700 A.2d 1377
Appellate Court of Connecticut.
Joseph A. HORTON et al.
Argued Jan. 28, 1997.
Decided Sept. 23, 1997.
Before EDWARD Y. O'CONNELL, C.J., and HEIMAN and SCHALLER, JJ.
The plaintiff appeals from the trial court's rendering of summary judgment in favor of the defendants. On appeal, the plaintiff claims that the trial court improperly determined that no genuine issue of material fact exists as to whether the defendants, Missionary Oblates of Mary Immaculate, Inc., of New Hampshire and Franco-American Oblate Fathers, Inc., (Oblate institutional defendants) are vicariously liable for the defendant priest's actions under (1) the doctrine of respondeat superior or (2) the doctrine of apparent authority. [FN1] We agree with the plaintiff and reverse the judgment of the trial court.
FN1. The plaintiff also argues that the trial court improperly rendered summary judgment on her CUTPA; General Statutes § 42-110a et seq.; and professional negligence claims. Both the CUTPA and professional negligence claims, however, are fundamentally based on the Oblate institutional defendants' being held vicariously liable for Horton's actions. Thus, our resolution of the vicarious liability claim is dispositive of the CUTPA and professional negligence claims.
The following facts are necessary for a proper resolution of this appeal. The defendant, Joseph A. Horton, was a practicing Roman Catholic priest, ordained by and an agent of the Oblate institutional defendants. Horton was also a practicing psychologist. He maintained an office at the defendant Center for Individual and Group Therapy, P.C., in Vernon (therapy center). Given Horton's vow of poverty, he gave all of the profits he derived from his psychology practice to the Oblate institutional defendants.
In 1988, Horton was assigned weekly priestly duties at Saint Matthew's Church in Tolland, where the plaintiff was a parishioner. In August, 1988, the plaintiff sought the professional care and treatment of Horton for psychological, emotional and marital problems. Specifically, she sought counseling from Horton because of his joint status as a psychologist and a Roman Catholic priest associated with her parish.
Horton provided the plaintiff with a combination of pastoral, spiritual and psychological counseling, including psychological discussions, spiritual advice and prayer. The plaintiff received counseling from Horton both at his office at the therapy center, and at his office at the Immaculata Retreat House in Willimantic, a house owned and operated by the Oblate institutional defendants. Beginning in February, 1989, Horton and the plaintiff began a sexual relationship, with sexual contact taking place during the counseling sessions. Horton continued to bill the plaintiff and her insurance company for these counseling sessions in which sexual contact occurred. Sexual contact between Horton and the plaintiff also occurred at church retreats, sponsored and run by the Oblate institutional defendants, where Horton was serving as retreat faculty. Horton and the plaintiff's sexual relations continued for approximately two and one-half years, terminating in February, 1992.
About December 16, 1993, the plaintiff filed a seven count complaint against the defendants. On October 31, 1994, the Oblate institutional defendants filed a motion for summary judgment, arguing that there was no genuine issue of material fact as to whether the Oblate institutional defendants were vicariously liable for Horton's alleged misconduct under either the doctrine of respondeat superior or the doctrine of apparent authority. Attached to their motion for summary judgment were three sworn affidavits of Oblate priests, and a portion of the plaintiff's deposition. In opposition to the motion for summary judgment, the plaintiff filed her sworn affidavit, a portion of her deposition, and an affidavit of Anne C. Pratt, a licensed Connecticut psychologist. On October 18, 1995, the trial court granted the Oblate institutional defendants' motion for summary judgment. This appeal follows.
The plaintiff first argues that the trial court improperly determined that no genuine issue of material fact exists as to whether the Oblate institutional defendants are vicariously liable for Horton's actions under the doctrine of respondeat superior. In response, the Oblate institutional defendants argue that because the laws of the Roman Catholic Church and the rules of the Oblate Order expressly prohibit priests from engaging in sexual activity, Horton's alleged sexual exploitation of the plaintiff could not be within Horton's scope of employment, nor could it be viewed as a furtherance of the Oblate institutional defendants' business. We agree with the plaintiff.
"We initially note the standard of review of a trial court decision granting a motion for summary judgment. Practice Book § 384 mandates that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A material fact is a fact that will make a difference in the result of the case.... The party seeking summary judgment has the burden of showing the absence of any genuine issue as to all material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.... The test is whether a party would be entitled to a directed verdict on the same facts." (Internal quotation marks omitted.) Budris v. Allstate Ins. Co., 44 Conn.App. 53, 56-57, 686 A.2d 533 (1996). "[A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed." (Internal quotation marks omitted.) Miller v. United Technologies Corp., 233 Conn. 732, 752, 660 A.2d 810 (1995).
Thus, in order to prevail on her challenge to the summary judgment, the plaintiff must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact as to whether the Oblate institutional defendants are vicariously liable for Horton's actions, under the doctrine of respondeat superior. "Under the doctrine of respondeat superior, [a] master is liable for the wilful torts of his servant committed within the scope of the servant's employment and in furtherance of his master's business.... A servant acts within the scope of employment while engaged in the service of the master, and it is not synonymous with the phrase during the period covered by his employment.... While a servant may be acting within the scope of his employment when his conduct is negligent, disobedient and unfaithful ... that does not end the inquiry. Rather, the vital inquiry in this type of case is whether the servant on the occasion in question was engaged in a disobedient or unfaithful conducting of the master's business, or was engaged in an abandonment of the master's business.... Unless [the employee] was actuated at least in part by a purpose to serve a principal, the principal is not liable." (Citation omitted; internal quotation marks omitted.) Glucksman v. Walters, 38 Conn.App. 140, 144, 659 A.2d 1217, cert. denied, 235 Conn. 914, 665 A.2d 608 (1995).
"When the servant is doing or attempting to do the very thing which he was directed to do, the master is liable, though the servant's method of doing it be wholly unauthorized or forbidden. If the servant's disobedience of instructions will exonerate the master, the proof, easily made, virtually does away with the maxim of respondeat superior.... That the servant disobeyed the orders of the master is never a sufficient defense. It must be shown further that he ceased to act for the master and in the course of his employment." (Citation omitted; internal quotation marks omitted.) Son v. Hartford Ice Cream Co., 102 Conn. 696, 700-701, 129 A. 778 (1925).
"Ordinarily, it is a question of fact as to whether a wilful tort of the servant has occurred within the scope of the servant's employment and was done to further the master's business.... But there are occasional cases where a servant's digression from duty is so clear-cut that the disposition of the case becomes a matter of law." (Citation omitted; internal quotation marks omitted.) A-G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 207, 579 A.2d 69 (1990).
Viewing the evidence before it in the light most favorable to the plaintiff, the trial court could have reasonably found the following. The Oblate institutional defendants employed Horton to give pastoral counseling to parishioners, in conjunction with his other priestly duties. The Oblate institutional defendants also employed Horton as a staff psychologist for the annulment tribunal and at a number of religious retreats sponsored by the Oblate institutional defendants. The Oblate institutional defendants enabled Horton to counsel both church personnel and the public at large, by giving him an office in their retreat house. The Oblate institutional defendants benefited from Horton's pastoral and psychological counseling of their parishioners and clerical personnel. They also benefited monetarily from his clinical psychology practice, because all profits derived from his practice were given to the Oblate institutional defendants pursuant to his vow of poverty. Thus, a trier of fact could reasonably find that Horton's pastoral and psychological counseling of the plaintiff was well within the scope of his employment for the Oblate institutional defendants and was in furtherance of the Oblate institutional defendants' business.
