Corbett v. Manorcare of America, Inc.

FILED BY CLERK
IN THE COURT OF APPEALS NOV 29 2006
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO
DYANE CORBETT, Personal )
Representative of the Estate of DORIS )
LOUCKS, )
)
Plaintiff/Appellant/ )
Cross-Appellee, )
)
v. ) 2 CA-CV 2005-0160
) DEPARTMENT A
MANORCARE OF AMERICA, INC.; )
MANORCARE HEALTH SERVICES, ) OPINION
INC.; and MANORCARE OF ARIZONA, )
INC., a Delaware corporation with its )
principal place of business in Ohio, dba )
MANOR CARE HEALTH SERVICES- )
TUCSON fka HCR MANOR CARE, )
INC.; MANORCARE HEALTH )
SERVICES OF ARIZONA, INC.; )
NETTIE ELIE and JOHN DOE ELIE, a )
married couple; RICHARD PARK and )
JANE DOE PARK; PAUL ORMOND )
and JANE DOE ORMOND, a married )
couple; MICHAEL MARTINEZ and )
JANE DOE MARTINEZ, a married )
couple; RICK PAREDES and JANE )
DOE PAREDES, a married couple; and )
KEITH WEIKEL and JANE DOE )
WEIKEL, a married couple, )
)
Defendants/Appellees/ )
Cross-Appellants. )
)
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY
Cause No. C20043303
Honorable Michael D. Alfred, Judge
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
Lisa Kimmel Tucson
Attorney for Plaintiff/
Appellant/Cross-Appellee
Gust Rosenfeld, P.L.C.
By James W. Kaucher Tucson
Attorneys for Defendants/
Appellees/Cross-Appellants
V Á S Q U E Z, Judge.
¶1 Appellant Dyane Corbett, personal representative of the Estate of Doris
Loucks, appeals from the trial court’s grant of summary judgment to Manor Care of America,
Inc.; Manor Care Health Services, Inc.; Manor Care of Arizona, Inc. (all corporate
subsidiaries of Manor Care, Inc.); and several employees of Manor Care, Inc. and its
subsidiaries. Corbett also appeals from the trial court’s dismissal of her complaint against
employee Richard Park and the court’s award of attorney fees to the subsidiaries and the
employees. The subsidiaries and employees cross-appeal from the trial court’s denial of
their motion for sanctions. We affirm in part and reverse in part the summary judgment and
affirm the dismissal of Corbett’s claim against Park. We vacate the attorney fee award and
affirm the denial of sanctions.
Standard of Review
¶2 We review a trial court’s grant of summary judgment de novo. Andrews v.
Blake, 205 Ariz. 236, ¶ 12, 60 P.3d 7, 11 (2003). We will affirm a summary judgment only
2
if there are no genuine issues of material fact and the moving party is entitled to judgment
as a matter of law. Id. ¶ 13. “[W]e view the facts ‘in the light most favorable to the party
against whom judgment was entered.’” Ariz. Prop. & Cas. Ins. Guar. Fund v. Martin, 210
Ariz. 478, ¶ 2, 113 P.3d 701, 701-02 (App. 2005), quoting Bothell v. Two Point Acres,
Inc., 192 Ariz. 313, ¶ 2, 965 P.2d 47, 49 (App. 1998). We review for an abuse of discretion
a trial court’s decision on a motion to dismiss a complaint for failure to timely serve a
defendant. Toy v. Katz, 192 Ariz. 73, 83, 961 P.2d 1021, 1031 (App. 1997).
Facts and Procedural Background
¶3 This appeal is from the second of two lawsuits Corbett filed on behalf of the
estate of her mother, Doris Loucks, arising from the treatment provided Loucks in a Tucson
Manor Care facility in April 2001.
Corbett I
¶4 Corbett filed her first complaint in 2002 in Pima County Superior Court
against Manor Care, Inc., alleging violations of Arizona’s Adult Protective Services Act
(APSA), A.R.S. §§ 46-451 through 46-457, as well as claims of negligence, breach of
contract, and fraud. Manor Care removed the case to federal district court in May 2002.
Corbett learned during discovery that Manor Care, Inc. was the parent company of several
subsidiaries. She amended her complaint pursuant to the parties’ stipulation in May 2003
to include the subsidiaries. The subsidiaries moved to dismiss the complaint in February
2004, alleging Corbett had not timely served them. The district court granted the motion
in April 2004 and dismissed the subsidiaries without prejudice.
