Opinion
2 CA-CV 2022-0081
02-16-2023
Samayra Estrada, Plaintiff/Appellant, v. John Nguyen; Sunny Nguyen; Advantage Insurance PLLC; NFP Insurance Services, Inc., a Texas corporation dba NFP Property &Casualty Services, Defendants/Appellees.
Ahwatukee Legal Office P.C., Phoenix By David L. Abney Counsel for Appellant Law Offices of John Aguirre APC, Phoenix By John Aguirre and Davis Miles McGuire Gardner PLLC, Tempe By Steven E. Weinberger, Michael E. Medina, Jr., and Kyle B. Sherman Counsel for Plaintiff/Appellant Hassett Glasser P.C., Phoenix By Myles P. Hassett, Jamie A. Glasser, and David R. Seidman Counsel for Defendant/Appellee NFP Insurance Services, Inc. Righi Fitch Law Group By Richard L. Righi and Benjamin L. Hodgson Counsel for Defendants/Appellees John Nguyen, Sunny Nguyen, and Advantage Insurance PLLC
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2018002223 The Honorable Daniel G. Martin, Judge.
Ahwatukee Legal Office P.C., Phoenix
By David L. Abney
Counsel for Appellant
Law Offices of John Aguirre APC, Phoenix By John Aguirre
and
Davis Miles McGuire Gardner PLLC, Tempe
By Steven E. Weinberger, Michael E. Medina, Jr., and Kyle B. Sherman
Counsel for Plaintiff/Appellant
Hassett Glasser P.C., Phoenix
By Myles P. Hassett, Jamie A. Glasser, and David R. Seidman
Counsel for Defendant/Appellee NFP Insurance Services, Inc.
Righi Fitch Law Group
By Richard L. Righi and Benjamin L. Hodgson
Counsel for Defendants/Appellees John Nguyen, Sunny Nguyen, and Advantage Insurance PLLC
Vice Chief Judge Staring authored the decision of the Court, in which Judge Eppich concurred and Presiding Judge Brearcliffe dissented.
MEMORANDUM DECISION
STARING, Vice Chief Judge.
¶1 Samayra Estrada appeals from the trial court's grant of summary judgment in favor of NFP Insurance Services, Inc., Advantage Insurance PLLC, John Nguyen, and Sunny Nguyen (collectively, "NFP") in a negligence action predicated on a theory of vicarious liability. She also challenges the court's denial of her motion to extend disclosure and discovery deadlines, as well as its denial of her motion for new trial. For the following reasons, we vacate the judgment and remand for further proceedings.
NFP Insurance Services, Inc. initially cross-claimed against the Nguyens and Advantage below, but following the trial court's grant of NFP Insurance Services, Inc.'s motion for summary judgment, in which the Nguyens and Advantage joined, the parties stipulated to stay the cross-claim. On appeal, the Nguyens and Advantage join in NFP Insurance Services, Inc.'s answering brief.
Factual and Procedural Background
¶2In October 2014, Phuthrida Fite was driving to begin her dinner shift at Thai Basil, a restaurant where she worked as a server and in which she owned a minority interest, when she struck and injured Estrada, a pedestrian. Estrada initially filed a negligence action against Fite, her husband, and several businesses they owned, including Sara Sha, LLC dba Thai Basil. Estrada alleged that, at the time of the accident, Fite had been acting as "an agent and/or employee" of the restaurants owned by the Fites and had been tasked "to pick up food and other goods to be used in" those restaurants. Further, she asserted Fite had been "in the process of delivering food and other goods to the various restaurants" while "driving her personal vehicle on company business and in the course and scope of her employment." Thus, Estrada argued, the Fites' businesses, including Thai Basil, were vicariously liable for Fite's negligence in failing "to maintain a proper lookout for pedestrians" and "to control her vehicle in a way which avoided collisions."
¶3 The Fites were insured under a personal automobile insurance policy with a $100,000 per person limit, and their insurance company retained attorney Benjamin Thomas to represent them against Estrada's claims. In 2016, during the course of such representation, Thomas wrote a letter to NFP Insurance Services, Inc., the insurance agency under which John Nguyen and his company, Advantage Insurance PLLC, had assisted Thai Basil in purchasing business insurance, inquiring whether coverage for the accident was available under Thai Basil's business policy. In the letter, Thomas wrote: "Ms. Fite is a part owner in the insured restaurant and was on her way to the restaurant at the time of the accident to deliver restaurant supplies which she had just picked up at a restaurant supply store. As such, she was performing a function on behalf of the restaurant at the time of the accident." Estrada's attorney at the time, John Aguirre, was copied on the letter. Thai Basil's commercial insurer denied coverage.
¶4 The Fites subsequently entered into a settlement agreement with Estrada under the terms of which the Fites' personal automobile insurer was to pay Estrada the $100,000 policy limit; the Fites and their businesses assigned to Estrada any claims they may have had against NFP arising out of the collision; the parties stipulated to judgment in the amount of $5,000,000; and Estrada agreed not to execute on the judgment and to release the Fites and their businesses from further liability. The agreement stated the Fites "admit[] liability and responsibility for some of the Estrada damages caused by their neglect."
