SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
Argued October 11, 2005 -- Decided May 22, 2006
LONG, J., writing for a unanimous Court.
In this appeal, the Court considers the propriety of an order granting summary judgment in favor of Browning-Ferris Industries of New York, Inc., (BFI-NY), where the complaint alleges that BFI-NY had a duty to ensure the safety of trucks used by its independent contractors.
The Puckreins were killed and Alecia Puckrein’s mother, Jean Graeves, was seriously injured in 1998 when their automobile was struck by an unregistered and uninsured tractor-trailer with seriously defective brakes. The tractor-trailer was owned by ATI Transport, Inc., (ATI). At the time of the accident, the tractor-trailer was transporting a load of glass residue for BFI-NY from Brooklyn to American Ref-Fuel, an incinerator plant in Newark. BFI-NY actually had contracted with World Carting Corp., to transport the load, and World Carting, in turn, had assigned its responsibilities to ATI.
The driver of the tractor-trailer, Gaizka Idoeta, was issued several summonses, including reckless driving, operation of an unsafe vehicle, and operation of an uninsured vehicle. ATI, as owner of the tractor-trailer, received summonses for operation of a vehicle with a suspended registration, operation of an unsafe vehicle, and operation of an uninsured vehicle. Idoeta was also charged with manslaughter and was acquitted. John Stangle, the owner of ATI and World Carting, was charged with manslaughter as well. After his trial resulted in a hung jury, Stangle pled guilty to fourth-degree creating a risk of widespread injury or damage, and to the motor vehicle offenses of suspended registration, unsafe vehicle, and uninsured vehicle.
At the time of the accident, BFI-NY was one of Browning-Ferris Industries’ nearly 200 North American wholly-owned subsidiaries. BFI-NY used a facility in Brooklyn as a central hub for the five boroughs of New York City. Pursuant to two contracts with the City, BFI-NY collected and hauled the City residents’ waste and recyclable materials to Brooklyn. BFI-NY used independent carriers to transport recyclables and solid waste from Brooklyn to sites in other states and around the world. BFI-NY also purchased trucks and registered them to BFI-NJ, an affiliate and a registered federal motor carrier, to transport waste from Brooklyn to American Ref-Fuel in Newark.
In July 1997, BFI-NY contracted with World Carting to haul glass residue and solid waste to American Ref-Fuel and other sites. Pursuant to the contract, World Carting was to provide all necessary equipment complying with all federal, state and local laws, rules, regulations, permits and licenses. World Carting also agreed to maintain required insurance, to furnish BFI-NY with proof of insurance, and to indemnify BFI-NY for injuries or death to persons resulting from work performed under the agreement. Finally, the contract stipulated that World Carting was not to subcontract the work without prior written approval from BFI-NY.
Jeff Randazzo, Transportation Manager of BFI-NY, oversaw all material going outbound from the Brooklyn facility. He indicated that the contract with ATI arose when BFI-NY’s Operation Manager recommended Stangle. Randazzo testified that he received Stangle’s certificate of insurance from the Operations Manager. According to documentation provided by investigating officers in 1998, World Carting’s liability insurance expired two months before the accident.
Despite BFI-NY’s contract with World Carting, Randazzo testified that ATI trucks “showed up for World Carting,” leading him to believe they were the same company. In fact, World Carting and ATI had the same address and were both owned by Stangle. Randazzo said he could not remember what the invoices for loads hauled by ATI said, though he thought all payments were issued to World Carting. Procedures for admittance to the BFI-NY facility are unclear. One employee testified that for ATI to haul for World Carting, they would just show up and say they were hauling for World Carting, or World Carting would call to inform BFI-NY. Another employee, who was responsible for health and safety at the facility, stated that BFI-NY would not allow just anybody to come in off the street – they [the trucks] would have to have some sort of agreement with BFI. And, although Randazzo said that a hauler had to have an inspected and registered tractor and trailer along with insurance to haul for BFI-NY, he acknowledged that nobody checked to determine if ATI’s registration, insurance, and other licenses were in order.
The Puckreins’ estate and the Greaves filed suit against twenty-two defendants. Idoeta, the Stangles, ATI and World Carting defaulted. The trial court granted BFI-NY’s motion for summary judgment. In a damages trial, the jury returned verdicts against the defaulting defendants, including one million dollars in punitive damages against Stangle. Plaintiffs appealed from the grant of summary judgment in favor of BFI-NY, and the Appellate Division affirmed. The Supreme Court granted certification.
HELD: The facts alleged in the complaint were sufficient to establish BFI-NY’s liability for negligent hiring of an incompetent contractor, and summary judgment should not have been entered in favor of BFI-NY.
