Keith v. MANORCARE, INC.

Certiorari Granted, No. 31,958, October 8, 2009

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: 2009-NMCA-119

Filing Date: August 14, 2009

Docket No. 28,008

LORI KEITH, Personal Representative
of the Estate of Barbara Barber,

Plaintiff-Appellee,

v.

MANORCARE, INC.,

Defendant-Appellant,

and

CLYDE SANCHEZ, DOORSTEP
MEDICAL CONSULTANTS, LLC,
KATHY BUSHNELL, GERARD
MURAIDA, and SOUTHWEST
GERIATRIC ASSOCIATES, LLC,

Defendants.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Linda M. Vanzi, District Judge

Lorenz & Goble P.C.
Alice Tomlinson Lorenz
Robin A. Goble
Albuquerque, NM

Dines & Gross P.C.
Michael Gross
Steven J. Leibel
Albuquerque, NM

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Shapiro Bettinger Chase LLP
Carl J. Bettinger
Albuquerque, NM

for Appellee

Modrall, Sperling, Roehl, Harris & Sisk, P.A.
R. E. Thompson
Tim L. Fields
Emil J. Kiehne
Albuquerque, NM

Carlton Fields, P.A.
Sylvia H. Walbolt
Matthew J. Conigliaro
Tampa, FL

for Appellant

Lewis and Roca LLP
Thomas P. Gulley
Albuquerque, NM

Reed Smith LLP
Paul D. Fogel
Raymond A. Cardozo
San Francisco, CA

for Amicus Curiae Association of
Commerce & Industry

Doerr & Knudson
Randy J. Knudson
Portales, NM

for Amicus Curiae National Citizens’
Coalition for Nursing Home Reform

OPINION

FRY, Chief Judge.

{1} Defendant ManorCare, Inc., appeals from a $53.2 million jury verdict entered against
it in a wrongful death action brought by Plaintiff Lori Keith as the personal representative

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of the estate of Barbara Barber, the decedent. Ms. Barber was a resident at the ManorCare
Camino Vista nursing home and died at the home in December 2004. Plaintiff sued, alleging
that Defendant had negligently caused Ms. Barber’s death. On appeal, Defendant argues that
the district court erred by: (1) entering a finding that Defendant was the employer of the
staff of the nursing home where Ms. Barber resided, (2) declining to allow the jury to
apportion fault to the physician who treated Ms. Barber, (3) declining to allow separate trials
for liability and punitive damages, (4) excluding one of Defendant’s expert witnesses, and
(5) declining to reduce the $50 million punitive damages award as unconstitutionally
excessive. We conclude that the district court erred in determining prior to trial and on the
basis of disputed facts that Defendant was the employer of the staff at the facility where Ms.
Barber resided and that this error requires a new trial. Because this issue is dispositive, we
do not address any of Defendant’s remaining arguments.

BACKGROUND

{2} Plaintiff brought this action following the death of Barbara Barber, a resident of the
ManorCare Camino Vista (Camino Vista) nursing home facility in Albuquerque, New
Mexico. On December 20, 2004, Ms. Barber was found unresponsive in her bed by a nurse
working at the Camino Vista facility. Ms. Barber was pronounced dead shortly after the
staff’s discovery of her body. Plaintiff alleged that Ms. Barber died of gastrointestinal
bleeding that was negligently left untreated by the nursing staff at the Camino Vista facility.
Plaintiff sought compensatory damages for Defendant’s alleged negligence as well as
punitive damages for Defendant’s alleged wanton, willful, and reckless conduct.

{3} In its answer to Plaintiff’s complaint, Defendant noted that its subsidiary, Four
Seasons Nursing Centers, Inc. (Four Seasons), was the owner and operator of the Camino
Vista facility, not Defendant. Specifically, while Defendant admitted that it “owns the stock
of a corporation that owns the stock of another corporation that wholly owns the stock of
[Four Seasons]” and that Four Seasons was doing business as HCR ManorCare Camino
Vista, it denied that it “owned, operated or managed the nursing home.” Defendant also
denied Plaintiff’s allegation that it “was acting through its employees, agents, apparent
agents or contractors who were acting within the scope of their employment, agency,
apparent agency or contract in the services they provided to [Ms.] Barber while she was a
patient at [Camino Vista] nursing home.”

