Tennessee Supreme Court Clarifies Law on When a Principal May Be Sued for Vicarious Liability for the Acts of Its Agent

In Abshure v. Methodist Healthcare-Methodist Hospitals, 325 S.W.3d 98 (Tenn. Oct. 20, 2010), the Tennessee Supreme Court clarified and expanded the situations in which an employer can be held vicariously liable for the acts of its employees. The Abshure plaintiffs filed suit against a hospital based upon the conduct of emergency room physicians.

Before Abshure, a principal could not be held vicariously liable: (1) when a court finds the agent not liable for the tort; (2) when the agent is immune under the common law or by statute; or (3) when the injured party extinguishes the agent’s liability by settling with the agent. In each of these situations, the vicarious liability cause of action against the principal had to be dismissed. For example, in a car accident case, if the plaintiff sued and settled with the driver, the plaintiff would then be prohibited from proceeding with the lawsuit against the owner of the car absent some independent theory of recovery separate and apart from the vicarious liability claim. Or, if a hospital was sued for the acts of one of its employees but the employee was immune from suit due to the application of a statute, then the plaintiff would be prohibited from proceeding against the hospital. Lastly, if both an agent and a principal were sued and a judgment was rendered against the principal but the judgment found the agent not liable, the Court would not allow the judgment against the principal to stand if its liability was based solely upon the acts of the agent.

In Abshure, the plaintiffs initially filed suit against a hospital and two physicians, including a vicarious liability claim against the hospital in their Complaint. They later twice dismissed the action against the physicians, thereby barring any further action against the physicians. After the plaintiffs dismissed the physicians, the hospital moved for summary judgment arguing that since the plaintiffs had sued the hospital only on a theory of vicarious liability and the plaintiffs were barred from proceeding against the physicians, then the hospital could not be held liable for the physicians’ conduct. The trial court and the appeals court both agreed with the hospital because the right of action against the physicians had been extinguished by operation of law.

The Tennessee Supreme Court reversed the decision, however, holding that because the plaintiffs had filed a vicarious liability claim against the hospital before the claims against the physicians were extinguished by operation of law, the plaintiffs were entitled to proceed in their lawsuit against the hospital solely on the vicarious liability claim. To summarize, the Abshure decision represents an announcement or clarification of the law as follows: If a plaintiff initially and timely files a vicarious liability claim against a principal, the principal may be held liable for the acts of its agent even if the plaintiff’s claims against the agent are later extinguished by operation of law. It is important to note that this decision only affects vicarious liability claims. The Abshure decision would not apply to any separate and independent claims against the principal, such as negligent entrustment or negligent hiring.

For additional information on this Tort & Insurance article, please contact:

Casey Smith

(731) 426-8122

csmith@raineykizer.com

Source: Rainey, Kizer, Reviere & Bell

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