Varco, Inc. v. Uns Elec., Inc.

393 P.3d 946

VARCO, INC., an Arizona corporation; RW Warehouse Corporation, an Arizona corporation, Plaintiffs/Appellees,

v.UNS ELECTRIC, INC., an Arizona corporation, Defendant/Appellant.

No. 2 CA–CV 2016–0144

Court of Appeals of Arizona, Division 2.

Filed March 23, 2017

Burris & MacOmber, P.L.L.C., Tucson, By D. Rob Burris and Karl MacOmber, Counsel for Plaintiffs/Appellees

Snell & Wilmer, L.L.P., Tucson, By Andrew M. Jacobs and W. Danny Green, Counsel for Defendant/Appellant

Judge Miller authored the opinion of the Court, in which Presiding Judge Staring and Judge Espinosa concurred.

OPINION

MILLER, Judge:

¶ 1 Defendant UNS Electric appeals from the trial court's grant of a motion for new trial in favor of plaintiffs Varco and RW Warehouse Corporation, after the jury ruled in favor of UNS. The ruling was based on misconduct by UNS's counsel for examining witnesses regarding excluded evidence, as well as disclosure violations.¹ For the following reasons, we affirm.

Factual and Procedural Background

¶ 2 The lawsuit arose out of a 2013 fire that destroyed a warehouse owned by Varco and rented by RW Warehouse Corporation, hereinafter collectively referred to as "Varco." Varco alleged the fire originated on a utility pole negligently installed and maintained by UNS in close proximity to the warehouse. Specifically, Varco alleged UNS's negligence resulted in electrical "arcing" that caused the fire.

¶ 3 Varco filed motions in limine to preclude evidence that a cigarette butt was found on the site near the fire origination, that Varco did not possess property insurance, and certain opinions of UNS fire expert Keith Paffrath. The trial court granted the motion about the cigarette butt and lack of insurance, but reserved ruling on the admissibility of Paffrath's testimony "pending proof of proper foundation." The minute entry does not reflect the court's reasoning, and UNS did not designate a transcript of the motions hearing as part of the appellate record.² We presume the missing transcript would support the court's ruling, Myrick v. Maloney , 235 Ariz. 491, ¶ 11, 333 P.3d 818, 822 (App. 2014) ; further, we rely on the court's statements—made throughout trial—as to the rulings, their scope, and the court's rationale.

¶ 4 On the second day of trial, UNS cross-examined an employee who witnessed the fire, asking him if he and others smoked at the warehouse. After objection by Varco, the trial court reminded the parties that its motion-in-limine ruling was based on the fact that UNS was not expected to offer a witness who could "provide a reasonable basis for the jury to conclude that there was some other cause of the fire, whether it was smoking or anything else"; therefore, evidence of any specific people smoking or of a cigarette butt was not relevant. UNS stated it intended instead to introduce evidence of smoking to show a violation of the fire code, but the court still sustained the objection.

¶ 5 Resuming cross-examination, UNS immediately asked the witness about where smoking is allowed, Varco objected, and the trial court sustained the objection. UNS then asked where smoking is not allowed, Varco objected, and the court sustained the objection. At a bench conference, UNS argued that an expert would testify that smoking in certain areas would have been a violation of the fire code. The court again sustained the objection, concluding fire code violations were irrelevant unless there was testimony that adherence to the fire code would have ameliorated the fire. Later, the court further explained its basis for precluding testimony about smoking and the fire code as both lacking relevance under Rule 401, Ariz. R. Evid., and more prejudicial than probative, confusing the issues, and confusing to the jury pursuant to Rule 403, Ariz. R. Evid.

¶ 6 The next day during direct examination, Varco's expert was asked, "There is no other evidence of anything else starting the pallets on fire other than the sparking; is that correct?" The expert agreed. During cross-examination, UNS asked about smoking areas at the warehouse and whether smoking is a frequent cause of fires. Varco objected, but the trial court overruled the objection on the ground that Varco opened the door to questions about the methodology the expert had used to eliminate other causes of the fire. The court still precluded questions regarding the cigarette butt because there was no evidence the fire began with smoking.

¶ 7 At the start of UNS's case in chief, it began by introducing deposition testimony of a Varco employee. Varco unsuccessfully objected based on a lack of pretrial designation. Several pages into the testimony, UNS's counsel read four questions and answers regarding who smoked at the warehouse and what the warehouse smoking policy was. Varco eventually objected, arguing that UNS had improperly introduced testimony regarding smoking. The trial court sustained the objection.

