Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-01208/USCOURTS-azd-2_13-cv-01208-10/pdf.json

Nature of Suit Code: 375
Nature of Suit: False Claims Act
Cause of Action: 31:3729 False Claims Act

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Marc A. Wichansky, 

Plaintiff, 

v. 

David T. Zowine, et al., 

Defendants.

No. CV-13-01208-PHX-DGC

ORDER 

 Plaintiff Wichansky has provided a proposed form of judgment (Doc. 507), 

Defendants have objected and proposed their own form (Doc. 517), and Plaintiff has 

responded (Doc. 519). A few issues require further briefing. 

I. Joint and Several Liability.

 The jury found $11,000,000 in compensatory damages for breach of fiduciary 

duty, and allocated fault among some Defendants. Doc. 500. Plaintiff’s form of 

judgment would appear to permit him to recover $11,000,000 from Defendant Zowine, 

$1,100 from the Ilardo Defendants, $550,000 from Defendant Johnson, $110,000 from 

Defendant Leon, and $27,500 from the Shanahan Defendants. Doc. 507-1. In his 

response, Plaintiff acknowledges that he can recover no more than $11,000,000. 

Doc. 519. Without citing any authority, Arizona or otherwise, Plaintiff argues that he 

may recover all of the $11,000,000 from Defendant Zowine, or may recover amounts in 

accordance with the jury’s allocation of fault, or may recover something in between. Id. 

at 2-3. But this is possible only if Defendants are jointly and severally liable for the 

Case 2:13-cv-01208-DGC Document 524 Filed 05/18/16 Page 1 of 5
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

$11,000,000 in total damages. Plaintiff fails to address the fact that Arizona has 

abolished joint and several liability in most cases: 

In an action for personal injury, property damage or wrongful death, the 

liability of each defendant for damages is several only and is not joint, 

except as otherwise provided in this section. Each defendant is liable only 

for the amount of damages allocated to that defendant in direct proportion 

to that defendant’s percentage of fault, and a separate judgment shall be 

entered against the defendant for that amount. To determine the amount of 

judgment to be entered against each defendant, the trier of fact shall 

multiply the total amount of damages recoverable by the plaintiff by the 

percentage of each defendant’s fault, and that amount is the maximum 

recoverable against the defendant. 

A.R.S. § 12-2506(A). As the Arizona Supreme Court has explained, “The 1987 

amendment, codified at A.R.S. § 12-2506, establishes a system of comparative fault, 

making ‘each tortfeasor responsible for paying his or her percentage of fault and no 

more.’ Dietz v. Gen. Elec. Co., 169 Ariz. 505, 510, 821 P.2d 166, 171 (1991). Under this 

system of several-only liability, plaintiffs, not defendants, bear the risk of insolvent joint 

tortfeasors.” State Farm Ins. Cos. v. Premier Manufactured Sys., Inc., 172 P.3d 410, 413 

(Ariz. 2007) (emphasis in Deitz). 

 The statute recognizes three exceptions to this rule, two of which are potentially 

applicable to this case: where Zowine and the other Defendants were “acting in concert,” 

and where the other Defendants were acting as “an agent or servant” of Zowine. A.R.S. 

§ 12-2506(D)(1) & (2). The phrase “acting in concert” is specifically defined in the 

statute. See § 12-2506(F)(1). The parties do not address whether either of these 

exceptions applies. 

 Finally, even if one or both of these sections could apply, the jury was not asked to 

decide whether Defendants were acting in concert of were agents of one another within 

the meaning of A.R.S. § 12-2506. The parties do not address this fact. 

II. Punitive Damages.

 Defendants argue that the jury awarded a total of $14,375,000 in punitive 

damages, and that this amount must be allocated among the Defendants found at fault. 

Case 2:13-cv-01208-DGC Document 524 Filed 05/18/16 Page 2 of 5
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

Doc. 517 at 2. The Court does not agree. The verdict form was clear. The $14,375,000 

constituted the amount of “punitive damages . . . assessed against Defendant Zowine.” 

Doc. 500 at 2. The punitive damages assigned to Defendants Johnson, Leon, and 

Shanahan were “the amount of punitive damages that should be assessed against that 

Defendant.” Id. at 5. 

III. Judgments of Acquittal. 

 Plaintiff concedes that judgments of acquittal should be entered against 

Defendants Costello, Knowlton, Mayo, and Narducci, whom the jury found not liable, 

but fails to acknowledge that the Court granted judgment in favor of Defendants Grant, 

Gonzales, and Sarah Shanahan for their allegedly tortious conduct. Doc. 478. All of 

these Defendants will be included in the final judgment. 

IV. Prejudgment Interest.

 Plaintiff does not dispute “the rule in Arizona that prejudgment interest may not be 

awarded unless the claim for payment is liquidated prior to judgment.” Fairway 

Builders, Inc. v. Malouf Towers Rental Co., 603 P.2d 513, 535 (Ariz. Ct. App. 1979). 

