Puga et al v. About Tyme Transport, Inc. et al

Filing 110

ORDER granting in part and denying in part 91 Motion for Summary Judgment. The Pugas's claims of RCX's independent negligence and any claim that RCX is independently or vicariously liable for punitive or exemplary damages, are dismissed.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(lcayce, 2)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION

January 03, 2017
David J. Bradley, Clerk

ALEXANDRO PUGA, et al,

§
§
Plaintiffs,
§
VS.
§ CIVIL ACTION NO. 2:15-CV-73
§
ABOUT TYME TRANSPORT, INC., et al, §
§
Defendants.
§
ORDER
Plaintiffs Alexandro and Norma Puga (the Pugas) seek to recover damages for
personal injuries from Defendant RCX Solutions, Inc. (RCX), alleging that RCX was the
statutory employer of Ronald Brown (Brown), the driver of the tractor-trailer rig that
struck the vehicle driven by Alexandro Puga.

RCX previously sought summary

judgment that it could not be liable because it was not Brown’s employer by contract or
by common law. D.E. 65. The Court observed that Plaintiffs had abandoned any claim
of contractual or common law employment and had adopted, instead, a statutory
employment argument. Because that theory had not been pled, the Court granted leave to
the Pugas to amend their complaint and assert that theory.
Now before the Court is RCX’s second motion for summary judgment (D.E. 91),
again asserting that it has no employer-based responsibility for Brown’s actions. In
particular, RCX argues that: (1) as a matter of law, there was no lease agreement to
support a finding that RCX was Brown’s statutory employer; (2) the purposes of the
Motor Carrier Act were satisfied by About Tyme’s status as carrier, with the requisite
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insurance coverage, and there should be no multiple-employer theory; (3) there is no
evidence of proximate cause to support any theory of RCX engaging in independent
negligence that caused Plaintiffs’ damages; and (4) there is no evidence of gross
negligence or malice. The Pugas have responded (D.E. 94), and RCX has replied (D.E.
97). For the reasons set out below, the motion is GRANTED IN PART and DENIED IN
PART.
FACTS
The facts briefed by the parties have not changed significantly since the previous
summary judgment motion. See Order, D.E. 77. In sum, Sunset Transportation brokered
the transport of a shipment for L’Oreal USA, placing it with RCX. RCX expected to
fulfill the contract by using a leased driver.

RCX’s original leased driver had an

equipment failure and could not handle the shipment. So RCX, without involving Sunset
Transportation, L’Oreal USA, or any other entity, called in Ronald Brown, who was coowner of About Tyme Transport, Inc. and its only driver. Brown agreed with RCX to
transport the shipment, but there is no documentation of the terms of that arrangement.
There is no evidence of a written lease and RCX denies that there was an oral lease.
It appears that Brown did not use RCX’s placard on his tractor, but rather
continued to drive with About Tyme’s placard. RCX now claims to have acted as broker
for the shipment, assigning it to About Tyme pursuant to a Carrier Agreement (D.E. 913). However, it is undisputed that RCX did not have Department of Transportation
authority to act as a broker at the time of this shipment. This argument of RCX-as-broker
also runs contrary to the Bill of Lading (D.E. 94-2), which allowed Brown to pick up the
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cargo that had been loaded into RCX’s leased trailer.