1. Plaintiffs argue that BFI-NY qualified as a motor carrier under federal statutes and was thus vicariously liable for the negligence of World Carting and ATI; that BFI-NY was liable for hiring an incompetent contractor; and that the strong public policy in favor of highway safety devolved a non-delegable duty on BFI-NY to assure that its waste and recyclables were safely transported on the highways. The Court first addresses plaintiffs’ incompetent contractor claim. Ordinarily, one who hires an independent contractor is not liable for the negligent acts of the contractor in the performance of the contract. There are, however, exceptions to this general rule: where the principal retains control of the manner and means of the work; where the principal engages an incompetent contractor; and where the activity constitutes a nuisance. Only the second exception is at issue here. (pp. 11-14)
2. To prevail against the principal on a claim of hiring an incompetent contractor, a plaintiff must show that the contractor was incompetent or unskilled to perform the job for which he or she was hired; that the harm that resulted arose out of the incompetence; and that the principal knew or should have known of the incompetence. Mavrikidis v. Petullo, 153 N.J. 117 (1998), is this Court’s most recent opinion on the incompetence exception. There, the principal, Clar Pine, hired an independent contractor to replace the asphalt on its commercial property. A dump truck belonging to the contractor and overloaded with hot asphalt that was being transported to the job site collided with plaintiff’s car, injuring her. This Court held that Clar Pine could not be held liable, primarily because the accident did not result from negligence in the work that was the subject of the contract – paving. The Court explained that Clar Pine had no reason to inquire about peripheral issues such as the contractor’s mode of transporting equipment or supplies to the job site. (pp. 14-17)
3. Unlike Mavrikidis, transportation was not peripheral to the BFI-NY/World Carting contract, it was the contract. The very job that BFI-NY hired World Carting/ATI to do was to haul waste and recyclables across state lines. Clearly, the hauler’s basic competency included, at a minimum, a valid driver’s license, a valid registration certificate, and a valid liability insurance identification card. The question is whether BFI-NY knew or should have known of World Carting’s incompetence. A company like BFI-NY, whose core purpose is the collection and transportation of materials on the highways, has a duty to use reasonable care in the hiring of an independent trucker including a duty to make an inquiry into the trucker’s ability to travel legally on the highways. According to the record, BFI-NY imposed such a duty of inquiry on its own employees. Yet, there is no indication that anyone at BFI-NY inquired about World Carting’s ability to travel on the highways. Finally, BFI-NY cannot avoid liability at this point by claiming it had contracted with World Carting, and had no relationship with ATI. Plaintiffs’ evidence suggests that World Carting and ATI were one and the same, and that BFI-NY knew it and treated them as one entity. (pp. 18-24)
The judgment of the Appellate Division is REVERSED, plaintiffs’ complaint against BFI-NY is REINSTATED, and the matter is REMANDED to the Law Division for further proceedings.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN, WALLACE and RIVERA-SOTO join in JUSTICE LONG’s opinion.
SUPREME COURT OF NEW JERSEY
A-
117 September Term 2004
GARY A. PUCKREIN, administrator of the Estates of KEVIN H. PUCKREIN, deceased, and
ALECIA PUCKREIN, deceased, and JEAN GREAVES and CECIL GREAVES, h/w,
Plaintiffs-Appellants,
v.
ATI TRANSPORT, INC., GAIZKA IDOETA, JOHN R. STANGLE, JR., WORLD CARTING CORP., KRISTEN
STANGLE, a/k/a KRISTEN GOSDICK, COVENANT DISPOSAL, INC., BURKEEN CONSTRUCTION CO., BULK TRANS EXPRESS
CO., INC., BFI RECYCLING SYSTEMS, BFI RECYCLING OF NEW JERSEY, INC., formerly BROWNING-FERRIS
INDUSTRIES WASTE SYSTEMS, INC., BROWNING-FERRIS INDUSTRIES WASTE SYSTEMS, INC., BFI WASTE SYSTEMS OF
NEW JERSEY, INC., BFI WASTE SYSTEMS OF NORTH AMERICA, INC., AMERICAN REF-FUEL CONSTRUCTION
OF ESSEX COUNTY, INC., a/k/a AMERICAN REF-FUEL COMPANY, JOE FABLE, "JOHN DOE" HUMPHREY,
JIM VAN WOERT, JEFF RANDAZZO and RICK DEANDRE, JOHN DOE TRUCKING, 1-10, and
JOHN DOE MOTOR CARRIER, 1-10,
Defendants,
and
ALLIED WASTE INDUSTRIES, INC., successor in interest to BROWNING-FERRIS INDUSTRIES OF NEW YORK,
INC. a/k/a BFI OF NEW YORK, INC.,
Defendant-Respondent.
Argued October 11, 2005 – Decided May 22, 2006
On certification to the Superior Court, Appellate Division.
Paul D. Brandes argued the cause for appellants (Villari, Brandes & Kline, attorneys;
Mr. Brandes and Theresa L. Giannone, on the briefs).
Christopher C. Mauro argued the cause for respondent (Camacho Mauro Mulholland, attorneys).
JUSTICE LONG delivered the opinion of the Court.
