Yom v. Toyota Motor Credit Corp.

• Decision Date: 08 March 2016
• Docket Number: Civil Docket No.: CL14-584
• Court: Circuit Court of Virginia
• Parties: Re: Chong Kil Yom v. Toyota Motor Credit Corp., et al.

Re: Chong Kil Yom v. Toyota Motor Credit Corp., et al.

Civil Docket No.: CL14-584

FOURTH JUDICIAL CIRCUIT OF VIRGINIA CIRCUIT COURT OF THE CITY OF NORFOLK

March 8, 2016

DAVID W. LANNETTI JUDGE

Allan R. Serrano, Esq.

Gordon Feinblatt LLC

233 East Redwood Street

Baltimore, Maryland 21202

Martin Schubert, Esq.

Bancroft, McGavin, Horvath & Judkins, P.C.

9990 Fairfax Boulevard, Suite 400

Fairfax, Virginia 22030

Mary Margaret Callahan Lyons, Esq.

Robey, Teumer, Drash, Kimbrell & Counts

Dominion Tower, Suite 2025

999 Waterside Drive

Norfolk, Virginia 23510

Dear Counsel:

Today the Court rules on the Plea in Bar filed by Defendants Toyota Motor Credit Corp. ("Toyota") and Renovo Services, LLC ("Renovo"), a Motion for Summary Judgment filed by Toyota, and a Motion for Leave to Amend Complaint filed by Plaintiff Chong Kil Yom ("Yom"). The Court finds that Defendant Tebor Melick ("Melick") is an independent contractor and not an employee or agent of Toyota or Renovo and therefore SUSTAINS Toyota and Renovo's Plea in Bar. Because Toyota's potential liability is predicated on an employer-employee or principal-agent relationship, the Court GRANTS Toyota's Motion for Summary Judgment. Although leave to amend a complaint normally is liberally granted, under the circumstances present here—including Yom's significant delay in filing his motion and the concomitant substantial prejudice to the defendants—the Court DENIES Yom's Motion for Leave to Amend Complaint. The reasons for the Court's rulings are articulated herein.

Background

Yom filed suit against Toyota, Renovo, and Melick, alleging claims of negligence arising out of a July 22, 2010, encounter during which Yom was injured while a vehicle (the "Vehicle") he attempted to access was being repossessed. (Compl. ¶¶ 1, 6.) Yom allegedly reached into the Vehicle to retrieve a piece of paper as Melick moved the Vehicle, causing the Vehicle driver's side door to strike Yom on the head and throw him to the ground, resulting in further injuries. (Id.) At the time of the repossession, Yom's daughter, the apparent Vehicle owner, allegedly had defaulted on her loan with Toyota, which prompted Toyota to initiate the repossession process. (Tr. 9.)

Renovo¹ apparently oversees asset recovery and repossession services for its business partners. (Tr. 93-95; Def. Ex. A, ¶ 1.) Renovo operates nationwide and has both independent contractors and employees perform repossessions on its behalf. (Tr. 35, 39-40, 71.) Toyota contracted with Renovo² in 2007 to repossess vehicles after debtors defaulted on Toyota loans. (See Def. Ex. B.) Melick previously was an employee manager of Renovo, but after his position was eliminated—several years prior to the incident at issue—he entered into an "Independent Recovery Contractor Agreement" (the "Agreement") with Renovo. (See Def. Ex. A.) The Agreement was effective at the time of the Vehicle repossession. (Tr. 42-43.)

The Agreement includes the following relevant provisions:

• "[Melick] is an independent contractor acting on its own behalf. Nothing in this agreement shall be construed as establishing an employment, agency, partnership or joint venture relationship between the parties." (Def. Ex. A, ¶ 15.)

• "As an independent contractor, [Melick] will receive a 1099 for each year worked under this agreement, as required by federal tax laws." (Id.)

• "[Melick] agrees to perform recovery/repossession assignments for [Renovo] as requested by [Renovo] from time to time on a contract basis (the 'Services')." (Id. ¶ 2.)

• "[Melick] shall be responsible for assuring that all of its employees performing the Services are trained to the full extent necessary to ensure that all Services performed for [Renovo] shall be in full compliance with this Agreement." (Id. ¶ 3.)

• "While [Melick], or any employee of [Melick], is on duty performing any Assignment on behalf of [Renovo], such person shall at all times have on [his] person a Cellular Phone, which can be used by [Renovo] to contact[Melick] or its employees, including for purposes of modifying, amending or canceling an Assignment." (Id.)

• "[Melick] is not exclusively engaged by [Renovo] hereunder and [Renovo] may itself perform or may engage other persons and entities to perform asset recovery and repossession services similar to the Services in or outside of [Melick's] Coverage Area . . . and [Melick] may perform services similar to the Services for other persons and entities . . . ." (Id.)

• "[Melick] will at all time [sic] maintain all necessary insurance coverage, licenses, approvals and bonds as are required to lawfully carry out any Assignment . . . ." (Id. ¶ 5.)

