Continental Casualty Co. v. Mirabile

Morton, J., delivered the opinion of the Court. This appeal arises from what is, at the least, a series of petty humiliations unfortunately inflicted upon an extremely sensitive young man by his coworkers. His response, after continued abuse, was to file in the Circuit Court for Baltimore County two tort actions against his employer and several of his supervisors alleging negligence, defamation, assault, battery, intentional infliction of emotional distress and conspiracy to interfere with contractual relations. The trial judge (Haile, J.) directed verdicts in favor of defendants as to certain counts, joined separate counts, and reformulated those that remained.

When the smoke cleared, the jury entered verdicts in the amount of $261,000 against several of the defendants on the only two counts left for their consideration — deceit and assault and battery. Essentially, the appellants argue on appeal that the ³⁸⁹ claims are barred by the Workmen’s Compensation Act and that even if they are not, the deceit award must be reversed and the assault and battery award must be reversed or reduced. The appellee asserts in his cross-appeal that this Court should remand for a retrial on those counts taken from the jury’s province. The testimony at trial disclosed that Russell Mirabile, appellee and cross-appellant, had worked nearly five years as a trainee and then a claims representative at the Towson branch of Continental Casualty Company (hereinafter Continental) investigating claims, preparing reports and maintaining files.

Phillip E. Klingler was the Towson office manager who directly supervised Mr. Mirabile’s work. Klinger, in turn, reported to William F. Sheehan, the claims manager of the Silver Spring regional office, and ultimately to Ronald Lewis, the general branch manager of that office. It was Continental’s policy to conduct a uniform annual performance evaluation of all employees, rating ten areas on a scale from 1 to 10, a 5 or 6 being "competent” and a 3 or 4 reflecting a need for improvement. Klingler, as direct supervisor of Mirabile, was responsible for rating Mirabile’s performance on a standardized evaluation form and then reviewing the rating with Mirabile, who was to sign the form as an indication that although there might not be agreement, he had been advised of his rated performance status.

The completed form was then to be submitted to Mr. Sheehan for final review and acceptance. Following these periodic reviews, a "competent” employee could expect a salary increase. This procedure, as enumerated in the "Performance Review Program” promulgated by Continental, was fully carried out as to Mirabile’s performance report for the review period August, 1975, to June 15, 1976, at which time Klingler’s overall rating was "needs improvement.” Mirabile’s performance review covering the period June 15,1976, to July 8, 1977, however, was returned to Klingler by Sheehan with a memorandum dated July 18,1977, stating that after a review of Klingler’s comments and Mirabile’s light caseload, Sheehan was of the opinion that Mirabile’s ³⁹⁰ overall rating was properly a "needs improvement” rather than "competent” as appraised by Klingler. It also appears that Mirabile’s performance, as appraised by Klingler, averaged an overall 3.9, just within the "needs improvement” range, although this was not noted by Sheehan.

Sheehan directed Klingler "to review this with Russ Mirabile . . . .” Rather than resubmit a new or corrected form to Mirabile for his review and signature, Klingler altered the rejected evaluation, making additional comments and changing the overall status to "needs improvement.” Sheehan approved the amended evaluation and forwarded it to Lewis, who presumably knew nothing of the alterations, with a recommendation for a five percent pay increase. The recommendation was rejected. While it seems that Mirabile was not explicitly told that his review was being resubmitted on a "needs improvement” basis, Klingler did advise Mirabile in a memorandum dated August 22, 1977, that: "[T]he files were discussed with the deficiencies that were anything but acceptable. The files that were reviewed showed a complete lack of proper investigation, prompt contact, and reporting to the file.

This was office-wise and showed a need for improvement on all concerned. At the time of your recent salary discussion on July 11, 1977, we discussed your areas for needs of improvement. I indicated to you at that time that even though you could answer on the file, the file itself was not responsive to the above criteria, that is prompt contact, proper investigation, and prompt reporting. Also, Russ, I discussed the use of the dictaphone in conveying your investigation in the file, inasmuch as there was some difficulty at times in reading your memos.