The Bill of Lading lists

“Sunset/RCX” as the carrier.
As documented in the Texas Peace Officer’s Crash Report, during the transport of
the L’Oreal shipment, Brown was driving at an unsafe speed in wet conditions,
hydroplaned, crossed the median, collided with Alexandro Puga’s vehicle, jackknifed,
and caused both vehicles to catch on fire. D.E. 94-1, p. 2. There is also some evidence
that Brown was talking on his cell phone at the time of the accident. Brown was killed
and About Tyme’s tractor burned in the ensuing fire. Puga was injured.
The Pugas designated Roger Allen as their expert on motor carrier issues and they
have attached his report to their response. D.E. 94-2, pp. 32-55. RCX did not object to
the consideration of Allen’s opinions in connection with the summary judgment
proceedings and, in fact, cited to them in support of some of RCX’s arguments.
However, Allen’s opinions are subject to a separate motion filed by RCX to limit or
exclude his testimony. D.E. 88. Without adjudicating the motion to exclude, the Court
finds that Allen’s opinions are not necessary to the disposition of this motion and are thus
disregarded at this time.
DISCUSSION
A. Statutory Employer Status Does Not Require Proof of “Lease”.
RCX contends that, as a matter of law, it cannot be the statutory employer of
Brown and it thus incurred no liability for his negligence. In setting up this argument,
RCX relies heavily on Crocker v. Morales-Santana, 854 N.W.2d 663, 668-69 (N.D.
2014), which describes the reasons for the creation of the statutory employer relationship
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and uses the term “lease” as the standard scenario under which vicarious liability for a
driver’s negligence is extended to a carrier. However, nothing in Crocker indicates that
an arrangement short of a lease is insufficient to apply statutory employer liability. That
issue was not presented there.
In fact, in refusing to extend statutory employer status to a broker, the Crocker
opinion states that the operative facts are—with respect to the specific transaction at
issue—one party, in fact, acting as a carrier and the other acting as driver for the
shipment. Id. at 671. As Crocker explains, the statutory employer relationship was
created to put an end to arrangements by which carriers leased equipment owned by
drivers or their associated business entities and called the drivers independent contractors
or owner-operators with their own motor carrier authority in order to escape liability for
incidents arising from the drivers’ negligence. Id. at 670. Now—whether the drivers are
called direct employees, independent contractors, or owner-operators—if the carrier hires
them to transport a shipment, they are the carrier’s statutory employees and the carrier
has statutory control over the equipment and the driver to support vicarious liability.
In this respect, Crocker is entirely consistent with the plain language of the statute,
which states:
(a) General authority of Secretary.—The Secretary
may require a motor carrier providing transportation subject
to jurisdiction under subchapter I of chapter 135 that uses
motor vehicles not owned by it to transport property under an
arrangement with another party to—
(1)

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make the arrangement in writing signed by the parties
specifying its duration and the compensation to be paid
by the motor carrier;

(2)

carry a copy of the arrangement in each motor vehicle
to which it applies during the period the arrangement is
in effect;

(3)

inspect the motor vehicles and obtain liability and
cargo insurance on them; and

(4)

have control of and be responsible for operating those
motor vehicles in compliance with requirements
prescribed by the Secretary on safety of operations and
equipment, and with other applicable law as if the
motor vehicles were owned by the motor carrier.

49 U.S.C. § 14102(a) (emphasis added).1
Plaintiffs have at least raised disputed issues of material fact supporting a finding
that they met the qualifying conditions for applying the statutory employer requirements.
There is evidence that RCX, acting as a motor carrier, used the tractor owned by About
Tyme to transport property under an arrangement with Brown. In fact, the only time that
the statute includes the term “lease” is in the heading. The body of the statute refers to
the “arrangements,” rather than a “lease.”

The implication is that the necessary

relationship exists, whether or not it is termed a “lease.” It is the fact of “use” that
triggers the vicarious liability imposed by the Motor Carrier Act.
Once the Pugas satisfy this threshold requirement—use—the statute, set out
above, goes on to prescribe four categorical requirements that accompany that carrier’s
use, in order to make it lawful. While the first and second requirements mandate the
carrier to reduce the arrangement to writing and have that writing accompany the vehicle,
1

Plaintiffs cite 49 U.S.C. § 11107 and 49 C.F.R. § 1057 as the controlling statute and regulation for statutory
employer status, as set out in Zamalloa v. Hart, 31 F.3d 911, 913 (9th Cir. 1994). They further discuss the Interstate
Commerce Commission (ICC) as the enforcing body. D.E. 94, p. 8. However, in 1995, the ICC was abolished and
the statutes and regulations were reorganized and renumbered to be enforced by the Department of Transportation.
ICC Termination Act of 1995, PL 104–88, 109 Stat 803. Plaintiffs reference the correct statute and regulations in
their pleading. D.E. 78, p. 5.

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those requirements are separate from, and in addition to, the imposition of statutory
liability in the third and fourth requirements. Each of the four categorical requirements
are set out with equal dignity. Thus the duties to inspect and insure the vehicles and to
control and be responsible for their operation exist whether or not the lease is written and
carried with the vehicles.
The motor carrier regulations do not mandate a different result. While RCX
claims that the lease requirement for statutory employment status appears in 49 C.F.R.
§§ 376.11 and 376.12, those regulations, like the statute, state only the conditions upon
which the carrier may lawfully proceed with its use of equipment it does not own. 2 It is
required to enter into a lease for the equipment, setting out specific terms. Failure to do
so does not exonerate it from statutory employer liability. Rather, the lease requirement
has only the potential of placing the carrier out of compliance with the law.
The Court concludes that any requirement of a lease is a consequence of triggering
the statute, not the means for triggering the statute. Therefore, no lease—written or
oral—is required prior to imposing statutory liability on RCX as an employer.
Consequently, the Court DENIES IN PART RCX’s request for summary judgment based
on its argument that there is no evidence of a lease.
B. There May Be Two Employers
RCX argues that the Pugas should not be permitted to assign the vicarious liability
of an employer to RCX because that liability has already been successfully assigned to

2

“[T]he authorized carrier may perform authorized transportation in equipment it does not own only under the
following conditions . . . .” 49 C.F.R. § 376.11.

