Court Opinion

ID: 2688914
Source: CourtListenerOpinion
Date Created: 2014-08-01 14:53:47.199068+00
Date Added: 2024-06-11T15:20:52.706251
License: Public Domain

FILED BY CLERK
                              IN THE COURT OF APPEALS                 NOV 29 2006
                                  STATE OF ARIZONA
                                                                      COURT OF APPEALS
                                    DIVISION TWO                        DIVISION TWO

DYANE CORBETT, Personal                        )
Representative of the Estate of DORIS          )
LOUCKS,                                        )
                                               )
                        Plaintiff/Appellant/   )
                           Cross-Appellee,     )
                                               )
                   v.                          )        2 CA-CV 2005-0160
                                               )        DEPARTMENT A
MANORCARE OF AMERICA, INC.;                    )
MANORCARE HEALTH SERVICES,                     )        OPINION
INC.; and MANORCARE OF ARIZONA,                )
INC., a Delaware corporation with its          )
principal place of business in Ohio, dba       )
MANOR CARE HEALTH SERVICES-                    )
TUCSON fka HCR MANOR CARE,                     )
INC.; MANORCARE HEALTH                         )
SERVICES OF ARIZONA, INC.;                     )
NETTIE ELIE and JOHN DOE ELIE, a               )
married couple; RICHARD PARK and               )
JANE DOE PARK; PAUL ORMOND                     )
and JANE DOE ORMOND, a married                 )
couple; MICHAEL MARTINEZ and                   )
JANE DOE MARTINEZ, a married                   )
couple; RICK PAREDES and JANE                  )
DOE PAREDES, a married couple; and             )
KEITH WEIKEL and JANE DOE                      )
WEIKEL, a married couple,                      )
                                               )
                  Defendants/Appellees/        )
                      Cross-Appellants.        )
                                               )

           APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY

                                  Cause No. C20043303

                           Honorable Michael D. Alfred, Judge
           AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

Lisa Kimmel                                                                       Tucson
                                                                    Attorney for Plaintiff/
                                                                 Appellant/Cross-Appellee

Gust Rosenfeld, P.L.C.
 By James W. Kaucher                                                              Tucson
                                                                Attorneys for Defendants/
                                                               Appellees/Cross-Appellants

V Á S Q U E Z, Judge.

¶1            Appellant Dyane Corbett, personal representative of the Estate of Doris

Loucks, appeals from the trial court’s grant of summary judgment to Manor Care of America,

Inc.; Manor Care Health Services, Inc.; Manor Care of Arizona, Inc. (all corporate

subsidiaries of Manor Care, Inc.); and several employees of Manor Care, Inc. and its

subsidiaries. Corbett also appeals from the trial court’s dismissal of her complaint against

employee Richard Park and the court’s award of attorney fees to the subsidiaries and the

employees. The subsidiaries and employees cross-appeal from the trial court’s denial of

their motion for sanctions. We affirm in part and reverse in part the summary judgment and

affirm the dismissal of Corbett’s claim against Park. We vacate the attorney fee award and

affirm the denial of sanctions.

                                   Standard of Review

¶2            We review a trial court’s grant of summary judgment de novo. Andrews v.

Blake, 205 Ariz. 236, ¶ 12, 60 P.3d 7, 11 (2003). We will affirm a summary judgment only

                                             2
if there are no genuine issues of material fact and the moving party is entitled to judgment

as a matter of law. Id. ¶ 13. “[W]e view the facts ‘in the light most favorable to the party

against whom judgment was entered.’” Ariz. Prop. & Cas. Ins. Guar. Fund v. Martin, 210
Ariz. 478, ¶ 2, 113 P.3d 701, 701-02 (App. 2005), quoting Bothell v. Two Point Acres,

Inc., 192 Ariz. 313, ¶ 2, 965 P.2d 47, 49 (App. 1998). We review for an abuse of discretion

a trial court’s decision on a motion to dismiss a complaint for failure to timely serve a

defendant. Toy v. Katz, 192 Ariz. 73, 83, 961 P.2d 1021, 1031 (App. 1997).

                           Facts and Procedural Background

¶3            This appeal is from the second of two lawsuits Corbett filed on behalf of the

estate of her mother, Doris Loucks, arising from the treatment provided Loucks in a Tucson

Manor Care facility in April 2001.

Corbett I

¶4            Corbett filed her first complaint in 2002 in Pima County Superior Court

against Manor Care, Inc., alleging violations of Arizona’s Adult Protective Services Act

(APSA), A.R.S. §§ 46-451 through 46-457, as well as claims of negligence, breach of

contract, and fraud. Manor Care removed the case to federal district court in May 2002.

Corbett learned during discovery that Manor Care, Inc. was the parent company of several

subsidiaries. She amended her complaint pursuant to the parties’ stipulation in May 2003

to include the subsidiaries. The subsidiaries moved to dismiss the complaint in February

2004, alleging Corbett had not timely served them. The district court granted the motion

in April 2004 and dismissed the subsidiaries without prejudice.