{4} The issue of whether Defendant was the employer of the Camino Vista nursing staff
does not appear to have come up again in any way until after Defendant filed a motion for
summary judgment on Plaintiff’s punitive damages claim. In that motion, Defendant noted
that Plaintiff had made a direct punitive damages claim against it as well as a vicarious
liability claim based upon the actions of the nurses at Camino Vista and argued that there
was no evidence that either Defendant or the nurses had any malicious intent. Thus,
Defendant argued, Plaintiff could neither establish vicarious liability for punitive damages
based on the actions of the nursing staff nor show that Defendant directly engaged in the
type of conduct needed to prove a punitive damages claim. In response, Plaintiff argued that
a “corporation may be liable for punitive damages for the wrongful acts of employees who
are acting within the scope of employment and who are employed in a managerial capacity”

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when the corporation ratifies an employee’s conduct, and, under Clay v. Ferrellgas, Inc., 118
N.M. 266, 270, 881 P.2d 11, 15 (1994), when “the actions of the employees in the aggregate
demonstrate a cumulative effect that proves the requisite culpable intent.”

{5} To address these arguments, Defendant argued in its reply that the cumulative
conduct of the Camino Vista staff could not be used against it because none of the staff
members were its employees. In support of this argument, Defendant submitted a number
of documents showing that the employees whose conduct Plaintiff sought to cumulate were
actually employees of Heartland Employment Services, Inc. (Heartland), who were working
for Four Seasons at the Camino Vista facility, not for Defendant ManorCare, Inc.

{6} At the hearing on Defendant’s motion, Plaintiff argued that Defendant had
improperly raised the absence of an employment relationship and asked the court to stop
Defendant from raising the issue again. Plaintiff’s counsel argued, “I believe they are
estopped, both from their conduct up until this point, and from the documents I will now
submit,” from arguing that Defendant was not the employer of the nursing staff. Plaintiff
submitted the following to the court: a ManorCare, Inc., annual report that made references
to “the employees of ManorCare” at its 276 nursing homes and indicated that ManorCare,
Inc., is also “refer[red] to as ManorCare or HCR ManorCare”; documents from the personnel
file of Nola Jamison showing many internal references to the facility as “HCR ManorCare”;
a cost report for the Camino Vista facility submitted to a state agency that was signed by
Barry Lazarus, who Plaintiff’s counsel represented was an executive “for the entire
company”; a number of other documents used at the Camino Vista facility that utilized the
name “HCR ManorCare” and indicated that the Camino Vista staff members were
employees of HCR ManorCare; and excerpts from the depositions of Richard Parades, who
Plaintiff’s counsel represented was “the mid-stage division head of ManorCare,” and Brian
Galpin, who Plaintiff’s counsel represented was the “nursing home administrator at [Camino
Vista].” Plaintiff’s counsel explained the significance of the deposition excerpts as
demonstrating the chain of command among various executives and administrators.

{7} In response, Defendant relied on the documents it had submitted with its reply
showing that: the employees at the facility, including Jamison and Galpin, were employed
by Heartland and that the facility was owned by Four Seasons; Ms. Barber had contracted
with Four Seasons, not with Defendant, for her care at the facility; and Four Seasons was a
subsidiary of one of Defendant’s subsidiaries.

{8} The court then advised the parties that it would not “consider any issues that were
raised in the reply brief that were not raised in the original motion, but [that] insofar as that
may become an issue down the road, [it was] going to find that all of these folks were
employees of ManorCare.” In making this finding, the court did not consider the evidence
Defendant had submitted with its motion and relied solely on Plaintiff’s evidence and the
one exhibit Defendant had been allowed to introduce at the hearing that showed Defendant’s
corporate structure. The court then proceeded to deny Defendant’s motion for summary
judgment because factual issues existed regarding the elements of Plaintiff’s claims for
punitive damages.

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{9} At a hearing a few days before the trial, Defendant again sought to introduce
evidence showing that it did not employ the Camino Vista employees in order to make the
records part of the official record for the trial so that it could document its objection to the
court’s finding that the Camino Vista staff was employed by Defendant. The court,
however, granted Plaintiff’s motion to strike Defendant’s evidence, noting that “[i]nsofar as
[D]efendant wants to preserve their objections I think both by the motions for summary
judgment and this hearing today your objection . . . for putting those records into the trial
will be noted.” Plaintiff then asked the court for a written order memorializing the court’s
finding. The court agreed that a written order was necessary, noting that the employment
issue was “not going to be an issue that gets litigated at trial starting next week.” Plaintiff
then submitted a proposed order.

{10} Defendant filed an objection to the proposed order and argued that the order
“functionally asks the [c]ourt to enter an order granting summary judgment in its favor on
the issue of who was the employer of the staff at [Camino Vista] even though Plaintiff has
not filed a motion for summary judgment on this issue and there are genuine factual issues
on this point.” With this objection, Defendant submitted the affidavit of a former director
for the region including Camino Vista, who stated that the Camino Vista facility’s staff was
employed by Heartland, not by Defendant. Plaintiff then asked the court to strike the
affidavit and argued that the affidavit “never addresses the relevant factors under New
Mexico law that create an employer-employee relationship.” Over Defendant’s objections,
the court entered the order, finding that “the staff at [Camino Vista] were employees of
[Defendant].” In entering the order, the court stated that it was doing so “as a finding of the
[c]ourt, not as a motion for summary judgment.”

