Rapid Group, Inc. v. Yellow Cab of Columbus, A01A1363.

• Decision Date: 29 November 2001
• Docket Number: No. A01A1363.,A01A1363.
• Citation: 557 S.E.2d 420,253 Ga. App. 43
• Court: Georgia Court of Appeals
• Parties: RAPID GROUP, INC., v. YELLOW CAB OF COLUMBUS, INC.

557 S.E.2d 420

253 Ga. App. 43

RAPID GROUP, INC., v. YELLOW CAB OF COLUMBUS, INC.

No. A01A1363.

Court of Appeals of Georgia.

November 29, 2001.

Reconsideration Denied December 14, 2001.

David A. Webster, Atlanta, for appellant.

Taylor W. Jones & Associates, Taylor W. Jones, Atlanta, Richard E. Harris, Norcross, for appellee. POPE, Presiding Judge.

In general, legal malpractice liability attaches when an attorney fails to apply well-settled legal principles or procedures. In this case, the attorney representing a taxicab company allegedly failed to assert the well-known independent contractor defense to a claim of respondeat superior for a cabdriver's tort. But the malpractice defendants argued that it is also well settled that the independent contractor defense did not apply to the facts of the case. They relied on Yellow Cab of Chatham County v. Karwoski, 226 Ga. App. 63, 486 S.E.2d 39 (1997), which was decided three years after the alleged legal malpractice. Thus, one of the questions presented by this appeal is does Karwoski reiterate well-settled law or break new ground.

In 1992, Stephens, a driver for Yellow Cab of Columbus, Inc., had an accident in Columbus that injured Lester and Tina Howard. At the time of the accident, Stephens had a Columbus taxicab driver's permit but not a Columbus taxicab business license. Stephens had a business relationship with Yellow Cab, described by Yellow Cab as one of dispatch service and independent contractor. The Howards sued Stephens in tort, and Yellow Cab under the doctrine of respondeat superior. Rapid Group, Inc. insured Yellow Cab, and it provided a defense using attorney Sidney Moore.

In 1994, during the litigation, Moore allegedly committed malpractice in several ways including failing to respond to discovery, which resulted in a default judgment. After a trial on damages, a judgment in the amount of $101,000 was entered against Yellow Cab. Yellow Cab sued Moore and Rapid Group for legal malpractice alleging in part that the default judgment precluded it from raising the defense that Stephens was an independent contractor. Moore and Rapid Group attempted to rely on Karwoski and argued that Stephens was Yellow Cab's employee as a matter of law and, therefore, Yellow Cab would have been liable regardless of the default judgment.

But, because the decision in Karwoski was issued three years after the alleged malpractice occurred, the trial court did not charge Karwoski to the jury, did not allow the defendants to argue Karwoski, and would not grant a directed verdict and rule as a matter of law that Karwoski applied to the facts of this malpractice case. At the end of the trial, the jury ruled in favor of Yellow Cab and awarded damages and attorney fees totaling $244,431 for the malpractice. Rapid Group appeals.

1. In its first three enumerations, Rapid Group contends, in essence, that the trial court prevented it from fully asserting its defense that Yellow Cab employed the driver and therefore would have been liable as a matter of law in the tort action even if there had been no default judgment. Rapid Group based its defense on Karwoski, which suggests that the driver was Yellow Cab's employee—not an independent contractor—as a matter of law, because he did not have a taxicab owner's business license as required by an applicable Columbus municipal ordinance. See Karwoski, 226 Ga.App. at 67-69,486 S.E.2d 39 (on motion for reconsideration). Rapid Group contends that Karwoski did not change the law, but simply articulated what had always been the law, and therefore,

[ 557 S.E.2d 423]

the trial court erred by not applying it to the case.¹

In numerous cases dating back to at least 1939, this Court has repeatedly held that, for the purposes of determining employer liability under the Georgia Workers' Compensation Act, OCGA § 34-9-1 et seq., a taxicab company is estopped to deny that an affiliated driver is an employee (and claim that he is an independent contractor) when local ordinances either directly or indirectly prohibit the use of independent contractors, or the independent contractor himself is not fully and properly licensed and operating in compliance with the local ordinances. See Karwoski, 226 Ga.App. at 63, 486 S.E.2d 39, and cases cited therein; Aetna Cas. &c., Co. v. Prather, 59 Ga.App. at 797(1), 2 S.E.2d 115 (1939).² For the purposes of this decision, the application of a local ordinance to determine employee/independent contractor status will be referred to as the local ordinance rule.

