Torres v. Jai Dining

Citation: Not availableDocket: 1 CA-CV 19-0544

Court: Court of Appeals of Arizona; March 29, 2022; Arizona; State Appellate Court

Original Court Document: View Document

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Roberto Torres and others filed a lawsuit against JAI Dining Services (Phoenix, Inc.) concerning damages caused by a patron, Cesar Aguilera Villanueva, after a night of drinking that resulted in two fatalities. The Arizona Court of Appeals, on appeal from the Maricopa County Superior Court, addressed whether common law negligence and dram shop liability claims against JAI were preempted by Arizona's statutory dram shop liability framework, specifically A.R.S. § 4-311 and 4-312. The court, on remand from the Arizona Supreme Court, affirmed that A.R.S. § 4-312(B) preempts the plaintiffs' claims. It also clarified that this statute does not violate the Arizona Constitution's anti-abrogation clause since dram shop liability claims did not exist at common law in 1912. Consequently, the court reversed the Superior Court's judgment against JAI, ordering that judgment be entered in favor of JAI while allowing the plaintiffs' claims only regarding Villanueva.

Plaintiffs initiated a lawsuit against Villanueva for negligence and against JAI under common law negligence and dram shop liability, as well as statutory dram shop negligence under A.R.S. 4-311. Prior to trial, JAI sought summary judgment, claiming that Villanueva's later decision to drive was an intervening cause that relieved JAI of liability, but this argument was not presented at trial regarding preemption of the claims by Arizona’s statutory scheme. During the jury trial, JAI moved for judgment as a matter of law, asserting that the elements of duty and proximate cause were not satisfied, but the court denied the motion. The jury found Villanueva negligent, ruled in favor of Plaintiffs on common law negligence and dram shop claims against JAI, but favored JAI on the statutory dram shop claim, awarding $2,000,000 in damages, with 60% fault assigned to Villanueva and 40% to JAI. JAI's subsequent motion for judgment as a matter of law was also denied. JAI appealed, arguing three points: preemption of the claims, that Villanueva's actions were an intervening cause, and that JAI did not breach any duty. Plaintiffs contended that JAI waived the preemption argument by raising it on appeal, although they addressed it on the merits. The appellate court reversed the judgment against JAI, stating that Villanueva's decision to drive was an intervening cause that severed proximate causation. The Arizona Supreme Court later granted a review on whether Villanueva’s actions cut off JAI's liability, ultimately vacating the appellate decision and ruling that it was a jury question. The Supreme Court declined to address the preemption issue as it was not granted for review.

Parties interested in submitting amicus briefs were not notified of this opportunity, and JAI did not present the preemption issue to the trial court, though it was raised at the appellate level. The appellate court must first determine if an exception to the waiver doctrine applies and decide on the merits if warranted. The supreme court remanded the case for consideration of additional issues raised by JAI, including whether the waiver doctrine applies to JAI's preemption argument and if Plaintiffs' common law negligence and dram shop claims are preempted by A.R.S. 4-312(B). 

The analysis begins with addressing Plaintiffs’ assertion that JAI has waived the preemption issue by not raising it in the superior court. Generally, appellate courts do not consider new issues raised for the first time on appeal, as trial courts and opposing counsel should have the opportunity to correct any defects. This waiver rule is procedural and can be suspended at the appellate court’s discretion, especially for issues of statewide significance or public interest. In this case, both parties extensively briefed and argued the preemption issue, eliminating any claim of surprise. It would have been futile for JAI to raise preemption in the superior court, which was bound by earlier rulings from this court. The rationale for the waiver doctrine does not apply here, as both parties had sufficient notice and opportunity to address the issue, and amici have contributed to the court’s understanding of the matter.

Well-established exceptions to the waiver doctrine apply in this case, particularly regarding the preemption issue raised by JAI. The court must determine if A.R.S. 4-312(B) violates the Arizona Constitution's anti-abrogation clause (Article 18, Section 6), which would prevent it from preempting common law negligence and dram shop liability claims. This constitutional question is critical and affects both civil plaintiffs’ and defense counsels, as it could significantly influence their clients' interests.