¶ 8 The absence of property insurance was the source of continuing dispute throughout trial, despite a pretrial ruling precluding reference to it. UNS argued in its written response and throughout trial that a lack of insurance showed a lack of inspection and a general failure to follow fire codes. During trial, the trial court sustained objections involving insurance, noting testimony regarding fire code violations was irrelevant and more prejudicial than probative. The court separately explained it had precluded UNS from offering proof that the warehouse had never been permitted or inspected, based on lack of foundation as well as relevance.

¶ 9 Nonetheless, on the fifth day of trial, UNS asked the owner if the building had a certificate of occupancy, to which Varco objected. The trial court noted that it had reviewed the audio recording of the motions hearing and found this issue fell under compliance with local fire codes, and it was therefore still inadmissible. UNS argued its expert, Paffrath, would testify that had the fire codes been followed, the fire would have remained outside the building. The court concluded UNS could try to establish relevance and lay a foundation with Paffrath, but noted there was still a pending issue involving late disclosure with respect to Paffrath's testimony about fire codes.

¶ 10 Finally, during Paffrath's testimony, UNS asked, "Do you understand that the building was—was never inspected?" Varco objected and the trial court reiterated that fire code violations were irrelevant absent an opinion connecting violations to causation. The court further stated it did not "appreciate [UNS] asking the question, is it your understanding this thing has never been inspected, in anticipation of [Varco's] objection to this question." The court reiterated the basis of its ruling on the motion in limine, again stating that it reviewed the audio recording.³ The court had the court reporter read back the question, concluded it was leading, and stated that it found the actions of UNS's counsel to be intentional. The court inquired about whether Varco wanted a curative instruction, but Varco did not ask for one and the court did not give one.

¶ 11 The jury found in favor of UNS, and Varco filed a motion for new trial arguing misconduct by UNS's counsel caused them unfair prejudice. After a hearing, the trial court granted the motion in an unsigned minute entry. UNS moved for reconsideration of the order for a new trial, and the court issued a detailed twenty-one page signed order reaffirming its ruling and denying the motion for reconsideration. UNS timely appealed. We have jurisdiction pursuant to A.R.S. §§ 12–120.21(A)(1) and 12–2101(A)(5)(a).⁴

Motion for New Trial

¶ 12 UNS generally argues the trial court abused its discretion by granting the motion for new trial because it did not commit misconduct, Varco did not suffer prejudice, and the court did not "consider whether the jury's verdict was correct."⁵ The trial court has broad discretion in ruling on a motion for new trial. See Leavy v. Parsell , 188 Ariz. 69, 72, 932 P.2d 1340, 1343 (1997). A trial court abuses its discretion when it commits an error of law, or when the record lacks substantial evidence to support the court's finding. Romer–Pollis v. Ada , 223 Ariz. 300, ¶ 12, 222 P.3d 916, 918–19 (App. 2009). Further, "[w]e review an order granting a new trial under a more liberal standard than an order denying one." Englert v. Carondelet Health Network , 199 Ariz. 21, ¶ 5, 13 P.3d 763, 767 (App. 2000), quoting State Farm Fire & Cas. Co. v. Brown , 183 Ariz. 518, 521, 905 P.2d 527, 530 (App. 1995). This is because the denial may be a final disposition of the rights of the parties, and because "we recognize that trial judges disfavor new trial motions and will generally grant them only with great caution." Liberatore v. Thompson , 157 Ariz. 612, 620, 760 P.2d 612, 620 (App. 1988).

¶ 13 When ruling on a motion for new trial based on attorney misconduct, the trial court "must decide whether the misconduct materially affected the rights of the aggrieved party," and reversal is only required "when it appears probable that the misconduct ‘actually influenced the verdict.’ " Leavy , 188 Ariz. at 72, 932 P.2d at 1343, quoting Grant v. Ariz. Pub. Serv. Co. , 133 Ariz. 434, 454, 652 P.2d 507, 527 (1982). Although there is no presumption of prejudice or lack thereof, "[i]f the misconduct is serious ... the judge should resolve any doubt in favor of the party aggrieved." Id.

Misconduct

¶ 14 UNS argues the trial court abused its discretion when it labeled several occurrences during trial as misconduct. It first contends it did not commit misconduct when asking generally about smoking because the pretrial ruling was limited to testimony about a single cigarette butt. Because we presume the missing transcript of the motions hearing supports the court's ruling as it pertains to smoking, Myrick , 235 Ariz. 491, ¶ 11, 333 P.3d at 822, UNS's claim that the ruling was limited to preclusion of a specific cigarette butt is not...