TERRY K. JONES аnd CHRISTINE JONES v. THE GLENWOOD GOLF CORPORATION
No. 20-0303
IN THE SUPREME COURT OF IOWA
Submitted December 16, 2020—Filed March 12, 2021
TERRY K. JONES and CHRISTINE JONES, Appellees, vs. THE GLENWOOD GOLF CORPORATION, Appellant.
Appeal from the Iowa District Court for Mills County, Richard H. Davidson, Judge.
The defendant golf cart owner appeals from an order granting a new trial in a negligence action in which the jury found the driver who was a released party one hundred percent at fault. REVERSED AND CASE REMANDED FOR DISMISSAL.
Waterman, J., delivered the opinion of the court, in which all justices joined.
William H. Larson, Zachary D. Clausen (argued), Rene Charles Lapierre (argued) of Klass Law Firm, L.L.P., Sioux City, for appellant.
Stephen A. Rubes (argued) and Joseph J. Hrvol of Joseph J. Hrvol, P.C., Council Bluffs, for appellees.
In this appeal, we must decide a question of first impression: whether an injured passenger‘s settlement and release of negligence claims against the driver by operation of law extinguished his vicarious liability claim against the vehicle owner under
On our review, for the reasons explained below, we hold that the passenger‘s release of the driver extinguished the owner‘s vicarious liability under
I. Background Facts and Proceedings.
On September 14, 2017, plaintiff Terry Jones went golfing with his son, Jeff Jones, at Glenwood Golf Course in Mills County. Glenwood Golf Corporation owns the golf course and the golf carts used by its patrons with its permission. Jeff was driving the cart with Terry in the passenger seat. As they crossed a bridge in the cart, the cart started veering to the left and when Jeff over-corrected, the cart‘s left front tire became wedged into the steel structure of the bridge. The impact ejectеd Terry through an opening in the bridge‘s safety-rail. Terry fell about twenty-five feet onto a creek bed below filled with concrete and steel reinforcement bar. Terry suffered life-threatening injuries and was airlifted by helicopter to the University of Nebraska Medical Center. He underwent multiple surgeries and spent months hospitalized and in a rehabilitation facility.
Terry and his wife, Christine Jones, entered into a settlement agreement with Jeff and his homeowner‘s liability insurer, Liberty Mutual Insurance Company. Under the terms of the six-page contract entitled ”RELEASE AND INDEMNITY AGREEMENT,” Liberty Mutual paid $817,500 to Terry and Christine (identified in the contract as “the Plaintiffs“) and their lawyer, and $60,000 to Pacific Life & Annuity Services, Inc. to purchase a structured settlement annuity for additional monthly payments. The settlement released all claims against Jeff Jones and Liberty Mutual (identified in the contract as the “Released Parties“) arising from the golf cart accident. The agreement included these terms:
[T]he Plaintiffs further agree to hold the Released Parties harmless, and to defend and indemnify the Released Parties from any suits, claims, cross-claims, judgments, costs or expenses of any kind, including attorney‘s fees, arising from assertion of any such liens, reimbursement right, subrogation interest or claim.
D. PRESERVATION OF CLAIM. By signing this agreement and entering into this Release Plaintiffs specifically preserve any and all claims they may have against the Glenwood Golf Course, Glenwood Golf Corporation and any other responsible party. E. As further consideration of this payment, the Plaintiffs hereby agree that:
1. This Release and Indemnity Agreement covers the released parties’ proportionate responsibility for all injuries and damages, whether known or not, and which may hereafter appear or develop arising from the matters referred to above[.]
