Opinion
Case No. 2:01-CV-220TC
November 21, 2003
ORDER
This matter is before the court on two motions. First, Defendants PK Trucking, Inc. and Naveed Mustaf Akhtar (collectively, the "Defendants") have filed a Motion for Partial Summary Judgment. Second, Defendant PK Trucking, Inc. has filed a Motion In Limine seeking to exclude Plaintiffs expert witness report that purports to calculate Plaintiff Ronald Kasai's damages. For the reasons set forth below, Defendants' Motion for Partial Summary Judgment is GRANTED in part and DENIED in part, and PK Trucking's Motion In Limine is GRANTED.
PROCEDURAL BACKGROUND
This case concerns the liability of a truck driver, Naveed Akhtar, and his employer, PK Trucking, for personal injuries suffered by Plaintiff Ronald Kasai in a May 1999 truck-car accident (the trucker is accused of running a red light and "broadsiding" Plaintiffs car at an intersection in Sandy, Utah). In his first claim, Plaintiff alleges negligence against the driver Mr. Akhtar and against PK Trucking for the alleged negligent hiring and retention of Mr. Akhtar. Plaintiff requests punitive damages against both parties in his second claim, which is essentially an extension of his negligence claim. He alleges that both Mr. Akhtar and PK Trucking acted with a reckless indifference when they engaged in the conduct targeted by Plaintiffs negligence claim.
Plaintiff has alleged other claims against other defendants. Those claims and defendants are not part of the motions currently before the court.
Mr. Akhtar, during pendency of this suit, filed for Chapter 7 bankruptcy. On December 6, 2002, he was discharged from bankruptcy. (See Discharge of Debtor Case No. 02-29508-B-7 (Bankr. ED. Cal. Dec. 6, 2002), attached as Ex. B to Def.'s Mem. in Supp.) The discharge forms the basis for part of Defendants' motions.
Defendants Akhtar and PK Trucking have filed two independent motions. The first is a Motion In Limine asking the court to exclude evidence of lost profits of Automotive Business Computers ("ABC"). Plaintiff is a majority shareholder (83%) of ABC and was a salaried employee as well. The second motion requests partial summary judgment. Defendants' Motion for Partial Summary Judgment targets all of Plaintiff's claims against Mr. Akhtar, and Plaintiffs claims for punitive damages and negligent hiring/retention against PK Trucking.
A third motion, Plaintiffs Motion for [Partial] Summary Judgment on Liability (Docket No. 71-1), was originally scheduled for hearing along with the Defendants' two motions. Plaintiff withdrew his motion on September 12, 2003, (See Docket Entry No. 102-1.)
Defendants filed an earlier Motion for Partial Summary Judgment on December 31, 2002 (Docket No. 24-1), but that Motion was superceded by the current Motion for Partial Summary Judgment (Docket No. 66-1), which was filed on June 2, 2003.
FACTUAL BACKGROUND
The facts included in this background section are either undisputed or, where disputed, are read in the light most favorable to Mr. Kasai.See McCarty v. City of Bartlesville, 8 Fed. Appx. 867, available at 2001 WL 246196 at **1 (10th Cir. Mar. 13, 2001). Material disputed facts are discussed in relevant portions of the analysis that follows.
1. Mr. Akhtar's Training and Employment History at PK Trucking
Sometime in 1998, Mr. Akhtar, on his own initiative, attended a truck driver training program at a place in California called the U.S. Driving School. (See Deposition of Naveed Mustaf Akhtar ("Akhtar Dep."), attached as Ex. B to Def.'s Reply Mem.) He then obtained a commercial driver's license ("CDL") from the State of California. (Id.) He had no previous on-the-job training or experience as a truck driver. (Id.)
In early 1999, he applied for a long-haul truck driver position with PK Trucking, Inc. (Id.) Before he was hired, Mr. Akhtar was given a "road test" (i.e., a driving test) by PK Trucking principal and manager Hardeep Kandola (who is also known as Gurdip Singh). (See Deposition of Gurdip Singh ("Kandola/Singh Dep.") at 30-31, attached as Ex, A to Def/s Mem. in Supp.) Mr. Kandola, in deposition testimony, described Mr. Akhtar's driving and truck handling skills as "poor" at the time of that initial road test. (Id. at 31,) Mr. Kandola said that Mr. Akhtar needed more training before PK Trucking could offer him a job. (Akhtar Dep. at 27.)
