Opinion ID: 1366472
Heading Depth: 1
Heading Rank: 3

Heading: the court's special verdict

Text: Before examining whether the parent company liability theory, which was the basis of the counsel-drafted order has any legal basis in Idaho law, we must first analyze the court's jury instructions, and the jury instruction conference, to determine if that issue was even raised by the pleadings and the evidence, and, if so, was it covered by the instructions which were given. [7] By the Idaho Constitution, the right to a jury trial is guaranteed. Id. Const. art. 1, ง 7. Here the parties expressly requested a jury trial. Accordingly, they were entitled to a jury trial on all fact issues raised in the case. See State v. Miles, 43 Idaho 46, 248 P. 442 (1926); People ex rel. Brown v. Burnham, 35 Idaho 522, 207 P. 589 (1922); Shields v. Johnson, 10 Idaho 476, 79 P. 391 (1904); Christensen v. Hollingsworth, 6 Idaho 87, 53 P. 211 (1898). [T]he right of trial by jury is one which should be carefully safeguarded by the courts, and when a party had demanded such a trial, he is entitled to have the benefit of the jury's findings on issues of fact; and it is not the trial court's prerogative to disregard or nullify them by making findings of his own. Mel Hardman Productions, Inc. v. Robinson, 604 P.2d 913, 917 (Utah 1979). In overruling the jury's verdict in this case, thus denying the defendants' right to their jury trial and verdict, the district court relied on I.R.C.P. 49(a) which provides that if ... the court omits any issue of fact raised by the pleadings or by the evidence, each party waives his right to a trial by jury of the issue so omitted unless before the jury retires he demands its submission to the jury. (Emphasis supplied.) This rule was copied from Federal Rule of Civil Procedure 49(a) and must be read in conjunction with I.R.C.P. 15(b) which provides that [w]hen issues not raised by the pleading are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. With regard to the trial of issues not pleaded, 3 Moore's Federal Practice ถ 15.13[2] (2d ed. 1987), states: The purpose of an amendment to conform to proof is to bring the pleadings in line with the actual issues upon which the case was tried; therefore an amendment after judgment which brings in some entirely extrinsic issue or changes the theory on which the case was actually tried is not permissible, even though there is evidence in the record โ introduced as relevant to some other issue โ which would support the amendment. This principle is sound, since it cannot be fairly said that there is any implied consent to try an issue if the parties do not squarely recognize it as an issue in the trial. Reading Rules 49(a) and 15(b) together, the apparent meaning is that if ... the court omits any issue of fact raised by the pleadings or by the evidence [and which were tried by the express or implied consent of the parties] each party waives his right to a trial by jury on the issues so omitted unless before the jury retires he demands its submission to the jury. There are very few federal cases which have considered Rule 49(a). The commentators have stated that it is only the inadvertent omission by the court to submit issues which were actually raised by the pleadings or tried by the express or implied consent of the parties which justifies a court in making additional findings under Rule 49. 9 C. Wright & A. Miller, Federal Practice & Procedure: Civil ง 2507, at p. 504 (1971). There is no authority which holds that a litigant can choose to submit a case to the jury on certain issues, choosing not to submit on others, or overlooking certain issues or theories and then, after losing the case before the jury, ask the trial court to retry the case upon the other issues which it chose not to raise, or through neglect failed to raise. If the rule were otherwise a litigant could, either by choice or lack of preparedness, try a case to the jury on one issue or legal theory and then, after an adverse verdict, request the court to redecide the case on the factual record made based on new research and new issues or legal theories, thus depriving the other party of his constitutional right to a jury trial on those new issues. Our cases have rejected such a practice. Masters v. State, 105 Idaho 197, 200, 668 P.2d 73, 76 (1983) (The parties will be held to the theories upon which a cause was tried.); Eastern Idaho Loan & Trust Co. v. Blomberg, 62 Idaho 497, 506, 113 P.2d 406, 