Despite not being raised at trial, the court deems the constitutional issue important enough to consider since it could decisively impact the appeal and clarify the law. The unusual mixed verdict from the jury—finding JAI liable under common law but not under statutory obligations—provides a unique context for addressing this issue, which may not arise again soon. Therefore, the court opts to examine JAI's preemption argument.

JAI contends that recent Supreme Court decisions, including Dickey and Young, render previous case law obsolete, asserting that A.R.S. 4-312(B) validly preempts Plaintiffs’ common law claims, warranting a reversal of the judgment against JAI. Evaluating this argument necessitates a review of Arizona's dram shop liability history.

Historically, tavern owners in Arizona were not liable for off-premises injuries caused by intoxicated patrons, even if their negligence contributed to the incidents. This nonliability persisted until July 1983, when the Arizona Supreme Court, through Ontiveros and Brannigan, abolished the common law nonliability doctrine and recognized a common law cause of action for dram shop liability. The court also encouraged the legislature to enact statutes that could potentially replace or preempt the newly established common law.

Three years post the supreme court decisions in Ontiveros and Brannigan, the Arizona legislature enacted A.R.S. 4-311 and 4-312, establishing a statutory framework for dram shop liability. Section 4-311 allows for liability against liquor licensees for property damage, personal injury, or wrongful death if they sell alcohol to individuals who are "obviously intoxicated" or underage, and if the alcohol consumption is a proximate cause of the resulting harm. The definition of "obviously intoxicated" is specified as significant impairment of physical faculties. Conversely, A.R.S. 4-312(B) limits liability, stating that liquor licensees are not liable for damages caused by the sale or service of alcohol, except as outlined in 4-311. Since the enactment, liquor licensees have argued that these statutes replace common law liability from Ontiveros and Brannigan with a clear statutory scheme. However, subsequent court opinions have raised questions about the anti-abrogation clause's protection of common law causes of action, suggesting that it may encompass claims arising post-constitutional adoption. The Arizona Supreme Court has previously held that the anti-abrogation clause applies to common law wrongs, but later decisions have created ambiguity regarding the applicability of this clause to newer torts. Notable cases include Bryant v. Continental Conveyor, where the court ruled that A.R.S. 12-551 did not abrogate a substantive right, and Hazine v. Montgomery Elevator Co., which overruled Bryant, establishing the recognition of strict liability for product-related injuries as protected under the anti-abrogation clause. Justice Martone's dissent in Hazine contended that the majority improperly expanded the constitutional protections to all tort law in Arizona, conflicting with prior rulings.

In 1995, the court's decision in Young addressed the constitutionality of A.R.S. 4-312(B), determining it violated the Arizona Constitution’s anti-abrogation clause. A plaintiff had sued a bar owner after an intoxicated patron caused an accident, and the bar relied on 4-312(B) to limit liability to the provisions of 4-311. The court ruled that 4-311 was the exclusive remedy for dram shop liability, leading to a defense verdict. The plaintiff appealed, claiming that 4-312(B) unconstitutionally abrogated the common law negligence action established in Ontiveros. The court agreed, stating that the statute unconstitutionally restricted claims for plaintiffs unable to prove the purchaser was "obviously intoxicated" under 4-311 while still showing common law negligence.

Subsequently, the Arizona Supreme Court clarified the anti-abrogation clause's scope, indicating it does not protect all tort claims but only those that existed or evolved from recognized common law rights. In Cronin v. Sheldon, the court rejected the idea that wrongful termination claims were protected under the anti-abrogation clause, explaining that the clause applies only to tort actions with common law roots. In Andrews ex rel. Woodard v. Eddie’s Place, Inc., the appellate court reiterated its earlier ruling that 4-312(B) was unconstitutional and concluded that the legislature did not intend to abrogate Ontiveros's holding but rather aimed to codify existing common law. The court maintained that the legislature could abrogate claims for torts like employment discrimination that did not exist at the time of Arizona's statehood, emphasizing that historical common law origins do not automatically validate contemporary tort claims.

