Moran PERRY v. ASPHALT & CONCRETE SERVICES, INC.
No. 27, Sept. Term, 2015.
Court of Appeals of Maryland.
March 28, 2016.
Reconsideration Denied April 21, 2016.
133 A.3d 1143
Imoh E. Akpan (David A. Skomba, Ralph L. Arnsdorf, Franklin & Prokopik, Baltimore), on brief, for Respondent.
Argued before: BARBERA, C.J., BATTAGLIA, GREENE, ADKINS, MCDONALD, WATTS, and GLENN T. HARRELL, JR. (Retired, Specially Assigned), JJ.
GREENE, J.
In the instant case we are asked to address whether evidence of insurance or lack of insurance is admissible to establish a negligent hiring claim. At the core of this case is whether the admission of this evidence likely influenced the jury‘s determination of liability for Perry‘s injuries. Petitioner, Moran Perry (“Perry“) filed suit against Respondent, Asphalt & Concrete Services, Inc. (“ACS“), Higher Power Trucking, LLC (“Higher Power“) and William Johnson, II (“Johnson“) for injuries he suffered when he was struck by a dump truck owned by Higher Power and operated by Johnson. The Circuit Court for Prince George‘s County allowed into evidence witness testimony regarding Johnson‘s lack of liability insurance coverage at the time of the accident. We conclude that this was legal error. Evidence of lack of insurance coverage had no causal relationship to the injuries suffered by Perry and was thus irrelevant to both the claims of negligent hiring and ordinary negligence.
FACTUAL AND PROCEDURAL BACKGROUND
On April 28, 2009, Perry was crossing the intersection of Opossumtown Pike and Thomas Johnson Drive in Frederick, Maryland when he was struck by a 2007 Kenworth dump truck operated by Johnson, and owned by Higher Power. As a result of the accident, Perry suffered head trauma and rib fractures. ACS had hired Higher Power to haul asphalt and stone to St. John‘s Regional Catholic Church, where ACS was paving a children‘s play pad. A preliminary investigation by Officer Joseph Palkovic revealed that neither Johnson nor Higher Power had liability insurance covering the truck because of a lapse in payment on the insurance policy.1
On April 11, 2012, Perry filed his initial complaint in the Circuit Court for Prince George‘s County. Perry alleged negligence against Higher Power, Johnson, and ACS.2 He also alleged that ACS was negligent in its hiring and supervision of Higher Power. After the completion of discovery, ACS filed a Motion for Summary Judgment on August 30, 2013 contending there was no dispute that Johnson and ACS did not have an employer-employee
On September 27, 2013, Perry filed a “Motion for Leave to File First Amended Complaint” to reflect that Higher Power “was not in good standing according to the publicly available
records of the Maryland State Department of Assessments and Taxation at the time of the accident.” Thus, Perry sought to dismiss Higher Power as a separately named defendant because Higher Power “was simply a trade name under which [Johnson] was unlawfully operating his dump truck business.” The proposed first amended complaint alleged the same counts of negligence and negligent hiring but substituted Johnson for Higher Power in the negligent hiring count. The court granted Perry‘s motion.4 The first amended complaint contained the following assertions:
COUNT I (Negligence—All Defendants)
* * *
11. Johnson, as the operator of the truck which struck Perry, at all times material to this Complaint, was the agent, servant and/or employee of ACS, acting at the direction and control of ACS and for the financial benefit of ACS. As such, ACS and Johnson owed duties of care to Perry and members of the public at large to lawfully operate the truck in a safe and reasonable manner.
12. On or about April 28, 2009, ACS and Johnson breached the duties of care owed to Perry by (1) failing to operate the vehicle in a reasonably safe manner; (2) failing to travel at a safe speed; (3) failing to stop or avoid Perry while he was a pedestrian; (4) operating the vehicle in violation of Maryland law regarding registration, licensure and insurance; and (5) being otherwise careless while operating his vehicle.
13. As a result of ACS‘s and Johnson‘s breaches of the duties of care owed to Perry, he sustained substantial damages.
COUNT II (Negligent Hire and Supervision—ACS)
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15. At all times material to this Complaint, ACS hired Johnson to act for its financial benefit and Johnson was subject to ACS‘s direction and control. As such, ACS owed Perry and members of the public at large [a duty] to take reasonable measures, both at the time it hired Johnson and throughout its employment of Johnson, to ensure that Johnson conducted himself in [a] lawful and prudent manner while operating vehicles on behalf of ACS. Those duties include, but are not limited to, ACS‘s duty to make sure that Johnson was a properly licensed driver, operating a lawfully registered and insured vehicle.
