Reardon v. King ( 2019 )

IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 114,937
KEVIN E. REARDON, Special Administrator,
for the Estate of
MARILYN K. PARSONS,
Appellee,
v.
JON M. KING,
Defendant,
and
THE TRUST COMPANY OF KANSAS,
Appellant.
SYLLABUS BY THE COURT
In Kansas, an employer owes a duty of reasonable care under the circumstances to
prevent harm to third parties caused by its employees when those employees are acting
within the scope of their employment. More particularized articulations of this duty are
disapproved.
Review of the judgment of the Court of Appeals in an unpublished opinion filed March 17, 2017.
Appeal from Leavenworth District Court; DAVID J. KING, judge. Opinion filed November 15, 2019.
Judgment of the Court of Appeals reversing the district court is reversed. Judgment of the district court is
reversed and the case is remanded with directions.
Rachel N. Wetta, of Foulston Siefkin LLP, of Wichita, argued the cause, and Darrell L. Warta, of
the same firm, was with her on the briefs for appellant.
Michael P. Crow, of Crow & Associates, of Leavenworth, argued the cause, and Peter C.
Robertson and Dan Heinz, of the same firm, were with him on the brief for appellee Marilyn K. Parsons.
1
The opinion of the court was delivered by
STEGALL, J.: The Trust Company of Kansas (TCK) employed Jon M. King, a
Kansas-licensed attorney, as a trust officer. TCK had a policy prohibiting employees
from practicing law during employment. Unbeknownst to TCK, King represented his
TCK client—Marilyn K. Parsons—in legal matters before, during, and after his
employment with TCK. In his capacity as a trust officer, King would transfer funds from
Parsons' TCK account to her personal account to pay a flat rate legal fee of $5,000 per
month. Once TCK learned about King's attorney-client relationship with Parsons, TCK
filed a complaint of suspected elder abuse with the Kansas Department of Social and
Rehabilitation Services and an ethics complaint with the Kansas Disciplinary
Administrator's Office.
Further investigation by the Kansas Disciplinary Administrator's Office revealed
that Parsons paid King approximately $250,271.50 in attorney fees during his
employment at TCK. As a result, King voluntarily surrendered his license to practice law.
See In re King, 297 Kan. 208, 300 P.3d 643 (2013). Soon after, Parsons filed a lawsuit
against TCK and King, asserting various theories of liability. The case went to trial, and a
jury found TCK liable for "negligent training" and King liable for breach of fiduciary
duty. The Court of Appeals reversed the jury's verdict against TCK, finding the evidence
insufficient. Accordingly, the panel remanded the case with instructions to enter
judgment as a matter of law in favor of TCK.
On review, we conclude the district court's instructions failed to present the jury
with an accurate statement of our negligence law and incorrectly separated Parsons'
negligence claim against TCK into two causes of action. As a result of these errors,
questions of fact remain. We reverse the Court of Appeals and remand this matter for a
new trial decided on proper instructions.
2
PROCEDURAL BACKGROUND
At this stage of the litigation, the key facts are procedural and they are not in
dispute. Parsons sued TCK and King seeking $250,271.50 in damages plus an additional
$12,111.99 for loss of income and loss of investment appreciation. After Parsons
amended her complaint several times and each party filed multiple pretrial
questionnaires, the district court issued a pretrial order describing three separate claims
against TCK: "(1) breach of contract, (2) breach of fiduciary duty, and (3) failure to
properly supervise its employee, Jon King."
The case proceeded to a four-day jury trial. At the close of Parsons' case-in-chief,
TCK moved for judgment as a matter of law on all claims against TCK. After hearing
oral argument, the court granted TCK's motion for judgment as a matter of law on part of
Parsons' breach of contract claim. The court then summarized Parsons' remaining claims
as follows:
"What I have is—is the—the claims that plaintiff has asserted against TCK that survived
is their breach of contract claim, partially, one of their specifications of breach of
contract, I've ruled that there's not evidence to support there was a breach.
"[S]o, breach of contract, breach of fiduciary duty, negligent representation, and
negligent supervision."
The district court proceeded to finalize its jury instructions and verdict form. The
instructions included a claim of "negligent supervision and training" against TCK:
3
"INSTRUCTION NO. 18
"Negligent supervision and training claim against Trust Company of Kansas
"The plaintiff, Marilyn Kay Parsons, claims the defendant, Trust Company of
Kansas, failed to adequately supervise and train Jon M. King by the following:
"(1) Failing to train and orient Jon M. King that he was prohibited from practicing
law for TCK clients while employed by TCK
"(2) Failing to provide training regarding TCK company policies
"(3) Failing to provide training regarding fiduciary duties to TCK clients
"(4) Failing to verify that Jon M. King did not engage in the private practice of law
while employed by TCK
"The plaintiff must prove her claim for negligent supervision and training by a
preponderance of the evidence.
