MEMORANDUM OPINION AND ORDER
REEVES, District Judge.
This matter is pending for consideration of Powersource's motion for summary judgment regarding the Plaintiffs' remaining agency claim [Record No. 124] and Phantom Leasing's motion for judgment. [Record No. 127] Because there are no material factual issues in dispute regarding the agency claim, the Court will grant Powersource's motion for summary judgment. Similarly, because summary judgment on all claims has been previously granted to Phantom Leasing, their motion for judgment also will be granted.
This case arises from an airplane crash in Somerset, Kentucky, on February 16, 2003. Plaintiff Mia Zetter and her four children were returning home after visiting Mia's husband and the children's father, Todd Zetter, in Griffith, Indiana. Mia and the children were traveling in a Cessna 421 which was owned by Great Northern Aircraft (the "Great Northern Cessna") and piloted by Shalabh Agarwal. The plane crashed as it was making its final approach into the Somerset airport.
The pilot, Agarwal, and another passenger in the front seat (Joseph Maglish) were killed in the crash. In addition, one of the Zetter children, R.Z., was ejected from the aircraft and died. Mia Zetter and the other three Zetter children, M.Z., C.Z. and Z.Z., were injured in the crash.
At the time of the crash, Todd Zetter was a vice president of Powersource, having been hired in that capacity in October 2002. At the time of the accident, he was second in the Powersource corporate hierarchy, ranking only behind Alfred Bakos, president of Powersource. Bakos was also president of Phantom Leasing.
Powersource is an Indiana corporation that provides services and coordination in the trucking industry. Phantom Leasing is an Indiana corporation that buys and leases semi-tractors to drivers who wish to become owner-operators. Most of these owner-operators then contract with Powersource to obtain loads for delivery. Griffith Aviation is the fixed-base operator at Griffith Airport, which is located in Griffith, Indiana.
To entice Todd Zetter to agree to work in Griffith while his family remained behind in Somerset, a "Temporary Travel Arrangements" clause was included in his employment contract. This provided that Todd Zetter could fly home on weekends or the rest of the Zetter family could fly to
Premil would get approval for the trip from Bakos, and would then contact Griffith Aviation. Normally, Griffith would provide the pilot, and the Zetters would fly on a Bonanza airplane owned by Bakos, or on a Cessna 421 owned by Phantom Leasing. Despite the fact that Todd Zetter worked for Powersource, Phantom Leasing would normally receive an invoice for the pilot time and fuel, which it would pay, settling up with Powersource later.
On the weekend of the accident, Paul Goldsmith, a Griffith pilot, picked up Mia Zetter and her children in Somerset on February 11, 2003, and delivered them safely to Griffith, Indiana. Prior to the return flight on February 16, 2003, Todd Zetter brought his wife and children to Griffith Airport for the return trip, arriving at approximately 5:00 p.m. Todd Zetter then assisted the pilot, Agarwal, in loading the family's baggage into the Great Northern Cessna. The flight departed at 5:30 p.m., and crashed on final approach to Somerset at 8:02 p.m.
As the Court has noted previously, summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Once a moving party has met its burden, `its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.'" Keeneland Ass'n, Inc. v. Earner, 830 F.Supp. 974, 984 (E.D.Ky.1993), citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that establish the absence of a genuine issue of material fact. Chao v. Hall Holding Co., Inc., 285 F.3d 415 (6th Cir.2002).
Once the movant has satisfied this burden, the non-movant must go beyond the assertions made in the pleadings and come forward with specific evidence to demonstrate that there is a genuine issue of material fact. Id. The nonmoving party cannot rely upon the assertions in its pleadings; rather, that party must come forward with probative evidence, such as sworn affidavits to support its claims. Celotex, at 324, 106 S.Ct. 2548. However, the trial court does not have a duty to search the entire record to establish that it is bereft of any genuine issue of material fact. In re Morris, 260 F.3d 654 (6th Cir.2001). Rather, the nonmoving party has an affirmative obligation to direct the court's attention to those specific portions of the record upon which it seeks to rely to create genuine issues of material fact. Id.
