Present: All the Justices
GINA CHIN & ASSOCIATES, INC.
OPINION BY
v. Record No. 992557 JUSTICE LAWRENCE L. KOONTZ, JR.
November 3, 2000
FIRST UNION BANK
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Benjamin N. A. Kendrick, Judge
In this appeal, we consider whether the trial court erred
in striking the evidence at the conclusion of the plaintiff’s
case-in-chief by ruling, as a matter of law, that a bank teller
who participated in a scheme to deposit forged checks was acting
outside the scope of his employment, thus relieving his employer
from civil liability for those acts.
BACKGROUND
Under well settled principles of law, we will review the
evidence in the light most favorable to the plaintiff, the non-
moving party. See, e.g., Lenders Financial Corp. v. Talton, 249
Va. 182, 188, 455 S.E.2d 232, 236 (1995).
In 1994, Henry Steven Cardenas was employed as a teller by
First Union Bank. His duties included, among other things, the
receiving of cash and checks for deposit into the accounts of
the bank’s customers. At the beginning of his employment,
Cardenas received “about two weeks” of training. During that
training, First Union instructed Cardenas not to accept checks
made payable to businesses for deposit into personal accounts or
to accept checks for more than $7,000 for deposit without a
supervisor’s approval.
Prior to beginning his employment with First Union,
Cardenas was acquainted with Amie Cheryl Lehman, who was dating
Cardenas’ brother. Shortly after Cardenas began working as a
teller, he moved into an apartment with his brother and Lehman.
Lehman, who had formerly been a teller at Signet Bank, was
employed at that time by Gina Chin & Associates, Inc. (Chin), a
food wholesaler, as the firm’s accounts payable clerk.
After Cardenas had been working at First Union “a little
over a year,” Lehman, relying on her knowledge as a former bank
teller, requested his assistance in depositing a forged check
into her First Union account. The check was drawn on Chin’s
account at Signet Bank, 1 and was made payable to one of Chin’s
suppliers. Lehman created the check by entering a false invoice
into Chin’s accounts payable computer program, which produced
the check on a printer. Lehman then forged both the signature
of Gina Chin, Chin’s president, as drawer and the endorsement of
the supplier making the check payable to Lehman.
Cardenas at first refused to assist Lehman, “but then she
kept on insisting and insisting and then she convinced me, I
1
During the course of the ensuing forgery scheme conducted
by Lehman and Cardenas, Chin moved its account to Citizen’s Bank
2
guess, by offering me some money on the side.” Lehman told
Cardenas that “it wouldn’t come back to [him] at all” because
she reconciled the bank statements for Chin’s account and could
intercept the statements with the forged checks before they came
to the attention of the firm’s principals. Cardenas thereafter
deposited the check into Lehman’s First Union account. The
drawer bank paid the check, debiting the amount from Chin’s
account.
Ultimately, using the forgery scheme outlined above, Lehman
and Cardenas succeeded in depositing $270,488.72 in forged
checks into Lehman’s personal account at First Union. 2 Cardenas
received approximately 20 percent of the funds deposited. After
Lehman left her employment with Chin, Signet Bank discovered the
forgery scheme and reported its findings to Chin and the police.
Lehman and Cardenas subsequently were convicted of one count of
bank fraud each in federal court.
On June 11, 1996, Chin filed a motion for judgment against
First Union seeking $270,488.72 in damages resulting from the
forgery scheme of Lehman and Cardenas. Chin alleged that First
of Washington, D.C. Checks drawn on both accounts were
deposited into Lehman’s First Union account.
2
The total amount of the forged checks reflected here is
taken from Chin’s motion for judgment. Chin concedes in that
pleading that this amount is subject to amendment because some
of the forged checks were apparently deposited in another bank.
3
Union was negligent when it accepted for payment checks drawn on
Chin’s accounts bearing both forged signatures of the drawer and
forged endorsements of the payees. Chin further alleged that
First Union was vicariously liable for Cardenas’ criminal acts.
