Haynes v. Syntek Finance Corp.

• Citation: 184 Ariz. 332,909 P.2d 399
• Decision Date: 11 April 1995
• Docket Number: No. 1,CA-CV,1
• Parties: Barbara Jean HAYNES, Plaintiff-Appellee, v. SYNTEK FINANCE CORPORATION, Defendant-Appellant. 93-0331.
• Court: Court of Appeals of Arizona

Page 399

909 P.2d 399

184 Ariz. 332

Barbara Jean HAYNES, Plaintiff-Appellee, v. SYNTEK FINANCE CORPORATION, Defendant-Appellant.

No. 1 CA-CV 93-0331.

Court of Appeals of Arizona,

Division 1, Department D.

April 11, 1995.

Reconsideration Denied June 9, 1995.

Review Denied Jan. 17, 1996. ^*

[184 Ariz. 334] Jones, Skelton & Hochuli by David C. Lewis, Phoenix, and Kirkpatrick & Kramer by Christopher W. Kramer, Flagstaff, for defendant-appellant.

Aspey, Watkins & Diesel by Louis M. Diesel and Zachary J. Markham, Flagstaff, for plaintiff-appellee.

OPINION

VOSS, Judge.

Syntek Finance Corporation ("Defendant") was held liable after a jury trial for damages suffered by Barbara Haynes ("Plaintiff") resulting from her fall on a sidewalk at a Flagstaff apartment complex. On appeal, Defendant raises four issues. We affirm.

FACTS AND PROCEDURAL HISTORY

Plaintiff was a tenant at the Country Club Estates Apartments in Flagstaff. On the evening of September 21, 1990, she fell and broke her leg while walking on a sidewalk within the apartment complex.

Plaintiff filed suit against Defendant on April 22, 1991, alleging that it owned and operated the apartment complex and that it was negligent because the sidewalk was decaying and poorly lighted. On June 14, 1991, Defendant filed its answer, admitting both ownership of the apartment complex and control of the "common area walkways" including the sidewalk at issue.

Discovery and other pretrial proceedings ensued. After postponing the trial date on two occasions, the trial court set the matter for trial on August 18, 1992. On July 29, 1992--less than three weeks before the trial was to begin and less than two months before the running of the statute of limitations--Defendant filed a motion to amend its answer, seeking to withdraw its admission that it owned the apartments and controlled the sidewalk where Plaintiff was injured. Defendant claimed:

[D]efense counsel contacted Scott Miller, president of Syntek. Mr. Miller indicated that Syntek did not own, and has never owned Country Club Estates Apartments.... The deed, a public record at the time of filing of the complaint, shows that Wespac Investors Trust, a California real estate investment trust, owned the premises in question at the time of the accident.

Following briefing and oral argument, the trial court granted the motion to amend on August 6, 1992, stating:

The Court finds that the Defendant Syntek failed to exercise due diligence concerning the ownership issue, and that its admission of ownership in its answer has placed Plaintiff at an unfair disadvantage, as Syntek belatedly disclaims ownership on the eve of trial. On the other hand, it would be unjust to allow a non-owner to be found liable. In attempting to be just to both parties, the Court orders as follows:

....

1. The Motion to Amend is granted.

....

3. Defendant Syntek shall pay any reasonable costs incurred by Plaintiff as a result of the trial postponement.

4. Defendant Syntek shall pay all of Plaintiff's reasonable costs incurred in discovery on the ownership issue from this day forward.

5. Defendant Syntek shall pay Plaintiff $5,000 as attorney's fees incurred in connection with the ownership issue. This sum must be paid at least 30 days prior to trial. If not timely paid, then Defendant Syntek will be estopped to deny ownership.

Defendant, in contemplation of filing a special action in this court, sought an interlocutory stay of paragraphs three, four, and five of the court's order. Plaintiff, on the other hand, filed a motion for reconsideration and a motion for an accelerated telephonic deposition of Mr. Scott Miller. When the trial court held a hearing on these motions on September 1, 1992, it stopped the proceedings so that a court reporter could be present. On the record, the court stated:

Before the reporter came into Chambers, I had heard oral argument on the plaintiff's Motion for Reconsideration and the defendant's Motion for an Interlocutory Stay. I had ruled on those motions denying the Motion for Reconsideration and granting the Motion for an Interlocutory Stay.