Upon review of all the evidence relevant to the motion for summary judgment, a district court should, after viewing the evidence in a light most favorable to the nonmoving party, determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Moore
This case was filed on April 29, 2003, approximately two and one-half months after the plane crash. Following a lengthy period of discovery and the filing of motions for summary judgment by Defendants Powersource and Phantom Leasing, the Plaintiffs reached a settlement with Defendants Griffith Aviation, Great Northern Aircraft, Paul Goldsmith, and the Estate of Shalabh Agarwal. In exchange for payment of $500,000.00, the Plaintiffs released these Defendants from "any and all claims of plaintiffs, whether asserted or unasserted." [Record No. 88]
The terms of the settlement are contained in documents labeled "Release of All Claims." [Record No. 121, Ex. 1] Through this release, each Plaintiff agreed to:
[Record No. 121, Ex. 1]. As a result of this settlement, the Plaintiffs moved to dismiss all claims against these Defendants. This left pending only the claims against defendants Powersource and Phantom Leasing.
These remaining claims included a breach of contract claim against Powersource and claims of negligent operation, negligent maintenance, negligent entrustment and negligent leasing against both Defendants. In addition, Plaintiffs also alleged that Powersource and Phantom Leasing were joint entities. The Court heard arguments of counsel on April 24, 2005, and issued an opinion the following day, granting the Defendants' motions for summary judgment on all claims except the claim of negligent operation against Powersource. [Record No. 119]
With respect to the claim of negligent operation, the Court found that certain statements allegedly made by Powersource's president could allow a jury to find that Powersource "held out" Agarwal to be an agent of the company, even though he was in fact an employee of Griffith Aviation, an independent contractor. These statements could allow a jury to find Powersource vicariously liable on a theory of apparent agency. Id. at 19-24.
As a result of the Court's prior opinion, Powersource filed a second motion for
In response, the Plaintiffs argue that summary judgment is inappropriate because there are facts in dispute regarding Powersource's role in selecting Agarwal as the pilot and Powersource's choice of aircraft. [Record No. 129, pg. 2-3] The Plaintiffs also argue that Waddle and Copeland are distinguishable, as Powersource has independent liability to Plaintiffs in addition to vicarious liability for the actions of Agarwal. Id. at 5.
The Plaintiffs and Powersource appear to disagree not only on the controlling law, but also concerning what claims remain following this Court's April 25, 2006, Memorandum Opinion and Order. Therefore, it is necessary to address whether Plaintiffs have any remaining claims for liability against Powersource, apart from vicarious liability for the actions of Agarwal.
The Plaintiffs assert that, in addition to a theory of vicarious liability, Powersource could still be found liable for its role in the "selection [of] Mr. Agarwal as the pilot for the Zetter family, [for the] choice of an aircraft to fly the family and [for] Powersource's control over the selection of the aircraft." [Record No. 129, pg. 2] They claim that a jury could find Powersource negligent for "allowing Mr. Agarwal to fly without a valid FAA license or medical certificate" and for not checking "to see if Mr. Agarwal had a valid pilot's license or medical certificate." Id. at 3. Thus, the Plaintiffs must be arguing that these allegations provide independent bases for liability, were part of the "negligent operation" claim — the only claim on which the Court did not grant summary judgment for the defendants.
