Maria Henning v. Montecini Hospitality

FILED BY CLERK
IN THE COURT OF APPEALS DEC 20 2007
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO
MARIA HENNING and GLENDA )
HENNING, as guardians for KRISTOFER )
JOSEPH LANCASTER, and MARIA )
HENNING, individually as mother of ) 2 CA-CV 2007-0109
Kristofer Joseph Lancaster, ) DEPARTMENT B
)
Plaintiffs/Appellants, ) OPINION
)
v. )
)
MONTECINI HOSPITALITY, INC., dba )
FAMOUS SAM’S #1, )
)
Defendant/Appellee. )
)
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY
Cause No. C20060192
Honorable Charles V. Harrington, Judge
AFFIRMED
Law Office of Elliot Glicksman, P.L.L.C.
By Elliot Glicksman Tucson
Attorney for Plaintiffs/Appellants
Schneider & Onofry, P.C.
By Jon D. Schneider and Luane Rosen Phoenix
Attorneys for Defendants/Appellees
E C K E R S T R O M, Presiding Judge.
¶1 This case arose from an automobile accident in which Kristofer Lancaster, son
of appellant Maria Henning, was seriously injured while a passenger in a car driven by
Steven Zenizo. Both Kristofer and Zenizo were intoxicated after drinking alcoholic
beverages at a bar known as Famous Sam’s, a franchise of Famous Sam’s Inc. (FSI). On the
night of the accident, the bar was owned by appellee Montecini Hospitality, Inc., but
operated by Zimbow Enterprises, Inc., a company that was in the process of purchasing the
bar.
¶2 Henning and her daughter, appellant Glenda Henning, as guardians for
Kristofer, appeal from the trial court’s grant of summary judgment in favor of Montecini on
the Hennings’ complaint. The complaint alleged Montecini was liable under dram shop
laws and for negligently training its employees to serve alcohol to obviously intoxicated or
underage persons. Because we agree with the trial court that Montecini no longer exercised
sufficient control over the bar or its employees to owe any duty to Kristofer, we affirm the
judgment.
¶3 When reviewing a case decided by summary judgment, we must view the facts
in the light most favorable to the party adversely affected by the court’s ruling. Ontiveros
v. Borak, 136 Ariz. 500, 503, 667 P.2d 200, 203 (1983). After consuming alcoholic
beverages at Famous Sam’s on January 21, 2005, Zenizo drove his car into a tree. Although
his passenger, Kristofer, was under the legal drinking age, he had also consumed alcohol at
Famous Sam’s.
2
¶4 About two months before the accident, Montecini and Zimbow had entered
into a purchase agreement for the sale of the bar at issue, with the sale originally scheduled
to close no later than December 31, 2004. On December 24, the parties signed an
addendum to the purchase agreement that provided Zimbow would take possession of the
bar five days later. The addendum stated that Zimbow “agrees to be responsible for all
employees’ salaries from December 29, 2004 . . . [and] to transfer all utilities into its name
on the subject property as of December 29, 2004.” It also provided that Zimbow would “be
responsible for any [and] all Royalties due Famous Sam’s commencing January 1, 2005.”
The Arizona Department of Liquor Licenses and Control issued Zimbow an interim liquor
license for the bar on December 30, 2004.1 Although the franchise transfer was supposed
to be effective as of January 1, 2005, FSI did not ratify the transfer until February 3, 2005.
And the sale of the business from Montecini to Zimbow did not close until May or June of
that year. Thus, the January 2005 accident occurred after Zimbow took possession and
assumed operation of the business but before ownership had fully passed from Montecini.
¶5 The Hennings sued Montecini, FSI, and Zimbow for negligence both under
Arizona dram shop laws and in the hiring, training, and supervision of their employees. The
Hennings dismissed their claims against Zimbow and FSI after reaching settlement
agreements with those parties. Montecini moved for summary judgment, contending it had
1
On the night in question, Zimbow held an interim liquor permit. It was not granted
its permanent license until May 2005, but we find no relevant difference for purposes of this
appeal. See, e.g., Ariz. Admin. Code R19-1-101 (defining “Licensed” as having a “license
or interim permit” issued by the Arizona Department of Liquor Licenses and Control); see
also A.R.S. § 4-203.01 (interim permit rules).