                                             3
¶5           Corbett then moved for leave to amend her complaint to include the

subsidiaries. The district court denied the motion in May 2004 after finding the amendment

would be futile because Corbett’s personal injury and APSA claims were then barred by the

statutes of limitations, a ground the court raised sua sponte. The district court denied

Corbett’s motion for reconsideration of that ruling. In September 2004, the court granted

summary judgment in favor of the parent company, Manor Care, Inc., the only remaining

defendant, after finding, inter alia, that Corbett had “pursued the incorrect defendant” by

suing the parent company instead of the subsidiaries on her APSA claim. Corbett timely

appealed that ruling to the Ninth Circuit Court of Appeals.1

Corbett II

¶6           In June 2004, while the district court case was pending, Corbett filed the

present case in Pima County Superior Court against the subsidiaries and the employees,

alleging APSA violations, breach of contract, and negligence. The subsidiaries and

employees moved for summary judgment. The subsidiaries asserted that Corbett was barred

under the doctrine of res judicata from pursuing her claims because of the district court’s

grant of summary judgment in favor of Manor Care, Inc. in Corbett I and also that Corbett

was estopped from bringing her claims because of the district court’s rulings regarding her

motion to amend her complaint. The employees argued that the doctrines of res judicata and

collateral estoppel barred Corbett from pursuing her claims because of the district court’s

rulings regarding her motion to amend her complaint. The employees also asserted that the

      1
       Corbett’s appeal is pending.

                                            4
statute of limitations had run on Corbett’s negligence and breach of contract claims and that

her APSA claim was baseless because they had not been “employed to provide care” to

Loucks.

¶7            The trial court granted summary judgment in favor of the subsidiaries and

employees, finding that Corbett’s claims against the subsidiaries were barred by res judicata

and collateral estoppel, that her claims against the employees were barred by collateral

estoppel, and that her claims against the employees for negligence, breach of contract, and

the APSA violation were barred by the statutes of limitations. The trial court further found

that the employees were not liable as a matter of law on Corbett’s APSA claim because they

“were not ‘employed to provide care’” to Loucks under the statute. The court also granted

employee Richard Park’s motion to dismiss the complaint without prejudice after finding he

had not been timely served.

                                        Discussion

Dismissal of Park

¶8            Corbett argues the trial court abused its discretion in granting Park’s motion

to dismiss on the ground she had failed to timely serve him. Corbett contended below that

she had served the complaint in July 2004 on a Manor Care, Inc. employee, believing that

the employee was authorized to accept service for all the employees who had not yet been

served, including Park. In his affidavit submitted in support of his motion to dismiss,

however, Park stated that he had not been employed by Manor Care, Inc. or “any Manor

Care entity” in July 2004 and that he had not authorized Manor Care, Inc. to accept service

                                             5
on his behalf. Park therefore argued that he had not been timely served and the claim

against him should be dismissed pursuant to Rule 4(i), Ariz. R. Civ. P., 16 A.R.S., Pt. 1,

which provides:

                      If service of the summons and complaint is not made
              upon a defendant within 120 days after the filing of the
              complaint, the court, upon motion or on its own initiative after
              notice to the plaintiff, shall dismiss the action without prejudice
              as to that defendant or direct that service be effected within a
              specified time; provided that if the plaintiff shows good cause
              for the failure, the court shall extend the time for service for an
              appropriate period.

¶9            Corbett now argues that the trial court erred in dismissing Park under this rule

because she did not have “prior notice” that Park had not been served. She contends the

trial court should have afforded her an opportunity to correct the deficiency. But Corbett

cites no authority for the proposition that she was entitled to notice that Park had not been

properly served before he filed his motion, and we are aware of none. And Rule 4(i), on its

face, warranted the trial court’s dismissal without prejudice of Corbett’s complaint against

Park. We therefore find no abuse of discretion in that ruling. See Toy v. Katz, 192 Ariz. 73,

83, 961 P.2d 1021, 1031 (App. 1997).

Summary judgment rulings

¶10           The party moving for summary judgment has the burden of showing there are

no genuine issues of material fact and it is entitled to judgment as a matter of law. Schwab

v. Ames Constr., 207 Ariz. 56, ¶ 15, 83 P.3d 56, 60 (App. 2004). We will uphold a grant

of summary judgment if it is correct for any reason. CDT, Inc. v. Addison, Roberts &

Ludwig, C.P.A., P.C., 198 Ariz. 173, ¶ 19, 7 P.3d 979, 984 (App. 2000). We review issues

                                              6
of law, such as those involving res judicata, collateral estoppel, and statutory interpretation,

de novo. Hall v. Lalli, 194 Ariz. 54, ¶ 5, 977 P.2d 776, 779 (1999) (res judicata);

Campbell v. SZL Props., Ltd., 204 Ariz. 221, ¶ 8, 62 P.3d 966, 968 (App. 2003) (collateral

estoppel); Mercy Healthcare Ariz., Inc. v. Ariz. Health Care Cost Containment Sys., 181
Ariz. 95, 98, 887 P.2d 625, 628 (App. 1994) (statutory interpretation).