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About Tyme.

Previously, the Pugas had sued About Tyme as Brown’s employer,

including alternative pleadings that Xtra Lease, LLC and RCX were also Brown’s
employers—jointly or alternatively. D.E. 1-3, 27. Alternative and inconsistent pleadings
are permissible. Fed. R. Civ. P. 8(d). And the Pugas’s current claims against RCX are
consistent with its current pleading. D.E. 78. The Court rejects RCX’s argument that the
Pugas’s statutory employer theory must fail because it is inconsistent with their
pleadings.
RCX goes on to state that About Tyme had more than the minimum insurance
coverage limits required for motor carriers, which policy limits were paid to the Pugas to
settle their claim against About Tyme. Thus, RCX argues, the purpose behind the
statutory employer provision has been served because the Pugas were able to recover for
their injuries from About Tyme as a financially responsible defendant. RCX appears to
assert that the Motor Carrier Act is interested in supplying only one financially
responsible party; Brown needed only one employer and that employer was About Tyme.
The first flaw in this argument is that RCX seeks to treat as res judicata a matter
that was settled out of court. A compromise and settlement between parties does not
involve court action, court approval, a court decision, or a final judgment. Thus any
attempt to use the About Tyme settlement as a bar to assigning employer liability to RCX
is rejected.
Second, RCX has not cited any authority for the concept that an injured party is
limited to one recovery from a single financially responsible party. If RCX is found to be
“an” employer or “the” employer, the only significance of the About Tyme settlement is
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in applying the one satisfaction rule. And that issue can only be determined on the basis
of the damages incurred—a matter not addressed by the summary judgment motion.
Cases have acknowledged that a driver may have more than one employer, subject
to joint and several liability consistent with state law. See generally, Zamalloa, supra at
916; Simmons v. King, 478 F.2d 857, 867 (5th Cir. 1973). RCX’s attempt to distinguish
Zamalloa is unpersuasive. While the Zamalloa court considered the driver and the carrier
to have established an oral lease, that lease was evidenced by the driver setting out to
pick up the load prior to executing any written lease. Here, Brown had picked up the
load at RCX’s direction. While there may be no evidence that the parties had expressly
agreed to execute a written lease, it is clear that RCX, if found to be acting as a carrier in
this transaction, was using Brown and his equipment. In that event, the law imposed
upon RCX an obligation to execute a written lease.
Zamalloa has demonstrated that a carrier’s statutory employer liability begins
when the driver responds to the carrier’s direction. And that liability persists, despite
another carrier having contractual employer liability.

Furthermore, RCX does not

attempt to distinguish the Simmons v. King decision. As the Fifth Circuit held, the
liability of one employer does not insulate another employer from liability. Simmons,
supra at 867.
Thus it makes no difference to RCX’s liability that the Pugas alleged that About
Tyme was liable as Brown’s employer and About Tyme’s insurance carrier paid policy
proceeds in excess of the minimum statutory requirements. The Court DENIES IN

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PART RCX’s motion for summary judgment that About Tyme’s settlement insulated it
from liability.
C. There is No Evidence of Proximate Cause from Independent Negligence.
RCX argues that it had no duty to the Pugas to support a finding of individual or
vicarious employer-based liability. As set out above, the Court rejects that proposition,
holding that there is a disputed issue of material fact as to whether RCX was a carrier and
was Brown’s statutory employer, a status that carries with it the duties imposed by law
and discussed by the parties. The Court thus holds that the Pugas are entitled to proceed
on their claims that RCX is vicariously liable for Brown’s negligence. The scope of
RCX’s summary judgment motion does not encompass any challenge to Brown’s
liability, which could extend to RCX as Brown’s statutory employer, given the necessary
fact findings.
This does not hold true, however, with respect to allegations of RCX’s
independent negligence.

