Tarron v. Bowen MacHine & Fabricating, Inc.

SUPREME COURT OF ARIZONA
En Banc

JAMES TARRON and SHERRY TARRON, ) Arizona Supreme Court
husband and wife, ) No. CV-09-0230-PR
)
Plaintiffs/Appellees, ) Court of Appeals
) Division One
v. ) No. 1 CA-CV 08-0436
)
BOWEN MACHINE & FABRICATING, ) Maricopa County
INC. dba BOWEN INDUSTRIAL ) Superior Court
CONTRACTORS, INC., a foreign ) No. CV2006-002351
corporation, )
)
Defendant/Appellant. ) O P I N I O N
_________________________________ )

Appeal from the Superior Court in Maricopa County
The Honorable John A. Buttrick, Judge

REVERSED AND REMANDED
________________________________________________________________

Opinion of the Court of Appeals, Division One
222 Ariz. 160, 213 P.3d 309 (App. 2009)

AFFIRMED
________________________________________________________________

ELY, BETTINI, ULMAN, & ROSENBLATT Phoenix
By Ronald Ozer
Burton Rosenblatt
Attorneys for James Tarron and Sherry Tarron

THE CAVANAGH LAW FIRM, P.A. Phoenix
By Ralph E. Hunsaker
Taylor C. Young
Attorneys for Bowen Machine & Fabricating Inc. and
Bowen Industrial Contractors, Inc.

LAW OFFICES OF DAVID L. ABNEY, ESQ. Phoenix
By David L. Abney
Attorney for Amicus Curiae of
The Law Offices of Charles M. Brewer, Ltd.
________________________________________________________________
B E R C H, Chief Justice

¶1 This case concerns the “borrowed servant” doctrine.

The issue for decision is whether a general employer is

vicariously liable for the negligence of two “borrowed

employees” working at the jobsite of a special employer.

I. FACTUAL AND PROCEDURAL BACKGROUND

¶2 James Tarron was injured while working at a Phelps

Dodge Corporation copper smelter. He fell into a gap created

when two workers removed access ramps to a converter. Instead

of covering the gap or installing a barrier, the workers strung

yellow caution tape around the opening. Thinking that a

handrail was in place, Tarron leaned on the caution tape, lost

his balance, and fell approximately eighteen feet, seriously

injuring his elbow and ankle.

¶3 The two workers who put up the caution tape were

temporary employees loaned to Phelps Dodge under a labor

agreement with Bowen Machine & Fabricating, Inc. The labor

agreement consisted of a 1995 “Master Agreement” and a 2004

“Supplement.”

¶4 Tarron sued Bowen, alleging that Bowen was responsible

under the doctrine of respondeat superior for the negligent work

of the two borrowed employees.1

1
Tarron’s recovery from Phelps Dodge was limited to workers’
compensation benefits. See Ariz. Rev. Stat. (“A.R.S.”) § 23-
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¶5 Bowen moved for summary judgment, arguing that it was

not vicariously liable because the two employees were working

under Phelps Dodge’s direction. Tarron cross-moved for partial

summary judgment. The trial court granted Tarron’s motion and

denied Bowen’s motion, finding that, although Phelps Dodge

“exercised actual control over the work at issue,” section 6 of

the Master Agreement gave Bowen the legal right to control the

employees.

¶6 The jury awarded Tarron damages of $1.5 million,

apportioning fault as follows: Tarron, 2%; Phelps Dodge, 38%;

and Bowen, 60%.

¶7 The court of appeals affirmed the denial of Bowen’s

motion for summary judgment, but reversed the partial summary

judgment in favor of Tarron, finding an issue of material fact

as to “whether Bowen surrendered to Phelps Dodge the exclusive

right to control [the two employees’] work activities related to

installing a barrier.” Tarron v. Bowen Mach. & Fabricating,

Inc., 222 Ariz. 160, 165, 171 ¶¶ 21, 47-48, 213 P.3d 309, 314,

320 (App. 2009).

¶8 We granted Tarron’s petition for review and Bowen’s

cross-petition because interpretation of the borrowed servant

doctrine is an issue of statewide importance. We have

1022 (1995) (making recovery of workers’ compensation “the
exclusive remedy against the employer or any co-employee acting
in the scope of his employment”).
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jurisdiction under Article 6, Section 5, Clause 3, of the

Arizona Constitution and Arizona Revised Statutes (“A.R.S.”)

section 12-120.24 (2003).

