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Santiago v. Phx. Newspapers - 164 Ariz. 505, 794 P.2d 138 (1990)

Rule:

Contract 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. The fundamental criterion is the extent of control the principal exercises or may exercise over the agent.

Facts:

On April 20, 1986, a car driven by Frank Frausto collided with a motorcycle driven by plaintiff William Santiago. At the time Frausto was delivering the Sunday edition of a newspaper on his route for defendant Phoenix Newspapers, Inc. ("PNI"). Santiago later filed a negligence action in Arizona state court against Frausto and PNI, alleging that Frausto was PNI's agent. Both parties filed motions for summary judgment. The trial court, finding no genuine issues of material fact, concluded that Frausto was an independent contractor. The court of appeals agreed, finding that it was clear from the undisputed facts that there was no employer-employee relationship created between PNI and Frausto. Santiago appealed.

Issue:

Did the trial court correctly find, as a matter of law, that PNI was not vicariously liable for the injuries Santiago sustained in a collision with Frausto, a PNI delivery agent?

Answer:

No.

Conclusion:

The court vacated the appellate court's opinion and remanded the case to the trial court for further proceedings. The court held that Whether an employer-employee relationship existed could not be determined as a matter of law in either side's favor because reasonable minds could disagree on the nature of the employment relationship. A jury could infer from the facts that Frausto was an employee because PNI involved itself with the details of delivery, received directly all customer complaints and changes so as to remove much of Frausto's independence, retained broad discretion to terminate, and relied heavily on Frausto's services for the survival of its business. The jury could also infer that Frausto was an independent contractor because he used his own car, was subject to little supervision, provided some of his own supplies, and could have someone else deliver for him within limits. Thus, the trial court erred in finding as a matter of law that Frausto was an independent contractor, and summary judgment on the vicarious liability claim was inappropriate. 

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