J. GREGORY WEHRMAN, Magistrate Judge.
Items belonging to plaintiffs John Beauchamp and Jessica Klingenberg were thrown away by persons operating under the direction of defendants Regional Realty and Eibeck Realty.
Eibeck Realty had a contractual relationship with Freddie Mac whereby Eibeck Realty was authorized to manage, market and sell real estate owned by Freddie Mac. See, e.g., Deposition of Charlette Williams (doc. 100) (hereafter "Williams Depo."), p. 16. In August 2012, a condominium and associated detached garage located at 20 Highland Meadows Circle in Highland Heights, Kentucky was assigned by Freddie Mac to Eibeck Realty to prepare for foreclosure-based resale. Id. at p. 36-37.
Eibeck Realty's first task was to ascertain if the property was empty. Id. at 38. Eibeck Realty was permitted to enter the property if it were empty. Id. at 38-39. If property with a value of less than $300 was present, Eibeck Realty was supposed to perform a "trash out;"
Eibeck entered the condominium to be foreclosed upon in August 2012. Eibeck Depo. at 33. However, Eibeck did not learn there was a garage associated with that condominium until early October 2012. Id. Prior to entering a garage on October 4 (id. at 52), Eibeck spoke with an as-yet unidentified individual at a property management company who told him that the garage corresponding with 20 Highland Meadows Circle was "directly across the street from the main entry of building number 20." Id. at 39. Unfortunately, Eibeck incorrectly concluded that the garage belonging to plaintiffs was the corresponding to 20 Highland Meadows Circle.
As plaintiff Klingenberg testified in her deposition, identification of the proper detached garage belonging to each condominium was rendered more difficult by the fact that the area contained four buildings, each of which contained multiple condominiums, clustered together with four sets of corresponding detached garages. Doc. 92 (hereafter Klingenberg Depo.), p. 8. In fact, the garage corresponding with condominium number 9 of building 20 and the garage corresponding with condominium number nine for building 19 were roughly equidistant from the front door of building number twenty. Id. at 12. Nonetheless, Eibeck did not consult any local residents or the condominium owners association to make sure he ascertained the proper garage. Eibeck Depo., p. 47. Eibeck also did not retrieve a plat or deed to verify which garage corresponded to 20 Highland Meadows Circle. Id. at 49-50.
Eibeck gained entry to plaintiffs' garage by simply lifting the door handle. Id. at 52-53. Eibeck then began to inventory the garage's contents. Eibeck's inventory placed a total value of $175 on the garage's contents. Doc. 99-10. Among the enumerated contents on the inventory prepared by Eibeck were a photo collage, textbooks, "loose" photos, and a homemade wooden shelf. Id. Klingenberg testified that one of the containers in the garage had awards she had won in high school and college, as well as yearbooks and photos from her high school graduation. Klingenberg Depo., p. 21. Additionally, Beauchamp's military uniforms were in the garage. Id. at 30. Beauchamp testified that he had numerous military uniforms, medals and ribbons in the garage, including an irreplaceable framed photo of his boot camp graduating class. Doc. 93 (Beauchamp Depo.), p. 26-27. A sentimentally valuable chair given to Beauchamp by his deceased aunt was also in the garage. Id. at 32. Because the inventory did not contain an itemization of all items in the garage, Beauchamp labeled the inventory prepared by Eibeck "grossly insufficient. . . ." Id. at 63.
Williams testified that military medals were an example of an item having intrinsic personal value. Williams Depo., p. 63. Eibeck agreed that family photos would be items possessing intrinsic personal value, but curiously stated he had no way of knowing whether the photos in the garage were family photos. Eibeck Depo, p. 57. Eibeck testified that he did not see any military medals or uniforms. Id. at 60. Based on his itemization and valuation of the garage's contents, Eibeck did not contact the property coordinator (id. at 66); instead, he hired a local company to conduct a trash out, which occurred about a week later.
In November 2013, plaintiffs discovered their garage had been emptied. Klingenberg Depo., p. 13. Klingenberg contacted the Highland Heights police to report what she believed had been a robbery. Id. After speaking to the condominium complex's office, Klingenberg was given Eibeck's name. Id. at 16-17. Klingenberg called Eibeck, who told her that he had nothing to do with the wrong garage having been emptied. Id. at 18. Afterwards, Klingenberg gave Eibeck's name to the Highland Heights police (id. at 19), who contacted Eibeck. Eibeck Depo. at 72. According to Eibeck, that was when he first became aware that the wrong garage had been trashed out. Id. However, Eibeck did not notify Freddie Mac about the improper trash out until April 2013. Id. at 75. Williams testified that Eibeck should have notified Freddie Mac when he discovered the improper trash out had occurred. Williams Depo., p. 70-71.