The trial court initially sustained First Union’s demurrer
to Chin’s motion for judgment and entered summary judgment in
favor of First Union on the ground that under the factual
circumstances asserted by Chin certain provisions of the Uniform
Commercial Code barred an action by the drawer of a check
against the depository bank. We awarded Chin an appeal from
that judgment, reversed it, and remanded the case for further
proceedings. Gina Chin & Associates v. First Union Bank, 256
Va. 59, 63, 500 S.E.2d 516, 518 (1998). In doing so, we held
that “Chin’s motion for judgment pled a cause of action pursuant
to §§ 8.3A-404 and –405 of the Uniform Commercial Code, Code
§§ 8.1-101 through 8.11-108.” Id. at 61, 500 S.E.2d at 517. We
explained that pursuant to these statutes the concept of
comparative negligence is employed to determine liability to the
person sustaining the loss based upon the premise “that all
participants in the process have a duty to exercise ordinary
care in the drawing and handling of [checks].” Id. at 62, 500
S.E.2d at 517. Thus, in the context of the present case, the
ultimate issue of comparative negligence, which is solely a jury
issue, centers upon the conduct of First Union through its
4
employees and that of Chin through its employees. In short,
there is no dispute that while First Union accepted the forged
checks for payment and Chin permitted access to its checks by
its employee who forged them, the ultimate issue still undecided
at that point in the proceedings was whether First Union was
negligent or whether First Union and Chin were both negligent
and, if so, to what comparative extent.
Upon remand, a jury trial was commenced in the trial court
on July 17, 1999. After First Union prevailed on its motion in
limine to exclude the anticipated testimony of Chin’s expert
witness regarding established banking customs and standards, the
trial court stated “the primary issue is scope of employment.”
Chin then proceeded to produce its evidence to the jury.
Cardenas, Lehman, and Donald Chin, Chin’s treasurer, were
each called as witnesses for Chin. Consistent with the facts
previously related herein, Cardenas and Lehman detailed the
scheme to forge the checks and to deposit them into Lehman’s
account. Cardenas further testified that after he left his
employment with First Union, Lehman continued the forgery scheme
using her account at another bank where Cardenas’ brother worked
as a teller. Donald Chin testified concerning the failure of
Chin to detect the forgery scheme. At the conclusion of Chin’s
case-in-chief, the jury was read stipulations of fact, including
5
the stipulation that Cardenas’ acts were not known to his
supervisors. 3
First Union moved to strike Chin’s evidence, asserting that
Chin had failed to establish that Cardenas was acting within the
scope of his employment in knowingly accepting the forged checks
for deposit. First Union argued that “although taking these
checks may have been incidental to First Union’s business
because it takes checks for deposit, there was no evidence that
it was in furtherance of First Union’s interest.” First Union
contended that this was so because Cardenas willfully violated
its policies concerning the deposit of commercial checks into
personal accounts and accepting certain checks without
management approval. Thus, First Union argued that Cardenas was
not acting in furtherance of its interest and, hence, not within
the scope of his employment.
Chin, citing Commercial Business Systems, Inc. v. Bell
South Services, Inc., 249 Va. 39, 453 S.E.2d 261 (1995), and
other cases, responded that the specific wrongful act by the
employee need not be in furtherance of the employer’s interest
3
First Union had been permitted to call its expert witness
out of turn at the end of the first day of the trial, but had
not formally begun presenting its case when it moved to strike
Chin’s evidence. Accordingly, we will not consider the evidence
received from that witness in reviewing the trial court’s
ruling.
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so long as the service that the employee was performing at the
time was in the course of his employment. Chin asserted that
its evidence showed that Cardenas was acting as an employee of
First Union when he accepted the forged checks for deposit.
After a lengthy colloquy in which the trial court and
counsel for both parties discussed in detail the case law
concerning the doctrine of respondeat superior, the trial court
sustained First Union’s motion to strike Chin’s evidence. In
the final order dismissing the case with prejudice, the trial
court ruled as a matter of law that Cardenas’ acts “were not
within the scope of the employee’s authority, being in
contravention of First Union’s directives, and they were not
within the scope of employment as they were shown not to be in
furtherance of First Union’s interests; and . . . reasonable
persons cannot differ on the conclusion reached herein based on
the evidence presented by the Plaintiff, with all inferences
most favorable to the Plaintiff.” We awarded Chin this appeal.