• "[Melick] will attend, or will cause its applicable employees to attend, any and all training sessions or other meetings or conferences required by [Renovo] from time to time . . . ." (Id.)

• "[Renovo] will pay [Melick] for all completed Assignments (which are not cancelled before [Melick] performs the same) in accordance with a fee schedule established by [Renovo] . . . ." (Id. ¶ 6.)

• "Either party may terminate [Melick's] engagement hereunder at any time, without cause, by giving the other party ten (10) days [sic] written notice of its intent to terminate this agreement . . . . [Renovo] reserves the right to immediately terminate [Melick's] engagement for cause." (Id. ¶ 8.)

• "[Melick] shall indemnify, defend, and hold [Renovo] harmless from any and all losses, damages, claims, and/or causes of action . . . which arise out of or result from any act or omission of [Melick] or any of its . . . employees, or out of [Melick's] breach of any representation, warranty, covenant or obligation hereunder." (Id. ¶ 13.)

The Agreement also includes an exhibit, entitled "Procedures and Guidelines for Engagement, Reporting and Cancellation of Assignments," which provides, inter alia, a section that outlines "Guidelines for Debtor Contact." (Id., Ex. A.)

Positions of the Parties

Toyota and Renovo's Plea in Bar

Both Toyota and Renovo claim they are not employers or principals of Melick. (Def.'s Bench Br. on Plea in Bar 1.) They also claim that Toyota has no relationship with Melick and that Melick is an independent contractor of Renovo. (Id.) Toyota and Renovo rely on the following factors to support their contention that Melick was an independent contractor of Renovo at the time of the incident: (1) Melick and Renovo entered into the Agreement, which expressly states that Melick is an independent contractor; (2) Melick no longer was a management employee of Renovo; (3) Melick did not receive a W-2, any benefits, vacation time, or health insurance from Renovo but instead received a 1099 tax form; (4) Melick provided his own equipment, training, skill, and licenses; (5) Melick was required to carry his own insurance; (6) Melick was not instructed by Renovo on how to physically perform a repossession; (7) Melick was required to indemnify Renovo for any damages caused while he repossessed vehicles; (8) Melick was paid per repossession completed, not by hours worked, and there was no guarantee of any work or compensation; (9) Melick was subject to immediate termination for cause or, otherwise, with 10 days' notice; (10) Melick could hire employees; and (11) Melick was not required to provide services exclusively to Renovo. (Id. at 1-2.)

Yom responds that there are indicia that Melick is an employee of Renovo, as discussed in more detail in his response to Toyota's Motion for Summary Judgment. These include the following: (1) Renovo imposed certain duties on Melick related to the repossession itself; (2) Renovo required Melick to cease the repossession if the debtor objects; and (3) Renovo required Melick to carry a cell phone with him at all times in case there was a change in or cancellation of the repossession. (Tr. 29.)

Toyota's Motion for Summary Judgment

In November 2015, Defendants Renovo and Toyota filed a motion for summary judgment, claiming that as a matter of law they are not liable to Yom. Toyota and Renovo claim that Toyota had no contract whatsoever with Melick and that Melick is an independent contractor of Renovo; they therefore assert that they are not liable for any negligence of Melick. (D.'s Mot. for Summ. J. 1-2.) On December 18, 2015, the Court denied Renovo's Motion for Summary Judgment and took Toyota's Motion for Summary Judgment under advisement. (Dec. 18, 2015, Order.)

Yom contends that Melick is Renovo's employee or agent. (Pl.'s Mot. in Opp'n to Summ. J. 1.) Yom relies on certain provisions of the Agreement to support his contention. (Id. at 5.) He argues that the Agreement contains certain guidelines regarding how Melick is to conduct repossessions. Specifically, Yom asserts that Renovo exercised significant "control factors" over Melick, requiring him to: possess a cell phone at all times; obtain certain information from Renovo regarding the debtor and the vehicle to be repossessed; complete a condition report; inventory the repossessed vehicle; and notify Toyota after the repossession was complete. (Id.) Additionally, the Agreement contains guidelines regarding how Melick is required to act when around debtors. (Id.) Melick also testified regarding certain other requirements not in the Agreement that Renovo allegedly placed on him while performing repossessions, including a preclusion from using "sling trucks," a prohibition against driving repossessed vehicles, and a requirement that he not use or carry a firearm. (Id. at 6-7.)

Yom's Motion to Amend his Complaint

In January 2016, Yom moved to amend his Complaint against Toyota. At that time, Yom conceded that Melick was not an employee or agent of Toyota. (Pl.'s Mot. for Leave to Amend Compl. 1.) In his motion, Yom—for the first time—seeks to impose a non-delegable duty upon Toyota, as the Vehicle lienholder, to ensure an injury-free repossession. (Id. at 3-5.) Yom relies on cases from more than ten non-Virginia jurisdictions, which interpret Uniform Commercial Code (the "UCC") language adopted by Virginia, and...