3
¶5 Corbett then moved for leave to amend her complaint to include the
subsidiaries. The district court denied the motion in May 2004 after finding the amendment
would be futile because Corbett’s personal injury and APSA claims were then barred by the
statutes of limitations, a ground the court raised sua sponte. The district court denied
Corbett’s motion for reconsideration of that ruling. In September 2004, the court granted
summary judgment in favor of the parent company, Manor Care, Inc., the only remaining
defendant, after finding, inter alia, that Corbett had “pursued the incorrect defendant” by
suing the parent company instead of the subsidiaries on her APSA claim. Corbett timely
appealed that ruling to the Ninth Circuit Court of Appeals.1
Corbett II
¶6 In June 2004, while the district court case was pending, Corbett filed the
present case in Pima County Superior Court against the subsidiaries and the employees,
alleging APSA violations, breach of contract, and negligence. The subsidiaries and
employees moved for summary judgment. The subsidiaries asserted that Corbett was barred
under the doctrine of res judicata from pursuing her claims because of the district court’s
grant of summary judgment in favor of Manor Care, Inc. in Corbett I and also that Corbett
was estopped from bringing her claims because of the district court’s rulings regarding her
motion to amend her complaint. The employees argued that the doctrines of res judicata and
collateral estoppel barred Corbett from pursuing her claims because of the district court’s
rulings regarding her motion to amend her complaint. The employees also asserted that the
1
Corbett’s appeal is pending.
4
statute of limitations had run on Corbett’s negligence and breach of contract claims and that
her APSA claim was baseless because they had not been “employed to provide care” to
Loucks.
¶7 The trial court granted summary judgment in favor of the subsidiaries and
employees, finding that Corbett’s claims against the subsidiaries were barred by res judicata
and collateral estoppel, that her claims against the employees were barred by collateral
estoppel, and that her claims against the employees for negligence, breach of contract, and
the APSA violation were barred by the statutes of limitations. The trial court further found
that the employees were not liable as a matter of law on Corbett’s APSA claim because they
“were not ‘employed to provide care’” to Loucks under the statute. The court also granted
employee Richard Park’s motion to dismiss the complaint without prejudice after finding he
had not been timely served.
Discussion
Dismissal of Park
¶8 Corbett argues the trial court abused its discretion in granting Park’s motion
to dismiss on the ground she had failed to timely serve him. Corbett contended below that
she had served the complaint in July 2004 on a Manor Care, Inc. employee, believing that
the employee was authorized to accept service for all the employees who had not yet been
served, including Park. In his affidavit submitted in support of his motion to dismiss,
however, Park stated that he had not been employed by Manor Care, Inc. or “any Manor
Care entity” in July 2004 and that he had not authorized Manor Care, Inc. to accept service
5
on his behalf. Park therefore argued that he had not been timely served and the claim
against him should be dismissed pursuant to Rule 4(i), Ariz. R. Civ. P., 16 A.R.S., Pt. 1,
which provides:
If service of the summons and complaint is not made
upon a defendant within 120 days after the filing of the
complaint, the court, upon motion or on its own initiative after
notice to the plaintiff, shall dismiss the action without prejudice
as to that defendant or direct that service be effected within a
specified time; provided that if the plaintiff shows good cause
for the failure, the court shall extend the time for service for an
appropriate period.
¶9 Corbett now argues that the trial court erred in dismissing Park under this rule
because she did not have “prior notice” that Park had not been served. She contends the
trial court should have afforded her an opportunity to correct the deficiency. But Corbett
cites no authority for the proposition that she was entitled to notice that Park had not been
properly served before he filed his motion, and we are aware of none. And Rule 4(i), on its
face, warranted the trial court’s dismissal without prejudice of Corbett’s complaint against
Park. We therefore find no abuse of discretion in that ruling. See Toy v. Katz, 192 Ariz. 73,
83, 961 P.2d 1021, 1031 (App. 1997).
Summary judgment rulings
¶10 The party moving for summary judgment has the burden of showing there are
no genuine issues of material fact and it is entitled to judgment as a matter of law. Schwab
v. Ames Constr., 207 Ariz. 56, ¶ 15, 83 P.3d 56, 60 (App. 2004). We will uphold a grant
of summary judgment if it is correct for any reason. CDT, Inc. v. Addison, Roberts &
Ludwig, C.P.A., P.C., 198 Ariz. 173, ¶ 19, 7 P.3d 979, 984 (App. 2000). We review issues
6
of law, such as those involving res judicata, collateral estoppel, and statutory interpretation,
de novo. Hall v. Lalli, 194 Ariz. 54, ¶ 5, 977 P.2d 776, 779 (1999) (res judicata);
Campbell v. SZL Props., Ltd., 204 Ariz. 221, ¶ 8, 62 P.3d 966, 968 (App. 2003) (collateral
estoppel); Mercy Healthcare Ariz., Inc. v. Ariz. Health Care Cost Containment Sys., 181
Ariz. 95, 98, 887 P.2d 625, 628 (App. 1994) (statutory interpretation).
