Gonzales v. City of Phoenix

SUPREME COURT OF ARIZONA
En Banc

ALEX GONZALES, a married man, ) Supreme Court
) No. CV-01-0170-PR
Plaintiff/Appellee, )
) Court of Appeals
) Division One
) No. 1CA-CV98-0700
)
) Maricopa County
v. ) Superior Court
) No. CV-95-14110
CITY OF PHOENIX, a municipal )
corporation; JAMES J. FINNERTY, )
) O P I N I O N
Defendants/Appellants. )
)
_________________________________ )

Appeal from the Superior Court of Maricopa County
No. CV-95-14110

The Honorable Christopher M. Skelly, Judge

AFFIRMED AND REMANDED WITH INSTRUCTIONS

_________________________________________________________________

Court of Appeals, Division One
Memorandum Decision
VACATED
_________________________________________________________________

DEBUS, KAZAN & WESTERHAUSEN, LTD. Phoenix
by Larry L. Debus
Tracey Westerhausen
and
Leslie O’Hara
Attorneys for Appellee

JONES, SKELTON & HOCHULI Phoenix
by William R. Jones, Jr.
Randall H. Warner
Attorneys for Appellants
_________________________________________________________________
J O N E S, Chief Justice

INTRODUCTION

¶1 Alex Gonzales, manager of the Central Pawn Store in

Phoenix, was charged with one count of trafficking in stolen

property and one count of theft. The trial court dismissed both

counts with prejudice after the state determined there was no

reasonable likelihood of conviction. Gonzales sued the City of

Phoenix and James Finnerty, a detective with the Phoenix Police

Department, alleging malicious prosecution. The jury returned a

verdict in favor of Gonzales for $1.4 million. The trial court

denied defendants’ motion for judgment notwithstanding the verdict

(JNOV).1 In a split memorandum decision, the court of appeals

reversed, holding as a matter of law that the defendants had

probable cause to believe Gonzales committed the underlying

criminal offenses. We granted review to decide whether the court

of appeals applied the correct legal standard.

STANDARD OF REVIEW

¶2 A trial court's denial of a motion for JNOV will be

reversed only if it reflects a manifest abuse of discretion. See

1
A Motion for Judgment Notwithstanding the Verdict (JNOV) is
referred to under the current rule as a motion for judgment as a
matter of law (JMOL). Ariz. R. Civ. P. 50. Counsel for the
parties, as well as the trial court and the court of appeals, use
the old terminology. Accordingly, for purposes of uniformity, this
court elects to use the old terminology – judgment notwithstanding
the verdict.
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Hutcherson v. City of Phoenix, 192 Ariz. 51, 53, 961 P.2d 449, 451,

¶¶12-13 (1998); Blakely Oil, Inc. v. Wells Truckways, Ltd., 83

Ariz. 274, 278, 320 P.2d 464, 466 (1958). In reviewing a jury

verdict, we view the evidence in the light most favorable to

sustaining the verdict, and if any substantial evidence could lead

reasonable persons to find the ultimate facts sufficient to support

the verdict, we will affirm the judgment. Hutcherson, 192 Ariz. at

53, 961 P.2d at 451, ¶13. We have jurisdiction pursuant to article

VI, § 5(3) of the Arizona Constitution and Arizona Revised Statutes

(A.R.S.) section 12-2102 (2001).

FACTUAL AND PROCEDURAL HISTORY

A. Facts

¶3 On January 11, 1994, Robert Dovilla offered to sell a set

of Ping golf clubs to Central Pawn. Dovilla was quoted a price of

$160.00, but, before proceeding with the proposed transaction, a

store clerk identified Dovilla as a person who had previously sold

a stolen generator to the store. The clerk notified another

employee who called the Phoenix Police Department’s pawn detail to

report the situation and to determine if the clubs were stolen. A

detective at the pawn detail ran the serial numbers through its

database, but the clubs were not listed as stolen; therefore, the

employee was told that the store could purchase the clubs.