After that, by consent of the parties, I began to hear oral argument on the plaintiff's motion to accelerate the taking of a telephonic deposition. During the course of that argument, [Defendant's counsel] made the statement that the named defendant, Syntek Finance Corporation, is part of an interlocking corporate structure that may have as many as 150 corporations and they are deliberately set up so that if somebody gets a judgment against one, you cannot pursue other entities in the enterprise, sounding very much as if these parties have deliberately created a situation making it difficult, if not impossible, for anyone being awarded a judgment against one of them to pursue that judgment and have it satisfied.

Having heard that, it now strikes the Court that it would be unjust to allow Syntek Finance Corporation to do what it has done here, which is, first, to admit ownership, then wait 16 months until the eve of trial, then to inform the Court that it was not the true owner, ask the Court for leave to amend to allow it to plead that it is not the owner. That's the motion that I heard earlier, some weeks ago. Having heard only that, it seemed to me that it would be unjust if Syntek truly is not the owner to have it responsible to pay a judgment which might be $50,000 or more, and it seemed that it would not be unduly burdensome to require the plaintiff then to do some digging and be prepared to deal with a claim that Syntek Finance Corporation was not the true owner.

Since that time I am advised this morning the plaintiff has done some discovery, is beginning to find all these layers and the various entities that are involved and the possible ownership and/or management of the property in question and we are just beginning to see the tip of the iceberg here as to how difficult this is going to be. And based on [the] statement [of Defendant's counsel] here this morning, it strikes the Court now that it was inequitable to allow Syntek Finance Corporation to wait as long as it did, having admitted ownership, then to come in at the last minute before trial and deny ownership and throw the [Plaintiff] into the virtually impossible situation of trying to prove ownership and to pin liability on an entity that will respond to the judicial liability that may be established, that these defendants may have deliberately created a situation to be judgment proof.

If that's the case, then the equities shift radically and it would not be proper to allow Syntek at this point, or in July when this came up, to deny ownership.

....

Unfortunately, we do not have on the record [the] comment [of Defendant's counsel] that so shocked the Court. But the way it struck me was this named defendant and the others that have been talked about are a part of a corporate set-up involving over 150 subsidiary corporations who are set up in such a way that if you went after one, you couldn't get to the others, as if such way (sic) that this was created to confound creditors and defeat justice. That's exactly the way it struck me, and it shocked me to the point that I stopped the proceedings and brought the reporter in here and told [Plaintiff's counsel] I would rehear his motion to reconsider. I think it's that grave.

When we talk about achieving a just result here, I look back at my minute entry of August the 6th dealing with the Motion to Amend the Answer. That states, "The Court finds that the Defendant Syntek failed to exercise due diligence concerning the ownership issue, and that its admission of ownership in its answer has placed plaintiff at an unfair disadvantage, as Syntek belatedly disclaims ownership on the eve of trial. On the other hand, it would be unjust to allow a non-owner to be found liable."

Well, I am reconsidering that second statement now under these conditions: where Syntek is part of a deliberate scheme of setting up a huge umbrella of labyrinthin[e] devices just deliberately confuses (sic) ownership and makes it very difficult to find and to prove.

Syntek has never proven to me that it is not the owner. My intention in allowing the amendment of the answer was simply to allow them to raise that as an issue.

But at this point, based on what was told to me this morning by defense counsel, it is ordered granting the Motion to Reconsider.

Reporter's Transcript of Proceedings, September 1, 1992, at 2-4, 14-15. The trial court then denied Defendant's motion to amend its answer.

The matter proceeded to trial and Defendant was estopped from arguing that it did not own or control the apartment complex. The court overruled Defendant's objections to photographs of other deteriorated sidewalks within the apartment complex. It also denied Defendant's motion for a directed verdict on the issue of notice of the dangerous condition, and refused a defense instruction concerning notice. The jury's verdict found that Plaintiff's damages amounted to $71,216.65 and apportioned fifty-five percent (55%) of the fault to Defendant. The court then denied Defendant's motion for judgment notwithstanding the verdict and entered judgment in accordance with the verdict.

After the court denied Defendant's motion for new trial by formal order, Defendant timely appealed to this court, raising the following four arguments: (1) That the trial court abused its discretion by denying its motion to amend its answer; (2) that the trial court erred by denying the motion for directed verdict; (3) that the court abused its discretion by admitting in evidence photographs of other deteriorated sidewalks within the apartment complex; and (4) that the court erred by declining to give the Defendant's requested jury instruction on notice. We have jurisdiction pursuant to Arizona Revised Statutes Annotated section 12-2101(F)(1) (1994).

DISCUSSION

A. Denial of Defendant's Motion to Amend Answer.

Defendant contends...