In their Second Amended Complaint, the Plaintiffs alleged that their injuries were the result of a crash caused by the "negligent entrustment, operation, leasing and/or maintenance by defendants and/or their agents[.]" [Record No. 40] They later clarified their allegations in response to Powersource's first motion for summary judgment. [Record No. 101] There, they argued that Powersource was liable for negligent entrustment because it "permitted Mr. Agarwal to pilot Plaintiffs in violation of FAA regulations . . . where Powersource knew, or should have known, that Mr. Agarwal was not a duly licensed or certified pilot." Id. at 2. By contrast, the claim for negligent operation arose from Agarwal's negligent flying. This distinction is important because, to the extent Powersource is liable for the negligent flying/control of the airplane, that liability can arise only vicariously through the actions of an agent or employee. Caretenders, Inc. v. Commonwealth, 821 S.W.2d 83, 86 (Ky.1991) ("It is true that a corporation can only act through its agents.")
Based on the foregoing analysis, the only claim remaining in this lawsuit is Plaintiffs' allegation of negligent operation; that is, whether Agarwal was negligent in his operation of the airplane. This alleged negligence extends to Powersource only if there is some evidence by which a jury could find Agarwal to be an apparent agent of Powersource. To the extent that Powersource would be liable to Plaintiffs, it can only be under a theory of vicarious liability.
Summary judgment is most appropriate where the only claims in a case present legal, rather than factual, questions. Having determined that the only remaining claim under which Plaintiffs may recover is based on a theory of vicarious liability, the Court can readily address Powersource's argument that such a claim was legally barred once Plaintiffs released Agarwal from liability. The Plaintiffs argue that material facts in dispute make summary judgment inappropriate. However, the legal question which Powersource's motion for summary judgment presents is exactly the kind of claim for which summary judgment is intended to address. Stein, 942 F.2d at 1064. Powersource's motion for summary judgment is based upon the language of a release which Plaintiffs signed with other Defendants. Powersource argues that the language releasing Agarwal from liability, as well as the language of indemnity therein, operates to release Powersource from all liability which could result from the remaining claim of negligent operation. In short, the interpretation of the legal effect of unambiguous contract language is precisely the kind of determination for which
Powersource argues that, under long standing principles of Kentucky law, the release of an agent from liability also releases the principal. [Record No. 125, pg. 4]; citing Waddle, 131 S.W.3d at 365; Copeland, 769 S.W.2d at 69-70. Therefore, when the Plaintiffs released Agarwal from liability for his alleged negligence in causing Plaintiffs' injuries, that release had the legal effect of releasing Powersource. In response, the Plaintiffs assert that Waddle and Copeland are distinguishable, and that the Court should instead apply the holding in DeStock # 14, Inc. v. Alvey, 993 S.W.2d 952 (Ky.1999).
In Waddle, the plaintiff was brought into the emergency room at Humana Hospital Lake Cumberland (Cumberland) following a motorcycle crash. He was initially attended by an emergency room doctor who called in Dr. Brown for a surgical consultation. Dr. Brown decided to transfer the plaintiff from the local hospital to the larger University of Kentucky Medical Center ("UKMC"), where the surgery was performed. Waddle and his mother sued Dr. Brown and Cumberland alleging that the delay between his diagnosis and the surgery (much of which was due to the decision to transfer him to UKMC) was the result of Dr. Brown's negligence. Following a directed verdict for the defendants which was reversed on appeal and remanded for trial, the plaintiffs voluntarily dismissed their claim against Dr. Brown as the result of a settlement, although they apparently did not reduce it to writing. Id. at 363. Cumberland then moved for dismissal, arguing that once the plaintiffs had "released" the doctor from liability, they could no longer proceed against the hospital under an ostensible agency theory.
Citing its prior holding in Copeland, the Kentucky Court of Appeals reaffirmed the basic principle that:
Id. at 365. The plaintiffs in Copeland and Waddle had a cause of action against the hospital only because they had a cause of action against the hospital's employee. That is, the liability of the hospital was derivative of the employee's liability; if the employee were found not to be negligent, there could be no negligence on the part of the hospital.
This is the situation in the case at bar. Although the Plaintiffs alleged a number of theories of negligence, the Court granted Defendants summary judgment on all counts except one: that Agarwal was an apparent agent of Powersource, and his liability, therefore, could be imputed vicariously to Powersource as his principal.
