Court Opinion

ID: 2680245
Source: CourtListenerOpinion
Date Created: 2014-06-24 16:01:20.301375+00
Date Added: 2024-06-11T13:14:47.346791
License: Public Domain

NOTICE: NOT FOR PUBLICATION.
   UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
          LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

                                     IN THE
               ARIZONA COURT OF APPEALS
                                 DIVISION ONE

    US EXPRESS LEASING, INC.; CIT TECHNOLOGY FINANCING
   SERVICES, INC.; BANC OF AMERICA LEASING & CAPITAL, LLC,
                        Plaintiffs/Appellees,

                                        v.

       LAURA LELAND and BRIAN LELAND wife and husband,
                    Defendants/Appellants.

                             No. 1 CA-CV 13-0360
                              FILED 06-24-2014

           Appeal from the Superior Court in Maricopa County
                          No. CV2008-022375
               The Honorable Randall H. Warner, Judge

                                  AFFIRMED

                                   COUNSEL

Jaburg & Wilk, PC, Phoenix
By Rodger L. Cohen, Kathi M. Sandweiss
Counsel for Plaintiff/Appellee US Express

David N. Ingrassia, PC, Phoenix
By David N. Ingrassia
Counsel for Plaintiff/Appellee CIT

Poli & Ball, PLC, Phoenix
By Michael N. Poli, Lawrence R. Moon
Counsel for Plaintiff/Appellee Banc of America
The McBride Law Firm, PC, Scottsdale
By Melanie G. McBride, Keith A. Gernant
Counsel for Defendants/Appellants

                      MEMORANDUM DECISION

Presiding Judge Kenton D. Jones delivered the decision of the Court, in
which Judge Margaret H. Downie and Judge Donn Kessler joined.

J O N E S, Judge:

¶1             Laura Leland (Leland) appeals the trial court’s denial of her
motion for new trial filed pursuant to Arizona Rule of Civil Procedure
59(a). 1 For the reasons stated below, we affirm.

                FACTS 2 AND PROCEDURAL HISTORY

¶2           Bryan Bartel (Bartel) and Jane Doe Bartel were the sole
owners of All H2, Inc., a corporation authorized to transact business in
Arizona under the registered trade name of Copyrite Business Equipment
(Copyrite). Leland, a sales agent of Copyrite, received compensation in
the form of commissions and salary based upon the value of the
equipment she sold or leased for Copyrite.

¶3            From June 2007 through January 2008, Copyrite, Bartel, and
Leland (Copyrite defendants) claimed to have sold and delivered to
Robert Kubicek Architects and Associates (Kubicek), more than $703,019
in industrial grade copy and printing equipment (new equipment). In
fact, the Copyrite defendants entered fictitious serial numbers for new
equipment on fraudulent lease agreements which Copyrite then paid a
Kubicek employee $55,000 to sign. USXL, Banc America, CIT, and GE,
(financing companies) then paid the Copyrite defendants $703,019 for the
alleged sales and deliveries to Kubicek. 3 However, Kubicek never

1 Absent material revisions after the relevant dates, we cite the current
version of the statutes and rules unless otherwise indicated.
2 In reviewing the denial of a motion for new trial, we view the evidence

in the light most favorable to sustaining the verdict. Hutcherson v. City of
Phx., 192 Ariz. 51, 53, ¶¶ 12-13, 961 P.2d 449, 451 (1998).
3 The Copyrite defendants stated, “CopyRite [sic][] entered into a series of

contracts in which CopyRite [sic] sold equipment to the Leasing

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                      US EXPRESS, et al. v. LELAND
                          Decision of the Court

received the majority of the equipment reflected on the financing
agreements.

¶4           Kubicek only became aware of the transactions between the
Copyrite defendants and his employee when the company’s controller
discovered the firm’s leased equipment expenses were significantly higher
than the historical average, apparently due to Kubicek’s payment of
$262,119 on invoices received from the financing companies for the
phantom new equipment.

