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CNA INS CO v. COOLEY
CNA Insurance Company v. Cooley, Docket No. 94711 (Mich. Ct. App. Oct. 20, 1987)
Factual and Procedural Background
Defendant Les Irwin owned a front end loader which he lent to Eldon Leroy Cooley. Cooley drove the loader to Merl's Towing Service to recover a motorcycle that Merl's planned to sell for unpaid towing and storage charges. When Merl's refused to return the motorcycle, Cooley drove the front end loader into Merl's building, fence, and other vehicles, causing approximately $24,000 in damages. Those damages were paid by Merl's insurer, plaintiff CNA, which brought suit as subrogee against Cooley and Irwin.
CNA's complaint alleged negligence and intentional torts against Cooley, and negligent entrustment and vehicle owner statutory liability against Irwin. A default judgment was entered against Cooley. CNA obtained summary judgment against Irwin on the vehicle owner statutory count (MCL 257.401; MSA 9.2101) after moving under GCR 1963, 117.2(3). Irwin's motion to set aside that summary judgment was denied. This matter subsequently came before the Court of Appeals after remand proceedings; on an earlier remand this Court concluded the summary judgment could not stand under either negligent entrustment or the owner's liability statute and remanded. Following further proceedings, Irwin moved for summary disposition under MCR 2.116(C)(8) and (10), and the trial court granted summary disposition for Irwin on August 7, 1986. CNA appealed, raising two issues.
Legal Issues Presented
- Whether the trial court erred by granting summary disposition to Irwin on the negligent entrustment claim.
- Whether Irwin was entitled to summary disposition under the motor vehicle owner's liability statute, MCL 257.401; MSA 9.2101.
Arguments of the Parties
Plaintiff's (CNA) Arguments
- Irwin knew of Cooley's state of intoxication and his lack of capability to drive the loaned equipment.
- Irwin knew of Cooley's intended use of the front end loader (i.e., that Cooley would use it to ram the towing company's property), or at least should have known.
- Irwin was not entitled to summary disposition under the motor vehicle owner's liability statute because the statute should apply to the facts of this case.
The opinion does not contain a detailed account of the defendant's (Irwin's) separate legal arguments beyond the procedural motions he filed (e.g., motions under MCR 2.116(C)(8) and (10)).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CNA Ins Co v Cooley (After Remand), unpublished opinion per curiam of the Court of Appeals, decided December 12, 1985 (Docket No. 69029) | Prior statement of pertinent facts and prior appellate determination that Cooley's conduct was intentional and that the vehicle owner's liability statute did not apply. | The Court relied on this prior appellate determination as the basis for invoking the law of the case doctrine with respect to the statute issue and to explain procedural history. |
| Lloyd v Avadenka, 158 Mich. App. 623, 626; 405 N.W.2d 141 (1987) | Standard for deciding motions under GCR 1963, 117.2(3) (now MCR 2.116(C)(10)): view pleadings and evidence and draw inferences in favor of the nonmoving party. | Used to state the applicable summary disposition standard the court must follow in evaluating Irwin's motion under MCR 2.116(C)(10). |
| Muscat v Khalil, 150 Mich. App. 114, 121; 388 N.W.2d 267 (1986) | Summary of Michigan law on negligent entrustment. | Employed as the source summarizing the negligent entrustment doctrine that the Court applied to the facts. |
| Moning v Alfono, 400 Mich. 425, 443-444; 254 N.W.2d 759 (1977) | Adoption of the Restatement (Second) of Torts § 390 definition of negligent entrustment. | The Court cited this case for the foundational definition of negligent entrustment used in analyzing Irwin's liability. |
| Fredericks v General Motors Corp, 411 Mich. 712; 311 N.W.2d 725 (1981) | Refinement of the standard of care in negligent entrustment—what plaintiffs must show to prove negligent entrustment. | The Court relied on Fredericks (as summarized in later cases) to articulate that plaintiffs must show either that the defendant knew the entrustee was not to be entrusted or that the defendant had special knowledge putting him on notice. |
| Buschlen v Ford Motor Co (On Remand), 121 Mich. App. 113, 117; 328 N.W.2d 592 (1982), aff'd 421 Mich. 192; 364 N.W.2d 619 (1984) | Application of Fredericks: plaintiffs must show defendant knew entrustee was unfit or had special knowledge putting defendant on notice. | The Court cited Buschlen for the articulation of the evidentiary standard for negligent entrustment and applied that standard in holding a genuine issue of material fact existed as to Irwin's knowledge. |
| CAF Investment Co v Saginaw Twp, 410 Mich. 428, 454; 302 N.W.2d 164 (1981), reh den 411 Mich. 1119 (1981) | Doctrine of law of the case: an appellate court's determination of a legal question on a prior appeal is binding on subsequent appeals if facts remain materially the same. | The Court invoked this doctrine, holding it could not reconsider the prior determination that Cooley's conduct was intentional and that the owner's liability statute did not apply. |
Court's Reasoning and Analysis
The Court first set out the applicable summary disposition standard for motions under GCR 1963, 117.2(3) (now MCR 2.116(C)(10)): the court must consider pleadings, affidavits and other evidence, draw all reasonable inferences in favor of the nonmoving party, and deny the motion if the claim can be supported by evidence at trial (citing Lloyd v Avadenka).