16. On or about April 28, 2009, ACS breached the duties of care it owed to Perry by employing Johnson, who was not a properly licensed driver and was unlawfully operating an unregistered and uninsured dump truck which struck Perry.
17. As a result of ACS‘s breaches of the duties of care owed to Perry, he sustained substantial damages.
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Trial began on October 7, 2013. Perry was the first witness. He testified about the extent of his injuries, the effect the injuries had on his everyday activities, and his medical treatment following the accident. After Perry‘s testimony, in a conversation with the court that occurred outside the presence of the jury, ACS repeated the argument it made in its September 20, 2013 motion in limine that evidence of lack of insurance through the testimony of Officer Joseph Palkovic should not be admitted:
[THE COURT]: Well, one of the problems I have had in thinking this through is this. I think part of what you said is a hundred percent correct because really before the jury can reach a verdict on the negligent hiring they first have to reach a verdict on the negligence. If the jury finds [Johnson] was not negligent in the operation of that vehicle then obviously ... how could there be a negligent hiring. But
the two are being tried together.... So that‘s the issue I have is that I think it‘s relevant to the hiring count, the negligent hiring count, but not particularly to the negligence.
[DEFENSE COUNSEL]: May I? Your Honor, you‘re way ahead. The issue first is whether or not he‘s our employee or an independent contractor.
[THE COURT]: Well, yeah, that‘s of course the big issue.
[DEFENSE COUNSEL]: That‘s the prime—yeah, that‘s the huge issue. And if we get in evidence through a police officer that says this guy was uninsured, the bell‘s rung, the prejudice is done, and we‘ve got a mistrial on our hands....
[THE COURT]: Well, no you don‘t get—you wouldn‘t get a mistrial granted because that‘s what I was just about to say. I mean there might be a curative instruction right now.... I mean it‘s only admissible against [ACS]—if they find that Johnson, II was an agent or an employee, only then is it admissible for the negligent hiring.
[DEFENSE COUNSEL]: Right. But there‘s no basis—there‘s no foundation for that to be introduced at this point.
[THE COURT]: What do you mean?
[DEFENSE COUNSEL]: There‘s no evidence that he was our employee. So the jury‘s going to hear it and assume that—you know, it was introduced that he‘s our driver and—
[THE COURT]: Well, I assume they‘ll tie it up, that there will be evidence that it (sic) was the employee. [DEFENSE COUNSEL]: I mean—Your Honor?
[THE COURT]: I understand you say he‘s not, but their evidence—because they say he is.... I mean the rule or the principle exists to prevent the jury from knowing that there is insurance on the theory that it would encourage—so what is the point of not having insurance.... [Perry is] trying to get in the opposite[,] that there was no insurance.
[DEFENSE COUNSEL]: Right. In the effort to show that we are the insured party.... Which is totally inadmis-
sible ... the implication is that if [Johnson] doesn‘t that we do.
....
[THE COURT]: Well, no that‘s ... [t]o say someone didn‘t have it doesn‘t mean to say everyone else has it.... That‘s not a logical inference.
[DEFENSE COUNSEL]: In this case he [Johnson] actually did have a policy of insurance. That‘s I guess the big issue. There was a policy of insurance. He did have one through Progressive, and it covered this accident. It just simply lapsed for nonpayment a month before. What does the fact that he—the insurance lapsed for nonpayment have to do with any issue in this case?
[THE COURT]: When was he hired to do this?
[PLAINTIFF‘S COUNSEL]: This particular job? Two weeks before April 28th. They had an ongoing relationship.
[THE COURT]: So a check would have revealed the insurance had lapsed.
[DEFENSE COUNSEL]: Wait a minute. How would a check reveal that his insurance had lapsed? To us? I can‘t check your insurance to find out whether or not it‘s valid.
[THE COURT]: Well, you can ask me. Show me your insurance.
[DEFENSE COUNSEL]: And he did. He gave us the policy and said it was valid.
...
[PLAINTIFF‘S COUNSEL]: Well, no, he never provided any proof of insurance at all until after the accident. And that‘s the testimony from the ACS employees. And that‘s what ACS‘s file indicates. And also, what we‘re doing here is ... establishing it right through the ACS employees’ testimony that, look, hey, when we hire a driver we check two things: he‘s got a valid license and he‘s got insurance [] And what I‘m trying to demonstrate is they violated their own policies when they hired this guy because he didn‘t produce any proof of insurance....
The court decided that Perry should call ACS‘s employees to establish a foundation for an employment relationship before
it would rule on the admissibility of the evidence of lack of insurance “[b]ecause there‘s too many factual disputes here.”