"In response to this claim, the defendant, Trust Company of Kansas, denies that it
failed to adequately supervise and train Jon M. King. It maintains that plaintiff's losses
are not attributable to any failure of training and supervision on its part, but rather to the
intentional wrongful acts of Jon M. King, of which it was not aware."
"INSTRUCTION NO. 25
"Negligent supervision and training
"In considering the plaintiff's claim against Trust Company of Kansas for
negligent supervision and training, you should consider the following:
"1. An employer has a duty to supervise an employee it knows, or has reason to
know, is unfit to undertake the responsibilities of his or her employment.
4
"2. Negligent supervision entails either inadequate oversight and review of an
employee in the performance of his or her job duties or failing to control an employee
with propensities that might pose a danger.
"3. A claim based on negligent training depends upon establishing facts showing
that more or better training would have prevented the harm.
"The plaintiff must prove her claim for negligent supervision and training by a
preponderance of the evidence."
But the verdict form separated the "claims" of negligent supervision and negligent
training into two distinct causes of action:
"PLAINTIFF'S CLAIMS AGAINST THE DEFENDANT TRUST COMPANY OF KANSAS
....
"10. Do you find that plaintiff has proven by a preponderance of the evidence
that the defendant Trust Company of Kansas negligently failed to supervise Jon M.
King? . . .
"11. Do you find that plaintiff has proven by a preponderance of the evidence
that the defendant Trust Company of Kansas negligently failed to train Jon M. King?"
TCK then questioned the instructions and informed the court that "[t]he claim
against us was stated negligent supervision and training claim. There was 'and' it was one
claim with both supervision and training." But the court explained the separation was
intentional because negligent supervision and negligent training had "different
standard[s]." After this explanation, TCK had no further objection.
5
These instructions, along with the verdict form, were given to the jury. In the end,
the case submitted to the jury included five claims against TCK: (1) breach of contract;
(2) breach of fiduciary duty; (3) negligent misrepresentation; (4) negligent failure to
supervise King; and (5) negligent failure to train King.
Ultimately, the jury found TCK liable for negligent training and King liable for
breach of fiduciary duties. The jury returned a defendant's verdict on the remainder of
Parsons' claims against TCK and King. The jury awarded damages of $125,135.75 plus
interest of $6,055.99—half the amount claimed—jointly and severally against TCK and
King.
TCK timely filed a renewed motion for judgment as a matter of law, or, in the
alternative, a new trial. The district court denied the motion and TCK timely appealed.
King did not appeal the jury's finding against him for breach of fiduciary duty, and
Parsons did not cross-appeal.
At the Court of Appeals, TCK argued: (1) there was insufficient evidence to
support the verdict; (2) the district court should have granted its motion for judgment as a
matter of law; and (3) the jury instructions on Parsons' negligence claims were erroneous.
Parsons v. King, No. 114,937, 2017 WL 1035190, at *1 (Kan. App. 2017) (unpublished
opinion). The Court of Appeals reversed and remanded with instructions for the district
court to enter judgment as a matter of law in favor of TCK. 2017 WL 1035190, at *5.
The panel found the evidence could not support the jury verdict for negligent failure to
train even when considering all the facts and inferences that could reasonably be drawn in
Parsons' favor. 2017 WL 1035190, at *4. According to the panel, the evidence failed to
show more or better training would have prevented Parsons' loss and that it "rather . . .
focused on whether TCK adequately supervised King." 2017 WL 1035190, at *4.
6
Parsons filed a petition for review arguing the Court of Appeals erred by finding
TCK was entitled to judgment as a matter of law on Parsons' negligence claim. TCK
responded to Parsons' petition, asking us to consider the district court's jury instructions
on Parsons' negligence claim or claims. We granted Parsons' petition and review TCK's
issue raised in its response to provide guidance on remand. See Supreme Court Rule
8.03(c)(3) (2017 Kan. S. Ct. R. 55) ("In a civil case, the response also may present for
review adverse rulings or decisions of the district court that should be considered by the
Supreme Court in the event of a new trial, provided that the respondent raised the issues
in the Court of Appeals."); see also Puckett v. Mt. Carmel Regional Medical Center, 290
Kan. 406, 443, 228 P.3d 1048 (2010) (reviewing an issue raised in a response to petition
for review under Supreme Court Rule 8.03[c][3]).