{11} Defendant renewed its objection to the court’s finding during the jury instruction
phase of the trial and argued that “any and all instructions that imply or state or would lead
a jury to conclude that the staff at Camino Vista are employed by [Defendant], isn’t [sic]
correct.” The court nonetheless instructed the jury that “[t]he [Camino Vista] staff were
employees of [Defendant] at the time of these events. Therefore, [Defendant] is liable for
any negligent act or omission of the Camino Vista staff that caused harm to [Ms.] Barber”
and that “[P]laintiff . . . has the burden of proving that . . . [t]he actions of the Camino Vista
staff demonstrate willful, reckless or wanton misconduct, . . . such that punitive damages
should be awarded against [Defendant].”

{12} Following the jury verdict, Defendant filed a motion for a new trial based on the
court’s pre-trial finding that it was the employer of the Camino Vista staff. Plaintiff
responded, arguing for the first time that judicial estoppel barred Defendant from asserting
that it was not the employer of the staff. The district court denied Defendant’s motion for
a new trial, and Defendant appealed.

DISCUSSION

{13} Defendant argues that the district court erred when it found that Defendant was the
employer of the Camino Vista staff and that because of the court’s error, a new trial is
necessary. Defendant contends that the court’s order was the functional equivalent of

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summary judgment because “[t]he existence of an employment relationship usually is a
question for the trier of fact” and the question of whether Defendant employed the Camino
Vista staff should have been submitted to the jury because there were disputed issues of
material fact on the issue.

{14} In response, Plaintiff argues that the district court’s finding “was not a procedurally-
defective summary judgment ruling but, rather, a finding that [Defendant] was judicially
estopped from disavowing the employer status it had advantageously embraced and asserted
throughout the proceedings.” Plaintiff contends that the district court’s order
“memorializ[ed] its finding that [Defendant] was bound by its prior representations that the
Camino Vista staff were its employees” and that “[t]he [district] court’s finding constituted
an appropriate application of the doctrine of judicial estoppel.”

{15} The record does not support Plaintiff’s view that the district court’s finding was
based on judicial estoppel. The court’s order specifically stated that it was based on the
evidence and argument Plaintiff presented at the hearing on Defendant’s motion for
summary judgment. Other than Plaintiff’s counsel briefly arguing that “I believe they are
estopped, both from their conduct up until this point, and from the documents I will now
submit,” Plaintiff made no argument to the court prior to the entry of the order that
Defendant should be judicially estopped from asserting that it was not the employer of the
Camino Vista staff, and the court did not make such a finding. When Defendant argued for
a new trial based on the court’s finding that Defendant was the employer of the Camino
Vista staff, Plaintiff, for the first time, made an argument that judicial estoppel had barred
Defendant from maintaining that it did not employ the staff.

{16} For the reasons that follow, we agree with Defendant that the court’s order
effectively granted summary judgment to Plaintiff on the issue of whether Defendant
employed the staff of the Camino Vista facility and that the district court erred in doing so.
Although we may affirm a district court’s ruling if it is right for any reason, we conclude that
judicial estoppel is inapplicable in this case and therefore reject Plaintiff’s argument that the
court’s order should be affirmed as a proper application of judicial estoppel.

The District Court Effectively Granted Plaintiff Summary Judgment on the Question
of Whether Defendant Employed the Camino Vista Staff

{17} Because the parties disagree about the applicable standard of review, we first
consider the nature of the district court’s order. The court unequivocally ruled that
Defendant was the employer of the staff at the Camino Vista facility. Defendant argues that
this finding is the functional equivalent of summary judgment, which we review de novo,
while Plaintiff argues that the court’s finding was a proper application of the judicial
estoppel doctrine, which we review only for an abuse of discretion.

{18} The record establishes that Defendant raised the employment issue in the first
pleading it filed. Plaintiff’s complaint against Defendant alleged that Defendant had
negligently caused the death of Ms. Barber both as a result of Defendant’s direct corporate
negligence and as a result of the negligent actions of the staff who cared for Ms. Barber. In

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its answer to Plaintiff’s complaint, Defendant asserted that it did not own, operate, or
manage the Camino Vista facility and Defendant denied Plaintiff’s assertion that “[a]t all
times material herein, [Defendant] was acting through its employees . . . in the services they
provided to [Ms.] Barber while she was a patient at [Camino Vista] nursing home.” Thus,
from the very outset of the litigation, Defendant disputed the employment relationship
between itself and the Camino Vista staff.

