• Key point: A religious denomination is not necessarily legally responsible for the acts of sexual misconduct that occur in affiliated churches.

• In a case that will be of interest to denominational officers, an Ohio appeals court ruled that a national hotel chain was not responsible for the rape of a woman at one of its local franchises. A campus ministry organization leased a ballroom room at a local Best Western hotel for a social event and hired three women to serve as disk jockeys. At about 1:30 AM, one of the female disk jockeys left the ballroom to use the ladies restroom. While there, she was attacked and sexually assaulted. The woman sued not only the local hotel but also the Best Western national organization, arguing that both organizations failed to provide adequate security. A trial court dismissed the lawsuit against the national organization on the ground that no agency relationship existed between it and the local hotel. The woman appealed, arguing that the national Best Western organization exercised sufficient control over the local hotel to establish an agency relationship which made the national organization responsible for injuries occurring on the local unit’s premises. The appeals court began its opinion by observing:

We begin our analysis by recognizing that, not every relationship of principal and agent creates vicarious responsibility in the principal for acts of the agent. A principal and agent can be in the relationship of a master and servant, or simply in the status of two independent contractors. If a particular agent is not a servant, the principal is not considered a master who may be held vicariously liable for the negligent acts of the agent. Thus, in order for Best Western to be held vicariously liable for the alleged negligence of [the local hotel], the relationship between them must have been that of master and servant. In determining whether the [relationship between Best Western and the local hotel] was one of master and servant or simply that of two independent contractors, we are given guidance by our Supreme Court, which has declared: “[T]he basic inquiry is whether such person is subject to the alleged employer’s control or right to control with respect to his physical conduct in the performance of the services for which he was engaged …. The hallmark of an employee-employer relationship is that the employer not only controls the result of the work but has the right to direct the manner in which the work shall be accomplished; the hallmark of an independent contractee-contractor relationship is that the person engaged in the work has the exclusive control of the manner of performing it, being responsible only for the result.”

[The victim] is correct insofar as she contends that the hallmark of a master-servant relationship is that the master possesses the right to control the manner in which the servant’s work is accomplished. However, she urges us to apply what we believe is an overly-broad conception of what constitutes “control.” Best Western does not “direct the manner in which the work is to be accomplished” simply by having a marketing agreement with [the local hotel]. “It is the element of continuous subjection to the will of the principal which distinguishes the … agency agreement from other agreements.” Restatement (Second) of Agency, § 1(1), comment b (1957) (emphasis added) …. [W]e believe that the focus of our inquiry should be whether the alleged master has day-to-day control over the manner of the alleged servant’s performance.

The court pointed out that in this case the local hotel, and not the national Best Western organization, managed the day-to-day operations of the hotel and made all of the decisions relating to its operation. The employees of the hotel were hired, fired, paid, and supervised by the local hotel’s managers. The local hotel set the prices for the various services it provides. Best Western has no ownership interest in the local hotel. To the contrary, one hundred percent of the stock in the hotel is owned by a local family. Best Western is paid a fixed amount each year ($23,500) for its services. Moreover, the agreement between Best Western and the local hotel specifically provides that their relationship is one of independent contractor, and that Best Western has “no responsibility for the … safety of the premises.” It also gives the local hotel the right to voluntarily end its association with Best Western at any time for any reason. The court concluded that “[f]or these reasons, there is clearly not the necessary control by Best Western of day-to-day operations to establish a master-servant relationship.” The court rejected the victim’s argument that the Best Western program of quality control and its corresponding rules and regulations and the programs and workshops Best Western conducts in order to achieve this goal are enough to establish control or the right to control. It observed: “[T]he fact that Best Western sets certain standards in order to maintain a uniform quality of inn service only addresses the result of the work and not the manner in which it is conducted. Here, it is [the local hotel] which decides the manner in which it will meet the quality criteria set by Best Western. Such an arrangement does not constitute a master-servant relationship, but rather is indicative of an independent contractor-contractee relationship …. The victim further pointed out that if the local hotel failed to adhere to these quality control requirements (which were checked in biannual inspections) Best Western could terminate the hotel from using its trade name. The court responded:

Such a sanction, however, does not indicate that there is continuous subjection to the will of the alleged master so as to constitute a master-servant relationship …. Rather, it merely reemphasizes that [the local hotel], which has the ability to voluntarily terminate its relationship with Best Western at any time, is an independent entity which controls its own destiny. Best Western cannot compel [the hotel] to alter its conduct. It merely has the ability to either terminate its relationship with [the hotel] or threaten to terminate it. We conclude that this type of marketing arrangement simply does not evidence the type of day-to-day control over the manner of performance which would establish a master-servant relationship.

