Robert Ray Perez and Rhonda Lee Arevalo v. Arturo Zepeda Arredondo, CUSA KBC, LLC D/B/A Kerrville Bus Company ( 2014 )

Fourth Court of Appeals
San Antonio, Texas
DISSENTING OPINION
No. 04-13-00646-CV
Robert Ray PEREZ and Rhonda Lee Arevalo,
Appellants
v.
Arturo Zepeda Arredondo, CUSA KBC, LLC d/b/a Kerrville Bus s
Arturo Zepeda ARREDONDO, and
CUSA KBC, LLC d/b/a Kerrville Bus Company,
Appellees
From the 79th Judicial District Court, Brooks County, Texas
Trial Court No. 10-07-15670-CV
Honorable Joaquin Villarreal III, Judge Presiding
Opinion by: Karen Angelini, Justice
Dissenting Opinion by: Rebeca C. Martinez, Justice
Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Rebeca C. Martinez, Justice
Delivered and Filed: December 3, 2014
I respectfully dissent because I believe there was sufficient evidence to support a
reasonable jury’s finding that both the objective and subjective prongs of the gross negligence
claim were met.
GROSS NEGLIGENCE
As noted in the majority opinion, the jury found that the harm to Perez and Arevalo resulted
from gross negligence attributable to KBC and awarded $1 million in exemplary damages against
KBC. The trial court, however, concluded there was no evidence to support the jury’s gross
Dissenting Opinion 04-13-00646-CV
negligence finding and entered a JNOV disregarding the finding and exemplary damages award.
In my opinion, the trial court erred in finding there was “no evidence” to support the jury’s finding
and exemplary damages award.
Standard of Review
In reviewing the entry of a JNOV, we determine whether there is any evidence upon which
the jury could have made the disregarded finding. Tanner v. Nationwide Mut. Fire Ins. Co., 289
S.W.3d 828, 830 (Tex. 2009) (entry of judgment notwithstanding the verdict is subject to review
under a no-evidence standard). In doing so, we view the evidence in the light most favorable to
the verdict, crediting favorable evidence and inferences if reasonable jurors could, and
disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168
S.W.3d 802, 822 (Tex. 2005). In this case, our review of the evidence in the light most favorable
to the jury’s finding is informed by the elevated standard of proof applicable to a gross negligence
claim. Perez and Arevalo had the burden to establish KBC’s gross negligence by “clear and
convincing” evidence. TEX. CIV. PRAC. & REM. CODE ANN. § 41.003(a)(3) (West Supp. 2014)
(claimant may be entitled to exemplary damages for gross negligence claim only if he “proves by
clear and convincing evidence that the harm with respect to which the claimant seeks recovery of
exemplary damages results from . . . gross negligence”); U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d
118, 138 (Tex. 2012). “‘Clear and convincing’ means the measure or degree of proof that will
produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations
sought to be established.” TEX. CIV. PRAC. & REM. CODE ANN. § 41.001(2) (West 2008). Thus,
when we are reviewing the sufficiency of the evidence to support a jury finding under a “clear and
convincing” standard of proof, we look at all the evidence in the light most favorable to the finding
to determine whether a reasonable trier of fact could have formed a firm belief or conviction that
its finding was true. Sw Bell Tel. Co. v. Garza, 164 S.W.3d 607, 627 (Tex. 2004). In looking at
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Dissenting Opinion 04-13-00646-CV
the evidence in the light most favorable to the finding, we assume the factfinder resolved disputed
facts in favor of its finding if a reasonable factfinder could do so. Id.
Analysis
Gross negligence involves two components, requiring an act or omission (1) “which when
viewed objectively from the standpoint of the actor at the time of its occurrence involves an
extreme degree of risk, considering the probability and magnitude of the potential harm to others,”
and (2) “of which the actor has actual, subjective awareness of the risk involved, but nevertheless
proceeds with conscious indifference to the rights, safety, or welfare of others.” TEX. CIV. PRAC.
& REM. CODE ANN. § 41.001(11) (West 2008). We therefore examine the record to determine
whether the evidence, when viewed in the light most favorable to the jury’s finding, supports a
“firm belief or conviction” that both prongs of gross negligence were met. Id.; Garza, 164 S.W.3d
at 627.