¶5 In March 2018, Estrada commenced this action against NFP, alleging it had "negligently failed to secure automobile insurance coverage" for Thai Basil, thereby exposing the Fites to "personal liability in connection with any loss or damage arising out of the ownership, use, or operation of their motor vehicles in connection with their business operations." Estrada sought $5,000,000 in damages, representing her stipulated judgment against the Fites. Because her claim against NFP was based on Thai Basil's vicarious liability for Fite's conduct at the time of the accident, Estrada again asserted Fite had caused her injuries while "driving a vehicle in the course and scope of her employment" with Thai Basil.
Estrada initially brought her claim in the names of the Fites, Sara Sha, LLC, and The Gold 9, LLC, but later amended her complaint to substitute only herself as the plaintiff.
¶6 At a deposition in December 2019, Fite testified that at the time of the accident, she had been "coming from I-10, coming down, because [she] ha[d] to work that night, the dinner shift" at Thai Basil. When asked where she had been coming from, she testified, "I come from-I couldn't remember that day. I think I do real estate, real estate, the customer. And then after that I just come to fulfill for the dinner, the dinner shift." She later confirmed she had been traveling to Thai Basil "from an event for [her] real estate, [her] separate real estate business" at the time of the accident. Estrada's counsel did not attempt to impeach Fite's deposition testimony with Thomas's 2016 letter. NFP subsequently supplemented its disclosure statement to include the following description of its legal basis of defense: "[T]o show that NFP caused damages, Plaintiff must show that Sara Sha and any other businesses implicated by Plaintiff were legally responsible for causing the subject accident. Plaintiff cannot do so because she cannot show that Mrs. Fite was acting in the course and scope of her employment with Sara Sha or any of the other businesses implicated in this lawsuit."
¶7 In August 2020, NFP moved for summary judgment, alleging Fite had not been "in the course and scope of her employment with Thai Basil at the time of the accident." In support of this assertion, NFP pointed to Fite's deposition testimony that she had been traveling to Thai Basil from a real estate event. NFP argued that because Fite had merely been driving to work, "commercial automobile coverage for Thai Basil would not have applied to [her] allegedly negligent driving." Thus, it urged, Estrada could not "prevail on her claim that NFP caused Thai Basil damages by not selling it such a policy."
¶8 Estrada opposed NFP's motion, arguing genuine issues of material fact existed as to whether Fite had been "in the course and scope of her employment at the time that she struck and injured" Estrada. In support of her argument, she pointed to three exhibits: 1) the settlement agreement in which the Fites had admitted liability and fault; 2) Thomas's 2016 letter stating that Fite "was on her way to the restaurant at the time of the accident to deliver restaurant supplies which she had just picked up at a restaurant supply store"; and 3) Thomas's 2020 affidavit quoting the statements made in his 2016 letter and averring that Fite had "repeated and confirmed" those statements at a subsequent meeting. Estrada asserted Thomas's letter and affidavit contradicted Fite's deposition testimony, thereby preventing the trial court from entering summary judgment in favor of NFP.
¶9 After briefing on NFP's motion for summary judgment had been completed, Estrada moved to stay the trial court's ruling on the pending motion, requested relief pursuant to Rule 56(d), Ariz. R. Civ. P., and asked the court to extend the disclosure and discovery deadlines pursuant to Rule 37(c), Ariz. R. Civ. P., to allow her to name and depose Thomas. In her Rule 56(d) and 37(c) motions, Estrada asserted Fite's statements, as described in the exhibits accompanying her response to NFP's motion for summary judgment, were admissible as prior statements inconsistent with Fite's deposition testimony. The court denied her request for relief under Rule 56(d) as untimely but deferred ruling on her motion to extend disclosure and discovery deadlines until oral argument on NFP's motion for summary judgment.
¶10 In February 2021, following oral argument, the trial court granted NFP's motion for summary judgment, reasoning that, based on Fite's sworn deposition testimony, NFP had "established by admissible evidence . . . that . . . Fite was not acting within the course and scope of her employment on the day of the accident." The court continued:
Estrada, on the other hand, relies on hearsay (the May 16, 2016 letter and the Thomas Affidavit), and a document (the [settlement] agreement) (also hearsay) from a different case to which NFP was not a party and which does not contain within it any statements as to conduct that would establish that Ms. Fite was acting within the course and scope of her employment on the day of the accident.
¶11 In denying Estrada's motion to extend disclosure and discovery deadlines, the trial court stated her "suggestion that she should be allowed to collect additional, admissible evidence after NFP pointed out that she had none is contrary to Rule 56, which requires such requests to be submitted prior to the filing of a response." It also noted that Estrada's attorney had been "present at . . . Fite's deposition and chose not to examine her on the testimony elicited by defense counsel that she was not acting within the course and scope of her employment on the day of the accident."
Although we do not reach Estrada's argument that the trial court erred in denying her motion to extend disclosure and discovery deadlines or her apparent suggestion that it erred in denying her motion for relief pursuant to Rule 56(d), we note that her attachment of the transcript of the December 2020 hearing on the Rule 56(d) motion to her opening brief does not satisfy the requirements of Rule 11(b) and (c), Ariz. R. Civ. App. P. Estrada bore the responsibility of ordering certified "transcripts of superior court proceedings not already in the official record" that she "deem[ed] necessary for proper consideration of the issues on appeal." Ariz. R. Civ. App. P. 11(b)(1), (c)(1)(A); see In re Property at 6757 S. Burcham Ave., 204 Ariz. 401, ¶ 11 (App. 2003) (discussing former version of Rule 11(c)(1)(A)). We will not consider transcripts attached to the opening brief. See 6757 S. Burcham Ave., 204 Ariz. 401, ¶ 11.
