Rick v. RLC CORP., Civ. No. 9-73305.

Decision Date16 December 1981
Docket NumberCiv. No. 9-73305.
Citation535 F. Supp. 39
PartiesJack RICK, et al., Plaintiffs, v. RLC CORPORATION, Defendant.
CourtU.S. District Court — Western District of Michigan

Richard L. Steinberg, Detroit, Mich., for plaintiffs.

Thomas F. Myers, Detroit, Mich., for defendant.


RALPH M. FREEMAN, District Judge.

This matter is before the Court on defendant's motion for directed verdict and/or judgment notwithstanding the verdict. Plaintiffs Jack and Betty Rick brought this action claiming that defendant RLC Corporation was negligent in providing management services relating to accident prevention to Jack Rick's employer, Matlack, Inc. Jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332(a)(1).

On October 6, 1977, Jack Rick was employed by Matlack, Inc. as a truck driver operating out of Matlack's terminal in Woodville, Ohio. Early that morning, he left the Woodville terminal driving a tractor-trailer combination to deliver a load of pebble lime to the Ford Rouge Plant in Dearborn, Michigan. Upon arriving in Dearborn, Jack Rick and the driver of another Matlack vehicle stopped for breakfast at a roadside restaurant. After breakfast, Jack Rick returned to his vehicle, which he had parked in a lot across the street from the restaurant. As he pulled out of the lot and turned right onto the street, the vehicle upset and overturned on its right side, spilling the load of lime pebbles. As a result of the accident, Jack Rick claimed he suffered a herniated disc and nerve root impingement and that he is now totally and permanently disabled. Betty Rick, his wife, claimed she suffered the loss of consortium and companionship as a result of the injury to her husband.

The dump trailer which Jack Rick used to haul the lime pebbles was equipped with an air lift suspension system. This system is attached to the bottom of the trailer and is located approximately nine feet in front of the tandem rear axles of the trailer. It allows the wheels of the air lift suspension axle to be lifted above the pavement when the trailer is empty and to be lowered onto the ground when the trailer is hauling a load.

Jack Rick claimed that the trailer overturned because the air lift suspension system failed to remain fastened to the bottom of the trailer. He claimed that when the air lift suspension axle broke loose and fell to the ground, the rear tandem axles rolled over it and overturned the trailer.

At the time of the accident, Matlack was a wholly-owned subsidiary of defendant RLC Corporation, then known as Rollins International. Plaintiffs brought this action claiming that defendant was negligent in providing management services in accident prevention and safety to plaintiff Jack Rick's employer, Matlack. They contend that defendant, by undertaking to provide management services to Matlack, incurred a duty to Jack Rick as an employee of Matlack to exercise reasonable care under common law tort principles expressed in Restatement Torts 2d, § 324A (1965).1

At the close of plaintiffs' proofs, defendant moved for a directed verdict on several different grounds. The motion was denied in part, but the Court reserved ruling on whether plaintiffs had produced evidence establishing a duty of defendant to plaintiffs. After defendant produced its proofs, it renewed its motion for a directed verdict. The Court again reserved ruling on the motion and submitted the case to the jury. The jury returned a verdict for plaintiffs. The jury awarded Jack Rick damages in the amount of $469,537.24, but found that thirty percent of the total combined negligence of the parties was attributable to Jack Rick. The jury did not award damages to Betty Rick. Defendant timely filed this motion for directed verdict and/or judgment notwithstanding the verdict under Fed.R.Civ.P. 50.

It is the law of this Circuit that in cases in which jurisdiction rests on diversity of citizenship, the court is bound by the standards under state law in determining whether sufficient evidence was presented to withstand a motion for directed verdict or judgment notwithstanding the verdict. Warkentien v. Vondracek, 633 F.2d 1, 6 (6th Cir. 1980); Standard Alliance Ind. v. Black Clawson Co., 587 F.2d 813, 823 (6th Cir. 1978); Garrison v. Jervis B. Webb Co., 583 F.2d 258, 261 n.4 (6th Cir. 1978); Chumbler v. McClure, 505 F.2d 489 (6th Cir. 1974). But see Gold v. Nat'l Savings Bank of Albany, 641 F.2d 430, 434, n. 3 (6th Cir. 1981).