¶11 We first note Corbett does not argue on appeal concerning the summary
judgment on her breach of contract claim against the employees, which the trial court found
was barred by the statute of limitations. The employees correctly assert that she has
therefore waived any issue on that claim, and we do not address it. See Rowland v. Great
States Ins. Co., 199 Ariz. 577, n.1, 20 P.3d 1158, 1169 n.1 (App. 2001). Similarly,
although the trial court granted summary judgment in favor of the employees on Corbett’s
common law negligence claim, also on statute of limitations grounds, Corbett’s arguments
on appeal refer only to her statutory negligence claim under APSA and not to any other
negligence claim. Therefore, we do not address her common law negligence claim. See id.
A. Subsidiaries
¶12 Corbett first argues the trial court erred in finding that her APSA claim against
the subsidiaries is barred on res judicata and collateral estoppel grounds based on the district
court’s rulings in Corbett I. Because the district court rendered the prior rulings that gave
rise to those defenses, federal law governs whether those rulings have a preclusive effect.
In re Gila River Sys. Water Rights, 212 Ariz. 64, ¶ 13, 127 P.3d 882, 887 (2006); Garcia
7
v. Gen. Motors Corp., 195 Ariz. 510, ¶ 7, 990 P.2d 1069, 1072-73 (App. 1999). We note,
however, the result is the same under either federal or Arizona law.
1. Res judicata
¶13 “Under res judicata, a final judgment on the merits bars further claims by
parties or their privies based on the same cause of action.” Montana v. United States, 440
U.S. 147, 153, 99 S. Ct. 970, 973 (1979); Di Orio v. City of Scottsdale, 2 Ariz. App. 329,
331, 408 P.2d 849, 851 (1965). Corbett contends her claim is not precluded by res judicata
because Corbett I and Corbett II did not involve the same parties. The subsidiaries contend
Corbett II “meets the criteria for res judicata . . . [because it] is the same suit, based on the
same facts, with the same plaintiff” as Corbett I, in which the district court granted summary
judgment in favor of Manor Care, Inc. The subsidiaries further contend they were parties
to Corbett I.
¶14 Corbett initially amended her complaint in Corbett I following her stipulation
with Manor Care, Inc. to join the subsidiaries as defendants. However, the district court
granted the subsidiaries’ motion to dismiss the case against them without prejudice on the
ground that they had not been timely served. And the district court denied Corbett’s
subsequent motion to amend her complaint to again join the subsidiaries as defendants, as
well as her motion for reconsideration of that ruling. Thus, even though the subsidiaries had
been joined as defendants, they ceased to be parties to Corbett I once they were dismissed
and never again became parties because the court denied Corbett’s motions.
8
¶15 When the district court granted summary judgment in Corbett I, the only
parties to the action were Manor Care, Inc. and Corbett. The district court found Manor
Care, Inc. was not a proper defendant under APSA and Corbett should have sued the
subsidiaries instead. But, because the subsidiaries have not shown that Corbett I and
Corbett II involved the same parties or their privies,2 res judicata does not bar Corbett’s
claim against the subsidiaries in Corbett II.
2. Collateral estoppel
¶16 “Under collateral estoppel, once an issue is actually and necessarily
determined by a court of competent jurisdiction, that determination is conclusive in
subsequent suits.” Montana, 440 U.S. at 153, 99 S. Ct. at 973. Collateral estoppel applies
when the issue sought to be precluded is the same as that involved in the prior proceeding,
the issue was actually litigated in the prior proceeding, the issue was determined by a valid
and final judgment on the merits, and the determination was essential to the final judgment.
In re Giangrasso, 145 B.R. 319, 322 (B.A.P. 9th Cir. 1992); Garcia, 195 Ariz. 510, ¶ 9,
990 P.2d at 1073 (noting state elements of collateral estoppel virtually identical to federal).
¶17 The subsidiaries argue Corbett is estopped from litigating in Corbett II the
issue of whether her APSA claim is timely because the district court denied Corbett’s motion
to amend the complaint and her motion for reconsideration in Corbett I on statute of
limitations grounds. They contend these district court rulings constitute a valid and final
judgment on the merits for purposes of collateral estoppel. In contrast, Corbett argues that
2
The subsidiaries do not assert they are privies of Manor Care, Inc.
9
“[t]he underlying merits of this case have never been adjudicated.” Assuming, without
deciding, that rulings based on statute of limitations grounds are to be given issue-preclusive
effect, 3 we agree with Corbett’s alternate argument that collateral estoppel cannot apply
because the statute of limitations issue was not fully and “actually litigated.”4
¶18 For collateral estoppel to bar a party from litigating an issue, the issue must
have been actually litigated. Giangrasso, 145 B.R. at 322; Garcia, 195 Ariz. 510, ¶ 9, 990
P.2d at 1073. This requirement means that preclusion is inappropriate if the parties did not
raise the issue in the pleadings, Gospel Missions of America v. City of Los Angeles, 328
F.3d 548, 553 (9th Cir. 2003), and thus, did not have “a full and fair opportunity to litigate
the merits of an issue,” Littlejohn v. United States, 321 F.3d 915, 923 (9th Cir. 2003). See
also Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986).