Horton's alleged sexual exploitation of the plaintiff occurred during his church sanctioned pastoral-psychological counseling sessions and while he staffed church retreats. Thus, a trier of fact could reasonably determine that Horton's sexual relationship with the plaintiff was a misguided attempt at pastoral-psychological counseling, or even an unauthorized, unethical, tortious method of pastoral counseling, but not an abandonment of church business.
Furthermore, a trier of fact could reasonably find that the sexual relations between Horton and the plaintiff directly grew out of, and were the immediate and proximate results of, the church sanctioned counseling sessions. According to the affidavit of the clinical psychologist, Anne Pratt, sexual relations often mistakenly arise out of an emotional therapeutic relationship. This is known as the transference-countertransference phenomenon. Pratt further opined in her affidavit that a transference- countertransference phenomenon arose between the plaintiff and Horton, with the emotional nature of the therapeutic relationship causing the parties to displace feelings and confuse the therapeutic relationship with an intimate sexual relationship.
The present case is similar to Glucksman v. Walters, supra, 38 Conn.App. 140, 659 A.2d 1217, and Pelletier v. Bilbiles, 154 Conn. 544, 227 A.2d 251 (1967). In Glucksman v. Walters, supra, at 142-43, 659 A.2d 1217, a part-time Young Men's Christian Association (YMCA) employee responded to a foul in a YMCA basketball game by severely assaulting the man who had fouled him. We concluded that a jury could have reasonably characterized this assault as "a misguided effort" at maintaining order on the YMCA basketball court and, accordingly, we reversed a directed verdict holding the YMCA not vicariously liable for the assault on the basis of respondeat superior. Id., at 145-48, 659 A.2d 1217. In Pelletier v. Bilbiles, supra, 154 Conn. 544, 227 A.2d 251, an employee of a confectionery store, charged with keeping order in the store, assaulted a customer who had thrown a wrapper on the floor. Our Supreme Court held that "[t]he beating of an unruly customer ... is an extremely forceful, although misguided, method of discouraging patrons of the [store] ... from causing disturbances on the premises in the future. The fact that the specific method a servant employs to accomplish his master's orders is not authorized does not relieve the master from liability.... Also, the fact that the battery ... may have been motivated by personal animosity ... does not exonerate the defendant.... A master does not escape liability merely because his servant loses his temper while he is conducting the master's business." (Citations omitted.) Id., at 548, 227 A.2d 251. Here, as in Glucksman and Pelletier, the trier of fact could reasonably have found that Horton's sexual relations with the plaintiff during their pastoral-psychological counseling sessions, were a "misguided effort" at psychologically and spiritually counseling the plaintiff, rather than an abandonment of the counseling. Just as the YMCA employee's assault on the basketball court in Glucksman, and the employee's assault on the customer who had littered in Pelletier represented extreme and clearly unauthorized methods of maintaining order and thereby furthering their employers' business, Horton's engaging in sexual contact with the plaintiff during counseling sessions also could represent an extreme and clearly unauthorized method of spiritually and emotionally counseling the plaintiff and thereby furthering the church's business. "The fact that the specific method a servant employs to accomplish his master's orders is not authorized does not relieve the master from liability." Id., at 548, 227 A.2d 251. The Oblate institutional defendants argue that this case is governed by Gutierrez v. Thorne, 13 Conn.App. 493, 537 A.2d 527 (1988), Brown v. Housing Authority, 23 Conn.App. 624, 583 A.2d 643 (1990), cert. denied, 217 Conn. 808, 585 A.2d 1233 (1991), A-G Foods, Inc. v. Pepperidge Farm, Inc., supra, 216 Conn. 200, 579 A.2d 69, and Nutt v. Norwich Roman Catholic Diocese, 921 F.Supp. 66 (D.Conn.1995). We are unpersuaded, however, and conclude that the present case is distinguishable from these cases.
In Gutierrez v. Thorne, supra, 13 Conn.App. at 496-97, 537 A.2d 527, an employee of the commissioner of mental retardation was hired to help retarded persons living in the supervised apartment program with keeping up their apartments, grocery shopping, expense budgeting and performing other aspects of daily living. The employee entered the retarded plaintiff's apartment and repeatedly sexually assaulted her. Id. We affirmed a summary judgment in favor of the employer, the commissioner of mental retardation, holding that "it is clear that [the employee] ... was engaging in criminal conduct which had no connection to the defendant's business of providing supervision and training to mentally retarded persons regarding daily living skills. Since there were no facts before the court from which it could conclude that [the employee] was furthering the defendant's interests, the defendant's nonliability under a respondeat superior theory was properly determined as a matter of law." Id., at 499, 537 A.2d 527. In Gutierrez, unlike here, a trier of fact could not reasonably have determined that the employee's brutal rape of the retarded plaintiff in her shower was merely a negligent or misguided attempt at supervising her shopping, cleaning, budgeting and daily living. A trier of fact could not reasonably have determined that the employee's rape of the retarded plaintiff constituted merely an extreme, unauthorized and disobedient method of supervising her daily living. Rather, the employee's brutal sexual assault of the plaintiff was clearly an abandonment of his supervising duties.
In Brown v. Housing Authority, supra, 23 Conn.App. 624, 583 A.2d 643, a mechanic was driving his employer's van from one maintenance job to another when the plaintiff asked the employee to move his van, which was blocking traffic. The employee refused to move the van, and the plaintiff drove away. The employee then left his job route and followed the plaintiff's car. The employee found the plaintiff and rear-ended his car several times. The plaintiff got out of his vehicle, and the employee grabbed a hammer and struck the plaintiff in the chest. Id. A trier of fact could not reasonably find that the Brown employee's abandonment of his maintenance mechanic job responsibilities to pursue and assault the plaintiff was a negligent or misguided effort at maintaining machines, or even an extreme method of traveling from one maintenance mechanic job to another, because "the employee necessarily abandoned his employer's business to pursue and attack the plaintiff." Glucksman v. Walters, supra, 38 Conn.App. at 148, 659 A.2d 1217. The employee's "intentional, criminal acts were in no way connected to the defendant's business." Brown v. Housing Authority, supra, 23 Conn.App. at 628, 583 A.2d 643. The defendants and the dissent rely on A-G Foods, Inc. v. Pepperidge Farm, Inc., supra, 216 Conn. 200, 579 A.2d 69. In that case Pepperidge Farm entered into a consignment agreement with Anthony Spinelli, granting him an exclusive franchise to distribute Pepperidge Farm bakery products within a specified geographical area. Id., at 204, 579 A.2d 69. Spinelli began defrauding certain independent grocery stores by charging the stores for goods he did not deliver. Id. Pepperidge Farm was unaware of Spinelli's scheme and never received any money as a result of it. Id., at 205, 579 A.2d 69. Spinelli argued that Pepperidge Farm benefited from his fraud because the fraud caused a larger portion of shelf space to be devoted to Pepperidge Farm bakery products, thereby stimulating demand and increasing the likelihood of sales. See id., at 207-08, 579 A.2d 69. The Supreme Court concluded, however, that "any possible indirect benefit Pepperidge Farm might have received by the increased shelf space was so de minimis that, as a matter of law, it [did] not support a conclusion that Spinelli acted within the scope of his employment and in furtherance of Pepperidge Farm's business." Id., at 209, 579 A.2d 69. A-G Foods, Inc., is distinguishable from the present case. First, Pepperidge Farm did not benefit monetarily or otherwise from Spinelli's fraudulent scheme. Here, however, the Oblate institutional defendants did benefit monetarily from Horton's misguided counseling of the plaintiff. Second, Spinelli's intricate, complicated and well thought out fraud scheme could not reasonably be characterized as a misguided or negligent attempt at furthering the distribution of Pepperidge Farm products.
