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Fourth Circuit Court of Appeals held that Homebuyers could not Recover Damages for Emotional Distress from Security Company for Racially-Targeted Arsons perpetrated by an Employee

Antonio v. SSA Security, Inc.
No. 13-1031, __ F.3d _ (4th Cir. April 14, 2014)
by Wayne C. Heavener, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Antonio v. SSA Security, Inc., the United States Court of Appeals for the Fourth Circuit held that homebuyers who had not yet closed on their houses could not recover damages for emotional distress from a security company hired to protect their homes, even though the homebuyers’ houses were burned down by an employee of the security company because the homebuyers were racial minorities. Writing for the Court, Circuit Judge Henry Franklin Floyd found dispositive the fact that the homebuyers only sought damages for emotional distress caused by learning that their homes had been burned down. The Court held that, under Maryland law, Plaintiffs could not recover for emotional distress, absent certain exceptions that the Court held not to apply in this case. The Court did, however, certify to the Maryland Court of Appeals a question of state law as to whether the Maryland Security Guards Act, MD. CODE ANN., BUS. OCC. & PROF. § 19-501 rendered a security company strictly liable for the criminal acts of its employees, where the employee planned any part of his or her criminal actions while off duty.

Several homebuyers (“Plaintiffs”) contracted to purchase homes from U.S. Home Corporation and Patriot Homes, Inc. (“Developers”) in the Hunter’s Brooke neighborhood in the town of Indian Head, Maryland. SSA Security, Inc. (“SSA”), a private security company, provided Hunter’s Brooke with security services from November 12, 2004, to December 6, 2004, during which time arsons destroyed many homes. At the time, Defendant employed Aaron Speed (“Speed”) and William Fitzpatrick (“Fitzpatrick”) as security guards for the Hunter’s Brooke neighborhood. Speed conspired with four (4) other men to burn down the houses owned by the Plaintiffs. Speed targeted particular homes, including those that Plaintiffs had contracted to buy, because their purchasers were all racial minorities. On the day of the arson, Fitzpatrick left his post before his shift ended, allowing Speed and his co-conspirators to set fire to Plaintiffs’ houses. Of those affected by the arsons, only two (2) buyers had taken possession of their homes; the remaining homebuyers — Plaintiffs in this case — had yet to close on or take possession of their homes. Therefore, Plaintiffs’ homes were still owned by Developers when the arsons occurred.

Plaintiffs sued multiple defendants, including SSA, asserting negligence claims and one (1) claim premised on a provision of the Maryland Security Guards Act, MD. CODE ANN., BUS. OCC. & PROF. § 19-501. In particular, Plaintiffs alleged that Section 19-501, which provides that “[a] licensed security guard agency is responsible for the acts of each of its employees while the employee is conducting the business of the agency,” id., rendered Defendant strictly liable for any actions of its security guards, including intentional torts. The District Court for the District of Maryland entered summary judgment in favor of Defendant as to Plaintiffs’ negligence counts, and declined to certify Plaintiffs’ state law question of whether Section 19-501 imposed liability beyond the common law principles of respondeat superior. Plaintiffs appealed.

The Fourth Circuit Court of Appeals affirmed the district court’s entry of summary judgment as to Plaintiffs’ negligence-based claims, but certified Plaintiffs’ question regarding the scope of the Maryland Security Guard Act to the Maryland Court of Appeals. With respect to Plaintiffs’ negligence claims, the Court found dispositive the fact that Plaintiffs alleged only emotional injury, given that they did not actually own their homes at the time of the arson. The Court recognized that, under Maryland law, a plaintiff cannot generally recover for emotional injury caused by witnessing or learning of negligently inflicted injury to his or her property, absent two (2) exceptions. The first exception to this rule is where the plaintiff’s personal safety was in jeopardy; the Court noted, however, that Plaintiffs did not contend this exception applied. The second exception is where the acts were inspired by fraud, malice, or like motives. The Court ultimately held this second exception did not apply to Plaintiffs because Maryland law required a plaintiff seeking emotional damages under this exception to allege either notice of the mental distress on the part of the tortfeasor, or that the acts were calculated to cause mental distress. Plaintiffs did not contend that Defendant’s actions were calculated to cause mental distress, and Plaintiffs failed to show that Defendant had any prior notice of Plaintiffs’ emotional injuries. Furthermore, the Court found that Plaintiffs could not hold Defendant responsible for emotional injuries based on Speed’s malice because Plaintiffs’ injuries were not a foreseeable result of Defendant’s actions.

The Court also held that Plaintiffs’ question regarding the scope of the Maryland Security Guard Act should be certified to the Court of Appeals of Maryland. The parties argued two (2) different interpretations of Section 19-501’s language, both of which would be determinative of whether Defendant could be liable for Speed’s intentional acts. Plaintiffs argued that Section 19-501 rendered Defendant strictly liable, even for off-duty criminal acts of an employee, when the employee planned any part of the off-duty criminal acts while he or she was on duty. Conversely, Defendant argued that the scope of Section 19-501 was only as broad as common law respondeat superior, under which Defendant could not be held liable for the criminal acts of its employee. The Court acknowledged that Maryland law offered support to both positions. Accordingly, the Court declined to interpret the statute, seeking the guidance of the Court of Appeals of Maryland.