Favorito v. Pannell

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-2377

CHRISTINE FAVORITO, ET AL.,

Plaintiffs, Appellants,

v.

NICHOLAS PANNELL, ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ronald R. Lagueux, U.S. District Judge]

Breyer,* Chief Judge,

Campbell, Senior Circuit Judge,

and Cyr, Circuit Judge.

Barry I. Fredericks for appellants.

James T. Shirley, Jr., with whom Haight, Gardner, Poor & Havens,

Francis X. Byrn, Jeanne-Marie Downey, Roberts, Carroll, Feldstein &

Peirce and Dennis Roberts were on brief for appellees.

June 22, 1994

*Chief Judge Stephen Breyer heard oral argument in this matter,
but did not participate in the drafting or the issuance of the panel
opinion. The remaining two panelists therefore issue this opinion
pursuant to 28 U.S.C. 46(d).

CYR, Circuit Judge. This admiralty action stems from a
CYR, Circuit Judge.

late evening boating accident which resulted in serious injuries

to plaintiffs-appellants. Although plaintiffs obtained default

judgments against the operator of the boat in which they were

riding at the time of the accident, the district court directed

entry of judgment as a matter of law in favor of defendant-

appellee Pendragon Marine Ltd., the owner of the boat, and the

plaintiffs appealed. Finding no error, we affirm.

I

BACKGROUND

The S/Y DOLPHIN, a 75-foot sailing sloop, was moored in

Newport Harbor for the 1990 charter season. She was crewed by

Captain Gordon Percy, defendant Nicholas Pannell, the engineer,

and Robert Sass, deckhand. On Friday, July 27, 1990, Captain

Percy disembarked for a weekend in Cape Cod, leaving defendant

Pannell in charge. Prior to disembarking, Percy instructed

Pannell that he was not to bring guests aboard the yacht, the

DOLPHIN's 12-foot inflatable tender was to be left on deck, and

the public launch service (for which the DOLPHIN held a season's

pass) was to be used for conveyance between the yacht and shore.

Appellants Christine Favorito and Lenka Viducic arrived

in Newport the same day. As fate would have it, come evening

2

Favorito and Viducic met defendant Pannell, who invited them and

a third woman aboard the DOLPHIN for a party. Shortly after

reaching the DOLPHIN via the public launch service, appellants

asked to be returned to shore. By this time it was after

midnight and the public launch service was no longer operating.

Disregarding Captain Percy's orders, Pannell offered to ferry

appellants to shore in the 12-foot inflatable tender. En route,

the inflatable collided with two other vessels moored in the

harbor. Investigators opined that Pannell had been operating the

tender at an excessive speed. Favorito suffered facial

lacerations and a broken jaw. Viducic received back injuries and

a laceration to the forehead. Both required extensive

reconstructive and cosmetic surgery.

Appellants instituted the present action in the

District of Rhode Island against Pannell and appellee Pendragon

Marine Ltd. In due course, the case came to trial.1 On motion

by Pendragon, the district court withdrew the case from the jury

at the conclusion of plaintiffs-appellants' case and directed

entry of judgment as a matter of law pursuant to Fed. R. Civ. P.

50(a)(1) on the ground that no rational jury could find against

Pendragon on any of the three causes of action.

1Although duly served, Pannell failed to appear; default
judgments were obtained by Favorito ($250,000) and Viducic
($100,000).

3

II

DISCUSSION

A judgment entered as a matter of law pursuant to Fed.

R. Civ. P. 50(a)(1) is subject to plenary review under the same

stringent standard incumbent upon the trial court in the first

instance:

[W]e must examine the evidence and the
inferences reasonably extractable therefrom
in the light most hospitable to the
nonmovant. To affirm withdrawal of any claim
from the jury, we must find that, so viewed,
the evidence would permit thoughtful
factfinders to reach but one reasoned
conclusion.

Fashion House, Inc. v. K-Mart Corp., 892 F.2d 1076, 1088 (1st

Cir. 1989).2

A. Negligent Retention

The first cause of action we address is a variant on

the traditional tort of negligent hiring: "an employer has a

[continuing] duty to retain in its service only those employees

who are fit and competent." Welsh Manuf. v. Pinkerton's, Inc.,

2Absent a federal liability scheme, the governing
substantive law in an admiralty action is drawn from common law
tort principles which comport with the tenets of maritime law.
Lyon v. RANGER III, 858 F.2d 22, 27 (1st Cir. 1988). Rhode

Island provides the principal source of tort law relating to an
accident within its coastal waters. See id. (Massachusetts law

applies to accident 1/4 mile off Cape Cod). Ultimately, of
course, federal common law supersedes a particular state law
formulation with which it conflicts. Puerto Rico v. SS ZOE

COLOCOTRONI, 628 F.2d 652, 672 (1st Cir. 1980), cert. denied, 450

U.S. 912 (1981).