Again, the Court rejects RCX’s argument that it had no

employer-based duties related to this incident. And the Pugas have provided evidence of
breaches of RCX’s duties as employer, as RCX has freely admitted that it did nothing to
investigate, qualify, test, train, or supervise Brown. The problem with respect to this
category of issues is that the Pugas have not supplied evidence of proximate cause.
In response to the summary judgment motion, the Pugas refer the Court to part IV
of their Response (D.E. 94) for evidence of RCX’s individual liability. But nothing in
that factual recitation addresses whether or how RCX’s alleged failure to meet its duties
as employer foreseeably made the incident more likely or more damaging. Even if the
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Court were to refer to Allen’s expert report (D.E. 94-2), which is subject to a motion to
exclude, the Court finds it to be replete with evidence of duty and breach, but devoid of
evidence of proximate cause. The only reference is global and conclusory: “In my
opinion, the matters contained in this report and the negligence of About Tyme, RCX,
and Mr. Brown led to and caused the collision on January 9, 2015.” D.E. 94-2, p. 55.
Without evidence that investigating Brown or testing him would have shown
Brown to be an unsafe driver, for instance, there is no proximate cause.

Without

evidence of an equipment defect that would have been revealed and repaired by proper
inspection and maintenance, there is no proximate cause. The Pugas have offered no
evidence that, had RCX satisfied its duties, the Pugas would not have been injured—
RCX would not have hired Brown, it would not have assigned this particular job to
Brown, Brown would have driven in a different manner, or the equipment would have
functioned differently to avoid or mitigate the effect of the collision.

Conclusory

allegations to that effect are not sufficient to withstand a no-evidence summary judgment
motion. Fed. R. Civ. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
Because the Pugas have not supplied evidence to support a finding of proximate
cause related to RCX’s independent duties as employer, the Court GRANTS IN PART
the summary judgment motion and DISMISSES the Pugas’s claims against RCX for
independent negligence, as stated in parts V(B) and V(C) of their second amended
complaint (D.E. 78).

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D. The Claim for Punitive or Exemplary Damages Fails.
Last, RCX challenges the Pugas’s claims for gross negligence or malice. The
Pugas’s response is limited to arguments regarding RCX’s independent gross negligence
or malice, arising from its failure to address cell phone usage with Brown. As previously
noted, without evidence of proximate cause, the Pugas cannot maintain any of their
claims based upon RCX’s independent negligence. Without negligence, there can be no
assessment of gross negligence or malice. “Recovery of punitive damages requires a
finding of an independent tort with accompanying actual damages.” Fed. Exp. Corp. v.
Dutschmann, 846 S.W.2d 282, 284 (Tex. 1993).
So the only remaining question—the one RCX briefed—is whether RCX, as
statutory employer, may be held vicariously liable for Brown’s alleged gross negligence
or malice. Under Texas law, applicable when this Court sits in diversity jurisdiction:3
Punitive damages can properly be awarded against a master
or other principal because of an act by an agent if, but only if,
(a)
(b)

the agent was unfit and the principal was reckless in
employing him, or

(c)

the agent was employed in a managerial capacity and
was acting in the scope of employment, or

(d)

3

the principal authorized the doing and the manner of
the act, or

the employer or a manager of the employer ratified or
approved the act.

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).

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Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 391 (Tex. 1997) (quoting and
acknowledging Texas’ adoption of Restatement of Torts § 909 (1939)). See also, King v.
McGuff, 234 S.W.2d 403, 405 (Tex. 1950).
The Pugas’s second amended complaint (D.E. 78) and response (D.E. 94) lack
allegations that RCX authorized or ratified any act of Brown that would constitute gross
negligence or malice.

Neither have the Pugas offered evidence of authorization or

ratification, eliminating from consideration bases (a) and (d). Likewise, the Pugas have
offered nothing in allegations or evidence that Brown was employed in a managerial
capacity, eliminating basis (c).

Thus the only potential avenue for assessment of

vicarious liability for punitive damages against RCX for Brown’s conduct is the
allegation that RCX was negligent in hiring Brown. The Court would have to interpret
this allegation as including the complaint that Brown was unfit and RCX was not just
negligent, but reckless, in employing him—basis (b).
Even if the Court were to make this stretch with respect to the pleading, and even
if the Court were to interpret RCX’s failure to take statutory precautions, such as
investigating and testing Brown, as equivalent to recklessness, the question remains
whether Brown was unfit to act as a driver. As the Court found with respect to the claims
of independent negligence against RCX, the Pugas have not supplied evidence to raise a
disputed issue of material fact that Brown was unfit as a driver when RCX engaged his
services.
The Court GRANTS IN PART the motion for summary judgment and
DISMISSES the Pugas’s claims for punitive or exemplary damages.
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CONCLUSION
For the reasons set out above, RCX’s motion for summary judgment (D.E. 91) is
DENIED IN PART with respect to RCX’s claim that it could not be a statutory employer.
The motion is GRANTED IN PART, dismissing the Pugas’s claims of RCX’s
independent negligence and any claim that RCX is independently or vicariously liable for
punitive or exemplary damages.
ORDERED this 3rd day of January, 2017.
___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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