Lee v. Pulitzer Pub. Co.

• Decision Date: 21 May 2002
• Docket Number: No. ED 79812.,ED 79812.
• Citation: 81 S.W.3d 625
• Parties: Seung LEE, Appellant, v. PULITZER PUBLISHING COMPANY, Respondent.
• Court: Missouri Court of Appeals

81 S.W.3d 625

Seung LEE, Appellant, v. PULITZER PUBLISHING COMPANY, Respondent.

No. ED 79812.

Missouri Court of Appeals, Eastern District, Division Two.

May 21, 2002.

Motion for Rehearing and/or Transfer to Supreme Court Denied July 23, 2002.

Application for Transfer Denied August 27, 2002.

COPYRIGHT MATERIAL OMITTED

Gary Alan Growe, James D. Bass, Clayton, MO, for appellant.

Russell F. Watters, Thomas M. Ward, St. Louis, MO, for respondent.

GEORGE W. DRAPER III, Judge.

Seung Lee (hereinafter, "Lee") appeals from the trial court's judgment granting summary judgment in favor of Pulitzer Publishing Company (hereinafter, "Pulitzer"). Lee claims the trial court erred in granting summary judgment in favor of Pulitzer because there were genuine issues of material fact with respect to whether Pulitzer's newspaper carriers were independent contractors or employees. Lee alternatively claims if the carriers are deemed independent contractors, then the trial court erred in granting summary judgment because there are genuine issues of material fact as to whether Pulitzer negligently selected and retained these carriers. We affirm.

Pulitzer is a corporation who publishes, markets, sells and distributes the St. Louis Post-Dispatch. As a part of its marketing, sales and distribution efforts, Pulitzer has established a network of carrier routes, each of which encompasses an exclusive geographic territory. Some carrier routes are owned and operated by Pulitzer while others are owned and operated by individuals Pulitzer has designated as independent contractors pursuant to a Home Delivery Service Agreement (hereinafter, "the Agreement"). The Agreement governs several areas, inter alia, relationship, liability, taxes, delivery, fees, billing and collections, carrier delivery area, assignments, delivery lists, and termination.

The Agreement states that carriers are self-employed independent contractors and not employees of Pulitzer. Carriers have the right to choose their own employees and "shall have the right to engage such other subcontractors as the Carrier may deem necessary ... and the Carrier shall exercise the sole and exclusive control and supervision over all said persons." Carriers may engage in other business activities so long as it does not interfere with the performance of their duties under the Agreement. Carriers are responsible for the costs of conducting and operating their businesses, including the provision of office space, transportation vehicles, equipment, and other supplies. The Agreement specifies Pulitzer "is interested only in the results to be obtained by the Carrier ... and the manner and means to be employed by the Carrier are matters entirely within the authority and discretion of the Carrier over which [Pulitzer] has no authority or jurisdiction."

Further, the Agreement requires that carriers maintain liability insurance on all vehicles and present evidence of such coverage upon Pulitzer's request. Carriers must carry liability insurance in the amount of $100,000 for bodily injury of each person, $300,000 bodily injury for each occurrence, and $25,000 property damage on all vehicles. Carriers are responsible for paying all payroll expenses for their employees and must file their tax returns on the basis of their status as independent contractors.

The Agreement mandates that carriers deliver the daily and Sunday papers according to the performance standards set forth in the Agreement. Pulitzer retains the sole discretion to amend these performance standards upon ten days' prior written notice. Pulitzer also designates the carriers' specific delivery area and provides carriers with a customer list. Pulitzer prohibits carriers from disclosing the customer list or using the list to deliver any other product or material except those designated by Pulitzer. Carriers must return the customer list upon termination of the Agreement.

The Agreement sets forth the fee schedule for delivery of each paper according to the size of the publication. Moreover, the Agreement details how customer billings and collections will be handled. Pulitzer determines all prices charged to the subscriber. Upon Pulitzer's request, the carriers prepare and distribute bills to subscribers and use their best efforts to make collections of the monies owed. If the carriers collect fees, Pulitzer provides the carriers with a weekly accounting statement. Pulitzer does not hold carriers responsible for non-collection from subscribers. Pulitzer offers a collection incentive bonus based upon the levels of collections carriers are able to retrieve. If Pulitzer changes the delivery prices, it informs the carriers, and they notify the subscribers. Finally, Pulitzer may terminate the carriers's obligation to collect fees with sixty days' prior written notice.

