Banner Univ. Med. Ctr. Tucson Campus, LLC v. Gordon

Decision Date29 May 2020
Docket NumberNo. 2 CA-SA 2019-0051,2 CA-SA 2019-0051
Citation467 P.3d 257,249 Ariz. 132
Parties BANNER UNIVERSITY MEDICAL CENTER TUCSON CAMPUS, LLC, an Arizona corporation dba Banner University Medical Center Tucson; Geetha Gopalakrishnan, M.D.; Marie L. Olson, M.D.; Emily Nicole Lawson, D.O.; Demetrio J. Camarena, M.D.; Prakash Joel Mathew, M.D.; Sarah Mohamed Desoky, M.D.; Seung Hur, M.D.; Banner Health; Banner University Medical Group; Petitioners, v. Hon. Richard E. GORDON, Judge of the Superior Court of the State of Arizona, IN AND FOR the COUNTY OF PIMA, Respondent, and Jeremy and Kimberly Harris, Real Parties in Interest.
CourtArizona Court of Appeals


¶1 In this special action, we are asked to decide whether a vicarious liability claim against a private employer must be dismissed when the claims against its employees were dismissed with prejudice due to the plaintiff's failure to timely serve those employees with a notice of claim as required by A.R.S. § 12-821.01 due to their joint employment by a public entity. We conclude that under the circumstances here, the claim of vicarious liability against the private employer survives the dismissal of claims against the employees.


¶2 When reviewing a grant of summary judgment, we view the facts in the non-moving party's favor. Normandin v. Encanto Adventures, LLC , 246 Ariz. 458, ¶ 9, 441 P.3d 439 (2019). In October 2015, Connor Harris, a fourteen-month-old child, died from complications caused by an improperly treated bowel obstruction while in the care of doctors employed by Banner University Medical Center Tucson Campus LLC (and various other companies under the umbrella of Banner Health) and by the University of Arizona. His parents, Jeremy and Kimberly, sued the individual doctors, alleging medical malpractice, and Banner, alleging it is vicariously liable for that malpractice, among other claims. Under A.R.S. § 12-821.01, a person is required to first provide a timely notice of claim before they may sue a "public employee." The Harrises did not serve such claim notices on any defendant.

¶3 The respondent judge granted summary judgment in favor of the individual doctor-defendants due to the Harrises’ failure to serve them with notices of claim pursuant to § 12-821.01, required because of their employment by the University. The respondent concluded it would be

impossible for the jury to reasonably find that the doctors in this case (who were both attending physicians as well as residents in this case) were providing (1) care and (2) supervision of that care as well as (3) learning to have conducted those services on behalf of [their] employer, the University, to be outside the course and scope of their employment for the University.

Thus, the doctor-defendants were dismissed "with prejudice."1

¶4 The respondent judge, however, denied Banner's motion for summary judgment on the vicarious liability claim against it grounded in the negligence claims against the individual doctor-defendants. Banner seeks special-action relief from that ruling, arguing as it did below that because dismissal with prejudice constitutes an adjudication on the merits, dismissal of the claims against the doctors requires dismissal of the vicarious liability claim against it grounded in the doctors’ alleged malpractice. Because the issue presented is purely a matter of law, could affect the course of the ongoing litigation, and presents an important question that may arise in future cases, we accept special-action jurisdiction. See Nordstrom v. Cruikshank , 213 Ariz. 434, ¶¶ 8-9, 142 P.3d 1247 (App. 2006) (special-action jurisdiction appropriate to address issue of statewide importance that could readily recur in other cases); see also Ariz. R. P. Spec. Act. 1(a).


¶5 At the heart of Banner's argument is the principle that a dismissal with prejudice constitutes an adjudication on the merits. It relies primarily on De Graff v. Smith , 62 Ariz. 261, 157 P.2d 342 (1945), and Law v. Verde Valley , 217 Ariz. 92, 170 P.3d 701 (App. 2007). In De Graff , our supreme court determined that an employer could not be vicariously liable when a judgment stemming from a voluntary dismissal of the employee "reliev[ed] [the employee] of all liability," which the supreme court stated thus "adjudged" that employee "as not guilty of any negligence because of the dismissal with prejudice." 62 Ariz. at 264, 269-70, 157 P.2d 342. The court noted that dismissal with prejudice is an adjudication on the merits. Id. at 269, 157 P.2d 342 ; see also Torres v. Kennecott Copper Corp. , 15 Ariz. App. 272, 488 P.2d 477 (1971) (voluntary dismissal of claim against employee ends derivative claim against employer). Similarly, in Law , the employee-doctors were dismissed with prejudice—one by stipulation in conjunction with a settlement agreement and the other upon motion by the plaintiffs. 217 Ariz. 92, ¶ 5, 170 P.3d 701. Applying De Graff , we concluded that the dismissals necessarily barred a vicarious liability claim against the employer. Id. ¶¶ 12-13.