DISCUSSION
Initially, we note that the procedural posture of this
case, as will be demonstrated, is significant. The case is
before us following the trial court’s grant of the motion to
strike Chin’s evidence. In that posture, we are unable to
review this case in consideration of all the evidence that may
have been produced on the issue in question. Moreover, despite
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our consideration of this case in the prior appeal, we are
unable to reach the ultimate merits, or lack thereof, of Chin’s
claims against First Union. However, for the reasons that
follow, we will reverse the judgment of the trial court and
remand the case for further proceedings.
With respect to an assertion of liability based upon the
doctrine of respondeat superior, this Court made the following
pertinent observation almost 80 years ago in Davis v. Merrill,
133 Va. 69, 112 S.E. 628 (1922):
If a person, acting for himself, wilfully and
maliciously inflict an injury upon another, he is
liable in damages for such injury. And there is no
reason why a master should be permitted to turn his
business over to servants who have no regard for the
public welfare and thereby escape the responsibility
which he would otherwise have to bear. It is
manifestly right and just that both corporations and
individuals be required to answer in damages for
wanton and malicious assaults inflicted upon others by
their servants, while acting within the scope of the
servant’s employment and duty, and it matters not
whether the act of the servant is due to lack of
judgment, the infirmity of temper, or the influence of
passion, or that the servant goes beyond his strict
line of duty and authority in inflicting such
injury . . . .
Id. at 74, 112 S.E. at 630-31.
Almost from its first consideration by the courts of this
Commonwealth, however, the determination of the issue whether
the employee’s wrongful act was within the scope of his
employment under the facts of a particular case has proved
“vexatious.” See, e.g., Kidd v. DeWitt, 128 Va. 438, 443, 105
8
S.E. 124, 125 (1920); Appalachian Power Company v. Robertson,
142 Va. 454, 456, 129 S.E. 224, 224 (1925).
We have defined “scope of employment” in the following
terms:
Generally, an act is within the scope of the
employment if (1) it was expressly or impliedly
directed by the employer, or is naturally incident to
the business, and (2) it was performed, although
mistakenly or ill-advisedly, with the intent to
further the employer’s interest, or from some impulse
or emotion that was the natural consequence of an
attempt to do the employer’s business . . . .
Kensington Associates v. West, 234 Va. 430, 432, 362 S.E.2d 900,
901 (1987)(emphasis added). The emphasized language in this
definition is the focal point of First Union’s assertion in the
present case. First Union apparently interprets this language
to require that the specific act which caused the injury be
performed by the employee with an intent to benefit the
employer. At first blush, this language is susceptible to such
an interpretation. However, our prior decisions do not support
that interpretation by implication, see, e.g., Plummer v. Center
Psychiatrists, Ltd., 252 Va. 233, 238, 476 S.E.2d 172, 175
(1996)(counselor engaging in unethical sexual relationship with
patient was potentially acting within scope of employment);
Commercial Business Systems, 249 Va. at 46, 453 S.E.2d at 266
(employee violating company rule against self-dealing and
accepting illegal bribes to award contracts was potentially
9
acting within the scope of employment), and we expressly reject
it now.
In cases involving a willful and wrongful act of an
employee, a narrow and literal reading of the language in this
definition, which would create a patent conflict within it, is
not to be applied as a matter of law to the facts of a
particular case. The present case and First Union’s assertions
in support of its motion to strike Chin’s evidence are
illustrative of the point. Where an employee commits a willful
and wrongful act that results in injury to others, simple logic
suggests that such employee generally does not do so “with the
intent to further the employer’s interest.” That is to say, the
employee generally does not intend to benefit the employer.
Here, it may well be reasonable to conclude that a bank
teller does not intend to further the interest of his employer
bank when he knowingly accepts forged checks for deposit for his
own gain. However, that does not resolve the legal issue
presented, as a matter of law, to the trial court upon a motion
to strike the injured party’s evidence. Rather, it should be
apparent that the proper application of this definition in the
context of the doctrine of respondeat superior does not resolve
into a simplistic determination that an employee’s willful and
wrongful act was not done with the intent to further the
employer’s interest or to benefit the employer in some way. Any
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doubt that may have existed in that regard was clearly resolved
in Commercial Business Systems and in Plummer.