To get Mr. Akhtar that training, PK Trucking sent Mr. Akhtar out on the road with experienced PK Trucking driver Prit Paul. (Akhtar Dep.) Mr. Akhtar trained with Mr. Paul for approximately two weeks before he was offered a job by PK Trucking. (Kandola/Singh Dep. at 34; Akhtar Dep.) After he was hired, he continued to ride with Mr. Paul for approximately three months. (Kandola/Singh Dep. at 35; Akhtar Dep.) Mr. Akhtar did drive the truck periodically during that time under Mr. Paul's supervision. (Kandola/Singh Dep. at 35.) After that three-month period, when Mr. Paul said Mr. Akhtar was ready to go out on his own, PK Trucking gave Mr. Akhtar a second driving test. (Singh/Kandola Dep. at 36.) The portions of the record provided by the parties do not disclose the results of that second road test, PK Trucking also gave Mr. Akhtar a drug test, which he apparently passed. (Akhtar Dep. at 28 ("everything came clear").) Then PK Trucking sent Mr. Akhtar out by himself on long-haul jobs. (Kandola/Singh Dep. at 35-36.)
Although Mr. Akhtar had a valid commercial drivers license which had never been revoked or suspended, the parties dispute whether Mr. Akhtar had a clean driving record. Apparently, on March 13, 1999, while driving for PK Trucking, Mr. Akhtar received a speeding ticket in New Mexico. (Pl.'s Opp'n Mem. at p. 3, ¶ 7 (quoting Akhtar Dep. at 17).) Also, at some point prior to 1999 (i.e., prior to training and driving trucks for PK Trucking), Mr. Akhtar was involved in a motor vehicle accident. (PL's Opp'n Mem. at pp. 2-3, ¶ 6 (quoting Akhtar Dep. at 17).) According to Mr. Akhtar, the other driver involved in that accident ran into the back of Mr. Akhtar's car and was found to be at fault. (Akhtar Dep. at 17-18.)
At the time of the accident, Mr. Akhtar was an employee of PK Trucking, was operating the truck in the course of his employment, and had a valid commercial driver's license, (See PL's Opp'n Mem. at p. 4, ¶ 1; Def.'s Reply Mem. at p. 1, ¶ 1, and p. 2, ¶ 8.) Mr. Akhtar, as an employee of PK Trucking, is apparently an insured under PK's insurance policy. (See PL's Opp'n Mem. at p. 5, ¶ 6.)
2. The Accident
In the early hours of May 15, 1999, at the intersection of 9000 So. Street and State Street in Salt Lake City, Utah, a PK Trucking semi-tractor trailer truck, driven by Naveed Akhtar, collided with Ronald Kasai's Nissan Pathfinder. Mr. Akhtar was traveling southbound on State Street. State Street is a main corridor surface road used for travel through the Salt Lake City metropolitan area. At 9000 South, it is a four-lane road. The intersection at 9000 South and State Street is a four-way intersection controlled by traffic signals. According to Mr. Kasai, Mr. Akhtar ran a red light at the intersection as Mr. Kasai entered the intersection from the cross street on a green light. The weather was clear and the road was dry. (Report of Ronald L. Probert, Accident Reconstructions!, at 1, attached as Ex. C to Def.'s Mem. in Supp. Report of Dennis F. Andrews, Accident Reconstruction Specialist, at 1, attached as Ex. D to Def.'s Mem. in Supp.) The accident occurred some time after midnight. (See Sandy Police Department Investigating Officer's Report, attached as Ex. D to Def.'s Mem. in Supp.)
Although the parties dispute whether Mr. Kasai had the right of way, the court assumes for purposes of this analysis that Mr. Akhtar ran a red light.