(1) Objective Prong
The first issue is whether there is evidence of an act or omission by KBC that, viewed
objectively from KBC’s standpoint at the time, involved an extreme risk of harm to others. TEX.
CIV. PRAC. & REM. CODE ANN. § 41.001(11). In this context, an extreme risk is not merely “a
remote possibility of injury or even a high probability of harm, but rather the likelihood of serious
injury to the plaintiff.” Boerjan v. Rodriguez, 436 S.W.3d 307, 311 (Tex. 2014) (quoting Mobil
Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998)). We examine this risk “prospectively
from the perspective of the actor, not in hindsight.” Columbia Med. Ctr. of Las Colinas, Inc. v.
Hogue, 271 S.W.3d 238, 248 (Tex. 2008).
In support of this element, Perez and Arevalo cite to the evidence of Arredondo’s bad
driving history with KBC, KBC’s knowledge of that history, KBC’s own policy with regard to
driver operations and safety, and KBC’s actions and inactions with respect to Arredondo.
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Dissenting Opinion 04-13-00646-CV
Under KBC’s written “Rules of Conduct: Discharge and Discipline,” a progressive
discipline policy is applied to safety infractions, with a written warning given for the first (optional
counseling), second, and third offenses; a driver may be suspended or discharged upon committing
a third offense. Discharge is mandatory when a driver commits a fourth safety offense. 1 KBC’s
policy defines a “Safety Infraction” offense as: (1) failure to operate the vehicle in a safe and
proper manner; (2) failure to comply with State traffic laws; failure to observe and adhere to posted
street signs, traffic instructions, hazard warnings, etc.; (3) failure to comply with DOT regulations;
(4) involvement in a chargeable (preventable) accident with minimal damage; (5) violation of
safety or health rules; and (6) failure to comply with any other safety rule enumerated in an
appendix attached to the policy.
The record shows KBC hired Arredondo and trained him to drive its commercial buses on
about July 20, 2007. During the three-month span from July 20, 2007 to October 26, 2007,
Arredondo committed two accidents, both of which involved his bus hitting a fixed object—the
first time, Arredondo hit a parked vehicle; the second time, he hit a pedestrian walk sign. These
accidents occurred on the same day. Arredondo received two written warnings from KBC
informing him that these incidents amounted to two “chargeable accidents” under its progressive
discipline policy for safety infractions. After the two warnings, Arredondo received re-training.
From October 26, 2007 to January 23, 2008, Arredondo was still employed by KBC but did not
drive a bus at all during that period. Thus, during the first six months he was employed by KBC,
Arredondo received two warnings for accidents within the first three months, and did not drive at
all during the last three months. On January 23, 2008, Arredondo was involuntarily terminated by
1
KBC’s policy contains the qualifying phrase “[d]epending on the seriousness of the offense” at the beginning of
Sections 2 and 3 prescribing the progressive discipline that will be imposed for the designated Safety Infractions and
Operating Infractions.
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KBC. Christopher Robertson, Safety Director of KBC in 2008, testified that Arredondo was fired
for “inactivity” and failure to properly keep his DOT logs. KBC has a policy that a worker is
dismissed after six months of inactivity. A “DO NOT RE-HIRE” notation was written on
Arredondo’s personnel action form, which was placed in his personnel file. Robertson testified he
did not write the notation and did not know the reason for it.
After Arredondo was fired in January 2008, KBC began re-qualifying him for re-hiring
five months later in June 2008—despite the fact that Arredondo’s file contained a “DO NOT RE-
HIRE” directive. Arredondo had not driven a bus since the previous October, a period of eight
months. An operator pre-trip evaluation form dated June 27, 2008 documented that Arredondo
was “weak on vehicle control knowledge,” and recommended follow-up training and follow-up
evaluation; it also noted his driver log was not filled out correctly. A personnel action form in the
record shows KBC re-hired Arredondo on July 18, 2008. A subsequent pre-trip evaluation in
August 2008 indicates that Arredondo received more training and improved on his driving skills.