“Redetermination of issues is warranted if there is reason to doubt the quality, extensiveness,
or fairness of procedures followed in prior litigation.” Montana, 440 U.S. at 164 n.11, 99
S. Ct. at 979 n.11; see also State ex rel. Dep’t of Econ. Sec. v. Powers, 184 Ariz. 235, 237,
908 P.2d 49, 51 (App. 1995).
3
Compare Martin v. United States, 30 Fed. Cl. 542, 549 (1994) (finding elements
of issue preclusion had been met, including necessity of “judgment on the merits,” when
action dismissed on statute of limitations grounds), with Cepeda v. Coughlin, 785 F. Supp.
385, 388-89 (S.D.N.Y. 1992) (concluding that, although statute of limitations dismissals
have claim-preclusive effect in New York, they do not have issue-preclusive effect).
Corbett did not make this argument in her response to the subsidiaries’ motion for
4
summary judgment. However, she did argue it in her motion to vacate the judgment pursuant
to Rule 59(a), Ariz. R. Civ. P., 16 A.R.S., Pt. 2. Thus, she preserved this argument for
appeal. See United Bank of Ariz. v. Allyn, 167 Ariz. 191, 197, 805 P.2d 1012, 1018 (App.
1990).
10
¶19 As noted above in ¶ 5, the statute of limitations issue was first raised by the
district court in denying Corbett’s motion to amend her complaint in Corbett I, when the
district court found that her APSA claim was barred by the two-year statute of limitations
then in effect, making any amendment futile. See A.R.S. § 46-455(K). The district court
reasoned that, because Corbett had filed her motion to amend the complaint more than two
years after her cause of action had accrued in April 2001, her claim was time barred. See
id. APSA had originally contained a seven-year statute of limitations, see former § 46-
455(I), but the legislature amended the statute while Corbett I was pending, effective
September 18, 2003, reducing the time for bringing claims from seven years to two years
after the plaintiff actually discovers the cause of action. 2003 Ariz. Sess. Laws, ch. 129, §
2; § 46-455(K).
¶20 After the district court’s ruling denying her motion to amend her complaint in
Corbett I, Corbett filed a motion urging the court to reconsider its denial of the proposed
amendment, relying on A.R.S. § 12-505(C). That statute provides:
If an amendment of pre-existing law shortens the time of
limitation fixed in the pre-existing law so that an action under
pre-existing law would be barred when the amendment takes
effect, such action may be brought within one year from the
time the new law takes effect, and not afterward.
In her motion, Corbett argued that, pursuant to § 12-505(C), she had until September 18,
2004, one year after the date the statutory amendment took effect, to amend her complaint
to include the subsidiaries. In denying her motion for reconsideration, the district court
relied on this court’s decision in City of Tucson v. Clear Channel Outdoor, Inc., 206 Ariz.
11
335, n.5, 78 P.3d 1056, 1059 n.5 (App. 2003). We stated in Clear Channel that § 12-
505(C) “does not apply . . . when ‘an action is not barred by pre-existing law.’” 206 Ariz.
335, n.5, 78 P.3d at 1059 n.5, quoting § 12-505(B). The district court reasoned that,
because the amended statute became effective on September 18, 2003, and the subsidiaries
had not been dismissed until April 14, 2004, her action was not time barred when the
amendment took effect. Thus, the district court concluded, Corbett’s claim against the
subsidiaries “[was] not saved by § 12-505(C).”
¶21 Our supreme court subsequently vacated our Clear Channel decision. City
of Tucson v. Clear Channel Outdoor, Inc., 209 Ariz. 544, ¶ 44, 105 P.3d 1163, 1174
(2005). In April 2005, Corbett filed a motion in the district court pursuant to Rule 60(b),
Fed. R. Civ. P., arguing the supreme court’s Clear Channel decision constituted “an
intervening change in the controlling law” that required reconsideration of the district
court’s grant of summary judgment in favor of defendant Manor Care, Inc. The district court
denied the motion, stating Corbett’s notice of appeal, filed in October 2004, had divested
it of jurisdiction to consider her motion. See Katzir’s Floor & Home Design, Inc. v. M-
MLS.com, 394 F.3d 1143, 1148 (9th Cir. 2004) (“The district court lacked jurisdiction to
entertain the Rule 60(b) motion, which was filed after the notice of appeal had been filed,
thereby stripping the district court of its jurisdiction.”).
¶22 From this procedural history, we find Corbett did not have a full and fair
opportunity to litigate the issue of the amended statute of limitations on her APSA claim.
First, the applicability of the statute of limitations was raised sua sponte by the district court
12
in the first instance rather than by the parties. Second, Corbett was unable to litigate the
effect of the supreme court’s Clear Channel decision on the applicability of the amended
statute because the district court ruled that it lacked jurisdiction to consider her argument.