410 (1941) (Where both parties to an action try their case upon the same theory as to the issue tendered by the pleadings, they are bound by the theory so adopted.); Idaho Gold D. Corp. v. Boise Payette Lbr. Co., 52 Idaho 766, 776, 22 P.2d 147, 150 (1933) (Furthermore, the parties to an action are bound by the theory on which they try it.). Accordingly, we review the record to determine what issues were tried to the jury. Ross's complaint raised no issue concerning parent-subsidiary liability or, for that matter, joint venture or joint business enterprise liability of any kind. Evidence was offered at trial to prove plaintiff's strict liability, negligence and punitive damages claims against Coast and Coleman. The attempt by plaintiff to prove his strict liability claim against Coast and Coleman required the plaintiff to submit evidence of the design, manufacturing and marketing of the sailboat by one or both of the two corporations. The attempt by plaintiff to prove the sailboat to be unreasonably dangerous, both for strict liability purposes and for punitive damages purposes, required plaintiff to examine the interrelationship between the two corporations, regarding their knowledge of the electrical shocking problem and the attempts to remedy it. This evidence, which was admitted in support of plaintiff's strict liability and punitive damages claims, does reflect that Coleman was involved with its subsidiary Coast in marketing, advertising and researching the modification of the aluminum mast, and generally received economic benefit from the marketing of the sailboat. The question which we must first decide is whether, based upon that evidence, the issue of parent company liability, assuming there is such a legal doctrine, was raised by that evidence, since it was not raised by the pleadings. I.R.C.P. 15(b) provides that issues, even though not raised by the pleadings, may be tried by the express or implied consent of the parties. (Emphasis added.) However, consent implies, and minimal due process requires, notice to a litigant of the issues being raised. When issues are not raised by the pleadings, the evidence raising the legal issue must be clear enough so that both parties know of the issue and consent to the issue being tried. As this Court said in M.K. Transport, Inc. v. Grover, 101 Idaho 345, 349, 612 P.2d 1192, 1196 (1980): The requirement that the unpleaded issues be tried by at least the implied consent of the parties assures that the parties have notice of the issues before the court and an opportunity to address those issues with evidence and argument. Cook v. City of Price, Carbon County, Utah, 566 F.2d 699 (10th Cir. 1977); Cox v. Fremont County Public Building Authority, 415 F.2d 882 (10th Cir.1969); Otness v. United States, 23 F.R.D. 279 (D.Alaska 1959). `Implied consent to the trial of an unpleaded issue is not established merely because evidence relevant to that issue was introduced without objection. At least it must appear that the parties understood the evidence to be aimed at the unpleaded issue.' MBI Motor Co., Inc. v. Lotus/East, Inc., 506 F.2d 709, 711 (6th Cir.1974).  Where nothing in the record indicates that an unpleaded issue was litigated at trial, it is error for the trial court to base its decision on the unpleaded issue. See, e.g., Browning Debenture Holders' Committee v. Dasa Corp., 560 F.2d 1078 (2d Cir.1977); MBI Motor Co., Inc. v. Lotus/East, Inc., supra ; Freitag v. The Strand of Atlantic City, 205 F.2d 778 (3d Cir.1953). (Emphasis added.) It is the duty of the party asserting the issues to give that notice, first by the pleadings, then by requesting appropriate jury instructions setting out those issues at least five days before trial. I.R.C.P. 51(a)(1). [8] Joyce Brothers v. Stanfield, 33 Idaho 68, 71, 189 P. 1104, 1105 (1920) (Error cannot be predicated on failure to instruct ... in the absence of a request for such instruction.); Goodwin v. Wulfenstein, 107 Idaho 492, 690 P.2d 947 (Ct.App. 1984), citing Joyce Brothers with approval. A review of plaintiff's requested instructions and the dialogue at the instruction conference clearly indicated that by that time Ross's counsel were arguing that Coast's and Coleman's conduct could be evaluated both on a joint liability theory and on a separate basis. [9] Ross's Requested Instructions 10 [10] and 14 [11] were aimed at imputing Coast's negligence to Coleman based in part on the composite business relationship between Coast