¶11           We first note Corbett does not argue on appeal concerning the summary

judgment on her breach of contract claim against the employees, which the trial court found

was barred by the statute of limitations. The employees correctly assert that she has

therefore waived any issue on that claim, and we do not address it. See Rowland v. Great

States Ins. Co., 199 Ariz. 577, n.1, 20 P.3d 1158, 1169 n.1 (App. 2001). Similarly,

although the trial court granted summary judgment in favor of the employees on Corbett’s

common law negligence claim, also on statute of limitations grounds, Corbett’s arguments

on appeal refer only to her statutory negligence claim under APSA and not to any other

negligence claim. Therefore, we do not address her common law negligence claim. See id.

A. Subsidiaries

¶12           Corbett first argues the trial court erred in finding that her APSA claim against

the subsidiaries is barred on res judicata and collateral estoppel grounds based on the district

court’s rulings in Corbett I. Because the district court rendered the prior rulings that gave

rise to those defenses, federal law governs whether those rulings have a preclusive effect.

In re Gila River Sys. Water Rights, 212 Ariz. 64, ¶ 13, 127 P.3d 882, 887 (2006); Garcia

                                               7
v. Gen. Motors Corp., 195 Ariz. 510, ¶ 7, 990 P.2d 1069, 1072-73 (App. 1999). We note,

however, the result is the same under either federal or Arizona law.

       1. Res judicata

¶13             “Under res judicata, a final judgment on the merits bars further claims by

parties or their privies based on the same cause of action.” Montana v. United States, 440
U.S. 147, 153, 99 S. Ct. 970, 973 (1979); Di Orio v. City of Scottsdale, 2 Ariz. App. 329,

331, 408 P.2d 849, 851 (1965). Corbett contends her claim is not precluded by res judicata

because Corbett I and Corbett II did not involve the same parties. The subsidiaries contend

Corbett II “meets the criteria for res judicata . . . [because it] is the same suit, based on the

same facts, with the same plaintiff” as Corbett I, in which the district court granted summary

judgment in favor of Manor Care, Inc. The subsidiaries further contend they were parties

to Corbett I.

¶14             Corbett initially amended her complaint in Corbett I following her stipulation

with Manor Care, Inc. to join the subsidiaries as defendants. However, the district court

granted the subsidiaries’ motion to dismiss the case against them without prejudice on the

ground that they had not been timely served. And the district court denied Corbett’s

subsequent motion to amend her complaint to again join the subsidiaries as defendants, as

well as her motion for reconsideration of that ruling. Thus, even though the subsidiaries had

been joined as defendants, they ceased to be parties to Corbett I once they were dismissed

and never again became parties because the court denied Corbett’s motions.

                                               8
¶15           When the district court granted summary judgment in Corbett I, the only

parties to the action were Manor Care, Inc. and Corbett. The district court found Manor

Care, Inc. was not a proper defendant under APSA and Corbett should have sued the

subsidiaries instead. But, because the subsidiaries have not shown that Corbett I and

Corbett II involved the same parties or their privies,2 res judicata does not bar Corbett’s

claim against the subsidiaries in Corbett II.

       2. Collateral estoppel

¶16           “Under collateral estoppel, once an issue is actually and necessarily

determined by a court of competent jurisdiction, that determination is conclusive in

subsequent suits.” Montana, 440 U.S. at 153, 99 S. Ct. at 973. Collateral estoppel applies

when the issue sought to be precluded is the same as that involved in the prior proceeding,

the issue was actually litigated in the prior proceeding, the issue was determined by a valid

and final judgment on the merits, and the determination was essential to the final judgment.

In re Giangrasso, 145 B.R. 319, 322 (B.A.P. 9th Cir. 1992); Garcia, 195 Ariz. 510, ¶ 9,
990 P.2d at 1073 (noting state elements of collateral estoppel virtually identical to federal).

¶17           The subsidiaries argue Corbett is estopped from litigating in Corbett II the

issue of whether her APSA claim is timely because the district court denied Corbett’s motion

to amend the complaint and her motion for reconsideration in Corbett I on statute of

limitations grounds. They contend these district court rulings constitute a valid and final

judgment on the merits for purposes of collateral estoppel. In contrast, Corbett argues that

       2
       The subsidiaries do not assert they are privies of Manor Care, Inc.

                                                9
“[t]he underlying merits of this case have never been adjudicated.” Assuming, without

deciding, that rulings based on statute of limitations grounds are to be given issue-preclusive

effect, 3 we agree with Corbett’s alternate argument that collateral estoppel cannot apply

because the statute of limitations issue was not fully and “actually litigated.”4

¶18           For collateral estoppel to bar a party from litigating an issue, the issue must

have been actually litigated. Giangrasso, 145 B.R. at 322; Garcia, 195 Ariz. 510, ¶ 9, 990
P.2d at 1073. This requirement means that preclusion is inappropriate if the parties did not

raise the issue in the pleadings, Gospel Missions of America v. City of Los Angeles, 328
F.3d 548, 553 (9th Cir. 2003), and thus, did not have “a full and fair opportunity to litigate

the merits of an issue,” Littlejohn v. United States, 321 F.3d 915, 923 (9th Cir. 2003). See

also Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986).