4

474 A.2d 436, 441 (R.I. 1984) (emphasis added) (citing, e.g.,

DiCosala v. Kay, 450 A.2d 508 (N.J. 1982)). An employer is not

responsible for employee torts committed outside the scope of

employment unless the employer (1) had "reason to know of the

particular unfitness, incompetence or dangerous attributes of the

employee" and (2) "could reasonably have foreseen that such

qualities created a risk of harm to other persons." DiCosala,

450 A.2d 516 (emphasis added); accord Johnson v. Usdin Louis Co.,

591 A.2d 959, 961 (N.J. 1991).

One week after joining the DOLPHIN's crew, defendant

Pannell was stopped by the Harbormaster for exceeding the 5

m.p.h. speed limit in Newport Harbor, and received a warning. On

June 27, Pannell again was stopped for exceeding the 5 m.p.h.

limit, and received a ticket. The next day Captain Percy was

summoned to the Harbormaster's office, where he was informed that

it was his responsibility to ensure that his crew adhered to

harbor rules, and that further infractions could result in the

DOLPHIN's exclusion from Newport Harbor. Captain Percy in turn

delivered a stern lecture to Pannell and Sass.

There were no further incidents, and the record

contains no evidence of recklessness or other unreliability on

the part of Pannell, until the date of the accident approximately

one month later. Indeed, Percy testified that he had been

pleased with Pannell's overall performance and described Pannell

5

as a good engineer and a responsible crewman. Appellants

presented no evidence to the contrary.

Appellants contend that a jury could reasonably have

found that Captain Percy was negligent to retain Pannell after

learning of the two speeding incidents, and they insist that

dismissal from employment was Pendragon's only recourse. We

conclude, however, that the district court judgment is amply

supported by the record evidence viewed in the light most

favorable to appellants.

Appellants do not identify, let alone consider, the

particular employee qualities most pertinent to their negligent

retention claim. This would be a very different case were the

appropriate inquiry (as appellants would have it) whether Captain

Percy had reason to believe that Pannell might speed in the

harbor. However, the proper threshold inquiry the sine qua

non to appellants' negligent retention claim is whether there

is any evidence that Captain Percy had "reason to know," see

DiCosala, 450 A.2d 516, that Pannell might misappropriate the

DOLPHIN's tender for personal use in direct violation of the

Captain's order.3

3Careful scrutiny exposes as pure speculation
appellants' allegations that Pannell violated other orders given
by Captain Percy. For example, appellants point out that both
times Pannell was stopped for speeding in the harbor it was after
6:00 p.m. Consequently, they speculate, Pannell's use of the
boat on both those occasions must have been in violation of
Captain Percy's orders because Pannell was using the boat after
hours. However, Captain Percy testified, without contradiction,

6

It would not be reasonable to infer based solely on

the two speeding incidents that Captain Percy should have

foreseen, see id., that Pannell would disobey a direct order by

transporting personal guests in the DOLPHIN's tender during the

Captain's absence. And absent any evidence that it was not

reasonable for Captain Percy to rely on the adequacy of the

precautions taken before disembarking, the prior speeding

incidents did not give rise to a reasonably foreseeable "risk of

harm to other persons," id., and the negligent retention claim

fails as a matter of law.

The district court correctly rejected the position that

an employee must be dismissed in such circumstances without

regard to the adequacy of the employer's precautions against a

recurrence of the relevant employee conduct. See Usdin Louis,

591 A.2d at 961-62. "Public policy dictates that there should be

no liability absent a showing that the employer reasonably should

have foreseen an unreasonably enhanced hazard." Id. We hold that

a negligent retention claim does not lie absent sufficient

evidence to enable a rational factfinder to infer that the

employer reasonably should have foreseen that its precautions

that the crew was allowed to use the tender or dinghy (1) during
working hours; (2) on ship's business; or (3) at any other time
with his express permission. There is no evidence whatever that
Pannell violated Percy's orders on either occasion, nor that
those incidents took place "outside working hours," let alone
involved nonbusiness or unauthorized purposes. Thus, the record
is devoid of evidence that Pannell ever disobeyed an order prior

to the night of the accident.

7

were inadequate to protect persons in appellants' position from

an unreasonable risk of harm resulting from a recurrence of the

employee behavior of which the employer had prior notice.

