Opinion
Docket No. CL16-8909-00
12-12-2017
RE: John W. Parrish, III v. American Airlines, Inc. and Tracey Finley
Scott R. Torpey, Esquire
Jaffe Raitt Heuer & Weiss, P.C.
27777 Franklin Road, Suite 2500
Southfield, Michigan 48034 Gary C. Byler, Esquire
Cornelia Woodley, Esquire
Byler & Sampson, PC
505 S. Independence Blvd.
Suite 201
Virginia Beach, VA 23452 Kelley C. Holland, Esquire
Williams Mullen
222 Central Park Avenue
Suite 1700
Virginia Beach, VA 23462 Dear Counsel:
This case was last before the Court on November 16, 2017 for a hearing (the "Hearing") on the Defendant, American Airlines, Inc.'s ("American") Plea in Bar, Plaintiff's Motion to Add New Party, and Plaintiff's Motion to Amend Complaint. The questions presented to the Court are (I) whether American owed a duty to the Plaintiff to overcome the plea in bar, and (II) whether the Court will allow the Plaintiff to amend his Complaint to add Envoy.
BACKGROUND
Plaintiff, John W. Parrish, III ("Parrish") filed this suit on August 17, 2016, which was received by the courthouse by mail on the last day before the statute of limitations ran, seeking compensation for an alleged personal injury to himself at the Norfolk International Airport ("ORF") on August 17, 2014. The Complaint alleges that Parrish was employed and working as a Transportation Security Officer at ORF on or about August 17, 2014, when Finley ("Finley" misspelled Findley), employed by American as a baggage handler at ORF, "threw a bag directly on the plaintiff."
The Complaint as originally filed stated four counts of liability: (1) Finley was negligent in performing her duties as a baggage handler that resulted in injury to Parrish; (2) Defendant Jane Doe was negligent in performing her duties as a baggage handler that resulted in injury to Parrish; (3) American Airlines was negligent both in its capacity as Finley's employer as well as due to its failure to supervise and train Finley; and (4) American Airlines was negligent both in its capacity as Jane Doe's employer as well as due to its failure to supervise and train Finley. On March 2, 2017, the Court ruled that Counts Two and Four of the Complaint were dismissed with prejudice, which consequently dismissed any claims against Defendant Jane Doe. Thus, the remaining Counts before the Court are Counts One and Three.
Regarding the remaining two counts, the Complaint states that while acting within the scope of her employment with American, it was Finley's duty to perform her duties with reasonable care, and that it was the obligation of American as Finley's employer to require all of their employees, including Finley, to perform their duties in a safe manner and free from negligence while acting in the scope of their employment. The Complaint further alleges that American failed to take corrective actions regarding Finley's performance of her duties and failed to provide proper training and/or supervision of Finley to ensure the safety of the public and other employees in the area.
On September 15, 2017, American filed a Plea in Bar regarding the remaining counts. On October 25, 2017, Parrish filed a Motion to Add a New Party and Motion to Amend his Complaint. The Court heard argument regarding all three motions on November 16, 2017, during which American presented a Securities and Exchange Commission Form 10-K for American Airlines Group, Inc. ("Ex. 1") and Tracey Finley's ORF Identification Badge ("Ex. 2") as well as the testimony of Finley. Parrish also provided testimony at the Hearing on his behalf.
POSITION OF THE PARTIES
I. American's Position
According to American, Finley was not an American employee and was actually employed by Envoy Air, Inc. ("Envoy"). (Br. Supp. American's Plea in Bar 2.) American states that it was Envoy who "determined Finley's job duties, paid her wages and benefits, provided her uniform and tools, maintained disciplinary authority over her, controlled whether or not she was fired, and was the sole recipient of Finley's retirement notice on July 22, 2015." (Id.) American claims that it "did not have any power to hire, train, pay, discipline, terminate or otherwise control Finley or her actions." (Id.) American further claims that "other than the pilots, flight attendants and mechanics, they did not have any employees working at ORF on August 17, 2014." (Id.)