3
no duty under the dram shop laws because it did not have possession and control of the bar
nor did it employ any of the alcohol servers at the time of the accident. After originally
denying the motion, the court reconsidered it and granted summary judgment in favor of
Montecini on both claims, ultimately concluding Montecini owed no duty of care to
Kristofer.
DRAM SHOP LIABILITY
¶6 The Hennings argue the trial court erred in so concluding. Duty is an
“obligation, recognized by law, which requires the defendant to conform to a particular
standard of conduct in order to protect others against unreasonable risks of harm.”
Markowitz v. Ariz. Parks Bd., 146 Ariz. 352, 354, 706 P.2d 364, 366 (1985). Arizona
imposes a duty of care, both by statute and common law, on a “supplier of liquor” to refrain
from serving alcoholic beverages to underage persons or those who are disorderly or
obviously intoxicated. Brannigan v. Raybuck, 136 Ariz. 513, 516-17, 667 P.2d 213, 216-
17 (1983); Ontiveros, 136 Ariz. at 510-11, 667 P.2d at 210-11; see also A.R.S. § 4-244 (9),
(14). In a negligence action, “whether a duty exists[] is a matter of law for the court to
decide.” Gipson v. Kasey, 214 Ariz. 141, ¶ 9, 150 P.3d 228, 230 (2007). We review that
legal question de novo. De La Cruz v. State, 192 Ariz. 122, ¶ 1, 961 P.2d 1070, 1071
(App. 1998).
¶7 Notwithstanding the purchase agreement between Montecini and Zimbow, the
Hennings maintain that Montecini owed a duty of care to Kristofer simply because it still
owned the bar at the time of the accident. But we have previously declined to impose such
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a duty on “one who is merely associated with a licensee but who does not control the sales,
service, furnishing or supplying of alcohol by the licensee.” Callender v. MCO Properties,
180 Ariz. 435, 441, 885 P.2d 123, 129 (App. 1994). In concluding that a lessee of
government land owed no duty to a patron to whom a sublessee served alcohol, we
observed: “Only those who actually dispense liquor are in a position to gauge the age or
state of intoxication of a customer.” Id. Here, Zimbow, not Montecini, held the liquor
license and therefore clearly bore primary legal responsibility to control the sale of alcohol
to patrons of Famous Sam’s. Assuming arguendo this statutory responsibility of the licensee
did not necessarily relieve a nonoperating owner of all potential liability arising from serving
of alcohol at the owner’s establishment,2 the Hennings have presented no evidence
suggesting that Montecini, in the capacity of owner, exercised any continuing control over
the service of alcohol at the bar after Zimbow assumed operational responsibility pursuant
to the purchase agreement.
¶8 The Hennings emphasize that Montecini continued to advise Zimbow regularly
after Zimbow became responsible for operating the bar. And, as the Hennings observe, some
of that guidance apparently related to the service of alcohol.3 But the Hennings have
provided no evidence from which a jury could infer that the terms of the purchase agreement
2
See Prof’l Sports, Inc. v. Gillette Sec., Inc., 159 Ariz. 218, 222, 766 P.2d 91, 95
(App. 1988) (finding nonlicensee security company had duty of care with regard to alcohol
service arising from express contractual obligation to patrol ballpark for underage drinking).
A representative of Zimbow testified that the discussion included “dealing with
3
rowdy customers or cutting off customers.”
5
required Zimbow to follow Montecini’s advice. Under those circumstances, no jury could
reasonably interpret such advice, however helpful, as evidence that Montecini continued to
exercise control over serving alcohol at the bar. Id. (coupled with receipt of rent,
contractual provision permitting landlord to enter premises for any reasonably necessary
purpose not sufficient to give landlord “the right or duty to control or supervise the business
activities . . . [or] sale of alcoholic beverages” of tenant who was selling alcohol).