{19} Defendant’s answer put Plaintiff on notice that in order to hold Defendant liable for
the acts of the Camino Vista staff, she would have to prove that Defendant actually
employed the staff. See Cain v. Champion Window Co. of Albuquerque, LLC, 2007-NMCA-
085, ¶ 8, 142 N.M. 209, 164 P.3d 90 (noting that the plaintiff has the burden of proving that
an individual is an employee in order to hold an employer vicariously liable for that alleged
employee’s actions); see also UJI 13-407 NMRA (providing instructions to be submitted to
the jury when the existence of an employment relationship is disputed). “The principal test
for determining whether an employer-employee relationship exists . . . turns on the right of
the employer to control the work of the employee.” Reynolds v. Swigert, 102 N.M. 504, 508,
697 P.2d 504, 508 (Ct. App. 1984). Whether the employer exercises sufficient control to be
held liable for the acts of the employee is a question of fact that must be submitted to the jury
unless there are no issues of material fact regarding the employment relationship between
the parties.1 Blea v. Fields, 2005-NMSC-029, ¶¶ 10, 15, 138 N.M. 348, 120 P.3d 430
(noting that summary judgment is only proper where there are no material issues of fact
regarding the employment status of a defendant); see Ciup v. Chevron U.S.A., Inc., 1996-
NMSC-062, ¶ 8, 122 N.M. 537, 928 P.2d 263 (noting that whether franchisor controls
franchisee’s conduct for purposes of holding franchisor vicariously liable is a question of
fact that must be submitted to the jury unless no material fact is in dispute regarding
franchisor’s ability to control franchisee).

{20} Because resolution of the employment status of the Camino Vista staff was a fact
question, the district court could properly make a pre-trial determination that an employment
relationship existed only if Plaintiff properly moved for summary judgment and established
that there were no disputed issues of material fact. Thus, despite the court’s indication that
it was not entering summary judgment, the court’s order was the equivalent of summary

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Defendant argues that in order to hold it liable for the acts of its subsidiary, Plaintiff
was required to allege facts sufficient to pierce Defendant’s corporate veil. Although
piercing the corporate veil is the normal method by which a parent corporation is held liable
for the acts of its subsidiary, see Scott v. AZL Res., Inc., 107 N.M. 118, 121, 753 P.2d 897,
900 (1988) (noting that a parent and a subsidiary are separate corporations and that the
corporate veil must be pierced to hold the parent liable for the subsidiary’s actions), Plaintiff
here sought to bypass the corporate veil entirely by alleging that Defendant was actually the
employer of the Camino Vista staff such that Defendant could be held vicariously liable for
the employees’ conduct. We express no opinion on the soundness of Plaintiff’s theory, or
whether Plaintiff could prevail at trial. However, having chosen this particular legal theory,
Plaintiff must meet the burden of proving that Defendant actually employed the individuals
for whose conduct Plaintiff seeks to hold Defendant liable.

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judgment because it resolved a question of fact that ordinarily would be submitted to the
jury. See Boggs v. Anderson, 72 N.M. 136, 139, 381 P.2d 419, 421 (1963) (construing a
court’s sua sponte dismissal of an action to be summary judgment). By ruling that the
Camino Vista staff was employed by Defendant, the court took the employment relationship
question away from the jury. We therefore conclude that the court’s order constituted partial
summary judgment in favor of Plaintiff, which we review de novo. See Blea, 2005-NMSC-
029, ¶ 10 (noting that when reviewing the grant of summary judgment, we review the district
court’s order de novo and we construe all “reasonable inferences from the record in favor
of the party that opposed the motion”).

The District Court Erred by Entering Summary Judgment in Favor of Plaintiff on the
Existence of an Employment Relationship

{21} Plaintiff did not move for summary judgment on the employment relationship issue.
Instead, Plaintiff triggered the consideration of the issue in her response to Defendant’s
motion for summary judgment on the viability of the punitive damages claim. Plaintiff
argued that Defendant could be liable for punitive damages through its vicarious
responsibility for the reckless conduct of the nursing home staff. In reply, Defendant argued
that it was not the employer of the staff members. Thus, because the employment issue was
not the basis of Defendant’s motion, the court did not need to finally resolve the issue in
order to deny the motion. Instead, the court could have concluded that there were genuine
issues of material fact precluding summary judgment on the punitive damages issue,
including issues of fact regarding who was the actual employer of the Camino Vista staff.

{22} Despite the fact that final resolution of the employment issue was not necessary for
the resolution of Defendant’s motion for summary judgment, Plaintiff sought an order from
the court finding that Defendant was the employer of the Camino Vista staff because
Plaintiff did not want to have to keep dealing with the issue at trial. The exhibits Plaintiff
submitted in support of her argument consisted primarily of documents reflecting that both
the Camino Vista facility and Defendant used the name “HCR ManorCare.” While the court
allowed Defendant a brief opportunity to respond and accepted one exhibit from Defendant
showing the corporate structure of Defendant and its subsidiaries, the court refused to
consider other exhibits Defendant had submitted with its reply. Those exhibits tended to
show that the Camino Vista staff was employed by a subsidiary of Defendant, not by
Defendant itself.

