Richard Miller, v. Waste In Time, Inc., Sean Welling, Julie Welling and Zachary Gilbert

Richard Miller, v. Waste In Time, Inc., Sean Welling, Julie Welling and Zachary Gilbert

 

Civil Action-Negligence-Injury to Employee-Trash Truck-Motor Vehicle Accident-Punitive Damages-Intoxication of Vehicle Operator-Corporate Liability-Piercing the Corporate Veil

 

Richard Miller (“Plaintiff”) filed a Complaint alleging that he was injured when a trash truck owned by Waste In Time, Inc. (“Employer”) was operated by Zachary Gilbert (“Gilbert”) in a negligent manner that caused an accident while Plaintiff was working.  The Complaint alleges that Sean and Julie Welling (“the Wellings”) are owners of Employer.  The Complaint alleges that Gilbert significantly was impaired by the influence of illegal drugs warranting punitive damages.  Further the Complaint sets forth a claim against Employer seeking to pierce the corporate veil as to the Wellings.  Defendants filed Preliminary Objections challenging the claims for punitive damages and seeking to pierce the corporate veil.

 

1. A showing of negligence or even gross negligence generally is not sufficient to justify an award of punitive damages.

 

2. Punitive damages may be awarded only to punish outrageous conduct.

 

3. Outrageous conduct is defined as acts completed with bad motive or reckless indifference to the interests of others.

 

4. Driving Under the Influence of alcohol may be deemed outrageous conduct and a reckless indifference to the interests of others sufficient to allow punitive damages.

 

5. Since the Complaint alleges that Gilbert operated the truck while intoxicated that may constitute behavior sufficient to allow punitive damages, the claim for punitive damages will be permitted to proceed to discovery with the focus upon Gilbert’s driving and level of intoxication without prejudice to the ability of Defendants to challenge this claim through summary judgment.

 

6. Numerous factors are relevant in determining whether the corporate veil should be pierced including disregard of a corporate formalities, undercapitalization, substantial intermingling of corporate and personal affairs and use of the corporate form to perpetrate a fraud.

 

7. While Plaintiff is instructed to file an Amended Complaint to set forth whether liability is sought against the Wellings under negligent entrustment and/or vicarious liability theories of liability, the allegations of the Complaint indicating that the Wellings undercapitalized Employer, intermingled their personal assets and affairs with those of Employer, failed to adhere to corporate formalities and managed Employer for their own personal benefit are sufficient to support the claim seeking to pierce the corporate veil.

 

L.C.C.C.P. No. 2021-00145, Opinion by Bradford H. Charles, Judge, August 17, 2022.

 

 

 

 

 

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, PENNSYLVANIA

 

CIVIL ACTION – LAW

                                                                     

RICHARD MILLER,                                   :

Plaintiff                                                      :

                                                                   :

                                                                   :

1. :        2021-00145

                                                                   :

WASTE IN TIME, INC, SEAN                   :

WELLING, JULIE WELLING, AND          :

ZACHARY GILBERT,                                :

Defendant                                                  :        Decided on Briefs

                                                                   :

                                                         

ORDER OF COURT

 

 

AND NOW, this 17^th day of August, 2022 in accordance with the attached Opinion, the Order of this Court is as follows:

1. Defendant’s Preliminary Objection seeking to dismiss Plaintiff’s request for Punitive Damages is DENIED.
2. Defendant’s Preliminary Objections to Counts 5 and 6 entitled “Piercing the Corporate Veil” are granted in part and denied in part in accordance with the attached Opinion.
3. Plaintiff is to file an Amended Complaint within thirty (30) days of today’s date.