“Redetermination of issues is warranted if there is reason to doubt the quality, extensiveness,

or fairness of procedures followed in prior litigation.” Montana, 440 U.S. at 164 n.11, 99
S. Ct. at 979 n.11; see also State ex rel. Dep’t of Econ. Sec. v. Powers, 184 Ariz. 235, 237,

908 P.2d 49, 51 (App. 1995).

       3
        Compare Martin v. United States, 30 Fed. Cl. 542, 549 (1994) (finding elements
of issue preclusion had been met, including necessity of “judgment on the merits,” when
action dismissed on statute of limitations grounds), with Cepeda v. Coughlin, 785 F. Supp.
385, 388-89 (S.D.N.Y. 1992) (concluding that, although statute of limitations dismissals
have claim-preclusive effect in New York, they do not have issue-preclusive effect).

       Corbett did not make this argument in her response to the subsidiaries’ motion for
       4

summary judgment. However, she did argue it in her motion to vacate the judgment pursuant
to Rule 59(a), Ariz. R. Civ. P., 16 A.R.S., Pt. 2. Thus, she preserved this argument for
appeal. See United Bank of Ariz. v. Allyn, 167 Ariz. 191, 197, 805 P.2d 1012, 1018 (App.
1990).

                                              10
¶19           As noted above in ¶ 5, the statute of limitations issue was first raised by the

district court in denying Corbett’s motion to amend her complaint in Corbett I, when the

district court found that her APSA claim was barred by the two-year statute of limitations

then in effect, making any amendment futile. See A.R.S. § 46-455(K). The district court

reasoned that, because Corbett had filed her motion to amend the complaint more than two

years after her cause of action had accrued in April 2001, her claim was time barred. See

id. APSA had originally contained a seven-year statute of limitations, see former § 46-

455(I), but the legislature amended the statute while Corbett I was pending, effective

September 18, 2003, reducing the time for bringing claims from seven years to two years

after the plaintiff actually discovers the cause of action. 2003 Ariz. Sess. Laws, ch. 129, §

2; § 46-455(K).

¶20           After the district court’s ruling denying her motion to amend her complaint in

Corbett I, Corbett filed a motion urging the court to reconsider its denial of the proposed

amendment, relying on A.R.S. § 12-505(C). That statute provides:

                      If an amendment of pre-existing law shortens the time of
              limitation fixed in the pre-existing law so that an action under
              pre-existing law would be barred when the amendment takes
              effect, such action may be brought within one year from the
              time the new law takes effect, and not afterward.

In her motion, Corbett argued that, pursuant to § 12-505(C), she had until September 18,

2004, one year after the date the statutory amendment took effect, to amend her complaint

to include the subsidiaries. In denying her motion for reconsideration, the district court

relied on this court’s decision in City of Tucson v. Clear Channel Outdoor, Inc., 206 Ariz.
11
335, n.5, 78 P.3d 1056, 1059 n.5 (App. 2003). We stated in Clear Channel that § 12-

505(C) “does not apply . . . when ‘an action is not barred by pre-existing law.’” 206 Ariz.
335, n.5, 78 P.3d at 1059 n.5, quoting § 12-505(B). The district court reasoned that,

because the amended statute became effective on September 18, 2003, and the subsidiaries

had not been dismissed until April 14, 2004, her action was not time barred when the

amendment took effect. Thus, the district court concluded, Corbett’s claim against the

subsidiaries “[was] not saved by § 12-505(C).”

¶21            Our supreme court subsequently vacated our Clear Channel decision. City

of Tucson v. Clear Channel Outdoor, Inc., 209 Ariz. 544, ¶ 44, 105 P.3d 1163, 1174

(2005). In April 2005, Corbett filed a motion in the district court pursuant to Rule 60(b),

Fed. R. Civ. P., arguing the supreme court’s Clear Channel decision constituted “an

intervening change in the controlling law” that required reconsideration of the district

court’s grant of summary judgment in favor of defendant Manor Care, Inc. The district court

denied the motion, stating Corbett’s notice of appeal, filed in October 2004, had divested

it of jurisdiction to consider her motion. See Katzir’s Floor & Home Design, Inc. v. M-

MLS.com, 394 F.3d 1143, 1148 (9th Cir. 2004) (“The district court lacked jurisdiction to

entertain the Rule 60(b) motion, which was filed after the notice of appeal had been filed,

thereby stripping the district court of its jurisdiction.”).

¶22            From this procedural history, we find Corbett did not have a full and fair

opportunity to litigate the issue of the amended statute of limitations on her APSA claim.

First, the applicability of the statute of limitations was raised sua sponte by the district court

                                               12
in the first instance rather than by the parties. Second, Corbett was unable to litigate the

effect of the supreme court’s Clear Channel decision on the applicability of the amended

statute because the district court ruled that it lacked jurisdiction to consider her argument.