Thus, Corbett’s opportunity to litigate the applicability of the amended statute of limitations
was limited, and applying collateral estoppel to bar actual, future litigation on that issue
would therefore be inappropriate. See, e.g., Littlejohn, 321 F.3d at 923 (finding issue
preclusion inappropriate when party did not have “the opportunity to fully litigate” issue in
prior proceeding); see also Gospel Missions, 328 F.3d at 553 (finding issue preclusion
inappropriate when basis for decision “neither framed in the pleadings nor contested by the
parties” in prior proceeding); Powers, 184 Ariz. at 237, 908 P.2d at 51 (finding issue
preclusion inappropriate because pertinent issue not actually litigated in prior proceeding).
¶23 Furthermore, we agree with Corbett’s other argument that, regardless of
whether the elements of collateral estoppel are present, she should not be precluded from
litigating the issue of whether her APSA claim is timely because of the supreme court’s
Clear Channel decision. Corbett cites the Restatement (Second) of Judgments § 28 (1982),5
which states:
Although an issue is actually litigated and determined by a valid
and final judgment, and the determination is essential to the
5
We recognize that, in her response to the subsidiaries’ motion for summary judgment
in the trial court, Corbett did not specifically mention the Restatement (Second) of
Judgments § 28 in arguing that she should not be estopped from pursuing her APSA claim
in Corbett II. But she did argue that, in denying her motion for reconsideration, the district
court had relied on case law that had subsequently been overturned. Thus, because she
identified and argued the central issue, we address her argument.
13
judgment, relitigation of the issue in a subsequent action
between the parties is not precluded in the following
circumstances:
....
(2) The issue is one of law and . . . (b) a new determination is
warranted in order to take account of an intervening change in
the applicable legal context or otherwise to avoid inequitable
administration of the laws . . . .
¶24 The United States Supreme Court has stated that collateral estoppel may not
apply in certain situations, such as when “controlling facts or legal principles have changed
significantly since the [prior] judgment.” Montana, 440 U.S. at 155, 99 S. Ct. at 974-75;
see also State v. Whelan, 208 Ariz. 168, ¶ 16, 91 P.3d 1011, 1016 (App. 2004) (applying
Restatement § 28 exception in Arizona). Although a misapplication of the law does not
trigger the applicability of the exception to collateral estoppel, an intervening change in the
law will. Richey v. United States Internal Revenue Serv., 9 F.3d 1407, 1412 (9th Cir.
1993). Corbett argues that the supreme court’s Clear Channel decision is such an
intervening change in the law, requiring a redetermination of the issue of the applicability
of APSA’s amended statute of limitations after the parties have had a full and fair
opportunity to litigate it.
¶25 In its Clear Channel decision, the supreme court addressed the footnote in this
court’s Clear Channel opinion on which the district court relied in denying Corbett’s
motion for reconsideration. The supreme court disagreed with our conclusion that § 12-
505(C) does not apply when an action is not barred by pre-existing law. Clear Channel,
209 Ariz. 544, ¶ 33, 105 P.3d at 1171. Rather, the court concluded that § 12-505(C)
14
“covers those cases in which the cause of action is not barred by pre-existing law, but when
application of the new statute of limitations would bar the claim.” 209 Ariz. 544, ¶ 35, 105
P.3d at 1172. In other words, the supreme court interpreted § 12-505(C) as follows: “If a
claim would have been timely filed under the old law but not the new, under [§ 12-505(C),]
the plaintiff has one year from the effective date of the new law to file suit.” 209 Ariz. 544,
¶ 42, 105 P.3d at 1173. Corbett sought to amend her Corbett I complaint to include the
subsidiaries in April 2004, which would have been timely under the former seven-year
limitation period for APSA claims. Thus, under our supreme court’s decision in Clear
Channel, she had until September 18, 2004, one year from the effective date of the new
limitation period, to amend her complaint.
¶26 Accordingly, we agree with Corbett that there has been an intervening change
in the law sufficient to trigger the exception to collateral estoppel in Restatement § 28 and
discussed by the Supreme Court in Montana. In this case, our supreme court overturned the
very portion of this court’s Clear Channel decision upon which the district court relied.
Our supreme court’s Clear Channel decision thus constituted such an intervening change
in the law. See, e.g., Segal v. Am. Tel. & Tel. Co., 606 F.2d 842, 845 (9th Cir. 1979)
(“Issue preclusion does not compel reapplication of a remedy since held erroneous as a
matter of law.”); see also Whelan, 208 Ariz. 168, ¶ 16, 91 P.3d at 1016 (appellate court
decision issued after dismissal without prejudice in criminal case constituted intervening
change in law that prevented state from being collaterally estopped from refiling charges).