{23} The means employed by the district court was contrary to the proper procedure for
resolving an issue of fact before trial, which is via summary judgment. Rule 1-056(D)(2)
NMRA provides that a party moving for summary judgment “shall submit to the court a
written memorandum containing a short, concise statement of the reasons in support of the
motion with a list of authorities relied upon.” The rule also requires the court to provide the
party opposing the motion the opportunity to submit a written memorandum within fifteen
days from service of the motion for summary judgment. Id. These requirements serve to
“protect the rights of the party opposing the motion” by giving the party notice of the motion
against it and an opportunity to respond. Azar v. Prudential Ins. Co. of Am., 2003-NMCA-
062, ¶ 88, 133 N.M. 669, 68 P.3d 909 (internal quotation marks and citation omitted).

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{24} Here, Plaintiff did not file a written motion in support of its request for a ruling that
Defendant was the employer of the Camino Vista staff. Instead, Plaintiff orally moved the
court for such a ruling at a hearing on another motion, and the court immediately ruled in
favor of Plaintiff and then later entered a written order over Defendant’s objections. While
Defendant was given a brief opportunity to respond orally at the hearing, the court did not
allow Defendant to file a written response, and the court did not consider evidence that
Defendant sought to introduce after Plaintiff broached the employment relationship issue in
its response to Defendant’s motion for summary judgment on the punitive damages issue.
Thus, the court denied Defendant both notice that summary judgment could be entered
against it and a meaningful opportunity to respond to Plaintiff’s request for a ruling on the
employment issue.

{25} Not only was the procedure followed by Plaintiff improper, but the evidence that
Plaintiff submitted in support of its motion and that the court relied upon was insufficient
to support a ruling as a matter of law that Defendant was the employer of the Camino Vista
staff. In order to prove that Defendant was the employer, Plaintiff had to present evidence
establishing that Defendant had the right to control the work of the staff members. See
Reynolds, 102 N.M. at 508, 697 P.2d at 508 (stating that “[t]he principal test for determining
whether an employer-employee relationship exists . . . turns on the right of the employer to
control the work of the employee”); see also UJI 13-403 NMRA (explaining that “[a]n
employer is one who has another perform certain work and who has the right to control the
manner in which the details of the work are to be done”). A number of factors inform the
determination of “whether an employer has the right to control an individual for [the]
purpose of establishing vicarious liability.” Blea, 2005-NMSC-029, ¶ 12. These factors
include “(1) whether the employer is entitled to control the manner and means of the
individual’s performance[,] (2) the method of compensating the individual[,] (3) whether the
employer has furnished equipment for the individual[,] and (4) whether the employer has the
power to terminate the individual without cause.” Id.

{26} Notably, none of the evidence that Plaintiff submitted addressed any of the factors
listed above. Instead, Plaintiff’s evidence dealt with the fact that both the Camino Vista
facility and Defendant used the name “HCR ManorCare” and Defendant’s acknowledgment
that the Camino Vista facility was one of its subsidiaries. This evidence did not constitute
a prima facie showing that Defendant had the ability to control the Camino Vista staff, and
Plaintiff therefore failed to meet its burden to obtain summary judgment on the employment
relationship issue. See Ciup, 1996-NMSC-062, ¶ 7 (explaining that in order to obtain
summary judgment, the moving party must make a prima facie showing that it is entitled to
a judgment as a matter of law); cf. Savinsky v. Bromley Group, Ltd., 106 N.M. 175, 176, 740
P.2d 1159, 1161 (Ct. App. 1987) (noting that the defendant met its burden on summary
judgment by showing that it did not have the ability to control the work of alleged
employee).

{27} Furthermore, the evidence that Plaintiff submitted was contradicted by evidence
Defendant submitted indicating that the Camino Vista facility was owned and operated by
a subsidiary and that the staff was therefore employed by the subsidiary, not by Defendant.

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In light of this evidence, the court could not properly conclude as a matter of law that
Defendant employed the Camino Vista staff.

{28} It is apparent that the district court believed it was making a finding of fact that
Defendant employed the Camino Vista staff because the court expressly stated as much. We
are unable to discern how the district court could justify making such a pre-trial finding on
the basis of conflicting evidence. The only explanation Plaintiff offers is its contention that
the district court found that Defendant was judicially estopped from asserting that it was not
the staff’s employer. However, as we discuss later in this opinion, it does not appear that the
district court relied on judicial estoppel, but even if it had, the doctrine is not applicable in
this case.