The dissent relies heavily on Nutt v. Norwich Roman Catholic Diocese, supra, 921 F.Supp. 66. First, while a federal District Court opinion is persuasive authority, it is not binding on this court. More importantly, however, Nutt is factually distinguishable from the present case. In Nutt, a parish priest showed pornographic movies to two twelve year old altar boys. Id., at 69-70. Then, during various out-of-town trips, the priest repeatedly sexually molested the two minor boys, for a period of over six years. Id. The federal District Court granted the Roman Catholic institutional defendants' motion for summary judgment, holding that they could not be held liable for the defendant priest's actions under a doctrine of respondeat superior. Id., at 70-71. While a trier of fact could reasonably find that consensual sexual relations between two adults arising out of emotional, spiritual church sponsored counseling sessions represented a negligent and misguided effort at pastoral counseling, a trier of fact could not reasonably find that a priest's showing pornographic films to young boys and then criminally sexually molesting them in out-of-town motel rooms merely represented a negligent and misguided effort at pastoral counseling. The facts of Nutt clearly represent a situation in which the priest wholly abandoned his pastoral duties. Thus, Nutt represents one of those exceptional cases in which the servant's digression from duty is so clear cut that the disposition of the case is a matter of law. See A-G Foods, Inc. v. Pepperidge Farm, Inc., supra, 216 Conn. at 207, 579 A.2d 69. Therefore, on close examination of the specific facts of this case in light of the relevant case law, we conclude that whether Horton's actions constituted a negligent, disobedient and unfaithful conducting of church business or a complete abandonment of church business represents an issue about which reasonable minds could differ, and thus constitutes a genuine issue of material fact. Thus, we conclude that the trial court improperly granted the Oblate institutional defendants' motion for summary judgment.
The plaintiff next argues that the trial court improperly found that no genuine issue of material fact exists as to whether the Oblate institutional defendants are vicariously liable for Horton's actions under the doctrine of apparent authority. Specifically, the plaintiff argues that the Oblate institutional defendants held Horton out to the public as a trustworthy, ethical, respectable priest-clinical psychologist, and the plaintiff relied on this representation in choosing to go to Horton for counseling and in trusting and confiding in Horton during the counseling process. Thus, under the doctrine of apparent authority, the Oblate institutional defendants should be vicariously liable for Horton's negligent, misguided and unethical behavior during his counseling sessions with the plaintiff.
In other states, the doctrine of apparent authority has been used to hold a principal, who represents that another is his servant or agent and thereby causes a third person to rely justifiably on the care or skill of such agent, vicariously liable for harm caused to the third person by the lack of care or skill of his servant or agent. See 1 Restatement (Second), Agency § 267,pp. 578-79 (1958); see also Mehlman v. Powell, 281 Md. 269, 272-75, 378 A.2d 1121 (1977); Sanders v. Rowan, 61 Md.App. 40, 50-58, 484 A.2d 1023 (1984); McClellan v. Health Maintenance, 413 Pa.Super. 128, 135-39, 604 A.2d 1053 (1992). In Connecticut, however, the doctrine of apparent authority has never been used in such a manner. Thus, because we are bound by Connecticut precedent; see Conway v. Wilton, 238 Conn. 653, 658-59, 680 A.2d 242 (1996); Jolly, Inc. v. Zoning Board of Appeals, 237 Conn. 184, 195, 676 A.2d 831 (1996); we conclude that the doctrine of apparent authority is inapplicable to this case.
The judgment is reversed and the case is remanded with direction to deny the motion for summary judgment and for further proceedings in accordance with this opinion.
In this opinion EDWARD Y. O'CONNELL, C.J., concurred.
SCHALLER, Judge, dissenting.
Although I agree with part II of the majority opinion, I disagree with the conclusion in part I. I would affirm the trial court's determination that, as a matter of law, the Oblate institutional defendants are not liable under the doctrine of respondeat superior. When the facts presented by the parties' affidavits are viewed in their proper context, it is clear that the defendant Joseph A. Horton's "digression from duty is so clear-cut that the disposition of the case becomes a matter of law." (Internal quotation marks omitted.) A-G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200, 207, 579 A.2d 69 (1990).
The facts that the majority recites from the record present a partial image of the situation. There are, however, other facts and allegations by the plaintiff that are necessary to present a complete factual picture. Those allegations and facts were before the trial court for summary judgment purposes. In this regard, it is important to note that the plaintiff acknowledged the complete incompatibility and inconsistency of Horton's relationship with her vis-a-vis his role as a priest, by alleging in her complaint: "On several occasions ... Horton told the plaintiff he was going to leave the priesthood in order to continue and further their intimate relationship."
In addition, the plaintiff testified at her deposition that starting about March, 1989, and continuing until early 1992, Horton and the plaintiff had discussions about their getting married and his having to make a decision to leave the priesthood in order to marry her. In his deposition, Horton confirmed that the plaintiff had suggested that they get married and never tell anybody about their being married while he remained a priest, but he said that he could not do it that way. On a number of occasions, the plaintiff acknowledged that she and Horton engaged in sexual intercourse on occasions when she invited him into her home. She acknowledged further her active role in their romantic relationship in testifying that she purchased and provided certain materials for him to use most of the time when they engaged in sexual intercourse.
The plaintiff further admitted that during all of her relationship with Horton, she understood that it was clearly outside the scope of any Catholic priest's employment to engage in sexual relations with anyone. The plaintiff admitted that Horton's engaging in sexual relations with her was certainly not for the purpose of promoting any of the work of the Catholic Church. She further recognized that Horton, like every other Catholic priest, was under a vow to abstain from sexual activity and she had no reason to believe that he had ever been excused or relieved of that obligation to abstain from sexual activity.
