Friday, August 5, 2016

Hired Driver’s Lack of Liability Insurance May “Sound” like Admissible Evidence in a Suit for Negligent Hiring, but the Court of Appeals Disagrees in Perry v. Asphalt & Concrete Servs., 447 Md. 31, 133 A.3d 1143 (2015)

It is easy to analogize a negligence action and causation analysis to playing a vinyl record. When you begin to play the record you hear a beautiful tune. The song continues through verses and chorus until, suddenly, the record skips ever so briefly. After the skip, the record continues to play, and, ultimately, ends. At the end, you think to yourself how lovely the song sounded, oftentimes forgetting that brief skip. How can you dwell on that when, for the most part, everything sounded so cohesive? That beautiful song is analogous to the story often presented by a plaintiff at the trial of a terrible incident that resulted in grievous injuries, and the culpable ignorance of a defendant that should have known better. It all sounds wonderful until you take a closer look at that “skip”:  namely, whether the facts that a defendant knew or should have known actually have bearing on the cause of plaintiff’s injuries or simply “sound good.”  In the case of Perry the Court of Appeals concluded that although a hired driver's lack of liability insurance certainly sounds good in a negligent hiring case, it has no true bearing on the issue.    

In Perry v. Asphalt & Concrete Servs., 447 Md. 31, 133 A.3d 1143 (2015), the underlying facts are as follows: Moran Perry (“Perry”) was a pedestrian crossing an intersection in Frederick, Maryland when he was struck by a dump truck. The dump truck was operated by William Johnson (“Johnson”), and owned by a company called Higher Power Trucking L.L.C. (“Higher Power”). Asphalt Concrete Services, Inc. (“ACS”) hired Johnson and Higher Power to haul asphalt and stone to an ACS job site. While investigating the case, the responding officer discovered that neither Johnson nor Higher Power had liability insurance covering the dump truck at the time of the incident due to a lapse in payment on the policy.

Perry filed suit against Higher Power, Johnson and ACS in the Circuit Court for Prince George’s County. Prior to trial, ACS filed a motion in limine seeking to exclude evidence that the truck was uninsured at the time of the accident pursuant to Maryland Rule 5-411, which states that liability insurance coverage, or lack thereof, is generally inadmissible evidence because of its inherent prejudice. The trial court reserved on the issue, and permitted admission of evidence of the lack of insurance, over objection from counsel for ACS.  

The jury ultimately found that ACS was negligent in its hiring of Johnson, and that Johnson was negligent in the operation of his vehicle in the incident that resulted in Perry’s injuries. ACS filed a Motion for Judgment Not Withstanding the Verdict and for a New Trial based on part on the admission of the insurance-related evidence, but it was denied by the trial court. Subsequently, ACS appealed to the Court of Special Appeals of Maryland, which reversed the judgment and held that because there was no causal link between Johnson’s failure to maintain insurance coverage and the accident, evidence that he lacked insurance at the time of the accident was irrelevant to negligent hiring, and it should not have been admitted.  Asphalt Concrete Servs., Inc. v. Perry, 221 Md. App. 235, 108 A.3d 558 (2015).

Perry appealed to the Court of Appeals, which affirmed the intermediate court's ruling. In doing so, the Court first examined the relevance of Johnson’s liability insurance coverage on whether ACS breached its duty to check Johnson’s background when it hired him, and particularly its failure to observe its own policy of requesting proof of liability insurance. The Court found that evidence of lack of insurance was relevant on this issue because, in part, this evidence went to Johnson's competence as a hired driver.  However, the Court did not consider this to be the deciding factor in determining the relevance of the insurance-related evidence on Perry's negligent hiring action.  

The Court of Appeals found that the deciding factor was absence of a link between evidence of lack of insurance and proximate cause, and, specifically, whether ACS's failure to confirm Johnson's insurance coverage was the actually cause of Perry’s injury. Agreeing with the intermediate appellate court, the Perry Court found that ACS’s failure to comply with its policy to hire only those drivers who prove they are insured was not the cause of Perry’s injury, and therefore irrelevant to the negligent hiring claim. The Court contrasted the factual scenario in Perry to one in which a hired driver had a history of driving while intoxicated and then strikes a pedestrian while drunk, stating that because the driving history involved the very instrumentality that caused the accident, evidence of it would be appropriate and admissible. Here, however, the Court found that “[j]ust as it would be illogical to assert that [Johnson’s] driving was prudent on a particular occasion because he had liability insurance coverage…one cannot conclude the converse that [Johnson was] a poor driver because insurance coverage had lapsed due to missed payments.” Id. at 57, 133 A.3d at 1159.  

Much like the record playing a beautiful song, Perry’s case sounded unassailable to his attorney: a company that failed to follow its own rules hired a driver that did not have insurance and that driver that struck a pedestrian with a very large truck.  However, the Perry Court found that you cannot ignore that “skip” in the song when assessing whether evidence is truly relevant and admissible.

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