¶9 Nor does the purchase agreement or its addendum give Montecini the express
right to control or supervise Zimbow’s operation of the business. To the contrary, the terms
of the agreement—which shifted to Zimbow all continuing financial responsibility for the
bar’s operation as of December 29, 2004—suggest an implicit understanding between the
parties that Zimbow acquired full functional control of the bar on that date.4 The record
demonstrates that Montecini’s status as the named franchisee for the Famous Sam’s bar had
not yet passed to Zimbow at the time of the incident. Although that status could
conceivably provide an incentive for Montecini to retain some control over the bar’s
operations,5 the Hennings have provided no evidence demonstrating that Montecini was in
4
On the date of the accident, Montecini was still the named franchisee of FSI. As we
have noted, the franchise transfer agreement stated the transfer was to take place on
January 1, 2005, but it was not signed by FSI until February 3, 2005. The Hennings
maintain that any effort to transfer the business before then was null and void under the
franchise agreement. But they do not cite any authority for that proposition or articulate
how Montecini’s remaining the legal owner but not the operator of the franchise gave
Montecini a right or duty to control the service of alcohol to patrons of the bar.
5
A representative of FSI testified that FSI could hold Montecini, its franchisee,
responsible for any liquor law violations even if Montecini no longer exercised operational
control over the bar. During oral argument, the Hennings suggested that Montecini therefore
6
fact so motivated or took any actions, contractual or otherwise, to do so. In short, the
Hennings have not shown Montecini had any residual right to supervise or control the
business activities of Zimbow on the night of the accident.
¶10 The Hennings attempt to distinguish this case from the scenario presented in
Callender on the ground that Montecini retained an ownership interest in the property while
the relevant defendant in Callender was a mere lessee of the property in question. But the
holding in Callender—that a duty under Arizona’s dram shop laws does not arise from a
mere interest in property in the absence of control over the dispensing of liquor—applies to
an ownership interest no less than to other interests in property. See 180 Ariz. at 441, 885
P.2d at 129. In the analogous arena of premises liability, Arizona law makes clear that a
duty of care arises not from mere ownership of property but, rather, from possession and
control. See Ft. Lowell-NSS Ltd. P’ship v. Kelly, 166 Ariz. 96, 103-04, 800 P.2d 962, 969-
70 (1990) (no liability for landowner not in control of premises; “it is the fact of possession
that triggers the landowner’s duty to his invitees”).
¶11 The Hennings argue that, in any event, a bar owner’s duty to exercise
reasonable care in serving alcohol is nondelegable and that Montecini therefore cannot avoid
liability by ceding control over the bar to Zimbow. To support this proposition, they rely
on the general rule that a property owner or possessor has a nondelegable duty to keep his
possessed a duty of care arising solely from that contractual relationship between FSI and
Montecini. But the Hennings did not advance this particular argument in their briefs. We
therefore decline to address it. See Van Loan v. Van Loan, 116 Ariz. 272, 274, 569 P.2d
214, 216 (1977).
7
or her premises safe. See id., 166 Ariz. at 101, 800 P.2d at 967. But, as demonstrated in
Callender, this court has implicitly found that a lessor can delegate to a lessee the duty to
exercise reasonable care in serving alcohol. See 180 Ariz. at 441, 885 P.2d at 129. We can
conjure no logic for applying a different rule to the seller and purchaser of a business when
the purchaser has taken possession and operational control.
¶12 The Hennings finally argue we can find a duty based on sound public policy,
emphasizing “the injuries and deaths caused by alcohol related traffic accidents.” They rely
on Gipson, 214 Ariz. 141, ¶ 23, 150 P.3d at 232, for the proposition that we can impose a
duty based solely on public policy. There, our supreme court found a duty of care based
on Arizona statutes prohibiting the conduct at issue—distributing prescription drugs to those
without a valid prescription. Id. ¶¶ 25-26; see also Stanley v. McCarver, 208 Ariz. 219,
¶¶ 6, 14, 92 P.3d 849, 851, 853 (2004) (finding, when statutes silent on issue, public policy
supported recognizing duty of care even absent formal doctor-patient relationship).