The court referred to two other cases in which courts had rejected the argument that national hotel chains were legally responsible for injuries that occurred on the premises of local units. In one of the cases, a Maryland court ruled that control by Holiday was “totally lacking,” and that general oversight does not constitute “control” under the law:

Although Holiday Inn retained the right to conduct periodic inspections as a means of insuring adherence to Holiday Inn standards, it took no part in the day-to-day operation of the hotel. Associates merely purchased a product from Holiday—a uniform system of inn service—that carried with it an obligation to maintain certain standards prescribed by the seller. But “the fact that one of the parties has subsidiary duties to act for the interests of another, as where a purchaser of goods from a manufacturer agrees that he will advance the interests of the manufacturer in certain respects, does not create an agency relation with respect to the sale.” Restatement (Second) of Agency § 13, comment c (1958). The right possessed by Holiday Inn to insure compliance with its franchise standards constitutes no more than the right to enforce such a subsidiary duty.

In the second case involving a Ramada Inn hotel, a North Carolina court concluded:

[W]e find no evidence that [Ramada Inn] retained or exercised the kind of detailed control over the daily operation of the [local hotel] that would establish a principal-agent relationship. The general purpose of the contract is the maintenance of uniform service within, and public good toward, the Ramada Inn system. Otherwise, [the local hotel] operates the facility on its own behalf. The agreement primarily requires [the local hotel] to comply with certain standards in the construction, furnishing, and advertising of the facility. Apart from the imposition upon [the local hotel] to maintain its accommodations “in a clean, attractive, safe and orderly manner,” the twenty-page contract imposes no standards nor makes any other provision with respect to security of the premises. Under the agreement, [Ramada Inn] neither retained authority over, nor established standards for, hiring, firing, supervision, or discipline of personnel or myriad other details of the day-to-day operation. Moreover, although [it] has retained the right to conduct regular inspections of the accommodations to insure compliance with the contract and rules of operation, [its] actual control is limited to a right to terminate the franchise agreement and collect damages for any noncompliance [by the local hotel]. Under these circumstances, we conclude that no actual agency relationship existed that would justify holding [Ramada Inn] responsible for [the local hotel’s] security arrangement.

The court also rejected the victim’s claim that Best Western was responsible for her injuries on the basis of “apparent agency.” Apparent agency refers to a relationship that arises when one organization represents that another is its servant or agent and thereby causes a third person to rely upon the care of skill of the apparent agent. The “principal” or “master” is legally responsible for the acts of the apparent agent under these circumstances. The court rejected the application of this legal doctrine to the facts of this case:

Under the facts of this case, we fail to see how [the victim] can be said to have relied upon the apparent authority of [the local hotel] to avoid being the victim of this random act of violence. Our review of the record indicates that [she] has presented no evidence which even remotely supports her allegation that she relied upon the fact that [the local hotel] represented Best Western, as its agent, on the night she was sexually assaulted …. [She] was hired by a third party, a campus ministry group, wholly unrelated to either Best Western or [the local hotel] to work as a disc jockey on the night of [the incident]. [She] neither contracted nor negotiated with Best Western or [the local hotel]; the ministry group specified to [her] where the function was to take place. She simply agreed to show up at the designated place, on the designated night and play music for a social function sponsored by the ministry group. Our review of the record not only indicates that she did not rely on the fact that the designated place carried the name “Western,” but that it appears she would have performed the service she had contracted to at most any location the campus ministry group had designated. Thus, Best Western cannot be held vicariously liable for the alleged negligence of [the local hotel] under the theory of apparent authority.

This case will be directly relevant to religious denominations that are sued on the basis of injuries occurring on the premises or during the activities of affiliated churches or agencies. It demonstrates that more than a common name and some points of connection will be required to hold a denomination liable for the actions of local churches. As the court observed, what is required is continuous control by the principal over the day-to-day activities of the agent. This is a difficult standard to meet, and clearly does not characterize the relationship between many denominations and affiliated churches. The decision also is significant because of its rejection of the apparent agency theory. Very few persons who are injured on church property or during church activities can claim that they relied upon the “apparent authority” of the local church to avoid being hurt. Myszkowski v. Penn Stroud Hotel, Inc., 634 A.2d 622 (Pa. Super. 1993). See also the feature article in this newsletter entitled “Denomination Found Liable for Pastor’s Misconduct”.

See Also: Cases Finding Denominations Not Liable

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