{29} Given the improper procedure that gave rise to the district court’s effective grant of
partial summary judgment in favor of Plaintiff and Plaintiff’s failure to make a prima facie
showing that she was entitled to judgment as a matter of law on the employment issue, we
conclude that the court erred in ruling that Defendant employed the Camino Vista staff.

The District Court’s Error Requires Reversal and a New Trial

{30} Defendant argues that the court’s error compels reversal of the judgment against it
and a new trial because of the prejudice caused by the court’s ruling and the instruction to
the jury that Defendant was liable for any negligent acts of the Camino Vista employees.
Specifically, Defendant argues that the court took away from the jury an essential element
that was Plaintiff’s burden to prove—the question of whether Defendant could be held liable
for the alleged negligence of the Camino Vista staff—and that the “result was an
extraordinary damages award against a parent holding company for conduct of persons who
were . . . employees of an independent, lawfully formed corporate subsidiary.” In response,
Plaintiff asserts only that Defendant’s “contentions of prejudice” are “red herrings” and that
the case was not “simply one of nursing negligence but, rather, of direct corporate
negligence in putting profits first and people last, which led to the conduct causing [Ms.
Barber’s] death.” While Plaintiff does not expand on this assertion, we interpret Plaintiff’s
argument to be that if the district court erred by finding that Defendant was the employer of
the Camino Vista staff, that error is harmless because Plaintiff also asserted a cause of action
against Defendant for its own negligence.

{31} It is true that Plaintiff alleged that Defendant was directly negligent by failing to
implement corporate policies and procedures that would have prevented Ms. Barber’s death.
However, Plaintiff also alleged that Defendant was vicariously liable for the negligent
conduct of the nursing staff at the Camino Vista facilities, and Plaintiff submitted both the
direct corporate negligence claims and the vicarious liability claims to the jury.

{32} Indeed, the jury instructions focused on theories of Defendant’s vicarious liability
for the actions of Camino Vista staff members. Those theories allowed the jury to find
Defendant negligent if “[D]efendant neglected [Ms.] Barber”; “did not properly monitor,
assess, and treat [Ms.] Barber’s change in condition”; “did not timely transfer [Ms.] Barber
to the hospital”; “did not properly hire, train, supervise, or monitor the staff working at

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[Camino Vista]”; or “failed to properly follow the [c]are [p]lan it had prepared for [Ms.]
Barber.” These theories depended on the conduct of the Camino Vista staff. In addition, the
district court instructed the jury that “[t]he [Camino Vista] staff were employees of
[Defendant] at the time of these events. Therefore, [Defendant] is liable for any negligent
act or omission of the Camino Vista staff that caused harm to [Ms.] Barber.”

{33} The instructions related to Plaintiff’s claim for punitive damages also focused on the
conduct of Camino Vista employees. The district court instructed the jury that “if you find
that the conduct of Camino Vista staff persons . . . was willful, reckless, or wanton, you may
award punitive damages against [Defendant]” under theories of either managerial capacity
or corporate ratification. These theories for obtaining punitive damages expressly relied on
the existence of an employment relationship because a corporation cannot be held liable for
the managerial acts of individuals who are not its employees or for ratifying the conduct of
individuals who are not employed by the corporation. See Chavarria v. Fleetwood Retail
Corp., 2006-NMSC-046, ¶ 21, 140 N.M. 478, 143 P.3d 717 (noting that “[a] corporation
may be held liable for punitive damages for the misconduct of its employees” if “corporate
employees possessing managerial capacity engage in conduct warranting punitive damages”
or if “the corporation authorizes, ratifies, or participates in conduct that warrants punitive
damages” (emphasis added)).

{34} In addition, the special verdict form did not tell the jury to indicate which
theory—direct negligence or vicarious liability—it relied on. The form only required the
jury to answer the question: “Was [Defendant] negligent?” Thus, while the jury could have
found Defendant liable based solely on its direct negligence, it is equally likely that the jury
found Defendant liable solely under a theory of vicarious liability for the negligence of the
nursing staff at Camino Vista. Because we have no way of determining whether the jury
relied on the theory that was affected by the court’s error, we reverse the judgment against
Defendant and remand to the district court for a new trial. See Smith v. Vill. of Ruidoso,
1999-NMCA-151, ¶ 37, 128 N.M. 470, 994 P.2d 50 (reversing the jury’s award of damages
because it was impossible to determine whether the jury based its verdict on erroneous
contract instructions or on some other theory of damages).

Judicial Estoppel

{35} As noted above, the only argument Plaintiff makes in support of the court’s ruling
on the employment issue is that the court properly relied on judicial estoppel. We briefly
address this argument because, under our “right-for-any-reason” doctrine, we could affirm
the district court on the basis of judicial estoppel, assuming the doctrine were applicable, as
long as “reliance on the new ground would [not] be unfair to appellant.” Meiboom v.
Watson, 2000-NMSC-004, ¶ 20, 128 N.M. 536, 994 P.2d 1154 (internal quotation marks and
citation omitted).