Additional relevant, undisputed facts were presented by the Oblate institutional defendants pertaining to Horton's activities: (1) At all times, the laws and standards of the Roman Catholic Church and the Rules of the Oblate Order, as well as each priest's personal commitment to celibacy, have expressly prohibited each priest member of the Oblate Order from engaging in any sexual activity of any kind and from seeking or maintaining any personally intimate relationship or marital relationship with any woman; (2) At all times, any and all attempted or actual sexual activity or personally intimate relationship or marital relationship, which any priest member of the Oblate Order may have sought or maintained with any woman during that time frame, would have been clearly outside the scope of any employment which that person might possibly have held as a Catholic priest or as a member of the Oblate Order; (3) During the course of the plaintiff's relationship with Horton, Horton held nonecclesiastical employment as a clinical psychologist that was not related to any program sponsored or operated by the Oblate Order, and, during that time frame, he was also free personally to contract to render priestly services for and at local parish churches, which priestly services were also not related to any program sponsored or operated by the Oblate Order.
These additional facts and admissions by the plaintiff, when considered with the facts recited in the majority opinion, present a more complete factual picture of the situation and cast doubt on the majority's characterization of the parties' long-standing intimate relationship as merely "an extreme and clearly unauthorized method of spiritually and emotionally counselling the plaintiff and thereby furthering the church's business."
Horton's participation in this consensual relationship, which was even carried on in the plaintiff's home, and which involved proposals of marriage, with Horton either concealing it and remaining in the church, or leaving the church entirely, could not reasonably be construed as simply an errant and misguided method of carrying out his counseling mission. The full factual context represents a vivid picture of an unrelated, independent, intimate, romantic relationship that both parties recognized was far beyond the permissible scope of Horton's priestly role. The fact that the parties may have met, and the relationship may have commenced, in the course of counseling is not sufficient to activate the doctrine of respondeat superior with respect to the Oblate institutions from which Horton concealed his impermissible relationship. Under these facts, Horton's action in conducting this relationship with the plaintiff represented a complete departure from his responsibilities to the Oblate institutional defendants. His long-standing, independent relationship with the plaintiff in no way furthered the interests of his employers. Like the trial court, we should be extremely hard pressed under these facts to find that the business of the Oblate institutional defendants was furthered by the activities attributed to Horton.
As the majority acknowledges, "[o]rdinarily, it is a question of fact as to whether a wilful tort of the servant has occurred within the scope of the servant's employment and was done to further his master's business.... But there are occasional cases where a servant's digression from duty is so clear- cut that the disposition of the case becomes a matter of law...." (Citations omitted; internal quotation marks omitted.) A-G Foods, Inc. v. Pepperidge Farm, Inc., supra, 216 Conn. at 207, 579 A.2d 69. This case is controlled by our Supreme Court's decision in A-G Foods, Inc. Specifically, in that case the Supreme Court upheld the trial court's determination that "any possible indirect benefit Pepperidge Farm might have received by the increased shelf space [allocated to Pepperidge Farm because of Spinelli's overstated sales] was so de minimis that, as a matter of law, it does not support a conclusion that Spinelli acted within the scope of his employment and in furtherance of Pepperidge Farm's business." Id., at 209, 579 A.2d 69. Pepperidge Farm benefited basically from Spinelli's actual sales to A-G Foods. Similarly, even though the Oblate institutional defendants may have received some monetary benefit from Horton's authorized counseling work, there is no factual showing that it benefited specifically from the activities associated with the intimate relationship that Horton carried on with the plaintiff during the same time period as the counseling activity was occurring. Furthermore, the Supreme Court in A-G Foods, Inc., determined that, even though the fraudulent transactions took place at the stores and during the hours when Spinelli was engaged in selling Pepperidge Farm merchandise, that is not sufficient to support the conclusion that he was acting within the scope of his employment. "Unless Spinelli was actuated at least in part by a purpose to serve a principal, the principal is not liable." (Internal quotation marks omitted.) Id., at 210, 579 A.2d 69. Similarly, the facts in the present case indicate simply that Horton was motivated to serve his own interest, not that of the Oblate institutional defendants, whose most fundamental rules he violated by his conduct, and with full knowledge and acquiescence on the part of the plaintiff. The situation in A-G Foods, Inc., is directly analogous to the present situation. The speculation contained in the affidavit of one witness in this case that some sort of transference-countertransference may have occurred is no more significant a factor than the factor of the enhanced shelf space that may have resulted from Spinelli's activities.
The majority relies on Glucksman v. Walters, 38 Conn.App. 140, 144, 659 A.2d 1217, cert. denied, 235 Conn. 914, 665 A.2d 608 (1995), and Pelletier v. Bilbiles, 154 Conn. 544, 547, 227 A.2d 251 (1967), to support its interpretation of Horton's activities as merely misguided and unauthorized methods of counseling. Those cases are distinguishable. In both cases, the actions complained of represented an inappropriate and enlarged version of what would have been appropriate activity to maintain order and prevent disturbances. Neither case is persuasive. Gutierrez v. Thorne, 13 Conn.App. 493, 498-99, 537 A.2d 527 (1988), and Brown v. Housing Authority, 23 Conn.App. 624, 583 A.2d 643 (1990), cert. denied, 217 Conn. 808, 585 A.2d 1233 (1991), on the other hand, support the trial court's decision in this case. In both cases, the improper activity represented a departure from an appropriate course of conduct.
In the present case, Horton's activity was as much a departure from appropriate counseling activity as Spinelli's fraudulent sales activity was a departure in A-G Foods, Inc. Moreover, the decision in Nutt v. Norwich Roman Catholic Diocese, 921 F.Supp. 66 (D.Conn.1995) is highly persuasive. Horton's alleged actions in engaging in improper sexual activity no more furthered the interests of the Oblate institutional defendants than did that of the parish priest in Nutt. See also Tichenor v. Roman Catholic Church of Archdiocese of New Orleans, 32 F.3d 953, 960 (5th Cir.1994) ("[i]t would be hard to imagine a more difficult argument than that [Horton's] illicit sexual pursuits were somehow related to his duties as a priest or that they in any way furthered the interests of ... his employer").
I would affirm the decision of the trial court granting summary judgment in this case.
For the foregoing reasons, I respectfully dissent.
Gizzi v. Texaco
437 F.2d 308 (3rd Cir. 1971)
United States Court of Appeals, Third Circuit.
Augustine GIZZI, Appellant, and Anthony Giaccio
TEXACO, INC., Appellee.
Appeal of Anthony GIACCIO.
Nos. 18976, 18977. Argued Oct. 27, 1970.
Decided Jan. 20, 1971, Rehearing Denied March 8, 1971.
OPINION OF THE COURT
GERALD McLAUGHLIN, Circuit Judge.
The question posed on this appeal is whether the trial judge properly granted appellee Texaco's motion for a directed verdict in this personal injury action. Jurisdiction in the district court was based on diversity of citizenship and requisite amount in controversy.
Appellant Augustine Gizzi was a steady patron of a Texaco service station located on Route 130 and Chestnut *309 Street, Westville, New Jersey. The real estate upon which the station was situated was owned by a third party and was leased to the operator of the station, Russell Hinman. Texaco owned certain pieces of equipment and also supplied the operator with the normal insignia to indicate that Texaco products were being sold there.