Burt Maggio (“Maggio“), President of ACS at the time of the accident, was next to testify. Perry produced a fax cover sheet dated April 3, 2009 and asked Maggio to read a message on the sheet. Upon ACS‘s objection, the parties approached the bench and the following colloquy ensued:
[DEFENSE COUNSEL]: It was identified. I understand, but it wasn‘t moved into evidence, so I didn‘t want him reading from it. But the more important thing is, the issue as I understand what they‘re trying to prove is the fact that Higher Power didn‘t have liability insurance. This demonstrates that there‘s (unintelligible) to produce a W-9. And a W-9 is a certificate of liability insurance.
[THE COURT]: All right. I‘m missing something.
[DEFENSE COUNSEL]: There‘s no duty to require that of an independent contractor. [THE COURT]: Well, the issue is—the date here is April 3rd?
[DEFENSE COUNSEL]: Right.
[THE COURT]: When was the accident?
[PLAINTIFF‘S COUNSEL]: April 28th. And this was the second request. The original request was on March 6th, and then we can show all the job tickets of them working with this (unintelligible).
....
[THE COURT]: Why were they requesting this?
[DEFENSE COUNSEL]: That was part of their policy to request it ... [w]hether we request it or not, it is a requirement in Maryland—it‘s the law that [a] trucking company has, one, liability insurance, and two, uses licensed drivers. We‘re not required to enforce that law.
[THE COURT]: All right. I‘m going to overrule your objection.
Maggio read the message on the fax cover sheet to the jury in open court: “Hi. On March 11th, I sent you a request for a revised W-9 and certificate of liability insurance. I still have
not received either of these from you. Please send them to us ASAP. Thanks, Samantha.”5 Maggio stated that prior to using a truck operator on a project, ACS would request the truck operator provide, among other things, a certificate of liability insurance because the State of Maryland requires that vehicles be insured and “to make sure that they [the truck operators] had insurance.” Maggio was then asked to read into the record some handwritten notes contained in the April 3 fax cover sheet: “Higher Power. Still have not received anything from them. Second request. I called and LM [left message] too.” He further stated that ACS required proof of insurance because some of their customers required them to show proof of insurance.6
Next, Maggio testified to the nature of ACS‘s dealings with Higher Power. Based on how many trucks it needed for a project and how many hours it needed the trucks to operate, an ACS dispatcher would call various hauling companies to determine if they were available. ACS compensated Higher Power on an hourly basis. According to Maggio, a truck operator‘s “clock starts” when he or she picks up the first load from the materials supplier and heads to the job site. He pointed out that the only instruction ACS would give to truck operators was where to dump the material after they arrived at the job site. A truck operator would be free to go if the load dropped off satisfied the requirements of a project, otherwise, an ACS dispatcher or superintendent would ask them to go back to the supplier to pick up another load. Further, ACS does not dictate the route a truck operator uses to get to a site. Truck operators had the discretion to go to McDonald‘s for lunch, take a cigarette break, or do another job prior to completing ACS‘s job. Maggio also stated that
ACS reserved the right to dock a truck operator‘s hourly pay if it felt the operator took too long to complete a job.7
After Maggio‘s testimony, Perry made a request to call Officer Joseph Palkovic as the next witness and the following exchange occurred outside the presence of the jury:
[DEFENSE COUNSEL]: I mean, Your Honor, we still have the same issue with the insurance....
[THE COURT]: Well, you don‘t have the same foundation issue.
[DEFENSE COUNSEL]: In terms of employment? Is that what—
[THE COURT]: Well, I mean, you don‘t think there‘s enough information to generate a genuine jury issue as to that [the existence of an employment relationship]?
[DEFENSE COUNSEL]: No, Your Honor. I do disagree that there is enough information.... Obviously we noted our objection[,] so that‘s obviously going to be subject to your ruling [ ].
The court, finding that there was now enough evidence to establish a foundation as to ACS and Johnson‘s employment relationship, and over ACS‘s objection, granted Perry‘s request. The jury returned to the courtroom.
Officer Palkovic testified that he responded to the scene of the accident on April 28, 2009, where Johnson identified
himself as the driver who struck the person in the intersection. He stated that Johnson produced evidence of insurance. Over ACS‘s objection, the court allowed Officer Palkovic to testify that a further investigation revealed that the insurance policy on the truck Johnson drove was not valid due to a lapse in payment. On cross-examination, Officer Palkovic testified that he determined Higher Power was the owner of the truck.
Next, Perry called Blake Wood, project manager for ACS at the time of the accident. Mr. Wood stated that he requested Johnson‘s certificate of insurance and driver‘s license, and expected that the office manager would notify him if the paperwork was not received. He elaborated that he would not have hired Johnson without a certificate of insurance because it would be illegal and insurance is required.
...