American emphasizes the case Kellerman v. McDonough, 278 Va. 478, 492, 684 S.E.2d 786, 793 (2009), in which the Virginia Supreme Court concluded that "generally a person does not have a duty to protect another from the conduct of third persons," but may have such a duty if a special relationship exists, such as the employee-employer relationship. (Br. Supp. American's Plea in Bar 4; Transcript ("Tr.") 11.) To refute the argument that American and Finley had such a special relationship, American asserts in its brief that it is well settled law that a subsidiary is a separate legal entity and thus a parent company is not liable for the subsidiary's actions. (Br. Supp. of American's Plea in Bar 5.) As such, American alleges that it owed no duty to control the conduct of Envoy employees, including Finley. (Id. at 5-6.)
In addition to the argument in its brief, and at the Hearing, American introduced a Securities and Exchange Commission 10-K Filing Form marked and received in evidence as Defense Exhibit 1. (Tr. 14.) This exhibit provided that during the year of the incident, both American Airlines, Inc. and Envoy Aviation Group, Inc. were both wholly-owned subsidiaries of the holding company American Airlines Group, Inc. ("AAG"). (Tr. 14-15; Ex. 1.) As such, American argues that it is "not a parent corporation at all of Envoy Airlines but rather a sister corporation, both of whom are subsidiaries of American Airlines Group, Inc., a separate parent corporation." (Tr. 15.)
In addition, American claims that Parrish's negligent supervision and negligent training claims are not actionable in Virginia. (Br. Supp. American's Plea in Bar 6-8.) American further notes, even if they were actionable, American could not be held liable because it had no duty to supervise an individual that was not an employee. (Id.)
With regard to the question of adding a new party, American argues that because the statute of limitations has run against Envoy, Envoy is not subject to the Court's jurisdiction. American further asserts that the suit must be dismissed because a necessary party, namely Envoy, is not subject to the Court's jurisdiction. (American Airlines' Resp. Plaintiff's Mot. to Add New Party 2.) Additionally, American claims that Parrish's proposed amendment to his complaint should be denied as it relates to claims against American for the reasons American explains in its memorandum in support of the plea in bar. (Id. at 2-3.)
Lastly, American asserts that it has denied Finley's employment at American throughout the pleadings since this suit was filed. (Id. at 3-4.) In response to the counts in the Complaint implicating Finley, American's Answer, filed on September 14, 2016, states that "American avers that Tracy Findley ("Findley") (sic) was not an employee of American on or about August 17, 2014." (Id. at 3; Answer ¶ 2.) Furthermore, on September 21, 2016, almost eight months before American responded to discovery requests, American sent Parrish a letter informing him that Finley was not an American employee. (American Airlines' Resp. Plaintiff's Mot. to Add New Party 4.) Thus, American notes that Parrish's claim that he first learned that American had no employment relationship with Finley in May 2017 is "patently false." (Id.) Of note, American does not claim that it told Parrish that Finley was an employee of Envoy, but rather just that Finley was not an American employee.
II. Parrish's Position
According to Parrish (it appears he has acquiesced since the filing of his complaint) Envoy—not American—technically employed Finley at the time of the incident in question. (Tr. 23.) Parrish argued in his brief that the plea in bar should be denied because Envoy is a wholly-owned subsidiary of American. (Br. Opp'n of Def.'s Plea in Bar 3-4.) To support this assertion, Parrish cites Beale v. Kappa Alpha Order, 192 Va. 382, 396-97, 64 S.E.2d 789, 797 (1951), in which the Virginia Supreme Court held that a parent company may be held liable for the acts of its subsidiary when
undue domination and control was exercised by the parent corporation over the subsidiary, . . . [and] this control was exercised in such a manner as to defraud and wrong the complainant, and that unjust loss or injury will be suffered by the complainant as a result of such domination unless the parent corporation be held liable.(Br. Opp'n of Def.'s Plea in Bar 4.)
In applying Beale, Parrish asserts that American was in control of the area in which Finley was working, noting specifically that "the American logo was prominently displayed above the area, the employees behind the counter all wore American logos on their shirts, [and] all flights booked at the counter were with American, not Envoy." (Id. at 4.) Based on these factual assertions, Parrish argues that American, not Envoy, was in control of the counter at ORF. (Id.) Parrish further argues that American may be held liable for Finley's negligence because American exercised a large amount of control over Finley, creating a special relationship. (Id. at 2-3.)