¶12 Estrada subsequently filed a motion for new trial, which the trial court denied. This appeal followed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1), (5)(a).
Discussion
¶13 Estrada challenges the trial court's grant of summary judgment in favor of NFP based on its conclusion that the evidence she presented in opposition to NFP's motion constituted inadmissible hearsay and that she therefore failed to establish a genuine issue of material fact as to Thai Basil's liability for Fite's conduct at the time of the accident. According to Estrada, at the time of the accident, "in addition to traveling to the restaurant to start her work shift, [Fite] was also delivering supplies that she had picked up from the restaurant supply store." We review the court's grant of summary judgment de novo, BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363, ¶ 7 (2015), construing the facts and all reasonable inferences therefrom in the light most favorable to Estrada, see Engler v. Gulf Interstate Eng'g, Inc., 230 Ariz. 55, ¶ 8 (2012). We review the court's rulings regarding the admissibility of evidence in summary judgment proceedings for an abuse of discretion. Mohave Elec. Coop., Inc. v. Byers, 189 Ariz. 292, 301 (App. 1997). "A court abuses its discretion if it commits legal error in reaching a discretionary conclusion, or if the record lacks substantial evidence to support its ruling." Tritschler v. Allstate Ins. Co., 213 Ariz. 505, ¶ 41 (App. 2006).
¶14 Summary judgment is proper when "the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). Accordingly, a party moving for summary judgment "must come forward with evidence it believes demonstrates the absence of a genuine issue of material fact and must explain why summary judgment should be entered in its favor." Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 14 (App. 2008). Where the burden of proof on the claim or defense at trial rests on the non-moving party, the party moving for summary judgment need not "present evidence disproving the non-moving party's claim or defense." Id. ¶ 22. Rather, the moving party is only required to "'point out by specific reference to the relevant discovery that no evidence exist[s] to support an essential element of the [non-moving party's] claim' or defense." Id. (alteration in Thruston) (quoting Orme Sch. v. Reeves, 166 Ariz. 301, 310 (1990)). In doing so, the moving party must "refer[] to evidence in the record" -"conclusory statements will not suffice." Id. ¶¶ 23, 29 & 28.
¶15 If the moving party satisfies its initial burden of showing that the non-moving party lacks enough evidence to satisfy its ultimate burden of proof at trial, "the burden then shifts to the non-moving party to present sufficient evidence demonstrating the existence of a genuine factual dispute as to a material fact." Id. ¶ 26. To defeat the motion, "the non-moving party must call the [trial] court's attention to evidence overlooked or ignored by the moving party or must explain why the motion should otherwise be denied." Id. Parties are permitted to use affidavits to oppose motions for summary judgment, but such affidavits "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated." Ariz. R. Civ. P. 56(c)(5); see also Jabczenski v. S. Pac. Mem'l Hosps., Inc., 119 Ariz. 15, 18 (App. 1978) (trial court should not consider hearsay in addressing motion for summary judgment).
¶16 We are mindful of our supreme court's admonition that "summary judgment should not be used as a substitute for jury trials simply because the trial judge may believe the moving party will probably win the jury's verdict, nor even when the trial judge believes the moving party should win the jury's verdict." Orme Sch., 166 Ariz. at 310. When determining whether to grant summary judgment, the trial court must refrain from weighing witness credibility and the quality of the evidence, and must not "choose among competing or conflicting inferences." Id. at 311. Our duty on appeal is to determine if there were any genuine disputes as to material facts, or disputes as to inferences drawn from material facts, and if not, whether the court applied the law correctly. See Cliff Findlay Auto., LLC v. Olson, 228 Ariz. 115, ¶ 8 (App. 2011); cf. Santiago v. Phx. Newspapers, Inc., 164 Ariz. 505, 508 (1990). A dispute about a fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
¶17 "[A]n employer may be held vicariously liable on the theory of respondeat superior for negligent driving of a vehicle by its employee if the facts establish an employer-employee relationship and the negligence of the employee occurred during the scope of her employment." Carnes v. Phx. Newspapers, Inc., 227 Ariz. 32, ¶ 9 (App. 2011). Conduct is within the scope of employment if "(1) [it] is the kind the employee is employed to perform, (2) [it] is substantially within the authorized time and space limits, and (3) [it] is actuated, at least in part, by a purpose to serve the employer." Id. ¶ 10. "In tort actions arising out of vehicular accidents, our supreme court has explained that a 'basic test' to determine applicability of respondeat superior is whether the employee is 'subject to the employer's control or right to control' at the time of the negligent driving." Id. (quoting State v. Superior Court (Schraft), 111 Ariz. 130, 132 (1974)). "Because an employee is usually not subject to the employer's control or right of control when commuting to or from work, our supreme court has adopted the 'going and coming rule,'" which provides that an employer is not liable for accidents caused when an employee is going to or returning from her place of employment. Id. ¶ 11. Unless "the undisputed facts indicate that the conduct was clearly outside the scope of employment," "[w]hether an employee's tort is within the scope of employment is . . . a question of fact." Smith v. Am. Express Travel Related Servs. Co., 179 Ariz. 131, 136 (App. 1994).