Right before he collided with Mr. Kasai's car, Mr. Akhtar was driving approximately ten miles over the 45 miles per hour speed limit. The truck Mr. Akhtar was driving was fully loaded. (Aff. of Naveed Mustafa Akhtar at ¶ 4, attached as Ex, A to Def.'s Mem. in Supp. (he was hauling watermelons).) Given the long skid marks measured at the site of the accident and later analyzed by the parties' accident reconstruction specialists, Mr. Akhtar used his brakes before he collided with Mr. Kasai. (See Exs. C D attached to Def.'s Mem. in Supp.) Mr. Akhtar did not consume any alcohol or drugs in the twenty-four hours prior to the accident. (Def.'s Mem. in Supp. at p. 2, ¶ 9; PL's Opp'n Mem. at p. 3, ¶ 9.)
Mr. Kasai's expert has opined that Mr. Akhtar was driving between three and seven miles over the speed limit. (Defs.' Mem. in Supp. of Mot. for Partial Summ. J. ¶ 10.) PK Trucking's expert believes Mr. Akhtar's speed was greater than 45 miles per hour and less than 55 miles per hour. (Id. at ¶ 11.) Because the court must construe facts in the light most favorable to Mr. Kasai, the court assumes, without deciding, that Mr. Akhtar was driving ten miles over the speed limit.
Mr. Kasai, who was driving the car, was seriously injured in the accident. He brought this action against Mr. Akhtar and PK Trucking seeking damages for injuries suffered in the accident.
B. Mr. Kasai's Claim for Damages
Apparently, Mr. Kasai's physical injuries have interfered with his ability to work at the level he maintained before the accident. He is claiming, among other things, economic losses as damages.
At the time of the accident, Mr. Kasai was a majority shareholder and employee of Automotive Business Computers, Inc. ("ABC"). ABC (who is not a party to this action) develops and markets computer software for used car dealerships to track sales and generate the paperwork necessary for the sale of a vehicle.
Mr. Kasai owns 83.3% of ABC. Although Mr. Kasai is entitled to profit-sharing because he is a majority shareholder of ABC, ABC has not actually paid any distributions of profit since its inception. Profits earned by ABC have been put back into the company.
Mr. Kasai was also a computer programmer for ABC. Mr. Kasai is paid $48,000 per year as an employee of ABC, and he maintained this salary from 1994 through 2002. Mr. Kasai spent about 10-15% of his time actually programming.
Besides Mr. Kasai, ABC employs three other computer programmers. In addition, ABC employs two individuals who handle bookkeeping and telephone support. ABC markets its software through independent contractors. ABC has had between twelve and eighteen independent distributors of its software product.
In support of his claim for damages, Mr. Kasai has submitted a report by his damages expert, Dr. Cris Lewis. As part of his damages, Mr. Kasai is claiming economic losses of up to $2,177,000, of which approximately $430,000 to $2,000,000 is described as "Lost Profits from ABC, Inc." (See Ex. B. of Def.'s Mem. in Supp. of Mot. In Limine at Tbl. 1 (expert report of Dr. Cris Lewis).) In their Motion In Limine, Defendants dispute Mr. Kasai's right to claim the "Lost Profits from ABC, Inc." as part of his economic damages.
ANALYSIS
A. Motion for Partial Summary Judgment
Under Federal Rule of Civil Procedure 56, a court may enter summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Fed.R.Civ.P, 56(c); see Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 250-51 (1986); Adler v. Wal-Mart Stores. Inc., 144 F.3d 664, 670 (10th Cir. 1998).
1. Effect of the Bankruptcy Injunction on Mr. Kasai's Claims against Mr. Akhtar
Mr. Akhtar is protected by a bankruptcy court injunction issued when he was discharged from Chapter 7 bankruptcy on December 6, 2002. Based on the injunction, Defendants seek an order completely dismissing Mr. Akhtar, or, in the alternative, an order limiting Mr. Kasai's recovery for Mr. Akhtar's liability to insurance proceeds.
Mr. Akhtar's discharge in bankruptcy imposes a permanent injunction,see 11 U.S.C. § 524(a)(3), that bars Mr. Kasai's claims against Mr. Akhtar to the extent Mr. Kasai seeks personal liability damages from Mr. Akhtar. The bankruptcy statute provides that a discharge "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived." 11 U.S.C. § 524(a)(2).