After releasing their negligence claims against Jeff as driver of the golf cart, Terry and Christine filed this civil action against Glenwood alleging two theories of liability. First, their petition alleged that Glenwood “breached its duty as the owner of the Glenwood Golf Course, pursuant to the Restatement (2nd) of Torts, Section 344, to protect Plaintiff Terry K. Jones from the accidental, negligent, or intentional harmful acts of third persons, including Jeff Jones.” This premises liability clаim was factually based on the alleged unsafe condition of the bridge. Second, their petition alleged that Glenwood, as the owner of the golf cart, “is liable for damages caused by reason of the negligence of the driver of such vehicle in accordance with
Glenwood filed a motion for summary judgment contending that by releasing the driver, the plaintiffs extinguished their
The case proceeded to a jury trial. Glenwood failed to move for a directed verdict on grounds that the plaintiffs’ settlement with Jeff precluded liability under
Jeffery Jones is a released party having entered into a settlement with Plaintiffs. The amount paid to Plaintiffs by Jeffery Jones in that settlement is in excess of the total damages awarded by the jury in this case under the owner liability claim. Because the jury did not find or assign Glenwood Golf Corporation
any percentage of fault under the tort claim theory the court must reduce Plaintiffs’ recovery considering the Jeffery Jones settlement. Accordingly, the court reduces the award of $500,000 against Defendant Glenwood Golf Corporation, as owner of the golf cart operated by Jeffery Jones, to zero dollars. . . . THEREFORE the Court enters judgment in favor of Plaintiffs Terry and Christine Jones but reduces the amount of damages to zero dollars.
The plaintiffs filed a motion for new trial and additur on grounds that the verdict was inadequate because the evidence showed the past medical expenses were many times the amount awarded. Glenwood acknowledged the evidence showed past medical expenses of at least $295,463 while the plaintiffs argued the evidence showed far greater amounts. The district court again ruled that Glenwood “is liable on the owner liability claim” and granted a new trial on damages only. Glenwood appealed, and the plaintiffs filed no cross-appeal. We retained the case.
II. Standard of Review.
The dispositive issue on appeаl is whether the plaintiffs’ release of the golf cart driver, Jeff, extinguished their vicarious liability claims against Glenwood as the golf cart owner under
III. Analysis.
The fighting issue on appeal is whether the district court correctly ruled that the plaintiffs can recover from Glenwood as the golf cart owner under
A. Error Preservation. As noted, Glenwood moved for summary judgment on the legal question of whether the plaintiffs’ release of their negligence claims against Jeff as the golf cart driver extinguished their
The problem is that Glenwood failed to move for a directed verdict on that issue at trial. As we held in Estes v. Progressive Classic Insurance, rulings denying summary judgment are interlocutory. See 809 N.W.2d 111, 114 (Iowa 2012) (“An order overruling a motion for summary judgment is a nonreviewable order when the district court finds a genuine issue of material fact exists and the case proceeds to final trial.“). As we explained in Estes,
When the district court denies a party‘s motion for summary judgment and the pаrty appeals the final verdict, we review the issues raised in the unsuccessful motion for summary judgment based on the record made during trial and on the motion for directed verdict to determine if the district court committed error.
Id. Here, the district court denied Glenwood‘s motion for summary judgment under
Both sides want the issue resolved in this appeal. If we decline to decide the issue, Glenwood on remand would simply renew its legal argument in a motion for directed verdict and judgment notwithstanding the verdict in the new trial. That new trial would be a waste of the parties’ and court‘s time and resources if the legal issue is decided adversely to the plaintiffs. Why go through another multi-day jury trial if any damage award would be vacated on the second appeal? Because the release issue is certain to arise on remand, we decide it now.
B. The Legal Effect of the Plaintiffs’ Release of the Driver. We have never decided whether a plaintiff‘s release of negligence claims against a driver extinguishes the vehicle owner‘s vicarious liability under the Owner‘s Responsibility Law. We begin with the text of the statute, which provides, “in all cases where damage is done by any motor vehicle by reason of negligence of the driver, and driven with the consent of the owner, the owner of the motor vehicle shall be liable for such damage.”
Vicarious liability is broadly defined as liability a person bears for the actionable conduct of another person because of a relationship between the two parties. We recognize our owners’ responsibility
statute does not operate to impute the driver‘s liability to the owner, but imposes liability by imрuting the driver‘s negligence to the owner. In other words, the liability imposed under the statute is the owner‘s own liability. This liability versus negligence dichotomy has been important in helping us decide that a legal defense against liability possessed by the driver does not inure to the owner. Nevertheless, the owners’ responsibility statute remains under the umbrella of vicarious liability by imposing liability on an owner for the actionable negligence of the driver.