In 1998, Kevin and Alecia Puckrein were killed when their automobile was struck
by an unregistered and uninsured tractor-trailer with seriously defective brakes. The tractor-trailer was
owned by ATI Transport, Inc., (ATI) and, at the time of the accident,
had been transporting a load of glass residue for Browning-Ferris Industries of New
York, Inc., (BFI-NY) from Brooklyn, New York, to an incinerator plant in Newark,
New Jersey. BFI-NY actually had contracted with World Carting Corp., to transport the
load and World Carting, in turn, had assigned its responsibilities to ATI.
Plaintiffs sued a series of defendants including Gaizka Idoeta (the driver of the
tractor-trailer), ATI, World Carting, John Stangle (the owner of ATI and World Carting),
and BFI-NY. The trial judge dismissed the case against BFI-NY on summary judgment.
Plaintiffs prevailed at trial but all defendants were, by then, judgment proof.
The issue before us is the propriety of the grant of summary judgment
in BFI-NY’s favor. Plaintiffs argue that BFI-NY had a duty to ensure the
safety of the trucks it used under federal statutory and regulatory provisions relevant
to interstate motor carriers and under common-law negligence principles applicable to the hiring
of incompetent independent contractors.
Because the facts in this case, viewed in the light most favorable to
plaintiffs, did not warrant the grant of summary judgment in BFI-NY’s favor on
the issue of the hiring of an incompetent contractor, we now reverse that
judgment.
I
THE ACCIDENT
On June 22, 1998, the Puckreins were killed and Alecia Puckrein’s mother, Jean
Graeves, was seriously injured when a tractor-trailer with faulty brakes went through a
red light on Rock Avenue in North Plainfield and struck the automobile in
which they were riding. At the time, the tractor-trailer contained glass residue produced
in the glass-crushing process and had a gross weight of 79,000 pounds. Idoeta
had picked up the residue at BFI-NY’s Brooklyn site and transported it to
American Ref-Fuel in Newark. Because the hydraulic system on the truck was not
operating, he could not drop off the load and was asked to leave.
Idoeta was on his way back to ATI when the accident occurred. An
automotive engineer retained by the State Police determined that at the time of
the accident, a “maximum of 54 percent of the required braking existed” on
the truck. According to a police report, the truck had markings identifying it
as “ATI Transport.”
Idoeta was issued summonses for reckless driving, N.J.S.A. 39:4-96; failure to observe a
traffic signal, N.J.S.A. 39:4-81; operation of an unsafe vehicle, N.J.S.A. 39:3-44; and operation
of an uninsured vehicle, N.J.S.A. 39:6b-2. ATI, as the owner of the tractor-trailer,
received summonses for allowing operation of a vehicle with a suspended registration, N.J.S.A.
39:3-40; allowing operation of an unsafe vehicle, N.J.S.A. 39:3-44; and allowing operation of
an uninsured vehicle, N.J.S.A. 39:6b-2. Idoeta was also charged with manslaughter, of which
he was acquitted.
Stangle was charged with manslaughter as well. After the trial resulted in a
hung jury, Stangle pled guilty to fourth-degree creating a risk of widespread injury
or damage, N.J.S.A. 2C:17-2, and to motor vehicle offenses of suspended registration, N.J.S.A.
39:3-40; unsafe vehicle, N.J.S.A. 39:3-44; and uninsured vehicle, N.J.S.A. 39:6b-2. In entering the
pleas to the charges, Stangle admitted he knew that at least one of
the brake drums on the truck that killed the Puckreins was completely missing
and that, in sending the truck out onto the road, he consciously disregarded
the risk of injury, making him reckless. He also acknowledged that the truck
had neither registration nor insurance on the day of the accident.
THE PARTIES
In June 1998, BFI-NY was one of Browning-Ferris Industries’ nearly 200 North American
wholly-owned subsidiaries.
See footnote 1
BFI-NY used a facility at 72 Scott Avenue in Brooklyn as
“a central hub for the five boroughs of New York City.” Pursuant to
two contracts with the City of New York (the City), BFI-NY collected and
hauled the City residents’ waste and recyclable materials to Brooklyn. The facility also
accepted solid waste collected by its own trucks in Brooklyn, Queens, Manhattan, and
the Bronx, as well as waste independent haulers paid to leave at the
site. From the Brooklyn facility, BFI-NY shipped recyclables to “[t]he 50 states and
around the world” and solid waste to “Ohio, Pennsylvania, New Jersey, and Long
Island . . . and in some cases, Virginia.”
BFI-NY used independent carriers to transport recyclables and solid waste across state lines.
Further, BFI-NY purchased trucks and registered them to BFI-NJ, an affiliate and a
registered federal motor carrier, to transport waste from Brooklyn to American Ref-Fuel in
Newark. Dennis Pantano, President of BFI-NY in June 1998, explained that BFI-NJ trucks
were owned by BFI-NY and that the “paper transaction” with BFI-NJ was done
for the benefit of BFI-NY because of New Jersey environmental permit requirements. At
the time of the accident, BFI-NY was not registered as a federal motor
carrier.