In addition to his response to the Plea in Bar, Parrish moves for the Court to allow him to add Envoy as a party and amend his complaint according to Virginia Supreme Court Rule 3:16. (Mot. to Add New Party 1.) In support of this argument, counsel for Parrish emphasized in the Hearing that they had done their "due diligence in the run-up to the case in order to discover who Ms. Finley's employer was." (Tr. 25.) In support, Parrish claims that on the day of the incident he was told by the TSA at ORF that Finley's employer was American, and that they attempted to open up contact with American in order to discover any further information. (Tr. 25, 27.) Parrish asserts that "[a]t no point in [the] two years between the injury and the time of filing did American Airlines deny that Ms. Finley was their employee." (Tr. 25) In response to the Court's inquiry regarding why Parrish waited until the statute of limitations was about to run knowing that new information may come to light in the answer, Parrish's counsel stated that they had no reason to question the third party who informed them that Finley was employed by American. (Tr. 27.) Counsel further stated that, even during the time Parrish returned to work after the injury, he was unable to determine any further information regarding Finley's employment. (Id.)
Actually, Parrish cites to Rule 3:6 in his brief, however, the Court assumes that he meant Rule 3:16, considering that Rule 3:6 discusses proof of service. --------
ANALYSIS
I. Plea in Bar
i. Legal Standard
"The purpose of a plea in bar is to 'reduc[e litigation] to a distinct issue of fact which, if proven, creates a bar to the plaintiff's right of recovery.'" Schmidt v. Household Fin. Corp., II, 276 Va. 108, 116, 661 S.E.2d 834, 838 (2008) (quoting Tomlin v. McKenzie, 251 Va. 478, 480, 468 S.E.2d 882, 884 (1996)). The party moving for the plea in bar has the burden to prove that issue of fact. Tomlin, 251 Va. at 480, 468 S.E.2d at 884. "When considering the pleadings, 'the facts stated in the plaintiffs' motion for judgment [are] deemed true.'" Id. (quoting Glascock v. Laserna, 247 Va. 108, 109, 439 S.E.2d 380, 380 (1994)).
The elements of an action for negligence are: (1) legal duty, (2) breach of that duty, (3) the breach was a proximate cause of the injury, and (4) damage to the plaintiff. Blue Ridge Serv. Corp. v. Saxon Shoes, Inc., 271 Va. 206, 218, 624 S.E.2d 55, 62 (2006). "The law determines the duty, and the jury, upon the evidence, determines whether the duty has been performed. In other words, what duty rests upon the defendant, is a law question and, whether or not the duty was properly performed is a purely factual matter for the jury." Acme Markets, Inc. v. Remschel, 181 Va. 171, 178, 24 S.E.2d 430, 434 (1943). "It is incumbent on the plaintiff who alleges negligence to show why and how the accident happened . . . ." Blue Ridge Serv. Corp., 271 Va. at 218, 624 S.E.2d at 62. "Before any duty can arise with regard to the conduct of third persons, there must be a special relationship between the defendant and either the plaintiff or the third person." A.H. v. Rockingham Publ'g Co., 255 Va. 216, 220, 495 S.E.2d 482, 485 (1998).
ii. Parent Corporation Liability
In looking at the liability of the parent corporation, "[t]he separate corporate entities of corporations will be observed by the courts unless a corporation is shown to be the 'adjunct, creature, instrumentality, device, stooge or dummy of another corporation.'" Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 634, 561 S.E.2d 663, 669 (2002) (quoting Beale v. Kappa Alpha Order, 192 Va. 382, 399, 64 S.E.2d 789, 798 (1951). "Generally, courts will observe the separate corporate entity, even though one corporation 'may dominate or control another, or may treat it as a mere department [or] instrumentality . . . and courts will disregard the separate legal identities of the corporation only when one is used to defeat public convenience, justify wrongs, protect fraud or crime of the other.'" Id. (quoting Beale, 192 Va. at 399, 64 S.E.2d at 798). The person asserting that the court should disregard the separate corporate identities has "the burden to provide facts sufficient to demonstrate that [the subsidiary] was merely the 'alter ego' of [the parent company] in order for the trial court to disregard the corporate form and hold [the parent company] liable for the obligations of [its subsidiary]." Id.