Id. at 318 n.4 (emphasis added) (citations omitted).
We applied this “liability versus negligence dichotomy” in Smith v. CRST International, Inc., 553 N.W.2d 890, 895 (Iowa 1996) (emphasis omitted). William Smith was a passenger in a tractor-trailer operated by his coemployee and suffered injuries in an on-the-job motor vehicle accident. Id. at 891. The driver was statutorily immune as a coemployee under
California prеcedent is instructive. California has an owner‘s responsibility law similar to Iowa‘s.
such liability is secondary.” Rashtian v. BRAC-BH, Inc., 12 Cal. Rptr. 2d 411, 415 (Cal. Ct. App. 1992).
We reach the same conclusion under Iowa law. Glenwood‘s statutory vicarious liability for Jeff‘s negligence is secondary to Jeff‘s primary liаbility to the
This is where Iowa‘s Comparative Fault Act comes into play. With respect to Glenwood‘s alleged statutory liability under
A release . . . entered into by a claimant and a person liable discharges that person from all liability for contribution, but
it does not dischargе any other persons liable upon the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person‘s equitable share of the obligation, as determined in
section 668.3, subsection 4 .
The plaintiffs’ release of their claims against Jeff thus extinguished not only the plaintiffs’ owner liability against Glenwood, but also Glenwood‘s contribution claim against Jeff under
Sandra Biddle “became ill after eating a hot dog,” and, “[c]omplaining of nausea, weakness, chest pains, and shortness of breath, she was rushed by ambulance to Sartori Memorial Hospital” where she was admitted as a possible cardiac patient. Id. at 796. The emergency room physician (a hospital employee) merely treated her for gastroenteritis, and she gained some relief from antacid and antinauseant medications. Id. She was discharged and died of heart failure around four hours later. Id. Her husband as administrator of her estate brought medical malpractice claims against the physician, the hospital, and the municipal owner of the hospital. Id. He settled with the physician before trial, and the district court ruled that the settlement extinguished the hospital‘s vicarious liability for its physician‘s negligence. Id. The jury returned a defense verdict for the remaining defendants. Id. Biddle appealed the ruling on the effect of his settlement. Id. at 797.
[t]he “percentage of negligence” attributable to the conduct of the servant constitutes the entire “single share” of liability attributable jointly to the master and servant. ... Because this percentage of negligence represents the “single share” of liability covered by the common liability of the master and servant, the master is necessarily released from vicarious liability for the released servant‘s misconduct.
Id. at 798 (omission in original) (quoting Horejsi v. Anderson, 353 N.W.2d 316, 318 (N.D. 1984)). We held that the release of the doctor extinguished the vicarious liability claim against the hospital:
The doctоr and hospital were properly “treated as a single party” for purposes of the release.
Iowa Code § 668.3(2)(b) . By releasing the doctor, Biddle satisfied the percentage of fault attributable to him and, vicariously, attributable to the hospital. That is, the settlement wiped out any fault derived from the doctor‘s conduct, separate and apart from the hospital‘s own negligence, for which it remained accountable at trial.
Id. at 799. Biddle remains good law.4 See Hook v. Trevino, 839 N.W.2d 434, 437, 441, 443 n.3, 445 (Iowa 2013) (holding the state was unprotected by its volunteer driver‘s statutory immunity and harmonizing Estate of Dean and Smith while distinguishing Biddle). And under Biddle, the plaintiffs’ settlеment with Jeff discharged the percentage of fault the jury attributed to him (one hundred percent).
The plaintiffs argue that settlements with drivers will be discouraged if the release operates to extinguish the owner‘s vicarious liability under
parties actually encourages settlements by contemporaneously extinguishing vicarious liability. 518 N.W.2d at 798–99. Otherwise, a principal “found vicariously liable for the negligent acts of an agent retains a right of full indemnity against the actual tortfeasor.” Id. at 799. Discharge of the owner‘s vicarious liability for the driver‘s negligence is a necessary corollary to discharge of the driver‘s liability to the owner for contribution or indemnity.