¶18 Estrada asserts NFP "failed to meet its initial burden of making a prima facie showing of the absence of any genuine dispute of fact because the only evidence it presented was a singular, ambiguous statement by a deponent who expressed uncertainty about her activities prior to a motor vehicle collision that had occurred five (5) years earlier." Alternatively, she asserts she "presented three key exhibits to the trial court" that were admissible as Fite's prior inconsistent statements under Rule 801(d)(1)(A), Ariz. R. Evid., based on Fite's deposition testimony, "any one of which taken individually precludes summary judgment from being entered": Thomas's 2016 letter to NFP, Thomas's affidavit, and the settlement agreement between Estrada and the Fites and their businesses. Estrada contends that each of these documents "raises a material dispute of fact that directly contradicts the . . . statement relied upon by the trial court" in granting NFP's motion for summary judgment.
¶19 Specifically, Estrada argues Thomas's 2016 letter to NFP was admissible as evidence of Fite's prior inconsistent statement regarding her activities on the day of the accident because Thomas represented Fite at the time and "spoke on her behalf when he wrote" the letter, which "contradicts the feigning memory of Ms. Fite's deposition testimony." She further contends the letter "is significant because it shows that defendant NFP and its counsel were clearly aware of the conflicting statements at the time they filed the [motion for summary judgment] and disingenuously claimed said fact to be undisputed," thereby "placing [it] under the obligation to disclose Mr. Thomas by name, contact information, and a fair description of the relevant information that [he] possesses."
Although Estrada argues NFP concealed Thomas's 2016 letter "within a 5,000-page data-document dump," as NFP points out, Estrada's attorney, John Aguirre, was copied on the original letter from Thomas to NFP, a fact Estrada does not dispute on reply.
¶20 Further, Estrada argues Thomas's sworn affidavit, made in 2020, was also admissible as a prior inconsistent statement because it contained his verification that "as the attorney and legal representative for Ms. Fite he was obligated to thoroughly investigate the claims against her," as well as his attestation that he had attended a meeting during which Fite "repeated and confirmed the facts [he] had previously relayed to NFP" in his 2016 letter. And, as to the settlement agreement between Estrada, the Fites, and Thai Basil, Estrada contends it "laid out an unreserved admission of negligence and fault" inconsistent with Fite's deposition testimony and the trial court's finding that she had not been within the course and scope of her employment at the time of the accident. Specifically, she asserts that by entering into the agreement, the Fites and Thai Basil "conceded liability, and by so doing effectually made a statement that Ms. Fite was in the course and scope of her responsibilities as an owner and employee of the restaurant."
¶21 NFP responds that Thomas's letter and affidavit "contain inadmissible hearsay, not subject to any exception or exclusion." First, NFP asserts Thomas's letter is "precluded by two levels of hearsay: 1) the statement allegedly made by Ms. Fite to Mr. Thomas; and 2) the statement by Mr. Thomas contained in the letter." Moreover, it argues, pursuant to Rule 613(b), Ariz. R. Evid., "[e]xtrinsic evidence of a witness's prior inconsistent statement is admissible only if the witness is given an opportunity to explain or deny the statement and an adverse party is given an opportunity to examine the witness about it, or if justice so requires." Thus, NFP contends "Estrada cannot prove Thai Basil's vicarious liability by trying to impeach Ms. Fite's testimony with hearsay statements when she declined to examine Ms. Fite at deposition with what she now contends are 'prior inconsistent statements'" and should not be "permitted to sidestep the hearsay rules by construing Ms. Fite's non-testimony about deliveries [at the deposition] as an inconsistent statement." And, NFP asserts that "whether Mr. Thomas's letter and affidavit are admissible to impeach Ms. Fite's testimony is not material" because Estrada cannot satisfy her burden of proving Thai Basil's vicarious liability "merely by questioning Ms. Fite's credibility."
For the first time in supplemental briefing, and again during oral argument before this court, NFP asserted our supreme court's opinion in State v. Allred, 134 Ariz. 274 (1982), is controlling in this case and precludes admission of Fite's prior statement. There, the court acknowledged the danger of unfair prejudice when impeachment evidence is used for substantive purposes and identified factors for courts to consider in determining whether a prior inconsistent statement's probative value is "substantially outweighed by the danger of prejudice, confusion or misleading the jury" under Rule 403, Ariz. R. Evid. 134 Ariz. at 277-78 (factors include witness denying having made the statement, lack of corroboration that statement was made, impeachment testimony as only evidence of guilt, and true purpose being substantive rather than impeaching). Because NFP acknowledged during oral argument the lack of authority establishing the applicability of these factors in civil cases, and we find none, we do not further address NFP's argument.
¶22 Additionally, NFP argues Thomas's letter and affidavit "include only bare statements and conclusions" regarding Fite's delivery of restaurant supplies, "which are inadequate to create a fact question." Moreover, it asserts, because these documents "do not attach receipts, reimbursements, records of transactions or any other support" for the statements contained therein and fail to "identify what was being delivered, who directed the delivery, or where the delivery came from," they "lack external indicia of reliability." And, based on Estrada's failure to disclose Thomas as a fact witness until after the lay witness disclosure deadline had expired, NFP contends he "is precluded from testifying at trial" and accordingly his affidavit and 2016 letter "cannot be used to oppose summary judgment under Rule 56(c)."