Unfortunately for the Plaintiffs, there can be no question that the document entitled "Release of all claims" has the (intended) effect of discharging Agarwal from all liability arising out of this incident.
Id. at 364; citing Frear, 103 S.W.3d at 107.
The Court is aware of those few cases in which the release of the servant from liability did not release the master, even where the master's liability was only based on a theory of vicarious liability. However, as those courts have noted, those situations are few and far between, and are usually based on specific statutory schemes. See, e.g., Munson v. United States, 13 Ohio Misc. 243, 380 F.2d 976 (1967)
Similarly, there are situations in which the injured party will be allowed to proceed against the master/principal even though they could no longer seek recovery against the servant/agent. For example, in Cohen v. Alliant Enterprises, Inc., 60 S.W.3d 536 (Ky.2001), the plaintiff was allowed to proceed against a defendant hospital under the theory of respondeat superior even though a suit against the doctor/agent was prohibited by the statute of limitations. The Kentucky Supreme Court determined that there was a difference between the preclusion of recovery from the agent and the release of the agent from liability. Id at 538. However, as in DeStock, the court implicitly affirmed the holding of Copeland, citing favorably its language:
Id., citing Copeland, 769 S.W.2d at 69.
Finally, it is true that "a plaintiff may bring suit and recover from the principal under a vicarious liability theory without first filing suit and getting a judgment against the agent." Cohen, 60 S.W.3d at 539. However, this rule applies in situations where the plaintiff proceeds against the principal and agent separately, or against the principal alone. Id. Where the plaintiff has released the agent from liability, this rule is inapposite.
In this case, there are no circumstances suggesting that the general rule in Copeland and Waddle should not apply. The Plaintiffs have released Agarwal's estate and agreed to "release, acquit and forever discharge . . . [Agarwal, et al] . . . of and from any and all past, present, and future actions, causes of actions [and] third party actions . . ." [See Record No. 121, Ex. 1.] The Plaintiffs have released Agarwal from all liability arising from this incident, and have, in return, received consideration. They have, therefore, executed a clear release of Agarwal, and that release operates to release Powersource from all vicarious liability for Agarwal's negligence. As this
The Plaintiffs' release of Agarwal from liability effectively releases Powersource of any vicarious liability, as its alleged negligence was entirely derivative. Alternatively, summary judgment would be appropriate on these claims because the "release of all claims" contains an effective indemnification clause, by which Plaintiffs agree to indemnify Agarwal for any direct or third-party lawsuits which may arise from this incident. The legal effect of this indemnification clause is to release Powersource from liability so as to avoid what the Kentucky courts label the "indemnification/circuitry of litigation" problem. Copeland, 769 S.W.2d at 69.
Addressing what it considered a "dearth of Kentucky law on the subject," the Kentucky Court of Appeals noted the problems presented when an agent is released from liability but the plaintiff continues against the principal. Id. The court adopted the logic of the Illinois Supreme Court, which adopted a Tennessee decision. Id., citing Holcomb v. Flavin, 34 Ill.2d 558, 216 N.E.2d 811, 814 (1966), citing Stewart v. Craig, 208 Tenn. 212, 344 S.W.2d 761 (1961). These courts all recognized the difficulties which result when a plaintiff releases and indemnifies the agent from liability, but attempts to reserve the right to proceed against a principal who has no independent liability. In the event the plaintiff was able to recover from the principal, that recovery would be based entirely on the negligence of the agent. The principal would then be entitled to seek indemnity from the agent in the amount it paid the plaintiff. However, the plaintiff, having agreed to indemnify the agent, would be required to essentially substitute itself for the agent, such that the principal would be seeking recovery from the plaintiff in the amount it paid the plaintiff. This is the "circuitry of litigation" that the courts in Holcomb and Stewart sought to avoid. Copeland, 769 S.W.2d at 69 (internal citations omitted).