An important part of the Agreement at issue in this case is the "Assignment by Carrier" section. It states that the carriers have "the right to sell and assign all or any portion of its rights and obligations under this Agreement at any time to any person for such compensation or payment as may be agreed upon between the Carrier and the assignee ..." with some caveats. First, carriers must give thirty days' advance written notice and must provide Pulitzer with all written contracts which comprise the agreement, along with any additional documentation Pulitzer deems necessary to evaluate the prospective carrier's ability and fitness to perform under the Agreement. Second, Pulitzer must give prior written approval of any such assignment, and may withhold approval for any reason so long as it is made in Pulitzer's reasonable good faith business interest. Third, carriers agree to train the new carrier for a reasonable period of time, and upon completion of this training, Pulitzer will provide the original carrier with a written release from any other obligations under the Agreement.

The Agreements devotes several paragraphs to termination under the Agreement. Initially, this section states that the Agreement shall remain in effect until Pulitzer ceases publication of the St. Louis Post-Dispatch, unless otherwise terminated. Should Pulitzer determine that a carrier has failed to perform fully any of its obligations set forth under the Agreement, it may terminate the Agreement by providing the carrier with written notice detailing the reasons for termination. Additionally, Pulitzer may terminate the Agreement for any conduct on the part of a carrier, or any employee, subcontractor, or other person under the control of the carrier which would constitute fraud, misrepresentation, theft, conversion, or dishonesty with respect to Pulitzer or its subscribers.

Finally, Pulitzer shall determine whether sufficient grounds exist for it to terminate the Agreement in its good faith discretion. Carriers then may appeal Pulitzer's decision or must find an assignee within ninety days. In the event they cannot find an assignee, Pulitzer shall purchase the assignment from the carriers.

In December 1988, David Carron (hereinafter, "Carron") began delivering newspapers on Route 261 for Pulitzer after purchasing it for $60,000 from a third party. In May 1991, Carron executed a form of the Agreement with Pulitzer and continued to deliver papers as he had before executing the Agreement. In October 1992, Carron struck and severely injured a jogger while delivering papers along Route 261. Shortly thereafter, in 1993, Pulitzer chose to terminate its agreement with Carron.

Upon Pulitzer's termination of the Agreement, Carron entered into a contract to sell Route 261 to Rommel Medrano (hereinafter, "Medrano") for $90,000. No money changed hands with respect to this transaction, and Carron remained the active operator of the route. Carron hired Jason Meriwether (hereinafter, "Meriwether") to drive the route.

Under the terms of the Agreement, Pulitzer had to receive notice of the sale, together with all information regarding the purchaser. While Pulitzer was required to approve the sale, it did not have to select a purchaser nor did it have the right to select the subcontractor the purchaser could use in carrying out its responsibilities under the Agreement.

Medrano entered into a new Agreement with Pulitzer on August 2, 1993. Medrano and Carron were careful to give Pulitzer the impression that Medrano was Route 261's owner. Medrano attended meetings at the St. Louis Post-Dispatch. Carron opened a business checking account and rented a post office box in Medrano's name. He also signed up for electronic voice mail for which Medrano provided the prerecorded greeting. Medrano received the bills for the newspapers purchased at his rented post office box.

On April 8, 1999, Lee and a friend were jogging on the sidewalk along the west side of Hanley when a van driven by Meriwether crossed into the opposite lane of traffic, left the road, and struck both of them. Lee's friend was pronounced dead at the scene. Lee sustained several serious injuries.

Lee filed an Amended Petition for personal injuries, setting forth four counts of negligence against four defendants, Pulitzer, Medrano, Carron, and Meriwether. Count I alleged a general claim for personal injuries against all four defendants and against Pulitzer based on the theory of respondeat superior. Count II set forth a claim of negligence against Pulitzer for negligently approving Medrano as a carrier, negligently allowing its carriers to employ incompetent substitute drivers, and negligently failing to require adequate insurance to protect the public. Count III asserts a claim against Pulitzer and Carron for negligent entrustment and negligent selection of Meriwether. Finally, Count IV asserts a claim of negligent entrustment and negligence against Medrano.

Pulitzer sought summary judgment on Counts I, II, and III. The trial court granted Pulitzer's motion for summary judgment, holding that Hougland v. Pulitzer Pub. Co., Inc., 939 S.W.2d 31 (...