Harding v. Sternsher ( 2017 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
LEE HARDING, et al., Plaintiffs/Appellants,
v.
DAVID NATHAN STERNSHER, dba SMART SMILES AZ, dba GREAT
BRACES FOR LESS, dba GREAT BRACES 4 LESS, Defendant/Appellee.
No. 1 CA-CV 16-0127
FILED 7-25-2017
Appeal from the Superior Court in Maricopa County
No. CV2013-010869
The Honorable Christopher T. Whitten, Judge
AFFIRMED IN PART; REVERSED IN PART AND REMANDED WITH
INSTRUCTIONS
COUNSEL
Law Offices of David W. Dow, Phoenix
By Carmen A. Chenal
Counsel for Plaintiffs/Appellants
Israel & Gerity, PLLC, Phoenix
By Michael E. Gerity
Counsel for Defendant/Appellee
HARDING, et al. v. STERNSHER, et al.
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Diane M. Johnsen delivered the decision of the Court, in
which Judge Patricia K. Norris1 and Judge Jay M. Polk joined.2
J O H N S E N, Judge:
¶1 Plaintiffs Lee Harding, Julie Harding and Kidz Connextion,
P.C., appeal the superior court's judgment in favor of defendant David
Nathan Sternsher. For the following reasons, we reverse the court's
summary judgment for Sternsher on conversion and remand for further
proceedings solely on that claim. We affirm the remainder of the judgment.
FACTS AND PROCEDURAL BACKGROUND
¶2 Lee Harding owned Kidz Connextion, a dental practice
specializing in pediatric dentistry that, until June 2012, employed dentist
David Sternsher. Beginning in September 2012 and continuing through
August 2013, several negative reviews of Kidz Connextion were posted
anonymously on the internet. The online reviews complained about long
wait times, poor customer service and unprofessional behavior at Kidz
Connextion and alleged that employees improperly restrained patients. In
addition, in December 2012, an unidentified person sent a letter to Phoenix
Health Plan ("PHP"), a program that contracts with the Arizona Health Care
Cost Containment System ("AHCCCS"), alleging that Kidz Connextion was
committing insurance fraud and abusing patients. In response to the letter,
PHP suspended Kidz Connextion from treating any PHP patients and
commenced an investigation. PHP ultimately reinstated Kidz Connextion's
credentials.
¶3 After he left Kidz Connextion, Sternsher and five other former
Kidz Connextion employees filed a complaint with the Arizona State Board
1 The Honorable Patricia K. Norris, Retired Judge of the Court of
Appeals, Division One, has been authorized to sit in this matter pursuant
to Article VI, Section 3, of the Arizona Constitution.
2 The Honorable Jay M. Polk, Judge of the Arizona Superior Court, has
been authorized to sit in this matter pursuant to Article VI, Section 3, of the
Arizona Constitution.
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
of Dental Examiners in which they alleged Lee Harding and Kidz
Connextion over-diagnosed and over-treated patients, and used improper
material for restorations. They also alleged Kidz Connextion allowed
dentists who were not credentialed by a patient's insurance plan to perform
dental work, and then fraudulently billed the insurance plan by having a
credentialed dentist sign the paperwork. Sternsher also sent a copy of this
letter to AHCCCS and other AHCCCS service providers.
¶4 The plaintiffs filed this action against Sternsher and the other
former Kidz Connextion employees who signed the Dental Board
complaint, alleging they were responsible for the negative online reviews
and the anonymous letter to PHP. The complaint alleged defamation,
tortious interference with business relations, conversion, intentional
infliction of emotional distress and negligent infliction of emotional
distress. In his answer, Sternsher alleged a counterclaim for breach of
contract.
¶5 Before trial, the plaintiffs dismissed their claims against all the
defendants except Sternsher. The superior court granted Sternsher
summary judgment on the claims alleging conversion, intentional infliction
of emotional distress and negligent infliction of emotional distress. That
left for trial Sternsher's counterclaim for breach of contract for failure to
reimburse him for orthodontic supplies, and the plaintiffs' claims for
defamation and tortious interference with business relations. The plaintiffs
did not assert any damages arising out of the letter to the Dental Board and
AHCCCS, but instead confined themselves to the online reviews and the
PHP letter.
¶6 The jury found in favor of Sternsher on all claims, awarding
him $1,997 on his counterclaim. The plaintiffs timely appealed. We have
jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-
2101(A)(1) (2017).3
DISCUSSION
A. Summary Judgment on the Plaintiffs' Tort Claims.
¶7 In reviewing a grant of summary judgment, this court will
determine de novo whether any genuine issues of material fact exist and
whether the superior court incorrectly applied the law. L. Harvey Concrete,
Inc. v. Agro Constr. & Supply Co., 189 Ariz. 178, 180 (App. 1997). We review
3 Absent material revision since the relevant events, we cite the
current version of applicable statutes.