In June of 1965, the station operator, Hinman, interested Gizzi in a 1958 Volkswagen van, which Hinman offered to put in good working order and sell for $400. Gizzi agreed to make the purchase and Hinman commenced his work on the vehicle. The work took about two weeks and included the installation of a new master braking cylinder and a complete examination and testing of the entire braking system. On June 18, 1965 Gizzi came to the station and paid the $400. He was given a receipt for the payment and was told that the car would be ready that evening. Gizzi returned at about six o'clock, accompanied by appellant Anthony Giaccio. They took the van and then departed for Philadelphia, Pennsylvania, to pick up and deliver some air-conditioning equipment. While driving on the Schuylkill Expressway, Gizzi attempted to stop the vehicle by applying the brakes. He discovered that the brakes did not work and, as a result, the vehicle collided with the rear end of a tractor trailer causing serious injuries to both Gizzi and Giaccio.
Texaco, Inc. was the only defendant named in the complaint and at trial, the testimony was all directed to the corporation's liability, the court having asked for an offer of proof on that question.
With regard to the sale of this vehicle, no actual agency existed between Texaco and Hinman. Although most of the negotiations involved in the transaction took place at the Texaco station, the record indicates that Hinman was selling the van on his own behalf, and not on behalf of Texaco. Texaco received no portion of the proceeds. The corporation was not designated the seller on the bill of sale, title to the vehicle being listed in the name of a company located in Atlantic City, New Jersey. Gizzi did receive a Texaco credit invoice as a receipt for the cash he paid. It would seem that this was an available convenience utilized by Hinman to record the transaction.
The repair work performed by Hinman was incidental to the sale of the vehicle. He offered to put the vehicle into good working order to further induce Gizzi to purchase it. Some work was done on the van after the money had been paid on June 18 and all work on the braking system was completed prior to that date.
The theory of liability advanced by appellants below was that Texaco had clothed Hinman with apparent authority to make the necessary repairs and sell the vehicle on its behalf and that Gizzi reasonably assumed that Texaco would be responsible for any defects, especially defects in those portions of the van which were repaired or replaced by Hinman. It was further contended that Gizzi entered into the transaction relying on this apparent authority, thereby creating a situation in which Texaco was estopped from denying that an agency did in fact exist.
The concepts of apparent authority, and agency by estoppel are closely related. Both depend on manifestations by the alleged principal to a third person, and reasonable belief by the third person that the alleged agent is authorized to bind the principal. The manifestations of the principal may be made directly to the third person, or may be made to the community, by signs or advertising. Restatement (Second), Agency §§ 8, 8B, 27 (1957). In order for the third person to recover against the principal, he must have relied on the indicia of authority originated by the principal, Bowman v. Home Life Ins. Co. of America, 260 F.2d 521 (3 Cir. 1958); Restatement (Second), Agency 267 and such reliance must have been reasonable under the circumstances. N. Rothenberg & Son, Inc. v. Nako, 49 N.J.Super. 372, 139 A.2d 783 (App.Div.1958); *310 Hoddeson v. Koos Bros., 47 N.J.Super. 224, 135 A.2d 702 (App.Div.1957); Mattia v. Northern Ins. Co. of New York, 35 N.J.Super. 503, 114 A.2d 582 (App.Div.1955); Elger v. Lindsay, 71 N.J.Super. 82, 176 A.2d 309 (County Court 1961).
In support of their theory of liability, appellants introduced evidence to show that Texaco exercised control over the activities of the service station in question. They showed that Texaco insignia and the slogan 'Trust your car to the man who wears the star' were prominently displayed. It was further established that Texaco engaged in substantial national advertising, the purpose of which was to convey the impression that Texaco dealers are skilled in automotive servicing, as well as to promote Texaco products, and that this advertising was not limited to certain services or products. The record reveals that approximately 30 per cent of the Texaco dealers in the country engage in the selling of used cars and that this activity is known to and acquiesced in by the corporation. Actually Texaco had a regional office located directly opposite the service station in question and Texaco personnel working in this office were aware of the fact that used vehicles were being sold from the station. It was further established that there were signs displayed indicating that an 'Expert foreign car mechanic' was on the premises.
Appellant Gizzi testified that he was aware of the advertising engaged in by Texaco and that it had instilled in him a certain sense of confidence in the corporation and its products.
In granting Texaco's motion for a directed verdict the court stated:
'I am convinced that as a matter of law there could not be any apparent authority on the basis of what I heard so far or what I have had the slightest glimmer that you could show, no apparent authority on the part of this operator to bind Texaco in connection with the sale of this used Volkswagon bus * * *
'In short, nobody could reasonably interpret any of these slogans or representations or indicia of control as dealing with anything more than the servicing of automobiles, and to the extent of putting gas in them and the ordinary things that are done at service stations.
'That 'Trust your car to the man who wears the star' could not possibly be construed to apply to installing new brake systems or selling used cars.'
We are of the opinion that the court below erred in granting the motion. Questions of apparent authority are questions of fact and are therefore for the jury to determine. Lind v. Schenley Industries, Inc., 278 F.2d 79 (3 Cir. 1960); System Investment Corp. v. Montview Acceptance Corp., 355 F.2d 463 (10 Cir. 1966); Frank Sullivan Co. v. Midwest Sheet Metal Works, 335 F.2d 33 (8 Cir. 1964). On a motion for a directed verdict, and on appeal from the granting of such a motion, all evidence and testimony must be viewed in a light most favorable to the party against whom such motion is made and that party is entitled to all reasonable inferences that could be drawn from the evidence. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962); Denneny v. Siegel, 407 F.2d 433 (3 Cir. 1969). While the evidence on behalf of appellants by no means amounted to an overwhelming case of liability, we are of the opinion that reasonable men could differ regarding it and that the issue should have been determined by the jury, after proper instructions from the court.
For the reasons stated herein, the order of the district court will be vacated and the case remanded for further proceedings consistent with this opinion. We do not pass on the merits of any other claims advanced on this appeal, but leave them for the consideration of the district court on the remand.
*311 SEITZ, Circuit Judge (dissenting).
I would affirm the order of the district court.
The two plaintiffs in this case each seek to recover damages for their personal injuries, claiming that Texaco is liable under the following four theories: (1) breach of warranty with respect to the sale of the delivery van; (2) breach of warranty with respect to the repairs which were made on the van before the sale; (3) vicarious liability for Hinman's negligence in repairing the van; and (4) negligence in permitting an unqualified person such as Hinman to perform repairs at its service station. Although this diversity action was brought in the Eastern District of Pennsylvania, where the accident occurred, it is not disputed that the issue of Texaco's liability is governed by the substantive law of New Jersey.
Plaintiffs first claim that Hinman warranted that the van was in good running condition and had no mechanical defects; at trial, they presented evidence which indicated that Hinman expressly told them that the van was 'in A-1 shape' and that the brakes in particular were in good working order. I agree with the majority that no actual agency relationship existed between Texaco and Hinman with respect to the sale of used vehicles, but I disagree that the district court erred in granting Texaco a directed verdict on the issues of apparent agency and agency by estoppel. The following statement of New Jersey law is pertinent to the disposition of this case:
'One who represents that another is his agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be servant as if he were such. Restatement, Agency, par. 267. * * * This rule normally applies where the plaintiff has submitted himself to the care or protection of an apparent servant in response to an apparent invitation from the defendant to enter into such relations with such servant. A manifestation of authority constitutes an invitation to deal with such servant and to enter into relations with him which are consistent with the apparent authority.'