Thus, Corbett’s opportunity to litigate the applicability of the amended statute of limitations

was limited, and applying collateral estoppel to bar actual, future litigation on that issue

would therefore be inappropriate. See, e.g., Littlejohn, 321 F.3d at 923 (finding issue

preclusion inappropriate when party did not have “the opportunity to fully litigate” issue in

prior proceeding); see also Gospel Missions, 328 F.3d at 553 (finding issue preclusion

inappropriate when basis for decision “neither framed in the pleadings nor contested by the

parties” in prior proceeding); Powers, 184 Ariz. at 237, 908 P.2d at 51 (finding issue

preclusion inappropriate because pertinent issue not actually litigated in prior proceeding).

¶23             Furthermore, we agree with Corbett’s other argument that, regardless of

whether the elements of collateral estoppel are present, she should not be precluded from

litigating the issue of whether her APSA claim is timely because of the supreme court’s

Clear Channel decision. Corbett cites the Restatement (Second) of Judgments § 28 (1982),5

which states:

                Although an issue is actually litigated and determined by a valid
                and final judgment, and the determination is essential to the

       5
        We recognize that, in her response to the subsidiaries’ motion for summary judgment
in the trial court, Corbett did not specifically mention the Restatement (Second) of
Judgments § 28 in arguing that she should not be estopped from pursuing her APSA claim
in Corbett II. But she did argue that, in denying her motion for reconsideration, the district
court had relied on case law that had subsequently been overturned. Thus, because she
identified and argued the central issue, we address her argument.

                                               13
               judgment, relitigation of the issue in a subsequent action
               between the parties is not precluded in the following
               circumstances:

               ....

               (2) The issue is one of law and . . . (b) a new determination is
               warranted in order to take account of an intervening change in
               the applicable legal context or otherwise to avoid inequitable
               administration of the laws . . . .

¶24            The United States Supreme Court has stated that collateral estoppel may not

apply in certain situations, such as when “controlling facts or legal principles have changed

significantly since the [prior] judgment.” Montana, 440 U.S. at 155, 99 S. Ct. at 974-75;

see also State v. Whelan, 208 Ariz. 168, ¶ 16, 91 P.3d 1011, 1016 (App. 2004) (applying

Restatement § 28 exception in Arizona). Although a misapplication of the law does not

trigger the applicability of the exception to collateral estoppel, an intervening change in the

law will. Richey v. United States Internal Revenue Serv., 9 F.3d 1407, 1412 (9th Cir.

1993). Corbett argues that the supreme court’s Clear Channel decision is such an

intervening change in the law, requiring a redetermination of the issue of the applicability

of APSA’s amended statute of limitations after the parties have had a full and fair

opportunity to litigate it.

¶25            In its Clear Channel decision, the supreme court addressed the footnote in this

court’s Clear Channel opinion on which the district court relied in denying Corbett’s

motion for reconsideration. The supreme court disagreed with our conclusion that § 12-

505(C) does not apply when an action is not barred by pre-existing law. Clear Channel,

209 Ariz. 544, ¶ 33, 105 P.3d at 1171. Rather, the court concluded that § 12-505(C)

                                              14
“covers those cases in which the cause of action is not barred by pre-existing law, but when

application of the new statute of limitations would bar the claim.” 209 Ariz. 544, ¶ 35, 105
P.3d at 1172. In other words, the supreme court interpreted § 12-505(C) as follows: “If a

claim would have been timely filed under the old law but not the new, under [§ 12-505(C),]

the plaintiff has one year from the effective date of the new law to file suit.” 209 Ariz. 544,

¶ 42, 105 P.3d at 1173. Corbett sought to amend her Corbett I complaint to include the

subsidiaries in April 2004, which would have been timely under the former seven-year

limitation period for APSA claims. Thus, under our supreme court’s decision in Clear

Channel, she had until September 18, 2004, one year from the effective date of the new

limitation period, to amend her complaint.

¶26           Accordingly, we agree with Corbett that there has been an intervening change

in the law sufficient to trigger the exception to collateral estoppel in Restatement § 28 and

discussed by the Supreme Court in Montana. In this case, our supreme court overturned the

very portion of this court’s Clear Channel decision upon which the district court relied.

Our supreme court’s Clear Channel decision thus constituted such an intervening change

in the law. See, e.g., Segal v. Am. Tel. & Tel. Co., 606 F.2d 842, 845 (9th Cir. 1979)

(“Issue preclusion does not compel reapplication of a remedy since held erroneous as a

matter of law.”); see also Whelan, 208 Ariz. 168, ¶ 16, 91 P.3d at 1016 (appellate court

decision issued after dismissal without prejudice in criminal case constituted intervening

change in law that prevented state from being collaterally estopped from refiling charges).