ANALYSIS
We take the unusual step of beginning with our conclusion. In short, we agree with
both parties. The trial court's jury instructions on Parsons' negligence claim were
erroneous. And as a direct result of this error, the Court of Appeals erred in granting
judgment as a matter of law in favor of TCK. The instructions and verdict form in this
case were so erroneous that an after-the-fact evaluation of the evidence is not possible.
The jury instructions did not adequately or accurately explain the elements of Parsons'
negligence claim. This prevented the jury from ever being able to consider whether
Parsons had sufficiently proven each of the elements of the claim. Given this failure, any
review of the evidence for sufficiency became futile and the case must now be returned to
the district court for a new trial on proper instructions.
The proper place to begin our analysis is with the jury instructions. When
reviewing jury instruction issues, we follow a three step process to determine:
(1) whether the issue is reviewable; (2) whether any error occurred; and (3) whether the
error requires reversal. Siruta v. Siruta, 301 Kan. 757, 771, 348 P.3d 549 (2015).
7
The first and third steps are related because the standard for determining whether
an error requires reversal depends on whether the party preserved the issue. 301 Kan. at
771. TCK failed to object to the district court's jury instruction and verdict form with
respect to Parsons' claim of negligent supervision and negligent training. When an
alleged instruction error was not objected to below we still review whether the instruction
was legally and factually appropriate, but will reverse only for "clear error." 301 Kan. at
772 ("'"An instruction is clearly erroneous when the reviewing court reaches a firm
conviction that if the trial error had not occurred there was a real possibility that the jury
would have returned a different verdict."'").
When conducting an error analysis, we must determine whether the instructions
were legally and factually appropriate. 301 Kan. at 775. We consider the instructions as a
whole and review whether the instructions "'properly and fairly stated the law as applied
to the facts of the case and could not have reasonably misled the jury.'" 301 Kan. at 775
(quoting State v. Horton, 300 Kan. 477, 491, 331 P.3d 752 [2014]). For an instruction to
be legally appropriate, it must fairly and accurately communicate the applicable law to
the jury. Castleberry v. DeBrot, 308 Kan. 791, 802, 424 P.3d 495 (2018). Thus,
determining whether the instructions in this case were legally appropriate require us to
review the law applicable to a negligence cause of action.
In its simplest form, a negligence claim requires a plaintiff to prove four essential
elements: (1) defendant owed a duty to the plaintiff; (2) defendant breached that duty;
(3) plaintiff's injuries were caused by the defendant's breach; and (4) plaintiff suffered
damages. Patterson v. Cowley County, Kansas, 307 Kan. 616, 622, 413 P.3d 432 (2018).
The first of these elements—the existence of a duty—is actually a question of law
rather than one of fact. Siruta, 301 Kan. at 766-67. Because the existence of a duty is a
question of law, the court must decide whether a duty exists and how to articulate that
8
duty. Dobbs, Hayden & Bublick, The Law of Torts § 164 (2d ed. 2019). Thus, one of the
crucial jury instructions in any negligence cause of action must be the trial court's
articulation of the duty owed by the defendant to the plaintiff. If this instruction is wrong
or misleading, the jury will be incapable of performing its fact-finding role in
determining the existence (or lack thereof) of the latter three elements.
Here, Parsons asserted a negligence claim against TCK as an employer. Although
this claim involves the conduct of TCK's employee and alleged harm to a third person,
the cause of action seeks to impose direct liability on TCK for its allegedly negligent acts
causing the harm, not for any negligence or fault on the part of the employee. As a
general rule, in the absence of a "special relationship" a defendant does not owe a duty to
third parties. C.J.W. v. State, 253 Kan. 1, 7-8, 853 P.2d 4 (1993). Kansas common law,
however, recognizes a "special relationship" between employers and third parties who
come into contact with their employees. See, e.g., Kansas State Bank & Tr. Co. v.
Specialized Transportation Services, Inc., 249 Kan. 348, 362, 819 P.2d 587 (1991). This
relationship creates a legal duty owed to the third party by the employer. But how is this
duty defined by Kansas law and how should it be explained to a jury?
A review of our caselaw makes it clear that an employer owes a duty of reasonable
care under the circumstances to prevent harm to third parties caused by its employees
when those employees are acting within the scope of their employment. See, e.g., Kansas
State Bank & Tr. Co., 249 Kan. at 362 (explaining that liability results from the employer
having "reason to believe that an undue risk of harm to others would exist as a result of
the employment of the alleged tortfeasor"); Plains Resources, Inc. v. Gable, 235 Kan.
