Business Law Chapter 33 Homework Liability Third Parties And Termination

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FN8. Moreover, the trial court granted Wilson’s and Sierra Pest’s “Motion for Order Requiring Expert

FN9. Warner also argues Wilson is liable for his own negligence in the training and supervision of Hoggatt.

She asserts that no expert opinion affidavit was required because the controlling statutes and Wilson’s own

¶ 20. For the reasons stated above, we reverse the trial court’s order dismissing Wilson and Sierra Pest. Again, like

the dismissal of Hoggatt, the dismissal of Wilson and Sierra Pest does not warrant a new trial on the issue of

¶ 21. On March 30, 2006, the appellees collectively moved for summary judgment on *995 the issue of punitive

damages.FN10 In her response, Warner argued that not only were there genuine issues of material fact preventing

summary judgment, but the evidence “demonstrate[d] that Defendant David Hoggatt, and Defendant SDI, consciously

FN10. The court did not dismiss Wilson and Sierra Pest until August 7, and did not dismiss Hoggatt until

August 29.

¶ 22. Granting Warner’s motion in part, the trial court agreed to reconsider its decision, and granted Warner leave to

later request a punitive damages jury instruction. After the evidence relevant to punitive damages had been presented

at trial, and in the context of discussing jury instructions with counsel, the court reconsidered the issue. Determining

that punitive damages would not be appropriate, the court stated,

¶ 23. Warner argues that, in making its decision, the trial court improperly “took it upon itself to weigh the evidence” by

finding that no unlicensed workers were involved despite four witnesses’ testimony to the contrary. She also contends

that “[t]he use of untrained, unlicensed, non–professionals to provide services … appropriate only for a licensed

applicator” would be sufficient grounds to justify punitive damages. Warner further argues that evidence presented at

trial also showed that Hoggatt and/or SDI intentionally had acted “outside the scope of authority, and contrary to the

FN11. Warner refers to the court’s ruling as a directed verdict. As we have noted, this term is interchangeable

with JMOL.

[13] ¶ 26. Although in deciding whether to grant JMOL a trial court may consider “ ‘the quantum of evidence required’

” by the applicable standard of proof,

id., quoting Orme School v. Reeves,

166 Ariz. 301, 309, 802 P.2d 1000, 1008

(1990), the court should not grant JMOL “simply because [it] believes the moving party should win or will win the jury’s

verdict.”

Potter v. H. Kern Wisner, M.D., P.C.,

170 Ariz. 331, 333, 823 P.2d 1339, 1341 (App.1991). Nonetheless, we

need not address whether, as Warner asserts, the trial court improperly acted as a fact-finder regarding the presence

22-23, 31 P.3d 114, 119 (2001). Thus, for SDI’s own actions, such as possibly having used unlicensed applicators, to

form the basis for a punitive damages award, SDI must be independently liable for negligence.

See id.

¶ 23. However,

it is unclear from Warner’s complaint that she even alleged SDI was independently liable. Indeed, after the court

granted summary judgment, finding Hoggatt had been negligent and that SDI was liable based on respondeat

superior, Warner never claimed that SDI was independently liable as well. Because Warner had not alleged an

¶ 29. We agree with Warner that the likely purpose of the licenses in those cases was, like here, public safety. In

those cases, however, it was illegal for an unlicensed person to perform the underlying activity.

See Snyder,

392

F.Supp.2d at 1120 (driving); *997

Menaugh,

799 S.W.2d at 73 (optometry);

Deerings W. Nursing Ctr.,

787 S.W.2d at

496 (nursing). Despite Warner’s assumption that the use of unlicensed herbicide applicators would be illegal, A.R.S. §

32-2312(F) allows companies to use unlicensed applicators so long as they “work under the direct supervision of a

licensed applicator at all times.” “Direct supervision” merely requires that the unlicensed applicators work “under the

instruction, control and responsibility of a licensed applicator who is available if needed for consultation or assistance

FN12. At oral argument, Warner asserted SDI’s use of unlicenced applicators violated Arizona Administrative

Code Title 4, Chapter 29, Article 5. The version of Article 5 to which Warner refers, however, was not in effect

at the time of the incident, and we find nothing in the administrative rules effective at that time that support

Warner’s position.

FN13. Warner did present evidence suggesting that Hoggatt did not arrive at the Aegis building until after the

herbicides had been applied and people had been evacuated; however, this alone does not permit the

inference that there was no “direct supervision,” as its definition does not require the physical presence of the

licensed applicator. A.R.S. § 32–2301(7). Furthermore, Hoggatt’s liability, based on his admission that he

negligently applied the herbicide at the Aegis building, had already been determined.