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
the facts in the light most favorable to the parties against whom summary
judgment was entered. Id. Summary judgment is appropriate "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).
1. Conversion.
¶8 In their claim for conversion, the plaintiffs alleged Sternsher
stole dental supplies while he was working for Kidz Connextion.
¶9 "Conversion is an intentional exercise of dominion or control
over a chattel which so seriously interferes with the right of another to
control it that the actor may justly be required to pay the other the full value
of the chattel." Miller v. Hehlen, 209 Ariz. 462, 472, ¶ 34 (App. 2005) (citing
Restatement (Second) of Torts § 222A(1) (1965)). To prove conversion, a
plaintiff must show that the defendant improperly and intentionally
exerted control and dominion over plaintiff's goods, thereby causing
damage. Focal Point, Inc. v. U-Haul Co. of Ariz., 155 Ariz. 318, 320 (App.
1986).
¶10 In his motion for summary judgment, Sternsher argued the
plaintiffs had not produced any evidence to support their claim. In
response, Lee Harding offered his declaration that Sternsher had access to
Kidz Connextion's dental supplies before the company terminated him and
certain supplies and instruments that were particularly related to
Sternsher's work disappeared at times that corresponded to his shifts at
Kidz Connextion. The superior court ruled that the plaintiffs did not set
forth any evidence that Sternsher took the dental supplies and Lee
Harding's speculation that Sternsher was the most likely suspect was not
sufficient to create a material question of fact.4
4 Sternsher argues the superior court rejected Lee Harding's
declaration because it was produced after the discovery deadline and in
response to Sternsher's motion for partial summary judgment. Sternsher,
however, did not move to strike the declaration, and the record does not
contain any indication that the court disregarded it. To the contrary, it
appears the court considered the declaration but found it insufficient to
create a material question of fact.
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
¶11 Contrary to the ruling of the superior court, the plaintiffs
offered sufficient evidence to allow a reasonable jury to find that Sternsher
converted the supplies. A party may support its conversion claim by
circumstantial evidence, so long as it is not mere suspicion or conjecture.
Performance Sys., Inc. v. Kahl, 24 Ariz. App. 92, 94 (1975). The evidence the
plaintiffs offered went beyond speculation, as Lee Harding averred that he
inventoried Kidz Connextion's dental supplies weekly and the
discrepancies "always corresponded" to when Sternsher worked at Kidz
Connextion. In addition, Lee Harding's declaration established that the
missing supplies were specialized equipment that had "no value to anyone
other than a dentist who owns a pediatric clinic" and disappeared at a time
when Sternsher was opening his own clinic. The plaintiffs therefore offered
not just suspicion and conjecture, but circumstantial evidence that
established a motive and a pattern from which a reasonable jury could infer
that Sternsher took the supplies. Orme Sch., 166 Ariz. at 309 (summary
judgment is only appropriate when reasonable people could not agree with
the conclusion advanced by the non-moving party).
2. Emotional distress claims.
a. Intentional infliction of emotional distress.
¶12 The Hardings alleged Sternsher intentionally caused them
severe emotional distress through extreme and outrageous conduct. The
superior court ruled that because the Hardings had failed to produce any
evidence of severe emotional distress, they could not recover on this claim.
The Hardings argue the court erred because Sternsher's conduct aggravated
Lee Harding's blocked artery condition and caused him insomnia for which
his physician prescribed a sleep medication.5
¶13 To establish a claim for intentional infliction of emotional
distress, a plaintiff must show that (1) the defendant's conduct was extreme
and outrageous, (2) the defendant either intended to cause emotional
distress or recklessly disregarded the near certainty that such distress
would result from his conduct, and (3) the defendant's actions caused the
plaintiff to suffer severe emotional distress. Ford v. Revlon, Inc., 153 Ariz.
5 Julie Harding argues she "suffered as a result of [Sternsher's]
outrageous conduct and the resulting consequence," but does not identify
the nature of her alleged suffering or any evidence in the record that
supports her claim. Because she did not adequately develop this argument,
we do not consider it. Schabel v. Deer Valley Unified Sch. Dist. No. 97, 186
Ariz. 161, 167 (App. 1996).
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
38, 43 (1987). Arizona courts apply a case-by-case analysis to determine
whether a plaintiff has offered sufficient proof of severe emotional distress.