¶23 Further, specifically challenging the admissibility of Thomas's affidavit, NFP argues his statement that Fite was in the process of delivering restaurant supplies is not based on his personal knowledge and essentially repeats the hearsay statements contained in his 2016 letter, thereby "add[ing] an inadmissible third level of hearsay under Ariz. R. Evid. 805." It further argues the affidavit is a "sham affidavit" and should be disregarded because it "contradicts the party's own deposition testimony." NFP also contends Thomas's affidavit is too vague to "reasonably be construed to create a fact question."
¶24 And, arguing the settlement agreement is inadmissible to prove vicarious liability, NFP asserts the agreement lacks specificity regarding Fite's "fault" and "liability" and does not "identify any activities in which [she] was engaged at the time of the accident that could have resulted in Thai Basil's vicarious liability." NFP also contends that the stipulations contained within the agreement are inadmissible to establish material facts in this subsequent proceeding, and that because the Fites signed the agreement in only their personal capacity, they lacked authority and intent to bind Thai Basil to the factual representations and purported admissions contained in the agreement. Further, NFP argues the admission of "fault" in the agreement is nonsensical when applied to Thai Basil because vicarious liability is by definition "fault free"; the uncontested evidence in the record shows Fite only occasionally purchased food for the restaurant and "ordinarily used a food delivery service"; and the agreement "contains no admissions, or statements of any kind regarding Thai Basil's vicarious liability," and, in any event, because "the Fites and Thai Basil are not parties to this lawsuit," the "party admissions" exception does not apply.
¶25 Hearsay is defined as a statement that "the declarant does not make while testifying at the current trial or hearing" and is "offer[ed] in evidence to prove the truth of the matter asserted in the statement." Ariz. R. Evid. 801(c). Hearsay is inadmissible unless an exception applies. See Villas at Hidden Lakes Condos. Ass'n v. Geupel Constr. Co., 174 Ariz. 72, 82 (App. 1992). However, not all prior statements are hearsay. A witness's prior statement may be admissible as non-hearsay if "[t]he declarant testifies and is subject to cross-examination about [the] prior statement, and the statement . . . is inconsistent with the declarant's testimony." Ariz. R. Evid. 801(d)(1)(A). "The rationale underlying this rule is that the jury should be allowed to hear the conflicting statements and decide 'which story represents the truth in the light of all the facts, such as the demeanor of the witness, the matter brought out on his direct and cross-examination, and the testimony of others.'" State v. Miller, 187 Ariz. 254, 257 (App. 1996) (quoting State v. Moran, 151 Ariz. 373, 375 (App. 1985)). In Arizona, "prior inconsistent statements, 'unless inadmissible under some other rule, become substantive evidence usable for all purposes.'" Phillips v. O'Neil, 243 Ariz. 299, ¶ 27 (2017) (emphasis omitted) (quoting State v. Acree, 121 Ariz. 94, 97 (1978)); see State v. Skinner, 110 Ariz. 135, 142 (1973) (trier of fact may consider prior inconsistent statements as substantive evidence, not solely for impeachment purposes).
¶26 As an initial matter, contrary to Estrada's assertion that it was NFP's burden to establish its "affirmative defense of vicarious liability," "[a] party asserting the existence of an agency relationship bears the burden of proving it." Reed v. Hinderland, 135 Ariz. 213, 217 (1983); see also Woerth v. City of Flagstaff, 167 Ariz. 412, 419 (App. 1990) (party asserting claim for relief generally has burden of proving facts essential to claim); Pacific Indem. Co. v. Kohlhase, 9 Ariz.App. 595, 597 (1969) ("When recovery is sought under an insurance contract, the insured has the burden of proving that his loss was due to an insured risk."); Ferguson v. Cash, Sullivan & Cross Ins. Agency, 171 Ariz. 381, 382, 386 (App. 1991) (for negligence claim against insurance agent, claimant must prove defendant caused the injury). Thus, as NFP argues, Estrada had "the burden to establish that Ms. Fite's conduct was in the course and scope of her employment for Thai Basil, such that Thai Basil was vicariously liable."
¶27 Although Estrada asserts NFP failed to establish that no genuine issue of material fact existed by relying only on Fite's "singular, ambiguous" statement that she "couldn't remember that day" but thought she had been on her way to Thai Basil from a real estate event, she fails to meaningfully develop this argument in her opening brief. See Ariz. R. Civ. App. P. 13(a)(7)(A) (opening brief must include arguments consisting of "[appellant's contentions concerning each issue presented for review, with supporting reasons for each contention, and with citations of legal authorities"); Ritchie v. Krasner, 221 Ariz. 288, ¶ 62 (App. 2009) (appellant's claim waived for failure to provide "significant arguments" with supporting authority in opening brief). Notably, Estrada fails to acknowledge that later during the deposition, Fite again confirmed that "when the accident occurred," she had been "coming from an event for [her] real estate, [her] separate real estate business." In any event, we assume without deciding that NFP satisfied its initial burden on summary judgment.
¶28 Whether a non-moving party may withstand summary judgment relying solely on a prior inconsistent statement appears to be undecided in Arizona. Like Arizona, however, many other states allow for the substantive use of unsworn prior inconsistent statements where the declarant testifies at trial and is subject to cross-examination. See Gibbons v. State, 286 S.E.2d 717, 721 (Ga. 1982) ("[A] prior inconsistent statement of a witness who takes the stand and is subject to cross-examination is admissible as substantive evidence."); Caliber Paving Co. v. Rexford Indus. Realty and Mgmt., Inc., 268 Cal.Rptr.3d 443, 455 (Ct. App. 2020) (statements inconsistent with declarant's testimony admissible as substantive evidence); Vogel v. State, 291 N.W.2d 838, 840, 844-45 (Wis. 1980) (unsworn prior statement admissible as substantive evidence). Several of these jurisdictions, including Wisconsin and Georgia, have concluded that a party opposing summary judgment may rely on the prior inconsistent statement of a witness to establish a genuine issue of material fact.