As in the present case, we recognize that the difficulty in
applying this definition to the facts of a particular case
frequently arises where “[t]he real inquiry is, was the question
as to whether [the employee] was acting within the scope of his
employment . . . one to be determined by the Court, or was it a
question of fact to be submitted to, and determined by, the
jury?” Crowell v. Duncan, 145 Va. 489, 500, 134 S.E. 576, 579
(1926). In that regard, a motion to strike requires the trial
court to test the evidence against the applicable burdens of
production before permitting the jury to weigh that evidence
against the applicable burden of persuasion.
Settled principles guide the trial court’s considerations.
While the plaintiff has the burden of persuasion on the issue
whether the employee was acting within the scope of his
employment at the time of the act complained of, we have
consistently held that proof of the employment relationship
creates a prima facie rebuttable presumption of the employer’s
liability. McNeill v. Spindler, 191 Va. 685, 694-95, 62 S.E.2d
13, 17-18 (1950). Thus, “[w]hen an employer-employee
relationship has been established, ‘the burden is on the
[employer] to prove that the [employee] was not acting within
the scope of his employment when he committed the act complained
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of, and . . . if the evidence leaves the question in doubt it
becomes an issue to be determined by the jury.’” Kensington
Associates, 234 Va. at 432-33, 362 S.E.2d at 901 (quoting
Broaddus v. Standard Drug Co., 211 Va. 645, 653-54, 179 S.E.2d
497, 504 (1971)); see also Plummer, 252 Va. at 235, 476 S.E.2d
at 174; Turner v. Burford Buick Corp., 201 Va. 693, 698, 112
S.E.2d 911, 915 (1960).
Admittedly, the trial court’s task may be particularly
difficult in cases in which the injury is caused by an
intentional, often criminal, tortious act which clearly would
not have been contemplated by the employer as being within the
scope of employment, but which nonetheless was performed
incident to the employment and even facilitated thereby. 4 Such
cases invoke consideration of whether the employee deviated from
the scope of his employment because of an “external,
independent, and personal motive . . . to do the act upon his
4
An alternate approach in such circumstances has been to
assign liability to the employer not vicariously through
respondeat superior, but directly through the torts of negligent
hiring and negligent retention. See, e.g., J. v. Victory
Tabernacle Baptist Church, 236 Va. 206, 208-09, 372 S.E.2d 391,
393 (1988)(confirming prior recognition of the tort of negligent
hiring); Philip Morris Inc. v. Emerson, 235 Va. 380, 401, 368
S.E.2d 268, 279 (1988)(recognizing tort of negligent retention).
Chin did not allege either of these torts in its motion for
judgment. Chin did allege negligent failure to supervise as a
theory of liability in its motion for judgment, but abandoned
that claim at the outset of trial on remand. Accordingly, the
viability of that claim is not before us in this appeal.
12
own account.” Broaddus, 211 Va. at 653, 179 S.E.2d at 503-04.
In that regard, we have distinguished between the motive of the
employee and the relevant question whether the service performed
was within the scope of employment. In making this distinction,
we have held that the motive of the employee in committing the
act complained of is not determinative of whether it took place
within the scope of the employment relationship. Commercial
Business Systems, 249 Va. at 45, 453 S.E.2d at 266; Tri-State
Coach Corp. v. Walsh, 188 Va. 299, 305-06, 49 S.E.2d 363, 366
(1948). Rather, the issue is “whether the service itself, in
which the tortious act was done, was within the ordinary course
of such business.” Davis v. Merrill, 133 Va. 69, 78, 112 S.E.
628, 631 (1922); accord Commercial Business Systems, 249 Va. at
44, 453 S.E.2d at 265.
In Commercial Business Systems, an employee, in violation
of conflict of interest rules established by his employer,
created a business to work with companies that provided services
to his employer. The employee then used his position as a
contract negotiator and administrator to funnel business to
suppliers who agreed to work with his company and pay him
illegal “kickbacks.” 249 Va. at 43, 453 S.E.2d at 265. We held
that these facts did not “conclusively establish that [the
employee] was not acting within the scope of his employment.”
Id. at 46, 453 S.E.2d at 266. Although the employee’s motive
13
was to advance his self-interest, rather than the interest of
his employer, he was nonetheless “performing his duties . . . in
the execution of the services for which he was employed.” Id.