Prior to resting his case, Perry called additional witnesses to testify on the subject of insurance. First, he called Samantha Mentzer, an ACS employee who worked in the front office at the time of the accident. She testified that her handwriting on the fax cover sheet introduced during Maggio‘s testimony read, “Higher Power, still have not received anything from them. Second request. I called and left message too.” Second, Perry called Diane Moses, a claims specialist with Progressive Insurance Company.8 The court overruled ACS‘s objections, and allowed Moses to testify that Higher Power
After Perry rested his case and while the jury was excused from the courtroom, ACS moved that Perry‘s requested jury instruction regarding the requirement of liability insurance9 be stricken. ACS‘s attorney explained that “we shouldn‘t be even discussing liability insurance because it‘s not relevant to the issue of whether or not ... Mr. Johnson was negligent.” The court then called the jury back into the courtroom to hear closing arguments. The court gave the jury, in pertinent part, the following instructions regarding the law, effectively overruling ACS‘s request to strike Perry‘s proposed jury instruction:
...
The violation of a statute which is a cause of plaintiff‘s injuries or damages is evidence of negligence. I‘m going to read you some motor vehicle statutes that if you find [they] were violated and the violation was the cause of the injuries, it is evidence of negligence.... Motor vehicles must be covered by a liability insurance policy which provides for the applicable amount of coverage required by Maryland law. A person who knows or has reason to know that a motor vehicle is not covered by a liability insurance policy as required may not drive the vehicle, or if he is the owner of the vehicle knowingly permit another person to drive it.
All right, negligence is deemed something that a person using reasonable care would not do, or not doing something that a person using reasonable care would do. Reasonable care means that caution (indiscernible) skill a reasonable person would use under similar circumstances.
An employer has a duty not to employ any person who poses an unreasonable risk to other persons who would foreseeably come into contact with that employee because of the employment relationship.
An employer who breaches this duty is responsible for any foreseeable injuries or damages caused by the conduct or actions of any such employee.
For the plaintiff to recover damages, the defendant‘s negligence must be a cause of the plaintiff‘s injury.
* * *
All right, in the event that you find for the plaintiff on the issue of liability, then you must go on to consider the question of damages.
(emphasis added). The jury returned a verdict in favor of Perry. The verdict sheet indicated that the jury found: (1) Johnson was the agent, servant, and/or employee of ACS; (2) ACS was negligent in its hiring of Johnson; (3) Johnson was negligent in failing to properly operate his vehicle on April 28, 2009, and that his negligence was a proximate cause of the injuries to Perry; and (4) Perry was not contributorily negligent. It awarded Perry $29,500 for past medical expenses and $500,000 for pain and suffering, physical
On October 22, 2013, ACS filed a “Motion for Judgment Notwithstanding the Verdict or, in the alternative, a Motion for New Trial.” The trial court denied this motion on November 7, 2013. ACS appealed to the Court of Special Appeals, which, in a reported opinion, reversed the judgment entered in favor of Perry.10 The intermediate appellate court concluded that “[b]ecause there was no causal link shown between Mr. Johnson‘s lack of insurance and the accident, [ ] lack of insurance was not relevant to the claim of negligent hiring,
- Did the [C]ircuit [C]ourt err in admitting evidence of Mr. Johnson‘s suspended driver‘s license, expired vehicle registration, negative driving record, and lack of liability insurance?
- Did the [C]ircuit [C]ourt err in denying ACS‘s motion to dismiss Mr. Perry‘s initial complaint?
- Did the [C]ircuit [C]ourt abuse its discretion in permitting Mr. Perry to amend his initial complaint after the statute of limitations had expired?
- Did the court err in denying ACS‘s motions for judgment?
Asphalt & Concrete Servs., Inc. v. Perry, 221 Md.App. at 241, 108 A.3d at 562.
and the court erred in admitting it.” Asphalt & Concrete Servs., Inc. v. Perry, 221 Md.App. 235, 266, 108 A.3d 558, 576 (2015).
On April 17, 2015, this Court granted a writ of certiorari, Perry v. Asphalt & Concrete Servs., 442 Md. 515, 113 A.3d 624 (2015), to answer the following question:
Did the trial court commit an abuse of discretion by admitting the evidence of insurance?
As explained below, we shall hold that, for the purposes of the instant case, evidence of lack of insurance coverage was inadmissible because it was not the proximate cause of the complaining party‘s injuries. Accordingly, we shall affirm the judgment of the Court of Special Appeals for the reasons explained in this opinion.