(1987). Although these facts may show Hoggatt was negligent, they do not permit the jury to infer the evil mind

necessary for a punitive damages award.

See Rawlings,

151 Ariz. at 162, 726 P.2d at 578 (punitive damages require

more than the “ ‘mere commission of a tort’ ”),

quoting

W. Prosser & W. Keeton,

Law of Torts

§ 2 at 9 (5th ed.1984).

FN14. At the time this case was filed, this provision was in § 23-1023(C).

See

2007 Ariz. Sess. Laws ch. 116,

§ 1.

[19] ¶ 34. Warner asserts that either the collateral source rule does not apply to workers‘ compensation benefits or,

¶ 35. We find no support in Arizona law for Warner’s position that the collateral source rule “has been abolished with

respect to work[ers’] compensation benefit payments and liens.” She relies on

Anderson v. Muniz,

21 Ariz.App. 25,

28-29, 515 P.2d 52, 55-56 (1973), but that case did not analyze the collateral source rule; it held that a plaintiff’s

damages for medical expenses are calculated according to the rates actually charged by his doctor, not the higher

12-1023.

Ruth,

107 Ariz. at 576, 490 P.2d at 832. It does not address whether presenting evidence in a tort action of

the plaintiff’s receipt of workers’ compensation benefits would violate the collateral source rule.

¶ 36. Moreover, even if the collateral source rule does not apply or can be waived, the evidence Warner seeks to

admit must otherwise be admissible. The trial court here determined the evidence was irrelevant and could “prejudice

… both parties.” The court also expressed concern that evidence of the amount of the carrier’s lien might

inappropriately set a floor for the jury’s calculation of damages.

See

Ariz. R. Evid. 402 (“Evidence which is not relevant

¶ 38. Warner also asserts that our supreme court’s decision in

Manhattan-Dickman Construction Co. v. Shawler,

113

Ariz. 549, 558 P.2d 894 (1976), “dictates that an instruction and evidence regarding a worker[s’] compensation lien

are mandatory when the jury is led to believe that worker[s’] compensation has been provided to a plaintiff.” In that

¶ 39.

Manhattan-Dickman

does not support Warner’s position. Indeed, it reemphasizes that evidence of workers’

compensation benefits and liens are generally irrelevant and prejudicial. It suggests that if such evidence is heard by

the jury, the jury should then be specifically instructed to disregard it. Warner does not claim the trial court erred by

failing to specifically instruct the jury that her carrier had a lien on her recovery or to ignore the possibility Warner had

¶ 41. On the third day of trial, the trial court informed the parties a juror had asked: “[D]id the defendant violate any

pesticide or herbicide regulation in their treatment at Aegis on September 29th, 2003?” It is not clear from the record

FN15. Hoggatt signed a consent agreement with SPCC agreeing to pay a $600 fine. That consent agreement

stated: “The disciplinary action in this matter constitutes a prior violation and may be used for the purpose of

determining sanctions in any further disciplinary matter, however it shall not act as conclusive evidence of a

violation in any other proceeding.” The trial court had previously granted SDI’s and Hoggatt’s motion in limine

to exclude evidence of the consent agreement.

¶ 42. Warner argues that, because the question demonstrates the jury was “confus[ed]” and “need[ed] more

information to render a verdict,” the trial court erred by declining to answer the question. She relies on

Harrington,

CHAPTER 33: LIABILITY TO THIRD PARTIES AND TERMINATION 567

understanding of a significant element of the applicable law, it is the court’s duty to give additional instructions on the

law to adequately clarify the jury’s doubt or confusion.’ ” 158 Ariz. at 121, 761 P.2d at 1025,

quoting Ott v. Samaritan

Health Serv.,

127 Ariz. 485, 491, 622 P.2d 44, 50 (App.1980) (alterations in

Harrington

¶ 43. In

Harrington,

a negligence and products liability case,

id.

at 119, 761 P.2d at 1023, the jury asked a question

during deliberations concerning the statute of limitations,

id.

at 120, 761 P.2d at 1024. Apparently, a contract entered

into evidence contained a one-year workmanship warranty.

Id.

The jury asked the trial court: “How many years [is] a

contractor liable for defects in workmanship and materials…[?] Contract reads one year. We want to know if another

¶ 44. The juror’s question here does not evidence a similar lack of understanding of any portion of this case. Evidence

of Hoggatt’s citation from the SPCC, even if otherwise admissible, would be relevant only to the issue of Hoggatt’s

FN16. Warner asserts the question was “obviously relevant,” but cites no authority in support of her position.

