Smoothreads, whose sole officer and shareholder is Lance Beesley, hired Ronald Wells to perform construction projects at the Beesley home that involved operating a vehicle. Beesley did not confirm that Wells had a valid driver’s license or auto insurance coverage and did not inquire into or verify Wells’ driving history in the State of California. Had Beesley done so, he would have learned that Wells did not have a valid driver’s license, did not have auto insurance coverage, and had three license suspensions for three separate driving under the influence criminal convictions.
While Wells was driving a vehicle owned Smoothreads for work-related purposes, he ran a red light and hit another vehicle, which caused that vehicle to strike pedestrian, Blake McKenna, while McKenna was crossing the street. As a result, McKenna suffered severe bodily injuries.
McKenna filed a civil lawsuit against Beesley and Smoothreads for negligent entrustment of a motor vehicle and negligent hiring to operate a motor vehicle. To prove a claim of negligent entrustment against a vehicle owner, a person must show: (1) the driver was negligent in operating the vehicle; (2) the vehicle owner either owned or possessed the vehicle; (3) the vehicle owner knew, or should have known, that the driver was incompetent or unfit to drive the vehicle; (4) the vehicle owner permitted the driver to drive the vehicle; and (5) the driver’s incompetence or unfitness to drive was a substantial factor in causing harm to the injured party. To prove a claim of negligent hiring to operate a motor vehicle against an employer, a person must show: (1) the employer hired the employee; (2) the employee was/became unfit or incompetent to perform the work for which he was hired; (3) the employer knew or should have known that the employee was/became unfit or incompetent and that this unfitness or incompetence created a particular risk to others; (4) the employee’s unfitness or incompetence harmed the person; and (5) the employer’s negligence in hiring, supervising, or retaining the employee was a substantial factor in causing the person’s harm. Both claims may be premised on actual or constructive knowledge that the driver is unfit or incompetent to drive.
McKenna alleged that Beesley and Smoothreads knew or should have known that Wells was a negligent driver who created a risk of harm to persons and property and nevertheless knowingly entrusted Wells with the use of the vehicle involved in the accident. Beesley and Smoothreads countered that there was no evidence they had any actual or constructive knowledge that Wells was an incompetent, reckless, or inexperienced driver. Beesley and Smoothreads asserted that Wells arrived at the Beesley home driving his own vehicle, which gave them no reason to question whether he was fit or competent to drive, and Wells never disclosed his history of driving under the influence convictions or that he did not have a valid driver’s license.
The trial court entered separate judgments in favor of Beesley and Smoothreads without trials on the merits of McKenna’s claims, finding that neither Beesley nor Smoothreads had any actual knowledge of any facts that would have placed either on notice of Wells’s lack of licensure or otherwise unfitness to operate a motor vehicle and so McKenna could not prevail on his negligent entrustment and negligent hiring claims. McKenna filed appeals to both judgments and the appeals court granted review.
The appeals court noted that Vehicle Code Section 14604 prohibits a vehicle owner from knowingly allowing another person to drive their vehicle unless the vehicle owner determines that the person possesses a valid driver’s license that authorizes the person to operate the vehicle. Vehicle Code Section 14604 also requires the vehicle owner “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.” The court explained that a violation of Vehicle Code Section 14604 may support a negligent entrustment claim even though the duty under Section 14604 is to inquire regarding a prospective driver’s license status, while liability under a negligent entrustment claim requires either actual or constructive knowledge of a prospective driver’s incompetence or lack of fitness to drive. The court explained that if a jury finds that a vehicle owner failed to comply with its affirmative statutory duty under Section 14604 to make a “reasonable effort or inquiry” into a prospective driver’s license status, the jury could reasonably rely on that finding in determining that the vehicle owner should have known that the prospective driver “was incompetent or unfit to drive the vehicle.”
In reviewing the evidence, the court noted that Beesley did not ask whether Wells had a valid driver’s license and did not request any driving information from him about whether he had any DUI convictions or suspended licenses. Therefore, the court found that a jury could reasonably conclude that there was sufficient evidence for a jury to find that Beesley and Smoothreads failed to comply with its affirmative statutory duty under Section 14604 and as such, had constructive knowledge that Wells was unlicensed and, nevertheless, allowed Wells to drive the vehicle.
The court further noted that Vehicle Code Section 14606, subdivision (a) prohibits a person from employing, hiring, knowingly permitting, or authorizing any person to drive a vehicle owned or controlled by him or her unless that person is licensed for the appropriate class of vehicle to be driven. The court noted that inherent in Section 14606 is the obligation to make a reasonable effort or inquiry into whether the prospective driver has the appropriate license, and that a violation of Section 14606 could support a claim for negligent hiring to operate a motor vehicle. The court concluded that since the evidence demonstrated that Beesley permitted Wells to drive the Smoothreads’ vehicle without asking Wells whether he had a valid driver’s license, a jury could find that Beesley had constructive knowledge of Wells’ incompetence to drive in order to support McKenna’s negligent hiring claim.
Therefore, the court reversed the trial court’s judgments in favor of Beesley and Smoothreads. McKenna’s claims will be presented to a jury.
McKenna v. Beesley (2021) 67 Cal.App.5th 552.
NOTE:
Generally, an employer is liable for an employee’s vehicle usage if the employee was acting within the “course and scope of employment.” For this reason, it is important for employers to follow all applicable laws and obligations related to employee drivers, such as confirming the employee possesses the appropriate licenses and enrolling in the DMV’s Employer Pull Notice (EPN) program, as necessary or appropriate. Employers should also consult with their insurers to confirm they have adequate coverage to account for employee drivers.