15
¶27 In sum, we conclude that at least one of the elements necessary for collateral
estoppel is not present here because Corbett did not have a full and fair opportunity to
litigate the applicability of the amended statute of limitations. And, even assuming the
elements of collateral estoppel are present, we further conclude that the Restatement §
28(2)(b) exception for an intervening change in the law applies. Thus, Corbett is not
estopped from litigating in Corbett II the issue of whether her APSA claim against the
subsidiaries is timely.6
B. Employees
¶28 Corbett next argues the trial court erred in granting summary judgment to the
employees on her APSA claim. The court found that Corbett was “collaterally estopped
from relitigating her claims arising from” Loucks’s stay at the Tucson facility because of the
district court’s rulings denying Corbett’s motion to amend her complaint, that the statute of
limitations had expired on all Corbett’s claims, and that the employees were not subject to
liability under APSA because they were not “employed to provide care” to Loucks. The
employees argue on appeal, as they did below, that Corbett’s APSA claim is also barred by
res judicata because of the district court’s rulings denying Corbett’s motion to amend her
complaint.7
6
Because the issue was not raised or argued below or on appeal, we do not address
which, if any, of the subsidiaries would potentially be subject to liability under APSA based
on whether it owned or operated the Tucson facility.
7
The trial court did not address this argument.
16
1. Collateral estoppel
¶29 We first consider Corbett’s argument that the trial court incorrectly determined
she is collaterally estopped from litigating the issue of whether her APSA claim against the
employees was timely. The employees argue that, “to the extent that Corbett II involves the
same issues litigated and decided in Corbett I, the [employees] are entitled to assert
collateral estoppel as a complete defense.” However, as we concluded above, even if the
elements of collateral estoppel are met, the intervening change in the law exception applies
in this case. The district court’s ruling denying Corbett’s motion for reconsideration of its
denial of her motion to amend her complaint was based on that part of our Clear Channel
decision that has since been overturned by our supreme court. Thus, Corbett is not estopped
from litigating in Corbett II the issue of whether her APSA claim against the employees is
timely.
2. Statute of limitations
¶30 Corbett argues the trial court erred in finding that the statute of limitations had
expired on her APSA claim.8 There is no dispute that Corbett’s cause of action accrued in
April 2001. At that time, she had seven years to file her complaint. As discussed above,
after the limitation period was reduced by the 2003 amendment of § 46-455, under § 12-
505(C), Corbett had until September 18, 2004, one year from the effective date of the
amendment to file her complaint. Corbett filed her complaint in Corbett II in June 2004,
8
The trial court raised this ground sua sponte because the employees had argued the
statute of limitations barred Corbett’s APSA claim in their motion for summary judgment
only in the context of their res judicata argument.
17
well within that one-year period. See City of Tucson v. Clear Channel Outdoor, Inc., 209
Ariz. 544, ¶ 42, 105 P.3d 1163, 1173 (2005). Therefore, this action was timely as a matter
of law, and the trial court erred in granting summary judgment on this ground.9
3. Applicability of APSA
¶31 Corbett next asserts that the trial court erred in granting summary judgment
to the employees on the ground they “were not ‘employed to provide care’ to Doris Loucks”
under APSA. As she did below, Corbett argues the employees violated A.R.S. § 46-455(B).
That statute provides that an APSA claim may be brought against “any person or enterprise
that has been employed to provide care” or that “has assumed a legal duty to provide care
. . . to [an] incapacitated or vulnerable adult for having caused or permitted” the abuse,
neglect, or exploitation of the adult.10
¶32 The employees assert that the statute requires a direct caregiver-patient
relationship for a duty to arise. The employees rely on Estate of McGill v. Albrecht, 203
Ariz. 525, 57 P.3d 384 (2002), arguing that, because “liability under APSA arises from the
relationship between a vulnerable adult and her care provider,” they cannot be liable under
APSA. They rely on the following language in McGill:
9
Given our conclusion, we need not consider Corbett’s contention that her action
would have been saved by A.R.S. § 12-504(A). We likewise need not address the
subsidiaries’ counterargument that Corbett’s contention constitutes an “improper attempt
at a horizontal appeal.”
10
The statute does limit the liability of certain health care providers, but the
employees do not argue that this limitation applies to any of them. See A.R.S. § 46-455(B),
(C).
18
We hold . . . that to be actionable abuse under APSA, the
negligent act or acts (1) must arise from the relationship of
caregiver and recipient, (2) must be closely connected to that
relationship, (3) must be linked to the service the caregiver
undertook because of the recipient’s incapacity, and (4) must be
related to the problem . . . that caused the incapacity.
Id. ¶ 16.
¶33 However, the employees’ reliance on McGill for their proposition that APSA
requires a direct caregiver-patient relationship is misplaced. The primary issues in McGill
were whether a single negligent act triggered liability under APSA and whether the
legislature intended the remedies of the Medical Malpractice Act and APSA to be mutually
exclusive. 203 Ariz. 525, ¶¶ 10, 18, 57 P.3d at 387-89. In applying the above quoted
language to the facts of the case before it, the court in McGill found that the allegedly
negligent acts did arise from and were closely connected to the relationship between the
caregiver and patient. Id. ¶ 24. But, contrary to the employees’ assertion, McGill does not
require a direct caregiver-patient relationship for liability to arise under APSA.