In July 1997, BFI-NY contracted with World Carting to haul glass residue to
Morgantown, Pennsylvania, and American Ref-Fuel in Newark, and if no glass residue was
available, to haul solid waste to American Ref-Fuel. Pursuant to the contract, World
Carting was to provide necessary “services and equipment” with the equipment “comply[ing] with
all applicable federal, state and local laws, rules, regulations, permits and licenses.” Additionally,
World Carting “warrant[ed] that it [had] all federal, state or local permits and
licenses required to perform the work.” World Carting was to perform the work
as an independent contractor, “in compliance with all applicable statutes and regulations, including,
without limitation, the rules and regulations of the Environmental Protection Agency, Department of
Transportation and the Occupational Safety and Health Administration, and any similar federal, state
or local law or regulations applicable.” World Carting also agreed to maintain required
insurance and to furnish BFI-NY with proof of insurance, as well as to
indemnify BFI-NY for “injuries to or death of persons . . . caused
by, resulting from, growing out of, or incidental to the work performed under
[the] Agreement.” Finally, the contract stipulated that World Carting was not to subcontract
the work without prior written approval from BFI-NY.
Jeff Randazzo, Transportation Manager of BFI-NY, “oversaw all of the material going outbound
from the facility.” He indicated that a relationship formed between BFI-NY and World
Carting after BFI-NY’s Operations Manager John Puma recommended Stangle. Randazzo provided Stangle, who
he believed owned “two trucks,” with the contract.
Randazzo testified that he received Stangle’s certificate of insurance from Puma. According to
documentation BFI-NY provided to investigating officers in June 1998, World Carting’s liability insurance
expired on April 15, 1998, two months before the accident, and BFI-NY had
no updated information on file indicating that the insurance had been renewed.
Despite BFI-NY’s contract with World Carting, Randazzo testified that ATI trucks “show[ed] up
for World Carting,” leading him to believe that “they were the same company.”
In fact, World Carting and ATI had the same address and leadership. World
Carting listed 401 Ferncrest Court, Three Bridges, New Jersey as its address in
its contract with BFI-NY. The same address was also listed for ATI on
the registration of the truck involved in the accident. Furthermore, Stangle served as
president and owner of both World Carting and ATI, and his wife, Kristen
Stangle, served as general manager for World Carting. Randazzo explained that the invoices
for loads hauled by ATI said “either . . . World Carting or
ATI,” he could not remember which, but he “believe[d] they were World Carting”
and “[he] thought all the payments were issued to World Carting.”
The procedures for admittance to the BFI-NY facility are unclear. Alfred Dibens, who
worked on “safety and health and environmental issues” for BFI-NY, indicated that for
ATI to haul on behalf of World Carting, either “[t]hey would just show
up and say ‘I’m hauling for World Carting’” or World Carting would call
to inform BFI-NY. Jim Van Woert, who was responsible for BFI-NY’s health and
safety in June 1998, noted however, that a truck needed clearance before it
entered the BFI-NY facility because BFI-NY “would not allow just anybody to come
off the street. They [the trucks] would have to have some sort of
agreement with BFI.”
Although Randazzo said that in order to haul for BFI-NY, a hauler had
to have an inspected and registered tractor and trailer along with insurance, he
acknowledged that nobody at BFI-NY checked to determine if ATI’s registration, insurance, and
other licenses were in order. BFI-NY just “assumed” the hauler had what was
“needed.” Further, according to several BFI-NY employees, it was the hauler, not BFI-NY,
who was responsible to ensure compliance with federal regulations.
The record contains only one agreement between World Carting and ATI. At 12:01
a.m. on June 20, 1998, World Carting leased the truck involved in the
accident (identified as tractor number 106) from ATI for sixty-five percent of gross
revenue, not including driver services. According to the agreement, World Carting was to
provide property and liability insurance. No mention of the BFI-NY/World Carting agreement is
contained in the lease that bears only the lessee’s signature, that of Stangle.
World Carting did not obtain permission from BFI-NY for the arrangement.
PROCEDURAL HISTORY
On May 26, 2000, plaintiffs Gary A. Puckrein, as administrator of the estates
of Kevin H. and Alecia Puckrein, as well as Jean and Cecil Greaves,
sued twenty-two defendants for the wrongful deaths of Kevin and Alecia, personal injury
and negligent infliction of emotional distress sustained by Jean Greaves, loss of consortium
suffered by Jean’s husband Cecil Greaves, and punitive damages.
See footnote 2
Idoeta, John and Kristen
Stangle, ATI, and World Carting defaulted. Plaintiffs filed a motion for partial summary
judgment on liability and causation against Idoeta, Stangle, ATI, and BFI-NY as well
as the other BFI entities.
BFI-NY opposed plaintiffs’ motion and cross-moved for summary judgment. Specifically, BFI-NY contended that
plaintiffs had not proven that BFI-NY was negligent or that Idoeta was a
statutory employee of BFI-NY. Thus, according to BFI-NY, it was not responsible for
his actions. The trial judge denied plaintiffs’ motion for summary judgment, and granted
summary judgment in favor of BFI-NY as well as all “BFI-related entities.”
