Opinion ID: 1172244
Heading Depth: 2
Heading Rank: 2

Heading: Schallock's tort action

Text: In her complaint, Schallock alleged (1) Heinze personally and APAAC vicariously were liable for a public policy tort (sexual harassment); (2) APAAC independently was liable for damages on the theory of negligent retention; and (3) Heinze personally and APAAC independently and vicariously were liable for intentional infliction of emotional distress. Heinze believed he would be indemnified by state insurance for any judgment against him and his wife. The state, however, reserved its rights if a court subsequently determined that Heinze's acts were outside the coverage or indemnity provided by A.R.S. § 41-621. [2] Asserting his Fifth Amendment rights, Heinze refused to give evidence in Schallock's tort case. After trial, the jury returned three verdicts for Schallock and against APAAC and Heinze. In the first verdict, the jury found Heinze liable for intentional or reckless infliction of emotional distress, and/or sexual harassment in the workplace, and ... the full damages to be $1,476,535.50. [3] In its second verdict (form 3), the jury stated APAAC was liable for intentional infliction of emotional distress, and/or sexual harassment in the workplace and ... the full damages to be $908,446.50. In its third verdict (form 6), the jury found APAAC liable for negligent hiring and full damages to be $908,446.50. Given the jury's answer to the accompanying interrogatory, we interpret this verdict as finding APAAC directly liable for negligent hiring, supervision, and retention of Heinze based on evidence that (1) Heinze had been dismissed from previous employment with a law enforcement agency because of charges of sexual impropriety, a fact allegedly known to one or more APAAC members when Heinze was hired; and (2) Heinze's aberrant sexual activities with APAAC's employees extended over almost a decade and were known or should have been known to APAAC's members. The jury also wrote a note: We want it to be clear that we have divided the liability in the following manner: Mr. Heinze $1,476,553.50 and APAAC $908,446.50 and total liability is $2,385,000. Before trial, the state and Schallock made a high-low agreement, providing a formula for a guaranteed payment to Schallock; in return, if a verdict were returned against APAAC, Schallock agreed to dismiss the action against it. Therefore, although verdicts 3 and 6 were returned on the claims presumably establishing APAAC's direct and vicarious liability, judgment was never entered on those verdicts. Instead, complying with the settlement agreement, Fireman's Fund, the state's insurer, paid Schallock $725,000 in full settlement of the $908,000 verdict against APAAC. We assume the $1.4 million verdict against Heinze, which was eventually reduced to judgment, remains unpaid.