¶4 While the employee was on the phone, the clerk began

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filling out a transaction ticket. In order to have sufficient time

to obtain relevant police information on stolen property, store

policy was to stall a questionable customer by beginning routine

paperwork and obtaining the seller’s signature on the ticket.

After obtaining Dovilla’s signature, the employee confronted him

about the stolen generator transaction. Initially, Dovilla denied

any knowledge of the generator. He then changed his story and

asked the employee if he was going to get paid. The employee

replied that the store needed to sort everything out before

finalizing the purchase. Dovilla then talked to Gonzales.

Gonzales testified that Dovilla asked to speak with the owner, but

when he was told that the owner was unavailable, Dovilla left the

store, leaving the clubs behind. As a result, Gonzales told the

employee to place a ten-day hold ticket on the golf clubs pursuant

to A.R.S. section 44-1624(F),2 and to store them in a secure

location.

¶5 Later the same day, Dovilla returned to the store to

reclaim the clubs. Gonzales refused his request and invited him to

call the shop owner or the police pawn shop detail to discuss the

situation. Later in the week, the store sent the original

transaction ticket with Dovilla’s signature to the pawn shop

2
The applicable statute provided: “The pawnbroker shall
retain any property obtained by good faith outright purchase in its
original form for ten days after the original transaction date.”

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detail. The words “stolen property” were crossed out based on the

information furnished by the police detail that the clubs were not

listed as stolen.

¶6 The following week, James Finnerty, a detective with the

Phoenix Police Department, went to the pawn shop after being

notified that a portion of the transaction ticket had been crossed

out. He questioned the employee about the clubs and asked to see

a copy of the ticket. Finnerty told store employees, including

Gonzales, that the golf clubs had not been placed on an official

police hold. Other events on that day are disputed. Gonzales

testified that Finnerty tore the tag off the clubs and told him he

could proceed to sell them. This testimony was corroborated by

other store employees who noticed the tag was missing after

Finnerty left the store. Finnerty denied this, but a fellow police

officer, contradicting Finnerty, testified that Finnerty had in

fact admitted to him that he told Gonzales to sell the clubs.

¶7 Finnerty later called the store and asked why the store

had purchased golf clubs they suspected were stolen. Gonzales

informed Finnerty that the store did not purchase the clubs, even

though the ticket indicated a purchase price of $160. Finnerty

told Gonzales that he was placing a ninety-day police hold on the

clubs. Finnerty then ran a second check on the clubs and

discovered that a set of Ping clubs had been reported stolen the

day Dovilla attempted to make his sale.
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¶8 Finnerty later interviewed Dovilla, who admitted

involvement in the generator and golf club transactions but denied

knowing the items were stolen. Dovilla told Finnerty the store had

indicated it would offset the value of the golf clubs against the

loss for the stolen generator. He also stated that three employees

had a conference behind the counter before quoting him the price of

$160.

¶9 Two days later, Finnerty returned to the store with his

partner. Finnerty questioned Gonzales about the earlier generator

transaction and whether the store intended to offset the loss.

Gonzales told Finnerty that he was not present when the generator

incident took place and that the store would attempt to sell the

clubs only if they were not stolen. However, when Finnerty

appeared before the grand jury, he testified to the contrary, that

during the interview, he told Gonzales that he, Gonzales, “had

every reason in the world to believe those golf clubs . . . were

stolen,” to which Gonzales allegedly responded,“absolutely.”

¶10 Based on Finnerty’s testimony, the grand jury indicted

Gonzales on one count of reckless trafficking in stolen property

and one count of theft. A person who recklessly traffics in stolen

property commits second degree trafficking. A.R.S. § 13-2307(A).