Turning to negligent entrustment, the Court summarized the governing law (citing Muscat, Moning, Fredericks, and Buschlen). Under that law, negligent entrustment requires proof that the supplier knew or had reason to know the entrustee was likely to use the chattel in a manner involving unreasonable risk of harm, and, as refined by Fredericks and applied in Buschlen, plaintiffs must show either (1) the defendant knew the entrustee was not to be entrusted or (2) the defendant had special knowledge of the entrustee putting the defendant on notice.
Applying that standard to the evidence viewed in the light most favorable to CNA, the Court concluded there remained a genuine issue of material fact as to whether Irwin knew or should have known that Cooley would use the loader in the destructive manner he did (specifically noting plaintiff's assertions regarding Cooley's intoxication, incapability, and intended use). Because reasonable inferences could be drawn in favor of plaintiff, summary disposition for Irwin on negligent entrustment was inappropriate and the matter was reversed and remanded for trial on that issue.
As to the motor vehicle owner's liability statute (MCL 257.401; MSA 9.2101), the Court held that it previously determined on prior appeal that Cooley's conduct was intentional, not negligent, and that the statute governs negligent conduct only. The Court therefore declined to reconsider that legal question under the law of the case doctrine (citing CAF Investment Co v Saginaw Twp) because the facts remained materially the same and no new facts were presented. Accordingly, the Court found no merit in plaintiff's contention regarding the statute.
Holding and Implications
Reversed and remanded.
Holding: The Court reversed the trial court's grant of summary disposition in favor of Irwin on the negligent entrustment claim and remanded that claim for trial. The Court affirmed the prior appellate determination that the motor vehicle owner's liability statute (MCL 257.401; MSA 9.2101) did not apply because Cooley's actions were intentional rather than negligent, and the Court declined to revisit that legal conclusion under the law of the case doctrine.
Implications: The direct consequence is that the negligent entrustment claim against Irwin proceeds to trial due to a genuine issue of material fact regarding Irwin's knowledge. The Court's decision leaves intact the prior appellate determination that the motor vehicle owner's liability statute does not apply here; the statutory claim will not be revived on the basis of reconsideration in this appeal. The opinion does not announce a new rule of law beyond applying established negligent entrustment principles and the law of the case doctrine.
PER CURIAM.
Plaintiff appeals as of right from an order granting summary disposition in favor of defendant Les Irwin.
This case is before us after second remand. The pertinent facts were stated in CNA Ins Co v Cooley (After Remand), unpublished opinion per curiam of the Court of Appeals, decided December 12, 1985 (Docket No. 69029):
Defendant Irwin is the owner of a front end loader, a type of construction tractor, which he lent to defendant Eldon Leroy Cooley, who is not a party to this appeal. Cooley drove the vehicle to Merl's Towing Service, which had possession of a motorcycle owned by Cooley and planned to sell the motorcycle at an auction unless Cooley paid towing and storage charges. When Cooley arrived at Merl's Towing Service, he demanded the return of his motorcycle, and upon refusal, proceeded to drive the front end loader into the building, fence, and other vehicles stored there. The $24,000 worth of damages incurred by Merl's was paid by its insurer, plaintiff CNA, which then brought suit as subrogee against defendant Irwin and defendant Cooley.
Plaintiff CNA'S complaint alleged counts of negligence and intentional tortious conduct against defendant Cooley, and counts of negligent entrustment and vehicle owner statutory liability against defendant Irwin. A default judgment was entered against defendant Cooley. Plaintiff CNA then moved for summary judgment under GCR 1963, 117.2(3) on its vehicle owner statutory count, based on MCL 257.401; MSA 9.2101, against defendant Irwin. This motion was granted, and defendant Irwin's subsequent motion to set aside the summary judgment order was denied.