STANDARD OF REVIEW
Our standard of review on the admissibility of evidence depends on whether the “ruling under review was based on a discretionary weighing of relevance in relation to other factors or on a pure conclusion of law.” Parker v. State, 408 Md. 428, 437, 970 A.2d 320, 325 (2009) (quoting J.L. Matthews, Inc. v. Md.-Nat‘l Capital Park & Planning Comm‘n, 368 Md. 71, 92, 792 A.2d 288, 300 (2002)). Generally, “whether a particular item of evidence should be admitted or excluded is committed to the considerable and sound discretion of the trial court” and reviewed under an abuse of discretion standard. Ruffin Hotel Corp. of Md., Inc. v. Gasper, 418 Md. 594, 619, 17 A.3d 676, 691 (2011) (internal quotation marks omitted). However, we determine whether evidence is relevant as a matter of law. State v. Simms, 420 Md. 705, 725, 25 A.3d 144, 156 (2011). The de novo standard of review applies “[w]hen the trial judge‘s ruling involves a legal question.” Parker, 408 Md. at 437, 970 A.2d at 325. Although trial judges have wide discretion “in weighing relevancy in light of unfairness or efficiency considerations, trial judges do not have discretion to admit irrelevant evidence.” Simms, 420 Md. at 724, 25 A.3d at 155.
Even where there is error, this Court will not reverse a lower court‘s judgment for harmless error. Crane v. Dunn, 382 Md. 83, 91, 854 A.2d 1180, 1185 (2004). Rather, the complaining party must demonstrate that the error was prejudicial, or in other words, “the error was likely to have affected the verdict below.” Id.
DISCUSSION
Neither party disputes the trial court‘s ruling that the evidence of lack of insurance was not relevant to the claim of ordinary negligence. Perry claims that the evidence of Johnson‘s lack of insurance demonstrates it was more likely than not that ACS violated its duty to use reasonable care in hiring Johnson because it knew or should have known of Johnson‘s inability to lawfully operate a dump truck. In response, ACS contends that admission of this evidence is contrary to Maryland Rule 5-411 which prohibits the admission of evidence of insurance to prove fault or liability and is irrelevant to the claim of negligent hiring. We shall discuss the admissibility of evidence of insurance generally and as it pertains to a party‘s liability for negligent hiring.
Relevance of Liability Insurance Generally
Under
ness.”
Establishing Liability for Negligent Hiring
An important issue at trial was determining the relationship between Johnson and ACS: was Johnson (1) an agent, servant, and/or employee of ACS (i.e., in an employment relationship where ACS was the employer) or (2) an independent contractor? The type of relationship is significant, because it would impact any determination of liability. Under the doctrine of respondeat-superior, an employer is vicariously liable for the acts of its employee, within the scope of employment, even if the employer does not commit any
of an independent contractor: “[p]ersons who render service but retain control over the manner of doing it are not servants,” but independent contractors. Id. When one engages an independent contractor, one “is not responsible for incidental negligence while such agent is conducting the authorized transaction.” Gallagher‘s Estate v. Battle, 209 Md. 592, 602, 122 A.2d 93, 98 (1956). There are exceptions, however, to the general rule that one who hires an independent contractor is ordinarily not liable for that contractor‘s negligence. For example, an employer is liable for the acts of an independent contractor under the theory of negligent hiring if the harm is caused by “some quality in the contractor which made it negligent for the employer to entrust the work to him.” RESTATEMENT (SECOND) OF TORTS § 411 cmt. b (AM. LAW INST. 1965).
At trial, the jury found Johnson to be the agent, servant and/or employee of ACS. Therefore, even if Perry failed to prove the negligent hiring count, ACS was liable under the doctrine of respondeat-superior. The trial court found there was enough evidence presented for the jury to determine the type of employment relationship that existed between Johnson and ACS. As we will later discuss, it is likely that the admission of the evidence of lack of insurance impacted the jury‘s verdict on this issue and as a result, the determination of liability.
To determine whether evidence is relevant to a claim of negligent hiring, we must analyze the elements of the claim. For a cause of action based in negligence, such as negligent hiring, “a plaintiff must prove the existence of a duty owed by a defendant to him (or to a class of which he is a part), a breach of that duty, a legally cognizable causal relationship between breach of duty and the harm suffered, and damages.” Cramer v. Housing Opportunities Comm‘n of Montgomery Cty., 304 Md. 705, 712, 501 A.2d 35, 39 (1985). One is negligent if he or she breaches a duty he or she owes to another. “[T]hat negligence is actionable[, however,] only if it is a proximate cause of the damage.” Cramer, 304 Md. at 712-13, 501 A.2d at 39. Specifically, to establish liability in a negligent hiring claim, “the plaintiff must prove two links in the causal chain.” Cramer, 304 Md. at 713, 501 A.2d at 39. First, the plaintiff must show that the failure of an employer to undertake a reasonable inquiry resulted in the contractor‘s hiring. Id. Next, even “if a negligent hiring is shown, the plaintiff still must prove that the hiring was a proximate cause of the [plaintiff‘s] injury.” Id. As we look to the elements of the claim, we keep in mind that relevant evidence is “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.”
