him against all third-party claims effectively preclude Broome from pursuing an action against J & J Timber based on vicariously liability. J & J Timber further contends that when an injured party releases the only negligent actor from liability, a derivative claim of liability against the employer is extinguished.

¶ 10. J & J Timber asserts that, should Broome succeed in pursuing a claim of vicarious liability, a "circle of indemnity" will result. J & J Timber points out that it has a common law right of indemnification against Galatas, who was the only actively negligent party. Thus, Broome would seek reimbursement from Galatas of any judgement against it. Galatas in turn would seek reimbursement from Broome pursuant to the indemnification agreement. Thus, in effect, Broome would be ultimately responsible for the payment of any judgment, rendering moot Broome's suit against J & J Timber. J & J Timber argues that such "circuity of action" can only be avoided by holding that the release of an employee bars all vicarious liability claims against the employer.

¶ 11. Broome argues that Mississippi law permits a third party injured by an employee to elect to sue the employee, the employer, or both. Accordingly, Broome says, the employee and employer are jointly liable for any damages to the injured party. Broome contends that under Mississippi Code Annotated Section 85-5-1, a wrongful death beneficiary's settlement with one party does not operate to release any other party at fault. Additionally, Broome points out that he released Galatas only in his individual capacity because the agreement expressly reserved the right to pursue a claim against J & J Timber as Galatas' employer. Broome contends the only way to harmonize the provisions of the release is to interpret them in a way that allows him to bring an action against J & J Timber. Notably, Broome never argues that we should uphold our previous determination of this issue from W.J. Runyon & Son, Inc. v. Davis, 605 So.2d 38 (Miss.1992) (hereinafter Runyon), overruled on other grounds by Richardson v. APAC-Mississippi, Inc., 631 So.2d 143 (Miss.1994).

Runyon and Richardson

¶ 12. Although Runyon holds that the release of an agent has no effect on the principal's vicarious liability, 605 So.2d at 43, J & J Timber points to a statement in dicta in Richardson indicating that the release of an employee bars claims of vicarious liability against the employer, 631 So.2d at 151 fn. 7. J & J Timber advocates the further overruling of Runyon and adoption of Richardson's dicta position on this issue.

¶ 13. In Runyon, the plaintiff, Davis, was injured when he collided with an asphalt truck obscured by the thick cloud of dust it created. 605 So.2d at 40-41. One issue before the Court was whether Davis could sue the truck driver's putative employer, Runyon, even after Davis settled with the driver and released him. Id. at 43. Runyon argued that the settlement effected a full recovery by Davis, and allowing Davis to pursue a claim against it would lead to unjust enrichment. Id. The Court noted that Davis had reserved his rights against the company in the release agreement, and we focused on the favorable public policy of encouraging settlements, stating "[t]here are all sorts of rational reasons why our law should allow a plaintiff to settle with less than all of multiple defendants and proceed against the remaining defendant or defendants." Id. Finally, we found that because no language in the release claimed that the settlement with the driver fully compensated him, Davis could proceed against Runyon. Id.

¶ 14. This Court also held that Runyon could be found independently negligent, not merely vicariously liable, for its actions leading to the crash. Id. at 42. While we held that the release of the driver did not preclude an action against Runyon, we blurred the distinction between maintaining an action against the employer on the basis of negligence directly attributable to the employer and negligence based solely on vicarious liability. This is the key inquiry in this case and the distinction discussed in dicta in Richardson.

¶ 15. Finally, the Runyon Court held that the employee/independent contractor analysis boils down to a single question "whether the project owner maintains a significant de jure right or de facto power of...