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Cole v. American Community Services

October 17, 2006

JOSEPH W. COLE, II, ET AL., PLAINTIFFS,
v.
AMERICAN COMMUNITY SERVICES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
U-GOLD KEY, INC., ET AL., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Judge Graham

Opinion and Order

This case arises from an incident between Third-Party Defendant Sean Marcelis ("Marcelis"), a door-to-door magazine salesperson, and Plaintiffs Joseph Cole, his wife Carla Cole, and Mrs. Cole's daughter, Keile Hambrick (collectively, "Plaintiffs"). Plaintiffs allege that Defendant American Community Services ("ACS") is directly liable for negligently hiring, supervising, and retaining Marcelis. Plaintiffs further that claim ACS is liable under the doctrine of respondeat superior for Marcelis's trespass, invasion of privacy, and intentional or negligent infliction of emotional distress to Ms. Hambrick. ACS denies that it employed Marcelis and alleges that he was an independent contractor for Third-Party Defendant Unified Producers, Inc. ("Unified").

ACS filed a Third-Party Complaint (Doc. 14) against Marcelis, Unified, The Doers, Inc. ("Doers") (allegedly a successor in interest to Unified), and U-Gold Key, Inc.*fn1 requesting indemnity or contribution if ACS is found liable on Plaintiffs' claims. This matter is before the Court on ACS's Motion for Summary Judgment (Doc. 53). The Court held arguments on the Motion on October 6, 2006, and for the following reasons, GRANTS ACS's Motion.

I. Summary Judgment Standard

Under Fed. R. Civ. P. 56(c), summary judgment is proper "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." LaPointe v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir. 1993).

The movant has the burden of showing that there are no genuine issues of material fact in the case. LaPointe, 8 F.3d at 378. The moving party may meet its burden by showing that the nonmoving party lacks evidence to support an essential element of its case. Barnhart v. Pickrel, Schaeffer & Ebeling Co., L.P.A., 12 F.3d 1382, 1389 (6th Cir. 1993).

In response, the nonmoving party "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must 'present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" Street v. J. C. Bradford & Co., 886 F.2d 1472, 1476 (6th Cir. 1989) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986)). The Court must view the evidence, all facts, and any inferences that may permissibly be drawn from the facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). See also Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456 (1992).

In reviewing a motion for summary judgment, "this Court must determine whether 'the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993)(quoting Anderson, 477 U.S. at 251-52). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48 (emphasis in original); see generally Booker v. Brown & Williamson Tobacco Co., Inc., 879 F.2d 1304, 1310 (6th Cir. 1989).

Thus, "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252. See also Gregory v. Hunt, 24 F.3d 781, 784 (6th Cir. 1994). Finally, a district court considering a motion for summary judgment may not weigh evidence or make credibility determinations. Adams v. Metiva, 31 F.3d 375, 379 (6th Cir. 1994).

II. Facts

On April 7, 2003, at approximately eight o'clock in the evening, Plaintiffs were at their home in Westerville, Ohio, when Marcelis rang the doorbell selling magazines. Mrs. Cole and Ms. Hambrick were upstairs. Mr. Cole answered the door.

Cole alleges that he listened to Marcelis's "sales pitch," but declined to purchase any magazine subscriptions. According to Cole, Marcelis then stuck his foot in the door to prevent Cole from closing it. Marcelis pushed the door open and shouted at Cole.

Cole told Marcelis to leave, but he refused.

Marcelis then crossed the threshold into the Coles' home, yelled at Cole, threatened to beat him, and shoved him backwards into a wall. Cole finally called to his wife, asking her to call the police. Cole "maneuvered" Marcelis into the front yard; shortly thereafter Genoa Township police arrived. (Plfs.' Mem. in Opp. to Def.'s Mot. for Summ. J., Ex. 1, Affidavit of Joseph W. Cole, II ("Cole Aff.") ¶ 16.)

