Scottsdale Ins. Co. v. Cendejas
| Decision Date | 03 March 2009 |
| Docket Number | No. 1 CA-CV 08-0001.,1 CA-CV 08-0001. |
| Citation | 220 Ariz. 281,205 P.3d 1128 |
| Parties | SCOTTSDALE INSURANCE COMPANY, an insurance company, on its own behalf and as subrogee for its insured, Todd Andrews, an Arizona resident, Plaintiffs-Appellees, v. Anthony CENDEJAS and Pamela Sue Cendejas, husband and wife; Topa, Inc., an Arizona corporation, Defendants-Appellants. |
| Court | Arizona Court of Appeals |
Adelman German, PC, by Steven J. German, Scottsdale, Attorneys for Appellees.
Doyle Berman Murdy, PC, by William H. Doyle, J. Randall Jue, Phoenix, Attorneys for Appellants.
¶ 1 Anthony Cendejas, Pamela Sue Cendejas, and Topa, Inc. (collectively "Appellants") appeal from the superior court's grant of summary judgment to Scottsdale Insurance Company ("SIC") after the court found that Appellants had not timely complied with the requirements of Arizona Rule of Civil Procedure Rule 26(b)(5) regarding their notice of nonparty at fault. Appellants also challenge the court's calculation of prejudgment interest. For the reasons that follow, we affirm the ruling regarding the notice of a nonparty at fault and thus SIC's entitlement to summary judgment, but we reverse the ruling with respect to the date that prejudgment interest began to accrue. We remand for recalculation of interest.
¶ 2 On June 23, 2003, as Anthony Cendejas was sawing into a wall in the home of Todd Andrews, he struck something that caused a spark and a resulting fire. Andrews' home and personal property suffered extensive damage. Andrews' insurer, SIC, paid Andrews $256,500, based upon the $259,000 policy limit less a $2,500 deductible.
¶ 3 On February 18, 2004, SIC demanded reimbursement of $259,000 from Appellants' insurer, Auto Owners Insurance Company ("Auto Owners"). Auto Owners' adjuster, Bruce Thomson, calculated that it owed only $218,702.45 and refused to pay any more than that amount.1
¶ 4 On January 7, 2005, SIC filed suit against Appellants, for "no less than $259,000," plus prejudgment interest. Appellants answered on November 14, 2005, which set the 150-day deadline for filing their notice of nonparty at fault on April 13, 2006.2
¶ 5 On February 2, 2006, Appellants filed a Notice of Non-Party at Fault. The notice included the following:
Oxley Construction Company, L.L.C.
. . . .
To the extent that the above named entity performed any work on the subject property as part of the original construction of the subject property in such a way as to cause or contribute to the condition of the subject property, if any, which may have caused or contributed to the fire at the subject property, Defendants herein name this entity as a non-party at fault.
2. Any subcontractor retained by Oxley Construction, not named specifically herein, revealed through discovery, who performed any work on the subject property as part of the original construction of the subject property in such a way as to cause or contribute to the condition of the subject property, if any, which may have caused or contributed to the fire at the subject property, Defendants reserve the right to name these entities as a non-party at fault.
3. Building Inspector
. . . .
Any building inspector, not specifically named herein, who inspected the original construction to the extent that such inspection failed to determine an inappropriately installed building component to the extent such components are determined to have caused or contributed to the fire at the subject property giving rise to this claim, Defendants herein named [sic] these individual(s) as a non-party at fault.
(Emphasis added.)
¶ 6 On June 28, 2006, the parties deposed Appellants' expert, Joe Sesniak, who testified that the attic insulation in Andrews' home had been installed backwards, which "rapidly accelerated" the fire's development. If the insulation had been installed correctly, he opined, the fire would have been much more contained.
¶ 7 On July 11, 2006, SIC asked the court to set new pretrial deadlines and a new, later trial date. SIC cited discovery delays and explained that "[w]ithin the past few weeks, one of the defense witnesses was deposed and suggested a completely new defense that was previously not known to Plaintiff." (Emphasis added.) The court granted a continuance.