Although Parrish was under the impression that American was a parent company of Envoy, this was proven untrue by American's Exhibit 1. As such, American has no parent corporation liability for the actions of an Envoy employee. Furthermore, even if American had been the parent corporation to Envoy, there is no evidence that Envoy was being used as an "adjunct, creature, instrumentality, devise, stooge or dummy" of American nor of Envoy being "used to defeat public convenience, justify wrongs, protect fraud or crime of [American]." See Eure, 263 Va. at 634, 561 S.E.2d at 669. Accordingly, American is not liable as a parent corporation.
iii. Third-Party Liability
As cited by American, the Virginia Supreme Court concluded in Kellerman v. McDonough that generally a person does not have a duty to protect another from third-party conduct, but may have such a duty if a special relationship exists, such as an employee-employer relationship. 278 Va. 478, 492, 684 S.E.2d 786, 793 (2009). Another theory of third party liability is apparent agency (otherwise called ostensible agency or agency by estoppel). Apparent agency is "an agency created by operation of law and established by a principal's actions that would reasonably lead a third person to conclude that an agency exists." Sanchez v. Medicorp Health Sys., 270 Va. 299, 304, 618 S.E.2d 331, 333 (2005) (quoting Black's Law Dictionary 142 (8th ed. 2004)). In Virginia, apparent agency has been applied to contract cases, however, it "has never been used in Virginia to impose vicarious liability on an employer for the negligent acts of an independent contractor." Id. at 306-08, 618 S.E.2d at 335.
Although Parrish claims that Finley appeared to be completely under control of American at the time of the incident, it is apparent that she was contracted to work there as an employee of Envoy. Thus, American cannot be held liable as a third party because it did not have an employer-employee relationship, or any other special relationship, with Finley. Given that the Supreme Court has previously declined to apply apparent agency law to hold an employer liable for the tort actions of its contractors, American's control over Finley at the time of the incident does not lead to the conclusion that American is vicariously liable.
iv. Negligent Training and Negligent Supervision
It has been repeatedly concluded that Virginia courts do not recognize a claim of negligent supervision. See Porter v. Woods, 2017 Va. Cir. LEXIS 150, at *5-6 (Norfolk August 30, 2017); Cleaves-McClellan v. Shah, 93 Va. Cir. 459 (Norfolk 2016); Lawrence v. Sentara Hosps.-Norfolk, 90 Va. Cir. 232, 233 (Norfolk 2015). The Virginia Supreme Court in Chesapeake & Potomac Telephone Co. v. Dowdy held that "[i]n Virginia, there is no duty of reasonable care imposed upon an employer in the supervision of its employees under these circumstances and we will not create one here." 235 Va. 55, 61, 365 S.E.2d 751, 754 (1988). Despite the limiting language in the Virginia Supreme Court's holding, Virginia courts "have routinely interpreted the decision to hold that negligent supervision is not actionable in Virginia." Lawrence, 90 Va. Cir. at 233 (citing cases).
Similarly, the Court is not aware of any authority recognizing negligent training in Virginia, and a number of Virginia courts have declined to recognize negligent training in cases in which the cause of action was proposed. Hernandez v. Lowe's Home Ctrs., Inc., 83 Va. Cir. 210, 212 (Norfolk 2011) (citing cases); see also Porter, 2017 Va. Cir. LEXIS 150, at *7.
As part of his Complaint against American, Parrish alleges that American was negligent in both its supervision and training of Finley. Primarily, these claims are inappropriate against American as Finley was employed by Envoy, rather than American. Secondarily, even if the Court were to find that American owed a duty, the claims would still fail given that neither have been recognized in the state of Virginia.
Based on the foregoing, the Court finds that American has presented sufficient evidence to meet its burden to prove that Finley was not employed by American and was employed by Envoy. Therefore, due to American's status as a sister company to Envoy, as well as Virginia's lack of recognition of claims for negligent training, negligent supervision, and apparent agency in the tort context, American's Plea in Bar is GRANTED.