II. DISCUSSION

A. The Borrowed Servant Doctrine2

1. Background

¶9 The doctrine of respondeat superior generally holds an

employer vicariously liable for the negligent work-related

actions of its employees. See Throop v. F.E. Young & Co., 94

Ariz. 146, 150–51, 382 P.2d 560, 562–63 (1963); Lee Moor

Contracting Co. v. Blanton, 49 Ariz. 130, 133–36, 65 P.2d 35,

36–38 (1937). The borrowed servant doctrine allows an employer

who loans its employees to another to escape vicarious liability

for the employees’ negligent acts under certain circumstances.

¶10 A borrowed servant relationship arises

when an employer sends one of its employees to do some
work for a separate business. The employer usually is
referred to as the “general employer” in the law of
agency. The separate business often is called the
“borrowing” or “special” employer. The transfer
frequently is pursuant to a contract between the
general and borrowing employers which calls for
compensating the general employer. . . . The general
employer has no intention of severing its employment
relationship with its employee. Instead, the loaned

2
We use the term “borrowed servant” or “borrowed employee”
doctrine to distinguish vicarious liability in the tort context
from the “loaned” or “lent” employee doctrine applicable in the
workers’ compensation context. See Inmon v. Crane Rental
Servs., Inc., 205 Ariz. 130, 132 n.2 ¶ 6, 67 P.3d 726, 728 n.2
(App. 2003).
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 employee is subject to the instructions of the
borrowing employer.

J. Dennis Hynes, Chaos and the Law of Borrowed Servant: An

Argument for Consistency, 14 J.L. & Com. 1, 4 (1994).

¶11 The doctrine has generated much confusion. Justice

Cardozo reflected on the difficulty in determining when to

attribute a borrowed employee’s acts to the general employer and

when to the special: “The law that defines or seeks to define

the distinction between general and special employers is beset

with distinctions so delicate that chaos is the consequence. No

lawyer can say with assurance in any given situation when one

employment ends and the other begins.” Benjamin N. Cardozo, A

Ministry of Justice, 35 Harv. L. Rev. 113, 121 (1921); see also

Restatement (Third) of Agency § 7.03 cmt. d(2) (2006) (“When an

actor negligently injures a third party while performing work

for the firm that has contracted for the actor’s services, the

question is whether that firm (often termed the ‘special

employer’) or the initial employer (often termed the ‘general

employer’), or both, should be subject to liability to the third

party.”).

¶12 To determine whether a general employer remains

vicariously liable for the negligent act of an employee it has

contracted out to another, courts typically examine whether the

general employer either exercised actual control over the acts

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giving rise to the injury or retained a right to control those

acts. See, e.g., Williams v. Wise, 106 Ariz. 335, 338, 476 P.2d

145, 148 (1970) (focusing on “the right to control, rather than

the actual exercise of control”); Lee Moor, 49 Ariz. at 136, 65

P.2d at 37–38 (“Control or right to control determines

liability.”).

¶13 In determining liability, courts focus on “which

employer had control of the details of the particular work being

done at the time of the injury-causing incident.” Ruelas v.

Staff Builders Pers. Servs., Inc., 199 Ariz. 344, 346 ¶ 5, 18

P.3d 138, 140 (App. 2001). In some circumstances, the general

employer and special employer may both be liable because each

had actual control of, or the right to control, the employee’s

actions. See, e.g., Inmon, 205 Ariz. at 135 ¶ 20, 67 P.3d at

731; Ruelas, 199 Ariz. at 348 ¶ 13, 18 P.3d at 142; McDaniel v.

Troy Design Servs. Co., 186 Ariz. 552, 555-56, 925 P.2d 693,

696-97 (App. 1996).

¶14 The Master Agreement provides that the loaned employees

are “not agents or employees” of Phelps Dodge and that Phelps

Dodge “will have no direction or control as to the method of

performance” of their work. Based on this language, the trial

court found Bowen vicariously liable as a matter of law,

reasoning that it had retained a contractual right to control

the two borrowed workers.