In 2003, pursuant to Rule 4:37-2(e), BFI-NY successfully moved for continued participation in
the pending damages trial against the remaining defendants who were judgment proof and
would not be appearing. Following the trial, the jury returned verdicts against Idoeta,
John and Kristen Stangle, ATI, and World Carting. The estate of Kevin Puckrein
was awarded $424,624.50, the estate of Alecia Puckrein $119,613, and Jean Greaves $175,000.
The jury also awarded one million dollars in punitive damages against Stangle.
Plaintiffs appealed from the grant of summary judgment in favor of BFI-NY and
the Appellate Division affirmed. In doing so, the court rejected plaintiffs’ claims that
(1) BFI-NY was ATI’s statutory employer; (2) BFI-NY was liable for ATI’s negligence;
or (3) plaintiffs were third party beneficiaries of the contract between BFI-NY and
the City. We granted certification.
183 N.J. 257.
II
Plaintiffs argue that BFI-NY qualified as a motor carrier under
49 U.S.C.A.
§13102(14)
and was thus vicariously liable for the negligence of World Carting and ATI;
that BFI-NY hired an “incompetent” contractor for whose acts it was responsible; and
that our “strong public policy” in favor of highway safety devolved a non-delegable
duty on BFI-NY to assure that its waste and recyclables were safely transported
on the highways.
See footnote 3
BFI-NY counters that it was not a registered motor carrier under federal safety
regulations and, therefore, did not qualify as a statutory employer of ATI; that
it was not liable for ATI’s actions because it did not contract with
ATI but only with World Carting; that even if it had contracted with
ATI it was insulated from liability because ATI was an independent contractor; and
that it was not liable for hiring an “incompetent” independent contractor under Mavrikidis
v. Petullo,
153 N.J. 117, 147 (1998).
III
We turn first to plaintiffs’ incompetent contractor claim. It is well-settled that when
a person engages an independent contractor to do work that is not itself
a nuisance, he is not vicariously liable for the negligent acts of the
contractor in the performance of the contract. Bahrle v. Exxon Corp.,
145 N.J. 144, 156 (1996) (“Ordinarily, an employer that hires an independent contractor is not
liable for the negligent acts of the contractor in the performance of the
contract.”); Baldasarre v. Butler,
132 N.J. 278, 291 (1993) (“Generally . . .
the principal is not vicariously liable for the torts of the independent contractor
if the principal did not direct or participate in them.”). The immunity of
the principal who hires an independent contractor rests on the distinction between such
a contractor and an employee.
The important difference between an employee and an independent contractor is that one
who hires an independent contractor
has no right of control over the manner in which the work is
to be done, it is to be regarded as the contractor’s own enterprise,
and he, rather than the employer is the proper party to be charged
with the responsibility for preventing the risk, and administering and distributing it.
[Baldasarre, supra, 132 N.J. at 291 (quoting W. Page Keeton et al., Prosser
and Keeton on the Law of Torts § 71 (5th ed. 1984)).]
There are, however, three exceptions to the general rule that principals are not
liable for the actions of independent contractors: (1) where the principal retains control
of the manner and means of doing the work subject to the contract;
(2) where the principal engages an incompetent contractor; or (3) where the activity
constitutes a nuisance per se. Majestic Realty Assocs. v. Toti Contracting Co.,
30 N.J. 425, 431 (1959). In this case, BFI-NY is not alleged to have
maintained control over the transportation of its goods by World Carting. Further, trucking
is neither a nuisance per se nor has it been held to be
an inherently dangerous activity requiring special precautions, thus warranting the imposition of a
non-delegable duty on the principal to assure the safe transport of its goods
on the public highways. Mavrikidis, supra,
153 N.J. 117, 147 (holding transport of
asphalt not inherently dangerous); see also Eastern Airlines v. Guida & Sons Trucking
Co.,
675 F. Supp. 1391 (E.D.N.Y. 1987) (hauling material by truck not inherently
dangerous activity); Morales v. Davis Bros. Constr. Co.,
647 So.2d 1302 (La.
Ct. App. 1994) (same); Kime v. Hobbs,
562 N.W.2d 705 (Neb. 1997) (same);
Norris v. Bryant,
60 S.E.2d 844 (S.C. 1950) (same); King v. Lens Creek
Ltd. P’ship,
483 S.E.2d 265 (W. Va. 1996) (same). Thus, only the second
exception--the incompetent contractor exception--is at issue here.
A.
The notion of liability for hiring an incompetent contractor is derived from basic
negligence principles. The Restatement (Second) of Torts § 411 (1965) states:
An employer is subject to liability for physical harm to third persons caused
by his failure to exercise reasonable care to employ a competent and careful
contractor (a) to do work which will involve a risk of physical harm
unless it is skillfully and carefully done, or (b) to perform any duty
which the employer owes to third persons.