{36} “Judicial estoppel is a doctrine that prevents a party who has successfully assumed
a certain position in judicial proceedings from then assuming an inconsistent position,
especially if doing so prejudices a party who had acquiesced in the former position.”
Rodriguez v. La Mesilla Constr. Co., 1997-NMCA-062, ¶ 20, 123 N.M. 489, 943 P.2d 136.

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The purpose of the rule is to “estop[] a party from playing fast and loose with the court
during the course of litigation.” Citizens Bank v. C & H Constr. & Paving Co., 89 N.M. 360,
366, 552 P.2d 796, 802 (Ct. App. 1976) (internal quotation marks and citation omitted).

{37} There are essentially three elements that must be met for judicial estoppel to be
applicable. First, the party against whom the doctrine is to be used must have successfully
assumed a position during the course of litigation. Rodriguez, 1997-NMCA-062, ¶ 20.
Second, that first position must be “necessarily inconsistent” with the position the party takes
later in the proceedings. See Johnson v. Aztec Well Servicing Co., 117 N.M. 697, 701, 875
P.2d 1128, 1132 (Ct. App. 1994). Finally, while not an absolute requirement, judicial
estoppel will be “especially” applicable when the party’s change of position “prejudices a
party who had acquiesced in the former position.” Rodriguez, 1997-NMCA-062, ¶ 20.

{38} Plaintiff directs us to a number of instances in the record where Defendant “asserted
itself as the Camino Vista staff’s employer.” Specifically, Plaintiff points out that during
discovery, Defendant objected to the “discovery of CaminoVista staff pre-employment
screening by stating [that] the requests did not ‘seek information limited to those ManorCare
employees who actually cared for [Ms.] Barber.’” Plaintiff also notes that Defendant filed
a number of motions in limine that referred to “ManorCare employees at Camino Vista” and
that Defendant’s counsel referred to the staff as “ManorCare employees” at a number of pre-
trial hearings. Finally, Plaintiff notes that Defendant “successfully opposed producing
documents regarding the . . . sale of its New Mexico facilities” by filing a motion in which
it stated that it “is not claiming an inability or unwillingness to accept any responsibility for
any judgment in this case and has produced the insurance policy that would be available to
pay any judgment.” Plaintiff argues that the language Defendant used in its motions
“unambiguously explained its status, confirming that i[t] was, indeed, the responsible party
for Camino Vista staff.”

{39} While these examples establish that Defendant colloquially referred to the Camino
Vista staff as “ManorCare employees” on more than one occasion, Plaintiff has failed to
show that these references rise to the level required to invoke judicial estoppel. The primary
purpose of the judicial estoppel rule is to prevent parties from “playing fast and loose with
the court” by successfully arguing one position and then later adopting a position
inconsistent with the first. Citizens Bank, 89 N.M. at 366, 552 P.2d at 802 (internal
quotation marks and citation omitted). In Guzman v. Laguna Development Corp., 2009-
NMCA-116, ¶¶ 13-14, ___ N.M. ___, ___ P.3d ___ (No. 27,827, June 25, 2009), for
example, we held that a defendant was judicially estopped from arguing to the district court
that workers’ compensation was the exclusive remedy for the plaintiff’s injury because, at
an earlier proceeding before the Workers’ Compensation Administration, the defendant had
successfully argued that the employee was not acting in the course and scope of employment
and that workers’ compensation was therefore inapplicable. Unlike the situation in Guzman,
Plaintiff here has not directed this Court to any instance in the voluminous record where
Defendant successfully argued that it in fact was the employer of the staff at the Camino
Vista facility. Instead, Plaintiff directs us only to instances where Defendant colloquially
referred to the staff as “ManorCare employees.”

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{40} Plaintiff argues that the fact that Defendant prevailed on some of the motions where
it used the phrase “ManorCare employees” is sufficient to give rise to judicial estoppel.
Plaintiff, however, has not indicated how the use of the phrase in any way affected the
resolution of those motions, and thus has failed to show that Defendant successfully argued
the position that it was the employer of the staff as required for judicial estoppel to apply.
Because the employment status of the Camino Vista staff was not at issue in any of the
motions or hearings upon which Plaintiff relies, Defendant cannot be said to have been
“playing fast and loose” with the court, and judicial estoppel is therefore inapplicable in this
case. See Sw. Steel Coil, Inc. v. Redwood Fire & Cas. Ins. Co., 2006-NMCA-151, ¶¶ 18-19,
140 N.M. 720, 148 P.3d 806 (noting that where an employer had specifically argued that a
decedent was not its employee in a previous proceeding, the employer was not barred by
judicial estoppel from later asserting that the decedent was its employee because the
previous case had settled before the issue was resolved and the employer therefore did not
successfully argue an inconsistent position).