Plaintiffs filed this action pro se against Freddie Mac and Eibeck Realty in April 2013. Doc. 1. The complaint raised a host of state law causes of action, ostensibly against all defendants: negligence; gross negligence; negligent hiring; negligent supervision; negligent infliction of emotional distress; conversion; trespass to chattel; trespass to land; intrusion upon seclusion; public disclosure of private matters; commercial appropriation; and wrongful foreclosure.
After extended procedural wrangling, Freddie Mac (which at the time was jointly represented with Eibeck Realty) filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) in October 2014. Doc. 51. The Court denied the motion in February 2015. Doc. 67.
The Court has considered all of the arguments raised by all parties. In the interests of judicial economy, however, this memorandum opinion and order will address directly only the most pertinent arguments.
Summary judgment is proper only if the facts on file with the court demonstrate that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The moving party may discharge its burden by "pointing out . . . an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party cannot rest on its pleadings, but must identify specific facts that remain in dispute for the finder of fact at trial. See id. at 324. Although all inferences are drawn in favor of the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986), the nonmoving party must present significant and probative evidence in support of its complaint. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). "Conclusory assertions, supported only by Plaintiff's own opinions, cannot withstand a motion for summary judgment." Arendale v. City of Memphis, 519 F.3d 587, 605 (6
The court's function is not to weigh the evidence and determine the truth of the matters asserted, but to determine whether a genuine issue of material fact remains for a fact finder at trial. Anderson, 477 U.S. at 249. The key inquiry is whether the evidence presents a "sufficient disagreement to require submission [of the case] to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. The court reviewing a summary judgment motion need not search the record in an effort to establish the lack of genuinely disputed material facts. Guarino v. Brookfield Township Trustees, 980 F.2d 399, 404 (6th Cir. 1992). Rather, the burden is on the nonmoving party to present affirmative evidence to defeat a properly supported motion, Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir. 1989), and to designate specific facts that are in dispute. Anderson, 477 U.S. at 250; Guarino, 980 F.2d at 404-05. The standard of review does not change when both parties move for summary judgment, nor does the presence of cross-motions mean that summary judgment must be granted if disputes remain as to material facts. See, e.g., Ferro Corp. v. Cookson Group, PLC, 585 F.3d 946, 949-50 (6th Cir. 2009).
In their motion for partial summary judgment, plaintiffs concede that "[d]iscovery has revealed that Plaintiffs cannot prevail on the following causes of action: 1) Negligent Hiring; 2) Negligent Infliction of Emotional Distress; 3) Commercial Appropriation; and 4) Wrongful Foreclosure. As such, Plaintiffs agree to dismiss only these four claims with prejudice." Doc. 99-1, p. 1. Therefore, the Court will not discuss further those four causes of action.
The overarching issue in dispute is whether Eibeck Realty was an independent contractor or an agent of Freddie Mac. Determining the proper relationship is paramount because, generally, if Eibeck Realty was as an independent contractor Freddie Mac would not be vicariously liable for Eibeck Realty's actions but Freddie Mac could be liable if Eibeck Realty was Freddie Mac's agent.
For over fifty years, Kentucky courts have defined agency as "the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." McAlister v. Whitford, 365 S.W.2d 317, 319 (Ky. 1962). The Kentucky Supreme Court has approved the following factors to determine whether an entity is an agent or an independent contractor:
Kentucky Unemployment Ins. Commission v. Landmark Community Newspapers of Kentucky, Inc., 91 S.W.3d 575, 579 (Ky. 2002).
Though the Kentucky Supreme Court in Landmark Community Newspapers rejected earlier precedent which had held that whether the master had control over the details of the servant's work was the most important factor,
The issue of whether an entity is an agent or independent contractor is a question of fact for a jury if the facts are disputed; if the facts are undisputed then the issue is a matter of law for the court to resolve. Nazar, 291 S.W.3d at 606. The parties disagree about the legal nature of the relationship between Freddie Mac and Eibeck, but have not really presented particularized, substantive factual disputes.
Plaintiffs' initial argument is that Eibeck Realty was Freddie mac's agent because an employee of Freddie Mac conceded as much to plaintiff Beauchamp. At his deposition, Beauchamp testified that Michael Henderson, an associate general counsel for Freddie Mac, told Beauchamp on the phone that "Terry Eibeck is Freddie Mac's agent" and Henderson also "admitted liability." Beauchamp depo., p. 99. Beauchamp later testified that Henderson "said that, yes, we [presumably Freddie Mac] understand he [Eibeck] trashed out the wrong place and that we are liable for this, but he [Henderson] disputed damages." Id. at 101. However, Beauchamp did not ask Henderson if he meant Eibeck was an agent as such a term is commonly used in real estate or if Henderson believed Eibeck to be an agent for vicarious liability purposes. Id. at 102.