Given the injunction, Mr. Kasai has stipulated that he will proceed against Mr. Akhtar only to establish Mr. Akhtar's liability "as a prerequisite for recovery from PK Trucking, the insurance carrier, and other responsible individuals or entities." (Pl.'s Opp'n Mem. at 7.) Rather than dismiss Mr. Akhtar outright, the court will allow Mr. Kasai to proceed against Mr. Akhtar as stipulated. See In re Walker, 927 F.2d 1138, 1142 (10th Cir. 1991) ("It is well established that [ 11 U.S.C. § 524(e)] permits a creditor to bring or continue an action directly against the debtor for the purpose of establishing the debtor's liability when, as here, establishment of that liability is a prerequisite to recovery from another entity.").
Accordingly, Defendants' Motion for Partial Summary Judgment is DENIED as to Mr. Kasai's claim for negligence against Naveed Akhtar to the extent that Mr. Kasai seeks only to recover insurance proceeds covering any negligence of Akhtar or to establish other individuals' or entities' liability for Mr. Akhtar's actions. However, Defendants' Motion for Partial Summary Judgment is GRANTED as to Mr. Kasai's claim for negligence against Mr. Akhtar to the extent that Mr. Kasai seeks to recover damages from Mr. Akhtar in excess of any applicable insurance proceeds.
2. Mr. Kasai's Punitive Damages Claim Against PK Trucking and Mr. Akhtar
Defendants seek dismissal of Mr. Kasai's claim for punitive damages against PK Trucking and Mr. Akhtar. Under Utah law, in order to establish a basis for punitive damages, Mr. Kasai must establish, by clear and convincing evidence, that Mr. Akhtar's and PK Trucking's alleged tortious actions were "the result of willful and malicious or intentionally fraudulent conduct, or conduct that manifests a knowing and reckless indifference toward, and a disregard of, the rights of others." Utah Code Ann. § 78-18-1(1)(a) (2003). Defendants argue that Mr. Kasai has not presented clear and convincing evidence to support a finding of "willful and malicious" conduct or "a knowing and reckless indifference toward, and a disregard of, the rights of others." The court agrees.
The "clear and convincing" evidence standard applies at the summary judgment stage. See Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 252 (1986) ("the inquiry involved in a ruling on a motion for summary judgment . . . necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits).
The punitive damages claim against Mr. Akhtar is improper for two reasons. First, the bankruptcy discharge injunction, in combination with Utah Code Ann. § 31A-20-101 (prohibiting insurers from insuring against punitive damages), prevents Mr. Kasai, as a matter of law, from recovering punitive damages arising out of Mr. Akhtar's negligent conduct. Second, Mr. Kasai's proffered evidence (that Mr. Akhtar was driving a semi-tractor trailer truck on a four-to six-lane main corridor thoroughfare surface street ten miles in excess of the posted 45 mph speed limit and ran a red light at 12:48 a.m.) does not establish malice or reckless disregard. There is no evidence Mr. Akhtar was weaving, driving in the wrong lane of traffic, intoxicated, or otherwise acting inappropriately. The case of Miskin v. Carter, 761 P.2d 1378 (Utah 1988), is particularly persuasive. In Miskin, the Utah Supreme Court held that the defendant motorist's act of entering an intersection against a red light while legally intoxicated was insufficient to justify punitive damages. 761 P.2d at 1380. Even viewing the facts in a light most favorable to Mr. Kasai, Mr. Akhtar's act of driving his truck ten miles over the speed limit and running a red light does not establish a basis for a punitive damages award. Mr. Kasai has not presented enough facts to send the issue to a jury.
As for Mr. Kasai's punitive damages claim against PK Trucking, Mr. Kasai's evidence does not suggest malice or reckless disregard on the part of PK Trucking when it hired Mr. Akhtar as a long haul semi-truck driver. Mr. Kasai essentially relies on the deposition testimony of PK Trucking principal and manager, Hardeep Kandola (also known as Gurdip Singh), and Mr. Akhtar.
