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Knecht v. Balanescu

United States District Court, M.D. Pennsylvania

October 13, 2017

MATTHEW KNECHT, Plaintiff,
v.
ANDREI BALANESCU, et al., Defendants.

          MEMORANDUM

          KAROLINE MEHALCHICK, UNITED STATES MAGISTRATE JUDGE.

         Before this Court are six motions for summary judgment in this trucking accident case; four filed by Plaintiff Matthew Knecht, one by Defendant Newburg Egg Corporation (“Newburg Egg”), and one by the remaining Defendants. While the motions raise a variety of issues, the question critical to resolving many of the motions is the employment relationship of Defendants Andrei Balanescu, Izzy Trucking, and Newburg Egg.

         I. Background and Procedural History

         On October 28, 2015, Plaintiff Matthew Knecht and Defendant Andrei Balanescu were both travelling west on I-80 near Turbot Township, PA. (Doc. 17, ¶ 14). Balanescu was operating a tractor-trailer, delivering a load to a customer of Newburg Egg, while Knecht drove his father's Ford Focus. The tractor was owned by Hudson Truck Leasing LLC, and leased to Izzy Trucking Inc. The trailer was owned by JILCO Equipment Leasing Co. Inc., and leased to Newburg Egg.

         Many of the facts surrounding the accident remain in dispute. Knecht asserts that Balanescu's tractor-trailer struck him from behind, causing the accident that resulted in Knecht's severe injuries, necessary surgeries, and memory loss. (Doc. 17, ¶ 19). The Defendants, citing the police report created by Trooper Edward Shannon, assert that Knecht passed Balanescu from the right hand lane, lost control of his vehicle, came to a rest perpendicular across the travel lanes, and was struck on the passenger side by Balanescu's truck when Balanescu could not stop in time to avoid the crash. (Doc. 60, ¶ 17-19; Doc. 60-6, at 5). On March 30, 2016, Knecht filed suit against Balanescu, Izzy Trucking, A&B Trucking of Queens Inc., Hudson Truck Leasing, and JILCO, amending his complaint on October 14, 2016 to include Newburg Egg. (Doc. 1; Doc. 17).

         On September 1, 2017, Knecht filed his first motion for summary judgment, arguing that Balanescu should be considered an employee of Newburg Egg as a matter of law. (Doc. 53; Doc. 56). Knecht argues that the lease agreement between Newburg and JILCO for the trailer involved in the accident affirmatively states that only employees will transport the trailer in question. (Doc. 56, at 4). Knecht further argues that the level of control exhibited by Newburg establishes an employment relationship. (Doc. 56, at 4). Newburg responded that the lease agreement with a third party does not establish an employment relationship, and that Newburg merely provided the destination of its shipments but did not exert any control over Balanescu. (Doc. 114).

         On September 7, 2017, Newburg filed a motion for summary judgment as well. In its motion, Newburg argues that Knecht has failed to produce evidence to support the contentions that Newburg: was involved in a joint venture; can be vicariously liable for Balanescu's actions; negligently hired, supervised, or retained Balanescu; negligently entrusted their equipment to him; or was reckless. (Doc. 57; Doc. 58). Knecht counters that there are genuine disputes of material fact on all of these contentions. (Doc. 77).

         Next, the remaining Defendants[1] moved for summary judgment as well. (Doc. 59; Doc. 61). In their motion, these Defendants argue that: claims against Hudson Truck Leasing and JILCO should be dismissed under the Graves Amendment; claims for punitive damages should be dismissed, as there is no evidence of outrageous conduct or evil motive, and; claims against A&B Trucking of Queens should be dismissed. (Doc. 61, at 2). Knecht responds that JILCO negligently entrusted their trailer to Newburg, constituting an exception to the Graves Amendment, and that factual disputes remain on whether Izzy Trucking and Andrei Balanescu acted with reckless indifference. (Doc. 79, at 4). Knecht did not oppose the dismissal of claims against Hudson Truck Leasing and A&B Trucking. (Doc. 79, at 3).

         Knecht then filed his second motion for summary judgment, arguing that as a matter of law Newburg Egg negligently hired, supervised, and retained Andrei Balanescu as a driver for its deliveries. (Doc. 62; Doc. 64). Newburg retorts that it is not a motor carrier, thus the cited provisions for Knecht's theory do not apply, nor is Balanescu an employee in any event. (Doc. 73).

         The same day, Knecht also filed a motion for summary judgment, arguing that Izzy Trucking also negligently hired, supervised, and retained Andrei Balanescu. (Doc. 65; Doc. 67). Izzy Trucking does not challenge Balanescu's employment status, but argues genuine questions of material fact remain and thus preclude summary judgment at this stage. (Doc. 74).

