Los Ranchitos v. Tierra Grande, Inc.

• Decision Date: 27 August 1993
• Docket Number: No. 13300,13300
• Parties: LOS RANCHITOS, a New Mexico Partnership, Plaintiff-Appellant, v. TIERRA GRANDE, INC., a New Mexico Corporation, Defendant-Appellee, and Patricia Gerber, Defendant.
• Court: Court of Appeals of New Mexico

Page 263

861 P.2d 263

116 N.M. 222

LOS RANCHITOS, a New Mexico Partnership, Plaintiff-Appellant, v. TIERRA GRANDE, INC., a New Mexico Corporation, Defendant-Appellee and Patricia Gerber, Defendant.

No. 13300.

Court of Appeals of New Mexico.

Aug. 27, 1993.

[116 N.M. 224] Robert B. Martinez, Albuquerque, for plaintiff-appellant.

Charles J. Crider, Crider, Calvert & Bingham, P.C., Albuquerque, for defendant-appellee.

OPINION

DONNELLY, Judge.

The central issue presented by this appeal is whether the trial court erred in granting Defendant's motion for summary judgment and dismissing Plaintiff's complaint which sought to recover damages resulting from the embezzlement of funds by an individual alleged to have been an employee of Defendant. We affirm in part and reverse in part.

Plaintiff, Los Ranchitos, a Partnership, filed suit against Defendant, Tierra Grande, Inc., and Patricia Gerber, alleging that Gerber, while acting as an employee of Defendant, embezzled approximately $57,663.89 of funds belonging to Plaintiff. Plaintiff alleged that Defendant was vicariously liable under the doctrine of respondeat superior for damages sustained by Plaintiff due to Gerber's wrongful acts. Plaintiff also sought to recover from Defendant under the separate theories of alleged negligent hiring, supervision, and retention. It is undisputed that Gerber performed clerical, bookkeeping, and financial services for both parties.

Defendant filed an answer denying that Gerber was acting as its employee at the time of the alleged criminal acts, and alleged that even if Gerber could arguably be found to have been its employee, her alleged wrongful conduct was outside the scope of her employment. Defendant also filed a cross-claim against Gerber. Following the filing of its answer, Defendant moved for summary judgment asserting that at all material times Gerber was a "loaned" or "special" employee of Plaintiff, and that Gerber in carrying out the alleged acts of embezzlement acted "outside the course and scope of her employment" with Defendant.

Defendant's motion for summary judgment was accompanied by the affidavits of Melvin LaVail, its chairman of the board, Clifford R. Miller, its vice president, and William M. Wilson, its president. Each of the affidavits submitted by Defendant contained similar factual statements. LaVail's affidavit stated, among other things, that "[w]hen performing services for [Plaintiff], Gerber took her directions and instructions from, and was solely under the control and supervision of, ... the five administrative partners of [Plaintiff]," and that the work performed by Gerber for Plaintiff was "controlled solely and entirely by the partners of [Plaintiff], and she answered only to the partners of [Plaintiff], not to any officer, director or employee of [Defendant]." LaVail's affidavit also recited that "[a]t no time prior to hiring Gerber to work for [Defendant], or during Gerber's employment by [Defendant], prior to discovery of the embezzlement alleged by [Plaintiff], did [Defendant] or any of its officers, agents or employees have any notice, or reason to suspect, that Gerber might engage in the acts of embezzlement," and that if "Gerber embezzled any funds from [Plaintiff], she did so for her own personal motives and reasons, and not in pursuit of the business of [Defendant]."

Plaintiff filed a written response to the motion for summary judgment, together with Defendant's answers to interrogatories, and the affidavits of Leon A. Wiltse and L.E. "Ned" Roberts, Plaintiff's partners. Following a hearing, the trial court granted Defendant's motion for summary judgment. Thereafter, Plaintiff voluntarily dismissed, without prejudice, its claim against Gerber.

WAS SUMMARY JUDGMENT PROPER?

Plaintiff contends that the trial court erred in failing to determine that the affidavits presented by it were sufficient to withstand Defendant's motion for summary judgment. Plaintiff argues that the responding affidavits of Wiltse and Roberts established the existence of genuine issues of material fact concerning whether: (1) at the time of the alleged embezzlement, Gerber was in fact an employee of Defendant; (2) at all material times Gerber was acting within the course and scope of her employment with Defendant; and (3) Defendant negligently hired, supervised, and retained Gerber.