B. Negligent Entrustment

The second cause of action asserts that Pendragon

negligently entrusted the tender to Pannell. Rhode Island

essentially hews to the common law rule, see Sabourin v. LBC,

Inc., 731 F. Supp. 1145 (D. R.I. 1990) (surveying Rhode Island

law), that "the owner . . . may be held liable for entrusting

[its] vehicle to an incompetent, reckless or unfit driver if the

owner knew or should have known of the driver's incompetence,

inexperience or recklessness." Id. at 1148.4 A rational

factfinder could find no entrustment on this evidence.

4This articulation comports with the Restatement:
It is negligence to permit a third person to
use a thing or to engage in an activity which
is under the control of the actor, if the
actor knows or should know that such person
intends or is likely to use the thing or to
conduct himself in the activity in such a
manner as to create an unreasonable risk of
harm to others.

Restatement (Second) of Torts 308 (1965). See also Restatement

(Second) of Torts 390 (1965) ("One who supplies directly or

through a third person a chattel for the use of another whom the
supplier knows to be likely because of his youth, inexperience,
or otherwise, to use it in a manner involving unreasonable risk
of physical harm to himself and others whom the supplier should

expect to share in or be endangered by its use, is subject to

liability for physical harm resulting to them.") (emphasis
added).

8

Appellants focus almost exclusively on whether it was

negligent for Captain Percy to entrust the tender to Pannell,

when in fact there was no entrustment, negligent or otherwise.

There is no evidence that Captain Percy permitted Pannell to use

the tender in his absence. Rather, the uncontroverted deposition

testimony of Captain Percy established that he prohibited guests,

directed Pannell to utilize the public launch service, and

forbade use of the DOLPHIN's tender or dinghy.5

Were it not for the unusual procedural posture, our

discussion of the negligent entrustment claim would be at an end.

It was appellants who introduced Captain Percy's deposition into

evidence, notwithstanding the fact that it cut sharply against

their negligent entrustment claim. On appeal, however,

appellants urge us to vacate the district court judgment because

the jury might have disbelieved Captain Percy's deposition

testimony. In other words, appellants argue, judgment as a

matter of law was improper because the jury might not have

believed that Percy forbade Pannell to use the tender.

The Supreme Court has pointed out that Rule 50

(judgment as a matter of law) and Rule 56 (summary judgment)

"mirror" one another. Anderson v. Liberty Lobby, Inc., 477 U.S.

5Asked why he had not taken the key to the tender's engine
when he left, Captain Percy responded: "The answer is I left it
for safety reasons as well as the fact that . . . if I felt that
they would have used the dinghy, I wouldn't have trusted them. I
wouldn't have left the boat [in the first place]."

9

242, 250 (1986). See also Fed. R. Civ. P. 50 advisory

committee's notes accompanying 1991 amendment (stating that

incorporation of the Rule 56 "judgment as a matter of law"

standard into Rule 50 was intended to "link the[se] two related

provisions"). It is well established that "a mere challenge to

the credibility of a movant's witnesses without any supporting

evidence" does not raise a trialworthy issue of fact. Moreau v.

Local Union No. 247, 851 F.2d 516, 519 (1st Cir. 1988) (citing

Anderson, 477 U.S. at 256); Blanchard v. Peerless Ins. Co., 958

F.2d 483, 490 (1st Cir. 1992) (noting: nonmovant must

demonstrate "genuine dispute" as to credibility in order to

resist summary judgment); 10A Charles A. Wright, et al., Federal

Practice and Procedure: Civil 2726, at 119 (2nd ed. 1983)

("[S]pecific facts must be produced in order to put credibility

in issue . . . [u]nsupported allegations . . . will not

suffice."). As the Supreme Court explained in Anderson v.

Liberty Lobby:

Respondents argue, however, that . . . the
defendant should seldom if ever be granted
summary judgment where . . . the jury might
disbelieve him or his witnesses . . . . They
rely on Poller v. Columbia Broadcasting Co.,

368 U.S. 464, 82 S. Ct. 486, 7 L. Ed. 2d 458
(1962), for this proposition. We do not
understand Poller, however, to hold that a

plaintiff may defeat a defendant's properly
supported motion for summary judgment in a
conspiracy or libel case, for example,
without offering any concrete evidence from
which a reasonable juror could return a
verdict in his favor and by merely asserting
that the jury might, and legally could,

10

disbelieve the defendant's denial of a
conspiracy or of legal malice. The movant
has the burden of showing that there is no
genuine issue of fact, but the plaintiff is

not thereby relieved of his own burden of

producing in turn evidence that would support

a jury verdict. Rule 56(e) itself provides

that a party opposing a properly supported
motion for summary judgment may not rest upon
mere allegation or denials of his pleading,
but must set forth specific facts showing
that there is a genuine issue for trial.