                                              15
¶27           In sum, we conclude that at least one of the elements necessary for collateral

estoppel is not present here because Corbett did not have a full and fair opportunity to

litigate the applicability of the amended statute of limitations. And, even assuming the

elements of collateral estoppel are present, we further conclude that the Restatement §

28(2)(b) exception for an intervening change in the law applies. Thus, Corbett is not

estopped from litigating in Corbett II the issue of whether her APSA claim against the

subsidiaries is timely.6

B. Employees

¶28           Corbett next argues the trial court erred in granting summary judgment to the

employees on her APSA claim. The court found that Corbett was “collaterally estopped

from relitigating her claims arising from” Loucks’s stay at the Tucson facility because of the

district court’s rulings denying Corbett’s motion to amend her complaint, that the statute of

limitations had expired on all Corbett’s claims, and that the employees were not subject to

liability under APSA because they were not “employed to provide care” to Loucks. The

employees argue on appeal, as they did below, that Corbett’s APSA claim is also barred by

res judicata because of the district court’s rulings denying Corbett’s motion to amend her

complaint.7

       6
        Because the issue was not raised or argued below or on appeal, we do not address
which, if any, of the subsidiaries would potentially be subject to liability under APSA based
on whether it owned or operated the Tucson facility.
       7
        The trial court did not address this argument.

                                             16
          1. Collateral estoppel

¶29              We first consider Corbett’s argument that the trial court incorrectly determined

she is collaterally estopped from litigating the issue of whether her APSA claim against the

employees was timely. The employees argue that, “to the extent that Corbett II involves the

same issues litigated and decided in Corbett I, the [employees] are entitled to assert

collateral estoppel as a complete defense.” However, as we concluded above, even if the

elements of collateral estoppel are met, the intervening change in the law exception applies

in this case. The district court’s ruling denying Corbett’s motion for reconsideration of its

denial of her motion to amend her complaint was based on that part of our Clear Channel

decision that has since been overturned by our supreme court. Thus, Corbett is not estopped

from litigating in Corbett II the issue of whether her APSA claim against the employees is

timely.

          2. Statute of limitations

¶30              Corbett argues the trial court erred in finding that the statute of limitations had

expired on her APSA claim.8 There is no dispute that Corbett’s cause of action accrued in

April 2001. At that time, she had seven years to file her complaint. As discussed above,

after the limitation period was reduced by the 2003 amendment of § 46-455, under § 12-

505(C), Corbett had until September 18, 2004, one year from the effective date of the

amendment to file her complaint. Corbett filed her complaint in Corbett II in June 2004,

          8
        The trial court raised this ground sua sponte because the employees had argued the
statute of limitations barred Corbett’s APSA claim in their motion for summary judgment
only in the context of their res judicata argument.

                                                 17
well within that one-year period. See City of Tucson v. Clear Channel Outdoor, Inc., 209
Ariz. 544, ¶ 42, 105 P.3d 1163, 1173 (2005). Therefore, this action was timely as a matter

of law, and the trial court erred in granting summary judgment on this ground.9

       3. Applicability of APSA

¶31           Corbett next asserts that the trial court erred in granting summary judgment

to the employees on the ground they “were not ‘employed to provide care’ to Doris Loucks”

under APSA. As she did below, Corbett argues the employees violated A.R.S. § 46-455(B).

That statute provides that an APSA claim may be brought against “any person or enterprise

that has been employed to provide care” or that “has assumed a legal duty to provide care

. . . to [an] incapacitated or vulnerable adult for having caused or permitted” the abuse,

neglect, or exploitation of the adult.10

¶32           The employees assert that the statute requires a direct caregiver-patient

relationship for a duty to arise. The employees rely on Estate of McGill v. Albrecht, 203
Ariz. 525, 57 P.3d 384 (2002), arguing that, because “liability under APSA arises from the

relationship between a vulnerable adult and her care provider,” they cannot be liable under

APSA. They rely on the following language in McGill:

       9
        Given our conclusion, we need not consider Corbett’s contention that her action
would have been saved by A.R.S. § 12-504(A). We likewise need not address the
subsidiaries’ counterargument that Corbett’s contention constitutes an “improper attempt
at a horizontal appeal.”
       10
       The statute does limit the liability of certain health care providers, but the
employees do not argue that this limitation applies to any of them. See A.R.S. § 46-455(B),
(C).

                                            18
              We hold . . . that to be actionable abuse under APSA, the
              negligent act or acts (1) must arise from the relationship of
              caregiver and recipient, (2) must be closely connected to that
              relationship, (3) must be linked to the service the caregiver
              undertook because of the recipient’s incapacity, and (4) must be
              related to the problem . . . that caused the incapacity.

Id. ¶ 16.

¶33           However, the employees’ reliance on McGill for their proposition that APSA

requires a direct caregiver-patient relationship is misplaced. The primary issues in McGill

were whether a single negligent act triggered liability under APSA and whether the

legislature intended the remedies of the Medical Malpractice Act and APSA to be mutually

exclusive. 203 Ariz. 525, ¶¶ 10, 18, 57 P.3d at 387-89. In applying the above quoted

language to the facts of the case before it, the court in McGill found that the allegedly

negligent acts did arise from and were closely connected to the relationship between the

caregiver and patient. Id. ¶ 24. But, contrary to the employees’ assertion, McGill does not

require a direct caregiver-patient relationship for liability to arise under APSA.