A. Respondeat Superior

Although we agree with Plaintiff that the affidavits of Wiltse and Roberts, together with the answers to interrogatories filed by Defendant, were sufficient to rebut Defendant's initial showing that Gerber was not acting as an employee of Defendant at the time of the alleged defalcations and to raise a material factual issue concerning her employment status, we nonetheless conclude that summary judgment was properly granted to Defendant on Plaintiff's claim of respondeat superior. As discussed below, even if Gerber was Defendant's employee when she embezzled from Plaintiff's account, as a matter of law she could not have been acting within the scope of her employment with Defendant. We discuss the issue of Gerber's employment status, however, because it is relevant to the issue of whether summary judgment was properly granted on Plaintiff's claim that Defendant negligently hired, supervised, and retained Gerber.

The affidavits of Wiltse and Roberts recited, in part, that LaVail served as one of the managing partners of Defendant until October 1989, and during this time he also served as an officer of Defendant corporation; and that LaVail suggested and "implemented" the hiring of Defendant's "personnel to perform general clerical, bookkeeping and accounting services" for Plaintiff for a monthly charge.

Wiltse's affidavit also recited that the bookkeeping and accounting work performed for Defendant was conducted at Defendant's office; that Defendant determined "the date, time, place and work to be performed, and the employees performing the work were paid for their services by [Defendant]"; that Plaintiff "did not have the authority to direct [Defendant] to hire or fire its employees or to direct the time, place or manner in which services were provided"; that Defendant hired Gerber, designated the work she was to perform, and "provided her with access" to Plaintiff's financial books and records, and checking account; and Defendant "supervised and monitored the work and activities" of Gerber on a daily basis. It is undisputed that Gerber's salary checks were written on Defendant's account and that it furnished her with her office and materials necessary to perform her duties. The matters set forth in Wiltse's affidavit were essentially mirrored in Roberts' affidavit. In addition, Defendant's answers to interrogatories admitted that Gerber performed general office work and bookkeeping for it from June 1982 to January 1990, and that her salary checks were drawn on Defendant's account. Thus, we agree with Plaintiff that the factual recitations listed above were sufficient to raise a material factual issue about whether, at the time of the alleged embezzlement, Gerber was acting as an employee of Defendant, and about the right of Defendant to control and supervise her activities. See Salswedel v. Enerpharm, Ltd., 107 N.M. 728, 732-33, 764 P.2d 499, 503-04 (Ct.App.1988) (material factual issue as to existence of employment relationship precluded award of summary judgment).

Defendant, however, points to facts presented by it in support of its motion for summary judgment, which it asserts compels a different result. It contends that, as shown by the affidavits of Miller and Wilson, at the times Gerber engaged in the alleged acts of embezzlement, she was a "loaned" or "special" employee of Plaintiff, and thus Defendant cannot be held liable under the doctrine of respondeat superior. Under our reading of the affidavits, together with the responsive affidavits of Plaintiff, we do not find this issue determinative of Defendant's right to summary judgment. As a general rule, an employer is not liable under respondeat superior for an injury negligently caused by a servant if the servant is not acting at the time as the servant of that employer, and the evidence shows that the employee has been loaned to the service of another who controls the manner and details of the employee's work. See Brown v. Pot Creek Logging & Lumber Co., 73 N.M. 178, 184-85, 386 P.2d 602, 606-608 (1963). Where, however, a factual issue exists as to whether the lending employer continued to retain the authority to control the manner of the employee's work, summary judgment is not proper. See Yorston v. Pennell, 397 Pa. 28, 153 A.2d 255, 262 (1959) (if different inferences can fairly be drawn concerning which party is the controlling master of the borrowed employee, the question becomes a contested factual issue).

In view of the opposing statements contained in the affidavits filed by the parties concerning this issue, we think it is clear that the question of whether Gerber was acting as a special or loaned employee at the time of her alleged acts of embezzlement constitutes a contested issue of fact. See Salswedel, 107 N.M. at 732-33, 764 P.2d at 503-04.

Despite our conclusion that a factual issue concerning Gerber's employment status exists, we agree with Defendant's argument that even if Gerber could arguably be found to have been its employee at the time of her alleged acts of embezzlement, her acts constituted criminal conduct, and absent evidence that Defendant authorized or ratified such conduct, as a matter of law the acts were outside the scope and course of her employment with Defendant. We thus conclude that summary judgment was properly granted on this issue.

An employer may be liable under the doctrine of respondeat superior for an intentional tort committed by its employee if the wrongful acts are committed in the course and scope of his or her employment. McCauley v. Ray, 80 N.M. 171, 180-81, 453 P.2d 192, 201-02 (196...