In 2003, the Arizona Supreme Court's decision in Dickey extended the precedent set in Cronin regarding common law negligence actions against municipalities. The court clarified that the anti-abrogation provision of the Arizona Constitution protects only those rights of action that existed at the time the Constitution was adopted, not those created afterward. In Dickey, plaintiffs sued the City of Flagstaff for injuries sustained by a child while sledding in a city park. The City defended itself under A.R.S. 33-1551, asserting that the plaintiffs needed to prove gross negligence or willful misconduct to succeed, which the superior court upheld by granting summary judgment in favor of the City due to insufficient evidence of such conduct.

The Supreme Court reviewed whether the requirements of the recreational use statute unconstitutionally abrogated the right to file a simple negligence lawsuit against the City. Ultimately, the court applied the Cronin standard and determined that a right of action for simple negligence against municipalities did not exist at common law at the time the anti-abrogation clause was instituted, thus rejecting the plaintiffs' argument. 

The implications of Cronin and Dickey indicate that if a claim was not viable against a specific defendant in 1912, the anti-abrogation clause does not protect it. This rationale also applies to dram shop negligence actions, which followed a similar historical progression of being rejected at common law, later recognized judicially, and subsequently legislatively addressed. Consequently, the anti-abrogation clause does not restrict the legislature from defining liability for dram shop claims created in 1983, nor does it safeguard liabilities that were previously rejected by 1912, as emphasized in both cases.

Claims against certain defendants, previously rejected at common law, are evaluated under the principles established in Cronin and Dickey, rather than the evolving concept of common law causes of action as proposed in Hazine. Specifically, under Dickey, claims that could not have been sustained when the anti-abrogation provision was enacted are not protected by that provision. The existence of general negligence actions in common law does not extend to dram shop liability claims, as demonstrated in Dickey, which involved a simple negligence lawsuit. Therefore, even if negligence is rooted in common law, it does not safeguard recovery rights that were unavailable at that time. Consequently, claims like the Lerners’ for negligent failure to disclose are not shielded by the anti-abrogation clause, similar to the wrongful termination claim in Cronin.

The document emphasizes that merely naming a claim after a common law action does not suffice; the context of the claim must be assessed to determine its legitimacy under common law. If a type of wrongful act against a specific defendant could not have been maintained at the time the anti-abrogation provision was enacted, it is not protected. The judiciary's role in evolving common law does not give it the authority to extend constitutional protection to all tort actions indiscriminately.

Furthermore, the principles from Cronin and Dickey uphold the separation of powers between legislative and judicial branches. The legislature had the opportunity to enact the statutory scheme for dram shop liability at various points without conflicting with the anti-abrogation clause. The constitutionality of such legislation does not change with the timing of court decisions that create new liabilities. Similar reasoning applies to social host immunity, which is constitutional since social hosts were not liable at common law.

Lastly, regarding the preemption question, plaintiffs argue that A.R.S. 4-312(B) unlawfully abrogates the common law dram shop cause of action. Even if this claim holds, the common law cause of action recognized in 1983 did not exist in 1912, reinforcing that claims not maintainable at the time of the anti-abrogation clause's enactment lack protection under it.

Young's assumption that the anti-abrogation clause applies to A.R.S. 4-312(B) is incorrect, and Young's ruling cannot stand following the precedent set by Dickey. A.R.S. 4-312(B) does not violate the anti-abrogation clause and is therefore valid law. Young mistakenly concluded that the legislature’s enactment of 4-312(B) alongside 4-311 unconstitutionally abrogated the general negligence cause of action recognized in Ontiveros, while it actually modified the necessary proof elements for liability rather than eliminating the cause of action. Citing Barrio, the line between permissible regulation and abrogation is established when a right of action is entirely abolished, and the legislature is permitted to regulate negligence claims as long as claimants retain reasonable alternatives to bring their actions. The 1986 legislative changes aimed to clarify a common law issue that could disadvantage the business community and established a standard for licensees to avoid serving alcohol to visibly intoxicated patrons. Consequently, A.R.S. 4-312(B) does not conflict with the Arizona Constitution's anti-abrogation clause because dram shop liability claims did not exist at common law in 1912. Additionally, A.R.S. 4-312(B) preempts the Plaintiffs’ claims for common law negligence and dram shop liability, leading to a reversal of the superior court's judgment against JAI and a remand for entry of judgment in favor of JAI and in favor of Plaintiffs only regarding Villanueva.