Opinion
SC: 165430 COA: 356766
09-29-2023
Ashley O'NEAL, Plaintiff-Appellant, and Jeremy O'Neal, Plaintiff, v. MCC MECOSTA, LLC, MCC Mecosta Tullymore Resort, LLC, MCC Golf Courses, LLC, and MCC Holdings, LLC, Defendants-Appellees, and Daniel Carlson, Defendant.
Order
On order of the Court, the application for leave to appeal the January 26, 2023 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the questions presented should be reviewed by this Court.
Welch, J. (dissenting).
Plaintiff, while a guest at Tullymore Golf Resort, was sexually assaulted by the cogeneral manager, Daniel Carlson. In addition to Carlson, plaintiff and her husband sued the companies that own the resort, alleging that they should be held civilly liable for the harm caused by Carlson's criminal conduct. The trial court dismissed all claims against the owners, holding that despite Carlson's extensive known predatory behavior while on the job, the owners "had no reason to foresee that Carlson would commit a sexual assault." I believe the Court has erred by declining to order oral arguments or, alternatively, to remand this case for further discovery as to the authority and ownership status of Carlson at the time the plaintiff was sexually assaulted by him.
Carlson became a cogeneral manager of the Tullymore Golf Resort in 2015 alongside his aunt, Joann Ministrelli. Ms. Ministrelli and her husband, Peter Ministrelli, own the defendant companies. Carlson sexually assaulted plaintiff, a guest at the resort, following an on-site Halloween party on October 29, 2016, and he has since been convicted for that assault. People v Carlson , 332 Mich App 663, 958 N.W.2d 278 (2020). Record evidence shows that in the months leading up to the assault, Carlson had gained a reputation for making female employees uncomfortable. At least two female employees who regularly worked with Carlson testified that they would avoid being alone with him given their concerns. These former female employees testified in their depositions that Carlson would pressure them to accompany him to his room for a drink while they were working. One employee stated that she observed him give unsolicited, and apparently unwanted, back and shoulder rubs to another employee.
Former employees also testified that Carlson was known for running the resort "like a frat house" and treating it as a "feeding ground" with women for him and his "golden boys." There was also testimony that Carlson would frequently drink and party excessively in the evenings, would have rooms reserved in his name or for him by staff, would provide free room upgrades and alcohol to female guests, and would linger around the resort in the late-night hours while intoxicated in ways that made guests uncomfortable. Carlson's conduct was apparently bad enough that guests of the resort would often leave complaints about him and would even request a shuttle from the Tullymore clubhouse back to their rooms at Tullymore's St. Ives hotel to get away from Carlson when he was lingering in an intoxicated state. There was also a rumor circulating among resort employees that Carlson was drugging female guests at the resort, but it is unclear when this rumor began or whether it was shared with other members of the resort's management or the owners.
At a minimum, Ms. Ministrelli and the resort's former chief operating officer were aware of the "frat house" accusations, Carlson's excessive drinking and partying, and complaints that Carlson's behavior made women uncomfortable. One former employee testified that she was told "whatever" Carlson "says goes." Another former employee testified that after she shared her complaints about Carlson to Ms. Ministrelli, Ministrelli protected him, which "prevent[ed] [her] and maybe other managers from complaining about [Carlson]." When asked whether she believed that Ministrelli was "blinded by her feelings for [Carlson]," she responded, "100 percent," stating that "blood is thicker than water, we used to say." The former chief operating officer similarly testified that Ms. Ministrelli was biased in favor of Carlson and "let things happen that a nonfamily member would never get away with." Moreover, according to a footnote in one of the briefs defendants submitted to the trial court, an agreement was signed sometime in November 2016 (mere weeks after Carlson had sexually assaulted a guest) that made Carlson a minority owner of the resort. That agreement was made retrospectively effective to the beginning of 2016, but the trial court permitted no discovery on this issue before granting summary disposition.
Hamed v Wayne Co , 490 Mich. 1, 803 N.W.2d 237 (2011), Brown v Brown , 478 Mich. 545, 739 N.W.2d 313 (2007), and Hersh v Kentfield Builders, Inc , 385 Mich. 410, 412-413, 189 N.W.2d 286 (1971), all set a high bar for the type of employee conduct that is sufficient to provide an employer with constructive notice that an employee might later criminally assault a coworker or guest. Here, the lower courts determined that the owners of Tullymore were not on notice that their cogeneral manager might sexually assault someone because the prior conduct which they were aware of was not the same as sexually assaulting a guest. Specifically, the lower courts concluded that because the complaints about Carlson were generally related to his partying, excessive drinking, and lingering around guests, this did not point to the potential for sexual assault. The lower courts also concluded that providing free alcohol or complimentary room upgrades to female guests, and only female guests, did not make it foreseeable that he would sexually assault a guest. Even if these actions were done by Carlson with the hope of seducing guests, the Court of Appeals concluded that such actions, while inappropriate, are not similar to sexual assault and do not suggest a propensity to commit sexual assault. Additionally, the Court of Appeals opined that even if management was aware of Carlson giving unwanted back or shoulder rubs to employees, this was not predictive of sexual assault.
The Court of Appeals acknowledged that one woman reported that Carlson had followed her upstairs to her condominium during a golf outing the week before the sexual assault in this case, but as that court concluded, there is no evidence that this incident was reported to anyone at the golf resort.
But if the facts of this case are not enough to create a triable question of fact as to constructive notice of future wrongdoing by an employee, then what conduct would be enough? Does an employer's agent or manager have to have previously directly threatened rape before a raped guest or employee can present a jury with the question of whether the company should be liable for the manager's conduct? Does it make a difference that the manager was related to the company owner and may have been acting as a de facto owner himself before achieving actual ownership status? Can a company or manager gain the tax and employment benefits of a retrospectively effective ownership agreement while still disclaiming such agreement when it concerns the company's liability?
These are important questions, and I would have ordered additional briefing and oral arguments to further explore them and to potentially reexamine our precedent in this area. At a minimum, I would have remanded this case to the trial court for further consideration and discovery as to Carlson's ownership status and evidence suggesting that Carlson was operating as a de facto owner prior to the sexual assault of a guest. See, e.g., Radtke v Everett , 442 Mich. 368, 395 n 43, 501 N.W.2d 155 (1993) ("Defendants claim that plaintiff had the ability to obtain recourse from Dr. Clarke. Yet Dr. Clarke was powerless to alter the behavior of Everett because he was only an equal shareholder in the corporation. In such circumstances, if an incident of sexual harassment would otherwise create a prima facie case, we find that recourse to an equal co-owner will not defeat the claim."). For these reasons, I respectfully dissent.
See also Santiero v Denny's Restaurant Store , 786 F Supp 2d 1228, 1236 (SD Tex, 2011) ("Hadi was the manager of the Denny's Restaurant at issue, and he possessed substantial authority over the employees there, much like the supervisory employee in [ GTE Southwest, Inc v Bruce , 998 S.W.2d 605, 618 (Tex, 1999) ], who had authority to employ, direct, and discharge employees at a particular facility. Thus, there is sufficient evidence to raise a genuine issue of material fact concerning Hadi's status as a ‘vice-principal’ of Den–Forest for purposes of imputing his actions to Den–Forest under Texas law."); Torres v Pisano , 116 F.3d 625, 634 & n 11 (CA 2, 1997) (noting that a supervisor may hold a sufficiently high position "in the management hierarchy of the company for his actions to be imputed automatically to the employer").