¶13 In the statutes pertinent to this case, our legislature has expressed a similarly
specific public-policy determination that drunk driving is a paramount concern and that
liquor licensees should not serve alcohol to clearly impaired or underage patrons. See
A.R.S. §§ 4-101 through 4-312. But, unlike other contexts in which our supreme court has
found duties based on public-policy considerations, our legislature here has also
significantly limited the liability of nonlicensees for serving alcohol. See §§ 4-301, 4-
312(B); see also Callender, 180 Ariz. at 441, 885 P.2d at 129 (landowner “merely
associated” with licensee has no duty of care in furnishing alcohol). We would exceed our
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authority were we to substitute our own public-policy determinations for those of the
legislature. See Grand Canyon Trust v. Ariz. Corp. Comm’n, 210 Ariz. 30, ¶ 35, 107 P.3d
356, 364 (App. 2005).
¶14 For the foregoing reasons, we conclude Montecini owed no duty of care with
regard to the sale and service of alcohol at Famous Sam’s on the night of Kristofer’s
accident. Therefore, the trial court did not err in granting summary judgment in favor of
Montecini on that claim.
NEGLIGENT TRAINING
¶15 The Hennings argue the trial court erred in granting summary judgment on
their claim that Montecini “was negligent . . . in the hiring, training, and supervision of its
employees concerning the lawful service of intoxicating beverages and concerning
compliance with Arizona liquor laws.”6 We review de novo the trial court’s grant of
summary judgment. State v. Mabery Ranch Co., L.L.C., 216 Ariz. 233, ¶ 23, 165 P.3d 211,
217 (App. 2007).
¶16 The trial court granted Montecini’s motion on this issue because none of the
bar employees who served alcohol on the night in question were still employed by
Montecini. Most of the handful of Arizona cases that have recognized the tort of negligent
hiring, training, or supervision have done so when the tortfeasor remains a current employee
of the entity to be held liable. See, e.g., Kuehn v. Stanley, 208 Ariz. 124, ¶ 21, 91 P.3d 346,
6
The Hennings produced evidence that the pertinent bar employees had been
previously hired and trained by Montecini.
9
352 (App. 2004); Pruitt v. Pavelin, 141 Ariz. 195, 202-03, 685 P.2d 1347, 1354-55 (App.
1984); Kassman v. Busfield Enters., Inc., 131 Ariz. 163, 165, 167, 639 P.2d 353, 355, 357
(App. 1981).7
¶17 Citing McGuire v. Arizona Protection Agency, 125 Ariz. 380, 381-82, 609
P.2d 1080, 1081-82 (App. 1980), the Hennings correctly note that we have previously
recognized a former employer may in some circumstances be liable for negligent hiring.
There, a homeowner sued an alarm company after its former employee, who was “either a
wanted felon or a person with a long felony record,” returned to a home where he had
installed an alarm system, disconnected the alarm, and stole the homeowner’s possessions.
Id. at 381, 609 P.2d at 1081. In a divided opinion, this court held that, “[i]n light of the
sensitive nature of the work and the temptations and opportunity attendant thereto,
defendant owed a duty to plaintiff to employ a responsible and trustworthy person, without
criminal proclivity that could reasonably be determined, to install the alarm system.” Id. at
382, 609 P.2d at 1082.8
7
We do not find persuasive the cases the Hennings rely on from other jurisdictions.
All involve a current rather than a former employee, and in each case the employee
committed a crime or an intentional tort, not a negligent act. See, e.g., Van Horne v. Muller,
705 N.E.2d 898, 903 (Ill. 1998); Ponticas v. K.M.S. Invs., 331 N.W.2d 907, 908, 911
(Minn. 1983); Interim Pers. of Cent. Va., Inc. v. Messer, 559 S.E.2d 704, 707 (Va. 2002).
8
We note the court in McGuire appeared to base liability on a provision in the
Restatement (Second) of Torts § 302B (1965), not on Restatement (Second) of Agency
§ 213 (1958). See 125 Ariz. at 382, 609 P.2d at 1082; but see Pruitt v. Pavelin, 141 Ariz.
195, 201, 685 P.2d 1347, 1353 (App. 1984) (interpreting McGuire as recognizing cause of
action for negligent hiring).