ACS is an Indiana corporation with its principal place of business in Indiana. ACS processes and clears orders for magazines that are sold by companies such as Unified. ACS's principle argument is that it cannot be held liable for Marcelis's allegedly tortious behavior because Marcelis was an independent contractor of Unified, which was ACS's independent contractor.

ACS submitted the declaration of its President, Levan Ellis, stating that Marcelis was not its employee on April 7, 2003. (Def.'s Mot. for Summ. J., Ex. B, Decl. of Levan Ellis ¶ 3.) On April 7, 2003, ACS was engaged in an "Independent Contractor Agreement," with Unified, a "direct selling organization." (Id. ¶ 9.) ACS: 1) did not control the times or places that Unified conducted its business; 2) did not control the means by which Unified sold magazines; 3) did not control whether or with whom Unified contracted to sell magazines; 4) did not have the ability to cause Unified to terminate a relationship with anyone Unified contracted with to sell magazines; 5) did not have regular, daily communication with Unified; 6) made payments to Unified based on Unified's sales; and, 7) intended its relationship with Unified be "in the form of an independent contractor relationship." (Id. ¶¶ 12-14, 16-17, 19.) ACS did not have regular, daily communication with Marcelis and, while ACS may have awarded Marcelis cash or prizes based on the number of orders he procured for Unified, Unified paid him for his work.*fn2 (Id. ¶¶ 16-17.) ACS avers it had no relationship with Marcelis other than through its independent contractor relationship with Unified.*fn3 (Id. ¶ 20.)

In his deposition in a related state court case, Marcelis testified that he was an "independent contractor, salesman," for Unified beginning in 1998 or 1999 and continuing through Unified's "merger" with The Doers, Inc. (Def.'s Mot. for Summ. J., Ex. C, Deposition of Sean D. Marcelis 17.) Marcelis testified he had never been arrested prior to this incident, nor does he know of any customer complaints about him as a door-to-door magazine salesperson, other than those associated with this incident, though he is not "exactly" aware of how his company handles customer complaints. (Id. 79, 116, 127-128.)

III. Choice of Law

ACS asserts that under Indiana law, Marcelis is an independent contractor of Unified, an independent contractor of ACS. Therefore, ACS cannot be held liable for Marcelis's alleged torts or for negligently hiring, retaining, or supervising Marcelis. The Independent Contractor Agreement between ACS and Unified states that Indiana law governs the agreement. (Def.'s Mot. for Summ. J., Ex. 3, Independent Contractor Agreement, ¶ XI.)

Plaintiffs argue that Ohio law governs this dispute. As Plaintiffs were not parties to ACS and Unified's contract, they challenge ACS's contention that Indiana law governs the determination of the nature of ACS's relationship with Marcelis due to the choice-of-law clause in that contract.

While choice-of-law provisions are generally enforced by federal courts and Ohio courts alike, see AMF, Inc. v. Computer Automation, Inc., 573 F.Supp. 924, 926 (S.D. Ohio 1983), "[t]o bind a non-party to a forum selection clause, the party must be 'closely related' to the dispute such that it becomes 'foreseeable' that it will be bound." Washburn v. Garner, No. 5:04-CV-228-M, 2005 U.S. Dist. LEXIS 16623 at *30 (W.D. Ky. Aug. 10, 2005) (citing Baker v. LeBoueuf, Lamb, Lieby & Macrae, 105 F.3d 1102, 1106 (6th Cir. 1997)). This reasoning would similarly apply to choice-of-law clauses. Thus, it would not be foreseeable to bind Plaintiffs to the choice-of-law clause ACS and Unified bargained upon several years before this incident even occurred. As such, the Court must engage in a choice-of-law analysis to determine whether Ohio, or Indiana, laws apply to the claims in this case.

A federal court sitting in diversity applies the choice-of-law provisions of the state in which it sits. Rosen v. Chrysler Corp., 205 F.3d 918, 921 n.2 (6th Cir. 2000) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Accordingly, the Court applies Ohio's choice-of-law rules to decide which state's laws govern Plaintiffs' claims.