Russ, in order that we can be of assistance to you in your career improvement with CNA, I am outlining our plans for improving your performance, which we have already begun some three weeks ago.” ³⁹¹ Mirabile did not learn of the revision until September or October when he realized that an expected pay raise had not been effected. He demanded that his initial "competent” rating be reinstated. When his supervisors refused, he retained in March 1978, a lawyer who filed on his behalf the initial action, case No. 97761, against Continental, Sheehan, Klingler and Lewis. The four counts charged, respectively, Klingler and Continental with what has been described by the plaintiff as "breach of duty and responsibility,” but construed by the judge as fraud or deceit; Lewis, Sheehan and Continental with the same tort; Klingler and Continental with defamation; and all four defendants with conspiracy to interfere with contractual relations.

Although Mirabile’s performance became more acceptable as reflected in the "competent” ratings for the periods from July 1 to October 1,1977; July 7 to October 7,1977; and July 8, 1977, to April 28, 1978, he contends that a pattern of workplace harassment was at this point initiated. Mirabile testified that his desk was first moved against a blank wall; then he was assigned by Sheehan to various uncomfortable, inconvenient desks — a desk near a noisy copying machine, a sticky desk that was used as a lunch table, the "wrong side” of another adjuster’s desk. With each move his supervisors would "smirk” and "laugh.” Mirabile also noticed that he was being sent on distant assignments, files were not being delivered to him from the file room, completed work was disappearing from his case files, and his mail was not always delivered. He further testified that Klingler would often "direct his hum at me .. . hum, hum, hum, hum,” put his face rather close, raise his eyebrows, chuckle and walk away.

Sheehan called him a "hyena” and on another occasion a "jackass” in the presence of coworkers. There was also evidence that all employees had to share desks due to cramped conditions; that Mirabile himself would occasionally make bird calls, sing out loud, and make loud sarcastic remarks about the company; and an expert witness testified that Mirabile showed signs of "paranoid thinking.” ³⁹² The culminating incident which prompted Mirabile to stop working and formed the basis of his assault and battery claim occurred on June 27, 1979, after more than a year of such "harassment.” The most violent version of the facts follows. On that day Sheehan, having repeatedly asked Mirabile to sit at a desk by himself rather than with Ed Hrica, whose desk he had previously been told to share, became annoyed when he saw Mirabile sitting at Hrica’s desk in the morning. He called Mirabile into his office, told him to stay away from Hrica, and at one point "swung his hand into” Mirabile.

That afternoon when Sheehan saw Mirabile standing at Hrica’s desk making a phone call, Sheehan grabbed the receiver and slammed it down; stood chin to chin with Mirabile, waving his finger in his face and screaming that he had 15... 10 seconds to get out of the area; rushed at Mirabile and started tapping his nose with his finger; repeatedly pushed Mirabile; grabbed Mirabile’s arm and pulled him back, saying he was going to fire him. Mira-bile, crying "worse than a baby,” was so upset and "shocked” that it took him one-half hour to find his car in the parking lot. He sought comfort of his priest that night and that of a psychiatrist the next day, whom he has continued to see twice a week. Having suffered what three experts agreed was a disabling psychological injury, 1 Mirabile did not return to work and a year later he was terminated.

A second tort action, case No. 102985, alleging assault, battery and intentional infliction of emotional distress against Sheehan (Counts 1, 3 and 5) and Continental (Counts 2, 4 and 6) was filed. The last count was eliminated as duplicative by defendants’ preliminary objection and the two actions were consolidated at trial. The plaintiff moved for a directed verdict as to all counts and the defendants did likewise as to all but the assault and battery counts, stating that whether the facts supported an ³⁹³ actionable assault and battery was a question for the jury. While it is plain from the record that the trial judge directed verdicts for defendants on the defamation and conspiracy counts, what else was done remains unclear.