In response to our request for a clarification of its order of summary judgment, the trial court offered the following:
1. We granted summary judgment under the vehicle owner's liability statute and
2. Under the theory of negligent entrustment. We therefore affirm our grant of summary judgment.
Upon reconsideration, this Court concluded that the order of summary judgment could not stand under either theory. Regarding the negligent entrustment theory, this Court said that it could not conclude as a matter of law from the facts presented that Irwin knew or should have known that Cooley would use the tractor to ram a gas station. Thus, summary judgment under GCR 1963, 117.2(3) could not be justified on the negligent entrustment theory.
In addition, this Court also found that the owner's liability statute, MCL 257.401; MSA 9.2101, did not support the trial court's ruling since the statute governs negligent conduct. The actions of Cooley could not reasonably be described as negligent. Rather, his actions most clearly constituted an intentional act. This Court then remanded the case to the lower court for proceedings not inconsistent with its opinion.
On February 6, 1986, this Court denied plaintiff's motion for rehearing. Thereafter, on May 16, 1986, defendant Irwin moved for summary disposition pursuant to MCR 2.116(C)(8) and (10). In an August 7, 1986, order, the trial court granted defendant Irwin summary disposition.
Plaintiff raises two issues on appeal. First, CNA argues that the trial court erred by granting Irwin summary disposition on the issue of negligent entrustment. Secondly, CNA contends that Irwin was not entitled to summary disposition under the motor vehicle owner's liability statute, MCL 257.401; MSA 9.2101.
A motion based on GCR 1963, 117.2(3), now MCR 2.116(C)(10), is designed to test the factual support for a claim or defense. The court must consider the pleadings, affidavits and other available evidence and be satisfied that the claim or position asserted cannot be supported by the evidence at trial because of some deficiency which cannot be overcome. The court must give the benefit of every reasonable doubt to the party opposing the motion and inferences are to be drawn in favor of that party. Lloyd v Avadenka, 158 Mich. App. 623, 626; 405 N.W.2d 141 (1987).
In Muscat v Khalil, 150 Mich. App. 114, 121; 388 N.W.2d 267 (1986), this Court summarized the law on negligent entrustment:
Michigan courts have adopted the following definition of the theory from 2 Restatement Torts, 2d, § [390]:
"`One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them.'" Moning v Alfono, 400 Mich. 425, 443-444; 254 N.W.2d 759 (1977).
As a result of further refinement of the applicable standard of care in Fredericks v General Motors Corp, 411 Mich. 712; 311 N.W.2d 725 (1981), it is now clear that, in order to prove negligent entrustment, "plaintiffs must show either that defendant knew the entrustee was not to be entrusted or that defendant `had special knowledge of [the entrustee] which would put defendant on notice.'" Buschlen v Ford Motor Co (On Remand), 121 Mich. App. 113, 117; 328 N.W.2d 592 (1982), aff'd 421 Mich. 192; 364 N.W.2d 619 (1984), quoting Fredericks, supra, p 720.
Plaintiff contends that Irwin was aware of Cooley's state of intoxication, his lack of capability to drive the loaned equipment, and his intended use of the vehicle. Giving the benefit of every reasonable doubt to and drawing inferences in favor of plaintiff, the party opposing the motion, we conclude that there is a genuine issue of material fact regarding whether Irwin knew or should have known that Cooley would use the front end loader in the manner he did. Thus, we reverse and remand for trial.
As to plaintiff's second ground for error, we find no merit to this claim. This Court already determined in CNA Ins Co v Cooley (After Remand), that Cooley's conduct was intentional and the statute solely applied to negligent conduct. This Court may not reconsider this legal question due to the doctrine of law of the case. In CAF Investment Co v Saginaw Twp, 410 Mich. 428, 454; 302 N.W.2d 164 (1981), reh den 411 Mich. 1119 (1981), the Supreme Court described the effect of this doctrine as follows:
As generally stated, the doctrine is that if an appellate court has passed on a legal question and remanded the case for further proceedings, the legal questions thus determined by the appellate court will not be differently determined on a subsequent appeal in the same case where the facts remain materially the same.
Because this legal question was already decided, and because plaintiff did not show any new facts in this case, the prior determination stands.
Reversed and remanded.
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