Truck Ins. Exch. v. Teixidor Enters.
| Decision Date | 24 August 2021 |
| Docket Number | 1 CA-CV 20-0342 |
| Parties | TRUCK INSURANCE EXCHANGE, Plaintiff/Appellee/Cross-Appellant v. TEIXIDOR ENTERPRISES INC., et al., Defendants/Appellants/Cross-Appellees. |
| Court | Arizona Court of Appeals |
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2016-001973 The Honorable James D. Smith, Judge
By David M. Bell, JP Harrington Bisceglia, Gena L. Sluga
Dixon Law Offices, PLC, Phoenix
By Thomas B. Dixon
Co-Counsel for Defendants/Appellants/Cross-Appellees
Richard A. Dillenburg, PC, Tempe
By Richard A. Dillenburg
Judge James B. Morse Jr. delivered the decision of the Court, in which Presiding Judge D. Steven Williams and Judge Jennifer B. Campbell joined.
¶1 Teixidor Enterprises, Inc. dba La Patisserie Bakery ("Patisserie") appeals the superior court's orders granting partial summary judgment and a new trial on damages to Truck Insurance Exchange ("Truck Insurance"). Truck Insurance cross-appeals the denial of its motions for directed verdict and the denial of its request for attorney fees. For the following reasons, we vacate and remand the court's attorney-fee order. We affirm all other orders of the superior court.
¶2 Patisserie operated a commercial bakery that sold bread to another company, Strictly from Scratch ("SFS"), which in turn supplied bread to Walmart. In May 2014, Walmart discovered that 75 pallets of Patisserie's bread, delivered by SFS, were contaminated by metal flakes. SFS paid Walmart $240, 084 to settle the resulting dispute ("Walmart Settlement").
¶3 In June 2014, SFS sued Patisserie for negligence and breach of contract ("Underlying Litigation"). SFS claimed losses for the Walmart Settlement and additional costs incurred to replace the bread. In 2015, the superior court entered verdicts in favor of SFS and against Patisserie for $674, 000 in damages and $514, 645 in fees and costs. Later, SFS seized assets from Patisserie's bakery to partially satisfy the judgment.
¶4 In 2014, Patisserie filed a liability insurance claim with its insurance provider, Truck Insurance, arising out of the Underlying Litigation ("Third-Party" claim). Truck Insurance denied coverage and refused to defend the Underlying Litigation, claiming that SFS was not seeking damages covered under Patisserie's policy. Patisserie reasserted its claim in 2015 but Truck Insurance, again, denied coverage.
¶5 In 2016, Patisserie filed a separate property claim relating to unsold bread contaminated by metal shavings, and various consequential damages ("First-Party" claim). The First-Party claim eventually included a proof of loss with schedules of damages. Schedule A included a $1, 074, 370 "loss that would have been incurred if the first-party claim was promptly adjusted and paid." Schedule B included $8, 728, 169 of actual losses. Schedule C included $98, 940, 884 in damages allegedly caused by the purported breach of the insurance contract. Truck Insurance denied coverage.
¶6 In March 2016, Truck Insurance sought a declaratory judgment confirming that it had no duty to defend or indemnify Patisserie in the Underlying Litigation. Patisserie counterclaimed for breach of contract, bad faith, and punitive damages. Patisserie also included a claim for negligence against its insurance agent, Kara Anspach.
¶7 Between 2017 and 2018, the parties filed four motions for summary judgment. The superior court delayed some of the briefing after Patisserie sought Rule 56(D) relief and an "opportunity to complete discovery as to [Truck Insurance's] knowledge of the underlying facts in" the Underlying Litigation. After briefing concluded, the court heard oral argument and issued a ruling in July 2018 ("2018 MSJ Order").
¶8 Regarding the Third-Party claim, the superior court held that Truck Insurance did not have a duty to defend or indemnify Patisserie in the Underlying Litigation. The court assumed that Third-Party coverage would exist "regarding damage to Walmart's products (i.e., sandwiches made using the non-conforming bread)." But the court held that it could not find competent evidence that the jury in the Underlying Litigation awarded damages for discarded sandwiches.
¶9 Regarding the First-Party claims, the court denied most of Truck Insurance's motion, holding that disputed issues of fact existed regarding possible claims arising from damage to Patisserie's property from defective bread pans. But the court also held that Patisserie did not offer "admissible evidence to support its burden regarding whether coverage extended to" its Schedule B &C damages and granted Truck Insurance summary judgment on those claims.