{41} Furthermore, from the very outset of the litigation, in its answer to Plaintiff’s
complaint, Defendant denied that it “owned, operated, and managed” the nursing home and
asserted that Four Seasons, doing business as ManorCare Camino Vista, was responsible for
the staffing and operation of the Camino Vista facility. Thus, Defendant’s initial position
with respect to the employment status of the Camino Vista staff was consistent with its
position throughout: that Defendant was not the employer. Defendant’s later casual
reference to the Camino Vista staff as “ManorCare employees” cannot be deemed an
abandonment of its defense that it did not own and operate the Camino Vista facility.

{42} Plaintiff also argues that Defendant’s statement that it was willing and able to pay
any judgment stemming from this case precludes Defendant from arguing that it is not the
employer of the Camino Vista staff. Contrary to Plaintiff’s argument, Defendant’s statement
did not constitute an unambiguous confirmation that it was the employer of the Camino Vista
staff. In fact, Defendant’s statement did not depend on an employment relationship, nor did
it assert that it was the employer of the Camino Vista staff. Defendant’s statement simply
indicated that if a judgment were entered against it, it had the financial resources to pay the
judgment. A prerequisite of such a judgment would be Plaintiff’s proving all elements of
her case against Defendant, including proving that Defendant was the employer of the
nursing staff such that it could be held accountable for the staff’s actions.

{43} In addition, neither party appears to dispute that the Camino Vista facility operated
under the name “ManorCare Camino Vista.” Thus, a reasonable shorthand reference to the
employees of the Camino Vista facility would be the “ManorCare employees.” Cf. Johnson,
117 N.M. at 701, 875 P.2d at 1132 (noting that a worker was not judicially estopped from
asserting that the defendant was his employer where he had represented on a form that
another company was his employer because the previous assertion did not indicate that the
other company was the only employer). Thus, Plaintiff has failed to show that Defendant
asserted a position with respect to the employment status of the Camino Vista staff that was
inconsistent with Defendant’s argument that it did not employ the staff.

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{44} Finally, while a showing of prejudice is not an essential element of judicial estoppel,
it is one factor that we consider. Plaintiff has failed to show that she was prejudiced in any
way by Defendant’s reference to the Camino Vista staff as “ManorCare employees.” See
Rodriguez, 1997-NMCA-062, ¶ 22 (noting that judicial estoppel was inapplicable because
the defendant failed to “demonstrate[] that it was prejudiced by [the plaintiff’s] conduct” and
because the plaintiff’s position “did not affect [the defendant] in any way”). Indeed, in the
district court, Plaintiff’s counsel argued that the court should rule that Defendant employed
the Camino Vista staff not because Plaintiff had in some way relied on Defendant’s use of
the shorthand term, but instead because Plaintiff’s counsel “[did not] want to have to be
dealing with [the employment issue] over and over again unnecessarily at trial.”

{45} From the outset of the litigation, Plaintiff was on notice that Defendant disputed the
allegation that it employed the staff at the Camino Vista facility. It was Plaintiff’s burden
to prove the existence of an employment relationship in order to hold Defendant liable for
the acts of the Camino Vista staff. Defendant’s shorthand reference to the staff as
“ManorCare employees” can hardly be said to have relieved Plaintiff of its burden of
proving that Defendant exercised the level of control required to hold Defendant vicariously
liable or to have constituted an abandonment of Defendant’s assertions that it did not own
and operate the Camino Vista facility.

{46} Because Plaintiff has failed to show that Defendant actually asserted any inconsistent
positions to the court, and because Plaintiff has failed to show how she was prejudiced by
any of the alleged inconsistencies, we conclude that judicial estoppel is inapplicable in this
case.

CONCLUSION

{47} For the foregoing reasons, we reverse the judgment against Defendant and remand
to the district court for a new trial.

{48} IT IS SO ORDERED.

______________________________________
CYNTHIA A. FRY, Chief Judge

WE CONCUR:

____________________________________
JAMES J. WECHSLER, Judge

____________________________________
ROBERT E. ROBLES, Judge

Topic Index for Keith v. ManorCare, Inc., No. 28,008

AE APPEAL AND ERROR

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AE-RM Remand

CP CIVIL PROCEDURE
CP-ES Estoppel
CP-NT New Trial
CP-SJ Summary Judgment

CS CORPORATIONS
CS-SB Subsidiary

EL EMPLOYMENT LAW
EL-EE Employer-Employee Relationship
EL-IC Independent Contractor

RE REMEDIES
RE-PU Punitive Damages

TR TORTS
TR-VL Vicarious Liability
TR-WD Wrongful Death

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