10
¶18 However, that case is inapposite in at least one crucial respect. When the
alarm company negligently employed the felon to install security systems, it owed a duty of
care to its current customers. McGuire was a current customer of the company during the
felon’s employment and when the felon installed the alarm. Id. at 381, 609 P.2d at 1081.
Thus, the alarm company owed a duty of care to McGuire specifically when it committed
the allegedly negligent acts. Here, however, the Hennings produced no evidence that
Kristofer and Zenizo were Montecini’s customers at the time Montecini trained or supervised
the relevant bar staff and thus were among those to whom Montecini owed a duty of care.
¶19 Assuming, without deciding, that an employer may under some circumstances
have a duty to those harmed by acts of a former employee, we decline to recognize any such
duty in the context of dram shop liability. Preliminarily, our jurisprudence has repeatedly
determined the scope of a defendant’s duty to third parties with reference to the defendant’s
right to control the person, place, or instrumentality causing injury. See, e.g., Ft. Lowell-
NSS Ltd. P’ship, 166 Ariz. at 101-04, 800 P.2d at 967-70 (landowner who does not control
premises not liable for injuries on property); Ruelas v. Staff Builders Pers. Servs., Inc., 199
Ariz. 344, ¶¶ 4-5, 18 P.3d 138, 140 (App. 2001) (general employer liable for acts of lent-
employee tortfeasor only if employer had “control of the details of the particular work being
done at the time of the injury-causing incident”); Callender, 180 Ariz. at 441, 885 P.2d at
129 (entity with no control over “sale, service, furnishing or supplying of alcohol” not
subject to dram shop liability). That jurisprudence renders us reluctant to expose a former
11
employer to liability based on the actions of persons the employer no longer has any right
to train, supervise, discipline, or terminate.
¶20 Moreover, our legislature has specifically considered and limited the class of
persons who owe a duty of care in the service of alcohol. See §§ 4-301 through 4-312.
Although those provisions do not specifically address whether an employer has a duty of
care that extends to the actions of former employees, the statutes generally limit potential
liability to “a licensee or an employee of a licensee acting during the employee’s working
hours or in connection with such employment.” § 4-301; see also § 4-311 (describing
circumstances under which “licensee” liable).9 Such language suggests that our legislature
intended to limit an employer’s dram shop liability to those circumstances in which the
employer has the right and ability to control an employee’s actions—during working hours
and “in connection with . . . employment.”10 Were we to recognize a common-law duty of
care for the actions of those serving alcohol in the absence of any employment relationship
at all, we would thwart this implicit policy judgment of our legislature.
9
Those limitations of liability apply only to the “furnishing or serving of spirituous
liquor to a person of the legal drinking age.” A.R.S. § 4-301.
10
The Restatement of Torts similarly anchors the scope of an employer’s duty for the
actions of an employee to the employer’s right to control the employee. See, e.g.,
Restatement (Second) of Torts § 317 (employer liable for actions of employee outside scope
of employment when employer has (1) right to control employee’s actions, (2) right to
control instrumentality used by employee to commit tort, or (3) right to control premises
upon which employee commits tort); § 414 (person employing independent contractor liable
for tortious actions of contractor when employer retains control of any part of work and fails
to exercise reasonable care in exerting that control).
12
¶21 The hazards of imposing a duty of care on those who lack such control are
especially pronounced here. Not only did Montecini no longer employ the allegedly
culpable bar staff but, unlike the facts in McGuire, these employees had retained their
positions with a new operator of the same premises. As the new operator of the business and
holder of its liquor license, Zimbow had acquired the right and the duty to train, supervise,
and terminate the bar’s employees at the time of the incident. To hold that Montecini owed
a duty of care to the Hennings under such circumstances would mean that an employer
could never escape potential liability for the actions of a former employee. We decline to
recognize an extension of duty with such far-reaching implications for the employer-
employee relationship in the absence of any compelling judicial precedent or express
legislative encouragement for doing so.
¶22 Affirmed.
____________________________________
PETER J. ECKERSTROM, Presiding Judge
CONCURRING:
____________________________________
PHILIP E. ESPINOSA, Judge
____________________________________
GARYE L. VÁSQUEZ, Judge
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