and Coleman. The plaintiff, after considerable discussion, dropped Plaintiff's Requested Instruction No. 10 in favor of Plaintiff's Instruction No. 14 (which was adopted as Instruction No. 26). That instruction told the jury:  You may find Coleman Company liable for a defect in the design of the Hobie 16 Sailboat, provided that you find all of the elements of product defect liability or negligence as required by these Instructions previously given, were proved by Plaintiff, and if you find that Coleman Company for a profit or other benefit participated in a composite business enterprise with Coast Catamaran Corporation. ... (Emphasis added.) Ross's counsel argued that the plaintiffs had introduced enough evidence during the trial to establish that Coleman was responsible for Coast's failure to correct the electrical conductivity in the Hobie Cat's mast, based primarily on the business relationship that existed between the two companies. Plaintiff's counsel stated, Somewhere the jury has to have an instruction [on the joint relationship], and [requested instruction] 14 links in with our special verdict [given Question 13] where we ask them that question: `Do you find that Coleman is responsible on this basis?' And if they [the jury] say, `no,' then the defendants had no problem. They've got no worry. But they're queried as to whether they do find Coleman responsible on a separate question. The foregoing statement demonstrates that the plaintiff (and, as the conference goes on, the judge and the defendants) understood that Plaintiff's Requested Instruction No. 14 (which became final Jury Instruction No. 26) was directed toward Coleman's joint liability with Coast because of its composite business enterprise with Coast Catamaran... . Special Verdict Questions No. 13 and 14 directly asked the jury to decide the factual issue of whether Coast and Coleman were jointly liable or separately liable. This Court, in Holland v. Peterson, 95 Idaho 728, 518 P.2d 1190 (1974), quoting from Mendenhall v. MacGregor Triangle Co., 83 Idaho 145, 149, 358 P.2d 860, 862 (1961), held that where a party fails to request further instructions amplifying the terms of a given instruction, no error may be predicated on the trial court's failure to fully amplify the instruction further. In this case, it was the plaintiff himself who requested Instruction No. 26 advising the jury that they could find the Coleman Company liable for Coast's defective or negligent design of the sailboat if they find that the Coleman Company for a profit or other benefit participated in a composite business enterprise with Coast Catamaran... . The plaintiff cannot complain, after the jury has returned its verdict, that that instruction was not adequate to place before the jury any liability which might be imposed upon Coleman as a result of the parent-subsidiary relationship. Holland v. Peterson, supra ; Mendenhall v. MacGregor Triangle Co., 83 Idaho 145, 149, 358 P.2d 860, 862 (1961). A party cannot complain of the adequacy or correctness of instructions which it itself has requested the court to give. 75 Am.Jur.2d Trial ง 576 (1974), citing Moeller v. St. Paul City R. Co., 16 N.W.2d 289 (1944) (a party requesting a certain instruction cannot afterward complain that such an instruction should not have been given); see also Papp v. Cantrell, 96 Idaho 751, 536 P.2d 746 (1975) (holding that where the jury was instructed on damages in accordance with defendant's requested instructions, the defendant could not subsequently complain that the damage award was excessive). As stated in Goldsmith v. Diamond Shamrock Corp., 767 F.2d 411, 415-416 (8th Cir.1985): In addition, assuming that the district court had the authority to grant the new trial, the exercise of such authority in this case was an abuse of discretion. [Citations omitted.] The instructional error on which the new trial order was based was invited by Diamond through its requested jury instructions, and courts generally find no ground for reversal when the instructions given were consistent with the position of the party seeking relief. If Instruction No. 26 was inadequate, it was the plaintiff's responsibility to submit an instruction which more specifically set out the legal issues that it was asserting, Holland v. Peterson, supra , rather than wait until after the jury decided the case and then request the court to retry the issue of parent-subsidiary liability. We conclude that any issue of parent-subsidiary