 

BY THE COURT:

 

__________________________J.

BRADFORD H. CHARLES

BHC/pmd

cc:     Court Administration (order only)

David Warner, Esq.// 525 S. 8^th Street, PO Box 49, Lebanon PA 17042

John Statler, Esq.// 101 Market St., PO Box 109, Lemoyne PA 17043

 

 

 

 

 

IN THE COURT OF COMMON PLEAS LEBANON COUNTY

PENNSYLVANIA

 

CIVIL DIVISION

 

RICHARD MILLER,                                   :

Plaintiff                                                      :

                                                                   :

1. :        2021-00145

                                                                   :

WASTE IN TIME, INC, SEAN                   :

WELLING, JULIE WELLING, AND          :

ZACHARY GILBERT,                                :

Defendant                                                  :        Decided on Briefs

                                                                   :

                                                                   :       

APPEARANCES:

 

David Warner, Jr., Esq.                          FOR Plaintiff                                                                                                                                                      

John Statler, Esq.                                   FOR Defendant

 

OPINION BY CHARLES, J.,  August 17, 2022

Before us are Defendants’ Preliminary Objections seeking to Dismiss Plaintiff’s Claim for Punitive Damages and its effort to impose individual responsibility on Julie Welling and Zachary Gilbert.  For reasons we will articulate in more detail below, we conclude that Defendants’ Preliminary Objections are premature.  We will therefore deny them without prejudice to the ability of Defendants to again seek relief at the Summary Judgment stage of these proceedings.

 

1. FACTS and BACKGROUND

On February 7, 2022, Plaintiff filed a Civil Complaint naming Waste In Time, Inc., Sean Welling, Julie Welling and Zachary Gilbert as defendants.  According to the Complaint, Plaintiff was a passenger in a 2002 Freightliner trash truck owned by Waste In Time, Inc. and driven by Zachary Gilbert.  Plaintiff alleged that Gilbert failed to negotiate a curve in a roadway that resulted in an accident.  Plaintiff alleges that he was injured as a result of that accident.

Plaintiff’s Complaint alleged that Gilbert was negligent in numerous respects, including “operating his motor vehicle while being significantly impaired by the influence of illegal drugs.”  Plaintiff also alleged that Gilbert’s conduct was “gross reckless and outrageous due to the fact that he was operating his vehicle while being impaired by the influence of illegal drugs, which conduct entitles Plaintiff to an award of punitive damages.” (Paragraph 21 of Complaint).

Count 2 of the Complaint sets forth a claim against Waste In Time, Inc. based upon a theory of vicarious liability.  Count 3 charges Sean Welling with negligence.  Count 3 alleges that Mr. Welling was “an owner, agent, servant and/or employee of Waste In Time, Inc.”  Count 3 alleges that Welling improperly entrusted the trash hauling vehicle to Gilbert knowing that Gilbert was “a poor driver and unfit to operate said vehicle.” Count 4 was lodged against Waste In Time, Inc. based upon a similar theory of negligent entrustment.

Counts 5 and 6 set forth causes of action against Sean Welling and Julie Welling that were entitled “Piercing the Corporate Veil”.  Both of these Counts allege that Mr. & Mrs. Welling “intermingled” personal assets with the Waste In Time corporation, they failed to adhere to corporate formalities, they used the corporation for their own personal benefit so that the corporation was an “alter ego” for the affairs of the Wellings.

Defendants filed Preliminary Objections on July 6, 2022.  The Defendants challenge the ability of Plaintiff to recover punitive damages.  According to the Defendants, the most that was alleged by Plaintiff was negligence, and mere negligence does not support a claim for punitive damages.  In addition, Sean Welling and Julie Welling challenge Plaintiff’s causes of action entitled “Piercing the Corporate Veil”.  While Defendant’s acknowledge that piercing the corporate veil is a legitimate legal concept, they allege that Plaintiff has failed to assert any specific factual averments in support of their claim.

We issue this Opinion to address the Defendants’ Preliminary Objections.  We will do so by analyzing each of the two legal theories proffered by the Defendants.

