Is Negligent Supervision and Hiring Covered by Commercial General Liability (CGL) Policies?

By Michael Penn

Hard Hat Construction Corp. employs Carl, a retired teacher that now works as a nighttime security officer. Carl is often under the influence while on the job. One evening, Carl decides to take a forklift off property for a spin on the open road and causes a car accident when several drivers swerve to avoid Carl on his joyride. Several people are seriously injured.

Question: Can a company be held liable for a third party’s injuries that resulted from physical altercations involving their employees or agents?

Short Answer: Yes, and insurance coverage may be available to compensate victims for their personal injuries.

The Santa Ana personal injury lawyers at Aitken Aitken Cohn has successfully represented plaintiffs in negligent hiring and supervision claims resulting in numerous seven-figure recoveries for our clients. These cases typically range from assault and battery, car accidents due to road-rage type incidents committed by truck drivers to other violent altercations, sexual abuse by a company’s personnel, physical abuse by bar or restaurant personnel, and firearm shootings by security personnel or onsite apartment resident managers.

The injuries sustained by victims commonly require surgical repair or result in permanent physical disabilities, serious emotional distress, and even wrongful death. Retaining competent legal counsel, or merely consulting with a skilled attorney early in the process is often critical to ensure a thorough investigation, preservation of evidence, and proper examination and review to achieve a successful result.

“Negligence liability will be imposed on an employer if it ‘knew or should have known that hiring the employee created a particular risk of hazard and that particular harm materializes.’ ” Phillips v. TLC Plumbing, Inc. (2009) 172 Cal.App.4th 1133, 1139.  The legal doctrine of respondeat superior holds an employer or principal legally responsible for the wrongful acts of an employee or agent if such acts occur within the scope of the employment or agency.  The Supreme Court explained:

An employer is liable for negligent hiring or retaining an employee when the employer “knows the employee is unfit, or has reason to believe the employee is unfit or fails to use reasonable care to discover the employee’s unfitness before hiring him.”  Evan F. v. Hughson United Methodist Church, (1992) 8 Cal.App. 4th 828, 842; see also Federico v. Superior Court (1997) 59 Cal.App.4th 1207. Under the doctrine of respondeat superior, an employer is vicariously liable for his employee’s torts committed within the scope of the employment. This doctrine is based on “a rule of policy, a deliberate allocation of risk. The losses caused by the torts of employees, which as a practical matter are sure to occur in the course of the employer’s enterprise, are placed upon that enterprise itself, as a required cost of doing business.” Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962, 967.

“Tortious conduct that violates an employee’s official duties or disregards the employer’s express orders may nonetheless be within the scope of employment.  So may acts that do not benefit the employer, or are willful or malicious in nature.” Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 209.

More recently, the California Supreme Court in Liberty Surplus Insurance Corp. Et al. v. Ledesma & Meyer Construction Co. Inc. recognized that even in instances involving an employee’s willful act of sexual misconduct, such intentional conduct does not preclude potential insurance coverage. This particular case involved the abuse of a 13-year-old student by a construction worker whose employer had contracted with the school district to manage a construction project on the middle school grounds. The student filed a lawsuit against the construction company alleging negligent hiring, retention, and supervision of the employee.

The company’s insurer defended the lawsuit under a reservation of rights and sought declaratory relief contending they had no obligation to defend or indemnify the construction company. Here, the Court recognized “society’s interest in providing an incentive for employers to take precautions against sexual abuse by their employees.  However, the threat of liability for negligent hiring, retention, and supervision, is a significant deterrent even when insurance coverage is available.”  Furthermore, the Court ruled that “absent an applicable exclusion, employers may legitimately expect coverage for such claims under comprehensive general liability insurance policies, just as they do for other claims of negligence.”

In other matters involving physical altercations and injuries, California law often requires an affirmative duty by defendant companies to provide protection from foreseeable third-party crime.  Specifically, California law requires landowners to maintain land in their possession and control in a reasonably safe condition. Civ. Code, § 1714; Rowland v. Christian (1968) 69 Cal.2d 108; Ann M. v. Pacific Plaza Shopping Center (1983) 6 Cal.4th 666, 674. A landlord generally owes a tenant the duty, arising out of their special relationship, to take reasonable measures to secure areas under the landlord’s control against foreseeable criminal acts of third parties. Delgado v. Trax Bar & Grill (2005) 36 Cal.4th 224, 235; Ann M. 6 Cal.4th at 674.

Further, California law requires that apartments in which there are 16 or more units utilized for profit shall maintain on-site managers twenty-four hours a day to provide services and protection for the tenants. California Law Civil Code Title 25, Section 42. This is further summarized in CACI 1005 which states, “A landlord must use reasonable care to protect the tenant from another person’s harmful conduct on its property in the landlord can reasonably anticipate such conduct.”

A landlord is not an insurer of the safety of his tenants, “but he is required to exercise reasonable care for their safety and is liable for injuries resulting from a breach of this duty. The general duty includes not only the duty to inspect the premises in order to uncover dangerous conditions but, as well, the duty to take affirmative action to control the wrongful acts of third persons which threaten invitees where the occupant has reasonable cause to anticipate such acts and the probability of injury resulting therefrom.” Taylor v. Centennial Bowl, Inc. (1966) 65 Cal.2d 114, 121, internal citations omitted.)

The reasonableness of a landlord’s conduct under all the circumstances is for the jury to decide. Amos v. Alpha Prop. Mgmt. (1999) 73 Cal.App.4th 895, 904; Isaacs v. Huntington Memorial Hospital (1985) 38 Cal.3d 112, 131, internal citation omitted (“Once a court finds that the defendant was under a duty to protect the plaintiff, it is for the fact-finder to decide whether the security measures were reasonable under the circumstances. The jury must decide whether the security was adequate.”).

For effective legal representation, it is important to conduct an immediate and thorough investigation into the matter at the earliest possible time. It takes considerable investigation and deliberate formal discovery measures to prove elements of notice and foreseeability in negligent hiring and supervision cases.

At Aitken Aitken Cohn, our office regularly works as a liaison for victims with the District Attorney’s Office and diligently cooperate with law enforcement personnel in order to help uncover evidence and expedite discovery of critical facts to assist with tying the wrongful conduct of the tortfeasor to their respective employer.  Where the facts do not allow for insurance coverage, the goal is to at least assist victims to present meritorious claims for restitution through the criminal justice system.