liability was subsumed by Instruction No. 26 and Special Verdict Questions 13 and 14, and was answered by the jury in the negative. The trial court erred in concluding that those issues had not been resolved by the jury. However, even assuming that the parent company liability issue had not been decided by the jury; and that it was not waived by the plaintiff's failure to submit a more comprehensive and inclusive instruction than the given Instruction No. 26; and that it had been tried by the consent of the parties, express or implied, and that the court had inadvertently failed to instruct the jury on the issue; we nevertheless find no legal basis for imposing liability on a parent corporation for the acts of its subsidiary under the circumstances of this case. Our analysis is based primarily upon our own research because the trial court's order set out no legal authorities or analysis for its decision, and the respondent's brief has made little analysis of this issue. [12] First, the Idaho legislature, when it enacted comparative negligence legislation, adopted the individual rule which requires that, when comparing percentages of negligence, the negligence of the plaintiff must be compared against each individual defendant in determining whether the plaintiff may recover. I.C. งง 6-801, 6-802 and 6-803; Odenwalt v. Zaring, 102 Idaho 1, 624 P.2d 383 (1980). [13] The statute requires that a plaintiff prove that a defendant's negligence was greater than that of the plaintiff before a judgment can be rendered against that defendant. Odenwalt v. Zaring, supra . Furthermore, the Constitution and statutes of this state expressly limit the individual or personal liability of a stockholder of a corporation for the obligations of a corporation. Id. Const. art. 11, ง 17; I.C. ง 30-1-25. [14] Whether the stockholder owns one share or all the shares, the Constitution and statutes have set the policy that no liability inures merely as the result of that stock ownership. The Court of Appeals recently summarized these provisions and this Court's prior decisions in Baker v. Kulczyk, 112 Idaho 417, 732 P.2d 386 (Ct.App. 1987), stating: In general, a corporate status limits liability. I.C. ง 30-1-25. For the court to disregard the corporate entity, two requirements must be met. First, there must `be such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist....' Chick v. Tomlinson, 96 Idaho 483, 485, 531 P.2d 573, 575 (1975) (quoting Surety Life Ins. Co. v. Rose Chapel Mortuary, Inc., 95 Idaho 599, 601, 514 P.2d 594, 596 (1973)). The second requirement is met by a showing that `if the acts are treated as those of the corporation an inequitable result will follow,...' id., or that it would `sanction a fraud or promote injustice.' Minich v. Gem State Developers, Inc., 99 Idaho 911, 917, 591 P.2d 1078, 1084 (1979) (quoting from Tom Nakamura, Inc. v. G. & G. Produce Co., 98 Idaho 183, 457 P.2d 422 (1969)). Baker v. Kulczyk, 112 Idaho 417, 419-420, 732 P.2d 386, 388-89 (Ct.App. 1987). Neither requirement is met in this case. Coast was a corporation separately owned and operated by others long before its stock was acquired by Coleman. After Coleman acquired the stock of Coast, both corporations were operated as separate entities, and there is nothing in the record to reflect that the separate personalities of the corporation[s] and the individual[s] no longer exist. Baker v. Kulczyk, 112 Idaho at 420, 732 P.2d at 389. There is nothing in the record to reflect that the corporate structures are a mere sham, with no corporate formalities being followed by the operators, as was the case of Surety Life Ins. Co. v. Rose Chapel Mortuary, Inc., 95 Idaho 599, 514 P.2d 594 (1973). In fact, the record reflects the contrary. The record would not support a finding that Coast was merely the alter ego of Coleman. This case is strikingly similar to Hassinger v. Tideland Elec. Membership Corp., 622 F. Supp. 146 (E.D.N.C. 1985). That case was another action brought against Coast Catamaran and Coleman because of another accident in which one of their Hobie Cat sailboats struck a low-hanging power line electrocuting the occupants. The federal district court held as a matter of law that there was not even a triable issue of fact on the plaintiff's claim that the parent corporation Coleman was liable for the acts of its subsidiary Coast. The court decided the case under North Carolina law, which is similar to the law set out in our cases of Chick