We emphasize that the employee’s improper motive is not
irrelevant to the issue whether the act was within the scope of
employment. Rather, it is merely a factor to be considered in
making that determination, and, unless the deviation from the
employer’s business is slight on the one hand, or marked and
unusual on the other, but falls instead between those two
extremes, the question is for the jury. McNeill, 191 Va. at
695, 62 S.E.2d at 18; accord Kensington Associates, 234 Va. at
433, 362 S.E.2d at 902. Thus, in Commercial Business Systems,
we held that “the evidence presents a jury issue whether [the
employee] acted within the scope of his employment when he
committed the wrongful acts.” 249 Va. at 46, 453 S.E.2d at 266;
see also Plummer, 252 Va. at 238, 476 S.E.2d at 175.
Applying these principles, the issue presented to the trial
court by First Union’s motion to strike was whether the evidence
presented by Chin was such that, as a matter of law, a
reasonable juror could not find that an employer-employee
relationship existed between Cardenas and First Union or that,
although such a relationship existed, Cardenas was acting within
the scope of that employment at the time of the commission of
the acts which injured Chin. First Union does not contest that
14
Chin produced clear evidence that established the necessary
employment relationship between Cardenas and First Union.
Accordingly, Chin’s evidence established a prima facie case of
First Union’s liability.
First Union contends, however, that Chin’s evidence was
also sufficient to meet First Union’s burden of production on
the issue whether Cardenas’ acts were nevertheless outside the
scope of that employment and, moreover, that this evidence was
sufficient to rebut the presumption of liability as a matter of
law. We disagree.
First Union asserts that Chin’s evidence establishes that
Cardenas’ wrongful acts were not “expressly or impliedly
directed by the employer” because he violated directives in
accepting commercial checks for deposit into a personal account,
in failing to obtain a manager’s approval to accept high value
checks for deposit, and in knowingly accepting checks for
deposit with forged endorsements. This assertion is without
merit because the act need not be expressly or impliedly
directed by the employer in order for the act to occur within
the scope of the employment. Similarly, an act committed in
violation of an employer’s direction is not always beyond the
scope of the employment. Rather, as previously noted, the test
is “whether the service itself, in which the tortious act was
done, was within the ordinary course of” the employer’s
15
business. In this instance, it is clear that accepting checks
for deposit by a bank teller is a service within the ordinary
course of First Union’s banking business.
First Union further asserts that Chin’s evidence also
establishes that Cardenas was acting exclusively for his own
benefit and that of Lehman. Thus, First Union contends that
Cardenas was acting outside the scope of his employment because
he had an “external, independent, and personal motive” to
perform the act.
There can be no doubt that Cardenas was not steadfast in
the performance of his duties and obligations to his employer
when he chose to participate in a criminal scheme to accept
forged checks for deposit. Cardenas was acting out of self-
interest in participating in Lehman’s scheme, and his conduct
was “outrageous and violative of his employer’s rules.”
Commercial Business Systems, 249 Va. at 46, 453 S.E.2d at 266.
Nonetheless, it is clear that in doing so he was performing a
normal function of a bank teller in accepting checks for
deposit.
In sum, First Union’s assertions, and the apparent basis of
the trial court’s decision to strike Chin’s evidence and to
award summary judgment to First Union, are premised not on the
failure of Chin to present sufficient evidence to establish a
prima facie case of the necessary employment relationship at the
16
time of the injury to Chin, but on the failure of that evidence
to prove that the acts complained of were committed within the
scope of that employment. As we have explained, Chin did not
have the burden of presenting evidence that Cardenas’ acts were
within the scope of his employment. Rather, having established
that the employment relationship existed, Chin was entitled to
have the case go forward with the burden on First Union to prove
that Cardenas acted outside the scope of his employment.
The procedural posture of the case, as we noted above, is
significant. Chin’s evidence, without any additional evidence
offered by First Union, was sufficient to establish a jury issue
whether Cardenas acted within the scope of his employment. That
issue therefore, on the evidence presented, did not lend itself
to a resolution as a matter of law by the trial court.
CONCLUSION
For these reasons, we hold that the trial court erred in
sustaining First Union’s motion to strike Chin’s evidence and
awarding summary judgment to First Union. Accordingly, we will
reverse the judgment of the trial court and remand the case for
further proceedings consistent with the views expressed in this
opinion.
Reversed and remanded.
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