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¶15 Summary judgment is appropriate “if no genuine issues

of material fact exist and the moving party is entitled to

judgment as a matter of law.” Wells Fargo Bank v. Ariz.

Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust

Fund, 201 Ariz. 474, 482 ¶ 14, 38 P.3d 12, 20 (2002). We stated

long ago, however, that “[w]hether a lent or hired servant

continues the servant of his general employer, or becomes the

servant of the borrower or hirer, is always a question of fact.”

Lee Moor, 49 Ariz. at 135, 65 P.2d at 37; see also Restatement

(Third) of Agency § 7.03 cmt. d(2) (“It is a question of fact

whether a general or a special employer, or both, have the right

to control an employee’s conduct.”); Restatement (Second) of

Agency § 227 cmt. a (1958) (to same effect).

¶16 Notwithstanding the sweeping language in Lee Moor and

the Restatement sections, summary judgment on the question may

sometimes be appropriate. If the evidence is such that

“reasonable persons might well come to different conclusions as

to who had the control or right of control at the time of the

accident, the issue should be submitted to the jury.” Williams,

106 Ariz. at 338–39, 476 P.2d at 148–49; see also Orme Sch. v.

Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990) (finding

entry of summary judgment appropriate “if the facts produced in

support of the claim . . . have so little probative value, given

the quantum of evidence required, that reasonable people could

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not agree with the conclusion advanced by the proponent of the

claim”). Since Williams, a number of Arizona cases have

resolved the borrowed servant question as a matter of law.

E.g., Ruelas, 199 Ariz. at 348 ¶ 14, 18 P.3d at 142; McDaniel,

186 Ariz. at 556–57, 925 P.2d at 697–98. Thus, while the

borrowed servant issue typically presents a fact question, if

the employer’s right to control is “clear and uncontradicted,”

the court may determine the issue as a matter of law. Williams,

106 Ariz. at 339, 476 P.2d at 149. We review a trial court’s

grant of summary judgment de novo, viewing the evidence in favor

of the party against whom summary judgment was entered.

Espinoza v. Schulenburg, 212 Ariz. 215, 216 ¶ 6, 129 P.3d 937,

938 (2006).

2. Contract Reservation of Right to Control

¶17 The record contains ample evidence that Phelps Dodge

actually controlled the work of the two employees.

Notwithstanding this evidence, Tarron claims that the superior

court correctly ruled, based on language in the Master

Agreement, that Bowen had reserved a contractual right to

control the employees.

¶18 Workers are often borrowed “pursuant to a contract

between the general and borrowing employers which calls for

compensating the general employer.” Hynes, supra ¶ 10, at 4.

These contracts “routinely provide that the lent employee is not

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a special employer’s employee for any purpose.” Section 6 of

the Master Agreement follows that model, providing that Phelps

Dodge “will have no direction or control as to the method of

performance of the Work” performed by employees borrowed from

Bowen. The provisions of the Master Agreement, on their face,

thus plainly gave Bowen the right to control the work of the two

employees.

¶19 The question nonetheless remains whether, despite these

contract terms, Bowen ceded that right to Phelps Dodge. Bowen

maintains that notwithstanding the contract terms, the court

should find as a matter of law that Phelps Dodge exercised

complete control over the details of the job function at issue.

Tarron counters that the contract provisions conclusively

establish Bowen’s right to control as a matter of law.

¶20 The court of appeals correctly rejected both positions.

Contrary to Tarron’s assertion, contract language does not

always determine employment status. See Santiago v. Phoenix

Newspapers, Inc., 164 Ariz. 505, 508, 794 P.2d 138, 141 (1990).

Rather, the factfinder must determine the “objective nature of

the relationship.” Id. (quoting Anton v. Indus. Comm’n, 141

Ariz. 566, 568, 688 P.2d 192, 194 (App. 1984)).

¶21 In Santiago, for example, the plaintiff was injured

when he was struck by a newspaper delivery car. 164 Ariz. at

506, 794 P.2d at 139. He sued Phoenix Newspapers, claiming that

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the driver was an agent of that company. Id. The contract

between the driver and the defendant, however, identified the

driver as an independent contractor. Id. at 507, 794 P.2d at

140.