Ohio courts apply the Restatement of the Law of Conflicts to determine which state's substantive laws govern a tort dispute. Morgan v. Biro Mfg. Co.,Inc., 474 N.E.2d 286, 288-89 (Ohio 1984). Accordingly, "a presumption is created that the law of the place of the injury controls unless another jurisdiction has a more significant relationship to the lawsuit." Id. at 289. Plaintiffs' alleged injuries occurred in Ohio, and therefore, a presumption exists that Ohio law applies to this action.

The second step in the choice-of-law inquiry is to determine if another state has a more significant relationship to this action than Ohio. Id. The Ohio Supreme Court in Morgan instructed courts to consider the following factors in this determination: 1) the place of the injury; 2) the place where the conduct causing the injury occurred; 3) the domicile, residence, nationality, place of incorporation, and place of business of the parties; 4) the place where the relationship between the parties, if any, is located; and 5) any factors under Section 6 of the Restatement of the Law of Conflicts,*fn4 which would be relevant. Id. Of the seven "Section 6" Restatement factors, the Court will examine factors two and three, the relevant policies of Ohio, versus the relevant policies of Indiana coupled with the relative interest of Indiana in the determination of this issue.

Beginning with the first four factors cited in Morgan, it is undisputed that:

1) Plaintiffs' alleged injuries occurred in Ohio;

2) Marcelis's conduct allegedly causing Plaintiffs' injuries occurred in Ohio;

3) Plaintiffs are Ohio residents, while ACS is an Indiana corporation with its principle place of business in Indiana; and,

4) to the extent that any relationship between ACS and Plaintiffs exists, it is due to Plaintiffs' interaction with Marcelis, which occurred in Ohio.

Accordingly, these factors weigh in favor of applying Ohio law to this dispute.

With respect to the fifth factor, Indiana and Ohio both apply the general rule of law that an employer is not liable for the torts of an independent contractor, with certain exceptions in each state.*fn5 Shell Oil Co. v. Meyer, 705 N.E.2d 962, 978 (Ind. 1998) (citing Allison v. Huber, Hunt & Nichols, Inc., 362 N.E.2d 193, 195 (Ind. Ct. App. 1977)); Mut. Ins. Co. of Eagle Twp. v. Hunt, No. 5-2000-07, 2000 Ohio App. LEXIS 4038, at **5-6 (Ohio Ct. App. Sept. 7, 2000) (citing Albain v. Flower Hosp., 553 N.E.2d 1038, (Ohio 1990), overruled on other grounds by Clark v. Southview Hosp. & Family Health Ctr., 628 N.E.2d 46 (Ohio 1994); Bostic v. Connor, 524 N.E.2d 881, paragraph 1 of the syllabus (Ohio 1988)). Indiana and Ohio courts also generally apply the Restatement (Second) of Agency § 220 factors*fn6 to determine whether an individual is an agent or independent contractor. Moberly v. Day, 757 N.E.2d 1007, 1009-10 (Ind. 2001); Bostic v. Connor, 524 N.E.2d 881, 883-84 (Ohio 1988), superceded by statute, Oh. Rev. Code Ann. § 4123.01(A)(1)(c), as recognized in Slauter v. Klink, No. 18150, 2000 Ohio App. LEXIS 3716, at **7-8 (Aug. 18, 2000 Oh. Ct. App.) (finding that the common law agent versus independent contractor test recited in Bostic was superseded with reference to the definition of "employee" in workers' compensation claims). In Ohio, the extent of control factor is predominant. In Indiana, no one factor is dispositive, but the extent of control factor is "'important.'" Moberly, 757 N.E.2d at 1010 (citing Restatement (Second) of Agency § 220 cmt. D).

Because Ohio law and Indiana law are substantially similar in the application of agency principles, and because Plaintiffs' alleged injury and Marcelis's conduct giving rise to the alleged injury took place in Ohio, the presumption that Ohio law should apply to this dispute has ...


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