         Lastly, Knecht moves for summary judgment on the issue of Israel Newman's employment. (Doc. 68; Doc. 70). Knecht argues that Newman, owner of Izzy Trucking, must also be considered an employee of Newburg Egg as a matter of law due to the exclusivity between Izzy Trucking and Newburg and because of Newburg's payment of Newman's fees and costs. Newburg responds that Izzy Trucking is entirely independent, was originally retained by Newburg through a non-party broker, and that the cost arrangement is fairly standard practice. (Doc. 72).

         As the motions were fully briefed and presented at oral argument, they are now ripe for review.

         II. Standard of Review

         Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is “genuine” only if the evidence “is such that a reasonable jury could return a verdict for the non-moving party.” Anderson, 477 U.S. at 248. In deciding a summary judgment motion, all inferences “should be drawn in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true.” Pastore v. Bell Tel. Co. of Pa., 24 F.3d 508, 512 (3d Cir. 1994).

         A federal court should grant summary judgment “if 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.” Farrell v. Planters Lifesavers Co., 206 F.3d 271, 278 (3d Cir. 2000). In making this determination, “a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor.” Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). The Court need not accept mere conclusory allegations, whether they are made in the complaint or a sworn statement. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990). In deciding a motion for summary judgment, the court's function is not to make credibility determinations, weigh evidence, or draw inferences from the facts. Anderson, 477 U.S. at 249. Rather, the court must simply “determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.

         III. Discussion

         As evaluation of a majority of the motions is affected by the potential employer-employee relationship between Newburg Egg and Andrei Balanescu, the Court first addresses this issue.

         A. The terms of the lease agreement between Newburg Egg and JILCO Equipment Leasing Co., Inc. do not by themselves create an employment relationship between Newburg Egg and Andrei Balanescu

         Knecht argues that Balanescu must be considered an employee of Newburg Egg pursuant to a lease agreement for the trailer Balanescu was towing at the time of the accident, entered into between Newburg and JILCO. (Doc. 56, at 4). Knecht argues that the agreement mandates that the operator of the leased equipment must be an employee. Under paragraph 14 of this lease agreement, Newburg Egg agreed that the “vehicle(s)” described in the equipment schedule between the two “shall be operated by safe, careful, and licensed drivers to be selected, employed, controlled, and paid by [Newburg]. [Newburg] agrees [] that said drivers are employees and agents of [Newburg] and not the employees and agents of JILCO . . .” (Doc. 56- 1, at 4). The subsequent equipment schedule lists one 2001 Great Dane over-the-road trailer, serial number 1GRAA96231B017983, which Knecht asserts is the same trailer involved in the accident. Thus, as driver of the “vehicle” identified in the equipment schedule, Balanescu is an employee per the express terms agreed upon by Newburg and JILCO. Newburg counters that the reliance on “boilerplate” language contained in the contract is misplaced, as there is no case law to support the finding of an employment relationship based on a lease agreement made with a third-party.

         While the Court is mindful that one of the indisputable foundational principles of contract law is that parties should be held to the plain language of their freely agreed to contracts, nonetheless the terms of the lease agreement between Newburg and JILCO does not in-and-of-itself establish an employer-employee relationship between Newburg and Andrei Balanescu. “Although there is a substantial volume of law pertaining to a determination of employer-employee relationships, one rule remains inviolable: each case must be determined on its own facts.” Daily Exp., Inc. v. Workmen's Comp. Appeal Bd., 406 A.2d 600, 601 (Commw. Ct. Pa. 1979).

         The existence of a lease agreement deeming a truck driver either specifically an employee of a particular entity or at least subject to the control of a specific entity is a factor to be considered by the courts in determining employment status, but is not by itself dispositive on the issue. See Red Line Express Co., Inc. v. Workmen's Comp. Appeal Bd. (Price), 588 A.2d 90, 95 (Commw. Ct. Pa. 1991). See also Genie Trucking Line, Inc. v. Am. Home Assur. Co., 524 A.2d 966, 968 (Pa. Super. Ct. 1987) (“[T]he terms of the lease are but one factor to be considered, and each case must be decided on its own facts.”); Patterson v. Workmen's Comp. Appeal Bd. (Wayne W. Sell Corp.), 485 A.2d 886, 889 (Commw. Ct. Pa. 1985) (Although lease terms provided for exclusive possession, control, and use by the carrier lessee, “the facts are that control was not transferred.”); N. E. Express, Inc. v. Workmen's Comp. Appeal Bd. (Woytas), 465 A.2d 724, 726 (Commw. Ct. Pa. 1983) (upholding determination of an employer-employee relationship partially due to the terms of a lease agreement where lessor also inspected vehicle, tested all drivers, paid bonuses to driver, provided medical insurance, and owned trailers in question, all of which bore the name of the lessor, and restricted driver's ability to contract with other shipper on return trips); Daily Express, 406 A.2d at 602 (“[T]he terms of the lease cannot be read so as to countermand the actual factual situation.”).

