State v. Sanchez

• Decision Date: 01 March 1978
• Docket Number: No. 2,CA-CIV,2
• Citation: 119 Ariz. 64,579 P.2d 568
• Parties: The STATE of Arizona, a body politic, Appellant, v. Esther SANCHEZ, Individually and as surviving parent of Rosendo M. Sanchez, Jr., Deceased, Appellee. 2669.
• Court: Arizona Court of Appeals

Page 568

579 P.2d 568

119 Ariz. 64

The STATE of Arizona, a body politic, Appellant, v. Esther SANCHEZ, Individually and as surviving parent of Rosendo M. Sanchez, Jr., Deceased, Appellee.

No. 2 CA-CIV 2669.

Court of Appeals of Arizona,Division 2.

March 1, 1978.

Rehearing Denied April 11, 1978.

Review Denied May 9, 1978.

Bruce E. Babbitt, Atty. Gen., Chandler, Tullar, Udall & Redhair, Tucson by D. B. Udall, Sp. Asst. Atty. Gen., and W. Page Keeton, Associated Counsel, Austin, Tex., for appellant.

Law Offices of Richard D. Grand by Richard D. Grand, Thomas J. McHugh and James G. Heckbert, Tucson, for appellee.

OPINION

HOWARD, Judge.

The issue in this case is whether the trial court erred in allowing punitive damages to be assessed against the State of Arizona. This is an action for wrongful death of the plaintiff's 20-year-old son who was killed on August 29, 1975 in an automobile collision involving a state vehicle operated by Joseph Noriega, an employee of the Arizona Highway Department. At the time of the accident, Joseph Noriega was intoxicated.

Noriega was a self-confessed alcoholic. During the five years he worked for the Arizona Highway Department, he was often absent from work as a result of being intoxicated the morning after a night's drinking.

In November of 1973, approximately two years before the collision, Noriega met with his immediate foreman, Tony Gracia, and the District Maintenance Supervisor, William White, to discuss his absences. At that time Gracia and White also discussed Noriega's alcoholism. They suggested that he contact Alcoholics Anonymous but made no record in his personnel file that he had a problem with alcohol. They permitted him to continue driving state vehicles.

On the day prior to the collision, Noriega visited a friend after work. After consuming a quart of beer at his friend's home, he went to a local bar in Tucson where he drank from 5:30 p. m. until 1 a. m. Thereafter he returned to his home where he consumed additional beer until retiring at 2 a. m.

When he woke up at 6 a. m., Noriega did not feel well. Upon arriving at work, he was ordered by the foreman, Tom Parrish, to drive a truck to Nogales to pick up a part. Noriega told Mr. Parrish that he had been up drinking all night and felt that he was in no condition to drive to Nogales. Notwithstanding that Parrish knew Noriega had a drinking problem and, in fact, had previously given Noriega information regarding alcoholic counseling, Parrish insisted Noriega drive to Nogales.

Upon arrival at the Highway Department yard in Nogales, Noriega was given the part requested. Although agents of the state in Nogales noticed that Noriega was acting strangely at the time, they did not question him or try to ascertain the reason for his strange behavior. After picking up the part, Noriega purchased more beer as he felt additional alcohol would make him feel better. He consumed 4 cans of beer before starting his return trip to Tucson.

Upon approaching the Amado turn-off northbound on U.S. Route 89, Noriega passed out at the wheel. His truck ran off the road to the right, overtook the Sanchez vehicle which had been northbound directly in front of Noriega, and struck the Sanchez vehicle as the truck came back onto the road. As a result, the Sanchez vehicle rolled over, killing plaintiff's son.

Officers of the Arizona Highway Patrol administered a field sobriety test to Mr. Noriega and determined that he was intoxicated. A blood sample revealed Noriega had a blood alcohol level of .23%.

This appeal was filed following a jury trial in which a verdict was returned in favor of the plaintiff as follows:

"1. Compensatory damages for the plaintiff ESTHER SANCHEZ and against the defendants JOSEPH NORIEGA and the STATE OF ARIZONA in the amount of $200,000.00.

2. Exemplary damages for the plaintiff ESTHER SANCHEZ and against the defendant JOSEPH NORIEGA in the amount of $25,000.00 on the issue of his wanton conduct.

3. Exemplary damages for the plaintiff ESTHER SANCHEZ and against the defendant STATE OF ARIZONA in the amount of $250,000.00 on the issue of its wanton conduct for the conduct of its employee JOSEPH NORIEGA.

4. Exemplary damages for the plaintiff ESTHER SANCHEZ and against the defendant STATE OF ARIZONA in the amount of $500,000.00 on the issue of its wanton conduct in the entrustment of its vehicle to the defendant JOSEPH NORIEGA."

After the judgment in this case, A.R.S. § 41-621 was amended. Subsection (H) now provides:

"The state and its departments, agencies, boards and commissions are immune from liability for losses arising out of a judgment for willful and wanton conduct resulting in punitive or exemplary damages."