580, 590, 682 P.2d 653 (1984) ("an employer has a duty to use reasonable care in the
selection and retention of employees"); see also Restatement (Third) of Torts § 41,
comment c (2012) ("The duty . . . is to exercise reasonable care under the
circumstances.").
9
By defining an employer's duty as one of "reasonable care," we reserve the
question of what specific acts constitute "reasonable care" in any of the infinite factual
circumstances that could exist to the second element of a negligence claim—breach of
the duty. And determining whether a legal duty was breached is a question of fact for the
jury.
We acknowledge that there has been a trend in recent years toward defining the
legal duty owed in negligence cases in ever narrower and more particularized ways. This
can have the deleterious effect of taking the fact question of breach away from the jury
"under the guise of deciding the question of 'duty' in its primary sense." Goldberg &
Zipursky, The Restatement (Third) and the Place of Duty in Negligence Law, 54 Vand. L.
Rev. 657, 713 (2001). Particularized duties tend to sneak conclusions about the facts of
particular cases into what are intended to be general standards. Dobbs, The Law of Torts
§ 226 (2000). But duty rules are not meant to be fact specific. Rather, they are to set
broadly applicable guidelines for public behavior. Cardi, Purging Foreseeability, 58
Vand. L. Rev. 739, 754 (2005). Otherwise, the line between the first and second elements
of a negligence claim—duty and breach—are blurred.
Today's case is a good example of that trend. The instructions told the jury below
that TCK had specific, discrete duties "to train" and "to supervise." But this misstates
Kansas law. Employers in Kansas do not have a duty to third parties to train or to
supervise their employees. They have a duty to exercise reasonable care under the
circumstances. A failure to either train or to supervise may (or may not) constitute a
breach of that duty—just as other specific facts may (or may not) constitute a breach. But
these are fact questions properly belonging to the second element of the negligence claim,
not the first.
The Supreme Court of Illinois helpfully confronted this unfortunate trend in
Marshall v. Burger King Corporation, 222 Ill. 2d 422, 856 N.E.2d 1048 (2006). There,
10
the plaintiff had filed a negligence action against Burger King due to the death of his son.
The decedent was killed when a car crashed through the window of the Burger King
restaurant where the decedent was eating. Plaintiff alleged that Burger King and Davekiz,
Inc.—Burger King's franchisee—were negligent for failing to place safety barriers such
as vertical concrete pillars or poles in front of the restaurant. This, they argued, would
have prevented Fritz' car from coming through the window and killing the decedent.
Defendants moved to dismiss arguing they owed no duty to protect the decedent from the
injury caused by Fritz' car. The trial court granted the motion holding there was no duty
owed by the defendants to place barriers in front of their restaurant. The court reasoned
that, given the likelihood of such an accident happening was minor, recognizing a duty
for all restaurant owners to construct such barriers was impractical. Marshall, 222 Ill. 2d
at 427.
Ultimately, the Illinois Supreme Court reversed the trial court. 222 Ill. 2d at 425. In
doing so, the court observed that by advocating for a particularized statement of duty,
Burger King and the other defendants were
"actually requesting that we determine, as a matter of law, that they did not breach their
duty of care. It is inadvisable for courts to conflate the concepts of duty and breach in this
manner. Courts could, after all, 'state an infinite number of duties if they spoke in highly
particular terms,' and while particularized statements of duty may be comprehensible,
'they use the term duty to state conclusions about the facts of particular cases, not as a
general standard.' 1 D. Dobbs, Torts § 226, at 577 (2001); see also 54 Vand. L. Rev. at
712-17 (discussing problems associated with using the duty element of negligence to
render decisions that no breach occurred as a matter of law). Thus, the issue in this case is
not whether defendants had a duty to install protective poles, or a duty to prevent a car
from entering the restaurant, or some such other fact-specific formulation. Because of the
special relationship between defendants and the decedent, they owed the decedent a duty
of reasonable care. The issue is whether, in light of the particular circumstances of this
case, defendants breached that duty. That question cannot be answered at this stage of the
11
proceedings. See Espinoza, 165 Ill. 2d at 114 (issue of breach is for jury to decide
provided there is genuine issue of material fact regarding that issue)." 222 Ill. 2d at 443-
44.
We find this discussion instructive and adopt the same posture toward today's
case. Like the trial court in Marshall, the trial court here constructed a definition of
TCK's duty so fact specific that on review by the Court of Appeals, the line between duty
and breach disappeared. In other words, the duty was defined with such particularity that
on review, the Court of Appeals determined that there was no evidence of breach.