Lucchesi v. Frederic N. Stimmell, M.D., Ltd., 149 Ariz. 76, 79 (1986). "A line of
demarcation should be drawn between conduct likely to cause mere
'emotional distress' and that causing 'severe emotional distress.'" Midas
Muffler Shop v. Ellison, 133 Ariz. 194, 199 (App. 1982) (citation omitted); see
also Restatement (Second) of Torts § 46 cmt. j (1965) (liability only arises
when emotional distress is extreme; "Complete emotional tranquility is
seldom attainable in this world, and some degree of transient and trivial
emotional distress is a part of the price of living among people."). Thus,
crying, being stressed and upset, and having occasional trouble sleeping is
not enough to establish severe emotional distress. Midas Muffler Shop, 133
Ariz. at 199. On the other hand, anxiety that results in physical symptoms
such as high blood pressure, a nervous tic, chest pains, fatigue and
dizziness may constitute severe emotional distress. Ford, 153 Ariz. at 41; see
also Pankratz v. Willis, 155 Ariz. 8, 12, 17 (App. 1987) (anger and depression
coupled with physical ailments such as headaches and hemorrhoids
supported claim for emotional distress).
¶14 In support of his claim for intentional infliction of emotional
distress, Lee Harding submitted his own declaration that Sternsher's
actions had aggravated his existing medical condition (a vertebral artery
blockage) "to the point of [it] being an emergent condition," but he did not
explain how (or if) the supposed exacerbated condition had any physical
manifestations or avow that he had received any medical treatment for it.
Moreover, Harding claimed he suffered from insomnia due to "job stress
and anxiety" but did not offer any evidence that it was Sternsher's conduct,
and not other employment-related stressors, that caused the stress and
anxiety leading to the insomnia.
¶15 This evidence did not create a material question of fact
regarding whether Sternsher's actions caused Lee Harding severe
emotional distress. See Midas Muffler Shop, 133 Ariz. at 199 (citing as
examples of severe emotional distress cases in which (1) plaintiff suffered
heart attack and nervous exhaustion, (2) plaintiff's fright resulted in
premature birth of a dead baby, (3) plaintiff was found writhing in bed in a
state of extreme shock and hysteria, (4) plaintiff suffered severe headaches
and stress and her state of anxiety ultimately required hospitalization, (5)
plaintiff suffered from multiple sclerosis, and stress caused by the
defendant's conduct caused a relapse that resulted in permanent
impairment of her condition).
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
b. Negligent infliction of emotional distress.
¶16 The Hardings likewise did not present sufficient evidence to
create a material issue of fact regarding negligent infliction of emotional
distress. To establish this claim, the plaintiff must prove that he or she
"witnessed an injury to a closely related person, suffered mental anguish
manifested as physical injury, and was within the zone of danger so as to
be subjected to an unreasonable risk of bodily harm created by the
defendant." Rodriguez v. Fox News Network, L.L.C., 238 Ariz. 36, 39, ¶ 7 (App.
2015). The Hardings did not present any evidence that they witnessed
injury to a loved one or were in a zone of danger. In addition, as discussed,
Lee Harding's declaration did not substantiate his claim that Sternsher's
conduct caused him emotional distress of such severity that it resulted in
physical manifestations. See also Gau v. Smitty's Super Valu, Inc., 183 Ariz.
107, 109 (App. 1995) (transitory physical symptom such as insomnia does
not support a claim for negligent infliction of emotional distress).
B. Exclusion of Audio Recordings.
¶17 The plaintiffs also argue the superior court abused its
discretion at trial by excluding certain audio recordings of Sternsher that
reflected his animus toward Lee Harding and Kidz Connextion. We review
the court's exclusion of evidence for an abuse of discretion and will not
disturb such a ruling "unless a clear abuse of discretion appears and
prejudice results." Gemstar Ltd. v. Ernst & Young, 185 Ariz. 493, 506 (1996).
¶18 In Spring 2013, Kidz Connextion employee Felix Lucero
secretly recorded several conversations in which Sternsher asked him to
gather evidence to support Sternsher's planned Dental Board complaint
(the "Lucero recordings"). In the recordings, Sternsher repeatedly
expressed his hostility toward Lee Harding, stating he wanted to "bury"
him and put him and Kidz Connextion out of business. Sternsher moved
in limine to exclude the audio recordings, arguing they were not relevant to
any element of the defamation and tortious interference claims and their
prejudicial effect would outweigh any probative value. The plaintiffs
maintained the recordings were not unfairly prejudicial and showed
Sternsher's malicious intent, a matter relevant to both claims and their
request for punitive damages.