The evidence offered by Mr. Kasai in support of his claim includes deposition testimony that at some point early on in Mr. Akhtar's involvement with PK Trucking, Mr. Kandola considered Mr. Akhtar a "poor driver." (See PL's Opp'n Mem. at p. 5, ¶ 5.) What Mr. Kandola meant by "poor driver" was not articulated. Mr. Kasai also points to vague deposition testimony of Mr. Kandola that Mr. Akhtar needed "additional training" at some point. (See PL's Opp'n Mem. at p. 5, ¶ 5.) A closer examination of the record, however, reveals that Mr. Kandola's evaluation of Mr. Akhtar's driving skills and need for training was based on Mr. Akhtar's abilities when he first approached PK Trucking for a job (the accident occurred approximately five months after PK Trucking hired Mr. Akhtar). After Mr. Kandola assessed Mr. Akhtar's truck driving skills as "poor" and identified the need for more training, Mr. Kandola sent Mr. Akhtar for two weeks of training before hiring him. During that two weeks of training, Mr. Akhtar rode along as a passenger in Prit Paul's truck. Then, even after Mr. Akhtar was hired, he was not allowed to go out on trips alone for another three months. Instead, he received approximately three months of training under Prit Paul's supervision. (See Kandola/Singh Dep. at 35, attached as Ex. A to Def.'s Reply Mem.) After another road test and Mr. Paul's statement that Mr Akhtar was ready to begin driving trucks on his own, PK Trucking allowed Mr. Akhtar to drive on his own.
Mr. Kasai also points to the fact that PK Trucking received an "unsatisfactory" rating from the Federal Highway Administration in November 1998 due to violations of the Federal Motor Carrier regulations. (See PL's Opp'n Mem. at p. 6, ¶ 7, and Ex. B attached to same.) The violations included four failures to require a driver to undergo pre-employment controlled substance testing, one failure to conduct random alcohol testing at the proper rate, three failures to "ensure each driver has an equal chance of being tested [for drugs and alcohol] each time selections are made" for drug testing, one violation of using a driver under the age of 21, and three violations of "false reports of records of duty status." (See Nov. 24, 1998 Notice of Claim from U.S. Dep't of Transp. to PK Trucking, attached as Ex. D to Def.'s Reply Mem.)
None of these violations involved Mr. Akhtar. There is no evidence that any act relating to Mr. Akhtar's fitness as a driver led to the issuance of the unsatisfactory safety rating. There was no evidence of alcohol or drug use at the time the accident occurred. Evidence of unrelated bad acts is not admissible to support a punitive damages award. See State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S.Ct. 1513, 1523 (2003). The evidence of unrelated violations of Federal Motor Carrier Regulations is not probative of the issue before the court.
Given the heightened evidentiary standard that Mr. Kasai must satisfy (i.e., clear and convincing), the evidence Mr. Kasai presents to support his claim for punitive damages against PK Trucking and Mr. Akhtar is insufficient to allow the issue to go to the jury. Accordingly, Defendants are entitled to summary judgment on the issue of punitive damages.
3. Mr. Kasai's Claim for Negligent Hiring, Retention and Supervision against PK Trucking
Mr. Kasai alleges that PK Trucking negligently employed, retained, and supervised Mr. Akhtar as a long haul semi-truck driver. Mr. Kasai contends that PK Trucking knew, or should have known, that Mr. Akhtar was a poor driver. (See Amended Complaint ¶ 25.) He also contends that PK Trucking was negligent "in providing inadequate and substandard supervising [sic] and training" to Mr. Akhtar. (Id. at ¶ 26.)
To establish a claim for negligent hiring, retention and supervision, Mr. Kasai must show that PK Trucking, Inc. owed Mr. Kasai a duty to protect him from the acts of its employees, PK Trucking breached that duty, the breach was a proximate cause of Mr. Kasai's injuries, and Mr. Kasai was in fact injured. See Jackson v. Righter, 891 P.2d 1387, 1392 (Utah 1995) (negligent supervision); J.H. v. West Valley City, 840 P.2d 115, 124 (Utah 1992) (negligent hiring and supervision), To establish a duty, Mr. Kasai must demonstrate that Mr. Akhtar's actions were foreseeable, in that PK Trucking knew or should have known that Mr. Akhtar was an inadequate truck driver who posed a threat to motorists on the road, and that PK Trucking did not adequately train Mr. Akhtar to minimize or protect against that threat. See Jackson, 891 P.2d at 1392.