¶29 Indeed, the Wisconsin Supreme Court has explained that "[w]here a party moving for summary judgment relies upon a particular assertion in the affidavit of a prospective witness as establishing his right to summary judgment, proof of a prior statement by the prospective witness, inconsistent in a material respect, is ordinarily sufficient to entitle the opposing party to trial, and defeat the motion for summary judgment." Koehler v. Haechler, 133 N.W.2d 730, 733 (Wis. 1965). Similarly, the Court of Appeals of Georgia has concluded that the "logical extension" of the rule that a testifying witness's prior inconsistent statement is admissible as substantive evidence "is to permit a non-moving party to withstand a motion for summary judgment by submitting sworn testimony averring personal knowledge of the existence of a prior inconsistent statement made by the witness upon whose sworn testimony the movant relies." Cooperwood v. Auld, 334 S.E.2d 22, 23 (Ga.Ct.App. 1985).
¶30 We find the above reasoning persuasive and consistent with our case law and rules of evidence. See Skinner, 110 Ariz. at 142. Accordingly, we conclude the trial court erred in refusing to consider Fite's statement referenced in Thomas's affidavit and attached letter when ruling on NFP's motion for summary judgment. This affidavit constitutes Thomas's sworn testimony based on personal knowledge that Fite had previously made a statement inconsistent with her deposition testimony -the testimony upon which NFP relies in support of summary judgment. See Ariz. R. Civ. P. 56(c)(5). Indeed, the affidavit states that Thomas "investigate[d] and obtained] the relevant facts pertaining to what Ms. Fite was doing at the time of the collision" - including "where she was coming from" and "where she was going to" - and "confirmed" Fite had been "on her way to the restaurant at the time of the accident to deliver restaurant supplies which she had just picked up at a restaurant supply store." Thomas avers that, after relaying this information to NFP in his 2016 letter, he attended an "in-person meeting" with the Fites, at which Estrada's counsel was also present, and Fite "repeated and confirmed the facts [he] had previously relayed to NFP."
¶31 This evidence of Fite's prior statement conflicted with her deposition testimony that she had been traveling to Thai Basil "from an event for . . . [her] separate real estate business." Such evidence was therefore sufficient to create a question of fact as to whether Fite had been acting in the course and scope of her employment at the time of the accident, which Estrada was required to prove in order to establish NFP's negligence in failing to purchase automobile insurance for Thai Basil. See State Farm Mut. Auto. Ins. Co. v. Swetmon, 492 S.E.2d 678, 680 (Ga.Ct.App. 1997) (rather than inadmissible hearsay, officer's affidavit and attached police report containing declarant's prior inconsistent statement constituted substantive evidence creating a jury question); Engler, 230 Ariz. 55, ¶ 9. Construing, as we must, the evidence in the light most favorable to the non-moving party, Engler, 230 Ariz. 55, ¶ 8, the record indicates a material issue of fact remains. Thus, the trial court erroneously granted summary judgment in favor of NFP
As to NFP's argument in its supplemental brief that the out-of-state cases on which we rely are inapplicable because NFP had "no burden to disprove vicarious liability" and therefore its motion for summary judgment did "not rely on Fite's statement," we disagree. Indeed, NFP was required to "refer[] to evidence in the record" to demonstrate the absence of a genuine issue of material fact, and, in doing so, it directly referenced Fite's deposition testimony. Thruston, 218 Ariz. 112, ¶ 29.
Given our conclusion, we need not address Estrada's argument regarding the settlement agreement or her assertion that the trial court "erroneously took upon itself the role of trier of fact in weighing the credibility and truthfulness of Ms. Fite's deposition testimony." Similarly, we do not address her arguments that the court erred in denying her motion to extend disclosure and discovery deadlines and motion for new trial.
¶32 And, while Rule 613(b), Ariz. R. Evid., which governs the admissibility of extrinsic evidence of a witness's prior inconsistent statement, ordinarily requires that the witness be given an opportunity to explain or deny the prior inconsistent statement and that an adverse party be given an opportunity to examine the witness about it, we do not believe these requirements apply in the limited context of summary judgment proceedings. See Ariz. R. Civ. P. 56(c)(5) (affidavit opposing summary judgment "must . . . set out facts that would be admissible in evidence") (emphasis added). Indeed, the reason for permitting a witness to explain or deny an alleged prior inconsistent statement is to assist the fact-finder in assessing the witness's credibility, which can only occur at trial. Colarossi v. Coty U.S. Inc., 119 Cal.Rptr.2d 131, 136-38 (Ct. App. 2002) (witness's prior inconsistent statement admissible and sufficient to defeat summary judgment despite no opportunity to explain or deny statement).
