Schropp v. Crown Eurocars, Inc.
| Decision Date | 16 March 1995 |
| Docket Number | No. 83522,83522 |
| Citation | 654 So.2d 1158 |
| Parties | 20 Fla. L. Weekly S128 Charles P. SCHROPP, Petitioner, v. CROWN EUROCARS, INC., etc, et al., Respondents. |
| Court | Florida Supreme Court |
Raymond T. Elligett, Jr. and Mark P. Buell of Schropp, Buell & Elligett, P.A., Tampa, for petitioner.
Claude H. Tison, Jr. of Macfarlane, Ausley, Ferguson & McMullen, Tampa, for respondents.
We have for review Crown Eurocars, Inc. v. Schropp, 636 So.2d 30 (Fla. 2d DCA 1993). This case involves a dispute between a purchaser of a Mercedes-Benz automobile and an automobile dealer concerning the paint finish on the car. The trial court judgment and district court opinion concern the broad issue of corporate liability for punitive damages. 1
The record reveals that Charles Schropp purchased a new Mercedes-Benz from Crown Eurocars (Crown) in St. Petersburg. A few days after the sale, Schropp complained to Crown about spots on the finish of the car. His persistent efforts to have Crown remove the spots were unavailing. According to Schropp, during one attempt to correct the defect, a Crown employee allegedly told Schropp by telephone that he was watching a worker buff the car at the dealership as they spoke. Schropp later presented evidence that this statement was untrue and that the car had not been buffed at that service visit. At a later visit, Schropp was allegedly asked by the Crown sales manager, Robert Cohen, to leave the Mercedes-Benz for a "special process" and inspection by a Mercedes-Benz representative. Schropp, allegedly with the understanding that the inspection was a precondition to having the car exchanged by the dealership, agreed and left the car with Crown for several days. Again not satisfied with the dealership's attempts to remove the spots, and on Crown's refusal to exchange the Mercedes, Schropp brought suit against the dealership and Cohen on multiple counts. Mercedes-Benz repurchased the car and its conduct is not an issue in this proceeding.
After a week-long trial, the jury found for Crown and Cohen on all but one count. The jury found each defendant liable for fraud based on statements made by Cohen concerning Mercedes-Benz's involvement in inspecting the car and authorizing a special process on the finish. The jury awarded $500 in compensatory damages for the time Schropp was wrongfully denied the use of the car. The interrogatory verdict also indicates that the jury found that Crown acted with malice toward Schropp and awarded $200,000 in punitive damages. The jury exonerated Cohen of any charge of malice and, consequently, declined to impose punitive damages for his actions. Crown appealed the verdict to the Second District Court of Appeal.
The Second District Court found sufficient evidence to affirm the compensatory damages award, but reversed the award of punitive damages against Crown. The district court noted that Cohen was the only Crown employee with managerial responsibility with whom Schropp had any contact; it concluded that "the jury's exoneration of Cohen from that higher level of maliciousness in the commission of the fraud, which is required to support an award of punitive damages, precludes the assessment of punitive damages against Crown." Crown, 636 So.2d at 35 (footnote omitted). The court analyzed the "managing agent" theory of liability found in Bankers Multiple Line Insurance Co. v. Farish, 464 So.2d 530 (Fla.1985), and elaborated on in Winn-Dixie Stores, Inc. v. Robinson, 472 So.2d 722 (Fla.1985), and found that these cases prohibited punitive damage liability for Crown because Cohen was the only management agent who had contact with Schropp, and the jury, by its verdict, had exonerated Cohen. The district court rejected Schropp's argument that Winn-Dixie announced a new theory of "direct corporate liability" that did not require malicious actions by a managing agent. The district court also analyzed whether Crown was vicariously liable for punitive damages under the theory explained in Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1981), but determined that the evidence did not support vicarious liability under this theory. The district court then certified the following question as one of great public importance:
IS THERE A DISTINCTION BETWEEN THE PREDICATE NECESSARY TO HOLD A CORPORATION LIABLE FOR PUNITIVE DAMAGES UNDER A THEORY BASED ON BANKERS MULTIPLE LINE INSURANCE COMPANY V. FARISH, 464 So.2d 530 (Fla.1985) AND UNDER A THEORY BASED ON WINN-DIXIE STORES, INC. V. ROBINSON, 472 So.2d 722 (Fla.1985)?
Crown, 636 So.2d at 37. We answer the certified question in the negative.
A review of the case law in Florida reveals two methods have been established by which a corporation may be held liable for punitive damages: (1) vicarious liability based on the willful and malicious actions of an employee with a finding of independent negligent conduct by the corporation; or (2) direct liability based on the willful and malicious actions of managing agents of the corporation.
In Mercury Motors Express, Inc. v. Smith, 393 So.2d 545 (Fla.1981), an employee of Mercury Motors Express lost control of his tractor-trailer rig while acting in the scope of his employment and killed a man. The personal representative of the decedent brought suit against the employer and alleged that it was vicariously liable for the willful and wanton acts of its employee. This Court held that, although a corporate employer could be vicariously liable for punitive damages caused by the willful and wanton acts of an employee, there must be some independent fault on the part of the corporate employer. Because the plaintiff had failed to allege any independent fault on the part of Mercury Motors Express, we quashed the district court's decision that had approved an award of punitive damages in the trial court. In stating the requisite degree of fault that would subject an employer to vicarious liability for punitive damages, we stated the following rule:
Although the misconduct of the employee, upon which the vicarious liability of the employer for punitive damages is based, must be willful and wanton, it is not necessary that the fault of the employer, independent of his employee's conduct, also be willful and wanton. It is sufficient that the plaintiff allege and prove some fault on the part of the employer which foreseeably contributed to the plaintiff's injury to make him vicariously liable for punitive damages.
Id. at 549. Under this theory, a plaintiff must (a) establish that the conduct of the employee was willful and wanton and (b) establish some fault on the part of a corporate employer in order to support a claim of vicarious liability against the corporate employer for punitive damages. We emphasize that under this theory it is not necessary for the plaintiff to establish that the corporate employer acted with the same heightened culpability as the employee to allow punitive damages. It is sufficient if the plaintiff establishes ordinary negligence on the part of the corporate employer.
In Bankers Multiple Line Insurance Co. v. Farish, 464 So.2d 530, 533 (Fla.1985), we discussed the second basis for corporate punitive damages liability, direct corporate liability, and expressly distinguished the vicarious liability theory set forth in Mercury Motors. In Bankers, the president of an insurance company, together with another managing officer of the insurer, encouraged a client of Farish to discharge Farish as the client's attorney and seek other counsel. The attorney sued the insurance company as well as the president of the insurer in his individual capacity. The jury returned a verdict in favor of the attorney against the insurer, including both compensatory and punitive damages, but found in favor of the president of the insurer and refused to award damages for his personal actions. This Court approved the award of punitive damages against the insurer because of the evidence of culpability on the part of the other corporate managing officer of the insurer apart from the actions of the president. Although w...
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