 

 

1. DISCUSSION
2. Punitive Damages

Not every civil case implicates recovery of punitive damages.  A showing of mere negligence or even gross negligence is not generally sufficient to justify a punitive damages award.  See¸ Williams v. Syed, 782 A.2d 1090 (Pa. Cmwlth. 2001).  Rather, punitive damages may only be awarded to punish an “outrageous” act.  McClellan v. Health Maintenance Organization of Pennsylvania, 604 A.2d 1053 (Pa. Super. 1992).  Outrageous conduct is defined as acts completed “with bad motive or with reckless indifference to the interest of others.” McClellan, at page 1061.  The phrase “reckless indifference to the interest of others” has been defined by Pennsylvania’s Supreme Court as follows:

“’Reckless indifference to the interest of others’, or as it has sometimes been referred to, ‘wanton misconduct’, means that ‘the actor has intentionally done an act of an unreasonable character, in disregard of a risk known to him or so obvious that he must be taken to have been aware of it and so great to make it highly probable that harm would follow.” Evans v. Philadelphia Transportation Company, 212 a.2d 440, 443 (Pa. 1965).

Our Superior Court has expanded on this definition by declaring that punitive damages presuppose that an actor recognizes that his/her conduct involves a risk substantially greater than what would  be necessary to make his/her conduct negligent.  Hall v. Jackson, 788 A.2d 390, 403 (Pa. Super. 2001).

In almost every civil case where punitive damages are sought, the defendant proffers preliminary objections.  Because an award of punitive damages is fact-specific, the “go-to” position of this Court has been to delay dismissal of punitive damages claims until after discovery has placed evidentiary flesh on the bare bones of the Complaint.  In Hamilton v. Cornwall Manor, et al., No. 2016-00926 (April 25, 2017), this jurist stated:

“While we are fully aware of our duty to serve as a “gatekeeper” with respect to punitive damages claims, our general philosophy is to defer this duty until a Motion for Summary Judgment can be filed.  At that point, we will have some sort of factual record upon which to base an educated decision regarding the viability of punitive damages.”

Courts across the country have begun to declare that driving while intoxicated can be “outrageous” conduct that would support an award of punitive damages.  See, generally, Intoxication of Automobile Driver as Basis for Awarding Punitive Damages, 33 A.L.R. 5^th 303.  In Pennsylvania, several cases have held that “driving while under the influence of intoxicating liquor, with its very great potential for harm or serious injury, may be deemed ‘outrageous conduct’ and ‘a reckless indifference to the interest of others’ sufficient to allow the imposition of punitive damages.” Focht v. Rabada, 268 A.2d 157, 160 (Pa. 1970); See also, Trotman v. Mecchella, 618 A.2d 982 (Pa. Super. 1992); Meier v. Discovery House, C.P.Leb.Co. No. 2018-01582 (March 6, 2019).

In this case, the Plaintiff has alleged that Mr. Gilbert operated a trash hauling vehicle “while being significantly impaired by the influence of illegal drugs.”  Accepting this allegation as true, we cannot declare as a matter of law that Gilbert’s conduct is immune from a punitive damages evaluation.  We will therefore overrule the Defendants’ objections seeking to dismiss Plaintiff’s punitive damages claims.

With the above being said, this Court is also aware that punitive damages discovery can be invasive.  Because of this, we have not to date permitted punitive damages discovery until or unless the Plaintiff’s claim has survived Summary Judgment.  In Hanley v. Twin Oaks Nursing Center, No. 2007-00162 (September 10, 2007), we stated:

“We note parenthetically that a punitive damages claim does not necessarily open up a plethora of discovery opportunities for plaintiffs that could be invasive.  [In the case of Brasher v. Manor Care, No. 2003-01250 (January 21, 2004)], we stated: ‘Any citizen can file a lawsuit simply by paying a filing fee.  For less than $100.00, a person can sue anyone else and include a punitive damages claim.  If this were enough to trigger disclosure of sensitive financial data, significant mischief could result.  In our opinion, there must be some prima facie showing of entitlement to punitive damages before we open that Pandora’s Box that is punitive damages discovery…At this point, we will not permit Brasher to complete any discover relevant to the issue of punitive damages…If the punitive damages claim withstands Summary Judgment scrutiny, we will permit discovery regarding Manor Care’s financial condition.”