Relying on Fairway Builders, Plaintiff argues that the amount at issue in this case was 

liquidated. The Court does not agree. Fairway Builders found the amount to be 

liquidated because the contract at issue called for “compensation at cost plus ten percent.” 

Id. No similar formula existed here. Plaintiff asked the jury to compensate him for 

damages caused by Defendant Zowine’s breach of fiduciary duty, which were not subject 

to precise calculation. See Pueblo Santa Fe Townhomes Owners’ Ass’n v. Transcon. Ins. 

Co., 178 P.3d 485, 496 (Ariz. Ct. App. 2008) (“Damages are liquidated if the evidence of 

damages furnishes data which, if believed, makes it possible to compute the amount of 

damages with exactness, without relying upon opinion or discretion. Thus, prejudgment 

interest begins to accrue when the amount of damages can be computed with exactness, 

not when the amount of damages still must be determined by opinion or discretion.”) 

(quotation marks and internal citations omitted). Plaintiff is not entitled to prejudgment 

interest under Arizona law. 

Case 2:13-cv-01208-DGC Document 524 Filed 05/18/16 Page 3 of 5
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

V. Post-judgment Interest.

 Plaintiff has identified no law that contradicts Defendants’ assertion that 28 U.S.C. 

§ 1961 governs the post-judgment interest rate to be applied in this case. The Court will 

apply that rate when it enters the final judgment. See § 1961(a) (“Such interest shall be 

calculated from the date of the entry of the judgment, at a rate equal to the weekly 

average 1-year constant maturity Treasury yield, as published by the Board of Governors 

of the Federal Reserve System, for the calendar week preceding the date of the 

judgment.”). 

VI. Offsets for State Court Valuation and Contingent Liabilities.

 As the Court noted in an earlier order, “Plaintiff agrees that he cannot recover 

damages twice. Thus, if he prevails in this case and recovers the measures of damages he 

has identified for breach of fiduciary duty, he agrees that he cannot retain or recover any 

portion of the valuation award he received in the state case.” Doc. 428 at 3. “Any 

concerns about double recovery will be satisfied by Plaintiff not retaining the financial 

benefits he received from the state-court proceeding he claims should never have 

occurred.” Id. at 5. 

 The Court sees two financial benefits Plaintiff received from the state court 

valuation: the $1,400,000 in payments he has received from Zowine, and the fact that 

Plaintiff has not been required to pay contingent liabilities of Zoel because Zowine has 

offset those liabilities against payments Zowine owed to Plaintiff under the state court 

valuation. 

 Plaintiff’s expert deducted the $1,400,000 from the lost profits calculation he 

presented to the jury. It appears that the jury largely accepted the expert’s calculations, 

awarding $11,000,000 when the expert calculated a total of $10,360,225 in lost profits, 

not including future profits. The Court thus concludes that the jury award of $11,000,000 

included an offset for the $1,400,000 in payments Plaintiff has received. 

 Plaintiff should not, however, be permitted to retain the financial benefit he 

received in not having to pay his share of Zoel’s contingent liabilities. Plaintiff’s share of 

Case 2:13-cv-01208-DGC Document 524 Filed 05/18/16 Page 4 of 5
- 5 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

those liabilities has been “paid” by Zowine retaining funds he owed Plaintiff under the 

state court’s valuation. Now that Plaintiff has disavowed the state court valuation, the 

funds Zowine has withheld are not owed to Plaintiff and Plaintiff must pay his share of 

the contingent liabilities. Plaintiff argues that Zowine has overcharged him for such 

liabilities, an issue that is being litigated in state court. The Court will not repeat that 

litigation here. The Court’s judgment will make clear that Plaintiff should be required to 

pay the share of Zoel’s contingent liabilities that the state court ultimately determines he 

owes. The Court will not offset the contingent liabilities against this judgment because 

they have not been reduced to judgment in the state court. They can be reduced to 

judgment, and collected from Plaintiff through appropriate state court procedures, once 

they have been determined in the state court litigation. 

VII. Doe Defendants. 

Defendants argue that claims have not been pled against John Doe Leon or Jane 

Doe Johnson, and that no judgment should be entered against them. Doc. 517 at 3. 

Plaintiff does not address this issue in his response. Doc. 519. 

IT IS ORDERED that the parties shall, by May 25, 2016, file eight-page 

memoranda addressing the following issues: (1) Does A.R.S. § 12-2506(A) apply to this 

case, requiring judgments against the individual defendants in amounts proportional to 

the fault assigned them by the jury? (2) Do the exceptions in § 12-2506(D) apply in this 

case? (3) For the exceptions in § 12-2506(D) to apply, must the jury have found that 

Defendants were acting in concert within the meaning of the statute or that the nonZowine Defendants were agents of Zowine? (4) Can the Court enter judgment against 

John Doe Leon or Jane Doe Johnson? (5) Any other judgment-related issues the parties 

wish to address.

Dated this 18th day of May, 2016. 

Case 2:13-cv-01208-DGC Document 524 Filed 05/18/16 Page 5 of 5