Warner v. Southwest Desert Images, LLC (1/28/2008): Arizona Court of Appeals Division Two Holds That (1) an Employee Is Not Immune from Negligence Simply Because the Employer Is also Liable Under the Respondeat Superior Doctrine; (2) an Expert Opinion Affidavit Under A.R.S. § 12-2602 Is Not Necessary For a Vicarious Liability Claim Against a Licensed Professional; (3) Evidence of Workers’ Compensation Benefits Could Be Excluded in Negligence Action; and (4) Offer of Judgment Sanction Cannot Be Imposed When Plaintiff’s Workers’ Compensation Carrier With a Lien Greater Than the Amount of the Offer Does Not Consent to the Offer of Judgment.
Catherine Warner suffered a heart attack after Southwest Desert Images, LLC, through its employee, negligently sprayed herbicide around Warner’s office building. The spraying lasted for over one hour and entered the building’s ventilation system, causing emergency services to evacuate the building. Warner “began having difficulty breathing, was coughing violently, and felt burning in her eyes, nose, and throat.” She then began feeling “‘extreme chest pain’ and ‘heart palpitations.’” Her doctor later determined that Warner, who had suffered previous heart attacks, suffered a heart attack on “the day of the evacuation.” She sued Southwest Desert Images, its employee, and the related parties who held the “qualifying license” to spray herbicide for negligence, and sought punitive damages. Although the trial court dismissed several other defendants, the jury found Southwest Desert Images responsible and awarded Warner compensatory damages. The trial court, however, granted defendants’ “motions for offer-of-judgment sanctions pursuant to Rule 68, Ariz. R. Civ. P” because Warner’s award was less than the offers of judgment.
The Arizona Appeals Court affirmed in part, reversed in part, and remanded the case for further proceedings. First, the Court concluded that the trial court had erred by dismissing the negligent employee because his employer (Southwest Desert Images) was liable under the respondeat superior doctrine. That doctrine did not relieve the employee of liability; rather it made both the employee and employer liable. Second, the Court concluded that the trial court had erred by dismissing certain defendants for Warner’s failure to serve a preliminary expert affidavit under A.R.S. § 12-2602, which requires such affidavits for negligence claims against licensed professionals. The affidavit was unnecessary because (1) the defendants were liable only by respondeat superior, not their own negligence and (2) the trial court never ordered that Warner serve the affidavit, which must be done before the trial court may dismiss defendants for failure to comply. Third, the Court concluded that the trial court had properly rejected Warner’s punitive damage claim because the evidence did not show an “evil mind” to disregard a substantial risk of bodily injury. Moreover, it was unclear whether having unlicensed employees apply the herbicide was illegal so long as they were supervised by a licensed employee, which they seemingly were. Fourth, the Court concluded that the trial court properly had rejected Warner’s attempt to introduce evidence of workers’ compensation benefits and her carrier’s lien on any recovery. Fifth, and finally, the Court reversed and remanded the trial court’s award of offer-of-judgment sanctions against Warner. Warner’s workers’ compensation carrier held a lien against any recovery she might obtain. Because the lien exceeded the amount of the offers of judgment, A.R.S. § 23-1023(C) required that Warner obtain written approval from the carrier before compromising the claim. Therefore, “if Warner intended to accept [Southwest Desert Image’s] offer of judgment, requested permission from the lien holder to do so, and the lien holder refused, the trial court’s Rule 68 sanctions against Warner were not proper.” Because the record was unclear on this point, and because it was “unfair to have expected the parties or the trial court to have anticipated the standard we adopt today,” “we therefore . . . remand this matter to the trial court so it can determine whether Warner can demonstrate that she intended to accept the offer and had not been given permission to settle the claim before the time to accept the offer of judgment would have expired.”
Judge Brammer authored the opinion; Chief Judge Pelander and Judge Howard concurred.