The contrary holding sought by the plaintiffs would create problems. What if the driver‘s insurer settled for a pittance? Would the owner then be responsible for all of the unsatisfied damages?
Normally the nonsettling defendant points the finger at the empty chair, the released party, whosе fault comes off the plaintiff‘s recovery. But a nonsettling defendant
Even before our state enacted
Our holding is supported by the majority of other jurisdictions. See, e.g., Simpson v. Townsley, 283 F.2d 743, 745, 748 (10th Cir. 1960) (holding that release of driver “removed any foundation upon which to impute negligence to [the driver‘s] employers“); Terry v. Memphis Stone & Gravel Co., 222 F.2d 652, 653 (6th Cir. 1955) (per curiam) (stating that “a covenant not to sue the truck owner and the driver—appellees alleged agents—would necessarily release appellee“); Cunha v. Colon, 792 A.2d 832, 833–34 (Conn. 2002) (holding the release of the driver extinguished the liability of the vehicle lessor); Elias v. Unisys Corp., 573 N.E.2d 946, 946, 948–49 (Mass. 1991) (holding that a general release of the agent-driver precludes a claim against the principal-owner); Reedon of Faribault, Inc. v. Fid. & Guar. Ins. Underwriters, 418 N.W.2d 488, 491 (Minn. 1988) (en banc) (“We hold that the release . . . of the insurer‘s agent in this case released the insurer from vicarious liability.“); McCurry v. Sch. Dist., 496 N.W.2d 433, 444 (Neb. 1993) (holding that a “settlement with the agent constitutes a settlement with the principal, no matter what the parties may have intended“); Mamalis v. Atlas Van Lines, Inc., 560 A.2d 1380, 1383 (Pa. 1989) (“We hold that absent any showing of an affirmative act, or failure to act when required to do so, by the principal, termination of the claim against the agent extinguishes the derivative claim against the principal.“); DelSanto v. Hyundai Motor Fin. Co., 882 A.2d 561, 566 (R.I. 2005) (holding that the release of the driver also released the lessor of the vehicle, and stating “exposure to liability ceases once there has been a resolution of the controversy involving the person or entity that triggered the possibility of vicarious liability“).
A majority of courts in other jurisdictions have also held that the release of the driver operates to extinguish claims against the owner notwithstanding the plaintiff‘s express reservation of a right to sue in the settlement agreement. See, e.g., Bacon v. United States, 321 F.2d 880, 881–82, 884–85 (8th Cir. 1963) (holding that settlement with employee-driver released the employer-owner from liability despite a specific reservation of that claim); Jacobson v. Parrill, 351 P.2d 194, 196, 200–01 (Kan. 1960) (holding that the release of the negligent driver opеrated to extinguish the owner‘s liability even though the release expressly reserved the right to sue him); Theophelis v. Lansing Gen. Hosp., 424 N.W.2d 478, 480, 491 (Mich. 1988) (plurality opinion) (holding that release of hospital employees extinguished vicarious liability of hospital even though
We reach the same conclusion under Iowa law. See Seastrom v. Farm Bureau Life Ins., 601 N.W.2d 339, 342, 344 n.3, 344–45 (Iowa 1999) (recognizing release of claims against insurance agent that reserved claims against his employer did not preserve claims for vicarious liability under Biddle but allowed separate tort claims for insurer‘s own bad-faith conduct).
The district court erred by ordering a new trial against Glenwood, which is entitled to judgment in its favor as a matter of law under
IV. Disposition.
For those reasons, we reverse the district court‘s ruling granting a new trial against Glenwood. We remand this case for entry of an order of dismissal.
REVERSED AND CASE REMANDED FOR DISMISSAL.
Notes
Every owner of a motor vehicle is liable and responsible for death or injury to person or property resulting from a negligent or wrongful act or omission in the operation of the motor vehicle, in the business of the owner or otherwise, by any person using or operating the same with the permission, express or implied, of the owner.