The statute cannot be applied retroactively in this case for two reasons. First, there is no provision for retroactivity in the statute. State v. Stone, 104 Ariz. 339, 452 P.2d 513 (1969). Second, a statute cannot be applied retroactively to impair a vested right. County of Cochise v. Pioneer National Title Insurance Company, 115 Ariz. 381, 565 P.2d 887 (App.1977). Appellee had a vested right to the judgment. Even though the above statute has been amended, it does not apply to municipal corporations, and thus this case takes on added significance.

Stone v. Arizona Highway Commission, 93 Ariz. 384, 381 P.2d 107 (1963), abrogated governmental immunity for tortious conduct. Appellee contends this puts the state on the same footing as private corporations which have been held liable in Arizona for punitive damages. Southern Pacific Company v. Boyce, 26 Ariz. 162, 223 P. 116 (1924); Western Coach Corporation v. Vaughn, 9 Ariz.App. 336, 452 P.2d 117 (1969). ¹ The reason for allowing punitive damages against a corporation is the supposed deterrent effect. The allowance of such damages will encourage employers to exercise closer control over their servants for the prevention of outrageous torts. Prosser, supra, § 2.

Appellant contends that appellee is wrong in her interpretation of Stone, supra, and that in the absence of a specific statute authorizing punitive damages against the state, they cannot be recovered.

We do not believe that Stone is determinative of the issue here. It does no more than abrogate sovereign immunity. It does not answer the damages question. The issue thus becomes is there a difference between the private corporation and the state which justifies awarding punitive damages in the case of the private corporation but not in the case of the state? From the standpoint of the various activities in which the state engages and the exposure of the public to harm resulting therefrom, it is difficult to perceive a difference between a private corporation and the state. However, this does not end our inquiry.

The general rule is that a municipal corporation ² cannot be held liable for punitive or exemplary damages in the absence of a specific statute authorizing them. Fisher v. City of Miami, 172 So.2d 455 (Fla.1965); Desforge v. City of West Saint Paul, 231 Minn. 205, 42 N.W.2d 633 (1950); Rascoe v. Town of Farmington, 62 N.M. 51, 304 P.2d 575 (1956); Clarke v. City of Greer, 231 S.C. 327, 98 S.E.2d 751 (1957); Lauer v. Young Men's Christian Association of Honolulu, 557 P.2d 1334 (Hawaii 1976); City of Gary v. Falcone, 348 N.E.2d 41 (Ind.App. 3rd Dist. 1976); Chappel v. City of Springfield, 423 S.W.2d 810 (Mo.1968); Brown v. Village of Deming, 56 N.M. 302, 243 P.2d 609 (1952); Foss v. Maine Turnpike Authority, 309 A.2d 339 (Me.1973); McHugh v. City of Wichita, 1 Kan.App.2d 180, 563 P.2d 497 (1977); Smith v. District of Columbia, 336 A.2d 831 (D.C.App.1975); Urban Renewal Agency of City of Aberdeen v. Tackett, 255 So.2d 904 (Miss.1971); Nixon v. Oklahoma City, 555 P.2d 1283 (Okl.1976). See Note 22 Wash.Lee L.Rev. 126 (1965); Annot. 19 A.L.R.2d 903 (1951); 57 Am.Jur.2d, Municipal, School and State Tort Liability, §§ 318-322; contra: Hennigan v. Atlantic Refining Company, 282 F.Supp. 667 (E.D.Pa.1967), aff'd, 400 F.2d 857 (3 Cir. 1968).

Various reasons are given in the foregoing cases for denying punitive damages against the state or municipal corporation in the absence of a statutory authorization. One is that since punishment is the objective, the people who would bear the burden of the award the citizens are the same group who are expected to benefit from the public example which the punishment makes of the wrongdoer. Another reason is that the deterrent effect adds little justification because it is to be assumed that municipal officials will do their duty and if discipline of a wrongdoing employee is indicated, appropriate measures will be taken without a punitive award. A huge award against the municipal corporation would not necessarily deter other employees who would generally be unlikely to be able to pay a judgment assessed against them personally. A third reason is the rule which permits evidence of the wealth of a tortfeasor as a measure of the amount of punitive damages which should be awarded. The theory is the wealthier the wrongdoer, the greater the award. Otherwise stated, a relatively small sum might be adequate to punish a common man whereas a much greater sum would be needed to punish a rich man. If this were allowed against municipalities, it would permit evidence of the unlimited taxing powers as a measure of a proper verdict. Fisher v. City of Miami, supra.

Some of these reasons apply equally to private corporations. Two of the reasons, the evidence of the unlimited taxing power of a municipal corporation, and the fact that the public would bear the burden of the award, are not applicable to private corporations. Appellee counters these two reasons by pointing out that in Price v. Hartford Accident and Indemnity Company, 108 Ariz. 485, 502 P.2d 522 (1972), our Supreme Court concluded that an insurance policy identical to that held by the state provides coverage for exemplary damages. Therefore, there cannot be an adverse financial impact upon the State of...