Ogden v. JM Steel Erecting, Inc.

• Decision Date: 31 May 2001
• Docket Number: No. 1 CA-CV 00-0260.,1 CA-CV 00-0260.
• Citation: 201 Ariz. 32,31 P.3d 806
• Parties: Lori A. OGDEN, a single person; Peggy Ann Klatt, individually, as Personal Representative of the Estate of Dean F. Zeller, and for the benefit of Tasha Ann Zeller, a minor, and A. Thomas Cole, as Personal Representative of the Estate of William Zeller, Plaintiffs-Appellees, v. J.M. STEEL ERECTING, INC., an Arizona corporation; Jay V. Soyko and Mary B. Soyko, his wife, Defendants-Appellants.
• Court: Arizona Court of Appeals

31 P.3d 806

201 Ariz. 32

Lori A. OGDEN, a single person; Peggy Ann Klatt, individually, as Personal Representative of the Estate of Dean F. Zeller, and for the benefit of Tasha Ann Zeller, a minor, and A. Thomas Cole, as Personal Representative of the Estate of William Zeller, Plaintiffs-Appellees, v. J.M. STEEL ERECTING, INC., an Arizona corporation; Jay V. Soyko and Mary B. Soyko, his wife, Defendants-Appellants.

No. -0260.

Court of Appeals of Arizona, Division 1, Department D.

May 31, 2001.

Law Offices of A. Thomas Cole by A. Thomas Cole, Casa Grande, Attorneys for Plaintiffs-Appellees.

Jones, Skelton & Hochuli by Mark D. Zukowski, and David C. Lewis, Phoenix, Attorneys for Defendants-Appellants.

OPINION

GARBARINO, Judge.

¶ 1 The pivotal issue is whether the defendants are entitled to a new trial because the jury failed to allocate some degree of fault to a non-party, even though the parties stipulated that the non-party proximately caused the relevant injuries. Here, the jury disregarded the stipulation and apportioned 100% of fault to the party defendants. We hold that a jury must allocate some degree of fault to a stipulated non-party at fault. Accordingly, we remand for a new trial.

¶ 2 We must also decide if we should vacate the jury's verdict in its entirety and remand for a trial on all issues of liability and damages, or affirm the jury's verdict as to liability and damages and remand for a trial only on the allocation of fault as between the party defendants and the designated non-party at fault. After reviewing the record, we conclude that the jury's verdict must be vacated in its entirety and the matter remanded for a trial on all issues of liability and damages.

FACTUAL AND PROCEDURAL HISTORY

¶ 3 In the early morning hours of November 3, 1990, in Phoenix, a pickup truck driven by Joseph Lichman collided with a motorcycle driven by Dean F. Zeller, with Lori A. Ogden seated behind him. Lichman, who had been drinking at a local bar, was turning left onto Campbell Avenue after proceeding southbound on 35th Avenue. Mr. Zeller died and Ms. Ogden suffered serious injuries.

¶ 4 The parties stipulated in their joint pretrial statement that "Lichman was intoxicated at the time of the accident, and his intoxication was a proximate cause of the accident." Lichman pled guilty to criminal charges in connection with Mr. Zeller's death and served time in prison.

¶ 5 Ms. Ogden and Mr. Zeller's relatives brought a personal injury action against Lichman's employer, J.M. Steel Erecting, Inc., and its owners, Jay Soyko (Soyko) and his spouse, Mary Soyko (collectively Steel). The suit also named Lichman as a defendant, but the trial court later severed Lichman from the case and redesignated him as a non-party at fault.

¶ 6 The parties agreed that Lichman was not acting in the course and scope of his employment at the time of the accident. Instead, the plaintiffs argued that Steel owned the truck and had negligently entrusted it to Lichman. The evidence at trial therefore focused on paperwork surrounding an alleged "sale" of the truck from Steel to Lichman and Lichman's driving record.

¶ 7 Soyko testified that he was unaware of Lichman's poor driving record, including a March 1989 conviction for driving under the influence. He further testified that he was aware of one occasion when Lichman had to walk back to work after a police officer prohibited him from driving because Lichman's driver's license had been suspended. Lichman, however, told Soyko that he had not received a ticket for the stop and simply had to pay a reinstatement fee.

¶ 8 Over Steel's objection, former J.M. Steel general manager Roger Morgan testified that Soyko was aware of Lichman's driving record. In fact, Morgan testified that J.M. Steel kept the title and insurance on the truck because it knew that Lichman would not qualify for insurance in light of his bad driving record. Morgan would pay the monthly insurance premiums on the truck during the time when it was being driven personally by Lichman, even though Morgan repeatedly complained to Soyko about the arrangement.

¶ 9 The jury returned a verdict in favor of the plaintiffs and against Steel. The verdict allocated 100% of the fault to Steel and no fault to Lichman. Ms. Ogden received $1,416,437 in damages, and Mr. Zeller's relatives collectively received $1,300,000. The trial court subsequently entered judgment not only for these compensatory damages, but also for pre-judgment interest accruing on certain portions of the judgment.