¶34           Our interpretation of APSA leads us to a different conclusion from that urged

by the employees and apparently adopted by the trial court. Our goal when interpreting

statutes is to give effect to the legislative intent. See Mercy Healthcare Ariz., Inc. v. Ariz.

Health Care Cost Containment Sys., 181 Ariz. 95, 98, 887 P.2d 625, 628 (App. 1994).

Our supreme court has stated: “The legislature’s intent and the policy behind the elder

abuse statute are clear. Arizona has a substantial population of elderly people, and the

legislature was concerned about elder abuse.” In re Guardianship/Conservatorship of

Denton, 190 Ariz. 152, 156, 945 P.2d 1283, 1287 (1997); see also McGill, 203 Ariz. 525,

                                              19
¶ 6, 57 P.3d at 387 (“[T]he statute was intended to increase the remedies available to and

for elderly people who had been harmed by their caregivers.”); Davis v. Zlatos, 211 Ariz.
519, ¶ 19, 123 P.3d 1156, 1161 (App. 2005). Our interpretation of the statute must be

consistent with this legislative intent.

¶35           And “statutory language controls our interpretation when the language is clear

and unequivocal.” Mercy Healthcare, 181 Ariz. at 98, 887 P.2d at 628. Moreover, we give

meaning to each word or phrase in a statute so none is rendered insignificant, contradictory,

superfluous, or void. Weitekamp v. Fireman’s Fund Ins. Co., 147 Ariz. 274, 275, 709 P.2d
908, 909 (App. 1985). Under the plain wording of the statute, an incapacitated or

vulnerable adult can bring a lawsuit against “any person or enterprise” that “has been

employed to provide care” or that “has assumed a legal duty to provide care” if the person

or enterprise has “caused or permitted” the incapacitated or vulnerable adult to be abused,

neglected, or exploited. § 46-455(B).

¶36           Following the principles of statutory interpretation set out above, we find that

the legislature did not intend to limit liability to those who have a direct caregiver-patient

relationship with an incapacitated or vulnerable adult. The statute subjects to liability both

persons and enterprises, not just individuals. Furthermore, the statute subjects to liability

those who cause or permit the abuse, neglect, or exploitation of an incapacitated or

vulnerable adult. § 46-455(B). Thus, the statute applies to a broader class of tortfeasors

than the trial court implicitly found.

                                             20
¶37           However, defendants Ormond, Parades, Weikel, and Martinez contend they

are not subject to liability under APSA because they were employees of the parent company,

Manor Care, Inc. and “were not even in the State of Arizona at the time of Loucks’s stay at

the facility.” Corbett does not dispute this contention. She also does not dispute their

further contention that they never “met, spoke to, or had any personal contact with Ms.

Loucks” and that “they had no personal knowledge of her condition, her care, or her

treatment while she was a patient” at the facility. Therefore, the trial court correctly granted

summary judgment to these employees on the ground they were not employed to provide

care to Loucks. Given that these employees were not employed by any of the subsidiaries

and that they had no knowledge of Loucks and were not involved with her care, we find no

error in the trial court’s entry of judgment in their favor.

¶38           The same cannot be said about defendant Elie, who was employed as the

director of nursing at the Tucson facility at the time Loucks was there. According to an

uncontroverted affidavit by the vice president of Manor Care, Inc., employees of the Tucson

facility are not employees of Manor Care, Inc. According to Elie’s deposition, which

Corbett submitted in support of her opposition to the motion for summary judgment, Elie

was not present at the facility when Loucks was admitted on April 10, 2001, but she became

aware of Loucks’s presence there on April 16, when she returned to work after a two-week

vacation. Elie also stated that, as director of nursing, she was responsible for managing the

daily operations of the department of nursing services at the Tucson facility, which included

overseeing patient care and staff education, “helping to direct . . . the clinical aspects of

                                              21
resident care,” managing the staff, and ensuring that federal and state regulations were

followed.

¶39           Corbett’s APSA claim was based, in part, on her assertion that the employees

had violated APSA by permitting Loucks to be abused and neglected by other employees.

Based on Elie’s deposition, and given our construction of the statute as not requiring a direct

caregiver-patient relationship, we conclude that Elie did not meet her burden of showing

that no genuine issue of material fact exists on whether she was employed to provide care

to Loucks and that she is not entitled to judgment as a matter of law on that claim.11 See

Schwab v. Ames Constr., 207 Ariz. 56, ¶ 15, 83 P.3d 56, 60 (App. 2004). Accordingly, the

trial court erred in granting summary judgment to Elie on that ground.

       4. Res judicata

¶40           We next consider whether the doctrine of res judicata bars Corbett’s APSA

claim against Elie because of the district court’s rulings regarding the statute of limitations.