Theft can occur in various ways. A person who “knowingly controls

the property of another with the intent to deprive the other person

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of such property” commits theft, as does a person who controls

another’s property “knowing or having reason to know” that it was

stolen. A.R.S. § 13-1802(A)(1) and (5). After certain evidentiary

rulings by the trial judge in the criminal prosecution, the state

moved for dismissal. On April 3, 1995, the trial court dismissed

both counts with prejudice.

B. The Malicious Prosecution Action

¶11 Gonzales brought the instant civil complaint against the

City of Phoenix and Finnerty, alleging malicious prosecution. The

court submitted the issue of probable cause to a jury, which

awarded Gonzales $1.4 million. After the judgment was entered,

defendants filed the motion for JNOV, asserting that probable cause

existed as a matter of law to support the initiation of criminal

proceedings against Gonzales. The trial judge denied the motion

and defendants appealed.

C. Opinion of the Court of Appeals

¶12 The court of appeals reversed the judgment. A majority

of the panel concluded as a matter of law that the underlying

criminal action was supported by sufficient evidence of probable

cause. The majority determined that the issue whether defendants’

JNOV motion was properly denied would best be resolved under a

probable cause analysis, ruling that the existence of probable

cause is a question of law to be determined de novo by the

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reviewing court without deferring to the findings of the trial

court. Relying on a few discrete facts, the majority held that

evidence of probable cause was sufficient to support the underlying

criminal charges. In dissent, Judge Garbarino argued that the

majority ignored the requirement that the facts must be viewed in

the light most favorable to Gonzales, the non-moving party.

DISCUSSION

A. Probable Cause -- The Standard

¶13 To prevail on a malicious prosecution claim, a plaintiff

must prove that the underlying criminal action was brought without

probable cause. In the context of malicious prosecution, probable

cause is defined as “a reasonable ground of suspicion, supported by

circumstances sufficient to warrant an ordinarily prudent man in

believing the accused is guilty of the offense. . . . The test

generally applied is: upon the appearances presented to the

defendant, would a reasonably prudent man have instituted or

continued the proceeding?” McClinton v. Rice, 76 Ariz. 358, 367,

265 P.2d 425, 431 (1953) (citations omitted).

¶14 Generally, the court decides as a matter of law whether

the facts are sufficient to establish probable cause. However,

when conflicting probable cause evidence exists, the court may

submit the issue to the jury in the form of a hypothetical

question. Bradshaw v. State Farm Mut. Auto. Ins. Co., 157 Ariz.

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411, 419, 758 P.2d 1313, 1321 (1988) ("[T]he court may instruct the

jury hypothetically, telling them what facts will constitute

probable cause.") (citations omitted); Sarwark Motor Sales, Inc. v.

Woolridge, 88 Ariz. 173, 177-78, 354 P.2d 34, 36-37 (1960) (setting

forth two methods of instructing the jury).3

¶15 The probable cause evidence in the present case was

disputed. Gonzales and Finnerty offered conflicting versions of

what had actually taken place during various exchanges among

Finnerty, Gonzales, and Central Pawn’s other employees. Given this

dispute, the trial court properly submitted the issue to the jury.

In reaching the verdict, the jury necessarily found the probable

cause evidence insufficient to support the underlying criminal

charges. Following the jury’s determination, the trial court

effectively sustained the verdict when it denied the defendants’

motion for JNOV. See Hutcherson, 192 Ariz. at 53, 961 P.2d at 451,

¶¶12-13.