¶34 Our interpretation of APSA leads us to a different conclusion from that urged
by the employees and apparently adopted by the trial court. Our goal when interpreting
statutes is to give effect to the legislative intent. See Mercy Healthcare Ariz., Inc. v. Ariz.
Health Care Cost Containment Sys., 181 Ariz. 95, 98, 887 P.2d 625, 628 (App. 1994).
Our supreme court has stated: “The legislature’s intent and the policy behind the elder
abuse statute are clear. Arizona has a substantial population of elderly people, and the
legislature was concerned about elder abuse.” In re Guardianship/Conservatorship of
Denton, 190 Ariz. 152, 156, 945 P.2d 1283, 1287 (1997); see also McGill, 203 Ariz. 525,
19
¶ 6, 57 P.3d at 387 (“[T]he statute was intended to increase the remedies available to and
for elderly people who had been harmed by their caregivers.”); Davis v. Zlatos, 211 Ariz.
519, ¶ 19, 123 P.3d 1156, 1161 (App. 2005). Our interpretation of the statute must be
consistent with this legislative intent.
¶35 And “statutory language controls our interpretation when the language is clear
and unequivocal.” Mercy Healthcare, 181 Ariz. at 98, 887 P.2d at 628. Moreover, we give
meaning to each word or phrase in a statute so none is rendered insignificant, contradictory,
superfluous, or void. Weitekamp v. Fireman’s Fund Ins. Co., 147 Ariz. 274, 275, 709 P.2d
908, 909 (App. 1985). Under the plain wording of the statute, an incapacitated or
vulnerable adult can bring a lawsuit against “any person or enterprise” that “has been
employed to provide care” or that “has assumed a legal duty to provide care” if the person
or enterprise has “caused or permitted” the incapacitated or vulnerable adult to be abused,
neglected, or exploited. § 46-455(B).
¶36 Following the principles of statutory interpretation set out above, we find that
the legislature did not intend to limit liability to those who have a direct caregiver-patient
relationship with an incapacitated or vulnerable adult. The statute subjects to liability both
persons and enterprises, not just individuals. Furthermore, the statute subjects to liability
those who cause or permit the abuse, neglect, or exploitation of an incapacitated or
vulnerable adult. § 46-455(B). Thus, the statute applies to a broader class of tortfeasors
than the trial court implicitly found.
20
¶37 However, defendants Ormond, Parades, Weikel, and Martinez contend they
are not subject to liability under APSA because they were employees of the parent company,
Manor Care, Inc. and “were not even in the State of Arizona at the time of Loucks’s stay at
the facility.” Corbett does not dispute this contention. She also does not dispute their
further contention that they never “met, spoke to, or had any personal contact with Ms.
Loucks” and that “they had no personal knowledge of her condition, her care, or her
treatment while she was a patient” at the facility. Therefore, the trial court correctly granted
summary judgment to these employees on the ground they were not employed to provide
care to Loucks. Given that these employees were not employed by any of the subsidiaries
and that they had no knowledge of Loucks and were not involved with her care, we find no
error in the trial court’s entry of judgment in their favor.
¶38 The same cannot be said about defendant Elie, who was employed as the
director of nursing at the Tucson facility at the time Loucks was there. According to an
uncontroverted affidavit by the vice president of Manor Care, Inc., employees of the Tucson
facility are not employees of Manor Care, Inc. According to Elie’s deposition, which
Corbett submitted in support of her opposition to the motion for summary judgment, Elie
was not present at the facility when Loucks was admitted on April 10, 2001, but she became
aware of Loucks’s presence there on April 16, when she returned to work after a two-week
vacation. Elie also stated that, as director of nursing, she was responsible for managing the
daily operations of the department of nursing services at the Tucson facility, which included
overseeing patient care and staff education, “helping to direct . . . the clinical aspects of
21
resident care,” managing the staff, and ensuring that federal and state regulations were
followed.
¶39 Corbett’s APSA claim was based, in part, on her assertion that the employees
had violated APSA by permitting Loucks to be abused and neglected by other employees.
Based on Elie’s deposition, and given our construction of the statute as not requiring a direct
caregiver-patient relationship, we conclude that Elie did not meet her burden of showing
that no genuine issue of material fact exists on whether she was employed to provide care
to Loucks and that she is not entitled to judgment as a matter of law on that claim.11 See
Schwab v. Ames Constr., 207 Ariz. 56, ¶ 15, 83 P.3d 56, 60 (App. 2004). Accordingly, the
trial court erred in granting summary judgment to Elie on that ground.
4. Res judicata
¶40 We next consider whether the doctrine of res judicata bars Corbett’s APSA
claim against Elie because of the district court’s rulings regarding the statute of limitations.
