Gump v. Wal-Mart Stores, Inc., No. 21670.

• Decision Date: 27 July 2000
• Docket Number: No. 21670.
• Citation: 5 P.3d 407,93 Haw. 417
• Parties: Linda GUMP, Respondent-Plaintiff-Appellee, v. WAL-MART STORES, INC., a Delaware corporation, Petitioner-Defendant-Appellant, and KBRL, Inc., a Hawaii corporation, John Does 1-10, Jane Does 1-10, Doe Corporations, Partnerships, Governmental Units or Other Entities 1-20, Defendants.
• Court: Hawaii Supreme Court

5 P.3d 407

93 Haw. 417

Linda GUMP, Respondent-Plaintiff-Appellee, v. WAL-MART STORES, INC., a Delaware corporation, Petitioner-Defendant-Appellant, and KBRL, Inc., a Hawaii corporation, John Does 1-10, Jane Does 1-10, Doe Corporations, Partnerships, Governmental Units or Other Entities 1-20, Defendants.

No. 21670.

Supreme Court of Hawai`i.

July 27, 2000.

John R. Lacy, Margaret Jenkins Leong, Normand Lezy, and Mavis M. Masaki, of Goodsill Anderson Quinn & Stifel, on the briefs, Honolulu, for petitioner-appellant.

Robert D.S. Kim, on the briefs, for respondent-appellee.

Francis Nakamoto and Steven L. Goto of Ayabe, Chong, Nishimoto Sia & Nakamura, on the briefs, Honolulu, for Amicus Curiae Hawaii Restaurant Association.

George W. Brandt and Bradford F.K. Bliss of Lyons, Brandt, Cook & Hiramatsu, on the briefs, Honolulu, for Amicus Curiae Hawaii Insurers Council.

Jay M. Fidell and Scott I. Batterman of Bendet, Fidell, Sakai & Lee, on the briefs, Honolulu, for Amicus Curiae Building Owners and Managers Association and Institute of Real Estate Management.

MOON, C.J., LEVINSON, NAKAYAMA, RAMIL, JJ., and Circuit Judge WONG¹, Assigned by Reason of Vacancy.

Opinion of the Court by NAKAYAMA, J.

Petitioner-appellant Wal-Mart Stores, Inc. (Wal-Mart) has applied to this court for a writ of certiorari to review the opinion of the Intermediate Court of Appeals (ICA) in Gump v. Wal-Mart Stores, Inc., 93 Hawai`i 428, 5 P.3d 418 (App.1999) [hereinafter, the "ICA's opinion"], affirming the trial court's judgment in favor of the plaintiff and various orders of the trial court. Wal-Mart argues that the ICA erred in affirming the judgment and orders because: 1) the ICA should not have adopted the "mode of operation" rule; 2) the ICA misapplied the rule by omitting certain requirements; 3) Gump did not prove that Wal-Mart failed to exercise reasonable care; 4) the settlement paid by Defendant KBRL, Inc. [hereinafter "McDonald's"] to Gump should have been set off against the amount of the jury's verdict; and 5) the trial court should have included McDonald's on the special verdict form. We hold that the ICA did not err in adopting the mode of operation rule. However, its application is limited to the circumstances of this case, wherein a commercial establishment, because of its mode of operation, has knowingly allowed the consumption of ready-to-eat food within its general shopping area. We further hold, as a matter of law, that the McDonald's settlement should have been set off against the amount of the jury's verdict against Wal-Mart. Therefore, we reverse the ICA's opinion insofar as it affirmed the amount of damages entered against Wal-Mart and affirm the opinion, as modified by our analysis, in all other respects.

I. BACKGROUND

A. Factual and procedural background

This case arose out of an incident in which Gump slipped on a french fry outside the McDonald's restaurant but inside the premises of Wal-Mart and sustained injuries. The restaurant is located inside the Kailua-Kona Wal-Mart. The factual and procedural background is described in the ICA's opinion. We repeat only the facts relevant to the issues discussed herein.

On October 2, 1997, Wal-Mart filed a motion for summary judgment arguing, inter alia, that it was entitled to summary judgment on the negligence claim because it did not have notice of the fallen french fry. The trial court denied the motion.

Prior to trial, Gump reached a settlement with McDonald's, pursuant to which Gump released McDonald's in exchange for $5,000. Upon Gump's motion in liminie regarding the dismissal of McDonald's, the trial court ruled that the issue of McDonald's liability would not be raised before the jury and that Mc-Donald's would not be included on the special verdict form. In its opposition to the motion, Wal-Mart also argued that, if the jury awarded damages to Gump, Wal-Mart was entitled to a set off in the amount of Gump's settlement with McDonald's. The trial court stated that it would not apply a set off because Wal-Mart had not filed a cross-claim against McDonald's.