¶5            In September 2011, Kubicek filed a complaint in the
Maricopa County Superior Court against the Copyrite defendants and the
financing companies.        The financing companies brought separate
counterclaims against Kubicek and crossclaims against the Copyrite
defendants. 4 Prior to trial, Kubicek settled with the financing companies
and dismissed claims against the Copyright defendants. The leasing
companies and the Copyrite defendants then went to trial on the leasing
companies’ crossclaims.

¶6            The jury entered forty-one verdicts in favor of the financing
companies. In summary, the jury found: (1) Copyrite liable for breach of
contract; (2) Copyrite and Bartel liable for negligent hiring and
supervision; (3) Copyrite responsible for Leland’s acts based upon
respondeat superior liability; and (4) Bartel and Leland liable for negligent
misrepresentation, fraud and unlawful activity in favor of CIT financing
company. 5

¶7          The jury awarded damages 6 to the three financing
companies in the following amounts: full damages against Copyrite in the
amount of $3.00; full damages against Bartel in the amount of $447,737.51;

[financing] Companies, which would simultaneously lease the equipment
to Kubicek.”
4 Given the complexity of the claims, counterclaims, and crossclaims, we

offer only a summary of the underlying proceedings as the issues on
appeal relate solely to the denial of Leland’s motion for new trial.
5 Leasing Company, CIT, alone alleged a pattern of unlawful activity

against the Copyrite defendants.
6 We aggregate the amount of damages awarded to the financing

companies.

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                      US EXPRESS, et al. v. LELAND
                          Decision of the Court

and full damages against Leland in the amount of $111,934.38. 7
Collectively, the jury awarded the finance companies punitive damages
against: (1) Copyrite in the amount of $3.00; (2) Bartel in the amount of
$1,119,343.78; and (3) Leland in the amount of $300,000.00. 8

¶8            After the trial court announced the verdicts, dismissed the
jury, and concluded the trial, the Copyrite defendants filed a motion for
new trial, pursuant to Rule 59(a), asserting: the jury finding of both fraud
and negligent misrepresentation was an inconsistent verdict; the jury
verdicts awarding punitive damages failed to indicate whether the awards
were for negligent misrepresentation, intentional misrepresentation or
both; and the jury award of punitive damages was without evidence of the
defendants’ financial conditions.

¶9            In denying the defendants’ motion for new trial, the trial
court held the fraud and negligent misrepresentation verdicts were not
inconsistent: the evidence supported a finding the Copyrite defendants
both intentionally defrauded the financing companies, and failed to
exercise reasonable care in communicating information regarding the
transaction as required for a negligent misrepresentation claim. The trial
court also found the punitive damage instruction was not in error as the
instruction clearly informed the jury it could not award punitive damages
unless it found the Copyrite defendants acted with an evil mind, and
“[o]ne can commit the tort of negligent misrepresentation while acting
with an evil mind.” 9 Ruling on the Copyrite defendants’ third assertion,

7  We aggregate the amount of damages awarded to the financing
companies.
8 The Copyrite defendants subsequently filed an “Objection to the Form of

Judgment” pursuant to Arizona Rule of Civil Procedure 58(d). As a result,
the trial court amended the form of judgment to conform with the verdict,
finding Copyrite liable for the total amount of compensatory damages
awarded to USXL, CIT, and Banc of America “because [Copyrite] [was]
liable for the acts of both Leland and Bartel.”
9 The requirement of an “evil mind” in a punitive damage award must be

evidenced by a “conscious action of a reprehensible character.” Linthicum
v. Nationwide Life Ins. Co., 150 Ariz. 326, 331, 723 P.2d 675, 680 (1986).
Central to the award is the wrongdoer’s intent to injure the plaintiff or
“his deliberate interference with the rights of others, consciously
disregarding the unjustifiably substantial risk of significant harm to
them.” Id. (citing Rawlings v. Apodaca, 151 Ariz. 149, 160, 726 P.2d 565, 576
(1989)). Thus, “evidence of an ‘evil mind’ and aggravated and outrageous

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                      US EXPRESS, et al. v. LELAND
                          Decision of the Court

the trial court found evidence of defendants’ financial condition was not
required when submitting the issue of punitive damages to the jury, and
that the Copyrite defendants waived this argument by failing to raise it
during trial.