Nor does she explain how the evidence would be relevant to any issue save Hoggatt’s negligence.

¶ 45. On the fourth day of trial, the court informed the parties it had received three additional jury questions, which

apparently were intended for Warner. One question asked whether Warner had made a claim for workers’

compensation benefits or qualified for disability social security insurance. The second question asked whether Warner

had medical insurance while employed with Aegis and whether that insurance covered prescription drugs. The final

¶ 47. The trial court granted Hoggatt’s, Wilson’s, and Sierra Pest’s motions for sanctions pursuant to Rule 68, Ariz. R.

Civ. P., because they had been dismissed from the lawsuit and had made offers of judgment to Warner.FN17

See

¶ 48. Warner argues we should vacate the Rule 68 sanctions awarded to SDI because she lacked the authority to

accept the offer in light of the fact that she had received workers’ compensation benefits and the carrier had a lien to

FN18. These provisions are now in § 23-1023(D).

[23][24][25] ¶ 49. “Interpretation of rules and statutes is a legal matter, which we review de novo.”

Pima County v.

¶ 50. At the time relevant here, Rule 68(d) provided that, if an offer of judgment is made and not accepted and “[i]f the

judgment finally obtained is equal to, or more favorable to the offeror than[ ] the offer, the offeree must pay, as a

sanction, those reasonable expert witness fees and double the taxable costs of the offeror….” SDI asserts we must

uphold the sanction here because “[t]here is no exception to Rule 68 awards of sanctions for offerees who reject

offers of judgment when there is a lien subject to A.R.S. § 23-1023(C).”

¶ 53. In

Duke v. Cochise County,

189 Ariz. 35, 40-41, 938 P.2d 84, 89-90 (App.1996), we held that imposition of Rule

68 sanctions cannot be based on an unapportioned joint offer of settlement from multiple parties. Although we relied

primarily on the rule’s language specifying only a single “party” and “offer,” we also stated:

FN19. SDI argues this reading of Rule 68 creates a conflict between the rule and § 23-1023, and, thus, the

rule should control.

See Pima County v. Hogan,

197 Ariz. 138, ¶ 8, 3 P.3d 1058, 1060 (App.1999) (“When a

statute conflicts with a procedural rule on a procedural matter, the rule controls.”). It does not explain,

however, how the rule and statute conflict. As we have explained, a party may not be sanctioned under Rule

FN20. At oral argument before this court, SDI argued for the first time that acceptance of an offer of judgment

under Rule 68 was not a “compromise” as contemplated by § 23-1023. It reasons that a settlement, unlike

acceptance of a Rule 68 offer, need not result in a judgment and involves contract law principles to govern its

effect.

See, e.g., Emmons v. Superior Court,

192 Ariz. 509, ¶ 14, 968 P.2d 582, 585 (App.1998) (

(2002),

quoting Brecht v. Hammons,

35 Ariz. 383, 389, 278 P. 381, 383 (1929). A Rule 68 judgment squarely

fits this definition-the parties ultimately compromise by agreeing on the value of the plaintiff’s claim by one

party’s accepting the other’s offer to confess judgment.

*1003 ¶ 55. Were we to conclude that a workers’ compensation lien holder’s refusal of the worker-plaintiff’s request to

accept an offer of judgment did not insulate a plaintiff from Rule 68 sanctions, a plaintiff in a third-party action whose

against the lien holder. Therefore, he or she could potentially obtain some relief from the Rule 68 sanctions. This

570 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

solution has some facial appeal-it would allow a defendant to recover costs that it would have been able to recover

from a plaintiff who voluntarily rejected a Rule 68 offer of judgment. And it would place some potential burden on the

insurance carrier which, perhaps unfairly, stands to benefit from the plaintiff’s lawsuit against a third party without

tort law generally favors the injured party, not the tortfeasor.

See, e.g., Lopez v. Safeway Stores, Inc.,

212 Ariz. 198, ¶

26, 129 P.3d 487, 496 (App.2006) (“[T]wo guiding principles of tort law [are] (1) the limitation of compensation to the

injured party to the amount necessary to make him whole and (2) the avoidance of a windfall to the tortfeasor if a

choice must be made between him and the injured party.”).

[35] ¶ 58. Nor would it be a satisfactory solution to require a plaintiff who desires to settle his or her claim to avoid

“has accepted the claim, paid benefits, and acquired a lien” forfeits workers’ compensation benefits);