As discussed, under Rule 801(d)(1)(A), a statement is not hearsay if "[t]he declarant testifies and is subject to cross-examination about a prior statement, and the statement . . . is inconsistent with the declarant's testimony." And, because Fite's prior inconsistent statement regarding her activities on the day of the collision is material to the issue of whether Thai Basil is vicariously liable for her conduct, "evidence of th[is] statement[] may be introduced if [Fite] on cross-examination denies making the statement[], claims no recollection of the statement[] or equivocates regarding [her] making the statement[]." State v. Allen, 117 Ariz. 168, 170 (1977). If Fite admits that she made a prior inconsistent statement, the statement's admissibility is discretionary. See State v. Woods, 141 Ariz. 446, 453 (1984) ("admissibility of extrinsic proof of an admitted inconsistent statement is in the discretion of the trial court").
¶33 Moreover, Thomas's affidavit is not a "sham affidavit" because, although "parties cannot thwart the purposes of Rule 56 by creating issues of fact through affidavits that contradict their own depositions," Wright v. Hills, 161 Ariz. 583, 588 (App. 1989), overruled on other grounds by James, Cooke & Hobson, Inc. v. Lake Havasu Plumbing & Fire Prot, 177 Ariz. 316 (App. 1993), Thomas's affidavit contradicts Fite's deposition testimony, not his own, and neither Thomas nor Fite are parties to the instant case. And, although "federal cases indicate that the sham affidavit rule is properly applied when a nonparty affiant has some motive, emotional or financial, to fabricate sham issues of fact," there is no evidence of such a motive in this case. Allstate Indem. Co. v. Ridgely, 214 Ariz. 440, ¶ 14 (App. 2007).
¶34 Finally, we address NFP's argument that, based on Estrada's failure to timely disclose Thomas as a lay witness pursuant to Rule 26.1(a)(4), Ariz. R. Civ. P., he was "precluded from testifying at trial" and therefore his affidavit could not be used to "oppose summary judgment under Rule 56(c)." Under Rule 26.1(a)(3) and (4), each party is required to disclose its witnesses and "person[s] whom the disclosing party believes may have knowledge or information relevant to the subject matter of the action." When a party has failed to timely disclose a witness, it "may not use the . . . witness . . . at trial" unless "the court specifically finds that such failure caused no prejudice or orders otherwise for good cause." Ariz. R. Civ. P. 37(c)(1).
¶35 Despite the language of Rule 37, our supreme court has stated that the disclosure rules "should be interpreted to maximize the likelihood of a decision on the merits." Allstate Ins. Co. v. O'Toole, 182 Ariz. 284, 287 (1995). "The object of disclosure, as with all discovery, is to permit the opponent a reasonable opportunity to prepare for trial or settlement-nothing more, nothing less." Bryan v. Riddel, 178 Ariz. 472, 476 n.5 (1994). The trial court has broad discretion to determine whether "a disclosure violation has occurred in the context of a given case" and, if so, its "practical effect." Solimeno v. Yonan, 224 Ariz. 74, ¶ 9 (App. 2010).
¶36 Although Estrada did not file her response to NFP's motion for summary judgment- relying, in part, on Thomas's affidavit and letter -until ten days after the deadline for disclosure of lay witnesses, this does not automatically preclude use of his affidavit to defeat summary judgment or his testimony at trial. See O'Toole, 182 Ariz. at 288 ("[E]ven if a party does not have a valid excuse for failing to timely disclose, permission to use the evidence at trial may, under some circumstances, still be appropriate," and "[e]ach situation must necessarily be evaluated on its own facts."). NFP argued in its reply in support of its motion that because Estrada had failed to timely disclose Thomas as a witness and show good cause "for permitting her to offer an affidavit from an undisclosed witness," she could not rely on his affidavit to oppose summary judgment. However, the trial court does not appear to have precluded, stricken, or otherwise disregarded Thomas's affidavit on this basis, instead considering its contents in determining whether to grant NFP's motion for summary judgment.
Although the trial court reproduced portions of NFP's response in opposition to Estrada's motion to extend disclosure and discovery deadlines in its under advisement ruling, including NFP's assertion that "failing to disclose Mr. Thomas appears to have been a strategic decision by [Estrada] and . . . cannot be the result of inadvertence," thus suggesting she had failed to show good cause, the court did not address the merits of those arguments.
Disposition
¶37 For the foregoing reasons, we vacate the trial court's grant of summary judgment in favor of NFP and remand for further proceedings consistent with this decision. As the prevailing party on appeal, we award Estrada her taxable costs upon compliance with Rule 21, Ariz. R. Civ. App. P.
BREARCLIFFE, Presiding Judge, dissenting:
¶38 I agree with most of the discussion above. I disagree on a very fundamental point, which leads me to dissent altogether.
¶39 After two years of litigation in the bad faith action, NFP brought summary judgment asserting that Estrada had failed to come forward with any evidence that Fite was acting in the course and scope of her employment at the time of the accident. In her response, Estrada argued that three pieces of evidence, as-yet undisclosed, were sufficient to defeat summary judgment: the Thomas letter, the Thomas affidavit, and the Damron agreement, as described by the majority. Apart from writing out "Arizona Rules of Evidence 801(d)" after referring to the Damron agreement, Estrada made no argument supported by any legal authority as to how each of these documents was admissible, seemingly just assuming that they were.
I discuss the Damron agreement as one of the three pieces of evidence offered, along with the Thomas letter and affidavit, although it had even more infirmities than the other two. The Damron agreement was offered as evidence of Fite's general admission of responsibility to contradict NFP's denial of responsibility. But, as the trial court correctly determined, it was hearsay "from a different case to which NFP was not a party and which does not contain within it any statements as to conduct that would establish that Ms. Fite was acting within the course and scope of her employment on the day of the accident."