         Guided by the above, the Court finds that Pennsylvania law does not recognize the existence of an employer-employee relationship based solely on the terms of a lease agreement. This precedent is the case even where the driver of a truck is a party to the terms of the lease agreement. Thus, the degree of separation between Balanescu and the parties to the lease agreement only further reinforces the need for consideration of other factors before finding the existence of an employment relationship.

         B. Material factual disputes exist on the control over Andrei Balanescu exhibited by Newburg Egg

         At oral argument, counsel for Knecht argued that should the lease prove inadequate to establish Balanescu's employment with Newburg Egg, that at the very least a dispute of material fact existed in terms of the control exercised over Balanescu by Newburg and thus Balanescu's status as an employee should be presented to the jury. While the extent of control indeed may be considered a material fact and by Defendants' own assertion is a question for the jury to resolve, Balanescu's status as an employee of Newburg is a question of law, not fact, which must be first evaluated by the Court.

         “Whether an employer-employee relationship exists is a question of law to be decided on the specific facts of each case.” 3d Trucking Co., Inc. v. W.C.A.B. (Fine and Anthony Holdings Int'l.), 921 A.2d 1281, 1288 (Commw. Ct. Pa. 2007) (citing Universal Am-Can, Ltd. v. Workers' Comp. Appeal Bd. (Minteer), 762 A.2d 328 (2000); Red Line Express Co. Inc. v. Workmen's Comp. Appeal. Bd. (Prince), 588 A.2d 90 (1991)). Where the facts are not in dispute, and the evidence leaves no sufficient ground for inconsistent inferences therefrom, the question as to who is the servant's employer is a matter for the determination of the court, but, where the evidence presents an issue of fact, or different inferences can reasonably be drawn therefrom, the question is one for determination by the jury. Mature v. Angelo, 97 A.2d 59, 61 (Pa. 1953) (citations omitted).

         In considering whether someone is an employee or an independent contractor, Pennsylvania courts consider many factors including:

(1) control of manner the work is done; (2) responsibility for result only; (3) terms of agreement between the parties; (4) nature of the work/occupation; (5) skill required for performance; (6) whether one is engaged in a distinct occupation or business; (7) which party supplies the tools/equipment; (8) whether payment is by time or by the job; (9) whether work is part of the regular business of employer; and, (10) the right to terminate employment.
Baum v. Workers' Comp. Appeal Bd. (Hitchcock), 721 A.2d 402, 405 (Commw. Ct. Pa. 1998) (citing Hammermill Paper v. Rust Eng'g Co., 243 A.2d 389, 392 (1968)

         No one factor is dispositive and not all factors need be met to determine the type of relationship that exists. See Baum, 721 A.2d at 405 (citing J. Miller Co. v. Mixter, 277 A.2d 867 (Commw. Ct. Pa. 1971)). The “key factors” to be considered are “(1) whether the purported employer has the right to hire and fire the employee; (2) whether the employer has the right to direct the manner of the employee's performance of the work; and (3) whether the employer has the right to control the work to be completed.” Baum, 721 A.2d at 405 (citing Comp. Appeal Bd. (Jack Greenberg Co.), 706 A.2d 403 (Commw. Ct. Pa. 1998); N. Penn Transfer, Inc. v. Workmen's Comp. Appeal Bd. (Michalovicz), 434 A.2d 228 (Commw. Ct. Pa. 1981)). See also 3D Trucking, 921 A.2d at 1288 (“An employer-employee relationship exists where the alleged employer possesses the right to select the employee; the right and power to discharge the employee; the power to direct manner of performance; and the power to control the employee.”) (citations omitted).

         While the majority of Knecht's brief focuses on the language of the lease agreement with JILCO, Knecht also asserts that Newburg exercised control over Balanescu in a manner consistent with an employer-employee relationship. Citing the deposition testimony of Moses Goldstein, President of Newburg Egg, Knecht asserts Newburg demonstrated an employment relationship by: being the shipper for the route, being the dispatcher for the shipment, providing the route, providing the customer information, and directing where the product was to be shipped. (Doc. 56, at 5).[2] Newburg contends that the conduct in question is “customary of a shipper within the transportation industry” and insufficient to establish an employment relationship. As noted above, the key considerations guiding this Court's determination are whether the purported employer has the right to hire and fire the employee, whether the employer has the right to direct the manner of the employee's performance of the work, and whether the employer has the right to control the work to be completed. Specifically to the facts of this case, these considerations become whether Newburg has the right to hire and fire Balanescu, whether Newburg has the right to direct the manner of Balanescu's performance of the work, and whether Newburg has the right to control the work to be completed.