As discussed above, res judicata bars a second action between the same parties or their

privies based on the same claim once a judgment on the merits has been entered in a prior

proceeding. Montana v. United States, 440 U.S. 147, 153, 99 S. Ct. 970, 973 (1979); Di

Orio v. City of Scottsdale, 2 Ariz. App. 329, 331, 408 P.2d 849, 851 (1965). Elie concedes

she was not a party to Corbett I. But she nonetheless contends the district court’s rulings

on the statute of limitations preclude Corbett’s claim against her as a privy of the subsidiaries

       11
       Our decision here does not preclude Elie from filing another motion for summary
judgment as the case develops.

                                               22
because of their principal-agent relationship. See Scottsdale Mem’l Health Sys., Inc. v.

Clark, 157 Ariz. 461, 466, 759 P.2d 607, 612 (1988) (“[T]he preclusive effect of a judgment

is limited to parties and persons in privity with parties.”); see also Daystar Invs., L.L.C. v.

Maricopa County Treasurer, 207 Ariz. 569, ¶ 15, 88 P.3d 1181, 1185 (App. 2004).

Examples of persons in privity include employers and employees, principals and agents, and

indemnitors and indemnitees. See Aldrich & Steinberger v. Martin, 172 Ariz. 445, 448-49,

837 P.2d 1180, 1183-84 (App. 1992).

¶41           As an employee of one of the subsidiaries, Elie is in privity with her subsidiary

employer, and Corbett does not dispute this. However, as we have noted above, all the

subsidiaries had been dismissed from Corbett I and were no longer parties to that action at

the time of the rulings from which Elie now seeks to benefit. Specifically, because the

district court denied Corbett’s motion to amend the complaint, the subsidiaries were never

again parties to that action after being dismissed. Thus, because the “party” with whom Elie

claims privity was not a party when the rulings at issue in the prior proceeding were

rendered, an essential element of res judicata has not been met. Therefore, Corbett’s APSA

claim against Elie is not barred under the doctrine of res judicata.

                                       Attorney Fees

¶42           Lastly, Corbett contends insufficient evidence supports the trial court’s award

of attorney fees to the subsidiaries and the employees. The trial court awarded attorney fees

under A.R.S. § 12-349(A) and Rule 11(a), Ariz. R. Civ. P., 16 A.R.S., Pt. 1. At oral

argument in this court, the subsidiaries and the employees abandoned their argument that

                                              23
they were entitled to fees under § 12-349(A). Therefore, we address only the propriety of

the award of fees as a Rule 11 sanction. Rule 11 permits sanctions on an attorney or party

who files a claim or defense that is groundless or brought for an improper purpose. The

sanction may include an order to pay the other party’s attorney fees. We review a trial

court’s imposition of Rule 11 sanctions for an abuse of discretion. Linder v. Brown &

Herrick, 189 Ariz. 398, 407, 943 P.2d 758, 767 (App. 1997).

¶43           In view of our reversal of summary judgment on Corbett’s APSA claim against

the subsidiaries and Elie, insufficient evidence supports the award of fees as a Rule 11

sanction.12 The trial court may, however, revisit the issue of attorney fees when the trial

court proceedings have concluded. See Johnson v. McDonald, 197 Ariz. 155, ¶ 30, 3 P.3d
1075, 1082 (App. 1999).

                                       Cross-Appeal

¶44           Following the trial court’s entry of summary judgment and award of attorney

fees to the subsidiaries and employees, they moved for sanctions, presumably under Rule

11, against Corbett “in her personal capacity” and against her attorney to have them held

personally responsible for paying the fees. The trial court assessed fees against the estate as

the plaintiff but denied the motion for sanctions. The subsidiaries and employees cross-

appeal from that denial.

       12
        See Wells Fargo Credit Corp. v. Smith, 166 Ariz. 489, 497, 803 P.2d 900, 908
(App. 1990) (finding on appeal that trial court improperly granted summary judgment
indicates claim or defense not frivolous).

                                              24
¶45            But, because we have concluded the trial court’s award of attorney fees as a

Rule 11 sanction was inappropriate against the estate, it follows that we find no abuse of

discretion in the trial court’s denial of the subsidiaries and employees’ motion to sanction

Corbett and her attorney personally.

                                         Disposition

¶46            We affirm the trial court’s dismissal of Richard Park. We affirm the trial

court’s grant of summary judgment on Corbett’s negligence and breach of contract claims.

Because genuine issues of material fact exist on whether the subsidiaries and Elie are subject

to liability under APSA, we reverse the summary judgment in their favor on that claim and

remand the case for further proceedings. The judgment in favor of the remaining employees

is affirmed.

¶47            The trial court’s award of attorney fees is vacated. The trial court’s denial of

sanctions is affirmed. We deny the subsidiaries and employees’ request for attorney fees on

appeal.

                                               ____________________________________
                                               GARYE L. VÁSQUEZ, Judge

CONCURRING:

____________________________________
JOHN PELANDER, Chief Judge

                                              25
____________________________________
JOSEPH W. HOWARD, Presiding Judge

                                 26