v. Tomlinson, 96 Idaho 483, 531 P.2d 573 (1975), and Surety Life Ins. Co. v. Rose Chapel Mortuary, Inc., 95 Idaho 599, 514 P.2d 594 (1973). The federal court in the Hassinger case held: Plaintiffs' evidence is simply insufficient to show that Coast is a corporate phantom which exists as a mere puppet and device of Coleman with respect to the manufacture and design process. North Carolina cases are clear that this type of control is required in order to invoke the instrumentality doctrine. Secondly, even assuming plaintiffs have presented the requisite demonstration of control by Coleman of Coast, they have failed to present any evidence that such `control' was used to commit a fraud or wrong or to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act. Even if complete control exists, some additional circumstances of fraud are necessary in order to invoke the instrumentality doctrine. Ram Textiles, Inc. v. Hillview Mills, Inc., 47 N.C. App. 593, 267 S.E.2d 700, 703 (1980); Huski-Bilt, Inc. v. First Citizens Bank & Co., 271 N.C. 662, 157 S.E.2d 352 (1967). Accordingly, the court holds that the evidence considered in the light most favorable to plaintiffs does not entitle them to have the jury pass on the instrumentality or alter ego claim and therefore defendant Coleman's motion for summary judgment is GRANTED. 622 F. Supp. at 152. There is nothing in this record to reflect that Coast was inadequately capitalized and as a result could not respond to a judgment against it. In fact, the record affirmatively shows that Coast has a net worth of several millions of dollars and could respond to any judgment rendered against it. [15] To recognize Coast's corporate structure and not hold Coleman liable for Coast's negligence would not sanction a fraud or promote injustice. Tom Nakamura, Inc. v. G. & G. Produce Co., 93 Idaho 183, 457 P.2d 422 (1969). Therefore, even if the trial court had been authorized to make post trial special findings concerning the parent company liability issue as asserted by the plaintiff Ross, there was absolutely no legal basis in this record for the trial court to impose liability on Coleman for any negligence of Coast. Furthermore, the jury in its answer to Special Interrogatory 7, found that Coast's negligence consisted of negligen[ce] in connection with the designing of the Hobie Cat 16 sailboat and/or mast. The negligent designing by Coast occurred in 1968, long before Coleman acquired Coast's stock. In no event could Coleman be held liable for the negligence of Coast which occurred prior to the time that Coleman acquired Coast's stock. In certain cases the negligence of one person may be imputed to another to charge the latter with liability to a third person injured by reason of such negligence. Generally, where there is an attempt to hold one person civilly liable for the negligence of another, it must be made to appear that the relation of principal and agent or master and servant existed between the two at the time the tort was committed, and that the tortious act was committed in the course of employment or within the scope of the agency, or that the person sought to be held responsible was engaged in a joint venture or enterprise with the one who was negligent. 58 Am.Jur.2d Negligence ง 458 (1971). (Emphasis added.) Finally, it must be pointed out that the trial court's action, in overruling the jury's verdict and aggregating, i.e., imputing the negligence of Coast to Coleman, was contrary to the court's Seppi v. Betty Instruction No. 34, which was given pursuant to the rule announced in our case of Seppi v. Betty, 99 Idaho 186, 579 P.2d 683 (1978). In Seppi, we held that the trial court should instruct the jury on the consequences of the special findings which they make in their verdict. We stated: It would be incredibly naive to believe that jurors, after having listened attentively to testimony of the parties and a parade of witnesses and after having heard the arguments of counsel, will answer questions on a special verdict form without giving any thought to the effect these answers will have on the parties and to whether their answers will effectuate a result in accord with their own lay sense of justice. With respect to most questions, the jury would have to be extremely dull witted not to be able to guess which answers favor which parties. Seppi v. Betty, 99 Idaho 186, 193, 579 P.2d 683, 690 (1978). As we said in Seppi, jurors are as much concerned with the final result which