The judge "denie[d] the motion of defendants Phillip E. Klingler and defendant Continental Casualty for a directed verdict under the second count” of 97761 and "grant[ed] the motion of the defendant, William F. Sheehan and the defendant Ronald Lewis for directed verdict” under that count, but then responded to counsel’s inquiry of Counts 1 and 2 of 97761 that he had "already knocked them out.” The jury was then instructed that in the first case the plaintiff claimed "he was injured and damaged by a misrepresentation of fact wilfully made and with malice” and in the second case that "he was injured and damaged by an assault and battery with malice.” After being further instructed with numerous exceptions by both counsel on the elements of assault and battery, and, with particularly strenuous exceptions by Mirabile’s counsel, on deceit, the jury returned these verdicts. In the "deceit” case, No. 97761, the verdict was $10,000 compensatory damages for Mirabile against Klingler and Continental, with $135,000 punitive damages against Continental and $1,000 punitive damages against Klingler. In the "assault and battery” case, No. 102985, the verdict was $80,000 compensatory damages for Mirabile against Sheehan and Continental, with $25,000 punitive damages against Continental and $10,000 punitive damages against Sheehan. Defendants’ motions for a new trial and for a judgment notwithstanding the verdict were denied and final judgment was entered on the jury’s and the directed verdicts.

I. Appeal by Continental, Klingler and Sheehan A. Motion to Dismiss and Scope of Appeal Preliminarily, appellee’s counsel argues that the appeal should be dismissed, or limited, because appellants entered an order for appeal from the trial court’s order passed "in the ³⁹⁴ above-entitled matters on July 21, 1981,” the date of the court’s order denying appellants’ motions for a new trial and for judgment notwithstanding the verdict, and directing the clerk to enter judgment absolute, rather than from the judgment absolute of July 22, 1981. Appellants respond that appellee’s previous motion to dismiss had already been denied by order of this Court on October 26, 1981. Indeed, this Court has considered appellee’s motion on the grounds that the appeal was prematurely taken before entry of final judgment and any appeal should be limited to the trial judge’s order of July 21, 1981. While the previous dismissal could not preserve the appeal if it were not taken from the entry of a judgment absolute, we are satisfied that the appellants’ designation of the appeal as from the "order of July 21, 1981,” was superfluous language.

"The order of appeal would have been effective had it merely directed the clerk to note an appeal; it would necessarily follow that it be from the final judgment.” Shipp v. Autoville Limited, 23 Md. App. 555, 559 (1974). The appeal, properly taken, is not limited to the denial of appellants’ judgment notwithstanding the verdict and new trial motions. B. Exclusivity of Workmen’s Compensation Act The threshold issue raised by appellants is whether the Maryland Workmen’s Compensation Act 2 (hereinafter the Act), which requires an employer to provide compensation "for the disability or death of his employee resulting from an accidental personal injury sustained by the employee arising out of and in the course of his employment,” § 15, and the exclusive remedy provisions thereof, precluded Mirabile’s assault and battery action against his employer and co-employees. 3 ³⁹⁵ The Act embodies a comprehensive scheme for compensation to employees of applicable employers for accidental job related injuries. Compensation under the Act does not require proof of fault and recovery is meant to be exclusive and to preclude tort actions against an employer. § 15.

Under § 44, however, the employee may make an election as to pressing his claim under the compensation statute or in a common law tort suit against his employer where the injury is the result of an intentional tort by his employer. 4 Continental argues that, notwithstanding this provision, employees can sue their employers for intentional torts only if the employer in person or someone acting as the "alter ego” of the employer was the actual tortfeasor. In the case of a corporate employer, the tortfeasor must, of course, be the latter. As support, Continental cites a dozen cases from other jurisdictions which have so held, including Jablonski v. Multack, 380 N.E.2d 924 (Ill.1978); Bryan v. Utah International, 533 P.2d 892 (Utah 1975); Elliot v. Brown, 569 P.2d 1323 (Alaska 1977); and Sands v. Union Camp Corp., 559 F.2d 1345 (5th Cir. 1977). This Court has recently decided to follow suit.