The issue in this case is whether it was well settled in 1994, the time of the alleged malpractice, that the same local ordinance rule applied in a tort case. This Court's decision in Karwoski purports to hold that it does. See Karwoski, 226 Ga.App. at 67-69, 486 S.E.2d 39. (on motion for reconsideration). But there are four reasons for concluding that Karwoski represents a change in the law and not simply an articulation of what had always been the law.

First and foremost, the opinion in Karwoski itself reveals that application of the local ordinance test to tort cases was strongly debated and that the law had previously been unclear. Karwoski was a workers' compensation case. The original opinion only addressed whether the local ordinance rule should apply to the specific facts of the case. Id. at 63-65, 486 S.E.2d 39. On a motion for reconsideration, the Court went further. The taxicab company in Karwoski suggested that the original opinion was inconsistent with Smith v. Yellow Cab Co. of Chatham County, 223 Ga.App. 143, 476 S.E.2d 887 (1996). In that tort action, this Court refused to apply the local ordinance rule to tort actions and instead applied the well-known law that the question of whether one is an employee or an independent contractor is resolved by determining whether the employer retains the right to exercise control over the time, manner and method of the work performed. Id. at 144, 476 S.E.2d 887.

In response to the motion for reconsideration, in a five-to-four decision, this Court overruled Smith and held that the local ordinance test applies to both tort and workers' compensation actions. In so doing, the majority acknowledged that the case law had "become blurred and confused" and that the cases "generally divide into two lines: those tort cases involving the doctrine of respondeat superior and those workers' compensation cases involving coverage for injured drivers." (Emphasis omitted.) Karwoski, 226 Ga.App. at 67, 486 S.E.2d 39. Furthermore, there was a pointed dissent to extension of the local ordinance rule to tort cases and to overruling Smith.

Thus, the decision itself makes manifest that the holding on the motion for reconsideration in Karwoski did not simply articulate well-established and unambiguous principles of law but rather extended the law. Moreover, one could argue that application of the local ordinance test to tort actions was unnecessary to the decision in Karwoski, a workers' compensation case.

Second, the original basis for application of the local ordinance rule to workers' compensation actions arose from the policy underlying the Workers' Compensation Act. This Court first applied a predecessor of the local ordinance rule to a taxicab case in 1939 in Prather, 59 Ga.App. 797(1), 2 S.E.2d 115. There, the Court held that a taxicab company certified to act as such by the Georgia Public Service Commission was without authority to hire an independent contractor who had no such certificate and, therefore, any person hired would be considered an employee as a matter of law for the purposes of determining workers' compensation liability. Id. The Court explained that the public policy emanating from the Workers' Compensation Act dictated this result. It explained,

This is true because the law[, i.e., the Workers' Compensation Act,] requires the carrier to insure against injury to its passengers, and makes it responsible for the fitness of the drivers of its vehicles, which duties it is against public policy to the State for the carrier to delegate to another over whom the [licensing entity] could have no jurisdiction.

Id.

Prather was directly followed in Diamond Cab Co. v. Adams, 91 Ga.App. 220, 85 S.E.2d 451 (1954), which in turn led to a line of workers' compensation cases establishing what we now refer to as the local ordinance rule.³

Third, no court has determined that the same policy should apply to the doctrine of respondeat superior. The only case we find partially relevant is West End Cab Co. v. Stovall, 98 Ga.App. 724, 106 S.E.2d 810 (1958). But that case is nonprecedential, and, although the opinion states that the taxicab driver could not be an independent contractor because he operated the taxicab under the cab company's license and not his own, the court answered the question of whether the driver was an employee by considering whether the driver was under the company's supervision and control. Id. at 729, 106 S.E.2d 810.

Fourth, precedent from this Court existing at the time of the alleged legal malpractice shows that the test in tort cases for determining employee/independent contractor status was the traditional control test. See, e.g., Brunson v. Valley Coaches, 173 Ga.App. 667, 668(1), 327 S.E.2d 758 (1985) ("right to direct the time, the manner, the methods, and the means of the execution of the work"). See also Hand v. Checker Cab Co., 216 Ga. App. 116, 453 S.E.2d 138 (1995); Red Top Cab Co. v. Hyder, 130 Ga.App. 870, 204 S.E.2d 814 (1974) (company had no control over operation of cab); English v. Yellow Cab Co., 119 Ga.App. 828, 168 S.E.2d 920 (1969); Clark v. Atlanta Veterans Transp., 113 Ga.App. 531, 148 S.E.2d 921 (1966). Similarly, Supreme Court precedent applicable to both workers' compensation actions and tort actions holds that the primary test for answering the employee/independent contractor question is whether the agreement between the parties gives the...