Comment a to § 411, in turn, defines a competent and careful contractor as
“a contractor who possesses the knowledge, skill, experience, and available equipment which a
reasonable man would realize that a contractor must have in order to do
the work which he is employed to do without creating unreasonable risk of
injury to others.” Comment b to § 411 further explains:
The employer of a negligently selected contractor is subject to liability under the
rule stated in this Section for physical harm caused by his failure to
exercise reasonable care to select a competent and careful contractor, but only for
such physical harm as is so caused. In order that the employer may
be subject to liability it is, therefore, necessary that harm shall result from
some quality in the contractor which made it negligent for the employer to
entrust the work to him.
In other words, to prevail against the principal for hiring an incompetent contractor,
a plaintiff must show that the contractor was, in fact, incompetent or unskilled
to perform the job for which he/she was hired, that the harm that
resulted arose out of that incompetence, and that the principal knew or should
have known of the incompetence. Mavrikidis, supra, 153 N.J. at 136-37.
B.
Mavrikidis, supra,
153 N.J. 117, is our most recent foray into the incompetence
exception. There, the owner of Clar Pine Servicenter (Clar Pine) hired an independent
contractor to replace the asphalt at his premises. Id. at 125. A dump
truck belonging to the contractor and overloaded with hot asphalt that was being
transported to the job site collided with the plaintiff’s car, injuring her. Id.
at 124-25.
Plaintiff sued the Petullos, who were the contractors hired to replace the asphalt
and also the owners of the truck; the company responsible for loading the
asphalt onto the truck; and Clar Pine. Id. at 129. A jury found
that Clar Pine was “negligent in engaging a careless, reckless or incompetent contractor”
and that its negligence was a proximate cause of the accident and the
plaintiff’s injuries. Id. at 130. The Appellate Division reversed, finding that there was
insufficient evidence to support a finding that Clar Pine was negligent in hiring
the Petullos. Id. at 130-31. This Court considered whether Clar Pine should be
vicariously liable for the negligence of the Petullos or for hiring an incompetent
contractor and condensed both inquiries stating: “Because the second Majestic prong may include
causes of action for both direct and vicarious liability, there is no reason
to set out a separate tort for negligently hiring an independent contractor.” Id.
at 137.
In Mavrikidis, a majority of this Court ruled in favor of immunizing Clar
Pine. Id. at 148. First, the Court held that there was no evidence
that the Petullos were incompetent to perform the work for which they were
hired-–“paving the service station.” Id. at 137. In that respect, the Court explicitly
determined that neither the risks of driving the asphalt truck nor its overloading
were “inherent” in the contracted paving work. Id. at 147. Second, the Court
held that even if the Petullos were incompetent, the principal had no reason
to know of it. Id. at 138. In that regard, the Court found
that the Petullos’ financial irresponsibility and the poor condition of its trucks were
not evidence of incompetency to pave. Id. at 138-42. In describing the subject
of the contract, the Court noted that most independent contractors transport their equipment
and supplies to the job site, and that the principal should not be
required to inquire about peripheral issues such as the contractor’s mode of transportation
or be liable for accidents that occur en route to the premises. Id.
at 142.
The dissent in Mavrikidis viewed the majority opinion as too limited an application
of the Majestic incompetency exception. See id. at 152-60 (Stein, J., dissenting). In
particular, the dissent found substantial evidence in the record to support the jury’s
finding that Clar Pine was negligent in hiring the Petullos “to pave and
transport hot asphalt to the job site,” id. at 154 (emphasis added), including
that Clar Pine hired the Petullos because they owed it money; that the
owner of Clar Pine described the Petullos’ trucks as “junks;” and that the
owner of Clar Pine acknowledged that the trucks were not inspected. Id. at
154-58.
At the heart of Mavrikidis was a difference of opinion over whether to
consider that contract narrowly as a paving contract, or more broadly as including
pre- and post-paving activities. Although that issue may be debatable, what is not
debatable is that the tipping point between the majority and the dissent in
Mavrikidis was not a disagreement over the basic legal principles to which we
have adverted. That is the backdrop for our inquiry.
C.
BFI-NY argues that, even assuming it was aware that World Carting’s trucks were
uninsured and unregistered (and therefore uninspected), Mavrikidis insulates it from liability because that
case held that insurance, registration, and poor financial condition are not competency issues.
That reading of Mavrikidis is incorrect. Mavrikidis essentially held that Clar Pine hired
a sub-contractor to pave; that the plaintiff was not injured during a badly
executed paving job; that the transport of equipment and products to the job
site was peripheral to the paving function; and that there was no evidence
from which Clar Pine should have concluded that the Petullos were incompetent to
pave.
By contrast, the very job that BFI-NY hired World Carting/ATI to do was
to haul waste and recyclables across state lines. Unlike Mavrikidis, transportation was not
peripheral to the BFI-NY/World Carting contract, it was the contract. Had that been
the case in Mavrikidis, we have no doubt that the result would have
been different. Clearly, under our law, the hauler’s basic competency included, at a
minimum, a valid driver’s license, a valid registration certificate, and a valid liability
insurance identification card. N.J.S.A. 39:3-29. Without those, the hauler has no right to
be on the road at all. Ibid. BFI-NY’s own witnesses agreed with that
conclusion.