Despite receiving remedial retraining, Arredondo had several more accidents and incidents during
his second period of employment before the accident involving Perez and Arevalo. From April
2009 to April 2010, Arredondo received four more warnings from KBC under its progressive
discipline policy for the following “Safety “Infraction” offenses: (1) an incident in April 2009 in
which he drove to the wrong city with a bus full of children; (2) an accident 2 on the way to Eagle
Pass in July 2009; (3) an accident in which his bus hit a fixed object, an awning, in April 2010;
and (4) a series of DOT log violations. Arredondo received retraining after each warning. Under
KBC’s own progressive discipline policy, these four safety offenses during a one-year period
2
The record does not contain any detail regarding the nature of the accident in Eagle Pass, other than it was
characterized as a “chargeable (preventable) accident with minimal damage” under KBC’s policy.
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should have resulted in Arredondo’s mandatory discharge upon the fourth offense—prior to the
accident involving Perez and Arevalo that occurred in June 2010.
KBC argues that the accidents reflected on Arredondo’s driving history during the three
years of his employment 3 were all minor and none involved significant injuries, unlike the accident
involving Perez and Arevalo. KBC stresses that, for several of these accidents, no passengers were
even on the bus at the time. 4 Thus, given the relatively minor nature of Arredondo’s prior
accidents, KBC asserts its actions and inactions with regard to Arredondo did not objectively
involve an extreme risk of harm to the public.
The fact that Arredondo’s previous accidents were relatively minor is not determinative of
the objective risk issue. “[A]wareness of an extreme risk does not require proof that the defendant
anticipated the precise manner in which the injury would occur or be able to identify to whom the
injury would befall.” U-Haul, 380 S.W.3d at 139; see Montemayor v. Heartland Transp., Inc.,
No. B-07-CV-151, 2008 WL 4777004 (S.D. Tex. Oct. 30, 2008) (“common sense suggests that
often only the most infinitesimal of contingencies separate a minor accident from becoming a
major one”). A foreseeable risk does not require proof that the defendant anticipated “the precise
manner in which the injury will occur.” U-Haul, 380 S.W.3d at 138 (quoting Lee Lewis Constr.,
Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex. 2001)). The record here shows a continuous pattern
of accidents by Arredondo, beginning right after he was hired in July 2007 and continuing
throughout his employment with KBC, with the latest accident occurring as late as April 2010,
two months before the accident with Perez and Arevalo. This is not a situation where a new bus
3
KBC’s statement that Arredondo drove their buses for three years before the Perez/Arevalo accident is somewhat
misleading since he was inactive for three months and was terminated for five months during that three-year period.
4
This argument that no passengers on Arredondo’s bus were harmed is inapposite because the statute merely requires
an extreme degree of risk to “others.”
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driver was involved in several accidents at the beginning of his training and then improved.
Despite multiple retraining sessions, Arredondo kept having accidents throughout the entire term
of his employment with KBC. Moreover, the accidents involved Arredondo hitting objects with
the bus—a parked car; a pedestrian “walk” sign; an awning. Thus, there was evidence upon which
the jury could form a firm belief that an extreme risk existed, based on probability, that Arredondo
would again collide with an object, whether fixed or not, while driving a KBC bus. As to the
magnitude of the potential harm to others, it was dependent on what the object was that Arredondo
hit and who was inside it. Colliding into the back of a stopped vehicle turning left from an active
lane of traffic on a public thoroughfare would be more likely to cause serious injury to the vehicle’s
passengers than hitting an empty vehicle parked on the side of the road. Viewed objectively from
KBC’s standpoint, there was sufficient evidence to support a firm belief that an extreme degree of
risk existed that Arredondo would hit another vehicle on the roadway, resulting in the likelihood
of serious injury to others. See U-Haul, 380 S.W.3d at 139 (awareness of an extreme risk does not
require proof that the defendant anticipated the precise manner in which the injury would occur or
be able to identify to whom the injury would befall).
Therefore, viewing the evidence in the light most favorable to the jury’s finding of the
objective prong for gross negligence, I believe there is sufficient evidence upon which a reasonable
jury could form a firm belief that KBC’s decisions to terminate indefinitely, and yet rehire
Arredondo as a driver despite a driving record with two collisions, and/or its subsequent decision
to maintain his employment after four additional safety offenses mandating discharge, when
viewed objectively from KBC’s perspective at the time, involved an extreme risk of harm to other
drivers and their passengers.