¶19 At the superior court's request, the plaintiffs designated the
specific portions of the Lucero recordings they intended to introduce in
evidence at trial. Sternsher objected to the admission of any portion of the
Lucero recordings, but submitted counter-designations that he asserted
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
also should be presented to the jury if the court allowed the recordings. On
the first day of trial, the court excluded the Lucero recordings, ruling the
proffered sections were confusing, misleading and unfair and that the
recordings were more prejudicial than probative. Nevertheless, the court
allowed the plaintiffs to impeach Sternsher with portions of the recordings
several times during his testimony.
¶20 The plaintiffs argue the superior court abused its discretion
by excluding the Lucero recordings because the probative value of the
recordings (demonstrating Sternsher's malicious intent toward Lee
Harding and Kidz Connextion) outweighed their prejudicial nature. The
superior court may exclude relevant evidence under Arizona Rule of
Evidence 403 if its probative value is "substantially outweighed by a danger
of unfair prejudice, confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence." State v.
Hardy, 230 Ariz. 281, 291, ¶ 49 (2012). The superior court has considerable
discretion when weighing these factors, State v. Gibson, 202 Ariz. 321, 324, ¶
17 (2002), and we will not disturb its ruling absent an abuse of discretion
and resulting prejudice. Yauch v. S. Pac. Transp. Co., 198 Ariz. 394, 404, ¶¶
28-30 (App. 2000).
¶21 We conclude the superior court abused its discretion by
ruling that the probative value of the Lucero recordings was outweighed
by a danger of unfair prejudice and confusion. The recordings, which over
and over captured Sternsher using profane language to describe his disdain
for Lee Harding and Sternsher's desire to put Kidz Connextion out of
business, constituted powerful evidence of Sternsher's intent, which was
relevant both to the plaintiffs' claim for defamation and their claim for
tortious interference with business relations. See, e.g., Reynolds v. Reynolds,
231 Ariz. 313, 317, ¶ 8 (App. 2013); Antwerp Diamond Exch. of America, Inc. v.
Better Bus. Bureau of Maricopa County, Inc., 130 Ariz. 523, 529-30 (1981).
Nevertheless, the court's ruling did not prejudice the plaintiffs because the
court allowed them to use key portions of the recordings as impeachment
during their cross examination of Sternsher. For example, the passages the
plaintiffs used to impeach Sternsher included his statements that he wanted
to "bury" Lee Harding by shutting down his business and leaving him
"broke" and, possibly, in jail. The court also allowed the plaintiffs to
impeach Sternsher with his statement that he expected his own business to
benefit if he was able to "bury" Lee Harding and Kidz Connextion. These
excerpts amply demonstrated Sternsher's animus toward Lee Harding and
Kidz Connextion.
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HARDING, et al. v. STERNSHER, et al.
Decision of the Court
¶22 Accordingly, because the superior court's ruling excluding
the Lucero recordings did not prejudice the plaintiffs, we will not reverse
the jury's verdict on that ground. Yauch, 198 Ariz. at 404, ¶¶ 28-30.
C. Breach of Contract Claim.
¶23 Finally, the plaintiffs argue the superior court erred by
granting judgment on the jury's verdict in favor of Sternsher on his
counterclaim for breach of contract because no written contract existed.
Arizona law permits the enforcement of an oral contract, see A.R.S. § 12-543
(2017), and Sternsher testified that Lee Harding agreed that Kidz
Connextion would reimburse him for one-half of the costs of the
orthodontic supplies and materials he used for Kidz Connextion patients,
but it failed to pay the last invoice.
CONCLUSION
¶24 For the foregoing reasons, we reverse the superior court's
summary judgment for Sternsher on the plaintiffs' conversion claim and
remand for further proceedings solely on that claim. We affirm the
remainder of the judgment.
¶25 Both parties request an award of attorney's fees on appeal
pursuant to A.R.S. § 12-341.01 (2017), which allows a court to award the
successful party reasonable attorney's fees in a contested action arising out
of contract. In our discretion, we decline to award fees to either party. See
Munger Chadwick, P.L.C. v. Farwest Dev. & Const. of the Sw., LLC, 235 Ariz.
125, 128, ¶ 14 (App. 2014). We also decline to award costs to either party.
Although we are remanding the plaintiffs' conversion claim, we cannot
know whether the plaintiffs ultimately will prevail on that claim. See A.R.S.
§ 12-342(A) (2017).
AMY M. WOOD • Clerk of the Court
FILED: AA
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