The allegations in this case strike at the heart of the competency issue
in a trucking case. Unlike the claims in Mavrikidis, licensing, registration, and insurance
are, under our law, the sine qua non to the transport of goods
on the roadways.
See footnote 4
N.J.S.A. 39:3-29. Registration, concomitant to inspection,
See footnote 5
is a method of
insuring the safety of vehicles that place the public at risk and insurance
is the guarantee that innocent victims of errant truckers will be compensated. Thus,
the core question here is not whether World Carting was competent to transport
BFI-NY’s loads upon the public highways--it was not. The question is whether BFI-NY
violated its duty to use reasonable care in selecting a trucker and whether
it knew or should have known of World Carting’s incompetence.
We return to the principles relevant to the duty of inquiry. As noted,
“an employer may be charged with negligence in hiring an independent contractor where
it is demonstrated that he should have known, or might by the exercise
of reasonable care have ascertained, that the contractor was not competent.” Reuben I.
Friedman, Annotation, When is Employer Chargeable with Negligence in Hiring Careless, Reckless, or
Incompetent Independent Contractor,
78 A.L.R.3d 910, 916 (1977); see also J.D. Lee &
Barry A. Lyndahl, Modern Tort Law § 8.03 (1991) (“An employer may be liable
for the negligent acts of an independent contractor if the employer fails to
exercise due care in the selection of a competent independent contractor.”); W. Page
Keeton et al., Prosser and Keeton on the Law of Torts § 71 (5th
ed. 1984) (same). The extent of the inquiry obviously depends on the status
of the principal and the nature of the task that the contract covers.
For example, as we explained in Mavrikidis, a principal who hires a contractor
to paint or pave or install electrical outlets need not inquire whether its
pick-up trucks are inspected and insured. Likewise, a casual shipper of goods has
a right to assume that the carrier is not conducting business in violation
of the law. On the contrary, a company whose core purpose is the
collection and transportation of materials on the highways, has a duty to use
reasonable care in the hiring of an independent trucker including a duty to
make an inquiry into that trucker’s ability to travel legally on the highways.
At a minimum, BFI-NY was required to inquire whether its haulers had proper
insurance and registration because without those items the hauler had no right to
be on the road. Just as BFI-NY itself could not have transported products
in unregistered and uninsured trucks, it was not free to engage an independent
contractor that did so.
Indeed, according to the record, BFI-NY imposed that duty of inquiry on its
own employees. Randazzo testified that in order to haul for BFI-NY, a trucker
had to have, “[a] registered truck and trailer,” “[i]nsurance,” and “inspection” from “whatever
state they were from.” Yet, on this record, there is no indication that
anyone at BFI-NY inquired about World Cartings’s ability to travel on the highways.
Randazzo’s testimony did not suggest otherwise:
Q. What was your responsibility, if any, for determining whether the truck owner who
was coming to you to be hired by BFI was, in fact, properly
licensed by the necessary authorities to do that job?
A. I had no responsibility for
that. The trucker was responsible for that.
Q. As part of your job did you
ever investigate to determine whether a trucker owner seeking to haul material for
BFI had all the necessary licenses and permits?
A. No.
Q. You did not consider that part
of your job?
A. No. As them being the trucker we just assumed that they
had the necessary, you know, registration or whatever they needed to haul the
material.
. . . .
Q. In order for the trucker to begin hauling for BFI, did you ever
require that the trucker provide you with copies of whatever federal, state and
local permits he or she had?
A. No.
Accordingly, BFI-NY was not entitled to summary judgment on the incompetent contractor exception.
At the very least, the reasonableness of its inquiry to World Carting was
a jury issue.
Even if it could be proved that BFI-NY made reasonable inquiry of World
Carting at the time of its original retention, its duty did not end
there. See Friedman, supra,
78 A.L.R.
3d at 920 (explaining that although originally unaware
that contractor was incompetent, employer who acquires knowledge of incompetence thereafter may be
liable for inaction) (citing Peck v. Woomack,
192 P.2d 874 (Nev. 1948); Kuhn
v. P.J. Carlin Const. Co.,
278 N.Y.S. 635 (N.Y. Sup. Ct.), aff’d,
288 N.Y.S. 1110 (N.Y. App. Div.), rev’d on other grounds,
8 N.E.2d 300 (N.Y.
1935)). By April 1998, World Carting’s insurance certificate, on file with BFI-NY, had
expired. Despite its continuing duty to inquire, BFI-NY never did so although it
continued to allow World Carting’s trucks to transport its glass residue. In other
words, at a point after the original retention but before plaintiffs’ accident, BFI-NY
should have known that World Carting had become incompetent to transport its products.