 

At this point, we will permit Plaintiff’s punitive damages claim to proceed to the discovery phase of litigation.  By definition, issues pertaining to Gilbert’s driving and level of intoxication will be relevant areas of focus during the discovery process.  Once discovery has ended, then Defendants will have another opportunity to challenge Plaintiff’s punitive damages claim via a Motion for Summary Judgment.  If and only if the punitive damages claim survives Summary Judgment, then we would permit punitive damages discovery.  All we state today is that we will not dismiss Plaintiff’s punitive damages claim via Preliminary Objections.

1. Piercing the Corporate Veil

Counts 5 and 6 of the Complaint are entitled “Piercing the Corporate Veil”.  Both Counts incorporate by reference all other allegations of the Complaint, including those that allege Waste In Time, Inc. to be negligent based upon a theory of negligent entrustment and vicarious liability.

We presume from our reading of the Complaint that Plaintiff seeks to impose liability upon Sean Welling and Julie Welling under theories of both negligent entrustment and vicarious liability, which are the same theories that Plaintiff has asserted against Waste In Time, Inc.  Unfortunately, the Complaint is not sufficiently specific to enable us to discern exactly what theory of liability is being asserted against Sean Welling and Julie Welling.  Although we know from those Counts that Plaintiff seeks to “pierce the corporate veil”, we also know that without a viable underlying legal theory, piercing a corporate veil does not afford Plaintiff with any legal right to recover damages.  Therefore, we will be returning the Complaint to Plaintiff for an amendment so that Plaintiff can be more specific with respect to what theories are being asserted against Sean Welling and Julie Welling.  Stated differently, Plaintiff will have to plead a theory of recovery and how that would justify an award of damages.

Having acknowledged that we will be ordering the filing of an Amended Complaint, we wish to avoid serial preliminary objections.  Therefore, we will address the Defendants’ premise that Plaintiff has not alleged sufficient facts to pierce a corporate veil.

In Lumax Industries Inc. v. Aultmann, 669 A.2^nd 893 (Pa. 1995), a plaintiff sought to impose personal liability upon the owner of a corporation.  In support of this effort, the plaintiff proffered two allegations: (1) that the owner was acting solely for herself and not for the corporation; and (2) that the owner was the only person actively involved in the day-to-day operations of the corporation.  Pennsylvania’s Supreme Court declared that these allegations were not sufficient to support a cause of action based upon the theory of piercing the corporate veil.  The Court stated: “The corporate veil will not be pierced in this jurisdiction absent the factors as set forth in [Kaites v. Department of Environmental Resources, 529 A.2d 1148, 1151 (Pa. Cmwlth. 1987).” Lumax Industries Inc. v. Aultmann, 669 A.2^nd 893,895 (Pa. 1995). In Kaites, the Commonwealth Court cited numerous factors relevant to whether the corporate veil should be pierced, including disregarding of corporate formalities, undercapitalization, substantial intermingling of corporate and personal affairs, and use of the corporate form to perpetrate a fraud.

In this case, Plaintiff has alleged that Mr. & Mrs. Welling undercapitalized Waste In Time, Inc., they intermingled their own personal assets and affairs with those of the corporation, they failed to adhere to corporate formalities and they managed the corporation for their own personal benefit “in such a way that if it became insolvent, it would be unable to pay its debts as they became due.” (Paragraph 50 and 53 of Complaint). We believe that the allegations of Plaintiff’s Complaint are sufficient to support the theory that the corporate veil of Waste In Time, Inc. should be pierced.  So long as Plaintiff can identify viable causes of action through which liability is sought (i.e., negligent entrustment and/or vicarious liability), we would permit the claims against Mr. & Mrs. Weller to proceed to the discovery phase of this litigation.