As discussed above, res judicata bars a second action between the same parties or their
privies based on the same claim once a judgment on the merits has been entered in a prior
proceeding. Montana v. United States, 440 U.S. 147, 153, 99 S. Ct. 970, 973 (1979); Di
Orio v. City of Scottsdale, 2 Ariz. App. 329, 331, 408 P.2d 849, 851 (1965). Elie concedes
she was not a party to Corbett I. But she nonetheless contends the district court’s rulings
on the statute of limitations preclude Corbett’s claim against her as a privy of the subsidiaries
11
Our decision here does not preclude Elie from filing another motion for summary
judgment as the case develops.
22
because of their principal-agent relationship. See Scottsdale Mem’l Health Sys., Inc. v.
Clark, 157 Ariz. 461, 466, 759 P.2d 607, 612 (1988) (“[T]he preclusive effect of a judgment
is limited to parties and persons in privity with parties.”); see also Daystar Invs., L.L.C. v.
Maricopa County Treasurer, 207 Ariz. 569, ¶ 15, 88 P.3d 1181, 1185 (App. 2004).
Examples of persons in privity include employers and employees, principals and agents, and
indemnitors and indemnitees. See Aldrich & Steinberger v. Martin, 172 Ariz. 445, 448-49,
837 P.2d 1180, 1183-84 (App. 1992).
¶41 As an employee of one of the subsidiaries, Elie is in privity with her subsidiary
employer, and Corbett does not dispute this. However, as we have noted above, all the
subsidiaries had been dismissed from Corbett I and were no longer parties to that action at
the time of the rulings from which Elie now seeks to benefit. Specifically, because the
district court denied Corbett’s motion to amend the complaint, the subsidiaries were never
again parties to that action after being dismissed. Thus, because the “party” with whom Elie
claims privity was not a party when the rulings at issue in the prior proceeding were
rendered, an essential element of res judicata has not been met. Therefore, Corbett’s APSA
claim against Elie is not barred under the doctrine of res judicata.
Attorney Fees
¶42 Lastly, Corbett contends insufficient evidence supports the trial court’s award
of attorney fees to the subsidiaries and the employees. The trial court awarded attorney fees
under A.R.S. § 12-349(A) and Rule 11(a), Ariz. R. Civ. P., 16 A.R.S., Pt. 1. At oral
argument in this court, the subsidiaries and the employees abandoned their argument that
23
they were entitled to fees under § 12-349(A). Therefore, we address only the propriety of
the award of fees as a Rule 11 sanction. Rule 11 permits sanctions on an attorney or party
who files a claim or defense that is groundless or brought for an improper purpose. The
sanction may include an order to pay the other party’s attorney fees. We review a trial
court’s imposition of Rule 11 sanctions for an abuse of discretion. Linder v. Brown &
Herrick, 189 Ariz. 398, 407, 943 P.2d 758, 767 (App. 1997).
¶43 In view of our reversal of summary judgment on Corbett’s APSA claim against
the subsidiaries and Elie, insufficient evidence supports the award of fees as a Rule 11
sanction.12 The trial court may, however, revisit the issue of attorney fees when the trial
court proceedings have concluded. See Johnson v. McDonald, 197 Ariz. 155, ¶ 30, 3 P.3d
1075, 1082 (App. 1999).
Cross-Appeal
¶44 Following the trial court’s entry of summary judgment and award of attorney
fees to the subsidiaries and employees, they moved for sanctions, presumably under Rule
11, against Corbett “in her personal capacity” and against her attorney to have them held
personally responsible for paying the fees. The trial court assessed fees against the estate as
the plaintiff but denied the motion for sanctions. The subsidiaries and employees cross-
appeal from that denial.
12
See Wells Fargo Credit Corp. v. Smith, 166 Ariz. 489, 497, 803 P.2d 900, 908
(App. 1990) (finding on appeal that trial court improperly granted summary judgment
indicates claim or defense not frivolous).
24
¶45 But, because we have concluded the trial court’s award of attorney fees as a
Rule 11 sanction was inappropriate against the estate, it follows that we find no abuse of
discretion in the trial court’s denial of the subsidiaries and employees’ motion to sanction
Corbett and her attorney personally.
Disposition
¶46 We affirm the trial court’s dismissal of Richard Park. We affirm the trial
court’s grant of summary judgment on Corbett’s negligence and breach of contract claims.
Because genuine issues of material fact exist on whether the subsidiaries and Elie are subject
to liability under APSA, we reverse the summary judgment in their favor on that claim and
remand the case for further proceedings. The judgment in favor of the remaining employees
is affirmed.
¶47 The trial court’s award of attorney fees is vacated. The trial court’s denial of
sanctions is affirmed. We deny the subsidiaries and employees’ request for attorney fees on
appeal.
____________________________________
GARYE L. VÁSQUEZ, Judge
CONCURRING:
____________________________________
JOHN PELANDER, Chief Judge
25
____________________________________
JOSEPH W. HOWARD, Presiding Judge
26