Defendants seek dismissal of Mr. Kasai's claim for negligent hiring, retention and supervision against PK Trucking on three grounds. First, Defendants argue that Mr. Kasai has not presented any evidence to prove that Mr. Akhtar's speeding and running of the red light was foreseeable conduct at the time PK Trucking hired and retained Mr. Akhtar as a long haul trucker. Second, they assert that Mr. Kasai has not presented any evidence that the alleged negligent hiring, retention and supervision of Mr. Akhtar was the proximate cause of the accident. And, third, they allege that Mr. Kasai's inability to establish his right to punitive damages from PK Trucking nullifies his negligent hiring/retention/supervision claim against PK Trucking. That is, they argue that such a claim, minus the possibility of punitive damages recovery, is duplicative of Plaintiff s respondeat superior claim because PK Trucking has stipulated that it is liable for Mr. Akhtar's negligence. (See Def.'s Mem. in Supp. at 23.) Under the circumstances in this case, the court agrees that Mr. Kasai's Negligent Hiring/Retention claim against PK Trucking is duplicative and should not be allowed to proceed.
The court has already held that Mr. Kasai cannot establish a claim for punitive damages based on either Mr. Akhtar's or PK Trucking's action. As such, Mr. Kasai is limited to recovering compensatory damages, if proven. Second, PK Trucking has already stipulated that it is liable under the theory of respondeat superior for any negligence of Mr. Akhtar. The issue is whether Mr. Kasai should be allowed to pursue his Negligent Hiring/Retention claim in light of the stipulation and lack of availability of punitive damages.
There are no reported cases in Utah addressing the issue. However, a number of courts in other jurisdictions have looked at this issue. The majority of those courts have held that such a claim, under the circumstances, should not be allowed to proceed. See, e.g., Wise v. Fiberglass Sys., Inc., 718 P.2d 1178, 1181 (Idaho 1986).
As Mr. Kasai points out, Utah courts do allow alternative theories of liability to proceed to the jury. See, e.g., Butler v. Naylor. 987 P.2d 41, 45 (Utah 1999). However, Butler, upon which Mr. Kasai relies, does not address the issue at hand. Instead, the Utah Supreme Court in Butler held that even if the trial court had erred by giving a jury instruction on alternative treatment methods in a medical malpractice action, the error was harmless because the jury could have based its no-cause verdict on several alternative theories.
This case is more akin to Jordan v. Cates, 935 P.2d 289 (Okla. 1997), and Wise v. Fiberglass Sys., Inc., 718 P.2d 1178 (Idaho 1986). InJordan, the court held that the defendant employer's stipulation to vicarious liability nullified the plaintiffs negligent hiring theory of recovery. 935 P.2d at 292-93 (granting summary judgment for defendant on theory of negligent hiring because when "employer stipulates that liability, if any, would be under the respondeat superior doctrine, . . . any other theory for imposing liability on the employer [is] unnecessary and superfluous"). Similarly, in Wise, the lower court did not allow the plaintiff to proceed against the car owner under the independent theory of negligent hiring because the owner of the car (i.e., the employer of the car's driver) had already admitted liability under the doctrine of respondeat superior. The employer defendant stipulated that it was vicariously liable for any negligent act of its employee connected to that employee's involvement in a truck-car accident. 718 P.2d at 1180. The plaintiff in Wise was not seeking punitive damages. The Supreme Court of Idaho held that, under the circumstances, the trial court did not err in refusing to admit evidence to establish the employer's liability under a negligent hiring theory.Id. at 1182.
Here, PK Trucking has already stipulated that it is vicariously liable. Also, the issue of punitive damages has now been resolved in Defendants' favor. Under the circumstances, Mr. Kasai's negligence claim against PK Trucking is duplicative. Defendant PK Trucking is entitled to summary judgment on Mr. Kasai's claim for negligent hiring/retention. However, at trial Mr. Kasai can pursue his claim against PK Trucking on a theory of respondeat superior for any negligence of Mr. Akhtar established by Mr. Kasai.
Given the court's ruling, it does not reach the issues of foreseeability or causation, both of which are elements of a negligent hiring/retention claim.
B. Defendant PK Trucking's Motion In Limine
Mr. Kasai's expert witness on damages, Dr. Cris Lewis, has prepared a report that calculates lost profits of Automotive Business Computers, Inc. ("ABC") (ABC is not a party to the action) and includes those in the damages total for Plaintiff. Mr. Kasai submitted this report as evidence of his damages, which prompted Defendant PK Trucking's Motion In Limine seeking an order that evidence of ABC Corporation's lost business income be excluded from trial.