¶22 We concluded that “[c]ontract language does not

determine the relationship of the parties[;] rather the

‘objective nature of the relationship [is] determined upon an

analysis of the totality of the facts and circumstances of each

case.’” Id. at 508, 794 P.2d at 141 (quoting Anton, 141 Ariz.

at 568, 688 P.2d at 194). Other evidence — that the newspaper

“designated the time for pick-up and delivery, the area covered,

the manner in which the papers were delivered, i.e., bagged and

banded, and the persons to whom delivery was made,” id. at 510,

794 P.2d at 143 — would support a jury’s finding that the

deliveryman was a newspaper company employee, rather than an

independent contractor. Id. at 512, 794 P.2d at 145. We

therefore vacated the summary judgment in favor of the newspaper

and remanded the case for a trial on the merits. Id. at 513,

794 P.2d at 146.

¶23 Santiago demonstrates that contractual language is not

talismanic. Contractual provisions may provide evidence of

employment status, but they are not determinative. The trier of

fact must examine the objective nature of the employment

relationship when determining employment status, one indicator

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of which may be contract terms.

3. The Restatement (Third) of Agency § 7.03

¶24 The court of appeals also relied on the Restatement

(Third) of Agency § 7.03 in determining that it should “not

limit the facts to be considered to the contract between the two

employers[,] but . . . the jury should consider all relevant

facts, especially facts that contradict the clear terms of a

contract.” Tarron, 222 Ariz. at 169 ¶ 38, 213 P.3d at 318

(citing Restatement (Third) of Agency § 7.03 cmt. d(2)). We

agree with this approach.

¶25 Arizona courts have traditionally relied on the

Restatement (Second) of Agency § 227 for guidance in determining

an employer’s right to control employees. See, e.g., Williams,

106 Ariz. at 337–38, 476 P.2d at 147–48; Inmon, 205 Ariz. at

135–36 ¶ 22, 67 P.3d at 731–32; Ruelas, 199 Ariz. at 346 ¶ 5, 18

P.3d at 140. That section provides that “the important question

is not whether or not [the employee] remains the servant of the

general employer as to matters generally, but whether or not, as

to the act in question, he is acting in the business of and

under the direction of one or the other.” Restatement (Second)

of Agency § 227 cmt. a (emphasis added). Section 227 creates a

presumption that the general employer remains vicariously

responsible for the employees’ actions, stating that “[i]n the

absence of evidence to the contrary, there is an inference that

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the actor remains in his general employment so long as, by the

service rendered another, he is performing the business

entrusted to him by the general employer.” Id. cmt. b.

¶26 The Third Restatement retains the presumption, but

permits the general employer to rebut it by presenting “factual

indicia” showing that the special employer has assumed control.

See § 7.03 cmt. d(2). It recognizes that a general employer in

the business of providing temporary workers may surrender or

cede to the special employer its right to control the work of

borrowed employees. See id. (“When both a general and special

employer have the right to control an employee’s conduct, the

practical history of direction may establish that one employer

in fact ceded its right of control to the other, whether through

its failure to exercise the right or otherwise.”).

¶27 We find appropriate § 7.03’s practical allocation of

liability to the employer that actually controls the work or has

the right to control the accident-causing conduct and is in the

best “position to take measures to prevent the injury suffered

by the third party.” It harmonizes with our borrowed servant

jurisprudence by examining the right to control and emphasizing

that such an analysis should usually be a question for the trier

of fact. See id.

¶28 Although not providing an exhaustive list, § 7.03

identifies several factors to guide the right-of-control

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determination, many of which have been employed by Arizona

courts for years. It includes

the extent of control that an employer may exercise
over the details of an employee’s work and the timing
of the work; the relationship between the employee’s
work and the nature of the special employer’s
business; the nature of the employee’s work, the
skills required to perform it, and the degree of
supervision customarily associated with the work; the
duration of the employee’s work in the special
employer’s firm; the identity of the employer who
furnishes equipment or other instrumentalities
requisite to performing the work; and the method of
payment for the work.