Although, surprisingly, the issue was not raised by any party, Henderson's alleged statements present significant hearsay issues.
One recognized exception to the hearsay rule is a statement against interest. See FRE 801(d)(2). For example, "an out-of-court admission by a party-opponent is not hearsay if . . . [t]he statement is offered against a party and is . . . a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship[.]" Ungerbuehler, 2010 WL 3732205, at *5 (quotation marks and citation omitted). Merely providing that a party's employee made a statement seemingly against the interests of the employer is insufficient to meet FRE 801(d)(2). As the Sixth Circuit held, "[t]here is a critical difference between making a statement while one is an employee and having the actual or implied authority to make such a statement on behalf of your employer. The test is whether the statement concerns a matter within the scope of the agency or employment." Jacklyn v. Schering-Plough Healthcare Products Sales Corp., 176 F.3d 921, 928 (6th Cir. 1999).
Plaintiff has provided Henderson's name and title but otherwise have not offered any evidence to show that Henderson had the authority to make a statement which could be binding upon Freddie Mac (i.e., that Freddie Mac's legal relationship with Eibeck Realty was within Henderson's scope of employment). Freddie Mac doubtlessly employs numerous attorneys and the stray remarks of one attorney on a matter which has not been shown to be within that attorney's regular work portfolio does not meet the hearsay exception of FRE 801(d)(2)). In short, the Court concludes that what plaintiffs deem to be a controlling concession by Henderson is instead inadmissible hearsay. See, e.g., Ungerbuehler, 2010 WL 3732205, at *5 ("In order for the Court to admit a statement as an admission by a party-opponent, the Court must find that the statement concerns a matter within the scope of the agency or employment. . . . Plaintiff provides no proof that any one of the alleged employees to whom she spoke were involved in or had the authority to confirm an order to take possession of a piece of property. . . . Because the statements allegedly made by the Washington Mutual employees do not, on this record, constitute admissions by a party-opponent, the Court finds that the aforementioned sections of the . . . affidavits present inadmissible hearsay.") (citation and quotation marks omitted).
To support their contention that Eibeck Realty was Freddie Mac's agent, plaintiffs rely on the terms of the contract between Freddie Mac and Eibeck Realty (the "2012 Master Listing and Services Agreement" which will be referred to simply as "the contract" herein). See Doc. 99-6. Section two of the contract provides that "[w]ith respect to each listing, Brokerage [Eibeck Realty] shall act as agent, but not as attorney-in-fact, for Seller [Freddie Mac]." Id. at p. 3. Freddie Mac contends that the contract's usage of the term "agent" is only a term "commonly known to apply to the process of negotiating, buying, and selling real estate . . . which is not used in the same manner as a fiduciary for . . . the range of other special relationships recognized under the law of Kentucky." Doc. 102, p. 5.
The contractual usage of the term agent is, in addition, hardly surprising or conclusive as that term is common parlance in the real estate business and, in that context, does not necessarily connote one possessing the broad fiduciary associations associated with vicarious liability. See, e.g., Robert L. Raper & Andrew J. Vandiver, Real Estate Broker Liability, 36 N. Ky. L.Rev. 409 (2009)
Plaintiffs next rely upon section six of the contract, which sets forth some general guidelines for Eibeck Realty to follow in preserving and managing property, to attempt to show that Freddie Mac exercised great control over the details of Eibeck Realty's work. See Doc. 99-6, p. 5-7. First, the clause unsurprisingly requires Eibeck Realty to comply with applicable state and local laws. Id. at 5. After requiring Eibeck Realty to maintain properties in a manner to make them marketable, the clause also requires Eibeck Realty to comply with "the Eviction personal property guideline and Emergencies preservation maintenance guideline as outlined in the QuickSteps for Broker guide."
Among the specified aspects of the QuickSteps guide is a clause requiring Eibeck Realty to make a report "if there is abandoned personal property totaling $300.00 or more . . . ." Doc. 99-6, p. 6. Eibeck Realty was instructed to "err on the side of caution" if "items may have particular sentimental value to the former resident (e.g., family photo books, religious books, etc.). . . ." Id. If Eibeck Realty was "uncertain as to [the] value of property" it was to "contact the Eviction Coordinator for further instructions before proceeding with the trash out." Id. Similarly, the 2012 Broker Vendor Training Guide provided that if a trash out were ordered and personal property valued at over $300 or with personal intrinsic value were found, the trash out should cease, an inventory should be made and the eviction coordinator should be notified. Doc. 99-7, p. 16. Examples of items having "intrinsic personal value" were family and wedding photo albums, family bibles, diplomas and documents related to births, marriages or deaths. Id. at 17. Section six also requires Eibeck Realty to preserve the property by, among other things, ensuring that utilities are active and are transferred to Eibeck Realty's name.