II. Motion to Add a New Party
Rule 3:16 of the Supreme Court of Virginia allows for the addition of parties on a motion of the plaintiff "at any stage of the case as the ends of justice may require." The Virginia Supreme Court has stated that "it is well-established that when 'a new party is brought into a suit by an amending pleading, the suit must be deemed to have been commenced as to him at the time that he was so brought in.'" Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71, 76, 387 S.E.2d 468, 471 (1990) (quoting Webb v. United States Fidelity & Guaranty Co., 165 Va. 388, 393, 182 S.E. 557, 559 (1935)).
Parrish admits that the statute of limitations on this negligence claim was two years from the date of the incident. He also admits that the alleged incident occurred on August 17, 2014, resulting in the statute of limitations expiring on August 17, 2016, the date that Parrish filed his complaint in this case. Considering that even when adding new parties the Virginia Supreme Court has stated that a "suit must be deemed to have been commenced as to [the new defendant] at the time he was so brought in," the statute of limitations has run on the claim against Envoy, and as such, Envoy should not be added as a party. See Mendenhall, 239 Va. at 76, 387 S.E.2d at 471 (quoting Webb, 165 Va. at 393, 182 S.E. at 559).
Parrish implies that American is using its status as a parent company to hide the true character of Finley's employment. He asserts that American withheld information from him regarding Finley's employment status for two years, leading Parrish to believe that Finley was an employee of American. While it may be true that American did not disclose this information to Parrish before the suit was filed, it had no duty to provide that information because such information regarding the accident is proper for discovery after the suit was filed. Parrish risked that he would discover pertinent information after the statute of limitations had expired when he filed his complaint on the very last day within the statute of limitations. Additionally, although not dispositive on this issue, the Court notes that Parrish filed his Motion to Add New Party on October 25, 2017, which is over thirteen months from the date that American alleged in its Answer to the Complaint that Finley was not an employee on September 14, 2016.
Consequently, because the statute of limitations has run on any claims against Envoy, it cannot be added as a party, and Parrish's Motion to Add a New Party is DENIED.
III. American's Motion to Dismiss
The term "Necessary parties" in civil cases has been defined broadly by the Virginia Supreme Court:
Where an individual is in the actual enjoyment of the subject matter, or has an interest in it, either in possession or expectancy, which is likely either to be defeated or diminished by plaintiff's claim, in such case he has an immediate interest in resisting the demand, and all persons who have such immediate interest in resisting the demand, and all persons who have such immediate interests are necessary parties to the suit.Mendenhall v. Douglas L. Cooper, Inc., 239 Va. 71, 75, 387 S.E.2d 468, 470 (1990) (quoting Rainey v. Four Thirty Seven Land Co., 233 Va. 513, 519-20, 357 S.E.2d 733, 736 (1987)). In other words, a court must determine whether those "whose interests in the subject matter of the suit, and in the relief sought, are so bound up with that of the other parties, that their legal presence as parties to the proceeding is an absolute necessity, without which the court cannot proceed." Bonsai v. Camp, 111 Va. 595, 597-98, 69 S.E. 978, 979 (1911) (quoting Barney v. Balt. City, 73 U.S. 280 (1868)). "All persons interested in the subject matter of a suit and to be affected by its results are necessary parties." Id. Necessary parties are in contrast to those have such "relations to the matter in controversy, merely formal or otherwise, that while they may be called proper parties, the court will take no account of the omission to make them parties." Id. As such, a person may be considered a proper party—whose absence does not require dismissal if the court does not have jurisdiction—without being a necessary party—whose absence would require a court to dismiss a suit if it did not have jurisdiction. See id.
Although Envoy likely would have been deemed a proper party were it added to this case within its statute of limitations, it does not appear to be a necessary party. Given that the statute of limitations has run, the outcome of this suit is of no consequence to Envoy. Envoy will be neither benefited nor will it face detriment by the outcome of the suit.
Thus, dismissal of the suit due to the Court's lack of jurisdiction over Envoy is not proper, and American's motion to dismiss is DENIED.
CONCLUSION
For the reasons stated herein, the Court GRANTS American's Plea in Bar, DENIES Parrish's request to add Envoy as a new party, and DENIES American's motion to dismiss. The Court directs counsel for American to prepare and circulate an Order consistent with the ruling in this opinion and submit it to the Court for entry within fourteen (14) days.
Sincerely,
/s/
Michelle J. Atkins
Judge MJA/kml