¶ 10 Steel then filed unsuccessful motions for a new trial pursuant to Rule 59(a) of the Arizona Rules of Civil Procedure, for judgment as a matter of law¹ because of the 0% allocation of fault to Lichman, and to amend the judgment. This appeal followed. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) sections 12-2101(B) and (F) (1994).

DISCUSSION

I. Steel's Motion for Judgment as a Matter of Law

¶ 11 We first address Steel's motion for judgment as a matter of law following the verdict because, if Steel prevails on this issue of the appeal, the remaining issues are moot. See, e.g., Pointe Resorts, Inc. v. Culbertson, 158 Ariz. 137, 140-41, 761 P.2d 1041, 1044-45 (1988)

("Generally the mootness doctrine requires that judicial opinions not be rendered concerning issues which no longer exist because of changes in the factual circumstances.").

¶ 12 Steel argues that it is entitled to judgment as a matter of law following the jury's verdict allocating 100% of fault for the plaintiffs' damages to Steel and 0% to Lichman, a designated non-party at fault. Steel bases its argument on the proposition that a defendant-entrustor cannot be held liable in tort for negligent entrustment if the underlying theory of negligence, that is, the negligence of an entrustee, fails. See Quintero v. Cont'l Rent-A-Car Sys., Inc., 9 Ariz.App. 488, 491, 453 P.2d 999, 1002 (1969)

("Tort liability arising out of negligent entrustment involves the concurrent acts of negligence of the person entrusting the automobile and of the person to whom the automobile was entrusted." (citing Hardwick v. Bublitz, 254 Iowa 1253, 119 N.W.2d 886 (1963))),

vacated on other grounds, 105 Ariz. 135, 460 P.2d 189 (1969). Steel contends that the jury's allocation of 0% fault to Lichman destroys the plaintiffs' overarching theory of liability—that is, negligent entrustment—because an entrustor cannot be negligent if the entrustee is not negligent in the first instance.²

See, e.g., Mulhern v. City of Scottsdale, 165 Ariz. 395, 398, 799 P.2d 15, 18 (App.1990) ("In order for the employer to be held liable for negligent hiring, retention or supervision, the employee must have committed a tort."); Behrens v. Aetna Life & Cas., 153 Ariz. 301, 302, 736 P.2d 385, 386 (App.1987) (declaring, in the context of a homeowners' insurance policy exclusion, that "[a] claim for negligent entrustment, or for that matter negligent supervision, cannot exist apart from the excluded negligent operation of the [instrumentality of the injury]").

¶ 13 Steel would be entitled to judgment as a matter of law if the jury had the question of whether Lichman was liable before it and then found Lichman not liable by returning a 0% allocation of fault to him. Here, however, the jury did not have to determine whether Lichman was negligent because the parties stipulated to his negligence. Rather, the questions before the jury were whether Steel negligently entrusted the vehicle to Lichman, and, if so, the extent of both Lichman's and Steel's respective liability. The stipulation, not the 0% allocation in the verdict, was conclusive as to Lichman's negligence.

¶ 14 The jury was effectively prohibited from concluding that Lichman was not negligent, and thus could not on that basis have exonerated Steel from liability. The jury failed to allocate fault to a non-party whose liability had been stipulated to by the parties. See infra Part II. Steel is not entitled to judgment as a matter of law.

II. Steel's Motion for New Trial for Improper Fault Allocation

¶ 15 A motion for a new trial on the ground that the verdict is against the weight of the evidence is within the sound discretion of the trial court. We will reverse the trial court's denial of such a motion only if it reflects a manifest abuse of discretion. Blakely Oil, Inc. v. Wells Truckways, Ltd., 83 Ariz. 274, 278, 320 P.2d 464, 466 (1958). If any substantial evidence could lead reasonable persons to find the ultimate facts to support a verdict, the judgment must be affirmed. Curlee v. Morris, 72 Ariz. 125, 127, 231 P.2d 752, 753 (1951). Nevertheless, "it is not only our right, but our duty, to set aside a verdict" if no evidence in the record justifies it. Spain v. Griffith, 42 Ariz. 304, 305, 25 P.2d 551, 551 (1933).

¶ 16 We find no evidence to justify the jury's conclusion that Steel was wholly at fault but Lichman was not at all at fault. It was undisputed that Lichman's blood alcohol level was 0.15 percent at the time of the accident; that he pled guilty to criminal charges arising out of the accident; and that he was not acting in the course and scope of his employment with Steel. The parties' stipulation that Lichman's negligence was a proximate cause of the plaintiffs' harm was admitted into evidence. Accordingly, Arizona law required the jury to assign some percentage of fault to Lichman. See A.R.S. § 12-2506(B) (Supp.2000) ("In assessing percentages of fault the trier of fact shall consider the fault of all persons who contributed to the alleged injury ...." (emphasis added)).

¶ 17 We also base this conclusion on this Court's holding in Styles v. Ceranski, 185 Ariz. 448, 916 P.2d 1164 (App.1996). The plaintiffs' lawyer in Styles asked the jury to assign all fault to the plaintiffs' family doctor and none to the surgeon who actually performed an unnecessary surgery. Id. at 449-50, 916 P.2d at 1165-66. The lawyer also argued in closing that the...