Kentucky has long abandoned the "clean hands doctrine", so a discussion of how fault would be partitioned between the agent and the principal in a vicarious liability context is unnecessary. Crime Fighters Patrol v. Hiles, 740 S.W.2d 936, 939 (Ky.1987). Crime Fighters makes clear that where the defendants are not in pari delicto, the less culpable tortfeasor is entitled to contribution from what the courts sometimes term the primary tortfeasor. Id., citing Restatement (Second) of Torts, § 886(b). More specifically, the Kentucky Supreme Court has explicitly adopted the indemnity argument embraced by Copeland in DeStock # 14, Inc. v. Alvey, 993 S.W.2d 952 (Ky.1999) — the decision which the Plaintiffs argue supports a denial of summary judgment.
In DeStock, a driver and passenger were injured in an automobile accident with a drunk driver. The injured plaintiffs sued both the driver (Logsdon) and the restaurant which, they alleged, continued to serve him alcohol after he became obviously intoxicated. The plaintiffs settled with Logsdon, but continued to press their lawsuit against the restaurant, DeStock. The trial court granted summary judgment to DeStock, "premised upon the theory that the release by [plaintiffs] of Logsdon, who was primarily liable, effectuated a concomitant release of DeStock, which was only secondarily liable." Id. at 959. The Kentucky Supreme Court overturned the trial court, finding Copeland inapplicable.
Under KRS § 413.241 (a specific statute which governs liability in actions against dram shops), although the driver was primarily liable to the plaintiffs the statute created independent liability in DeStock for the plaintiffs' injuries. While the court
The holding in DeStock is inapplicable to this case insofar as any of the Plaintiffs claims which could establish independent liability in Powersource have been decided in Powersource's favor in the Court's April 25, 2006 opinion. [Record No. 119] Absent a specific statute which would create independent liability by making Powersource a separate tortfeasor, Powersource can only be found vicariously liable.
However, DeStock is applicable insofar as it upholds the same indemnity logic which underscores Copeland specifically and the rule which releases a principal when the agent is indemnified by the plaintiff:
DeStock, 993 S.W.2d at 959. `The Kentucky Supreme Court is explicitly endorsing the circular indemnity logic which underlies the rule releasing a principal whose liability is vicarious only when the agent is released from liability. Indeed, the very fact that the court feels compelled to distinguish DeStock from Copeland implicitly confirms both rationales for the holding in Copeland. DeStock, 993 S.W.2d at 959.
Having determined that Kentucky recognizes the similar effect of indemnity and release in releasing the principal once the agent has been released, it only remains to be determined if Plaintiffs granted Agarwal indemnity, in addition to release. The Kentucky Supreme Court has adopted the view of American Jurisprudence, Second on Release, which recognizes the distinction between `release' and `indemnification':
Frear, 103 S.W.3d at 107 (internal citations omitted). As a common sense reading reveals, the "release of all claims" contains terms of both release and indemnification.
[Record No. 121, Ex. 1]. Having agreed to discharge Agarwal from any damages he suffer as the result of a suit or third party action for contribution or indemnity, Plaintiffs have created the exact circuitry of litigation which underlies the rule in Crime Fighters. To the extent Plaintiffs were to recover from Powersource on a theory of vicarious liability for Agarwal's negligence, Powersource would be entitled to recover that amount from Agarwal. In the suit for indemnity, Agarwal would, under `the terms of the release, be entitled to indemnification from Plaintiffs. Thus, summary judgment for Powersource is also granted on these alternative grounds.
Accordingly, for the reasons discussed herein, it is
(1) Defendant Powersource Transportation's Motion for Summary Judgment as to the Plaintiffs' Remaining Agency Claim is
(2) Defendant Phantom Leasing's Motion for Judgment is
(3) All claims asserted in this action having been resolved, this matter is