Although Freddie Mac did not give Eibeck Realty complete and unfettered carte blanche to prepare the property at issue for sale, neither did Freddie Mac control the specific method, manner, and details of Eibeck Realty's work. Plaintiffs' argument to the contrary notwithstanding, the mere fact that Freddie Mac set some baseline contractual standards for Eibeck Realty to adhere to is insufficient to convert Eibeck Realty into Freddie Mac's agent. See 41 Am. Jur. 2d Independent Contractors § 11 (2015) ("A contract does not rise to that level of supervision, dominion, and control of day-to-day activities necessary to create a master-servant relationship merely because the contract stipulates that the work must adhere to certain policies, standards, or instructions from the employer.").
In summary, taking all the relevant facts and circumstances into account, the evidence shows that Freddie Mac did not control the method, manner and details of Eibeck Realty's work such that Eibeck Realty was Freddie Mac's agent.
To succeed on a negligent retention/supervision claim under Kentucky state law, plaintiffs "must establish that (1) the employer knew or had reason to know of the risk that the employee created, (2) the employee injured the plaintiff, and (3) the supervision and/or retention of the employee proximately caused the injury." Grubbs v. Thermo Fisher Scientific, 2014 WL 1653761, at *2 (E.D. Ky. April 23, 2014) (citing Kentucky cases). "In recognizing the tort of negligent supervision, Kentucky has adopted the Restatement (Second) of Agency § 213 which illustrates the requirements for establishing a claim of negligent supervision." Booker v. GTEnet.LLC, 350 F.3d 515, 517 (6
Plaintiffs argue that Freddie Mac is liable under a negligent supervision theory because it failed to give adequate directions to Eibeck Realty regarding the foreclosure at issue. Indeed, plaintiffs' theory seems to be a version of res ipsa loquitur—Eibeck Realty could not have trashed out the wrong garage if it had not been negligently supervised by Freddie Mac. However, it is uncontested that Eibeck Realty was given the correct address of the property to be foreclosed upon and, other than speculation, plaintiffs have not shown why Freddie Mac should have anticipated that Eibeck Realty would nonetheless trash out the wrong garage. Instead, Eibeck Realty's failure to ascertain the correct garage seems to be an isolated incident of carelessness—and negligent supervision is inappropriate based solely on the carelessness of someone hired to do a job. See Restatement (Second) of Agency § 213, comment d.
Plaintiffs have also not explained sufficiently how their theory that Freddie Mac began the foreclosure/trash out proceedings before it had legal title to the property at issue means that Freddie Mac improperly supervised Eibeck Realty.
The Court has concluded that Freddie Mac is entitled to summary judgment. The only remaining parties, therefore, are plaintiffs and Eibeck Realty, who are all from Kentucky. This Court lacks diversity jurisdiction because no parties are diverse. See, e.g., Saginaw Housing Commission v. Bannum, Inc., 576 F.3d 620, 624 (6
Similarly, on August 29, 2015 plaintiffs filed a motion to add Terry Eibeck, individually, as a defendant. The motion states that plaintiffs' counsel "recently" requested and received "a copy of the entire liability policy and declaration of coverage sheet" which was the first time "[p]laintiffs and their lawyer were made aware that Kentucky Farm Bureau's named insured is `Terry Eibeck' and scheduled insureds are First Preston Mgmt Inc & Fannie Mae, 5040 Addison Circle, Ste 400, Addison, TX 75001." Doc. 114, p. 2-3.
The motion was filed well after the close of discovery and after the motions for summary judgment had already been briefed completely. In addition, though the motion states to the contrary, adding a new named defendant at this late date would be inherently prejudicial to Terry Eibeck and would likely lead to a motion to reopen discovery. Therefore, the motion will be denied. However, as the Court is dismissing without prejudice all claims against Eibeck Realty, the Court will deny the motion to add Terry Eibeck, individually, as a defendant without prejudice so the matter may be addressed fully in any subsequent state court proceeding.
For the foregoing reasons,
1. Plaintiffs' motion for partial summary judgment (doc. 99) is
2. Defendant Freddie Mac's motion for summary judgment on all claims against it (doc. 97) is
3. Plaintiffs' claims against Eibeck Realty Group, LLC and Regional Realty are
4. Plaintiffs' motion to amend complaint (doc. 114) is
5. A separate judgment shall issue herewith.
Doc. 102, p. 10.