Vehicle Owners and Employers Have Affirmative Duty to Ensure Their Drivers Are Licensed, California Court of Appeals Holds

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On August 6, 2021, a California Court of Appeal held that an employer and a vehicle owner were liable under theories of negligent hiring and negligent entrustment, respectively, when each failed to conduct a reasonable inquiry into whether a driver was properly licensed to drive who was subsequently involved in a motor vehicle accident. (See McKenna v. Beesley et al, No. D077189, filed August 6, 2021.) The case arises out of an accident that occurred when the Plaintiff pedestrian was struck by a truck that had run a red light. The truck was operated by Ronald Wells. Mr. Wells had been employed by Mr. Beesley to perform construction on Beesley’s home. The truck was owned by Beesley’s company, Smoothreads, Inc. Wells represented to Beesley that he had an active California contractor’s license and arrived at the Beesley home driving his own vehicle. Beesley arguably had no reason to suspect that Wells’ driver’s license had been suspended on three separate occasions for DUI convictions, and that he did not currently possess a valid driver’s license or any auto insurance coverage. Unfortunately for Defendants, Wells had declined to inform Beesley and Smoothreads of these facts, and Beesley had never asked. Plaintiff sued Beesley for negligent hiring and Smoothreads, Inc. for negligent entrustment of its truck.

California law recognizes the common law torts of negligent entrustment and negligent hiring, supervision and retention. The tort of negligent entrustment creates liability for the vehicle owner when the owner knows or should have known that the person to whom the vehicle is entrusted is incompetent, inexperienced or reckless. Likewise, negligent hiring creates liability for the employer when the employer knows or should have known that hiring the employee would create a particular risk or hazard, and that particular harm materializes. In practical terms, when the case involves a vehicle accident, these claims are functionally identical. Standing alongside the common law are criminal statutes that define the conduct for which there is criminal liability in these areas. Cal. Veh. Code § 14604 bars the owner of a motor vehicle from knowingly allowing another to drive the vehicle unless the driver possesses a valid driver’s license. The section provides that the owner of the vehicle is required only to make a “reasonable effort or inquiry to determine whether the prospective driver possesses a valid driver’s license before allowing him or her to operate the owner’s vehicle.” Similarly, Cal. Veh. Code § 14606 bars an employer from employing, hiring, knowingly permitting or authorizing any person to drive a motor vehicle owned by them or under their control unless that person is appropriately licensed to operate that vehicle.

Here, Smoothreads filed a motion for summary adjudication on the negligent entrustment claim, arguing that there was no evidence to suggest that Smoothreads had any actual or constructive knowledge that Wells was incompetent, reckless or inexperienced. Smoothreads argued that it had no reason to suspect any incompetence on the part of Wells, who had represented that he was an experienced contractor and who had arrived to the job site in his personal vehicle. Beesley similarly moved for summary adjudication on the negligent hiring claim on the basis that he had no actual knowledge of Wells’ incompetence. Plaintiff opposed both motions on the grounds that Beesley and Smoothreads should have known that Wells was incompetent because they had multiple opportunities to ask Wells about his driving record, but never did. The Superior Court, County of San Diego granted both motions for summary adjudication on the grounds that neither Defendant had actual knowledge of Wells’ incompetence, and indicated that it was disinclined to create a duty that would hold a vehicle owner liable for negligent entrustment solely on the basis of that owner’s failure to conduct an investigation into a driver’s fitness.

The Court of Appeals reversed, finding that the exact duty that the trial court declined to create was actually already in existence. The Court of Appeals pieced together two separate holdings to decide that Defendants were not entitled to summary adjudication because a jury could have plausibly found that the Defendants were liable for the respective claims. The first element of the Court’s reasoning was a long standing law holding that the fact that a “driver is unlicensed is a prima facie case of negligence in allowing him to drive the vehicle.” (Dodge Center v. Superior Court (1988), 199 Cal.App.3d 332, 341.) Thus, if a driver is unlicensed, that is evidence of first impression that the driver is incompetent for purposes of negligent entrustment and hiring. The second issue the Court needed to decide was what conduct, or lack thereof, was necessary to find that the vehicle owner or employer should have known of the driver’s unlicensed status. The Court did so by coordinating the standard of care applicable to the common law tort with the California Vehicle Code. In practical terms, the Court found that in order for a Plaintiff to prevail in a negligent entrustment action, the Plaintiff can prove the Defendant’s constructive knowledge of a driver’s incompetence if the Defendant did not conduct a reasonable inquiry into whether the driver possessed a driver’s license. In other words, if the Defendant did not meet the standard of the California Vehicle Code, that is sufficient evidence upon which to deny a defendant’s motion for summary adjudication.

From a public policy perspective, the Court’s ruling here furthers the goals of the statutory scheme by creating incentives for vehicle owners and employers to ensure that all drivers are licensed for the vehicle they are entrusted to operate. From a practical standpoint, this case establishes an affirmative duty onto owners and employers to conduct reasonable inquiry into the license status of every driver whom they employ or allow to drive their vehicle.  As such, vehicle owners and employers may face liability for failing to inquire whether those driving their vehicles are appropriately licensed.

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