         Review of these key factors shows that material facts remain in dispute and prevent a finding on Balanescu's employment status as a matter of law. On the first of these factors, Knecht has not produced any evidence, nor argued in passing, that Newburg had any right to hire or fire Balanescu. The Court is unaware of any assertion that Newburg could dictate the particular driver to be provided by Izzy Trucking for deliveries, let alone hire or fire any driver.

         It is consideration on the manner and control aspects of the relationship that gives the Court pause. On these issues, Knecht asserts that Newburg retained the right to control Balanescu by dictating the route to be taken in delivering the cargo. While control is typically narrowly construed, Pennsylvania courts have given significant weight to a shipper dictating the route to be taken in evaluating the existence of an employment relationship. “[T]he right to instruct a driver as to the route to take indicates the presence of the right to control the manner of performing the driver's work.” Lego v. Workmen's Comp. Appeal Bd., 445 A.2d 1324, 1327 (Commw. Ct. Pa. 1982). Directing a driver on specific routes to take has been identified as potentially creating an employer-employee relationship, as opposed to merely instructing a driver where to pick up a load and deliver it. See Red Line Express Co., Inc. v. Workmen's Comp. Appeal Bd. (Price), 588 A.2d 90, 96 (Commw. Ct. Pa. 1991). Knecht points to the deposition testimony of Newburg President Moses Goldstein, who stated that it provided the route to be taken. (Doc. 56-3). While it's unclear if Balanescu retained the discretion to deviate from this route, the provision of the route initially creates some presumption of control over the manner in which Balanescu would conduct performance of his duties.

         In addition to the key factors cited, the Court also considers other relevant circumstances as enumerated in Baum. Weighing in favor of Balanescu being an employee are the terms of the lease agreement between Newburg and JILCO, Newburg's providing of tools/equipment for the delivery, and Balanescu's payment by the job as opposed to payment for time (though the fact that payments flowed from Newburg to Izzy Trucking and then Balanescu clouds this factor). Weighing in favor of Balanescu being considered an independent contractor are the lack of an identified agreement between Newburg and Izzy Trucking or Balanescu labelling him as an employee, the nature of the work/occupation, the skill required for performance, the engagement in a distinct occupation or business.

         Accordingly, it is apparent that factual disputes remain that at this time prevent the Court from finding the existence or lack thereof of an employment relationship between Newburg Egg and Andrei Balanescu at the time of the accident. Thus, the issue of control, and thus an employment relationship, remains a question to be posited to the jury at trial. Accordingly, Plaintiff's motion for summary judgment (Doc. 53) is DENIED.

         C. Andrei Balanescu's employment remains a dispute of material fact preventing summary judgment

         Balanescu's employment status also affects a majority of the motion for summary judgment filed by Newburg Egg. (Doc. 57). Newburg Egg moves for summary judgment on five claims, asserting that Knecht has not produced evidence to establish: the existence of a joint venture between Newburg and Izzy Trucking; vicarious liability as a result of the accident; negligent hiring, supervision, or retention of Balanescu as an employee; negligent entrustment of the trailer to Balanescu; or recklessness on the part of Newburg Egg. (Doc. 58). Knecht responds that genuine disputes of material fact remain on each of these claims. (Doc. 77).

         Upon review of the respective briefs, it appears that the parties are in agreement that employment and control are paramount to evaluating claims of vicarious liability (Doc. 58, at 8-9; Doc. 77, at 10-11) and negligent hiring, supervision, or retention (Doc. 77, at 23-24). As Balanescu's relationship with Newburg Egg remains in dispute, as demonstrated by the foregoing rationale, the Court is unable to resolve either claim at this juncture. Accordingly, the Court only addresses the motion's assertions on the non-existence of a joint venture, negligent entrustment, and recklessness warranting punitive damages.

         1. Joint Venture

         Newburg argues that Knecht has not produced evidence to support the contention that they engaged in a joint venture with Izzy Trucking. (Doc. 58, at 5). Knecht refutes this argument, pointing to the exclusivity between Newburg Egg and Izzy Trucking, and asserting a mutual endeavor between the parties. (Doc. 77, at 5-8). Of note, the parties raise differing, though not entirely distinct, theories on what constitutes a joint venture under Pennsylvania law.

         Newburg provides a definition called the “Joint Enterprise Rule” from the Corpus Juris Secundum, Negligence § 153. Under this offered definition, courts find “a legal relationship between two or more parties that imposes the responsibility upon each joint adventurer for the negligent acts of the other while acting in furtherance of their common undertaking.” Newburg then states that “[f]our base elements are required to establish a joint enterprise for the purposes of negligence liability: (1) An agreement among members of the group; (2) A common purpose; (3) A community of pecuniary interest; and (4) An equal right to control the enterprise.” ...


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