In Schatz v. York Steak House Sys., 51 Md. App. 494 (1982), Judge Thompson stated for the Court: "The majority of jurisdictions that have considered the question have held that absent express authorization by the employer, the agent must be the 'alter ego’ of the employer in order for his intentional misconduct to be attributed to the employer. (Citations omitted.) The rationale of these decisions has been succinctly expressed by Professor Larson, in The Law of Workmen’s Compensation, § 68.21 (pp. 13:10-11 1976) in which he said: ³⁹⁶ 'When the person who intentionally injures the employee is not the employer in person nor a person who is realistically the alter ego of the corporation, but merely a foreman, supervisor or manager, both the legal and the moral reasons for permitting a common-law suit against the employer collapse, arid a substantial majority of modern cases bar a damage suit against the employer. The legal reason for permitting the common-law suit for direct assault by the employer, as we have seen, is that the same person cannot commit an intentional assault and then allege it was accidental. This does not apply when the assailant and the defendant are two entirely different people.

Unless the employer has commanded or expressly authorized the assault, it cannot be said to be intentional from his standpoint any more than from the standpoint of any third person. Realistically, it to him is just one more industrial mishap in the factory, of the sort he has a right to consider exclusively covered by the compensation system.’ (footnote omitted).” 51 Md. App. at 496-497 . The rationale is sound and the arguments are strong against allowing a common law tort action against an employer for the intentional torts of a supervisory employee who cannot be said to be the employer’s alter ego. To do so would mean that in all tort incidents arising between co-employees, of which there are no doubt a multitude, the plaintiff need only "show that the assailant was one notch higher on the totem-pole than the victim” in order to recover against the employer. 2A Larson, supra, § 68.21, p. 13-13.

Attribution of employer liability for the actor’s conduct should be based on identification rather than agency and is appropriate only where the actual tortfeasor is of such a rank or position that he may be deemed the alter ego of the ³⁹⁷ employer. Were it otherwise, there would be a subversion of the very purpose of the workmen’s compensation scheme of spreading the risk of loss for injuries arising out of and in the course of covered employment, in that an employer would be required not only to provide workmen’s compensation but also to defend tort actions of employees. Where, however, it is neither the employer personally nor someone acting as the alter ego of the employer who commits the intentional tort, there is no justification in holding the employer liable for an employee’s intentional acts solely on the principle of respondeat superior. This is true notwithstanding the line of decisions reviewed by the Court of Appeals in Embrey v. Holly, 293 Md. 128 (1982), which appellee suggests this Court failed to appreciate in Schatz .

In Embrey , at 135, the Court of Appeals characterized its prior decisions as having "sided with those which vicariously impose punitive damages on the master for acts of the servant committed during the course of his employment without regard to whether the master authorized, participated in, or ratifíed the employee’s conduct. See Safeway Stores, Inc. v. Barrack, 210 Md. 168, 176-77 , 122 A.2d 457, 461-62 (1955); Boyer & Co. v. Coxen, 92 Md. 366, 368 , 48 A. 161, 162 (1901); Balt. & Yorktown Turn. v. Boone, 45 Md. 344, 354-56 (1876); B & O, R.R. Co. v. Blocher, 27 Md. 277, 286 (1867).” (Emphasis supplied.) Neither Embrey nor the cases cited for support were for the purpose of determining employer responsibility in a workmen’s compensation context. Such general tort law principles are not applicable, we think, in the realm of workmen’s compensation law. As enunciated by us in Schatz , the employee must be the "alter ego” of the employer in order to hold the employer liable for the intentional acts of the employee.

The fact that Sheehan, the claims