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(2) Subjective Prong
A defendant must also have subjective awareness of the specific risk at issue, and
consciously disregard the risk, to be grossly negligent. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 41.001(11). Thus, the next issue is whether there is evidence that would support the jury’s firm
belief that KBC was subjectively aware of the extreme risk to the public and proceeded with
conscious indifference to the safety of others by disregarding its own directive (i.e., “Do Not
Rehire”) and re-hiring Arredondo and/or failing to fire Arredondo after his fourth safety offense,
which occurred as early as April 2010. Id. “In examining proof of the subjective component,
courts focus on the defendant’s state of mind, examining whether the defendant knew about the
peril caused by his conduct but acted in a way that demonstrates he did not care about the
consequences to others.” Reeder v. Wood Cnty. Energy, LLC, 395 S.W.3d 789, 796 (Tex. 2013).
“[W]hat separates ordinary negligence from gross negligence is the defendant’s state of mind; in
other words, the plaintiff must show that the defendant knew about the peril, but his acts or
omissions demonstrate that he did not care.” Diamond Shamrock Refining Co., L.P. v Hall, 168
S.W.3d 164, 173 (Tex. 2005). A defendant is not grossly negligent when it “actually and
subjectively believes circumstances pose no risk to the injured party, even if they are wrong.”
U-Haul, 380 S.W.3d at 141.
KBC claims there is no clear and convincing evidence that it actually knew Arredondo’s
driving ability presented an extreme degree of risk to the public and proceeded with conscious
indifference to that risk. KBC contends it could not have known that Arredondo would injure a
member of the public by hitting another vehicle while driving one of its buses.
Yet, KBC had itself documented, and thus had actual knowledge of, Arredondo’s driving
record filled with accidents from the date of his initial hire in July 2007 through his accident in
April 2010, a mere two months before the Perez/Arevalo accident. KBC required Arredondo to
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undergo retraining on multiple occasions, further supporting a finding that KBC was aware of the
danger posed by Arredondo’s reckless driving. Indeed, KBC documented Arredondo’s weakness
on “vehicle control knowledge” right before it re-hired him. Most revealing, KBC’s records
include the personnel action form documenting Arredondo’s termination in January 2008, which
shows that an internal decision was made at KBC to involuntarily fire him as a bus driver and
another decision was made to add a directive stating “DO NOT RE-HIRE” Arredondo. This
documentary evidence shows, or at least supports a reasonable inference, that KBC was
subjectively aware of Arredondo’s risk to the public’s safety before his rehiring. Indeed, KBC
decided to indefinitely terminate Arredondo’s employment with KBC and deemed him ineligible
for rehire. This action may show that the company cared about the consequences to others in firing
him. What does it show that KBC ignored its own directive and rehired him if not conscious
indifference to the safety of others?
Notwithstanding speculative argument as to KBC’s reason(s) for rehiring Arredondo, the
mere fact that KBC did rehire Arredondo five months after his termination, contrary to its own
mandate not to rehire him, shows that KBC consciously disregarded its own internal decision not
to rehire him and consciously ignored the risk to the public posed by his reckless driving record.
Further, despite Arredondo’s additional accidents involving collisions and his accumulation of
four warnings mandating discharge after his rehiring (in addition to his two previous warnings for
collisions), KBC failed to act and did not terminate him in April 2010 in accordance with its own
policy. This evidence supports a firm belief that KBC was consciously indifferent to the extreme
risk that Arredondo posed to the public. Robertson recognized KBC’s dangerous decisions when
confronted with the laundry list of incidents involving Arredondo at trial, and conceded that he
would give himself a grade of “D or F” on safety supervision in this situation.
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Viewing this evidence in the light most favorable to the jury’s finding of the subjective
prong for gross negligence, I believe it is sufficient to support a firm belief or conviction that KBC
had actual, subjective awareness of the extreme risk posed by Arredondo’s continued driving, but
proceeded with conscious indifference to the risk to public safety when it fired him indefinitely
and then re-hired him in June 2008, and again when it did not fire him in April 2010 even though
mandated by its own policy.
In conclusion, because I believe the evidence presented at trial was sufficient to support
the jury’s finding that KBC was grossly negligent, I would reverse the portion of the trial court’s
judgment disregarding the jury’s gross negligence award and render judgment on the jury’s verdict
in its entirety, subject to the statutory cap on exemplary damages. See TEX. CIV. PRAC. & REM.
CODE ANN. § 41.008 (West Supp. 2014).
Rebeca C. Martinez, Justice
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