¶10 The parties asserted renewed summary judgment motions in 2019. Patisserie also sought reconsideration of the 2018 MSJ Order based on newly discovered evidence. The court heard argument on all the motions and issued a ruling in June 2019 ("2019 MSJ Order").
¶11 The court granted Truck Insurance summary judgment on: (a) Third-Party claims for bad faith, (b) promissory estoppel, (c) reasonable expectations of coverage beyond the policy, and (d) punitive damages. The court also held that only Patisserie, not its individual officers, could pursue claims against Truck Insurance because the corporate officers were not parties to the insurance agreement. The court, again, denied Truck Insurance's motion for summary judgment regarding First-Party claims.
¶12 Regarding the motion for reconsideration, the court found that Patisserie "did not show that it could not earlier obtain the newly-discovered evidence with reasonable diligence." But the court also addressed the merits. The court found that none of the newly discovered evidence was admissible to establish that Walmart sought payment from SFS for destroyed sandwiches-thus, SFS's damages in the Underlying Litigation arising from the Walmart Settlement were not covered. Trial and Post-Trial
¶13 The First-Party claims were tried to a jury in September 2019. After a 13-day trial, the jury found in favor of Truck Insurance on the issue of bad faith but found in Patisserie's favor on the breach-of-contract claim. The jury awarded $6, 296, 753.76 in damages. The jury also found against Anspach (the insurance agent) on Patisserie's negligence claim, awarding $2, 616.80 in damages.[1] The court denied both parties' requests for attorney fees but awarded Patisserie $33, 143.77 in costs.
¶14 In May 2020, the court denied Truck Insurance's motions for directed verdict but ordered a new trial on the issue of contract damages. Patisserie timely appealed and Truck Insurance cross-appealed. This Court has jurisdiction under A.R.S. § 12-2101(A)(1) and (A)(5)(a).
¶15 In this appeal we address: (1) summary judgment on Third- Party coverage for sandwich damages (and related claims), (2) the new trial order on First-Party damages, (3) Truck Insurance's denied motion for a directed verdict on First-Party coverage, and (4) the denial of Truck Insurance's request for attorney fees.
¶16 Patisserie appeals the superior court's grant of summary judgment to Truck Insurance on the issue of whether it had a duty to investigate, defend, and indemnify the Underlying Litigation. Patisserie also appeals the related issues of promissory estoppel, a "2018 claim," the dismissal of Patisserie's officers, punitive damages, and attorney fees.
¶17 We review a grant of summary judgment de novo. United Bank of Ariz. v. Allyn, 167 Ariz. 191, 195 (App. 1990). Summary judgment should be granted "if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990). "We view the evidence and reasonable inferences in the light most favorable to the non-moving party." Aranki v. RKP Invs., Inc., 194 Ariz. 206, 208, ¶ 6 (App. 1999) (as corrected). But we will affirm the grant of summary judgment if the trial court was correct for any reason. Federico v. Maric, 224 Ariz. 34, 36, ¶ 7 (App. 2010).
¶18 "To succeed on a motion for summary judgment, the [movants] need only demonstrate an absence of evidence for an essential element of the complaint." Aranki, 194 Ariz. at 209, ¶ 12. Evidence used to oppose summary judgment "must be based on personal knowledge and must be admissible at trial." Portonova v. Wilkinson, 128 Ariz. 501, 502 (1981); Villas at Hidden Lakes Condos. Ass'n v. Geupel Constr. Co., 174 Ariz. 72, 81 (App. 1992); see Ariz. R. Civ. P. 56(c)(5); see also Jabczenski v. S. Pac. Mem'l Hosps., Inc., 119 Ariz. 15, 18 (App. 1978) (). We will uphold a trial court's ruling regarding the admissibility of evidence in summary judgment proceedings absent an abuse of discretion. Mohave Elec. Coop., Inc. v. Byers, 189 Ariz. 292, 301 (App. 1997).
¶19 In the 2018 MSJ Order, the superior court granted summary judgment on Truck Insurance's duty to indemnify. The court then considered new evidence and arguments presented in the motion for reconsideration. The court assumed that any damage to destroyed Walmart sandwiches ("Sandwich Damages") were covered under the property damage provision of...
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