¶6 De Graff and Law are facially distinguishable from the instant case because they addressed voluntary dismissals with prejudice. But the underlying notion—that the employee's liability is a necessary element of a claim of vicarious liability—has been applied to some involuntary dismissals as well. See, e.g. , Wiper v. Downtown Dev. Corp. of Tucson , 152 Ariz. 309, 310, 311-12, 732 P.2d 200, 201, 202–03 (1987) (jury awarded punitive damages against principal but not agent; "[i]f an employee's conduct does not warrant recovery of punitive damages against himself, it can not serve as a basis for such recovery against his employer"); Hansen v. Garcia, Fletcher, Lund & McVean , 148 Ariz. 205, 207-08, 713 P.2d 1263, 1265–64 (1985) (summary judgment against agent requires summary judgment against principal on vicarious liability claim); Kennecott Copper Corp. v. McDowell , 100 Ariz. 276, 281-82, 413 P.2d 749 (1966) (directed verdict for agent releases principal). None of these cases, however, including De Graff and Law , address the precise issue before us—whether an employer should be permitted to avoid liability by way of a defense available only to its employee.

¶7 In Kopp v. Physician Group of Arizona, Inc. , our supreme court expressly disavowed De Graff "insofar as that case and its progeny conclude that a stipulated dismissal with prejudice" adjudicates the question whether the dismissed party was negligent. 244 Ariz. 439, ¶ 1, 421 P.3d 149 (2018). There, a negligence claim against an individual doctor had been dismissed with prejudice following settlement. Id. ¶¶ 2, 3. The remaining claim against the doctor's employer, however, was dependent on proof of the doctor's negligence. Id. ¶ 10. The court determined the dismissal did not operate as an adjudication on the merits because "a dismissal with prejudice does not, on its own, trigger issue preclusion." Id. ¶ 14.

¶8 Banner seeks to distinguish Kopp , contending that case is limited to the application of issue preclusion to an independent negligence claim. Banner argues, then, that De Graff and Law are instead grounded in claim preclusion.2 Although the court in neither case expressly addressed claim or issue preclusion, those principles are necessarily implicated here given the general rule that a dismissal with prejudice operates as an adjudication on the merits. See Ariz. R. Civ. P. 41(b) ; see also Phillips v. Ariz. Bd. of Regents , 123 Ariz. 596, 598, 601 P.2d 596, 598 (1979) (" Rule 41(b) assumes that some dismissals for reasons other than the merits will result in a bar to future litigation as if the suit had been decided on the merits.").

¶9 Under the doctrine of claim preclusion, when "a final, valid judgment is entered after adjudication or default," a party "is foreclosed from further litigation on the claim." Circle K Corp. v. Indus. Comm'n , 179 Ariz. 422, 425, 880 P.2d 642, 645 (App. 1993). "The defense of claim preclusion has three elements: (1) an identity of claims in the suit in which a judgment was entered and the current litigation, (2) a final judgment on the merits in the previous litigation, and (3) identity or privity between parties in the two suits." In re Gen. Adjudication of All Rights to Use Water in Gila River Sys. & Source , 212 Ariz. 64, ¶ 14, 127 P.3d 882 (2006). Actual litigation of the claim is not required. Circle K Corp. , 179 Ariz. at 425, 880 P.2d at 645.

¶10 To the extent Banner asserts in its petition that claim preclusion applies here, it develops no argument that the third element—privity—is met.3 As the party asserting the defense, Banner has the burden of proving it applies.4 Hanrahan v. Sims , 20 Ariz. App. 313, 316, 512 P.2d 617, 620 (1973) ("res judicata is an affirmative defense and must be pleaded and proved"; the failure to do so constitutes waiver). And even assuming that Banner is in sufficient privity with the individual doctor-defendants to meet this element, claim preclusion nonetheless does not apply here.

¶11 Claim preclusion applies "only when the policies justifying preclusion are furthered," namely, finality, the prevention of harassment, efficiency, and "enhancement of the prestige of the courts." Circle K Corp. , 179 Ariz. at 425-26, 880 P.2d at 645–46 ; see also In re Marriage of Gibbs , 227 Ariz. 403, ¶ 12, 258 P.3d 221 (App. 2011) ("[T]he doctrine of res judicata enforces important principles of judicial economy and finality."). Banner has not explained how any of these policies weigh in its favor. The litigation has not yet ended, and it appears the negligence of at least some of the individual doctor-defendants will be further litigated irrespective of whether claim preclusion were applied to bar the vicarious liability claim against Banner.5

¶12 Further, we will not apply claim preclusion when it would contravene public policy or result in manifest injustice. Marriage of Gibbs , 227 Ariz. 403, ¶ 8, 258 P.3d 221. The policies...

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