¶40 After briefing on the motion for summary judgment, Estrada raised a new theory in her Rule 56(d) motion, namely that the Thomas letter and affidavit should come in under the "business records" exception to the hearsay rule (Rule 803(6), Ariz. R. Evid.). At oral argument, Estrada's tactic shifted again, as the trial court noted: "Perhaps recognizing the weakness of her position, Ms. Estrada urged at oral argument that she was not in fact offering the letter, affidavit, and agreement to prove the truth of the matters asserted therein, but rather as impeachment evidence to demonstrate Ms. Fite's absence of credibility."
¶41 The trial court granted NFP's motion for summary judgment because Estrada failed to show the existence of admissible evidence sufficient to create a triable issue of fact. In its lengthy under-advisement ruling, the court determined that NFP had shown by admissible evidence -Fite's statement that she had been traveling from a real estate event-that Fite was not acting in the course and scope of her employment when the underlying accident occurred, and that Estrada had failed to raise admissible contrary evidence in her response. It noted that the Thomas letter, affidavit, and Damron agreement were inadmissible hearsay and therefore incompetent to raise a genuine issue of material fact. The court found each ground for admitting these documents wanting-whether raised by Estrada in her formal response to the motion for summary judgment, in her post-briefing Rule 56(d) motion, or for the first time at oral argument.
¶42 On appeal, Estrada abandoned the business records exception ground, and does not argue that the documents are non-hearsay as admissions of a party-opponent or of an agent. Rather, Estrada solely argues that each document is admissible as a prior inconsistent statement under Rule 801(d)(1). While this argument was never expressly raised below, and Rule 801(d) was never cited except generally - and then, only relative to the Damron agreement-it was arguably encompassed within Estrada's claim that each of these documents has "impeachment" value. That is, that statements within these documents somehow contradict Fite's statements in her deposition. The trial court determined that such a claim was inadequate because controverting evidence must be admissible and mere impeachment evidence is not. The court was not, however, ever formally asked to determine whether statements in the Thomas letter, affidavit, or Damron agreement qualified as prior inconsistent statements under Rule 801(d)(1), and thus it did not.
¶43 My colleagues above squarely and satisfactorily address that evidence of a prior inconsistent statement is admissible as substantive evidence. Consequently, if the Thomas letter, affidavit, and Damron agreement were prior inconsistent statements, they would be substantively admissible, and therefore could serve to create an issue of fact and defeat summary judgment. Unfortunately, the majority goes from recognizing that prior inconsistent statements are substantively admissible to reversing the trial court without ever adequately addressing whether the Thomas letter, affidavit, and Damron agreement are, in fact, prior inconsistent statements.
¶44 Our role on appeal is limited. We are to uphold a trial court unless there is a legal basis not to in light of the record, and even if for a reason wholly different from that supporting its judgment. Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174, 178 (App. 1984); Gary Outdoor Advert. Co. v. Sun Lodge, Inc., 133 Ariz. 240, 242 (1982). Here, I would uphold the trial court's grant of summary judgment because nothing in the Thomas letter, Thomas affidavit, or Damron agreement is inconsistent with Fite's deposition testimony and therefore there was no basis for their admission. Thus, there was nothing to bar entry of summary judgment.
¶45 The operative admissions in the Thomas letter and repeated in the affidavit are that Fite was "on her way to the restaurant at the time of the accident to deliver restaurant supplies which she had just picked up at a restaurant supply store." This was the sole evidence offered to establish that Fite was acting in the course and scope of her employment (or ownership) of the restaurant rather than merely coming and going as an employee. But, as stated above, nowhere in her deposition did Fite deny that she was delivering restaurant supplies or otherwise engaging in any business activity of the restaurant. In her deposition, she merely agreed that she was "driving into the downtown Thai Basil restaurant to start [her] shift as a server" and that she was "coming from an event for . . . [her] separate real estate business." She did not exclude at all that she was bearing goods for the restaurant or otherwise on restaurant business. Her deposition therefore does not contradict anything in the Thomas letter or affidavit, and certainly nothing in the Damron agreement. Nothing in either the Thomas letter or affidavit disclaims that she was coming from a real estate event or doing any other unrelated business at the same time she was doing restaurant business.
¶46 To be sure, Estrada could have examined Fite in her deposition and elicited a contrary statement, but she did not. She could have pressed her on what she was transporting in her car, or whether she had made a stop on restaurant business before leaving her real estate event, or indeed whether she had made a stop at a restaurant supply store after leaving her real estate event. There were any number of things she could have asked to allow for the use of this as contradictory evidence. Instead, she let lay a wholly innocuous statement of where Fite was coming directly from, rather than what she was doing or where else she had been. This decision was, however, fatal to the admission of anything in the Thomas letter, affidavit, or Damron agreement. As the trial court correctly concluded, hearsay is inadmissible at trial, and a motion for summary judgment must be contested by admissible evidence. Ariz. R. Civ. P. 56(c)(5), (6); Villas at Hidden Lakes Condos. Ass'n v. Geupel Constr. Co., 174 Ariz. 72, 82 (App. 1992). And this motion was not.
¶47 As a result, and because the three documents at issue were hearsay and remained hearsay without exception at the time of the opposition to the motion for summary judgment, I respectfully dissent. I would affirm the trial court's judgment.