¶ 8 Soon after, SIC filed a motion asking the court to find that Appellants had failed to properly or timely designate nonparties at fault. It argued that the February 2006 notice failed to reveal a factual basis indicating how any of the designated parties caused or contributed to the fire or resulting damage. SIC also asserted that Appellants had disclosed for the first time at Sesniak's deposition a defense of improper insulation installation. SIC pointed out that the disclosure came after SIC had completed its examination and during examination by Appellants' counsel, suggesting that Appellants had prior knowledge of the defense. SIC further argued that Sesniak had completed his investigation in July 2003 so that Appellants had had ample time to develop and disclose the defense. Finally, SIC noted that Appellants still had not identified an allegedly negligent insulation installer.
¶ 9 Appellants responded that the notice of nonparties was sufficient to inform SIC that other potential parties may have contributed to the loss. They also argued that, given the continuance, SIC had sufficient time before trial to address the potential liability of a nonparty.
¶ 10 The court granted SIC's motion to strike the notice of nonparties at fault. Appellants moved for reconsideration, but the court declined to do so.
¶ 11 SIC then moved for summary judgment, seeking $259,000 plus prejudgment interest. Appellants responded that a question of fact existed as to the fire's cause because even if Anthony had started the fire, the improperly installed insulation had allowed it to spread and cause much greater damage. Appellants contended that the improperly installed insulation thereby constituted an intervening, superseding cause of the damages.
¶ 12 The court granted SIC's motion for summary judgment. It reasoned that even if it accepted the proposition that the insulation had been installed backwards, that error was not "an independent supervening cause of the fire." Rather, "two parties [could be] liable for causing the same damages." Furthermore, if Appellants' Notice of Nonparty at Fault had been timely, a jury could have apportioned liability between the parties. But because the notice was untimely, if the case went to trial, the court would not allow Appellants to introduce evidence about the insulation "because that would be pointing to a nonparty at fault" who was not in the case. Thus, there was no need for a trial, and no facts were in dispute once the nonparty at fault had been eliminated.
¶ 13 SIC also sought an award of sanctions under Arizona Rule of Civil Procedure 68 for the expert witness fees it had incurred, double taxable costs, and prejudgment interest on the liquidated amount of $259,000 from February 18, 2004, the date of SIC's demand letter to Auto Owners. Appellants objected to the imposition of prejudgment interest because the demand letter did not itemize the claim, was directed only to the insurance carrier, and sought damages that were unliquidated. Appellants also argued that SIC had improperly asked for costs related to Mike Scutt, who was not one of SIC's listed experts.
¶ 14 The court awarded SIC damages in the amount of $259,000; taxable costs of $3,953.30; Rule 68 sanctions of $5,311.00; expert witness fees of $14,373.59; and prejudgment interest of $82,596.16 dating from February 18, 2004. The total judgment of $365,234.05 was the full amount requested by SIC.
¶ 15 Appellants filed a motion for a new trial challenging the rulings that struck their notice of nonparties at fault, precluded a jury from deciding the issue of intervening cause, granted Rule 68 sanctions, and granted prejudgment interest. Appellants argued that striking their notice amounted to an extreme discovery sanction. The court denied the motion.
¶ 16 Appellants timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(B) (2003).
¶ 17 Appellants argue their notice of nonparty at fault was timely and sufficiently identified the designated parties. They also contend that the court's ruling resulted in an overly harsh discovery sanction and violated their right to pay damages in accordance with their percentage of fault. We review the superior court's ruling on discovery and disclosure issues for an abuse of discretion. Soto v. Brinkerhoff, 183 Ariz. 333, 335, 903 P.2d 641, 643 (App.1995).
¶ 18 Because Arizona has abolished joint and several tort liability, a defendant is liable to an injured party only for his percentage of fault and may ask the trier of fact to apportion fault among all of those who contributed to the injury. Thus, A.R.S. § 12-2506(B) (2003) provides in part:
B. In assessing percentages of fault the trier of fact shall consider the fault of all persons who contributed to the alleged injury, death or damage to property, regardless of whether the person was, or could have been, named as a party to the suit. Negligence or fault of a nonparty may be considered if the plaintiff entered into a settlement agreement with the nonparty or if the defending party gives notice before trial, in accordance with requirements established by court rule, that a nonparty was wholly or partially at fault.
As we have explained, the purpose of Rule 26(b)(5) is "to identify for the plaintiff any unknown persons or entities who may have caused the injury in time to allow the plaintiff to bring them into the action before the statute of limitations expires." LyphoMed, Inc. v. Superior Court, 172 Ariz. 423, 428, 837 P.2d 1158, 1163 (App.1992)....
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