A. Negligent Hiring: Employer‘s Duty
Generally, an employer has a duty “to use reasonable care to select employees competent and fit for the work assigned to them and to refrain from retaining the services of an unfit employee”
Both Perry and the intermediate appellate court cite Puckrein v. ATI Transport, Inc. for the proposition that lack of liability insurance is relevant to the issue of whether ACS employed a competent person to work as a truck driver. 186 N.J. 563, 897 A.2d 1034 (2006). In Puckrein, the New Jersey Supreme Court concluded that evidence of a waste disposal company‘s failure to verify a truck company‘s insurance coverage was relevant to the truck driver‘s competence. Because New Jersey law requires every owner of a motor vehicle to maintain motor vehicle liability insurance coverage, insurance is “the sine qua non to the transport of goods on the roadways.” Puckrein, 897 A.2d at 1043. See
ACS employees appeared to agree that they were “not allowed to” have truck operators who did not produce insurance information “because of the nature of the work” they did. Accordingly, under the circumstances of this case, Mr. Johnson‘s lack of liability insurance was relevant to whether ACS employed a competent person.
Asphalt & Concrete Servs., Inc., 221 Md.App. at 260-61, 108 A.3d at 573. The Court of Special Appeals noted, however, that “[this] is not the end of the inquiry.” Asphalt & Concrete Servs., Inc., 221 Md.App. at 261, 108 A.3d at 573. “To be relevant to the claim of negligent hiring, the employer‘s negligence in hiring someone with no liability insurance must be the proximate cause of Mr. Perry‘s injuries.” Asphalt & Concrete Servs., Inc., 221 Md.App. at 261, 108 A.3d at 573-74. We agree.
Like New Jersey, Maryland requires vehicles to be covered by liability insurance.
B. Negligent Hiring: Causation
Next, we discuss the causation element of a negligent hiring claim. As the intermediate appellate court recognized, the negligent hiring must be the proximate cause of Perry‘s injury to be relevant to a negligent hiring claim. Asphalt & Concrete Servs., Inc., 221 Md.App. at 261, 108 A.3d at 573-74. Similarly, the crux of ACS‘s argument focuses on proximate cause. It argued that for an employer to be liable under a negligent hiring claim, the very quality that renders an employee “incompetent” must be the cause of the harm. Perry cites Snowhite v. State, Use of Tennant, 243 Md. 291, 221 A.2d 342 (1966) to support his contention that the evidence of Johnson‘s lack of insurance is admissible because it is “probative on the issue of whether ACS exercised due care in hiring Johnson to transport paving materials to its job site.” As previously discussed, we agree that the evidence of lack of insurance is relevant to the standard of care exercised by ACS but note that Perry‘s arguments do not address the element of proximate cause.
Proximate cause consists of “1) a cause in fact, and 2) a legally cognizable cause.” Pittway Corp. v. Collins, 409 Md. 218, 243, 973 A.2d 771, 786 (2009) (citation omitted). The “requirement that specific negligent conduct be a legally cognizable cause” involves a determination of whether it was foreseeable that the negligent act would cause the specific injury complained of in the case. Henley, 305 Md. at 333, 503 A.2d at 1340. Section 435(2) of the Restatement (Second) of Torts states that an “actor‘s conduct may be held not to be a legal cause of harm to another where after the event and looking back from the harm to the actor‘s negligent conduct, it appears to the court highly extraordinary that it should have brought about the harm.”
In Cramer v. Hous. Opportunities Comm‘n of Montgomery Cty., we held that evidence of the county housing commission‘s ready access to an employee‘s criminal and arrest records was admissible because the evidence was relevant to whether the commission was negligent as well as to the issue of causation. 304 Md. 705, 501 A.2d 35 (1985). The Housing Opportunities Commission of Montgomery County (“Housing Commission“) hired a building inspector despite the applicant‘s incomplete employment application, and without calling the applicant‘s listed references or conducting a criminal background check. At the time he was hired, the applicant had been charged with first degree burglary, sodomy, rape, and robbery. During a home inspection, the building inspector impermissibly learned that a particular residence, a townhouse rented from the Housing Commission, was occupied by a single mother and her two children. The building inspector later returned to the residence and raped the mother. We noted that “an employer may be guilty of negligence without incurring liability for the harm claimed.” Cramer, 304 Md. at 718, 501 A.2d at 41. We provided the following example:
An employer who hires an armed security guard without being possessed of any information concerning his fitness, and without conducting any investigation, is negligent. However, if it is a fact that the guard has an unblemished record and excellent reputation for
trustworthiness, and that no potentially disqualifying information would have been obtained through the conduct of an appropriate inquiry, the employer has not been guilty of a negligent hiring.