Instructing the jury on a "duty to supervise" or a "duty to train" is analogous to
instructing a jury that Burger King has a duty to install concrete barriers outside its
restaurants. Rather than providing the jury with a standard against which it could judge
TCK's actions, the instructions described allegations which, if proven, might constitute a
breach of TCK's reasonable care duty. The breach element of Parsons' negligence claim
concerns the factual question of whether TCK took reasonable steps, in light of the
foreseeable probability and magnitude of any harm, to prevent harm. See Restatement
(Third) of Torts: Physical & Emotional Harm § 41, comment e (2012). To fulfill its duty
of reasonable care to protect Parsons against risks posed by King, TCK did not
necessarily have to supervise or train King. A jury might find that, through other actions,
TCK did fulfill its duty of reasonable care. Or alternatively, the jury might decide that
some act or omission by TCK falling outside the categories of "train" or "supervise"
amounted to a breach of its duty of reasonable care. This determination, however, should
be left to the jury.
The instructions, combined with the verdict form, likewise erroneously created
two negligence causes of action where only one existed. By separating negligent
supervision and negligent training into two separate claims the jury was left to assume
that an employer owes two separate legal duties to a third party: (1) a duty to supervise
12
its employees and (2) a duty to train its employees. Negligence causes of action,
however, are wholly derivative of the duty owed by the defendant. See Boulanger v. Pol,
258 Kan. 289, 296-97, 900 P.2d 823 (1995) ("'In Kansas it is a fundamental rule
actionable negligence must be based on a breach of duty.'"). And in Kansas, an employer
owes third parties a single duty of reasonable care, as we have described.
While an employer's practices when hiring, training, and supervising its employees
may be evidence of a breach of an employer's duty of reasonable care to third parties,
they are not separate causes of action. Here, TCK only owed Parsons one duty—the duty
to exercise reasonable care under the circumstances to prevent Parsons or any other
customer from being harmed by its employees. And with only one duty recognized, only
one cause of action for breach existed. To the extent our prior caselaw contributed to this
confusion by using terms like "negligent supervision" or "negligent training," we make
the conscientious decision today to move away from such characterizations of the
anatomy of a negligence claim in Kansas.
We have concluded the jury instructions erred: (1) by failing to properly state the
legal duty owed by TCK to Parsons; and (2) by separating Parsons' negligent claim into
two separate causes of action. Now we must determine whether these errors were
harmless or whether they require reversal. Because TCK failed to object to the
instructions at trial, we will reverse only for clear error. Siruta, 301 Kan. at 772. "'"An
instruction is clearly erroneous when the reviewing court reaches a firm conviction that if
the trial error had not occurred there was a real possibility that the jury would have
returned a different verdict."'" Siruta, 301 Kan. at 772 (quoting Hawkinson v. Bennett,
265 Kan. 564, 581, 962 P.2d 445 [1998]). In other words, if we are firmly convinced that
the legally inappropriate definition of negligence affected the verdict, we must reverse.
See Siruta, 301 Kan. at 780; State v. Williams, 295 Kan. 506, 516, 286 P.3d 195 (2012).
13
This case is unique in that the effect of the error on the verdict did not become
clear until the Court of Appeals reviewed the verdict. After all, Parsons won at trial. But
due to the defects in the instructions, the verdict was infirm on appeal. In fact, the verdict
was flawed at the outset because the jury found TCK liable for breaching a duty that does
not exist.
Had the jury been properly instructed, any jury verdict in favor of Parsons on her
negligence claim would likely have survived a sufficiency challenge. It was only because
the jury was factually cramped by the erroneous instructions that the Court of Appeals
was able to reach its conclusion of insufficient evidence. We do not know whether a
properly instructed jury would return a verdict in favor of Parsons. But we are firmly
convinced that the legal errors we have identified with the instructions did affect the
verdict. Therefore, we must reverse and remand for a new trial on legally appropriate
instructions.
Reversed and remanded with directions.
BEIER and JOHNSON, JJ., not participating.1
DAVID WILLIAM ROGERS, District Judge, assigned.2
1
REPORTER'S NOTE: Justice Johnson heard oral arguments but did not participant in
the final decision in case No. 114,937. Justice Johnson retired effective September 6,
2019.
2
REPORTER'S NOTE: District Judge Rogers was appointed to hear case No. 114,937
vice Justice Beier under the authority vested in the Supreme Court by art. 3, § 6(f) of the
Kansas Constitution.
14