Elger v. Lindsay, 71 N.J.Super. 82, 176 A.2d 309, 312 (Law Div.1961); see N. Rothenberg & Son, Inc. v. Nako, 49 N.J.Super. 372, 139 A.2d 783 (App.Div.1958); Price v. Old Label Liquor Co., 23 N.J.Super. 165, 92 A.2d 806 (App.Div.1952). Assuming that a person of ordinary prudence would be entitled to believe that Hinman was Texaco's agent in the sale of gasoline, oil, tires, and other items which are ordinarily sold at a filling station, it does not follow that a reasonable man would believe that Hinman's apparent authority extended to the sale of used cars. Such a belief would, in my view, be unreasonable. Moreover, in the absence of an appearance of agency, Texaco's mere acquiescence in the sale cannot be said to create an agency by estoppel. Where the evidence permits only one reasonable conclusion on the issue of agency, that issue must be decided by the trial court, not the jury. Harvey v. Craw, 110 N.J.Super. 68, 264 A.2d 448 (App.Div.1970).
I believe that a directed verdict was equally proper on plaintiffs' second and third theories of liability, involving the repairs which Hinman performed on the van. In Wallach v. Williams, 52 N.J. 504, 246 A.2d 713 (1968), the Supreme Court of New Jersey expressly reserved decision on whether an oil company which creates the impression by signs and advertising that it operates a service station can be held liable for the negligence of an independent contractor who operates the station. The facts of the present case also make it unnecessary to decide this issue. As both the majority and the district court have indicated, the repair work was purely incidental to the sale of the vehicle. Gizzi quoted Hinman as offering not only to *312 sell the van for $400 but also to replace the master cylinder and muffler, repair the engine, repaint the vehicle, and generally 'put it in A-1 shape' at no extra charge. I agree with the district judge that, considering plaintiffs' evidence in its most favorable light, the sale was strictly a personal transaction and Hinman made the repairs in his individual capacity simply to induce the sale. Particularly since the cost of the repairs was absorbed into the overall sales price, which was payable directly to Hinman, in my view, no reasonable man could conclude that Hinman was acting as a servant or agent of Texaco.
Finally, I believe that a directed verdict was proper on plaintiffs' claim that Texaco negligently permitted Hinman to perform automobile repairs even though he was unqualified and incompetent to do such work. Plaintiffs' only evidence was that Texaco itself did not give Hinman any specialized training. They produced no evidence to show either Hinman's incompetence or Texaco's negligence.
Drumond v. Hilton Hotel Corp.
501 F.Supp. 29 (E.D. Pa. 1980)
United States District Court, E. D. Pennsylvania.
James and Verna DRUMMOND
HILTON HOTEL CORPORATION Civ. A. No. 79-1818. July 3, 1980.
MEMORANDUM AND ORDER
GILES, District Judge.
Defendant, Hilton Hotel Corporation ("Hilton"), has moved for summary judgment in this action for damages. Plaintiff, Verna Drummond was injured as the result of a fall in a hotel whose trade name was the Hilton Inn. Hilton asserts that at no time did it maintain, own, control, or operate the hotel and that the record owner was the Creative Development Company ("Creative"), a wholly-owned subsidiary of the Gebco Investment Corporation ("Gebco"). A written agreement which on its face is a license/franchise agreement exists between Hilton and Creative. In that document, Hilton specifically disavows any agency relationship.
Plaintiffs resist Hilton's summary judgment motion asserting the doctrine of apparent agency. They maintain that Hilton held itself out in such a manner as to lead the general public, including hotel guests, to believe they were dealing directly with either Hilton or a servant or employee of Hilton, a hotel corporation of international reputation. Plaintiffs assert that representation of the hotel as a "Hilton Inn" estops Hilton from denying all possessory duties.
Upon careful examination of the controlling authority in this jurisdiction, this court concludes that there are material issues of fact presented regarding the existence of both a real and an apparent agency relationship between Hilton and Creative. Accordingly, for the reasons set forth below, Hilton's motion for summary judgment must be denied.
It is well-settled that summary judgment cannot be granted except on a clear showing that no genuine issue of fact exists. Bryson v. Brand Insulations, Inc., 621 F.2d 556 (3d Cir. 1980); Ely v. Hall's Motor Transit Co., 590 F.2d 62 (3d Cir. 1978). Hilton maintains that it had no ownership or control of the hotel at the time of plaintiff's accident.
Plaintiff urges that Hilton should be liable for the alleged negligent acts of Creative based on the doctrine of apparent authority as set forth in the Restatement of Agency s 267. Plaintiffs, opposing the instant motion, reference a signed agreement between Hilton and Creative which purports to be a license and franchise agreement. It has a provision which attempts to deny the existence of an agency relationship and to disclaim all liabilities incurred on behalf of the hotel.
"Under Pennsylvania law, when an injury is done by an 'independent contractor," the person employing him is generally not responsible to the person injured." Drexel v. Union Prescription Centers, Inc., 582 F.2d 781, 785 (3d Cir. 1978), citing Hader v. Coplay Cement Manufacturing Co., 410 Pa. 139, 150-51, 189 A.2d 271, 277 (1963). "However, when the relationship between the parties is that of 'master-servant' or 'employer-employee' as distinguished from 'independent contractor-contractee,' the master or employer is vicariously liable for the servant's or employee's negligent acts committed within the scope of his employment." Drexel, 582 F.2d at 785, citing Smalich v. Westfall, 440 Pa. 409, 415, 269 A.2d 476, 481 (1970). The basic inquiry which the Pennsylvania courts have set forth to determine whether a given person is an employee-servant or an independent contractor is
*31 whether such person is subject to the alleged employer's control or right to control with respect to his physical conduct in the performance of the services for which he was engaged.... The hallmark of an employee-employer relationship is that the employer not only controls the result of the work but has the right to direct the manner in which the work shall be accomplished; the hallmark of an independent contractee-contractor relationship is that the person engaged in the work has the exclusive control of the manner of performing it, being responsible only for the result.
Drexel, 582 F.2d at 785, quoting Green v. Independent Oil Co., 414 Pa. 477, 483-84, 201 A.2d 207, 210 (1964). "Actual control over the manner of work is not essential; rather, it is the right to control which is determinative." Drexel, 582 F.2d at 785, citing Coleman v. Board of Education, 477 Pa. 414, 421-22, 383 A.2d 1275, 1279 (1978).