Id. (emphasis in original). In the example above, an employer, although negligent, will not be liable to a third party for harms later committed by the security guard because a rea-sonable inquiry of the applicant‘s fitness for the job at the time of hiring would not have provided the employer with knowledge of any adverse tendencies. Similarly, “if [the building inspector] had been negligently hired but had assaulted a tenant of the [Housing Commission] previously unknown to him, in a nearby shopping center and during off-duty hours, there would be no causal relationship between the hiring and the assault” because the hiring of the building inspector, though negligent, did not enable him to commit the wrongful act. Cramer, 304 Md. at 713, 501 A.2d at 39.
In Snowhite v. State, Use of Tennant, we concluded that the references to an employer‘s truck liability insurance policy did not constitute prejudicial error. 243 Md. 291, 221 A.2d 342 (1966). Clarence Henderson, employee of Harold Snowhite,13 was delivering fuel in Snowhite‘s truck when he collided with decedent. The accident and decedent‘s death were the result of Henderson‘s negligent driving and driving while intoxicated. Henderson began drinking heavily two years prior to the accident and had a series of moving violations. During any given workday, Henderson frequented a bar on the same street where Snowhite‘s office was located. Testimony indicated that Snowhite went to this bar and asked Henderson to make a delivery on an occasion when Henderson appeared intoxicated. Snowhite, 243 Md. at 299, 221 A.2d at 346. There, we identified three exceptions to the general rule of law prohibiting evidence that a defendant is insured against liability:
- Where the evidence is relevant to the cause of the accident or the liability of the defendant.
- Where the reference to insurance is made by the defendant or his witness, in which event the testimony is admissible and is subject to legitimate comment and argument.
- Where the evidence is relevant to an issue of which of two or more defendants was the employer of the operator of the vehicle involved.
Snowhite, 243 Md. at 302, 221 A.2d at 348 (citations omitted). At trial, Henderson testified to a statement made by Snowhite that if Henderson had additional accidents, Snowhite‘s company would no longer be able to retain its liability insurance. This Court concluded that this statement was admissible because it fell within the first exception to the general rule. Henderson‘s reference to insurance was in response to a question regarding Snowhite‘s knowledge of Henderson‘s driving record. Because Henderson‘s negligent driving and his driving while intoxicated were the very instrumentalities causing the accident, testimony about insurance was appropriate. Unlike Snowhite, in the case before us, lack of insurance coverage alone, without more, should not, and did not give ACS an indication of Johnson‘s abilities to operate a dump truck.
We hold that for evidence of insurance to be admissible in a negligent hiring claim, the evidence must also be relevant to the proximate cause of the
In contrast to Snowhite and Cramer, where it was determined that the employer knew or should have known about a “specific quality” of the independent contractor, and that quality was relevant to the cause of the plaintiff‘s injury, the alleged basis of the negligent hiring here, i.e., the lack of liability insurance coverage, was not the cause and effect of Perry‘s injury. Rather, this evidence may have been admissi-ble if Perry demonstrated that the evidence of lack of insurance was relevant to ACS‘s actual or constructive knowledge of a specific quality of Johnson‘s that later contributed to Perry‘s injuries. Johnson‘s lack of liability insurance coverage was irrelevant to the claim of negligent hiring because it was not relevant to the proximate cause of Perry‘s injuries, and did not fall within any exceptions to the general rule against admitting evidence of insurance.
Furthermore, the trial court‘s requirement that Perry establish a foundation of an employer-employee relationship prior to admitting evidence of lack of insurance did not address the element of proximate cause and was therefore, an improper basis for admitting the evidence. A court‘s “failure to consider the proper legal standard in reaching a decision constitutes an abuse of discretion.” Wilson-X v. Dep‘t of Human Res., 403 Md. 667, 675, 944 A.2d 509, 514 (2008) (citing Pasteur v. Skevofilax, 396 Md. 405, 433, 914 A.2d 113, 130 (2007)). The trial court disregarded its requirement that Perry establish a foundation when it allowed Perry to elicit testimony about notes on a fax sheet. These notes demonstrated that ACS had knowledge of Higher Power‘s failure to produce proof of insurance after two requests. Maggio‘s testimony regarding ACS‘s dealings with Higher Power/Johnson was germane to whether an employer-employee relationship existed. Over ACS‘s objection, however, the trial court allowed Maggio to read into the record notes on the fax cover sheet before Perry elicited testimony about the nature of ACS‘s dealings with Higher Power/Johnson.14 By allowing the evidence to be presented in a sequence that violated its own prerequisite, the court abused its discretion.