The evidence adduced at trial established that McDonald's maintained a sign inside the restaurant that read, "Patrons, please do not leave these premises with food." However, Wal-Mart employees generally did not approach customers who took McDonald's food into the store unless they saw the customers "do something that would be hazardous. . . ." According to Bryan Wall, who was the store manager at the time of the incident, Wal-Mart had one or two employees patrolling the store at any given time and looking for spills or other hazards. Wall also testified that all employees were trained to constantly look for potential hazards and that the store called periodic "zone defenses" during the day. When a zone defense was called, employees stopped what they were doing to pick up debris on the floor and clean up any spills. However, Wall was unable to specify how often the zone defenses occurred or whether or when one had been implemented prior to Gump's fall.

The jury awarded Gump $20,000 in general damages and $6,500 in special damages and apportioned liability 95% to Wal-Mart and 5% to Gump. On April 23, 1998, the trial court entered final judgment in favor of Gump, ordering Wal-Mart to pay $25,175 in damages. Wal-Mart subsequently moved for a judgment notwithstanding the verdict (JNOV), arguing that there was no evidence that it had notice of the fallen french fry or that it had breached any of its maintenance procedures. In the alternative, Wal-Mart requested a new trial in which McDonald's could be included on the special verdict form. The trial court denied the motion. Wal-Mart timely appealed.

B. The ICA's opinion

On appeal, Wal-Mart argued that the trial court erred in: 1) denying Wal-Mart's motion for summary judgment as to the negligence claim; 2) dismissing McDonald's, excluding evidence regarding McDonald's liability, omitting McDonald's from the special verdict form, and refusing to set off the McDonald's settlement against the amount of the jury's verdict; 3) allowing Gump to introduce evidence of prior accidents; 4) sanctioning Wal-Mart under Rule 26 of the Hawaii Arbitration Rules; 5) sanctioning Wal-Mart for settlement conference violations; and 6) denying Wal-Mart's motion for JNOV or a new trial. The ICA affirmed the trial court on all points. In its application for certiorari, Wal-Mart does not contest issues 3, 4, and 5.

In affirming the trial court's denial of Wal-Mart's motion for summary judgment as to the negligence claim, the ICA adopted the mode of operation rule and held that the rule relieved Gump of her burden to prove that Wal-Mart had notice of the french fry. The ICA also held that the trial court properly dismissed McDonald's from the case and excluded evidence of McDonald's liability because Wal-Mart had not asserted a cross-claim for contribution against McDonald's. In addition, the ICA held that the trial court did not abuse its discretion in refusing to include McDonald's, a non-party, on the special verdict form. The ICA also affirmed the trial court's denial of Wal-Mart's motion for JNOV or, in the alternative, a new trial.

Wal-Mart filed a timely application for certiorari on December 17, 1999.² Wal-Mart argues that the ICA erred in affirming the judgment against Wal-Mart where there was no proof of actual or constructive notice and no proof that Wal-Mart failed to exercise reasonable care. Wal-Mart also argues that the ICA erred in affirming the award of damages where Wal-Mart was denied the opportunity to establish McDonald's liability and/or the trial court refused to set off the McDonald's settlement against the amount of the jury's verdict against it.

II. STANDARD OF REVIEW

The adoption of the mode of operation rule and establishment of the requirements of the rule are questions of law. Questions of law are reviewed de novo under the right/wrong standard. Roes v. FHP, Inc., 91 Hawai`i 470, 473, 985 P.2d 661, 664 (1999). The trial court's findings of fact are reviewed under the clearly erroneous standard and its conclusions of law are reviewed under the right/wrong standard. Brown v. Thompson, 91 Hawai`i 1, 8, 979 P.2d 586, 593 (1999).

[Hawai`i Rules of Civil Procedure (HRCP)] Rule 41(a)(2) provides in pertinent part that "[e]xcept [by stipulation], an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper." HRCP Rule 41(a)(2) (emphasis added). A court's imposition of such terms and conditions would be reviewable for an abuse of discretion. Sapp v. Wong, 3 Haw.App. 509, 512, 654 P.2d 883, 885 (1982).

Moniz v. Freitas, 79 Hawai`i 495, 500, 904 P.2d 509, 514 (1995) (some alterations in original). Whether Wal-Mart was entitled to set off the McDonald's settlement under the Uniform Contribution Among Tortfeasors Act (UCATA), HRS §§ 663-11 to 663-17 (1993 & Supp.1999), is a question of statutory interpretation. Questions of statutory interpretation are questions of law reviewed de novo. Robert's Hawaii Sch. Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91 Hawai`i 224, 239, 982 P.2d 853, 868 (1999).

III. DISCUSSION

A. The ICA did not err in adopting the mode of operation rule and in applying it to the present case.

In affirming the trial court's denial of Wal-Mart's motion for summary judgment, the ICA adopted the mode of operation rule, which it summarized as follows:

where a plaintiff is able to demonstrate that the business proprietor adopted a marketing method or mode of operation in which a dangerous condition is reasonably foreseeable and the proprietor fails to take reasonable action to discover and remove the dangerous condition, the injured party may recover without showing actual notice or constructive knowledge of the specific instrumentality of the accident.

ICA's opinion at 441, 5 P.3d at 431 (citing Jackson v. K-Mart, 251 Kan. 700, 840 P.2d 463,...