In Drexel, the Third Circuit observed that difficulties exist where the parties occupy the status of franchisor and franchisee. The mere existence of a franchise relationship does not necessarily trigger a finding of a master- servant relationship, nor does it automatically insulate the parties from such a relationship. Whether the control retained by the franchisor is also sufficient to establish a master-servant relationship depends in each case upon the nature and extent of such control as defined in the franchise agreement or by the actual practice of the parties. Drexel, 582 F.2d at 786. In Drexel, the defendant occupied the status of franchisor by virtue of a signed agreement. Although the franchise bore the name of the defendant, it denied all ownership and control and thus all liability for any negligence on the part of the franchisee. Notwithstanding a written provision in the agreement which stated that the liability of the defendant was strictly limited, the court concluded that other clauses in the agreement could be construed as reserving to the defendant the right to control certain facets of the franchise. For example, there were clauses requiring the franchisee to operate under the name of the defendant/franchisor, granting the defendant the right of inspection, and requiring that the franchise operate as part of a national organization securing its strength through adherence to defendant's "uniformly high standards of service, appearance, quality of equipment, and proved methods of operation." Id. 787. Such clauses prompted the court to state that it could not hold as a matter of law that a master-servant relationship did not exist.
In the agreement between Hilton and Creative, Hilton has the right to consult with Creative on operating problems concerning the hotel, the right to inspect the hotel to maintain the standards of the Hilton system. Creative is required to feature Hilton's name in all advertising and promotional material. The agreement does have a clause limiting Hilton's liability. Yet, as stated in Drexel, the mere fact that there is express denial of the existence of an agency relationship is not in itself determinative of the matter. Id. 786. Since such a denial of agency is not sufficient to relieve Hilton of all possible liability as a matter of law, the issue of Hilton's right to control any operations of the hotel is an issue for jury determination.
Plaintiff's contention that Hilton should be liable for the alleged negligent acts of Creative, irrespective of an actual agency relationship, is based on the doctrine of apparent agency as set forth by the Restatement (Second) of Agency s 267 (1975), which provides as follows:
One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.
Accord, Restatement of Agency s 267.
Plaintiffs cite Taylor v. Costa Lines, Inc., 441 F.Supp. 783 (E.D.Pa.1977), for the proposition that Pennsylvania law would adopt *32 this section of the Restatement. Hilton asserts that the Pennsylvania courts have traditionally rejected the application of this principle to tort actions. [FN1] The Third Circuit in Drexel agreed with the decision of the trial court in Taylor, and concluded that the Supreme Court of Pennsylvania would adopt s 267 or some similar principle of apparent agency. Drexel, 582 F2d at 791-94. Hilton could therefore be liable under this doctrine if the plaintiff makes a showing that Hilton represented Creative to be its servant and that plaintiff justifiably relied on such representation.
FN1. Hilton cites Janeczko v. Manheimer, 77 F.2d 205 (7th Cir. 1935) and Trautwein v. Loeb, 19 Pa.D. & C. 394 (Phila.Co.1933). These cases were specifically distinguished in Drexel, 582 F.2d at 791 n.14.
In Gizzi v. Texaco, Inc., 437 F.2d 308 (3d Cir.) (applying New Jersey law), cert. denied, 404 U.S. 829, 92 S.Ct. 65, 30 L.Ed.2d 57 (1971) while citing s 267, the court concluded that a question of apparent authority existed where a gas station was neither owned nor operated by Texaco but prominently displayed the Texaco insignia and slogan and where Texaco had engaged in national advertising, the effect of which could be found to instill confidence in Texaco gas stations. In Drexel, the Court also concluded that there were sufficient indicia of authority to raise questions of fact as to whether the elements of apparent agency had been established. Among these indicia were provisions in the franchise agreement which required the franchisee to use the name of the defendant/franchisor in all promotional and advertising materials. 582 F.2d at 795-96
In the instant case, plaintiffs reference to provisions in the license/franchise agreement between Hilton and Creative which require Creative to "disclose in all dealings with suppliers and persons, other than guests, that it is an independent entity and that Licensor (Hilton) has no liability for debts," and "Feature in the Hotel operation, in the guest rooms, public rooms and other public areas of the Hotel, and on the various articles therein as specified in the Operating Manual and in advertising and promotional material, the name 'Hilton' "
Therefore, this court concludes that whether Hilton held itself out to the public as the owner or operator of the Hilton Inn is a proper issue of fact for determination by a jury.
Ramos v. Preferred Medical Plan, Inc.
842 So.2d 1006
District Court of Appeal of Florida,
Angel R. RAMOS and Celina R. Ramos, individually and for an on behalf
of their son, Angel Ramos, Jr., a minor, Appellants,
PREFERRED MEDICAL PLAN, INC., Appellee.
April 16, 2003.
Before SCHWARTZ, C.J., and COPE and WELLS, JJ.
Angel and Celina Ramos appeal an adverse summary judgment in a medical malpractice case. We conclude that there are disputed issues of material fact on the issue of apparent agency, and remand for further proceedings.
Plaintiffs-appellants Angel and Celina Ramos are members of Preferred Medical Plan, Inc., a health maintenance organization ("HMO"). Preferred enters into contracts with physicians to provide medical services to its members. As between Preferred and contracting physicians, the physicians are independent contractors.
Preferred's members must obtain medical services from physicians with whom Preferred has contracted. From Preferred's approved list, the plaintiffs selected Dr. Gregory Fox as their primary care physician.
The plaintiffs consulted Dr. Fox regarding the medical condition of their minor son, who suffered from gynecomastia. Dr. Fox referred the plaintiffs to Dr. Ignacio Fleites, a participating general surgeon, who is the chief of surgery at Westchester General Hospital. Dr. Fleites performed the surgery, and was paid by Preferred for the operation. There was a $400 co- payment for the surgery, which the plaintiffs paid to Preferred.
The plaintiffs brought suit against Dr. Fleites, Preferred, and Westchester General Hospital. They alleged that removal of the excess breast material associated with gynocomastia had been improperly performed, leaving scarring and a depression in the chest area.
So far as pertinent here, the plaintiffs alleged that Dr. Fleites was the apparent agent of Preferred. The trial court entered summary judgment in favor of Preferred, and the plaintiffs have appealed. [FN1] FN1. Settlements were reached with the other defendants.
While this case was pending on appeal, the Florida Supreme Court announced its decision in Villazon v. Prudential Health Care Plan, Inc., 843 So.2d 842, 2003 WL 1561528 (Fla. March 27, 2003). The trial court did not have the benefit of this decision at the time it entered summary judgment, and the newly announced Villazonopinion requires reversal for further proceedings.
In Villazon, as here, an HMO entered into contracts with independent contractor physicians under which the physicians agreed to provide medical services to HMO members. The Florida Supreme Court ruled that an HMO can be held vicariously liable for the acts of an independent contractor physician if the physician is acting either (a) as the actual agent or (b) as the apparent agent of the HMO. Id. 843 So.2d at 850-51. The present case involves only a claim of apparent agency, not a claim of actual agency. The plaintiffs assert that Dr. Fleites was the apparent agent of Preferred.
The Illinois Supreme Court has discussed the issue of apparent agency at length in Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill.2d 17, 241 Ill.Dec. 627, 719 N.E.2d 756 (1999). We find the reasoning of that decision helpful here. The Petrovich decision states in part:
Because HMOs may differ in their structures and the cost-containment practices that they employ, a court must discern the nature of the organization before it, where relevant to the issues. As earlier noted, Share is organized as an independent practice association (IPA)-model HMO. IPA-model HMOs are financing entities that arrange and pay for health care by contracting with independent medical groups and practitioners.