As was noted above, ABC develops and markets computer software for used car dealerships to track sales and generate the paperwork necessary for the sale of a vehicle. Mr. Kasai was employed by ABC as a computer programmer. In addition, Mr. Kasai was a majority owner (83%) of ABC,
PK Trucking does not challenge the qualifications of Dr. Lewis. It does, however, argue that Mr. Kasai may not recover ABC's lost profits in his own name, and it argues that evidence of ABC's lost profits is not admissible because it is not relevant to Mr. Kasai's lost future earning capacity.
PK Trucking also argued that ABC has no right to recover lost profits due to an injury to its employee. Mr. Kasai, however, clarified that ABC is not seeking to recover lost profits due to the injury of Mr. Kasai. Accordingly, the issue is moot.
The Utah Court of Appeals has held that lost business profits are neither recoverable nor admissible as evidence of a plaintiff's lost earnings capacity except in very narrow circumstances. Corbett v. Seamons, 904 P.2d 229, 233 (Utah Ct.App. 1995). In Corbett, the Utah Court of Appeals cited to the Restatement (Second) of Torts § 924 comment c, which excludes evidence of lost business profits that are the result of employing capital and labor of others. Id. The only exception to this general rule is that such evidence is relevant if the business's profits "result primarily from the personal endeavors, skill, and attention of the owner, rather than from investment of capital or from labor of other persons. . . ." Id. at 233-34 (internal citations omitted). Mr. Kasai argues that he falls within the narrow exception to the rule. The court disagrees.
The issue is whether the profits of ABC were the result of the personal efforts of Mr. Kasai as opposed to the labor of others and the employment of capital. The Defendants emphasize the phrase "the profits" because there is little doubt that Mr. Kasai was an integral part of the business. Still, ABC employed three other programmers who performed 85% to 90% of the computer programming. The software was marketed through the efforts of twelve to eighteen independent contractors. Mr. Kasai was paid $48,000 annually, which was less than 15% of the company's expenses. The company never distributed profits to its shareholders. Instead, the profits were put back into the company, Mr. Kasai has not presented evidence that the profits of ABC were due primarily to his personal skills, endeavors, and attention.
There is an additional problem with Mr. Kasai's argument that the lost profits of ABC are simply a part of the calculation of his lost future earning capacity. In his report, Dr. Lewis calculated damages for three distinct areas: (1) "lost profits from ABC, Inc."; (2) "lost future earning capacity"; and (3) "present value of lost household services." Even though the report delineates three distinct categories of damages, Mr. Kasai is attempting to lump together the first two categories: ABC's lost profits and Mr. Kasai's lost future earning capacity. In spite of this inconsistency, Mr. Kasai continues to argue that the two categories are really one and the same. Regardless of how Mr. Kasai attempts to characterize Dr. Lewis's report after the fact, he cannot avoid the inevitable conclusion that Dr. Lewis's report, as written, suggests that Mr. Kasai is attempting to claim ABC's lost profits in addition to lost future earnings.
Mr. Kasai simply has not presented any evidence to dispute PK Trucking's contentions. Defendant's Motion In Limine is GRANTED.
ORDER
For the foregoing reasons, the court orders as follows:
1. Defendants' Motion for Partial Summary Judgment is DENIED as to Mr. Kasai's claim for negligence against Naveed Akhtar to the extent that Mr. Kasai seeks only to recover insurance proceeds covering any negligence of Mr. Akhtar or to establish other individuals' or entities* liability for Mr. Akhtar's actions. However, Defendants' Motion for Partial Summary Judgment is GRANTED as to Mr. Kasai's claim for negligence against Mr. Akhtar to the extent that Mr. Kasai seeks to recover damages from Mr. Akhtar in excess of any applicable insurance proceeds,
2. Defendants' Motion for Partial Summary Judgment is GRANTED as to Mr. Kasai's claim for punitive damages against PK Trucking, Inc. and Naveed Akhtar.
3. Defendants' Motion for Partial Summary Judgment is GRANTED as to Mr. Kasai's claim for negligent hiring and retention against PK Trucking, Inc.
4. PK Trucking's Motion in Limine is GRANTED.