477 U.S. at 256 (emphasis added).

Thus, we think it clear under Rule 50, as in the

summary judgment context, that a bare assertion that the opposing

party's uncontroverted evidence might be disbelieved is

insufficient to resist judgment as a matter of law on an issue as

to which the party resisting judgment bears the burden of proof.

See, e.g., Niemann v. Rogers, 802 F. Supp. 1154, 1157 (D. Del.

1992) (noting that plaintiff bears burden of proving entrustment

element in negligent entrustment claim). Were it otherwise,

Rules 50 and 56 could be rendered virtually useless, merely on

the strength of a nonmovant's supposition that the movant's

uncontroverted evidence might be disbelieved.

The authorities are in substantial accord that "where

the alleged entrustor has prohibited the entrustee from operating

the automobile or using the instrumentality in question, there is

no responsibility because there has been no entrustment." J.D.

Lee & Barry A. Lindahl, Modern Tort Law 33.01 (Rev. ed. 1988)

(citing Farney v. Herr, 358 S.W.2d 758, 761 (Tex. 1962) ("The

11

doctrine of negligent entrustment may not be so extended as to

impose liability upon the alleged 'trustor' for the negligent

operation of a vehicle which he had expressly forbidden the

alleged 'trustee' to drive.")); Kimble v. Muller, 417 P.2d 178

(Wyo. 1966) (upholding summary judgment in favor of defendant on

negligent entrustment claim where defendant father had instructed

his reckless-driving son not to use automobile except for travel

to and from work and school, but left the vehicle at home with

the son when the father worked the night shift). In sum,

appellants' negligent entrustment claim founders on the

uncontroverted testimony that Captain Percy specifically ordered

Pannell not to use the tender during his absence. As appellants

relied entirely on the totally unsupported speculation that a

jury might disbelieve Captain Percy's uncontroverted testimony,

the district court properly granted judgment as a matter of law.

C. Respondeat Superior

The third cause of action asserts that Pendragon is

vicariously liable for appellants' injuries under the doctrine of

respondeat superior. See Sabourin, 731 F. Supp. at 1149 (under

Rhode Island law, a corporation is liable for "torts committed by

agents acting within the scope of their authority or in the

course of their employment"); accord Drake v. Star Market Co.,

526 A.2d 517, 518 (R.I. 1987). As the district court correctly

ruled, there is no conceivable evidentiary basis for respondeat

12

superior liability on the part of Pendragon. The uncontroverted

trial evidence established beyond peradventure that Pannell was

on a frolic and banter of his own, actuated by no employer

mission whatever and in direct violation of Captain Percy's

explicit instructions not to use the tender and not to bring

guests aboard the DOLPHIN. See Restatement (Second) of Agency

228(1)(c) (1958); see also, e.g., Gill Plumbing Co. v. Macon,

370 S.E.2d 657 (Ga. Ct. App. 1988) (upholding summary judgment

disallowing respondeat superior claim where employee was driving

company vehicle on a "purely personal mission," without

authorization).

D. Miscellaneous Orders

Appellants attempted at trial to introduce portions of

Captain Percy's videotape deposition which probed various

hypothetical circumstances in which he might have considered it

appropriate to discharge a crew member. Appellants correctly

point out that we have said that relevant hypothetical questions

may be put to lay witnesses subject to the Rule 403 balancing

test. See, e.g., United States v. Ranney, 719 F.2d 1183, 1187-89

(1st Cir. 1983). Appellants, however, would construe our case

law as declaring "open season" for hypothetical questions without

regard to their overriding prejudice, cumulativeness and the

13

like.6 A review of the Percy deposition satisfies us that the

district court carefully exercised its Rule 403 discretion by

sustaining most, though not all, objections interposed by

Pendragon.

Lastly, appellants challenge the denial of their

belated motion to amend their complaint to name Parker

Montgomery, beneficial owner of the DOLPHIN, and the Montgomery

Group, as party defendants. Appellants represent that they were

unable to comply with the March 12, 1993 deadline for amending

the complaint because they did not learn that Montgomery was the

beneficial owner until after Captain Percy's deposition in June

1993. On the contrary, appellants acknowledged in their district

court pleadings that they first became aware of Parker

Montgomery's role in October 1992. Notwithstanding the

admonition that leave to amend is to be "freely given," Fed. R.

Civ. P. 15, the district court did not abuse its discretion in

these circumstances, see Johnston v. Holiday Inns, Inc., 595 F.2d

890, 896 (1st Cir. 1979), especially since there has been no

showing of prejudice.

Affirmed.

6But see Fed. R. Evid. 403 ("Although relevant, evidence may

be excluded if its probative value is substantially outweighed by
the danger of unfair prejudice, confusion of the issues, or
misleading the jury, or by considerations of undue delay, waste
of time, or needless presentation of cumulative evidence.").

14