Yet, according to the record, BFI-NY continued to load World Carting and ATI
trucks without evidence that they were competent to transport its products. Under the
circumstances, summary judgment in BFI-NY’s favor should not have been granted.
D.
We finally reject the contention that even if World Carting was incompetent, BFI-NY
cannot be vicariously liable for the acts of ATI because “BFI-NY had no
relationship whatsoever to ATI. BFI-NY contracted for services with World Carting only.”
The question of BFI-NY’s relationship with ATI could not have been decided in
BFI-NY’s favor on summary judgment. It is one for the trier of fact.
BFI-NY hired World Carting, through its president, Stangle, to transport its glass residue
to New Jersey. World Carting sent ATI trucks to do the transporting and
they were filled by BFI-NY with no questions asked. The BFI-NY employee responsible
for health and safety issues (Van Woert) testified at his deposition that for
ATI to have made pickups, it “would have to have some sort of
agreement with BFI.” As far as the transportation manager for BFI-NY could recall,
although ATI was doing the transporting, the invoices for the loads said “World
Carting” and all payments were issued to “World Carting.” Employees of BFI-NY testified
that they thought World Carting and ATI were the same company. Indeed, World
Carting and ATI have the same address, Stangle was president and owner of
both World Carting and ATI, and his wife, Kristen Stangle, served as general
manager for World Carting.
Further, although World Carting agreed in its contract with BFI-NY that it would
not subcontract the job to an “independent contractor” without BFI-NY’s permission, according to
the record, it neither sought nor obtained that permission to use the ATI
truck, inferentially holding out ATI as its employee or alter-ego. Indeed, that seems
to be the way BFI-NY’s employees viewed those entities. That evidence, viewed in
a light most favorable to plaintiffs, the non-moving parties, suggests that World Carting
and ATI were one and the same, and that BFI-NY knew it and
treated them as one entity. That alone justified a denial of BFI-NY’s motion
for summary judgment regarding whether it could be vicariously liable for the acts
of ATI.
IV
That ruling makes it unnecessary for us to address the closely poised issue
of BFI-NY’s status as a statutory employer under federal law. In re Dart
Transit Co.,
9 I.C.C.2d 701 (1993); Cox v. Bond Transp., Inc.,
53 N.J. 186 (1969). For the reasons to which we have adverted, the judgment of
the Appellate Division is reversed, plaintiffs’ complaint against BFI-NY is reinstated, and the
cause is remanded to the Law Division for further proceedings consistent with this
opinion.
CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN, WALLACE, and RIVERA-SOTO join in
JUSTICE LONG’s opinion.
SUPREME COURT OF NEW JERSEY
NO. A-117 SEPTEMBER TERM 2004
ON CERTIFICATION TO Appellate Division, Superior Court
GARY A. PUCKREIN,
Administrator of the Estates
of KEVIN H. PUCKREIN,
deceased, and ALECIA
PUCKREIN, deceased, and JEAN
GREAVES and CECIL GREAVES,
h/w,
Plaintiffs-Appellants,
v.
ATI TRANSPORT, INC., etc., et al.,
Defendants,
and
ALLIED WASTE INDUSTRIES,
INC., successor in interest
to BROWNING-FERRIS INDUSTRIES
OF NEW YORK, INC. a/k/a BFI
OF NEW YORK, INC.,
Defendant-Respondent.
DECIDED May 22, 2006
Chief Justice Poritz PRESIDING
OPINION BY Justice Long
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
In 1999, Allied Waste acquired BFI, making it the second largest solid waste
company in the nation.
Footnote: 2
The defendants included ATI Transport, Inc., Gaizka Idoeta, John R. Stangle, Jr., World
Carting Corp., Kristen Stangle, Covenant Disposal, Inc., Burkeen Construction Co., Bulk Trans Express
Co., Inc., BFI Recycling Systems, BFI Recycling of New Jersey, Inc., Browning-Ferris Industries
Waste Systems, Inc., Browning-Ferris Industries of New York, Inc., BFI Waste Systems of
New Jersey, Inc., BFI Waste Systems of North America, Inc., American Ref-Fuel Construction
of Essex County, Inc., Joe Fable, John Doe Humphrey, Jim Van Woert, Jeff
Randazzo, Rick Deandre, John Doe Trucking 1-10, and John Doe Motor Carrier 1-10.
Footnote: 3
Here, plaintiffs have not pressed the third-party beneficiary theory advanced in the Appellate
Division.
Footnote: 4
Under New Jersey law, “[e]very owner or registered owner of a motor
vehicle registered or principally garaged in this State shall maintain motor vehicle liability
insurance coverage . . . .” N.J.S.A. 39:6B-1. Commercial motor vehicles also have
their own specific registration requirements. See N.J.S.A. 39:3-20.
Footnote: 5
Under New Jersey law, “[e]very motor vehicle registered in this State which
is used over any public road, street, or highway or any public or
quasi-public property in this State” must be inspected at “official inspection facilities” or
“licensed private inspection facilities.” N.J.S.A. 39:8-1(a) (emphasis added).