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Iowa Supreme Court Rules on Vicarious Liability

• Mar 23, 2021

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Legal Update by Attorneys Clarissa Bierstedt, Adam Bates, and Law Clerk Jordan Gehlhaar

In Jones v. The Glenwood Golf Corporation, the Iowa Supreme Court addressed a matter of first impression: Does an injured passenger’s settlement and release of negligence claims against the driver extinguish their vicarious liability claim against the vehicle owner for damages caused by the driver? The answer is yes, under the Owner’s Responsibility Law, Iowa Code § 321.493.

In this case, Terry Jones and his son, Jeff Jones, were on a father-son golf outing at Glenwood Golf Course. While Jeff was driving a golf cart owned by Glenwood he struck a bridge. Terry was ejected from the passenger seat of the cart and sustained life-threatening injuries.

Mr. and Mrs. Jones entered into a settlement agreement with their son Jeff and his homeowner’s liability insurer. The insurer paid almost $900,000, and Mr. and Mrs. Jones released all claims against Jeff Jones and his insurer arising from the accident. The agreement also provided:

By signing this agreement and entering into this Release, Plaintiffs specifically preserve any and all claims they may have against the Glenwood Golf Course, Glenwood Golf Corporation and any other responsible party.

Mr. and Mrs. Jones then filed a civil action against Glenwood Golf alleging that as the owner of the golf cart, Glenwood was liable for damages caused by the negligence of the driver. Under Iowa’s Owner Responsibility Law, the owner of a motor vehicle is responsible for damage caused by negligent drivers who were operating with the owner’s consent. See Iowa Code § 321.493 (2010). Glenwood filed a motion for summary judgment contending that by releasing claims against the driver, the plaintiffs also extinguished their claims against it as the owner.

The district court denied Glenwood’s motion, reasoning that section 321.493 “does not specifically exclude liability if the driver is released by settlement” and “no case law in Iowa provides an escape from liability.” This appeal to the Iowa Supreme Court followed.

The Iowa Supreme Court clarified that the Owner’s Responsibility Law does not impute the driver’s liability to the owner, but rather imputes the driver’s negligence to the owner. For example, if a driver were immune from liability under Chapter 85 (workers’ compensation), an injured third party could still recover from the vehicle owner because 321.493 imposes owner’s liability for the driver’s negligence—not the driver’s liability for their negligence. Therefore, an owner’s statutory vicarious liability for a driver’s negligence is secondary to the driver’s primary liability.

Under Iowa’s Comparative Fault Act, a driver and vicariously liable owner are considered one party. See Iowa Code § 668.3(2)(b) (2021). Since Jeff was a “released party” under the Act, Glenwood was also—even though the plaintiffs tried to reserve their claim against the owner in the agreement. A release of negligence claims also extinguishes an owner’s cross-claim against a driver for indemnity. In effect, the settlement wiped out any fault derived from the driver’s negligence, including that which could be attributed to the owner vicariously. In the court’s view, this result avoids unnecessary, circular litigation.

Peddicord Wharton will continue to monitor case law on this issue and provide updates.

 

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