Under Michigan law, the standard for granting a judgment n. o. v. is the same as the standard for directing a verdict. Fitzpatrick v. Ritzenhern, 367 Mich. 326, 116 N.W.2d 894 (1962); Farm Bureau Mutual Ins. Co. v. Sears, Roebuck & Co., 99 Mich.App. 763, 298 N.W.2d 634 (1980); Isom v. Farrugia, 63 Mich.App. 351, 234 N.W.2d 520 (1975); Hes v. Haviland Products Co., 6 Mich.App. 163, 148 N.W.2d 509 (1967). In Cormack v. American Underwriters Corp., 94 Mich.App. 379, 288 N.W.2d 634 (1970), the court stated the standard as follows:

... A judgment n. o. v. on defendant's motion is appropriate only if the evidence is insufficient as a matter of law to support a judgment for the plaintiff. In reviewing a motion for judgment n. o. v. the Court must give the nonmoving party the benefit of every reasonable inference that could be drawn from the evidence. If reasonable minds could honestly disagree as to whether the plaintiff has satisfied his burden of proof on the necessary elements of his cause of action, judgment n. o. v. for the defendant is improper.
Id. at 382-83. See also Caldwell v. Fox, 394 Mich. 401, 231 N.W.2d 46 (1975); Cunningham v. Garber, 361 Mich. 90, 104 N.W.2d 746 (1960); S. C. Gray, Inc. v. Ford Motor Co., 92 Mich.App. 789, 286 N.W.2d 34 (1979); Yoder Co. v. Liberty Mutual Ins. Co., 92 Mich.App. 386, 284 N.W.2d 810 (1979); Dowell v. General Telephone Co., 85 Mich.App. 84, 270 N.W.2d 711 (1978); Beamon v. City of Highland Park, 85 Mich.App. 242, 271 N.W.2d 187 (1978); Cody v. Marcel Electric Co., 71 Mich.App. 714, 248 N.W.2d 663 (1976); Taft v. J. L. Hudson Co., 37 Mich. App. 692, 195 N.W.2d 296 (1972).

This Court notes that the Sixth Circuit has concluded that the Michigan standard for judgments n. o. v. is legally equivalent to the federal standard. In Warkentien v. Vondracek, 633 F.2d 1, 6-7 (6th Cir. 1980), the Sixth Circuit stated:

... However, the Michigan standard for directed verdicts appears to be identical to the federal standard, which is referred to as the "reasonable minds" test. Under this standard, a trial court should grant a motion for a directed verdict when, after viewing the evidence in the light most favorable to the non-moving party, the evidence points so strongly in favor of the movant that reasonable minds could not come to a different conclusion as to the appropriate verdict. The issue raised by a motion for a judgment n. o. v. is whether there is sufficient evidence to raise a question of fact for the jury.

The sole issue raised by defendant's motion is whether plaintiffs produced sufficient evidence to establish a duty owed by defendant to plaintiffs. The Michigan Supreme Court recently discussed the proper roles of the trial court and the jury in determining whether one party owes a duty to another in Smith v. Allendale Mutual Ins. Co., 410 Mich. 685, 713-15, 303 N.W.2d 702 (1981). The court stated:

It is generally agreed that the duty question —"whether upon the facts in evidence, such a relation exists between the parties that the community will impose a legal obligation upon one for the benefit of the other"—is to be decided by the court.
. . . . .
It is commonplace to say that a particular defendant owes a duty to a particular plaintiff, but such a statement, although not incorrect, merges two distinct analytical steps. It is for the court to determine, as a matter of law, what characteristics must be present for a relationship to give rise to a duty the breach of which may result in tort liability. It is for the jury to determine whether the facts in evidence establish the elements of that relationship. Thus, the jury decides the question of duty only in the sense that it determines whether the proofs establish the elements of a relationship which the court has already concluded give rise to a duty as a matter of law.
It is also for the court to determine what evidence is minimally necessary to establish the elements of a relationship on which tort liability may be premised ... (footnotes omitted).

The first step under this analysis is for the court to determine the characteristics which must be present to give rise to a duty, the breach of which may result in liability under Restatement Torts 2d, § 324A. The Smith case itself resolves this issue. In the Smith case, an employee brought an action against his employer's fire insurance carrier claiming that the carrier's inspections of the employer's factory for fire hazards was an undertaking to provide a safe work place for the employees. The employee argued that these inspections gave rise to a duty on the part of the carrier to the employees under the principles of Restatement Torts 2d § 324A. The Michigan Supreme Court addressed this issue at some length. Smith v. Allendale Mutual Ins. Co., supra at 711-719. The court stated:

One can agree with the general proposition that any person, including an insurer, who assumes to act must act with reasonable care without concluding that the insurers in these cases are subject to liability under the rule of § 324A. It is not enough that the insurer acted. It must have undertaken to render services to another. Its acts do not constitute such an undertaking unless it agreed or intended to benefit the insured or its employees by the inspections.
. . . . .
The law does not impose a duty upon an insurer who inspects in the absence of conduct evidencing an agreement or intent to benefit others by the inspection; only in such a case has the insurer acknowledged the propriety of judging the

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