their verdicts will render, as with the specific findings which they make apportioning negligence among the various parties. Accordingly, in Seppi we opted in favor of disclosure to the jury of the consequences of their findings and approved the trial courts instructing the juries of the consequences of their verdicts. The trial court in this case did give a Seppi v. Betty instruction. In Instruction No. 34, the court told the jury: You are now to compare the negligence of the parties and Idaho Power Company. If you find the plaintiff's negligence equal to or more than the total amount of negligence of either defendant or Idaho Power Company, he will receive nothing from that entity, regardless of the amount of damages you may find that he sustained. To the extent that you find the plaintiff negligent in an amount less than any of these entities the total amount of damages sustained by him will be reduced by the amount of percentage of negligence you may attribute to him. For example, if you find Michael Ross's negligence was less than Coast Catamaran Corporation, Michael Ross's recovery will be reduced by any percentage of negligence that you may have attached to him. The same analysis applies to Michael Ross and either Coleman Company, Inc., or the Idaho Power Company. Thus, the jury in this case was told that if they answered Question No. 13 no, thereby requiring them to evaluate Coast's and Coleman's negligence separately, not jointly, in Special Verdict Question No. 14, and if they find the plaintiff's negligence equal to or more than the total amount of negligence of either defendant [Coast or Coleman] ..., he [the plaintiff] will receive nothing from that entity. When the jury answered Question No. 13 no and then assessed 10% negligence to plaintiff Ross, and separately assessed only 10% negligence to defendant Coast and 5% to defendant Coleman, the jury understood that under Instruction No. 34, the plaintiff would receive nothing from [either Coast or Coleman]. Based on Seppi, it is apparent that the jury intended by its verdict that the plaintiff Ross collect nothing from the defendants Coast and Coleman. Yet when the trial court imputed the negligence of Coast to Coleman, contrary to the jury's verdict, it rendered the advice given in the Seppi v. Betty Instruction No. 34 erroneous. The jury was not accurately told what the consequences of its findings would be, but was erroneously told that, by its verdict, the plaintiff would receive nothing from Coast and Coleman, when in fact, as a result of their verdict, and the trial court's aggregating action, a judgment of nearly $400,000 was rendered against Coleman. Had the jury been correctly advised in Instruction No. 34 that the trial court intended to impute the negligence of Coast to Coleman, in spite of their finding of no joint negligence in their answers to Special Verdict Questions Nos. 13 and 14, the jury may well have allocated the negligence to Ross, Coast and Coleman in different proportions in order to accomplish their apparent lay sense of justice that Ross recover nothing by their verdict. It is apparent that at the time the trial court gave the jury its Seppi v. Betty Instruction No. 34, it had no thought that it would be aggregating (imputing) the individual negligence of Coast to Coleman in the event that the jury answered Special Interrogatory No. 13 no, finding no joint negligence against Coast and Coleman. A review of the trial court's statements after trial, when it made the decision to aggregate, discloses that the trial judge was basically just substituting his findings of how the negligence should have been apportioned for the findings of the jury. [16] However, there was substantial evidence to support the jury's findings, and accordingly, the trial court's action, which in effect amounted to a judgment notwithstanding the verdict, is clearly contrary to our case law. Quick v. Crane, supra ; Dinneen v. Finch, supra ; Seppi v. Betty, supra . In sum, then, the trial court erred when it overrode the jury's factual findings in Special Verdict Questions No. 13 and 14 which held that Coast and Coleman's negligence should be assessed on a separate basis, and that no joint or imputed negligence existed between them because of their composite business relationship. Accordingly, the judgment entered against Coleman is reversed, and the cause is remanded with directions to enter judgment on the jury's verdict in favor of Coleman and Coast. [17]