Prejudicial Effect of Admitting Inadmissible Evidence of Lack of Insurance
Even where evidence is wrongly admitted, under
Next, ACS contends that the admission of evidence of insurance was prejudicial because it, in violation of
lems that could arise from admitting the evidence of lack of insurance when it stated:
I think part of what you said is a hundred percent correct because really before the jury can reach a verdict on the negligent hiring they first have to reach a verdict on the negligence. If the jury finds [Johnson] was not negligent in the operation of that vehicle, then obviously .... how could there be a negligent hiring. But the two are being tried together.... So that‘s the issue I have is that I think it‘s relevant to the hiring count, the negligent hiring count, but not particularly to the negligence.
Despite this recognition, ACS notes that the trial court failed to give a curative instruction to the jury, an instruction, we note that all parties neglected to request timely. ACS further notes that the trial court failed to avoid prejudice by not taking action under Rules 2-50216 or 2-503(b).17
Concluding that the admission of the evidence that Johnson lacked insurance coverage was prejudicial, the Court of Special Appeals cited Derrick v. Rock, 218 Ark. 339, 236 S.W.2d 726, 729 (1951), where “the Supreme Court of Arkansas recognized that, when ‘there are two or more defendants it is improper to show that one of them is not protected by insurance, and the admission of this evidence was reversible error because the jurors[‘] minds likely were not indifferent to this fact in determining liability.‘” Asphalt & Concrete Servs., Inc., 221 Md.App. at 266, 108 A.3d at 577. The Court of Appeals of Georgia has similarly recognized that evidence of a defendant‘s liability insurance coverage “is not admissible in the trial of an action in tort, and it is the general rule that such evidence is not only irrelevant and immaterial but harmful and prejudicial.” McRee v. Atlanta Paper Co., 84 Ga.App. 181, 65 S.E.2d 832, 832 (1951). This Court has also discussed the prejudicial effect that the admission of irrelevant and immaterial evidence may have on a jury‘s determination of the issues in a case. In Balt. Belt R.R. Co. v. Sattler, 105 Md. 264, 270, 65 A. 752, 754 (1907), the Court concluded that in a cause of action for trespass, evidence of defendant Baltimore Belt Railroad Company‘s violation of certain ordinances is “not only wholly irrelevant and immaterial, but would tend to prejudice the defendants in the trial of the real issues involved.” It explained that violation of certain ordinances is evidence of breach of duty in negligence, a cause of action not raised in the pleadings. Id.
As described previously, in the present case, evidence of lack of insurance was irrelevant and immaterial to the claim of negligent hiring. Because references to Johnson‘s lack of insurance coverage were not stricken from the record, the admission of that evidence probably influenced the jury in its determination of liability, resulting in prejudice to ACS.
All parties and the trial court agreed that the evidence of lack of insurance was not admissible to establish the claim of ordinary negligence. The absence of an instruction to the jurors to disregard the evidence of lack of insurance and discount its relevance to the question of ACS‘s liability makes it highly probable that the jury considered this evidence in violation of
As to the negligent hiring claim, the court explained to the parties, but not the jury, that the evidence of insurance was limited to the purpose “of the negligent hiring and whether a reasonable hirer would have determined that and acted accordingly.” It further noted that “there might be a curative instruction right now” because the evidence was only admissible for the negligent hiring claim if the jury found “Johnson, II was an agent or an employee” of ACS. The court did not give this instruction or any other instruction to the jury to disregard the evidence of lack of insurance. Absence of such an instruction leaves a void in which the implication arises that the jury considered the evidence of lack of insurance to be18
relevant to the issues of duty, breach, causation, and damages. For reasons previously discussed, this was an inaccurate application of the law.
CONCLUSION
The evidence of lack of insurance was brought up repeatedly during trial. The testimony of Burt Maggio and Samantha Mentzer highlighted the fact that ACS hired Higher Power/Johnson despite Higher Power‘s failure to submit proof of insurance after two requests, in violation of ACS‘s internal policy. As a matter of law, ACS‘s apparent negligence in hiring Higher Power/Johnson to haul asphalt without verifying that Higher Power maintained liability insurance was not a proximate cause of Perry‘s injuries. Consequently, the court‘s admission of this evidence was an error. Because the determination of liability was a prime issue in the case and the jury was not instructed to disregard the evidence of lack of insurance in reaching its verdict, there is a reasonable probability that the jury considered the irrelevant evidence in finding ACS liable for Perry‘s injuries. As a result, we agree with the Court of Special Appeals and conclude that a new trial is warranted.
JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS IN THIS COURT AND THE COURT OF SPECIAL APPEALS TO BE PAID BY MORAN PERRY.