Firm Newsletter - January 2017

Negligent Entrustment and Failure to Screen

Photo by Bet_Noire/iStock / Getty Images

Photo by Bet_Noire/iStock / Getty Images

4Front, a warehouse owner, hired Reyes, a licensed electrician, to repair a lighted sign that hung on an exterior wall about twenty feet above the warehouse’s entrance. Reyes subcontracted with Rosales, another electrician, to assist him. 4Front loaned Reyes a forklift and a “man basket” so that he could lift Rosales up to the sign. Reyes acknowledged to a 4Front manager that he could operate the forklift by stating, “I can move it, but slowly.” Reyes and Rosales worked without incident on the first day, and they returned two days later to finish the job. On both days, Reyes operated the forklift on a sidewalk under the sign in front of the warehouse. On the second day, as Rosales was lifted up to the sign, Reyes drove the forklift off of the sidewalk’s edge. The fork lift toppled over and Rosales fell and was injured.

Rosales sued 4Front and Reyes for negligence, negligence per se, gross negligence, and premises liability. A jury found that 4Front negligently entrusted the forklift to Reyes and negligently failed to warn about or make safe a dangerous condition on the premises. The jury assigned responsibility as follows: 4Front, seventy-five percent; Reyes fifteen percent; and Rosales ten percent. It also found that 4Front was grossly negligent. The jury awarded Rosales $8 million in actual damages and $5 million in exemplary damages. The Thirteenth Court of Appeals reversed the exemplary damages’ award because it found legally insufficient evidence of gross negligence. However, it rejected 4Front’s legally sufficiency challenge to the negligent entrustment and premises liability claims.

In defending the jury’s finding of negligent entrustment before the Texas Supreme Court, Rosales argued that federal OSHA regulations requiring a forklift operator to have a federal safety certificate, coupled with the fact that Reyes did not have one, established legally sufficient evidence that 4Front should have known Reyes was incompetent.

The Texas Supreme Court rejected Rosales’s argument. It emphasized that there is an important distinction between an operator who is “incompetent or reckless” and one who is merely “negligent.” The term negligent entrustment can be misleading, because the claim requires a showing of more than general negligence. In order for Rosales’s failure-to-screen claim to succeed, he had to prove that the inquiries 4Front did not make would have revealed the risk that establishes liability for negligent entrustment. In other words, Rosales had to show that 4Front would have discovered facts through its inquiry that would have caused a reasonable employer to discover that Reyes was incompetent or reckless, not that he was not formally trained or certified. Even if Reyes was not formally trained and certified, and even if 4Front knew that he was not, a lack of formal training and certification does not establish that the operator was incompetent or reckless. The Court further held that it was not enough to show that 4Front knew or should have known that Reyes would have a momentary lapse in judgment or otherwise act negligently.

As for the premises liability claim, the only condition on which Rosales’s claim could possibly have been based on is the condition of the sign and of the sidewalk off of which Reyes drove the forklift. No evidence showed, however, that any condition of the sign was dangerous or proximately caused this accident. And even if the sidewalk’s edge was dangerous and did proximately cause the accident, the Court has declined to impose a duty for premises conditions that are open and obvious, regardless of whether such conditions are artificial or naturally occurring. The Court’s language regarding OSHA regulations may impact several practice areas. In trucking cases, plaintiffs’ attorneys emphasize the Federal Motor Carrier Safety Regulations and deviations from them. 4Front can be used to curb such tactics because such irrelevant deviations are not evidence of negligence.

Downloadable .PDF - January 2017