¶16 The majority of the court of appeals utilized a de novo

3
The trial court did not frame the issue in the form of a
hypothetical; instead, the court instructed the jury as to probable
cause, in general terms. Neither party objected to the final form
of the instructions given to the jury. Rule 51(a), Ariz. R. Civ.
P. Because neither party objected, any error is waived unless the
instruction constituted fundamental error. State v. Schrock, 149
Ariz. 433, 440, 719 P.2d 1049, 1056 (1986). There is no
fundamental error here, however, because the instruction did not
misstate the applicable law, and the instructions were not
misleading or confusing. See State v. Bass, 198 Ariz. 571, 576-77,
12 P.3d 796, 801-02, ¶17-18(2000); State v. Gallegos, 178 Ariz. 1,
10, 870 P.2d 1097, 1106 (1994).
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standard of review to determine the existence of probable cause as

a matter of law. Use of the de novo standard was improper inasmuch

as the facts presented to the jury were in dispute. As suggested

by the court of appeals dissent, the majority presumed incorrectly

on this record that probable cause is a legal issue solely for the

court to decide. Bradshaw, 157 Ariz. at 419, 758 P.2d at 1321.

Thus, the majority improperly substituted its view of the evidence

for that of the jury. In considering whether sufficient proof

exists to support a jury verdict, an appellate court looks to the

broad scope of the trial and does not re-weigh the evidence on

review. City of Glendale v. Bradshaw, 114 Ariz. 236, 238, 560 P.2d

420, 422 (1977).

B. The Jury Verdict Was Supported By Substantial Evidence

¶17 The record reflects that at the time Gonzales was

indicted, he may have suspected the goods were stolen. Gonzales

testified, however, that he acted upon his suspicion by following

all protocols set by statute, by the police pawn shop detail, and

by the pawn shop. He also testified that he was told by police to

sell the clubs because the clubs were not listed as stolen.

Importantly, this testimony was corroborated by Finnerty’s fellow

officer, who testified that Finnerty admitted that he had in fact

told Gonzales to sell the clubs. Presumably, this testimony

weighed heavily on the “no probable cause” verdict. Evidence was

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also presented that during the hold period the clubs were not

offered for sale by any employee, that Gonzales refused two

different offers to buy them, and that he did not attempt to sell

the clubs even after he was told he could do so by Finnerty.

¶18 The evidence was also disputed regarding Dovilla’s

attempted sale of the clubs to the pawn shop. Dovilla had claimed

earlier that the employees had a conference behind the counter,

quoted the selling price of $160, and then purchased the clubs. In

contrast, Gonzales testified that at the time the price was quoted,

he did not suspect the clubs were stolen, did not know Dovilla’s

history, and did not know the true value of the clubs. There was

also conflicting evidence regarding Gonzales’ knowledge as to

whether the golf clubs were stolen, that is, whether Finnerty

actually told the store to sell the clubs, whether the employees

had a conference before quoting the price, and whether the store

would sell the clubs to offset the generator loss.

¶19 The jury could reasonably infer from this evidence that

while Gonzales may have suspected that the clubs were stolen, he

nevertheless did not recklessly traffic or knowingly control stolen

goods. In addition, the jury apparently found Gonzales’ testimony

more credible than Finnerty’s. By its verdict, the jury rejected

the assertion that there was probable cause to charge Gonzales.

Ample evidence supports the jury’s determination on this issue.

Therefore, applying the correct standard, we view the evidence in
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the light most favorable to upholding the verdict. So viewed, the

evidence was legally sufficient for a jury determination of no

probable cause. Accordingly, the trial judge did not abuse his

discretion in denying the Motion for JNOV.

CONCLUSION

¶20 We find no reversible error in the trial court

proceedings. We vacate the memorandum decision of the court of

appeals and affirm the judgment of the trial court. This case is

remanded to the trial court with instructions to reinstate the jury

verdict and to enter judgment thereon.

___________________________________
Charles E. Jones
Chief Justice
CONCURRING:

____________________________________
Ruth V. McGregor, Vice Chief Justice

____________________________________
Stanley G. Feldman, Justice

____________________________________
Thomas A. Zlaket, Justice

____________________________________
William E. Druke, Judge, Court of
Appeals, Division Two

NOTE: By the recusal of Justice Frederick J. Martone,
William E. Druke, a judge of the Court of Appeals,
Division Two, was designated to sit in his stead.

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