Id. § 7.03 cmt. d(2); cf. Ruelas, 199 Ariz. at 347 ¶¶ 8-9, 18

P.3d at 141 (considering several of the factors specified by

§ 7.03 cmt. d(2)); McDaniel, 186 Ariz. at 555, 925 P.2d at 696

(same). Section 7.03 also suggests consideration of which

employer was in the better position “to take measures to prevent

the injury suffered by the third party.” Restatement (Third) of

Agency § 7.03 cmt. d(2).

¶29 In some instances, a general employer and a special

employer may both be vicariously liable for an injury. See,

e.g., Inmon, 205 Ariz. at 135 ¶ 20, 67 P.3d at 731; McDaniel,

186 Ariz. at 556, 925 P.2d at 697. The comments to § 7.03

expressly embrace this possibility of dual liability. See

Restatement (Third) of Agency § 7.03 cmt. d(2) (noting that when

a borrowed employee negligently injures another, “the question

is whether . . . the ‘special employer’[] or . . . the ‘general

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employer’[], or both, should be subject to liability”) (emphasis

added); id. (calling it a fact question “whether a general or a

special employer, or both, have the right to control an

employee’s conduct”).

¶30 The possibility of dual liability for the acts of

borrowed servants conflicts with the notion that a special

employer must have the exclusive right to control a borrowed

employee in order to be vicariously liable, and to the extent

that our cases suggest that exclusive control is necessary, we

disapprove such suggestions. See Inmon, 205 Ariz. at 135 ¶ 19,

67 P.3d at 731; McDaniel, 186 Ariz. at 555, 925 P.2d at 696.

Instead, the facts surrounding the borrowed servant relationship

determine whether the general employer, the special employer, or

both actually controlled or had the right to control the injury-

causing activity of the borrowed employees.

¶31 We also distance ourselves from the “furthering the

business” language in Lee Moor, 49 Ariz. at 135, 65 P.2d at 37,

because we find the construct unhelpful. The borrowed servant

at some level always furthers the business of the lender, which

is lending or leasing employees. Instead, the question is

whether the lender actually controlled the borrowed employees or

ceded the right to control.

4. Bowen’s Right to Control Borrowed Employees

¶32 Whether Bowen ceded its right to control the borrowed

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employees’ work must be considered in light of the facts

relating to the injury-causing event. The trial court

considered only one fact — the contractual provisions — which,

although relevant to the determination of whether Bowen retained

a right of control, are not conclusive on the issue. We agree

with the court of appeals that there was sufficient evidence in

the record to create a material issue of fact regarding whether,

despite the contract, Bowen had ceded its right of control to

Phelps Dodge. The grant of summary judgment therefore was not

proper.

B. New Trial

¶33 Because we find that genuine issues of material fact

exist as to whether Bowen retained a right to control the work

of the borrowed employees, we affirm the court of appeals’

reversal of the trial court’s entry of partial summary judgment

as to Bowen’s vicarious liability and remand for a new trial.

For the same reason, we agree with the court of appeals that

summary judgment was properly denied to Bowen. We take this

opportunity to clarify the issues on remand.

¶34 The jury awarded Tarron $1.5 million in damages.

Because the jury’s award was unrelated to which employer was

liable to pay damages, we see no reason to retry the jury’s

award of damages.

¶35 The jury allocated thirty-eight percent of fault to

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Phelps Dodge and two percent to Tarron. Neither the petition

nor the cross-petition challenges those allocations. Tarron’s

petition for review seeks to affirm the trial court judgment

holding Bowen liable for the remaining sixty percent as a matter

of law; the cross-petition claims that Bowen is not liable at

all under the facts of this case. There is therefore no reason

to remand on any issue other than whether Bowen ceded its right

to control the work performed by the two employees. The remand

is therefore limited to that issue.

III. CONCLUSION

¶36 For the foregoing reasons, we reverse the trial court’s

entry of summary judgment for Tarron as to Bowen’s vicarious

liability, affirm the judgment of the court of appeals, and

remand this cause to the trial court for a new trial.

_______________________________________
Rebecca White Berch, Chief Justice

CONCURRING:

_____________________________________
Andrew D. Hurwitz, Vice Chief Justice

_____________________________________
Michael D. Ryan, Justice

_____________________________________
W. Scott Bales, Justice

_____________________________________
A. John Pelander, Justice

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