¶10           Finally, the trial court conceded the jury should have
awarded the entire amount of damages against Copyrite, given the jury
instructions on respondeat superior liability, but held the defendants waived
this argument by failing to raise it at the time of the verdict when the
jury’s mistake might have been remedied.

¶11         Leland timely appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (A.R.S.) section 12-2101(A)(1) (2014).

                               DISCUSSION

¶12            The grant or denial of a motion for new trial is addressed to
the sound discretion of the trial court. Rodriguez v. Williams, 107 Ariz. 458,
460, 489 P.2d 268, 270 (1971). We review the denial of a motion for new
trial for an abuse of discretion. Hutcherson, 192 Ariz. at 53, ¶ 12, 961 P.2d
at 451.

¶13           Leland argues the trial court erred by refusing to order a
new trial as the jury’s verdict was contrary to law. Further, Leland
contends: (1) she did not have to raise the inconsistency of the amounts of
damages under Rule 49(c); and (2) the trial court should have granted her
Rule 59 motion because, in denying her motion, the trial court stated the
jury incorrectly applied the law of respondeat superior.

¶14           Rule 59(a)(8) allows a trial court to grant a new trial when a
verdict is contrary to law. However, a trial court’s grant of a motion for

conduct” is necessary for a jury to award punitive damages. Id. In the
immediate case, the jury instructions stated that an award of punitive
damages might enter if the jury were to find “fraud, negligent supervision
or pattern of unlawful activity.” Clearly, both fraud and pattern of illegal
activity allow for an award of punitive damages. The jury found for
plaintiff in regard to fraud, negligent supervision, and pattern of unlawful
activity. Following the jury’s verdict, no objection was interposed to the
inclusion of negligent supervision as allowing an award of punitive
damages and Leland, therefore, waived her right to object. Ariz. R. Civ. P.
51(a).

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                      US EXPRESS, et al. v. LELAND
                          Decision of the Court

new trial is premised upon the party’s conformity with Arizona Rule of
Civil Procedure 49(c), which states in pertinent part: “If the verdict is . . .
defective, the court may direct it to be reformed at the bar . . . . If the
verdict is not responsive to the issue submitted to the jury, the court shall
call the jurors’ attention thereto, and send them back for further
deliberation.”

¶15           The purpose of Rule 49(c) is to permit a correction of the
verdict before the jury is excused, and thus advance the efficient operation
of the courts. See Gonzalez v. Gonzalez, 181 Ariz. 32, 35, 887 P.2d 562, 565
(App. 1994). Furthermore, Rule 49(c) discourages litigants from jury-
shopping by “permitting them to decide whether to take their chances on
resubmitting the verdict and findings to the then-sitting jury, or remain
silent thereby allowing the entry of judgment and moving for a new trial
before a new jury.” Id. at 36, 887 P.2d at 566 (quoting Cundiff v. Washburn,
393 F.2d 505, 507 (7th Cir. 1968)).

¶16           Leland concedes failure to object to the jury verdicts at the
time the verdicts were rendered, but asserts Rule 59 does not require the
party moving for a new trial to raise an objection while the jury remains
empanelled. Instead, Leland contends Rule 49(c) places the burden of
informing the jury of defective or inconsistent verdicts upon the trial court
rather than the aggrieved party. Although Rule 49(c) permits a trial court
to reform a defective verdict, the party, not the court, moves for a new
trial pursuant to Rule 59; therefore, the party must necessarily raise issues
of defective verdicts, including verdicts contrary to law, at the time the
verdict is rendered. Trustmark Ins. Co. v. Bank One, Ariz., NA, 202 Ariz.
535, 543, ¶ 39, 48 P.3d 485, 493 (App. 2002) (“If Trustmark believed the
jury verdict was inconsistent, defective, or nonresponsive to its negligence
claim, Trustmark should have moved, before the jury was excused, for
resubmission of the case to the jury pursuant to Rule 49(c). . . . However,
Trustmark did not invoke Rule 49(c). By not challenging the verdict when
rendered, Trustmark waived its objection to any error.”) (internal citations
omitted).