This court has never addressed a question of whether an HMO may be held liable for medical malpractice.... Courts ... should not be hesitant to apply well-settled legal theories of liability to HMOs where the facts so warrant and where justice so requires.
As a general rule, no vicarious liability exists for the actions of independent contractors. Vicarious liability may nevertheless be imposed for the actions of independent contractors where an agency relationship is established under either the doctrine of apparent authority or the doctrine of implied authority.
We now hold that the apparent authority doctrine may ... be used to impose vicarious liability on HMOs.... Courts in other jurisdictions have likewise concluded that HMOs are subject to this form of vicarious liability....
To establish apparent authority against an HMO for physician malpractice, the patient must prove (1) that the HMO held itself out as the provider of health care, without informing the patient that the care is given by independent contractors, and (2) that the patient justifiably relied upon the conduct of the HMO by looking to the HMO to provide health care services rather than to a specific physician. Apparent agency is a question of fact.
A. Holding Out
The element of "holding out" means that the HMO, or its agent, acted in a manner that would lead a reasonable person to conclude that the physician who was alleged to be negligent was an agent or employee of the HMO. Where the acts of the agent create the appearance of authority, a plaintiff must also prove that the HMO had knowledge of and acquiesced in those acts. Significantly, the holding-out element does not require the HMO to make an express representation that the physician alleged to be negligent is its agent or employee. Rather, this element is met where the HMO holds itself out as the provider of health care without informing the patient that the care is given by independent contractors. Vicarious liability under the apparent authority doctrine will not attach, however, if the patient knew or should have known that the physician providing treatment is an independent contractor.
A plaintiff must also prove the element of "justifiable reliance" to establish apparent authority against an HMO for physician malpractice. This means that the plaintiff acted in reliance upon the conduct of the HMO or its agent, consistent with ordinary care and prudence.
The element of justifiable reliance is met where the plaintiff relies upon the HMO to provide health care services, and does not rely upon a specific physician. This element is not met if the plaintiff selects his or her own personal physician and merely looks to the HMO as a conduit through which the plaintiff receives medical care.
Id. at 763-68 (emphasis added; citations omitted).
Florida's law of apparent agency is substantially identical to that expressed in the Illinois decision, except that in Florida the test for apparent agency has been stated as a three-part test where Illinois uses a two- part test. Under Florida law there is
a three-prong test under general agency law in order to determine the existence of apparent agency: first, whether there was a representation by the principal; second, whether a third party relied on that representation; and, finally, whether the third party changed position in reliance upon the representation and suffered detriment.
Almerico v. RLI Ins. Co., 716 So.2d 774, 777 (Fla.1998) (citations omitted); see also Villazon, 843 So.2d at 851-52 (Fla.2003). III.
We conclude that disputed issues of material fact remain regarding the issue of apparent agency. Under Petrovich, the first question is whether "The HMO holds itself out as the provider of health care without informing the patient that the care is given by independent contractors." 241 Ill.Dec. 627, 719 N.E.2d at 766.
Preferred's own promotional literature indicates that it operates several full-service medical centers. (R. 881). "All of your medical care will be coordinated through the medical center that you originally chose on your application. This procedure will enable your primary physician to maintain a master medical record for you in order to ensure the continuity and quality of care that you should have as a member of Preferred Medical Plan." (R. 882). The member information includes, "You MUST see your Primary Care Physician in order to be treated. If it is necessary for you to see a specialist, it will be arranged for you. You CANNOT go on your own to a specialist without a written referral from your Primary Care Doctor." (R. 885).
Consistent with these policies, the plaintiffs consulted the primary care physician, Dr. Fox, who made the referral to Dr. Fleites. Under Preferred's rules, Dr. Fox could only refer the plaintiffs to a surgeon who was one of Preferred's participating providers. Preferred paid Dr. Fleites the fee for the surgery. The plaintiffs paid the $400 co-payment to Preferred.
As outlined in the Petrovich decision, the foregoing facts would lead a reasonable person to conclude that Preferred had undertaken to be the provider of health care services and that Dr. Fleites was acting on its behalf.
The Petrovich decision also holds, however, that "[v]icarious liability under the apparent authority doctrine will not attach ... if the patient knew or should have known that the physician providing treatment is an independent contractor." Petrovich, 241 Ill.Dec. at 637, 719 N.E.2d 756. The file contains a copy of the Preferred's Individual Medical and Hospital Services Contract. It provides in part, "The relationship between Health Plan and Participating Providers that are not Health Plan employees is an independent contractor relationship. Such Participating Providers are not agents or employees of Health Plan, nor is Health Plan, or any employee of Health Plan, an agent or employee of any such Participating Provider." As an initial matter, Preferred markets its services in English and Spanish. The promotional material quoted earlier is made available to subscribers in both languages. The plaintiffs are Spanish speaking. The Individual Medical and Hospital Services Contract is found in this record in the English language only.
Leaving aside the language issue, the contractual provision just quoted is, in any event, not clear enough to dispose of the apparent agency issue. The contract indicates that those persons who are not Health Plan employees are independent contractors. The contractual provision does not advise the subscriber who is an employee and who is not.
Preferred points to the medical consent form signed by Mrs. Ramos prior to the surgery, which was performed at Westchester Hospital. The medical consent form included, "I acknowledge that all physicians and surgeons furnishing services, including all radiologists, pathologists, anesthesiologists and emergency room physicians, are independent contractors and are not employees or agents of the hospital." Mrs. Ramos is Spanish speaking. She testified that this part of the consent form was not translated for her, while other parts were. Thus, this form is not dispositive of the issue.
Preferred correctly states that the contract between Preferred and Dr. Fleites describes Dr. Fleites as an independent contractor. While that is true, it is not dispositive on the issue of apparent agency. For apparent agency purposes, the question is what the plaintiffs knew or reasonably should have known. There is no indication that the plaintiffs ever saw the contract between Preferred and Dr. Fleites or had any reason to know of its contents.
The next question for purposes of the apparent agency analysis is reliance. As explained in Petrovich, this element is met "where the plaintiff relies on the HMO to provide health care services, and does not rely upon a specific physician. This element is not met if the plaintiff selects his or her own personal physician and merely looks to the HMO as a conduit through which the plaintiff receives medical care." 241 Ill.Dec. 627, 719 N.E.2d at 768.
The summary judgment record indicates that the plaintiffs met this part of the test. The plaintiffs chose their primary care physician from Preferred's list. That physician, Dr. Fox, referred the plaintiffs to Dr. Fleites, the surgeon on Preferred's approved list. As stated in the instructions Preferred gives its patients, "If it is necessary for you to see a specialist, it will be arranged for you." (R. 885).
The final question is whether there was a change of position and detrimental reliance. Again, this element is met. The operation was performed on the minor child. For purposes of this summary judgment, the plaintiffs' factual claims of bad result and physical injury are accepted as true.
For the stated reasons, the summary judgment is reversed and the cause remanded for further proceedings.