¶17           In support of her position, Leland cites Southern Pacific
Railroad Company v. Mitchell, 80 Ariz. 50, 292 P.2d 827 (1956), for the
proposition that, “the court has the power to put a manifestly irregular or
defective verdict in such form as to make it conform to the intention of the
jury, and carry their findings into effect, where the intention can be
ascertained with certainty.” In Southern Pacific, after discharging the jury,
the trial court amended a defective verdict in conformity with the
intention of the jury. Id. at 65-66, 292 P.2d at 837. However, contrary to

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                       US EXPRESS, et al. v. LELAND
                           Decision of the Court

Leland’s position, the trial court only did so after the aggrieved party
moved to amend the verdict, obtained affidavits of each jury member
attesting to their intention, and the trial court held a subsequent hearing to
determine the jury’s intent. Id. at 65, 292 P.2d at 837. As a result, the
Southern Pacific Court concluded the trial court had “jurisdiction to grant
the [party’s] motion to amend or correct the verdict.” Id.

¶18           Leland also cites Fornara v. Wolpe, 26 Ariz. 383, 226 P. 203
(1924), and Flanders v. Maricopa County, 203 Ariz. 368, 54 P.3d 837 (App.
2002), for her assertion the trial court, rather than the aggrieved party,
should bring unresponsive verdicts to the jury’s attention and send the
jury back for further deliberation. Leland’s reliance upon these cases is
unavailing as well. In Fornara, the trial court properly disregarded a
defective verdict after a party objected to the verdict when rendered. 26
Ariz. at 385, 388-89, 226 P. at 204-05 (“[T]he court granted appellee’s
motion for judgment for $1,050 notwithstanding the verdict, and in so
doing did not commit error.”).

¶19            In Flanders, the jury returned two verdict forms indicating a
different amount of compensatory damages for each claim. 203 Ariz. at
374, ¶ 41, 54 P.3d at 843. “After consulting with counsel, the court
instructed the jury that the amount on each verdict form must be the
same.” Id. at 374-75, ¶ 41, 54 P.3d 843-44. This Court affirmed the trial
court’s actions, noting that the trial court properly complied with Rule
49(c) by calling the “jurors’ attention to a defect in the verdict and
‘send[ing] them back for further deliberation.’” Id. at 375, ¶ 45, 54 P.3d at
844. Although Flanders teaches a trial court may reform a jury verdict
under Rule 49(c) after consulting with counsel, an aggrieved party must
object to the verdict at the time it is rendered if that party later moves for a
new trial. See Trustmark, 202 Ariz. at 543, ¶ 39, 48 P.3d at 493.

¶20             Thus, by failing to challenge the verdict when rendered,
Leland waived her ability to object on the ground the jury’s assignment of
damages to her, rather than to Copyrite, was contrary to law. Id. (“By not
challenging the verdict when rendered, [the party] waived its objection to
any error.”). 10

10As Leland waived her claim that the verdict was contrary to law, we
need not reach the question whether the doctrine of respondeat superior
precludes the assignment of damages against Leland.

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                     US EXPRESS, et al. v. LELAND
                         Decision of the Court

                            CONCLUSION

¶21          For the foregoing reasons, we affirm the trial court’s denial
of Leland’s motion for new trial. Appellee CIT requests attorneys’ fees
and costs pursuant to A.R.S. § 13-2314.04(A) (2014) as the action involved
a pattern of racketeering activity. In the exercise of our discretion, we
grant CIT reasonable attorneys’ fees on appeal and costs in an amount to
be determined upon compliance with ARCAP 21(c).

                                :gsh

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